<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
BANGOR HYDRO-ELECTRIC COMPANY
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
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<S> <C> <C>
/ / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
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/X/ Fee paid previously with preliminary materials: $39,026.15
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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</TABLE>
<PAGE>
[LOGO]
PROPOSED MERGER--YOUR VOTE IS IMPORTANT
Dear Bangor Hydro-Electric Company Shareholder:
You are cordially invited to attend a special meeting of shareholders of
Bangor Hydro-Electric Company, which will be held at the Pilot's Grill
restaurant, Hammond Street, Bangor, Maine, on Tuesday, October 24, 2000 at
10:00 A.M. (local time).
At this important meeting, we will ask you to approve an Agreement and Plan
of Merger by and among Bangor Hydro-Electric Company and Emera Incorporated.
Under the merger agreement, a wholly-owned indirect subsidiary of Emera will
merge with and into Bangor Hydro. In effect, Bangor Hydro will become a
wholly-owned subsidiary of Emera.
If the merger is completed, each share of Bangor Hydro common stock you own
will entitle you to receive U.S. $26.50 in cash, without interest (subject to
upward adjustment in certain circumstances if the merger is not completed on or
prior to June 29, 2001).
YOUR VOTE IS VERY IMPORTANT. In order to complete the merger, we need both
participation by shareholders sufficient to secure a quorum, and a majority of
the votes represented by the outstanding shares of Bangor Hydro common stock and
preferred stock, acting together as a class, voting in favor of the merger.
Failure to secure a quorum on the date set for the special meeting would require
an adjournment that would cause us to incur considerable additional expense.
Only shareholders of record of Bangor Hydro at the close of business on
September 18, 2000 are entitled to attend the special meeting and vote.
Whether or not you plan to attend the special meeting, please take the time
to vote by completing the enclosed proxy card and returning it in the enclosed
addressed envelope. The accompanying envelope requires no postage if mailed in
the United States. If you sign, date and mail your proxy card without indicating
how you want to vote, your shares will be voted "FOR" the approval of the merger
agreement. If you fail to submit a proxy or if you abstain from voting, it will
have the effect of a vote "AGAINST" the approval of the merger agreement. You
may revoke your proxy at any time before the vote is taken by delivering a
written revocation to the Clerk of Bangor Hydro, completing a later-dated proxy
and returning it to Bangor Hydro's shareholder services representative, or to
your broker if your shares are held by a broker, or by attending the special
meeting in person and notifying the Clerk of Bangor Hydro that you wish to
revoke your proxy.
The accompanying proxy statement contains answers to frequently asked
questions and a summary description of the merger, followed by a more detailed
discussion of the merger and other related matters. WE ENCOURAGE YOU TO READ THE
ENTIRE PROXY STATEMENT CAREFULLY.
THE BANGOR HYDRO BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE
BEST INTERESTS OF BANGOR HYDRO AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" THE APPROVAL OF THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY.
Sincerely,
/s/ Robert S. Briggs
Robert S. Briggs
President and Chief Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE MERGER, OR DETERMINED THAT THIS PROXY STATEMENT IS
ACCURATE OR COMPLETE. IT IS ILLEGAL FOR ANYONE TO TELL YOU OTHERWISE.
Bangor Hydro has furnished all the information in this proxy statement
concerning Bangor Hydro, and Emera has furnished all the information concerning
Emera.
This proxy statement is dated September 15, 2000 and was first mailed to
shareholders on or about September 18, 2000.
<PAGE>
BANGOR HYDRO-ELECTRIC COMPANY
33 STATE STREET
BANGOR, MAINE 04401
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 24, 2000
DATE: SEPTEMBER 15, 2000
To the Shareholders of Bangor Hydro-Electric Company:
The board of directors of Bangor Hydro-Electric Company is pleased to
provide you with notice of, and cordially invites you to attend in person or by
proxy, a special meeting of shareholders which will be held at the Pilot's Grill
restaurant, Hammond Street, Bangor, Maine, on Tuesday, October 24, 2000 at
10:00 A.M. (local time) for the following purposes:
1. To consider and vote upon a proposal to approve an Agreement and Plan of
Merger, dated as of June 29, 2000, attached as Appendix A to the
accompanying proxy statement, providing for the merger of a wholly-owned
indirect subsidiary of Emera Incorporated, with and into Bangor Hydro. As a
result of this merger, Bangor Hydro will become a wholly-owned subsidiary of
Emera. In the merger, Bangor Hydro shareholders will be entitled to receive
U.S. $26.50 in cash, without interest, for each share of Bangor Hydro common
stock owned (subject to upward adjustment in certain circumstances if the
merger is not completed on or prior to June 29, 2001); and
2. To transact such other business as may properly come before the special
meeting or any adjournment or postponement thereof.
Bangor Hydro shareholders who do not vote their shares in favor of the
merger agreement and who file with Bangor Hydro, prior to or at the special
meeting, a written objection to the merger will be entitled to assert
dissenters' rights under Maine law. If the merger agreement is approved and
these dissenting shareholders make a written demand for payment within 15 days
after the merger is approved, these shareholders will receive a cash payment
representing the fair value of the shares of Bangor Hydro common stock they
currently hold, and not the consideration payable in the merger. A copy of the
sections of Maine law that govern this process is attached as Appendix C to the
accompanying proxy statement.
Only Bangor Hydro shareholders at the close of business on September 18,
2000 are entitled to notice of and to vote at the special meeting or any
adjournment or postponement thereof. A complete list of shareholders entitled to
vote at the special meeting will be available at that meeting for inspection by
any shareholder. Approval of the merger agreement will require a majority of the
votes represented by the outstanding shares of Bangor Hydro common stock and
preferred stock, acting together as a class, voting in favor of the merger.
THE BANGOR HYDRO BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE
BEST INTERESTS OF BANGOR HYDRO AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS
THAT YOU APPROVE THE MERGER AGREEMENT AT THE SPECIAL MEETING.
Please sign, date and return the accompanying proxy card in the enclosed
addressed envelope, which requires no postage if mailed in the United States.
You may revoke your proxy at any time before the vote is taken, in accordance
with the instructions set out on page 13 of the accompanying proxy statement.
Please do not send stock certificates with your proxy card.
By Order of the Board of Directors,
/s/ Andrew Landry
Andrew Landry
Clerk
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS... 4
SUMMARY..................................................... 5
The Companies............................................. 5
The Special Meeting....................................... 5
Share Ownership of Management............................. 5
The Merger................................................ 6
Surrender of Certificates and Payment for Shares.......... 6
Background to and Reasons for the Merger.................. 6
Recommendation to Shareholders............................ 6
Opinion of Bangor Hydro's Financial Advisor............... 6
Conditions to the Merger.................................. 6
Regulatory Approvals...................................... 7
Certain Covenants......................................... 7
Termination............................................... 7
Material Federal Income Tax Consequences.................. 8
Interests of Certain Persons in the Merger................ 8
Dissenters' Rights of Appraisal........................... 8
Selected Consolidated Financial Data...................... 9
Price of Bangor Hydro Common Stock and Dividends.......... 10
Bangor Hydro Dividends.................................... 10
THE COMPANIES............................................... 11
Emera Incorporated........................................ 11
Bangor Hydro-Electric Company............................. 11
THE SPECIAL MEETING......................................... 12
Purpose, Time and Place................................... 12
Record Date, Voting Power and Vote Required............... 12
Ownership of Voting Stock by Management................... 13
Voting of Proxies......................................... 13
Revocability of Proxies................................... 13
Solicitation of Proxies................................... 13
THE MERGER.................................................. 15
General Description of the Merger......................... 15
Background to the Merger.................................. 15
Bangor Hydro's Reasons for the Merger..................... 17
Opinion of Bangor Hydro's Financial Advisor............... 18
Effective Time............................................ 22
Articles of Incorporation and By-laws..................... 22
Regulatory Approvals...................................... 23
Injunctions............................................... 25
Effects of the Merger..................................... 25
Interests of Certain Persons in the Merger................ 26
Material Federal Income Tax Consequences of the Merger.... 28
Rights of Dissenting Shareholders......................... 29
</TABLE>
i
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<CAPTION>
PAGE
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THE MERGER AGREEMENT........................................ 32
General................................................... 32
Corporate Governance Matters.............................. 32
Conversion of Bangor Hydro Shares......................... 32
Exchange of Stock for Cash................................ 33
Representations and Warranties............................ 34
Covenants................................................. 35
Additional Agreements..................................... 38
Conditions................................................ 42
Termination, Amendment, Waiver and Submission to
Jurisdiction............................................ 43
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS.................................................... 46
INDEPENDENT PUBLIC ACCOUNTANTS.............................. 47
SHAREHOLDER PROPOSALS FOR THE YEAR 2001 ANNUAL MEETING...... 47
WHERE YOU CAN FIND MORE INFORMATION......................... 47
</TABLE>
APPENDICES
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<S> <C>
APPENDIX A: Agreement and Plan of Merger, dated as of June 29, 2000
APPENDIX B: Opinion of Salomon Smith Barney Inc., dated June 29, 2000
APPENDIX C: Sections 908 and 909 of the Maine Business Corporation Act
</TABLE>
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q. WHAT WILL HAPPEN IN THE PROPOSED TRANSACTION?
A. A wholly-owned indirect subsidiary of Emera Incorporated will merge with and
into Bangor Hydro-Electric Company. As a result, Bangor Hydro will become a
wholly-owned subsidiary of Emera.
Q. WHY DID THE BANGOR HYDRO BOARD OF DIRECTORS DECIDE THAT THIS MERGER IS THE
BEST WAY TO MAXIMIZE SHAREHOLDER VALUE NOW?
A. The Bangor Hydro board of directors believes that the merger is in the best
interests of Bangor Hydro and its shareholders. The price of U.S. $26.50 per
share of Bangor Hydro common stock to be paid by Emera represents a premium
of approximately 75% over the U.S. $15.13 per share closing price of Bangor
Hydro common stock the day immediately preceding the announcement of the
merger on June 30, 2000, and exceeds Bangor Hydro's all-time high closing
share price of U.S. $24.13. The board of directors believes that the merger
consideration to be paid by Emera exceeds the shareholder value that Bangor
Hydro could reasonably be expected to achieve through remaining independent
or pursuing other alternatives. The Bangor Hydro board of directors
determined that Bangor Hydro's small size, and the possibility of further
shrinkage of its revenue base as additional aspects of its business become
subject to competition, would make it increasingly difficult to maintain
regulated rates at reasonable levels and attract capital on reasonable
terms. The board of directors believes that Emera and its principal
subsidiary, Nova Scotia Power Incorporated, represent a good fit for Bangor
Hydro. Nova Scotia Power serves a geographical area like Bangor Hydro's, and
its management has experience operating a utility with challenges similar to
those faced by Bangor Hydro. In turn, Bangor Hydro's management and
employees have experience doing business with Canadian utility companies.
The Bangor Hydro board of directors believes that the merger will provide
future benefits to Bangor Hydro's customers and employees as the best
practices of both firms are implemented.
Please read the more detailed description of Bangor Hydro's reasons for the
merger on pages 17 to 18.
Q. WHAT WILL I RECEIVE IN THE MERGER?
A. In exchange for each share of Bangor Hydro common stock you own, you will
have the right to receive U.S. $26.50 in cash, without interest (subject to
upward adjustment in certain circumstances if the merger is not completed on
or prior to June 29, 2001).
Please read the more detailed description of the consideration to be
received in the merger on pages 32 to 33.
Q. WILL I STILL BE A SHAREHOLDER OF BANGOR HYDRO AFTER THE MERGER?
A. No. In the merger, you will receive cash in exchange for all of your shares
of Bangor Hydro common stock. Following the merger, Bangor Hydro will be a
wholly-owned subsidiary of Emera and its shares will be delisted from the
New York Stock Exchange.
Q. HOW WILL THE MERGER AFFECT MY FUTURE DIVIDENDS?
A. After the merger becomes effective, you will not own any shares of Bangor
Hydro common stock on which to receive dividends. Until the merger becomes
effective, you will continue to receive regular quarterly dividends on your
shares of Bangor Hydro common stock. If the merger does not become effective
between a record date and payment date of a regular quarterly dividend,
Bangor Hydro may declare and pay a special dividend on Bangor Hydro common
stock, at the then current quarterly rate, for the period between that
payment date and a special record date prior to the date the merger becomes
effective.
1
<PAGE>
Q. WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO
SHAREHOLDERS?
A. You will be taxed on your receipt of the cash given to you for your shares of
Bangor Hydro common stock to the extent that the amount of cash you receive
exceeds your tax basis in those shares. Please read the more detailed
description of federal income tax consequences on pages 28 and 29.
THE TAX CONSEQUENCES OF THE MERGER TO YOU WILL DEPEND ON YOUR OWN SITUATION.
YOU SHOULD CONSULT YOUR TAX ADVISORS FOR A FULL UNDERSTANDING OF THE TAX
CONSEQUENCES OF THE MERGER TO YOU.
Q. WHAT DO I NEED TO DO NOW?
A. After you carefully read and consider the information contained in this
document, please complete, sign, date and mail your proxy card in the
enclosed return envelope as soon as possible. That way, your Bangor Hydro
shares can be represented at the special meeting of shareholders.
If a broker holds your shares as nominee, you will receive a voter
information form from your broker.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A. NO. DO NOT SEND IN YOUR STOCK CERTIFICATES NOW. If the merger is approved and
completed, you will receive written instructions for exchanging your Bangor
Hydro stock certificates. You must follow those instructions and return your
stock certificates accordingly. You will receive your cash payment as soon
as practicable after your Bangor Hydro stock certificates are received along
with the other documents requested in those instructions.
Q. WHO MUST APPROVE THE MERGER?
A. - Bangor Hydro's board of directors (already approved);
- Emera's board of directors (already approved); and
- A majority of the votes represented by the outstanding shares of Bangor
Hydro common stock and preferred stock, acting together as a class, voting
in favor of the merger.
We must also obtain some regulatory approvals for the merger as discussed
below.
Bangor Hydro and Emera cannot complete the merger without the affirmative
vote of shareholders described above. Your vote is very important.
THE BANGOR HYDRO BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
APPROVAL OF THE MERGER AGREEMENT.
Q. DO THE SHAREHOLDERS OF EMERA VOTE ON THE MERGER?
A. No. Only Bangor Hydro shareholders vote on the merger.
Q. WHAT EFFECT WILL THE MERGER HAVE ON BANGOR HYDRO'S CUSTOMERS AND EMPLOYEES?
A. We believe that the merger will have no adverse impact on customers, and
provides the potential for benefits in the future. Operations and employment
at Bangor Hydro are expected to be largely unaffected by the merger.
Q. WHEN DOES BANGOR HYDRO EXPECT TO COMPLETE THE MERGER?
A. We are working to complete all aspects of the merger as quickly as possible.
Currently, we expect to complete the merger by the first quarter of 2001.
Q. WHAT HAPPENS IF I DO NOT INSTRUCT A BROKER HANDLING MY SHARES ON HOW TO VOTE
ON THE MERGER?
A. If a broker holds your shares of Bangor Hydro common stock as nominee, he or
she will not be able to vote them without instructions from you. You will
receive a voter information form from your broker. If you do not instruct
your broker on how to vote, your shares will have the effect of a vote
"AGAINST" the merger agreement.
2
<PAGE>
Q. WHAT HAPPENS IF I DO NOT RETURN MY PROXY OR IF I ABSTAIN FROM VOTING?
A. If you do not return your proxy or if you abstain from voting, your shares
will have the effect of a vote "AGAINST" the merger agreement.
Q. CAN I CHANGE MY VOTE AFTER I HAVE MAILED IN MY SIGNED AND DATED PROXY CARD?
A. Yes. You may revoke your proxy at any time before your shares are voted.
Please refer to the instructions on how to revoke your proxy set out on
page 13.
Q. WHAT REGULATORY APPROVALS ARE NEEDED FOR THE MERGER?
A. The merger must be approved by the Maine Public Utilities Commission and the
Federal Energy Regulatory Commission. Additional filings must be made with
the Federal Communications Commission, the Committee on Foreign Investment
in the United States and the U.S. federal antitrust authorities. Emera may
also be required to obtain the approval of the Securities and Exchange
Commission under the Public Utility Holding Company Act of 1935. Unless an
exemption is available, Emera will be required to register with the SEC as a
holding company.
Please read the more detailed description of the regulatory approvals on
pages 23 to 25.
Q. ON WHAT OTHER MATTERS WILL I VOTE AT THE SPECIAL MEETING?
A. We are not aware of any other matters on which you will be asked to vote at
the special meeting, except possibly procedural items relating to the
conduct of the special meeting.
Q. WHO CAN ADDRESS ANY ADDITIONAL QUESTIONS I HAVE?
A. Andrew Landry of Bangor Hydro-Electric Company, 33 State Street, Bangor,
Maine 04401.
Telephone: (207) 945-5621.
Email: [email protected]
For questions on proxy card matters, please contact Bangor Hydro's
shareholder services representative, Boston EquiServe, Proxy Department,
P.O. Box 9381, Boston, Massachusetts 02205-9381.
Telephone: (800) 736-3001.
Q. WHERE CAN I FIND MORE INFORMATION ABOUT BANGOR HYDRO?
A. Various sources described under "Where You Can Find More Information" on
pages 47 to 48 of this document provide further information.
3
<PAGE>
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
Bangor Hydro has made forward-looking statements in this document (and in
documents incorporated by reference) that are subject to risks and
uncertainties. These statements include information concerning possible or
assumed future financial condition, results of operations and businesses of
Bangor Hydro. You can find many of these statements by looking for words such as
"believes," "expects," "anticipates," "estimates" or similar expressions.
These forward-looking statements are subject to numerous assumptions, risks
and uncertainties. The following are some of the factors that may cause actual
results to differ from the results indicated in the forward-looking statements:
- the risk of a significant delay in the expected completion of the merger;
- the risk that government authorities may impose unfavorable terms as a
condition of the merger;
- developments in the legislative, regulatory and competitive environments
in which Bangor Hydro or Emera operate;
- future economic conditions; and
- other considerations that may be disclosed from time to time in Bangor
Hydro's or Emera's publicly disseminated documents or filings.
The areas of risk described above should be considered in connection with
any written or oral forward-looking statements that may be made after the date
of this proxy statement by Bangor Hydro or anyone acting on its behalf. Except
for its ongoing obligations to disclose material information under the federal
securities laws, Bangor Hydro undertakes no obligation to release publicly any
revisions to any forward-looking statements to report events or circumstances
after the date of this proxy statement or the occurrence of unanticipated
events.
4
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION IN THIS DOCUMENT AND MAY NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD READ
CAREFULLY THE ENTIRE PROXY STATEMENT, THE DOCUMENTS INCORPORATED BY REFERENCE
AND THE OTHER DOCUMENTS TO WHICH IT REFERS, BEFORE YOU DECIDE HOW TO VOTE. SEE
"WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 47 OF THIS DOCUMENT. EACH ITEM IN
THIS SUMMARY INCLUDES A PAGE REFERENCE DIRECTING YOU TO A MORE COMPLETE
DESCRIPTION OF THAT ITEM. ("WE" AND "OUR" AS USED IN THIS DOCUMENT REFERS TO
BANGOR HYDRO-ELECTRIC COMPANY.)
THE COMPANIES
EMERA INCORPORATED
(PAGE 11)
Emera Incorporated was organized under the laws of the Province of Nova
Scotia, Canada in 1998. Until July 10, 2000, Emera operated its businesses under
the name "NS Power Holdings Incorporated."
Emera, through its various subsidiaries, is a diversified energy and
services company. Emera is the parent of Nova Scotia Power Incorporated, a
wholly-owned, fully-integrated, regulated electric utility with $2.8 billion of
assets, that serves 440,000 customers in Nova Scotia. Nova Scotia Power is the
primary electricity supplier in Nova Scotia, providing the vast majority of the
generation, transmission and distribution of electricity in the province. Emera
also has subsidiaries that distribute fuel oil products and own a 12.5% equity
investment in the Maritimes & Northeast Pipeline which transports natural gas
from offshore gas fields near Nova Scotia to markets in Maritime Canada and the
northeastern United States.
A wholly-owned indirect subsidiary of Emera will be formed by Emera solely
for the purpose of completing the merger with Bangor Hydro.
BANGOR HYDRO-ELECTRIC COMPANY
(PAGES 11 TO 12)
Bangor Hydro-Electric Company is an electric utility company serving
approximately 107,000 customers in Eastern Maine. Bangor Hydro also has
subsidiaries which provide security alarm services and fiber optic network
services.
THE SPECIAL MEETING
(PAGES 12 TO 14)
The special meeting of Bangor Hydro shareholders will be held at the Pilot's
Grill restaurant, Hammond Street, Bangor, Maine, on Tuesday, October 24, 2000,
at 10:00 A.M. (local time).
At the special meeting, we will ask you to approve the merger agreement. For
the merger to proceed, we must obtain a majority of the votes represented by the
outstanding shares of Bangor Hydro common stock and preferred stock, acting
together as a class, voting in favor of the merger.
Only the shareholders of Bangor Hydro at the close of business on the record
date, September 18, 2000 will be entitled to notice of the special meeting and
only those shareholders may vote.
Each share of Bangor Hydro common stock carries one-twelfth of one vote, and
each share of Bangor Hydro preferred stock carries one vote. On September 11,
2000, 660,958 votes were eligible to be cast at the special meeting. Of this
number, 613,618 votes are eligible to be cast by holders of common stock and
47,340 votes by holders of preferred stock.
SHARE OWNERSHIP OF MANAGEMENT
(PAGE 46)
At the close of business on September 11, 2000, the directors and executive
officers of Bangor Hydro and their affiliates beneficially owned less than 1% of
the shares of Bangor Hydro issued and outstanding. Bangor Hydro expects that all
of these directors and executive officers will vote their shares "FOR" the
approval of the merger agreement.
5
<PAGE>
THE MERGER
(PAGES 15 TO 31)
Under the merger agreement, a to-be-formed wholly-owned indirect subsidiary
of Emera will merge with and into Bangor Hydro. Bangor Hydro will continue as
the surviving company, and will continue to conduct its businesses as a
wholly-owned subsidiary of Emera.
In the merger, each share of Bangor Hydro common stock will be converted
into the right to receive U.S. $26.50 in cash, without interest (sometimes
referred to in this document as the merger consideration), subject to adjustment
as described below. Each outstanding share of Bangor Hydro preferred stock will
remain outstanding as one share of preferred stock of the surviving company.
Holders of Bangor Hydro warrants outstanding at the effective time of the merger
will thereafter be entitled to receive, upon exercise of each warrant, the
merger consideration less the exercise price.
If the closing of the merger does not occur on or prior to June 29, 2001,
and all conditions to closing have been satisfied or are capable of being
satisfied except the receipt by Emera of any necessary authorizations from the
SEC under the Public Utility Holding Company Act, and/or any other necessary
governmental approvals to be obtained by Emera, then the per share merger
consideration will be increased by an amount equal to U.S. $0.003 for each day
after that date up to and including the day before the closing of the merger.
The merger agreement is attached as Appendix A to this document. We
encourage you to read it carefully. It is the legal document that governs the
merger.
SURRENDER OF CERTIFICATES AND PAYMENT FOR SHARES
(PAGE 33)
After the merger, you will no longer have your usual rights as a Bangor
Hydro shareholder. Your sole right in any shares of Bangor Hydro common stock
you held immediately before the merger will be to receive the merger
consideration of U.S. $26.50 per share. You will receive letters of transmittal
for use in surrendering stock certificates and obtaining payment for surrendered
shares promptly after the merger is completed. Do not surrender any certificates
until you receive the letter of transmittal and instructions.
BACKGROUND TO AND REASONS FOR THE MERGER
(PAGES 15 TO 18)
You should review the factors that the Bangor Hydro board of directors
considered when deciding whether to approve the merger.
RECOMMENDATION TO SHAREHOLDERS
(PAGE 17)
The Bangor Hydro board of directors has determined that the merger is in the
best interests of Bangor Hydro and its shareholders and unanimously recommends
that you approve the merger agreement at the special meeting.
OPINION OF BANGOR HYDRO'S FINANCIAL ADVISOR
(PAGES 18 TO 22)
In connection with the merger, the Bangor Hydro board of directors received
a written opinion from Salomon Smith Barney Inc. as to the fairness, from a
financial point of view, of the merger consideration to the holders of Bangor
Hydro common stock. The full text of Salomon Smith Barney's written opinion
dated June 29, 2000 is attached to the back of this document as Appendix B. We
encourage you to read this opinion carefully in its entirety for a description
of the assumptions made, matters considered and limitations on the review
undertaken.
SALOMON SMITH BARNEY'S OPINION IS ADDRESSED TO THE BANGOR HYDRO BOARD OF
DIRECTORS AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER WITH
RESPECT TO ANY MATTER RELATING TO THE MERGER.
CONDITIONS TO THE MERGER
(PAGES 42 TO 43)
Completion of the merger depends upon the satisfaction of a number of
conditions. In addition to customary conditions relating to
6
<PAGE>
compliance with the merger agreement, these conditions include the following:
- approval of the merger agreement by Bangor Hydro shareholders;
- absence of any injunction, legal restraints or prohibitions preventing the
consummation of the merger; and
- compliance with the requirements set forth below under "Regulatory
Approvals."
REGULATORY APPROVALS
(PAGES 23 TO 25)
To complete the merger, Bangor Hydro and Emera must obtain appropriate
approvals from various federal and state regulatory agencies, including the
Maine Public Utilities Commission and the Federal Energy Regulatory Commission.
Additional filings must be made with the Federal Communications Commission, the
Committee on Foreign Investment in the United States and the U.S. federal
antitrust authorities. Emera may also be required to obtain the approval of the
SEC under the Public Utility Holding Company Act. Unless an exemption is
available, Emera will be required to register with the SEC as a holding company.
CERTAIN COVENANTS
(PAGES 35 TO 38)
Bangor Hydro has agreed not to solicit or encourage any proposal from any
person to acquire Bangor Hydro or its assets, but, until the time that the
Bangor Hydro shareholders approve the merger, it may consider, subject to
compliance with certain procedures, unsolicited proposals that it receives.
TERMINATION
(PAGES 43 TO 45)
The merger agreement may be terminated:
- at any time prior to the closing, by mutual written consent of the boards
of directors of Bangor Hydro and Emera;
- by either Bangor Hydro or Emera, if the merger has not become effective by
June 29, 2001; provided, that if the only barrier to closing is that the
requisite regulatory approvals have not been obtained, then the
termination date will be extended to December 29, 2001;
- by either Emera or Bangor Hydro, if the approval of Bangor Hydro
shareholders is not obtained;
- by either Emera or Bangor Hydro, if any law, order, rule or regulation is
adopted or issued which effectively prohibits the merger, or if any final
and nonappealable order, judgment, or decree issued by a governmental
authority permanently restrains, enjoins or prohibits the merger;
- by Bangor Hydro, in order to accept a third-party proposal concerning
another business combination, if the Bangor Hydro board of directors
determines, based upon the advice of outside counsel, that it is necessary
pursuant to its fiduciary duties that the board of directors reconsider
Bangor Hydro's binding commitment to consummate an agreement of the nature
of the merger agreement as a result of the third-party proposal; provided,
that before so terminating, Bangor Hydro and its financial and legal
advisors must negotiate with Emera to adjust the terms and conditions of
the merger agreement so as to enable Bangor Hydro to proceed with the
merger;
- by either Bangor Hydro or Emera, if there is a material breach by the
other of any representation, warranty, agreement or covenant contained in
the merger agreement, and any such breach has not been cured within
20 days after receipt of notice in writing from the other, specifying the
nature of such breach and requesting that it be remedied; or
- by Emera, if the Bangor Hydro board of directors withdraws or modifies its
approval or recommendation of the merger agreement or the transactions
contemplated therein (in a manner adverse to Emera), approves or
recommends a competing acquisition
7
<PAGE>
proposal, or resolves to take any of the foregoing actions.
We must pay Emera a termination fee of $9.0 million plus up to $1.5 million
for reimbursement of expenses if the merger agreement is terminated for any of
the following reasons:
- we become the target of a competing acquisition proposal and our board of
directors determines in good faith, based upon the advice of outside
counsel, that termination of the merger agreement is necessary to act
consistently with its fiduciary duties; or
- if, at a time when a competing acquisition proposal is pending, the merger
agreement is terminated (i) by Emera because the approval of our
shareholders was not obtained, (ii) by Emera if our board of directors
withdraws or modifies its approval or recommendation of the merger
agreement in a manner adverse to Emera, or approves or recommends a
competing acquisition proposal, or (iii) by Bangor Hydro if the merger
does not become effective by June 29, 2001 (or December 29, 2001 if the
termination date is extended as permitted under the merger agreement);
provided that in each case, we enter into a definitive agreement with
respect to the competing acquisition proposal within 1 year of
termination.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
(PAGES 28 TO 29)
The merger will be a taxable transaction for you. For United States Federal
income tax purposes, you will generally recognize a gain or loss in an amount
equal to the difference between the amount of cash you receive in exchange for
your shares of Bangor Hydro common stock and your adjusted tax basis in your
Bangor Hydro shares.
THE TAX CONSEQUENCES OF THE MERGER TO YOU WILL DEPEND ON YOUR OWN SITUATION.
YOU SHOULD CONSULT YOUR TAX ADVISOR FOR A FULL UNDERSTANDING OF THE TAX
CONSEQUENCES OF THE MERGER TO YOU.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
(PAGES 26 TO 28)
When you consider the recommendation of the Bangor Hydro board of directors,
you should be aware that some members of the board of directors and executives
will receive benefits or have interests that may be different from yours as a
shareholder. For example, at least 4 of Bangor Hydro's directors will be
appointed as directors of the surviving company, and as promptly as reasonably
practicable after the consummation of the merger, one of Bangor Hydro's
directors will be appointed as a director of Emera. Moreover, most of Bangor
Hydro's officers will be the initial officers of, and will hold their current
positions with, the surviving company. Some Bangor Hydro executives have change
of control agreements which could be triggered by the merger, and some Bangor
Hydro employees may receive payments as an incentive to remain with Bangor Hydro
through the closing of the merger or for the successful completion of the
merger.
The members of the Bangor Hydro board of directors were aware of these
additional interests and considered them when they approved the merger
agreement.
DISSENTERS' RIGHTS OF APPRAISAL
(PAGES 29 TO 31)
Dissenters' rights of appraisal permit shareholders to receive cash equal to
the fair value of their shares rather than the consideration they would receive
under the merger agreement. Under Maine law, Bangor Hydro shareholders are
entitled to assert dissenters' rights of appraisal in the merger. Therefore, if
you follow the procedures required by Maine law and you dissent from the merger
agreement, but the merger agreement is approved by Bangor Hydro shareholders and
the merger is completed, you will receive a cash payment representing the fair
value of the shares of Bangor Hydro common stock you hold. The fair value of
your shares may not be the same as the consideration payable under the merger
agreement. The relevant provisions of Maine law governing this process are
attached as Appendix C to this document.
8
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following sets forth selected consolidated financial data of Bangor
Hydro. This information does not purport to be complete and should be read in
conjunction with, and is qualified in its entirety by, Bangor Hydro's Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q, including the financial
statements and related notes, filed with the SEC and incorporated by reference
in this document. See "Where You Can Find More Information" on page 47.
The selected consolidated financial data as of and for each year in the
five-year period ended December 31, 1999 have been derived from Bangor Hydro's
audited financial statements. The selected consolidated financial data as of and
for the six months ended June 30, 1999 and 2000 have been derived from Bangor
Hydro's unaudited interim financial statements.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Income Statement Data:
Operating Revenues.............................. $ 98,684 $ 97,521 $197,995 $195,144 $187,324 $187,374 $184,914
Operating Income................................ $ 12,959 $ 18,388 $ 36,158 $ 35,136 $ 23,789 $ 36,241 $ 23,669
Net Income (Loss)............................... $ 5,277 $ 7,664 $ 18,281 $ 11,465 $ (387) $ 11,283 $ 4,336
Earnings (Loss) Per Share of Common Stock:
Basic......................................... $ 0.70 $ 0.97 $ 2.33 $ 1.39 $ (0.24) $ 1.33 $ 0.36
Diluted....................................... $ 0.62 $ 0.86 $ 2.08 $ 1.33 $ (0.24) $ 1.33 $ 0.36
Average Number of Shares Outstanding For
Calculation of Earnings Per Share:
Basic......................................... 7,363 7,363 7,363 7,363 7,363 7,336 7,265
Diluted....................................... 8,236 8,308 8,348 7,693 7,363 7,366 7,265
Dividends Declared Per Common Share............. $ 0.40 $ 0.15 $ 0.45 -- -- $ 2.04 $ 0.87
Balance Sheet Data (at the end of the period):
Total Assets.................................... $531,559 $562,816 $543,950 $605,688 $600,583 $556,629 $556,076
Long-term Debt-Net.............................. $165,185 $206,487 $183,300 $263,028 $221,643 $274,221 $288,075
Common Shareholders' Equity..................... $134,751 $124,782 $132,722 $118,864 $106,558 $108,321 $103,192
Book Value Per Common Share..................... $ 18.30 $ 16.95 $ 18.02 $ 16.14 $ 14.47 $ 14.71 $ 14.13
</TABLE>
9
<PAGE>
PRICE OF BANGOR HYDRO COMMON STOCK AND DIVIDENDS
Bangor Hydro's common stock is traded on the New York Stock Exchange under
the symbol "BGR."
The following table provides trading and dividend information for Bangor
Hydro common stock for the periods indicated based on a calendar year. All of
the prices set forth in this section are as reported on the New York Stock
Exchange Composite Transaction Tape, based on published financial sources.
<TABLE>
<CAPTION>
DIVIDENDS SHARE PRICE RANGE
DECLARED HIGH LOW
--------- -------- --------
<S> <C> <C> <C>
1998
First Quarter.............................................. $0.00 $ 8.63 $ 6.13
Second Quarter............................................. 0.00 9.13 7.69
Third Quarter.............................................. 0.00 10.94 7.94
Fourth Quarter............................................. 0.00 12.81 9.00
1999
First Quarter.............................................. $0.00 $14.31 $12.56
Second Quarter............................................. 0.15 16.38 11.88
Third Quarter.............................................. 0.15 16.94 15.75
Fourth Quarter............................................. 0.15 17.31 15.00
2000
First Quarter.............................................. $0.20 $17.38 $12.56
Second Quarter............................................. $0.20 $23.44 $14.38
Third Quarter through September 11, 2000................... $0.00 $24.44 $23.38
</TABLE>
The table below shows the closing prices for Bangor Hydro common stock on
June 29, 2000, the last full trading day before the public announcement of the
proposed merger, and on September 11, 2000, the most recent date for which
quotations were available prior to the printing of this document.
<TABLE>
<CAPTION>
DATE HIGH LOW CLOSE
---- -------- -------- --------
<S> <C> <C> <C>
June 29, 2000 $15.13 $14.75 $15.13
September 11, 2000 $24.25 $24.19 $24.19
</TABLE>
We urge you to obtain current market quotations for Bangor Hydro common
stock.
BANGOR HYDRO DIVIDENDS
The merger agreement does not restrict Bangor Hydro's ability to declare and
pay regular quarterly dividends on its common stock prior to the completion of
the merger. Beginning on the first regular quarterly dividend payment date in
2001, Bangor Hydro may increase the rate of its regular quarterly dividends up
to $0.25 per quarter. If the merger does not become effective between a record
date and payment date of a regular quarterly dividend, Bangor Hydro may declare
and pay a special dividend on its common stock, at the then current quarterly
rate, for the period between such payment date and a special record date prior
to the date the merger becomes effective.
10
<PAGE>
THE COMPANIES
EMERA INCORPORATED
P.O. BOX 910
1894 Barrington Street
Halifax, Nova Scotia
Canada B3J 2W5
(902) 428-6520
Emera was organized under the laws of the Province of Nova Scotia, Canada in
1998. Until July 10, 2000, Emera operated its businesses under the name "NS
Power Holdings Incorporated."
Emera, through its various subsidiaries, is a diversified energy and
services company. Emera is the parent of Nova Scotia Power Incorporated, a
wholly-owned, fully-integrated, regulated electric utility with $2.8 billion of
assets, that serves 440,000 customers in Nova Scotia. Nova Scotia Power is the
primary electricity supplier in Nova Scotia, providing the vast majority of the
generation, transmission and distribution of electricity in the province. Emera
is pursuing growth and diversification outside of its core electric business by
leveraging assets, including strong customer relationships and operational
expertise, into new lines of business, complementary to Emera's existing energy
and services portfolio. Emera has expanded its energy product line to include
distribution of a wide range of fuel oil products and related products and
services. Emera, through NSP Pipeline Inc. and Scotia Power U.S., Ltd., two of
its wholly-owned subsidiaries, has a 12.5% equity investment in the Maritimes &
Northeast Pipeline which transports Sable Island natural gas to markets in
Maritime Canada and the northeastern United States.
A corporation organized under the laws of a state of the United States will
be formed by Emera as a wholly-owned subsidiary solely for the purpose of
completing the merger with Bangor Hydro.
BANGOR HYDRO-ELECTRIC COMPANY
33 State Street
Bangor, Maine 04401
(207) 945-5621
Bangor Hydro-Electric Company is a public utility primarily engaged in the
transmission and distribution of electric energy in Eastern Maine. Bangor Hydro
serves approximately 107,000 customers in portions of the Maine counties of
Penobscot, Hancock, Washington, Waldo, Piscataquis and Aroostook. Since 1971,
Bangor Hydro, along with the major investor-owned utilities of New England, has
been a party to the New England Power Pool Agreement, an agreement that provides
for joint planning and operation of generating and transmission facilities in
New England. Bangor Hydro's common stock is listed on the New York Stock
Exchange.
Bangor Hydro's principal subsidiaries are as follows:
1. Bangor Var Co., Inc., a wholly-owned subsidiary of Bangor Hydro which
holds a 50% interest in Chester SVC Partnership. Chester SVC Partnership owns,
and acts as a financing vehicle for, a static var compensator, which provides
transmission reinforcement to the regional transmission system that allows the
Hydro-Quebec Phase II transmission line in New Hampshire to operate
simultaneously with another line that interconnects the New England transmission
system with the transmission system in New Brunswick, Canada.
2. Bangor Energy Resale, Inc., a wholly-owned subsidiary of Bangor Hydro
that permits Bangor Hydro's use of a power sales agreement as collateral for a
bank loan.
3. CareTaker, Inc., a wholly-owned subsidiary of Bangor Hydro that provides
security alarm services.
11
<PAGE>
4. Bangor Fiber Company, Inc., a wholly-owned subsidiary of Bangor Hydro
that supplies fiber optic communications cable to communications companies and
cable service providers and provides other related activities.
Bangor Hydro also owns minority interests in the following corporations:
1. Bangor Hydro owns 7% of the outstanding common stock of Maine Yankee
Atomic Power Company, a company which owns and, prior to its permanent closure
in 1997, operated an 880 MW nuclear generating plant in Wiscasset, Maine. Maine
Yankee is in the process of being decommissioned.
2. Bangor Hydro has a 14.2% ownership interest in Maine Electric Power
Company, Inc., a corporation that owns and operates electric transmission
facilities from Wiscasset, Maine to the Maine-New Brunswick border.
THE SPECIAL MEETING
PURPOSE, TIME AND PLACE
The Bangor Hydro board of directors is soliciting proxies in the
accompanying form for use at a special meeting of Bangor Hydro shareholders to
be held on Tuesday, October 24, 2000 at 10:00 A.M. (local time) at the Pilot's
Grill restaurant, Hammond Street, Bangor, Maine (and at any adjournment or
postponement of that meeting).
The purpose of the special meeting is to vote upon the proposal to approve
the merger agreement. Under the merger agreement, Bangor Hydro will become a
wholly-owned subsidiary of Emera and each holder of Bangor Hydro common stock
will receive their share of the consideration being paid by Emera for Bangor
Hydro common stock (I.E., U.S. $26.50 per share, in cash, without interest,
subject to adjustment).
RECORD DATE, VOTING POWER AND VOTE REQUIRED
Only holders of record of Bangor Hydro shares at the close of business
(5:00 P.M., local time) on September 18, 2000, the record date, will be entitled
to notice of, and to vote at, the special meeting or any adjournment or
postponement thereof. At the close of business on September 11, 2000, 7,363,424
shares of Bangor Hydro common stock and 47,340 shares of Bangor Hydro preferred
stock were issued and outstanding and entitled to vote at the special meeting.
Each share of Bangor Hydro preferred stock is entitled to one vote and each
share of Bangor Hydro common stock is entitled to one-twelfth of one vote, on
any matter that may properly come before the special meeting. Votes may be cast
at the special meeting in person or by proxy. See "Voting of Proxies" below. The
presence at the special meeting, either in person or by proxy, of the holders of
a majority of all of the outstanding Bangor Hydro shares entitled to vote is
necessary to constitute a quorum. If a quorum is not present at the special
meeting, a majority of the shares that are represented, in person or by proxy,
may adjourn or postpone the meeting.
A majority of the votes represented by the outstanding shares of Bangor
Hydro common stock and preferred stock, acting together as a class, voting in
favor of the merger, is required to approve the merger agreement. Abstentions
and broker non-votes (I.E., shares held by brokers as nominees for shareholders
who have not instructed their broker how to vote and the broker or nominee does
not have discretionary voting power on that proposal) will be counted as present
for purposes of establishing a quorum. Abstentions and broker non-votes will
have the effect of a vote "AGAINST" the merger agreement.
12
<PAGE>
OWNERSHIP OF VOTING STOCK BY MANAGEMENT
At the close of business on September 11, 2000, Bangor Hydro's directors and
executive officers and their affiliates beneficially owned 25,088 shares of
Bangor Hydro common stock and 28 shares of preferred stock, which represents
less than 1% of the shares of Bangor Hydro issued and outstanding. Bangor Hydro
currently expects that all of the directors and executive officers of Bangor
Hydro will vote their shares "FOR" approval of the merger agreement.
VOTING OF PROXIES
Bangor Hydro shares represented by properly signed and dated proxies
received in time for the special meeting will be voted in the manner specified
by the proxies. If your proxy is properly signed and dated but does not contain
voting instructions, your proxy will be voted "FOR" the approval of the merger
agreement. Your proxy also confers discretionary authority on the proxies to
vote on any other matter not currently known to management that may properly
come before the special meeting. We do not expect that any matter other than the
approval of the merger agreement and possibly procedural items relating to the
conduct of the special meeting will be brought before the special meeting.
If you have Bangor Hydro shares registered in different names, you will
receive a separate proxy card for each registration. All of these shares will be
voted in accordance with the instructions on the proxy card. If your Bangor
shares are held by a broker as nominee, you will receive a voter information
form from your broker.
The grant of a proxy on the enclosed proxy card does not preclude you from
voting in person.
REVOCABILITY OF PROXIES
If you exercise a proxy, you have the power to revoke it at any time before
it is voted:
- by delivering a written revocation to Andrew Landry, Clerk, Bangor
Hydro-Electric Company, 33 State Street, Bangor, Maine 04401;
- by completing a later-dated proxy and returning to Bangor Hydro's
shareholder services representative, Boston EquiServe, Proxy Department,
P.O. Box 9381, Boston, Massachusetts 02205-9381, if you sent your original
proxy there, or to your broker if your shares are held by a broker; or
- by attending the special meeting in person and revoking your proxy orally
by notifying the Clerk of Bangor Hydro.
Additional proxy cards are available from Bangor Hydro or Boston EquiServe,
or your broker, if your shares are held by a broker.
Attendance at the special meeting will not by itself constitute revocation
of a proxy. If you attend the special meeting, you may revoke your proxy and
vote in person by informing the Clerk of Bangor Hydro that you wish to revoke a
previously-submitted proxy.
We do not expect to adjourn the special meeting for a period long enough to
require setting a new record date for the special meeting. If an adjournment
occurs, it will have no effect on the ability of the Bangor Hydro shareholders
of record as of the record date either to exercise their voting rights or to
revoke any previously-submitted proxies.
SOLICITATION OF PROXIES
Bangor Hydro will bear the costs of soliciting proxies from Bangor Hydro
shareholders and the cost of printing and mailing this proxy statement.
13
<PAGE>
In addition to solicitation by mail, the directors, officers and employees
of Bangor Hydro and its subsidiaries may solicit proxies from Bangor Hydro
shareholders either by telephone or in person. These directors, officers and
employees will not receive additional compensation, but may be reimbursed for
out-of-pocket expenses incurred in connection with the solicitation of proxies.
Arrangements will also be made with banks, brokers and other custodians,
nominees and fiduciaries for the forwarding of solicitation materials to the
beneficial owners of Bangor Hydro shares held of record by these persons. Bangor
Hydro will reimburse theses parties for reasonable out-of-pocket expenses
incurred in forwarding the solicitation materials.
We have retained Corporate Investor Communications, Inc. to help solicit
proxies. Corporate Investor Communications will receive a fee that we expect
will not exceed $6,000 as compensation for its basic solicitation services, plus
additional charges for any telephone solicitation services, and reimbursement of
its out-of-pocket expenses. Bangor Hydro has agreed to indemnify Corporate
Investor Communications against certain liabilities arising from its engagement.
YOU SHOULD NOT SEND STOCK CERTIFICATES WITH YOUR PROXY CARDS.
NO VOTE IS REQUIRED FOR EMERA SHAREHOLDERS. The shareholders of Emera need
not approve the merger agreement. Thus, no one is soliciting proxies from Emera
shareholders.
14
<PAGE>
THE MERGER
THE DISCUSSION IN THIS PROXY STATEMENT OF THE MERGER AND THE PRINCIPAL TERMS
OF THE MERGER AGREEMENT IS QUALIFIED BY REFERENCE TO THE MERGER AGREEMENT, A
COPY OF WHICH IS ATTACHED TO THIS PROXY STATEMENT AS APPENDIX A AND IS
INCORPORATED HEREIN BY REFERENCE.
GENERAL DESCRIPTION OF THE MERGER
On June 29, 2000, Bangor Hydro and Emera entered into an Agreement and Plan
of Merger. The merger agreement sets forth the terms of a merger in which a
to-be-formed wholly-owned indirect subsidiary of Emera will merge with and into
Bangor Hydro. Bangor Hydro will be the surviving company, and will continue to
conduct its businesses as a wholly-owned subsidiary of Emera. After the merger,
you will cease to have any equity interest in Bangor Hydro, will not have the
opportunity to participate in the earnings and growth of Bangor Hydro, and will
not have any right to vote on corporate matters. Similarly, you will not face
the risk of losses generated by Bangor Hydro's operations or decline in the
value of Bangor Hydro after the merger.
In the merger, each outstanding share of Bangor Hydro common stock (other
than shares that are held by Bangor Hydro shareholders who have not voted in
favor of the merger and have properly asserted dissenters' rights, or shares
that are owned by Bangor Hydro as treasury stock, or by Emera, if any) will be
converted into the right to receive U.S. $26.50 in cash, without interest
(sometimes referred to in this document as the merger consideration), subject to
adjustment. Each outstanding share of Bangor Hydro preferred stock will remain
outstanding as one share of preferred stock of the surviving company, and
holders of Bangor Hydro warrants outstanding at the effective time of the merger
will thereafter be entitled to receive, upon exercise of each warrant, the
merger consideration less the exercise price. The total value of the
consideration that Bangor Hydro shareholders will receive in the merger, based
on the number of shares of Bangor Hydro common stock outstanding on the date of
this proxy statement, is approximately U.S. $195 million. Emera has represented
in the merger agreement that it will have the financial resources to complete
the merger, and the arrangement of financing by Emera is not a condition to
closing the merger. Emera has advised us that it presently has sufficient cash
on hand and amounts available to it under existing credit facilities to pay the
cash consideration.
BACKGROUND TO THE MERGER
In late 1999, Bangor Hydro's management raised with the Bangor Hydro board
of directors the potential desirability of exploring a business combination with
another company of equal or larger size. This initiative was prompted by three
principal factors:
- Already one of the smaller investor-owned utilities, Bangor Hydro had
become even smaller as a result of the sale of its generating assets in
1999 as required by utility restructuring legislation in Maine. The Bangor
Hydro board of directors believed that Bangor Hydro's small size, and the
possibility of further shrinkage of its revenue base as additional aspects
of its business become subject to competition, would make it increasingly
difficult to maintain regulated rates at reasonable levels and attract
capital on reasonable terms. Bangor Hydro's ability to manage rate levels
and access capital markets would benefit from economies of scale that a
larger organization could provide.
- Bangor Hydro's stock price had recovered somewhat from very depressed
levels in 1997, but was still trading below book value even after
resumption of payment of a dividend on common stock. Management believed
it was possible that a business combination could achieve a significant
increase in shareholder value in less time, and with less uncertainty,
than through Bangor Hydro continuing as a stand-alone enterprise.
15
<PAGE>
- From a timing standpoint, management felt that the large number of
already-completed consolidations in the electric utility industry in New
England suggested that opportunities for favorable transactions might
lessen as time goes on.
Management discussed these issues with the Bangor Hydro board of directors
at meetings in November and December 1999. The board of directors authorized
management to proceed to solicit indications of interest in a business
combination, and expressed the view that the process should include approaches
to a wide range of potential partners. The board of directors also approved the
retention of Salomon Smith Barney as financial advisor to Bangor Hydro to assist
in the solicitation effort. Salomon Smith Barney had regularly provided
financial advisory services to Bangor Hydro over the past several years.
In the period January through April 2000, Bangor Hydro, with the assistance
of its legal and financial advisors:
- developed a list of parties to be invited to receive confidential
materials concerning a possible transaction with Bangor Hydro;
- prepared a confidential information memorandum containing business and
financial information about Bangor Hydro; and
- prepared a form of confidentiality and 18-month standstill agreement that
participants in the process would be required to sign as a condition to
receiving the confidential information memorandum.
Beginning in early April 2000, at the direction of the Bangor Hydro board of
directors, Salomon Smith Barney and management informally contacted 23 parties
to ascertain their interest in a potential combination with Bangor Hydro. In
most but not all of the contacts, Bangor Hydro was specifically identified as
the potential partner. These parties included other utility companies in the
U.S. and Canada as well as a number of financial investors. Bangor Hydro
included on the contact list parties with which it had previously had
discussions regarding the possibility of an acquisition or merger. None of those
previous discussions had resulted in substantive negotiations.
Of the 23 parties contacted, 13 signed confidentiality agreements and
received the confidential information memorandum. On May 4 and May 5, 2000,
Bangor Hydro received preliminary, non-binding indications of interest from 6
parties concerning a potential transaction with Bangor Hydro. Five of the
indications of interest contemplated the cash purchase of Bangor Hydro's common
stock, at prices ranging from approximately U.S. $18.50 to U.S. $24.00 per
share. The sixth indication of interest, from a company roughly the same size as
Bangor Hydro ("Company A"), contemplated a stock-for-stock merger transaction
with an indicated per share value to Bangor Hydro shareholders in the range of
U.S. $20.00 to U.S. $24.00.
On May 9, 2000, the Bangor Hydro board of directors met to consider the
preliminary indications of interest. Management recommended that 4 of the
parties which had submitted indications of interest be invited to conduct
additional due diligence and submit definitive proposals. The remaining 2
indications of interest were from a group and an individual who each proposed to
form special-purpose companies to acquire Bangor Hydro in leveraged financial
transactions. These proposals were subject to a number of financial and
structural uncertainties, and neither of the proposed acquiring parties had
previously completed any similar transactions. Accordingly, management
recommended that these 2 indications of interest not be pursued. The Bangor
Hydro board of directors approved management's recommendations.
Following the May board of directors meeting, the 4 parties conducted
additional due diligence activities, including visits to a document data room
established by Bangor Hydro and participation in presentations by Bangor Hydro
management. Bangor Hydro's counsel also provided each party with a
16
<PAGE>
draft of a proposed merger agreement. During this period, Bangor Hydro's
management and advisors conducted similar due diligence activities concerning
Company A.
On June 21, 2000, Emera and Company A submitted definitive proposals,
including revised forms of the merger agreement. Emera proposed an all-cash
acquisition of Bangor Hydro at a price of U.S. $26.50 per share to Bangor Hydro
shareholders, subject to certain regulatory approvals and other customary
conditions. Emera's proposal was accompanied by a letter evidencing financing
available to close a transaction and was not conditioned upon financing. Company
A proposed a stock-for-stock merger transaction with a fixed exchange ratio, at
a notional price lower than the Emera proposal. Company A's proposal was subject
to, among other things, achieving pooling of interests accounting treatment,
qualifying as a tax-free reorganization, receiving the approval of Company A
shareholders, and certain regulatory approvals and other conditions. The other
two parties which had participated in the second round of due diligence
activities chose not to submit definitive proposals.
On June 23, 2000, the Bangor Hydro board of directors met to consider the
two definitive proposals that had been submitted. After discussion of the
features and conditions of both proposals, including the consideration offered,
the potential volatility of a fixed exchange ratio and the business position and
strategy of Company A, the board of directors authorized management to conduct
discussions with Emera in order to ascertain whether a definitive merger
agreement could be negotiated.
From June 24 through June 29, Bangor Hydro and Emera and their respective
advisors negotiated the final merger agreement. On June 29, 2000, at a special
meeting of the Bangor Hydro board of directors, the Bangor Hydro board of
directors, with the assistance of Bangor Hydro's advisors, reviewed the terms of
the final merger agreement. Also at this meeting, Salomon Smith Barney delivered
its opinion to the Bangor Hydro board of directors to the effect that, as of the
date of the opinion and based on and subject to the matters described in the
opinion, the merger consideration was fair, from a financial point of view, to
the holders of Bangor Hydro common stock. Following discussion, the Bangor Hydro
board of directors unanimously determined that the proposed transaction is in
the best interests of Bangor Hydro and its shareholders, and approved the merger
agreement.
On June 30, 2000, both Bangor Hydro and Emera issued press releases
announcing the transaction.
BANGOR HYDRO'S REASONS FOR THE MERGER
In determining that the merger is in the best interests of Bangor Hydro
shareholders, the Bangor Hydro board of directors consulted with Bangor Hydro's
legal and financial advisors and considered a number of factors, including the
following.
1. The extensive solicitation process undertaken before the execution of
the merger agreement, as described under the caption "Background to the
Merger" at page 15.
2. The price of U.S. $26.50 per share of common stock being paid by Emera
represents a premium of approximately 75% over the U.S. $15.13 per share
closing price of Bangor Hydro common stock on the day immediately
preceding the announcement of the merger on June 30, 2000. This price
also exceeds Bangor Hydro's all-time high closing share price of
U.S. $24.13.
3. The Bangor Hydro board of directors determined that Bangor Hydro would
be unlikely to achieve shareholder value equal to the merger
consideration being paid by Emera through remaining independent, through
attempted acquisitions or through a merger with a similarly-sized
electric utility company. Bangor Hydro's small size, and the possibility
of further shrinkage of its revenue base as additional aspects of its
business become subject to
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competition, would make it increasingly difficult to maintain regulated
rates at reasonable levels and attract capital on reasonable terms.
4. The Bangor Hydro board of directors believes that Emera and its
principal subsidiary, Nova Scotia Power, represent a good fit for Bangor
Hydro. Nova Scotia Power serves a geographical area similar to Bangor
Hydro's, and its management has experience operating a utility with
challenges similar to those Bangor Hydro faces. In turn, Bangor Hydro's
management and employees have experience in doing business with Canadian
utility companies. The board of directors believes that the merger will
provide future benefits to customers and employees as the best practices
of both firms are implemented.
5. The Bangor Hydro board of directors considered the financial
presentation of Salomon Smith Barney, including its written opinion dated
June 29, 2000, as to the fairness, from a financial point of view, of the
merger consideration to the holders of Bangor Hydro common stock, as
described below under the caption "Opinion of Bangor Hydro's Financial
Advisor."
6. The Bangor Hydro board of directors determined that Emera is financially
capable of completing the merger.
7. The Bangor Hydro board of directors took into account the terms and
conditions of the merger agreement, including those relating to the
ability of the Bangor Hydro board of directors to consider unsolicited
offers from third parties prior to approval of the merger agreement by
Bangor Hydro shareholders.
8. The merger agreement requires the affirmative vote of a majority of the
votes represented by the outstanding shares of Bangor Hydro common stock
and preferred stock, acting together as a class, voting in favor of the
merger, which, following the distribution of this proxy statement, allows
for an informed vote of Bangor Hydro's public shareholders on the
transaction.
The Bangor Hydro board of directors has also considered (i) the risk that
the merger would not be consummated, (ii) the effect of the public announcement
of the merger on Bangor Hydro's ability to retain employees, and on the trading
price of Bangor Hydro common stock, (iii) the substantial time and effort that
will be required of management to complete the merger, (iv) the possible
long-term impacts of the merger on Bangor Hydro employees, and (v) the
possibility that certain provisions of the merger agreement might have the
effect of discouraging other persons potentially interested in a combination
with Bangor Hydro from pursuing such an opportunity (E.G. Bangor Hydro's
potential obligation to pay to Emera a termination fee and the provision whereby
Bangor Hydro is prohibited from discussing such opportunities once Bangor
Hydro's shareholders have voted to approve the merger agreement). The board of
directors concluded that the potential benefits of the merger outweigh these
considerations.
In view of the wide variety of factors considered in connection with its
evaluation of the proposed merger, the Bangor Hydro board of directors did not
find it practicable to, and did not, quantify, rank or otherwise attempt to
assign relative weights to the foregoing factors. The board of directors viewed
its position and recommendation as being based on the totality of the
information presented to and considered by it. While the foregoing discussion of
the information and factors considered by the Bangor Hydro board of directors is
not intended to be all-inclusive, it does constitute a summary of all material
information considered by the board of directors in determining to recommend
approval of the merger agreement.
OPINION OF BANGOR HYDRO'S FINANCIAL ADVISOR
Bangor Hydro has retained Salomon Smith Barney to act as its exclusive
financial advisor in connection with the merger. In connection with its
engagement, Bangor Hydro requested that Salomon Smith Barney evaluate the
fairness, from a financial point of view, to the holders of Bangor Hydro
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common stock of the consideration to be received in the merger. On June 29,
2000, at a meeting of the Bangor Hydro board of directors held to evaluate the
merger, Salomon Smith Barney delivered to the board of directors its written
opinion to the effect that, as of that date and based on and subject to the
matters described in the opinion, the merger consideration was fair, from a
financial point of view, to the holders of Bangor Hydro common stock.
In arriving at its opinion, Salomon Smith Barney:
- reviewed the merger agreement;
- held discussions with Bangor Hydro's senior officers, directors and other
representatives and advisors and with Emera's senior officers and other
representatives and advisors concerning Bangor Hydro's business,
operations and prospects;
- examined publicly available business and financial information relating to
Bangor Hydro;
- examined financial forecasts and other information and data for Bangor
Hydro which Bangor Hydro's management provided to or otherwise discussed
with Salomon Smith Barney;
- reviewed the financial terms of the merger as described in the merger
agreement in relation to, among other things, current and historical
market prices and trading volumes of Bangor Hydro common stock, the
financial condition and historical and projected earnings and other
operating data of Bangor Hydro, and the capitalization of Bangor Hydro;
- considered, to the extent publicly available, the financial terms of other
transactions recently effected which Salomon Smith Barney considered
relevant in evaluating the merger;
- analyzed financial, stock market and other publicly available information
relating to the businesses of other companies whose operations Salomon
Smith Barney considered relevant in evaluating those of Bangor Hydro;
- at Bangor Hydro's request, approached and held discussions with third
parties to solicit indications of interest in the possible acquisition of
Bangor Hydro; and
- conducted other analyses and examinations and considered other financial,
economic and market criteria as Salomon Smith Barney deemed appropriate in
arriving at its opinion.
In rendering its opinion, Salomon Smith Barney assumed and relied, without
independent verification, on the accuracy and completeness of all financial and
other information and data that it reviewed or considered. With respect to
financial forecasts and other information and data, Bangor Hydro's management
advised Salomon Smith Barney that they were reasonably prepared on bases
reflecting the best currently available estimates and judgments of Bangor
Hydro's management as to Bangor Hydro's future financial performance. Salomon
Smith Barney assumed, with Bangor Hydro's consent, that in the course of
obtaining the necessary regulatory approvals for the merger, no limitations,
restrictions or conditions will be imposed that would have a material adverse
effect on the contemplated benefits of the merger to Bangor Hydro. Salomon Smith
Barney did not make and was not provided with an independent evaluation or
appraisal of Bangor Hydro's assets or liabilities, contingent or otherwise, and
did not make any physical inspection of Bangor Hydro's properties or assets.
Salomon Smith Barney expressed no view as to, and its opinion does not
address, the relative merits of the merger as compared to any alternative
business strategies that might exist for Bangor Hydro or the effect of any other
transaction in which Bangor Hydro might engage. Salomon Smith Barney's opinion
was necessarily based on information available, and financial, stock market and
other conditions and circumstances existing and disclosed, to Salomon Smith
Barney as of the date of its opinion. Although Salomon Smith Barney evaluated
the merger consideration from a financial point of view, Salomon Smith Barney
was not asked to and did not recommend the specific consideration
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payable in the merger, which was determined through negotiation between Bangor
Hydro and Emera. Bangor Hydro imposed no other instructions or limitations on
Salomon Smith Barney with respect to the investigations made or procedures
followed by Salomon Smith Barney in rendering its opinion.
THE FULL TEXT OF SALOMON SMITH BARNEY'S WRITTEN OPINION DATED JUNE 29, 2000,
WHICH DESCRIBES THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN, IS ATTACHED TO THIS DOCUMENT AS APPENDIX B AND IS
INCORPORATED INTO THIS DOCUMENT BY REFERENCE. SALOMON SMITH BARNEY'S OPINION IS
ADDRESSED TO THE BANGOR HYDRO BOARD OF DIRECTORS AND RELATES ONLY TO THE
FAIRNESS OF THE MERGER CONSIDERATION FROM A FINANCIAL POINT OF VIEW, DOES NOT
ADDRESS ANY OTHER ASPECT OF THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION
TO ANY SHAREHOLDER WITH RESPECT TO ANY MATTER RELATING TO THE MERGER.
In preparing its opinion, Salomon Smith Barney performed a variety of
financial and comparative analyses, including those described below. The summary
of these analyses is not a complete description of the analyses underlying
Salomon Smith Barney's opinion. The preparation of a fairness opinion is a
complex analytical process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances and, therefore, a fairness opinion
is not readily susceptible to summary description. Accordingly, Salomon Smith
Barney believes that its analyses must be considered as a whole and that
selecting portions of its analyses and factors, without considering all analyses
and factors, could create a misleading or incomplete view of the processes
underlying its analyses and opinion.
In its analyses, Salomon Smith Barney considered industry performance,
general business, economic, market and financial conditions and other matters
existing as of the date of its opinion, many of which are beyond the control of
Bangor Hydro. No company, transaction or business used in those analyses as a
comparison is identical to Bangor Hydro or the merger, and an evaluation of
those analyses is not entirely mathematical. Rather, the analyses involve
complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the acquisition, public
trading or other values of the companies, business segments or transactions
analyzed.
The estimates contained in Salomon Smith Barney's analyses and the valuation
ranges resulting from any particular analysis are not necessarily indicative of
actual values or predictive of future results or values, which may be
significantly more or less favorable than those suggested by its analyses. In
addition, analyses relating to the value of businesses or securities do not
necessarily purport to be appraisals or to reflect the prices at which
businesses or securities actually may be sold. Accordingly, Salomon Smith
Barney's analyses and estimates are inherently subject to substantial
uncertainty.
Salomon Smith Barney's opinion and analyses were only one of many factors
considered by the Bangor Hydro board of directors in its evaluation of the
merger and should not be viewed as determinative of the views of the board of
directors or management with respect to the merger consideration or the merger.
The following is a summary of the material financial analyses performed by
Salomon Smith Barney in connection with the rendering of its opinion dated
June 29, 2000:
SELECTED COMPANIES ANALYSIS.
Using publicly available information, Salomon Smith Barney analyzed the
market values and trading multiples of the following four selected publicly
traded companies in the electric utility industry:
- NSTAR
- The United Illuminating Company
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- Madison Gas and Electric Company
- Maine Public Service Company
All multiples were based on closing stock prices on June 27, 2000. Estimated
financial data for Bangor Hydro were based on internal estimates of Bangor
Hydro's management and estimated financial data for the selected companies were
based on publicly available research analysts' estimates. Salomon Smith Barney
compared the market values of Bangor Hydro and the selected companies as
multiples of book value as of March 31, 2000 and estimated calendar years 2000
and 2001 net income. Salomon Smith Barney then applied a range of selected
multiples derived from the selected companies of book value as of March 31, 2000
and estimated calendar years 2000 and 2001 net income to corresponding financial
data of Bangor Hydro in order to derive an implied equity reference range for
Bangor Hydro. This analysis resulted in an implied equity reference range for
Bangor Hydro of approximately U.S. $14.00 to U.S. $20.00 per share, as compared
to the merger consideration of U.S. $26.50 per share.
PRECEDENT TRANSACTIONS ANALYSIS.
Using publicly available information, Salomon Smith Barney reviewed the
implied purchase price multiples paid or proposed to be paid in the following 10
selected merger and acquisition transactions in the electric utility industry:
<TABLE>
<CAPTION>
TARGET ACQUIROR
------ --------
<C> <S> <C>
- CMP Group, Inc. Energy East Corporation
- The Empire District Electric Company UtiliCorp United Inc.
- St. Joseph Light & Power Company UtiliCorp United Inc.
- Eastern Utilities Associates New England Electric System
- Commonwealth Energy System BEC Energy
- Upper Peninsula Energy Corporation WPS Resources Corporation
- ESELCO, Inc. Wisconsin Energy Corporation
- WPL Holdings, Inc. Interstate Power Company
- Conowingo Power Company Delmarva Power & Light Company
- Southwestern Electric Service Company Texas Utilities Company
</TABLE>
Salomon Smith Barney compared purchase prices paid or proposed to be paid in
the selected transactions as multiples of latest book value and current calendar
year and next calendar year net income. All multiples were based on publicly
available financial information for the selected transactions. Salomon Smith
Barney then applied a range of selected multiples derived from the selected
transactions of latest book value and current calendar year and next calendar
year net income to the book value as of March 31, 2000 and estimated calendar
years 2000 and 2001 net income of Bangor Hydro in order to derive an implied
equity reference range for Bangor Hydro. This analysis resulted in an implied
equity reference range for Bangor Hydro of approximately U.S. $22.00 to
U.S. $28.00 per share, as compared to the merger consideration of U.S. $26.50
per share.
DISCOUNTED CASH FLOW ANALYSIS.
Salomon Smith Barney performed a discounted cash flow analysis of Bangor
Hydro to estimate the present value of the stand-alone, unlevered, after-tax
free cash flows that Bangor Hydro could generate for fiscal years 2000 through
2004, based on internal estimates of Bangor Hydro's management. The range of
estimated terminal values for Bangor Hydro was calculated by applying terminal
value multiples of 9.5x to 13.5x to Bangor Hydro's estimated calendar year 2004
net income. The present value of the cash flows and terminal values were
calculated using discount rates ranging from 7.0% to 8.0%. This analysis
resulted in an implied equity reference range for Bangor Hydro of approximately
U.S. $19.50 to U.S. $26.31 per share, as compared to the merger consideration of
U.S. $26.50 per share.
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OTHER FACTORS.
In rendering its opinion, Salomon Smith Barney also reviewed and considered
other factors, including:
- historical market prices and trading volumes of Bangor Hydro common stock
and Emera common stock and the relationship between movements in Bangor
Hydro common stock, movements in an index comprised of the common stock of
the selected companies and movements in the Philadelphia Utility Index;
and
- publicly available business and financial information relating to Emera.
MISCELLANEOUS.
Under the terms of its engagement, Bangor Hydro has agreed to pay Salomon
Smith Barney for its financial advisory services upon completion of the merger
an aggregate fee based on a percentage of the total consideration payable in the
merger. The fee payable to Salomon Smith Barney is currently estimated to be
approximately $4.4 million. Bangor Hydro also has agreed to reimburse Salomon
Smith Barney for reasonable travel and other expenses incurred by Salomon Smith
Barney in performing its services, including reasonable fees and expenses of its
legal counsel, and to indemnify Salomon Smith Barney and related persons against
liabilities, including liabilities under the federal securities laws, arising
out of its engagement.
In the ordinary course of business, Salomon Smith Barney and its affiliates
may actively trade or hold the securities of Bangor Hydro and Emera for their
own account or for the account of customers and, accordingly, may at any time
hold a long or short position in those securities. Salomon Smith Barney and its
affiliates have in the past provided investment banking services to Bangor Hydro
unrelated to the merger, for which services Salomon Smith Barney has received
compensation. In addition, Salomon Smith Barney and its affiliates, including
Citigroup Inc. and its affiliates, may maintain relationships with Bangor Hydro,
Emera and their respective affiliates.
Bangor Hydro selected Salomon Smith Barney as its exclusive financial
advisor based on Salomon Smith Barney's experience, expertise and familiarity
with Bangor Hydro and its business. Salomon Smith Barney is an internationally
recognized investment banking firm which regularly engages in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive bids, secondary distributions of listed
and unlisted securities, private placements and valuations for estate, corporate
and other purposes.
EFFECTIVE TIME
The merger will become effective when the parties to the merger agreement
file articles of merger with the Secretary of the State of Maine in accordance
with the Maine Business Corporation Act, or at a later time that Emera and
Bangor Hydro may specify in the articles of merger.
The merger will not become effective before the date of the special meeting
of Bangor Hydro shareholders. If the merger agreement is approved at the special
meeting, the effective time of the merger will occur as promptly as possible
after satisfaction or waiver of the remaining conditions to the merger contained
in the merger agreement, including the receipt of regulatory approvals.
ARTICLES OF INCORPORATION AND BY-LAWS
The articles of incorporation, as amended, of Bangor Hydro, as in effect
immediately prior to the effective time of the merger, will become the articles
of incorporation of the surviving company until they are amended. The by-laws of
Bangor Hydro, as in effect immediately prior to the effective time of the
merger, will be the by-laws of the surviving company until they are amended.
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REGULATORY APPROVALS
The parties must comply with federal and state regulatory requirements
before they can complete the merger. Although there can be no guarantee that the
parties will obtain the requisite consents or approvals on a timely basis, or at
all, we believe that the necessary approvals can be obtained in sufficient time
to allow the merger to be completed by the first quarter of 2001. A discussion
of the principal regulatory requirements follows.
MAINE PUBLIC UTILITIES COMMISSION.
Under Maine law, the approval of the Maine Public Utilities Commission is
required for the indirect transfer of control of Bangor Hydro resulting from the
merger, under a standard that requires a finding that the merger is consistent
with the interests of Bangor Hydro's customers and investors. In addition, in
rendering a decision, the Maine Public Utilities Commission must find that it
can continue to adequately regulate the reorganized utility. Bangor Hydro
expects to be able to satisfy these standards. Under Maine law, once an
application for approval is filed, the Maine Public Utilities Commission must
act definitively within 180 days of the date of filing. Bangor Hydro and Emera
filed a joint petition with the Maine Public Utilities Commission to approve the
merger on August 4, 2000. Bangor Hydro expects the Maine Public Utilities
Commission's order to be issued by February 1, 2001.
Bangor Hydro can give no assurance that the necessary Maine Public Utilities
Commission approvals will be obtained in a timely manner, or at all. Moreover,
we cannot guarantee that the Maine Public Utilities Commission approvals will
not include terms or conditions specifically relating to the merger that, in the
reasonable judgment of Emera, could be expected to have a material adverse
effect on the business, properties, financial condition or results of operations
of the surviving company and its subsidiaries taken as a whole if the merger
were consummated. If so, Emera will not be obligated to complete the merger.
THE PUBLIC UTILITY HOLDING COMPANY ACT.
Section 4 of the Public Utility Holding Company Act generally prohibits any
holding company that is not registered under Section 5 of the Public Utility
Holding Company Act from conducting business in interstate commerce. As a
result, Emera expects that if it completes its acquisition of Bangor Hydro, it
will have to register with the SEC as a public utility holding company unless an
exemption is determined to be available. Emera is currently exploring the
possibility of claiming an exemption.
The Public Utility Holding Company Act imposes restrictions on registered
holding companies. Among these restrictions are requirements that the SEC
approve certain securities issuances, sales and acquisitions of utility assets
or securities of utility companies, and acquisitions of an interest in any other
business. The Public Utility Holding Company Act also limits the ability of
registered holding companies to engage in non-utility ventures and regulates
transactions between various affiliates within holding company systems,
including the provision of services by holding company affiliates to the
system's utilities.
In connection with the merger and the acquisition by Emera of all the
outstanding shares of Bangor Hydro common stock, Emera may also be required to
obtain the prior approval of the SEC under the Public Utility Holding Company
Act, unless the nature of Bangor Hydro's participation in two of its affiliates
can serve as the basis for a conclusion by Emera's counsel that Bangor Hydro
itself should not be regarded as a holding company under the Public Utility
Holding Company Act. Emera's counsel is in the process of considering this
issue. Section 9(a)(2) of the Public Utility Holding Company Act requires an
entity owning, directly or indirectly, 5% or more of the outstanding voting
securities of a public utility company to obtain the approval of the SEC prior
to acquiring a direct or indirect interest in 5% or more of the voting
securities of any additional public utility company. In the
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merger, Emera will be indirectly acquiring Bangor Hydro and may be deemed to be
acquiring Bangor Hydro's other public utility subsidiaries.
If prior SEC approval is required, under the applicable standards of the
Public Utility Holding Company Act, the SEC must determine whether:
- the merger would tend towards detrimental interlocking relations or a
detrimental concentration of control of public utilities;
- the consideration to be paid in connection with the merger is reasonable;
- the merger would unduly complicate the capital structure or be detrimental
to the proper functioning of Emera's holding company system; or
- the merger would violate applicable state law, or be detrimental to the
carrying out of the integration provisions of the Public Utility Holding
Company Act.
Emera and Bangor Hydro believe that if SEC approval is required, the SEC
will approve the merger. However, Emera and Bangor Hydro can give no assurance
that the necessary SEC approvals will be obtained in a timely manner, or at all.
Moreover, Emera and Bangor Hydro cannot guarantee that the SEC approvals will
not include terms or conditions that, in the reasonable judgment of Emera, would
be expected to have a material adverse effect on the business, properties,
financial condition or results of operations of Emera and its subsidiaries taken
as a whole or the surviving company and its subsidiaries taken as a whole. If
so, Emera will not be obligated to complete the merger.
FEDERAL ENERGY REGULATORY COMMISSION.
Under Section 203 of the Federal Power Act, the Federal Energy Regulatory
Commission has jurisdiction when a public utility sells or otherwise disposes of
facilities that are subject to its jurisdiction. A disposition is deemed made
when there is a change of control of the public utility that owns the
facilities. Bangor Hydro is subject to the jurisdiction of the Federal Energy
Regulatory Commission as to certain matters, including rates for wholesale
purchases, sales of energy and capacity, and transmission services. For this
reason, the prior approval of the Federal Energy Regulatory Commission is
required in order to complete the merger.
In reviewing a merger, the Federal Energy Regulatory Commission generally
evaluates the effect of a proposed merger on competition and on rates and
whether the proposed merger will impair the effectiveness of regulation.
Bangor Hydro and Emera plan to file a joint application with the Federal
Energy Regulatory Commission, requesting that the Federal Energy Regulatory
Commission approve the merger. Bangor Hydro and Emera believe that the Federal
Energy Regulatory Commission will approve the merger. However, Emera and Bangor
Hydro can give no assurance that the necessary Federal Energy Regulatory
Commission approvals will be obtained in a timely manner, or at all. Moreover,
Emera and Bangor Hydro cannot guarantee that the Federal Energy Regulatory
Commission approvals will not include terms or conditions specifically relating
to the merger that, in the reasonable judgment of Emera, could be expected to
have a material adverse effect on the business, properties, financial condition
or results of operations of Emera and its subsidiaries taken as a whole or the
surviving company and its subsidiaries taken as a whole. If so, Emera will not
be obligated to complete the merger.
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976.
The merger is subject to the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and the rules and regulations thereunder, which
provide that certain acquisition transactions may not be completed until
specified information has been furnished to the Antitrust Division of the
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Department of Justice and the Federal Trade Commission and until certain waiting
periods have been terminated or have expired. Bangor Hydro and Emera will file
notification and report forms with the Federal Trade Commission and the
Antitrust Division of the Department of Justice. If the merger is not completed
within 12 months after the expiration or earlier termination of the initial HSR
Act waiting period, Bangor Hydro and Emera would be required to submit new
information to the Antitrust Division and the Federal Trade Commission, and a
new waiting period would have to expire or be earlier terminated before the
merger could be completed. The expiration or earlier termination of the HSR Act
waiting period would not preclude the Antitrust Division or the Federal Trade
Commission from challenging the merger on antitrust grounds, either before or
after the merger is completed. There can be no assurance that such a challenge,
if made, would not be successful. However, neither Bangor Hydro nor Emera
believes that the merger will violate federal antitrust laws.
COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES.
In the merger, Emera, a Nova Scotia holding company, will be acquiring all
of the outstanding common stock of Bangor Hydro. Section 721 of the Defense
Production Act of 1950 authorizes the Committee on Foreign Investment in the
United States to suspend or prohibit any merger, acquisition or takeover, by or
with a foreign person, of a person engaged in interstate commerce in the United
States when, in the Committee's view, the foreign interest exercising control
over that person might take action that threatens to impair the national
security. In reviewing an acquisition, the Committee generally evaluates
whether:
- the acquisition is by or with a foreign person;
- the acquisition could result in control by a foreign person of a person
engaged in interstate commerce in the United States;
- there is evidence that the foreign interest exercising control over that
person might take action that threatens to impair the national security;
and
- the national security is afforded adequate and appropriate protection by
provisions of law other than Section 721 and the International Emergency
Economic Powers Act.
Bangor Hydro and Emera plan to submit a joint voluntary notice to the
Committee, requesting that the Committee determine not to pursue a formal
investigation of the merger. Bangor Hydro and Emera believe that the Committee
will determine that the merger does not threaten to impair the national
security.
OBLIGATIONS TO OBTAIN REGULATORY APPROVALS.
Under the merger agreement, both Emera and Bangor Hydro have agreed to use
all commercially reasonable efforts to obtain all regulatory and governmental
approvals necessary or advisable to complete the merger.
INJUNCTIONS
The obligations of each of Emera and Bangor Hydro to complete the merger is
subject to the condition that there is no law, regulation or injunction in
effect that would prohibit the completion of the merger.
EFFECTS OF THE MERGER
As a result of the merger, Bangor Hydro common stock will no longer be
publicly traded, and Emera will become the sole stockholder of Bangor Hydro.
Trading in Bangor Hydro common stock on the New York Stock Exchange will cease
immediately as of the effective time of the merger. After the
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effective time of the merger, Bangor Hydro will delist the shares of Bangor
Hydro common stock from the New York Stock Exchange and deregister the shares of
Bangor Hydro common stock under the Securities and Exchange Act of 1934. Each
share of Bangor Hydro preferred stock that is issued and outstanding prior to
the effective time of the merger will remain outstanding as one share of
preferred stock of the surviving company.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
When you consider the recommendation of the Bangor Hydro board of directors
to approve the merger, you should be aware that some members of the Bangor Hydro
board of directors and officers of Bangor Hydro have interests that may conflict
with your own interests as a shareholder. The Bangor Hydro board of directors
was aware of these interests and considered them along with other matters in
recommending that you vote to approve the merger agreement. For example, at
least four of Bangor Hydro's directors will be appointed as directors of the
surviving company, and as promptly as reasonably practicable after the
consummation of the merger, one of Bangor Hydro's directors will be appointed as
a director of Emera. Moreover, the merger agreement provides that the officers
of Bangor Hydro immediately before the effective time of the merger will be the
initial officers of, and will hold the same positions with, the surviving
company from the effective time of the merger until their respective successors
are duly elected or appointed and qualified. This provision does not preclude
such officers from exercising their rights under existing employment-related
agreements, including the change of control provisions discussed below. It is
anticipated that Robert S. Briggs, the President, Chief Executive Officer and
Chairman of the Board of Bangor Hydro will, on or about the effective time of
the merger, terminate his employment with Bangor Hydro and be appointed to fill
the above-mentioned director position with Emera. No binding commitments with
respect to employment or continuing roles have been entered into between Emera
and any of the officers and directors of Bangor Hydro as of the date of this
proxy statement. It is possible that such commitments could be formalized, or
that the employment or responsibilities of any individual officer of Bangor
Hydro could change, before the effective time of the merger.
CHANGE OF CONTROL AGREEMENTS.
Bangor Hydro's executive officers, Robert S. Briggs, Paul A. LeBlanc,
Carroll R. Lee and Frederick S. Samp, each have agreements with Bangor Hydro
containing change of control provisions. The intent of these agreements is to
ensure that strategic business transactions, including transactions that may
qualify as a change of control under these agreements, are evaluated by Bangor
Hydro's management with a view to the best interests of Bangor Hydro
shareholders.
The approval of the merger by Bangor Hydro shareholders would qualify as a
change of control under these agreements. These agreements provide that each
executive officer is entitled to a severance payment if his employment with
Bangor Hydro is terminated within one year of a change of control, either:
(i) voluntarily by the executive officer (including by early retirement); or
(ii) involuntarily, other than for death, disability, willful misconduct, or
retirement (other than early retirement).
If his employment is terminated under these circumstances, the executive
officer shall be entitled to receive an amount which is equal to twice the
average of his annual compensation (base salary plus bonuses) during the three
calendar years preceding the date of termination.
In addition, for two years after the date of termination, the executive
officer shall be entitled to receive the same or substantially equivalent
health, disability and life insurance coverage as was applicable to the
executive officer and his eligible dependents prior to the date of termination.
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Following such two year period, the executive officer and his eligible
dependents shall be entitled to receive the retiree group health insurance
coverage that is otherwise available to retirees of Bangor Hydro, at a cost to
the executive officer that is no greater than the cost to a retiree of Bangor
Hydro; provided, however, that if the executive officer was not eligible for
early retirement at the date of his termination, such retiree coverage will not
commence until the later of the executive officer's attainment of age 55 or two
years after his date of termination.
If the amounts payable by Bangor Hydro under these agreements or pursuant to
the supplemental benefit agreements described below will be subject to the
excise tax applicable to "parachute payments" under the U.S. federal tax laws,
the executive officer will be entitled to receive an additional payment so that,
after payment of such excise tax, he receives a sum equal to the original,
intended pre-excise tax payment.
Mr. Briggs would be entitled to a change of control payment under his
agreement upon his expected termination of employment following the closing of
the merger. At the time of mailing of this proxy statement, Bangor Hydro is not
aware of any other planned departures or retirements of other executive officers
such that change of control payments would become payable to them, but any such
decisions are within the sole discretion of such executive officers.
SUPPLEMENTAL BENEFIT AGREEMENTS.
Messrs. Briggs, LeBlanc, Lee and Samp have entered into supplemental benefit
agreements containing change of control provisions. The approval of the merger
by Bangor Hydro shareholders would qualify as a change of control under these
agreements. These agreements provide that if a change of control occurs prior to
the executive officer's termination of employment with Bangor Hydro, he shall
have a fully vested and nonforfeitable right to receive the retirement benefits
under Bangor Hydro's supplemental executive retirement plan, commencing on or
after his attainment of age 55. If the executive officer is less than 55 years
of age at the date of his termination following a change of control, he shall be
treated as having attained age 55 immediately prior to his termination for the
purpose of calculating his benefits.
Prior to any change of control, Bangor Hydro is required to establish an
irrevocable trust for the benefit of the executives party to the supplemental
benefit agreements. Bangor Hydro will deposit into the trust cash or other
assets having a fair market value equal to the present value of the future
annual benefits payable to the executives under the agreements. Additional
deposits are required to be made to the trust annually if necessary to maintain
the fair market value of the trust assets equal to the present value of the
executives' future benefits. The obligations to maintain and fund the trust will
survive the merger.
RETENTION AND SUCCESS PAYMENTS.
The Bangor Hydro board of directors has authorized the President of Bangor
Hydro, in his discretion, to cause Bangor Hydro to enter into stay bonus
arrangements with any employee who is not a party to a change of control
agreement. Such arrangements would provide cash consideration for the employee's
agreement to remain in his or her position of employment through a date
following the merger. No such consideration may exceed $50,000 for each employee
so compensated without further approval of the Bangor Hydro board of directors.
Prior to the closing of the merger, the board of directors may authorize
retention payments to employees who are parties to a change of control
agreement.
The Bangor Hydro board of directors may also approve cash awards to officers
or employees of Bangor Hydro as incentives to achieve a successful closing of
the merger. Such awards would be payable following the consummation of the
merger. No such awards have been proposed or approved as of the date of this
proxy statement.
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INDEMNIFICATION AND INSURANCE.
Under the merger agreement, to the extent these individuals are not
otherwise indemnified, Emera and the surviving company have agreed to indemnify,
from and after the effective time of the merger, each person who was on the date
of the merger agreement, or who had been prior to the date of the merger
agreement, or who became prior to the effective time of the merger, an officer,
director or employee of Bangor Hydro or any of its subsidiaries. This
indemnification will cover all losses, expenses (including reasonable attorneys'
fees and expenses), claims, damages, liabilities or amounts paid in settlement
arising out of actions or omissions occurring at or prior to the effective time
of the merger that are in whole or in part (i) based on the fact that such
person is or was a director, officer or employee of Bangor Hydro or one of its
subsidiaries, or (ii) based on the transactions contemplated by the merger
agreement. These rights to indemnification will continue for at least six years
after the effective time of the merger.
In addition, for six years after the effective time of the merger, Emera
will (i) maintain directors' and officers' liability insurance policies for the
benefit of those persons who were covered by the liability insurance policies of
Bangor Hydro as of June 29, 2000, on terms that will be no less favorable than
the terms of the insurance coverage in effect as of June 29, 2000, or
(ii) provide tail coverage for those persons which provides coverage for a
period of six years for acts prior to the effective time of the merger on terms
no less favorable than the terms of the insurance coverage in effect as of
June 29, 2000.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
We have set out below a summary of the material U.S. federal income tax
consequences of the merger applicable to Bangor Hydro shareholders. It does not
purport to consider all aspects of U.S. federal income taxation that may be
relevant to you. This discussion is based upon the provisions of the Internal
Revenue Code, existing and proposed regulations thereunder, and administrative
and judicial interpretations of the Internal Revenue Code in effect at the date
of this document. Please remember that legislative, judicial and administrative
rules and interpretations are subject to change at any time, possibly with
retroactive effect, and the following statements and conclusions are therefore
subject to change.
This discussion does not address the tax consequences of the merger to
shareholders subject to special tax treatment (including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers, foreign
persons, shareholders who hold their shares of Bangor Hydro common stock as part
of a hedge, constructive sale, straddle or conversion transaction, and
shareholders who have acquired their shares of Bangor Hydro common stock upon
the exercise of employee options or otherwise as compensation or who exercise
their dissenters' rights of appraisal), nor does it consider the effect of any
foreign, state or local laws or any U.S. federal laws other than those
pertaining to federal income tax.
Your receipt of cash upon the exchange of your shares of Bangor Hydro common
stock pursuant to the merger will be a taxable transaction for U.S. federal
income tax purposes and may also be a taxable transaction under applicable
state, local, foreign and other tax laws. Generally, you will recognize gain or
loss equal to the difference between the amount of cash received and your
adjusted tax basis in the shares of Bangor Hydro common stock surrendered. If
you hold your shares of Bangor Hydro common stock as a capital asset, the gain
or loss recognized will constitute a capital gain or loss. Such gain or loss
will be a long-term capital gain or loss if your holding period for the shares
of Bangor Hydro common stock surrendered exceeds one year. Long-term capital
gains recognized by individuals and certain other non-corporate Bangor Hydro
shareholders are taxable at a preferential rate for U.S. federal income tax
purposes. There are limitations on the extent to which you may deduct capital
losses from ordinary income.
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Payments of cash to shareholders will generally be subject to information
reporting requirements. "Backup" withholding at a rate of 31% will apply to your
payments, unless you furnish your taxpayer identification number (which, for a
shareholder who is an individual, is the shareholder's social security number)
in the manner prescribed in the applicable U.S. Treasury regulations, certify
that such number is correct, certify as to no loss of exemption from backup
withholding and meet certain other conditions or are otherwise exempt from
backup withholding. Any amounts withheld under the backup withholding rules will
be allowed as a refund or credit against your U.S. federal income tax liability,
provided that you furnish the required information to the Internal Revenue
Service. Such backup withholding can be avoided if you properly complete, in a
timely manner, the letter of transmittal that will be mailed to you (in
connection with the merger), and you include in that letter your correct
taxpayer identification number. See "The Merger Agreement--Exchange of Stock for
Cash" at page 33.
YOUR INDIVIDUAL CIRCUMSTANCES MAY AFFECT THE TAX CONSEQUENCES OF THE MERGER
TO YOU. THE PARTICULAR FACTS OR CIRCUMSTANCES THAT MAY AFFECT THE CONSEQUENCES
TO YOU ARE NOT DISCUSSED HERE. ACCORDINGLY, YOU SHOULD CONSULT YOUR TAX ADVISORS
TO DETERMINE THE TAX EFFECT OF THE MERGER TO YOU, INCLUDING THE APPLICATION AND
EFFECT OF FOREIGN, U.S. FEDERAL, STATE, LOCAL OR OTHER TAX LAWS.
RIGHTS OF DISSENTING SHAREHOLDERS
If you hold shares of Bangor Hydro common stock and do not wish to accept
the merger consideration, then Sections 908 and 909 of the Maine Business
Corporation Act provide you with an alternative. Under these sections, you have
a right to dissent from the merger and can choose to be paid the fair value of
your shares of Bangor Hydro common stock once the merger is completed provided
you follow the procedures outlined in the Maine Business Corporation Act. The
complete text of these sections is attached as Appendix C to this document.
If you wish to exercise your dissenter's rights of appraisal or to preserve
the right to do so, you should carefully review Appendix C and seek the advice
of counsel. If you do not comply with the deadlines and procedures specified in
the Maine Business Corporation Act, you may lose your dissenters' rights of
appraisal. To exercise these rights, you must satisfy each of the following
conditions:
- You must file with Bangor Hydro, at or prior to the special meeting of
Bangor Hydro shareholders, a written objection to the merger.
- You must not vote in favor of the merger agreement.
- You must file a written demand for payment of the fair value of your
shares of Bangor Hydro common stock within 15 days after the date the
merger agreement is approved by the shareholders of Bangor Hydro.
- You should file your written objection and your demand for payment by
mailing them by certified or registered mail to Andrew Landry, Clerk,
Bangor Hydro-Electric Company, 33 State Street, Bangor, Maine 04401, or
delivering them in person to Bangor Hydro's principal place of business at
the same address, to the attention of Andrew Landry, Clerk. The objection
and demand for payment must specify your name and current address.
You may object with respect to fewer than all of your shares.
You must deliver the written objection to the merger even if you submit a
proxy or vote against the merger agreement. MERELY VOTING AGAINST, ABSTAINING
FROM VOTING OR FAILING TO VOTE IN FAVOR OF ADOPTION OF THE MERGER AGREEMENT WILL
NOT CONSTITUTE A WRITTEN OBJECTION TO THE MERGER UNDER THE MAINE BUSINESS
CORPORATION ACT. If you fail to meet these conditions, and the merger is
effected, your shares of Bangor Hydro common stock will be converted into the
merger consideration, which is U.S. $26.50 in cash, without interest (subject to
adjustment in certain circumstances).
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Once filed, the demand for payment may not be withdrawn without the consent
of Bangor Hydro. If you make a demand for payment, you may not thereafter vote
or exercise any other Bangor Hydro shareholder rights.
Your right to be paid the fair value of your shares of Bangor Hydro common
stock will terminate in the event that (i) the merger agreement is not approved
or is abandoned, (ii) your demand is withdrawn upon the consent of Bangor Hydro,
(iii) no judicial action for the determination of fair value is filed within the
time prescribed by Maine law, as described below, (iv) you fail to comply with
the statutory procedure, or (v) a court of competent jurisdiction determines
that you are not entitled to demand payment.
At the time you file your demand for payment, or within 20 days thereafter,
you must submit the certificates representing the shares for which you are
demanding payment for notation of the fact of your demand. You must mail or
deliver these certificates to Andrew Landry, Clerk, Bangor Hydro-Electric
Company, 33 State Street, Bangor, Maine 04401. Bangor Hydro will return share
certificates to you promptly after notation has been made. If you fail to submit
certificates for notation within this time limit, you will lose all rights as a
dissenting shareholder (unless a court of competent jurisdiction for good and
sufficient cause shown directs otherwise).
Within the later of 25 days after the merger agreement is approved by the
shareholders of Bangor Hydro or 10 days after the effective time of the merger,
Bangor Hydro must give written notice to each dissenting shareholder who has
complied with the procedures above that the merger has been effected, and must
make a written offer at a specified price to purchase the shares as to which
each shareholder is dissenting. The offer will be made at the same price per
share to all dissenting shareholders.
If you and Bangor Hydro agree on the price within 20 days after the last
date for delivery of this offer, Bangor Hydro must, within 90 days after the
effective time of the merger, make payment of the agreed amount upon your
surrender of your shares. At the time you are paid, you will cease to have any
interest in your shares. If you and Bangor Hydro fail to agree on the fair value
of your shares during that 20-day period, Bangor Hydro may, within a 60-day
period thereafter, bring an action in the Maine Superior Court to determine the
fair value of the shares. Alternatively, you may, up to 60 days after the
effective time of the merger, demand in writing that Bangor Hydro bring such an
action, in which case Bangor Hydro must do so within 30 days after receipt of
the demand. If Bangor Hydro fails to institute an action within this 30-day
period, you may bring a suit in the name of Bangor Hydro. All actions to
determine fair value, whether brought by Bangor Hydro or a shareholder, must be
filed within 6 months from the effective time of the merger.
All dissenting shareholders, wherever residing, who have not agreed with
Bangor Hydro on a price for their shares will be joined as parties in any action
to determine fair value and must be served with a copy of the complaint filed in
the court action. The value determined by the court will be binding on all
eligible dissenting shareholders. Upon request of Bangor Hydro, the court will
consider and pass upon whether specified dissenting shareholders have
satisfactorily complied with all of the requirements of Maine law. If the court
finds that the dissenting shareholders have not so complied, they will not be
entitled to be paid the fair value as determined, but will be bound by the terms
of the merger agreement. The burden of proof is on the shareholder to prove his
or her eligibility.
The judgment fixing the fair value of the shares will include interest, at a
rate the court finds to be fair and equitable, from the date of the shareholder
vote approving the merger agreement to the date of payment, unless the court
determines that your refusal to accept Bangor Hydro's offer of payment for the
shares was arbitrary, vexatious or not in good faith. The judgment will be
payable only upon surrender to Bangor Hydro of the certificates representing
your dissenting shares. Upon Bangor Hydro's payment of the judgment, you will
cease to have any interest in the shares. Costs and expenses of the proceeding,
as determined by the court, will be assessed against Bangor Hydro unless the
court finds that your refusal to accept Bangor Hydro's offer of payment for your
shares was arbitrary,
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vexatious or not in good faith. Costs and expenses will not include the fees and
expenses of counsel or of expert witnesses (unless the court orders otherwise
for good cause), but will include reasonable compensation and expenses to any
appraisers appointed by the court. If the "fair value" of the shares, as
determined by the court, "materially exceeds" the amount that Bangor Hydro
offered to pay for the shares, or if no offer was made, the court may award you
all or part of your attorneys' fees or expenses and reasonable compensation and
expenses to any expert you employed.
If you have exercised your right to dissent, any purchaser of your
dissenting shares will not acquire any rights in Bangor Hydro other than the
rights that you had as a dissenting shareholder. Any new certificate issued
evidencing the transferred shares will bear a notation reflecting your demand
for payment.
A shareholder who is a minor or otherwise legally incapacitated will be
bound by the procedural limitations of Section 909 of the Maine Business
Corporation Act. He or she may personally, or through a guardian or any person
acting for him or her as a legally authorized representative, take all actions
necessary to assert his or her right to dissent. Actions taken in respect of
shares held of record by a nominee for the benefit of another may be made only
by the nominee and not by the beneficial owner.
The foregoing discussion is qualified in its entirety by reference to
Sections 908 and 909 of the Maine Business Corporation Act, copies of which are
attached hereto as Appendix C.
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THE MERGER AGREEMENT
THE FOLLOWING SUMMARY OF THE MERGER AGREEMENT IS QUALIFIED BY REFERENCE TO
THE ACTUAL MERGER AGREEMENT, WHICH IS INCORPORATED BY REFERENCE AND ATTACHED TO
THIS DOCUMENT AS APPENDIX A.
GENERAL
The merger agreement provides that a to-be-formed wholly-owned indirect
subsidiary of Emera will merge with and into Bangor Hydro. Bangor Hydro will be
the surviving company, and will continue to conduct its businesses as a
wholly-owned subsidiary of Emera.
The closing of the merger will occur on the fifth business day after the
date upon which all conditions to the merger have been satisfied or waived, or
at such other time as Bangor Hydro and Emera agree. On the closing date, Bangor
Hydro and Emera will file articles of merger with the Secretary of the State of
Maine. The merger will become effective upon the filing of these articles of
merger, or at a later time specified in the articles of merger. We expect that
the closing date will occur by the first quarter of 2001.
CORPORATE GOVERNANCE MATTERS
DIRECTORS.
The board of directors of the surviving company as of the effective time of
the merger (at least four of whom will be directors of Bangor Hydro immediately
prior to the effective time of the merger) will be designated in writing by
Emera before the effective time of the merger. These directors will hold office
until their successors are duly elected or appointed and qualified. In addition,
as promptly as reasonably practicable after the effective time of the merger,
the board of directors of Emera will increase by one the number of directors on
the Emera board of directors and will appoint as a director, one director of
Bangor Hydro designated by Emera who is not a full time employee of the
surviving company.
OFFICERS.
The officers of Bangor Hydro immediately prior to the effective time of the
merger will be the initial officers, holding the same positions, of the
surviving company. All officers will hold their positions until their respective
successors are duly elected or appointed and qualified. See "The
Merger--Interests of Certain Persons in the Merger," at page 26.
CONVERSION OF BANGOR HYDRO SHARES
MERGER CONSIDERATION.
At the effective time of the merger, each outstanding share of Bangor Hydro
common stock (other than shares that are held by Bangor Hydro shareholders who
have not voted in favor of the merger and have properly asserted dissenters
rights, or shares that are owned by Bangor Hydro as treasury stock, or by Emera,
if any) will be converted into the right to receive U.S. $26.50 in cash, without
interest (subject to adjustment as described below). Each outstanding share of
Bangor Hydro preferred stock will remain outstanding as one share of preferred
stock of the surviving company, and holders of Bangor Hydro warrants outstanding
at the effective time of the merger will thereafter be entitled to receive, upon
exercise of each warrant, the merger consideration less the exercise price.
If the closing of the merger does not occur on or prior to June 29, 2001,
and all conditions to closing have been satisfied or are capable of being
satisfied except the receipt by Emera of any necessary authorizations from the
SEC under the Public Utility Holding Company Act, and/or any other necessary
governmental approvals to be obtained by Emera, then the per share merger
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consideration will be increased by an amount equal to U.S. $0.003 for each day
after that date up to and including the day before the closing of the merger.
DISSENTING SHARES.
Bangor Hydro shareholders who pursue their rights to dissent under Maine law
will lose their right to receive the merger consideration. These shareholders
will have only those rights that are guaranteed by applicable Maine law. If,
however, after the effective time of the merger, a holder of Bangor Hydro common
stock withdraws or loses his or her right to payment of the fair market value
for shares (in either case pursuant to Maine law), his or her shares of Bangor
Hydro common stock will be converted into the right to receive the merger
consideration. Bangor Hydro will promptly notify Emera if it receives any
written demands for payment of the fair market value of outstanding Bangor Hydro
common stock or withdrawals of such demands. The surviving company will make any
payments in respect of dissenting shares.
EXCHANGE OF STOCK FOR CASH
PAYING AGENT.
Prior to the effective time of the merger, Emera will designate a bank or
trust company in the United States as the paying agent for the merger. Emera
will deposit with the paying agent the amount of cash required to convert the
outstanding shares of Bangor Hydro common stock into the merger consideration.
EXCHANGE AND PAYMENT PROCEDURES.
Promptly after the effective time of the merger, the paying agent will mail
to each record holder of a certificate or certificates representing shares of
Bangor Hydro common stock that have been converted into the right to receive the
merger consideration:
- a letter of transmittal for use in submitting stock certificates to the
paying agent; and
- instructions explaining what the shareholder must do to effect the
surrender of the Bangor Hydro stock certificates in exchange for the
merger consideration.
After you submit your stock certificates, a letter of transmittal and other
documents that may be required, you will have the right to receive the merger
consideration represented by the surrendered shares.
The merger consideration may be delivered to someone who is not listed in
Bangor Hydro's transfer records if they present a Bangor Hydro stock certificate
to the paying agent along with all documents required to prove that the
certificate has been transferred to them and any applicable stock transfer taxes
have been paid.
Until surrendered, each certificate (other than those representing shares
held by Bangor Hydro shareholders who have not voted in favor of the merger and
have properly asserted dissenters' rights, or shares owned by Bangor Hydro as
treasury stock, or by Emera, if any) will be deemed at any time after the
effective time of the merger to represent only the right to receive the merger
consideration upon surrender. No interest will be paid on any cash payable to
those surrendering certificates.
From and after the effective time of the merger, Bangor Hydro's share
transfer books will be closed and there will be no further registration of
transfers of the shares of Bangor Hydro's common stock that were outstanding
immediately prior to the effective time of the merger. Certificates presented,
for any reason, to Emera after the effective time of the merger will be canceled
and exchanged for the per share merger consideration.
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LOST, STOLEN OR DESTROYED CERTIFICATES.
If you are the registered holder of a certificate representing shares of
Bangor Hydro common stock and the certificate has been lost, stolen or
destroyed, you can receive the merger consideration payable in exchange for
those shares by delivering to the paying agent an affidavit stating that the
certificate has been lost, stolen or destroyed. Before releasing the merger
consideration, Emera may require you to post a bond in a customary amount as
indemnity against any claim that may be made against Emera, Bangor Hydro or the
surviving company with respect to the missing certificate.
WITHHOLDING RIGHTS.
Emera and the surviving company are entitled to deduct and withhold from
payments of the merger consideration to you such amounts as are required to be
deducted and withheld by federal, state, local and foreign tax laws. For
purposes of the merger agreement and the payment of the merger consideration,
any amounts withheld for these reasons will be treated as having been paid to
you.
DO NOT FORWARD CERTIFICATES TO THE PAYING AGENT, EMERA OR BANGOR HYDRO UNTIL
YOU HAVE RECEIVED THE LETTER OF TRANSMITTAL. DO NOT RETURN CERTIFICATES WITH THE
ENCLOSED PROXY.
REPRESENTATIONS AND WARRANTIES
In the merger agreement, Bangor Hydro and Emera make representations and
warranties about themselves and their businesses.
Each party makes representations and warranties about the following:
- proper organization, good standing and qualification to do business;
- capital structure;
- authority to enter into, and enforceability of, the merger agreement;
- compliance with organizational documents, agreements and applicable laws;
- shareholder votes required to approve the merger;
- accuracy of information supplied for use in this proxy statement;
- ownership of stock in the other party;
- validity of its subsidiaries' stock and its ownership rights;
- filing of all required reports and financial statements and the accuracy
of information used in their preparation;
- regulation as a utility; and
- required third party consents and governmental approvals.
Bangor Hydro makes additional representations and warranties concerning the
following:
- absence of certain adverse changes or events;
- litigation;
- tax matters;
- employee matters and the Employee Retirement Income Security Act of 1974;
- environmental law compliance and liability;
- opinion of financial advisor;
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- the non-applicability of takeover laws;
- real property;
- certain material contracts with third parties; and
- nuclear facilities.
Emera additionally represents and warrants as to the availability of
financing to pay the consideration required by the merger agreement.
The representations and warranties made by the parties to the merger
agreement will not survive the merger.
COVENANTS
MUTUAL COVENANTS.
The parties have agreed to comply with the following covenants during the
period from the date of the merger agreement until the effective time of the
merger or until the merger agreement is terminated, except as otherwise
permitted in the merger agreement or by the written consent of the other party:
- they will, unless prohibited by law, promptly provide the other party with
copies of all filings with governmental authorities in connection with the
merger agreement;
- they and their subsidiaries will use all commercially reasonable efforts
to obtain all necessary consents to complete the merger, promptly notify
the other party of any failure or prospective failure to obtain these
consents, and, if requested by the other party, will provide copies of all
the consents that have been obtained;
- they and their subsidiaries will not willfully take any action that is
reasonably likely to result in a material breach of the merger agreement
or in any of their representations and warranties being untrue on and as
of the closing date; and
- they will not take any action that would cause the merger to be subject to
the requirements imposed by any applicable takeover law, and they will
take all necessary steps within their control to exempt (or ensure the
continued exemption of) the merger from any applicable takeover law.
COVENANTS OF BANGOR HYDRO.
Bangor Hydro has agreed that it and its subsidiaries will, during the period
from the date of the merger agreement until the effective time of the merger or
until the merger agreement is terminated (subject to certain exceptions stated
in the merger agreement):
- carry on their businesses in the ordinary course;
- preserve intact their business organizations, goodwill and relationships
with customers, suppliers and others having significant business dealings
with them;
- keep available the services of their present officers and employees as a
group (subject to prudent management of workforce needs and ongoing
programs currently in force);
- maintain their material properties and assets in as good repair and
condition as at present, and maintain supplies and inventories in
quantities consistent with past practice;
- comply in all material respects with all laws, orders and regulations of
all applicable governmental authorities;
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- abide by certain restrictions on their ability to do certain things,
including the following:
- declare or pay any dividends on or make other distributions in respect
of, any capital stock other than:
(A) dividends by a subsidiary to Bangor Hydro;
(B) regular dividends on Bangor Hydro's preferred stock;
(C) regular quarterly dividends on Bangor Hydro common stock that do
not exceed current regular dividends (provided, that Bangor Hydro
may increase the rate of such dividends to not more than $0.25
per quarter beginning on the first regular quarterly dividend
payment date in 2001); or
(D) if the effective time of the merger does not occur between a
record date and payment date of a regular quarterly dividend,
Bangor Hydro may declare and pay a special dividend on Bangor
Hydro common stock, at the then current quarterly rate, for the
period between such payment date and a special record date prior
to the date the merger becomes effective;
- split, combine or reclassify stock or issue other securities in
substitution for their shares of capital stock;
- redeem, repurchase or otherwise acquire any shares of their capital
stock (other than those in connection with dividend reinvestment plans,
cash payments to holders of Bangor Hydro warrants, or intercompany
acquisitions of capital stock);
- effect substantial equity and asset acquisitions and dispositions;
- incur capital expenditures in excess of a certain amount;
- discharge claims, liabilities or obligations;
- incur or guarantee indebtedness;
- enter into or amend employee benefit plans and other employment,
severance or other special pay arrangements;
- change their accounting method;
- modify, amend, terminate or renew material contracts or waive, release
or assign any material rights under them;
- make or rescind elections relating to taxes, settle tax claims, or
change their methods of reporting income or deductions for tax purposes;
- amend articles of organization, by-laws or regulations, or similar
organic documents, and take or fail to take actions which would
reasonably be expected to materially impede or interfere with the
merger;
- issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares or other securities convertible into rights, warrants or options
to acquire such shares or other securities other than in the case of
subsidiaries, for issuances of capital stock to Bangor Hydro or another
subsidiary; and
- negotiate collective bargaining agreements;
- maintain insurance in such amounts and against such risks and losses equal
at least to what is currently maintained by them;
- engage in activities that would cause a change in their status under the
1935 Act;
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- use reasonable efforts to maintain in effect all existing governmental
permits pursuant to which they operate, except for those permits which, if
lost, would not have a material adverse effect on them;
- confer regularly and frequently with representatives of Emera to discuss,
subject to applicable law, material operational and business matters;
- ensure that the entering into the merger agreement and the consummation of
the merger do not and will not result in the grant of any rights to any
person under any material agreement; and
- consult with Emera prior to implementing any material changes in rate
charges, standards of service or accounting, or executing any agreement
with respect thereto that is otherwise permitted under the merger
agreement, and deliver to Emera a copy in advance of each such filing or
agreement so that Emera may comment thereon.
COVENANTS OF EMERA.
Emera has agreed that prior to the effective time of the merger, except as
may be required by applicable law subject to other provisions stated in the
merger agreement, it shall cause a wholly-owned subsidiary of Emera to be formed
by Emera solely for the purpose of completing the merger with Bangor Hydro to:
- perform its obligations under the merger agreement; and
- not engage in any business or activities, not enter into any agreements or
arrangements, or be subject to or bound by any obligation or undertaking,
that would reasonably be expected to prevent Emera or such wholly-owned
subsidiary of Emera from performing their respective obligations under the
merger agreement.
Emera has also agreed to remain the indirect owner of 100% of such
wholly-owned subsidiary of Emera until the effective time of the merger.
NO SOLICITATION OF ALTERNATIVE PROPOSALS.
Bangor Hydro also agreed to certain restrictions concerning "Alternative
Proposals." An Alternative Proposal is defined in the merger agreement as a
merger, acquisition, consolidation, reorganization, share exchange, tender
offer, exchange offer or similar transaction involving Bangor Hydro, or any
proposal or offer to acquire in any manner, directly or indirectly:
- 10% or more of Bangor Hydro's outstanding common stock; or
- all or substantially all of the assets of Bangor Hydro and its
subsidiaries taken as a whole.
Specifically, Bangor Hydro agreed that:
- neither it nor its subsidiaries will knowingly encourage, initiate or
solicit any inquiries, proposals or offers that constitute, or may
reasonably be expected to lead to, an Alternative Proposal or engage in
any discussion or negotiations concerning, or provide any non-public
information or data to make or implement an Alternative Proposal (and
Bangor Hydro will also prevent its officers, directors, employees, agents
and representatives, as well as those of its subsidiaries, from doing any
of those things);
- it will immediately cease and cause to be terminated any then existing
solicitation, initiation, encouragement, activity, discussions or
negotiations with any parties existing at the date of the merger agreement
and conducted with a view of formulating an Alternative Proposal; and
- it will immediately notify Emera if it receives any such inquiries, offers
or proposals and it will keep Emera informed of their status.
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<PAGE>
Nonetheless, at any time before the Bangor Hydro shareholders vote to
approve the merger agreement, Bangor Hydro may take the following steps:
- Bangor Hydro may engage in discussions or negotiations with a third party
that seeks to initiate such discussions or negotiations, and may furnish
such third party with information concerning Bangor Hydro and its
business, properties and assets, but only if it complies with the
following requirements:
(i) the Bangor Hydro board of directors:
- concludes in good faith that the third party has made an Alternative
Proposal that is reasonably likely to be more favorable to Bangor
Hydro's shareholders than the merger, and has demonstrated that
adequate sources of financing to consummate the Alternative Proposal
will be available; and
- concludes in good faith, based upon the advice of outside counsel
and other relevant matters, that engaging in these discussions or
negotiations with the third party is necessary for the Bangor Hydro
board of directors to act in a manner consistent with its fiduciary
duties to shareholders under applicable law; and
(ii) before Bangor Hydro provides information to, or enters into
discussions or negotiations with, the third party, Bangor Hydro:
- promptly notifies Emera that it intends to furnish information to,
or intends to enter into discussions or negotiations with, that
third party;
- identifies the person or group making the Alternative Proposal and
its material terms; and
- receives from the third party an executed confidentiality agreement
in reasonably customary form except that the confidentiality
agreement with the third party shall not prohibit the third party
from making an unsolicited Alternative Proposal;
- Bangor Hydro may state its position to its shareholders in respect of a
tender or exchange offer in order to comply with Rule 14e-2 under the
Securities Exchange Act; and/or
- Bangor Hydro may accept an Alternative Proposal from a third party,
provided that it first terminates the merger agreement in accordance with
its terms, including the payment of the termination fee described below.
ADDITIONAL AGREEMENTS
In addition to the covenants above, the parties have also agreed on the
following matters.
ACCESS TO INFORMATION.
Until the effective time of the merger, upon reasonable notice and during
normal business hours, Bangor Hydro and its subsidiaries will afford Emera
reasonable access to all of its properties, books, contracts, commitments and
records. Bangor Hydro will afford this access:
- to the extent it is legally allowed to do so;
- to the extent this access does not constitute a waiver of the
attorney-client privilege;
- to the extent it does not unreasonably interfere with Bangor Hydro's
business and operations; and
- provided such right of access shall not include random environmental
testing with respect to the properties of Bangor Hydro or its
subsidiaries.
38
<PAGE>
In addition, until the effective time of the merger, Bangor Hydro and its
subsidiaries will promptly provide to Emera:
- access to each material report, schedule and other document that Bangor
Hydro or its subsidiaries filed or received under federal or state
securities laws or filed with or sent to any regulatory agency or
commission; and
- access to Bangor Hydro, its subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably requested by
Emera in connection with any filings, applications or approvals required
under the merger agreement.
Bangor Hydro will hold in strict confidence, and will cause its subsidiaries
and representatives to hold in strict confidence, all evaluation material (as
defined in the confidentiality and standstill agreement, dated March 28, 2000
between Bangor Hydro and Emera) concerning Emera furnished to it in connection
with the merger.
REGULATORY AND OTHER APPROVALS.
HSR FILINGS.
Bangor Hydro and Emera will file or cause to be filed with the Federal Trade
Commission and the Department of Justice any notifications required under the
HSR Act with respect to the merger and other transactions contemplated thereby,
and will use all commercially reasonable efforts to make such filings in a
timely manner and to respond on a timely basis to requests for additional
information.
Bangor Hydro and Emera will cooperate with each other and use their best
efforts to promptly prepare and file all necessary documentation to effect all
necessary applications, notices, petitions, filings and other documents, and
will use all commercially reasonable efforts to obtain the required governmental
consents no later than June 29, 2001 (as such date may be extended pursuant to
Section 9.01(b) of the merger agreement).
PUBLIC UTILITY HOLDING COMPANY ACT MATTERS.
Emera will register under Section 5 of the Public Utility Holding Company
Act, if such registration is necessary under applicable law for Emera to obtain
authorization from the SEC to consummate the merger, and/or to own Bangor Hydro
as a subsidiary after the merger. Emera will use commercially reasonable efforts
to complete all actions prior to June 29, 2001 with respect to its present and
proposed corporate, financial and business structure as may be necessary to
obtain the authorizations referred to above prior to June 29, 2001, as such date
may be extended pursuant to Section 9.01(b) of the merger agreement. Emera
agrees that each of its non-U.S. public utility company subsidiaries (and any
non-utility subsidiaries or businesses, if any, that Emera places under or
within any of the non-U.S. public utility company subsidiaries) will claim the
status of a "foreign utility company" under Section 33 of the Public Utility
Holding Company Act.
PROXY STATEMENT.
Bangor Hydro (with the cooperation of Emera) will prepare, file with the SEC
and distribute to its shareholders the proxy statement in accordance with
applicable federal and state law and with its Articles of Incorporation, as
amended, and by-laws.
SHAREHOLDER APPROVAL.
Bangor Hydro agreed to take all steps necessary to hold the special meeting
to obtain the necessary majority vote to approve the merger. Subject to its
fiduciary duties, the Bangor Hydro board
39
<PAGE>
of directors will recommend to the shareholders the approval of the merger
agreement, and cooperate and consult with Emera with respect to each of the
foregoing matters.
INDEMNIFICATION OF DIRECTORS AND OFFICERS AND INSURANCE.
See "The Merger--Interests of Certain Persons in the Merger--Indemnification
and Insurance," at page 28.
PUBLIC ANNOUNCEMENTS.
Subject to their legal obligations to disclose information, Bangor Hydro and
Emera will cooperate with each other in the development and distribution of all
news releases and other public information disclosures about the merger
agreement and the merger. In addition, they will not issue any public
announcement or statement concerning the merger without the consent of the other
party (which cannot be unreasonably withheld).
EMPLOYEE AGREEMENTS.
Except as provided below, Emera and the surviving company and its
subsidiaries will honor all contracts, agreements, collective bargaining
agreements and commitments of Bangor Hydro that were entered into before
June 29, 2000, that have been disclosed in the merger agreement and apply to
current or former employees and directors of Bangor Hydro.
Emera or the surviving company may also enforce such employment agreements
in accordance with their terms, including any rights of amendment, modification,
suspension, revocation or termination. Any workforce reductions affecting Bangor
Hydro employees carried out within the 12-month period following the effective
time of the merger by Emera or surviving company, will be done in accordance
with the merger agreement, the recommendations of the transition steering team,
and all applicable collective bargaining agreements and all laws and regulations
governing the employment relationship and termination thereof.
EMPLOYEE BENEFIT PLANS.
Emera must, directly or indirectly, provide the following employee benefits
to those employees of Bangor Hydro who continue to be employees of the surviving
company, Emera or their respective subsidiaries:
- for the 12 months immediately after the closing date, compensation,
benefits and coverage that are no less favorable in the aggregate than
those benefits provided immediately before the closing date;
- a severance benefit package to any Bangor Hydro employee whose employment
is terminated (other than for cause) by Emera, the surviving company or
their respective subsidiaries within 12 months following the closing date,
at least equal to the benefits provided by the Employee Transition Plan
approved by order of the Maine Public Utilities Commission dated
March 30, 1999;
- in addition to the foregoing severance package, for members of Bangor
Hydro's "Strategic Management Team" (not to exceed 25 persons) whose
benefits are not otherwise specified by contract and whose employment is
terminated by Emera, the surviving company or their respective
subsidiaries within 12 months following the closing date and prior to the
attainment by such persons of age 55, the entitlement to a pension benefit
at age 55 calculated as if such persons were eligible for "early
retirement" under the Bangor Hydro defined benefit plan pursuant to which
they are vested, and eligibility for medical and health care benefits;
40
<PAGE>
- full credit for years of service with Bangor Hydro or its subsidiaries for
the purposes of eligibility, vesting and determination of seniority-based
level of benefits under any employee benefit plans of Emera or the
surviving company in effect as of the closing date to the same extent
recognized by Bangor Hydro or its subsidiaries immediately prior to the
closing date, provided that such credit does not result in duplication of
benefits;
- credit for service in accordance with the terms of any employee benefit
plans established by Emera or the surviving company after the closing
date, provided, that employees of Bangor Hydro who continue to be
employees of the surviving company, Emera or their respective subsidiaries
are treated no less favorable than similarly situated employees of Emera
or its affiliates who are covered under the same or similar plans,
provided that such credit does not result in duplication of benefits;
- subject to applicable laws, credit for service prior to the closing date
for benefit accrual purposes that was counted for such purposes under the
Bangor Hydro defined benefit pension plan immediately prior to the closing
date, provided that such credit does not result in duplication of
benefits;
- waiver of all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
under any welfare benefit plan established to replace any Bangor Hydro
welfare benefit plans after the closing date, other than limitations or
waiting periods that are already in effect and that have not been
satisfied by the closing date; and
- credit for any co-payments and deductibles paid within the same plan year
as the closing date in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that are participated
in after the closing date.
EXPENSES.
Except as described under "Termination, Amendment, and Waiver" below, Bangor
Hydro and Emera will pay their own costs and expenses incurred in connection
with the merger.
FURTHER ASSURANCES.
Each party and its subsidiaries will execute additional documents and
instruments, and take all other actions the other party may reasonably request
in order to complete the merger in accordance with the merger agreement. The
parties also agreed that if the only barrier to completing the merger is the
inability to obtain governmental approvals and these approvals can be obtained
by adopting an alternative structure for the combination of Emera and Bangor
Hydro (that otherwise substantially preserves for Emera and Bangor Hydro the
economic benefits of the merger and does not require any additional filings
with, or authorizations, consents or approvals from, any governmental
authorities other than supplements or amendments to filings already made), then
the parties will use their commercially reasonable efforts to effect a business
combination among themselves by means of a mutually agreed upon structure other
than the merger that preserves the economic benefits of the merger.
COMMUNITY INVOLVEMENT.
After the effective time of the merger, Emera will permit the surviving
company to make charitable contributions to the communities served by it and
otherwise maintain a substantial level of involvement in community activities in
the State of Maine similar to, or greater than, the level of contributions,
community development and related activities currently carried on by Bangor
Hydro.
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<PAGE>
CORPORATE OFFICES.
For a period of not less than 10 years after the effective time of the
merger, the corporate headquarters of the surviving company will be located in
the State of Maine.
TRANSITION STEERING TEAM.
Emera and Bangor Hydro agreed that, as soon as reasonably practicable, they
would create a special transition steering team with representation from both
parties. The team will direct the exchange of information between Emera and
Bangor Hydro, develop recommendations concerning the future structure and
operations of Bangor Hydro after the effective time of the merger, and develop
regulatory plans and proposals, corporate organizational and management plans,
workforce combination proposals, and any other matters deemed appropriate. The
members of the transition steering team will be appointed by the chief executive
officers of Emera and Bangor Hydro.
CONDITIONS
MUTUAL CONDITIONS.
Before either Bangor Hydro or Emera will be obliged to complete the merger,
the following conditions must have been satisfied or waived:
- Bangor Hydro shareholders must have approved the merger agreement;
- Any waiting period (and any extension thereof) applicable to the merger
under the HSR Act must have expired or been terminated;
- No federal or state court has issued a temporary restraining order or
injunction that prevents consummation of the merger; and
- Bangor Hydro and Emera must have obtained the necessary governmental
approvals by the effective time of the merger and all applicable waiting
periods must have expired.
CONDITIONS TO OBLIGATIONS OF EMERA.
Before Emera will be obliged to complete the merger, the following
conditions must have been satisfied, or waived by Emera:
- Bangor Hydro must have performed in all material respects the agreements
and covenants required by the merger agreement;
- The representations and warranties of Bangor Hydro in the merger agreement
must be true and correct 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). The representations and warranties may contain inaccuracies if they
would not, individually and in the aggregate, reasonably be expected to
have a material adverse effect on Bangor Hydro and its subsidiaries taken
as a whole;
- Bangor Hydro must have provided Emera with a certificate, dated the
closing date and signed by Bangor Hydro's chief financial officer stating
that the two preceding conditions have been satisfied;
- Bangor Hydro has not suffered a material adverse effect, and there is no
fact or circumstance, other than those disclosed in Bangor Hydro's filings
with the SEC filed before June 29, 2000, that could reasonably be expected
to have a material adverse effect on Bangor Hydro and its subsidiaries
taken as a whole;
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<PAGE>
- The final order or orders of the Maine Public Utilities Commission with
respect to the merger must not impose terms or conditions specifically in
relation to the merger that, in the reasonable judgment of Emera, could be
expected to have a material adverse effect on the business, properties,
financial condition or results of operations of the surviving company and
its subsidiaries taken as a whole, if the merger were completed;
- The final order or orders of the SEC with respect to the merger and the
subsequent registration of Emera as a holding company under the Public
Utility Holding Company Act must not impose terms or conditions that, in
the reasonable judgment of Emera, would be expected to have a material
adverse effect on the business, properties, financial condition or results
of operations of Emera and its subsidiaries taken as a whole or the
surviving company and its subsidiaries taken as a whole;
- The final order or orders of the Federal Energy Regulatory Commission with
respect to the merger must not impose terms or conditions specifically in
relation to the merger that, in the reasonable judgment of Emera, could be
expected to have a material adverse effect on the business, properties,
financial condition or results of operations of Emera and its subsidiaries
taken as a whole or the surviving company and its subsidiaries taken as a
whole; and
- Bangor Hydro must have obtained the necessary third party consents.
CONDITIONS TO OBLIGATIONS OF BANGOR HYDRO.
Before Bangor Hydro is obliged to complete the merger, the following
conditions must have been satisfied, or waived by Bangor Hydro:
- Emera must have performed in all material respects the agreements and
covenants required by the merger agreement;
- The representations and warranties of Emera in the merger agreement must
be true and correct 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). The representations and warranties may contain inaccuracies if they
would not, individually and in the aggregate, reasonably be expected to
have a material adverse effect on Emera and its subsidiaries taken as a
whole; and
- Emera must have provided Bangor Hydro with a certificate, dated the
closing date and signed by the chief executive officer or chief financial
officer of Emera stating that the two preceding conditions have been
satisfied.
TERMINATION, AMENDMENT, WAIVER AND SUBMISSION TO JURISDICTION
TERMINATION.
The merger agreement may be terminated and the merger may be abandoned at
any time before the effective time of the merger, regardless of approval by the
shareholders of Bangor Hydro:
- by mutual written consent of the boards of directors of Bangor Hydro and
Emera;
- by either Bangor Hydro or Emera, if the merger has not become effective by
June 29, 2001 (or December 29, 2001, if the only barrier to the
consummation of the merger is the inability to obtain the requisite
regulatory approvals), so long as the party seeking termination has not
caused the delay by failing to fulfill its obligations under the merger
agreement;
- by either Bangor Hydro or Emera, by written notice to the other party, if
the approval of the Bangor Hydro shareholders has not been obtained at a
special meeting of Bangor Hydro shareholders or any adjournment thereof;
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<PAGE>
- by either Bangor Hydro or Emera, if any law, order, rule or regulation is
adopted or issued which effectively prohibits the merger (this
determination must be supported by the written opinion of outside
counsel), or if any court of competent jurisdiction issues a final and
nonappealable order, judgment or decree that permanently restrains,
enjoins or prohibits the merger. Bangor Hydro or Emera may not seek
termination, however, if they have not defended the lawsuit or proceeding
which prohibits the merger;
- by Bangor Hydro, upon 10 days' prior written notice to Emera, in order to
accept an Alternative Proposal, if the Bangor Hydro board of directors
determines, based upon the advice of outside counsel, that it is necessary
pursuant to its fiduciary duties to reconsider Bangor Hydro's binding
commitment to consummate an agreement of the nature of the merger
agreement as a result of the Alternative Proposal; provided, that before
so terminating, Bangor Hydro and its financial and legal advisors must
negotiate with Emera to adjust the terms and conditions of the merger
agreement so as to enable Bangor Hydro to proceed with the merger;
- by either Bangor Hydro or Emera, by written notice to the other, if there
has been any material breach by the other party of any representation,
warranty, covenant or agreement, and such breach has not been cured within
20 days of receiving written notice from the other party specifying the
nature of the breach and requesting that the breach be remied; and
- by Emera, by written notice to Bangor Hydro, if the Bangor Hydro board of
directors:
- withdraws or modifies its approval or recommendation of the merger
agreement or the transactions contemplated therein in any manner adverse
to Emera;
- approves or recommends an Alternative Proposal; or
- resolves to take any of the foregoing actions.
EFFECT OF TERMINATION.
Bangor Hydro and Emera have agreed that, if either of them terminates the
merger agreement for any of the reasons outlined above, the merger agreement
will become null and void, without any liability on the part of Emera or Bangor
Hydro or their officers or directors under the merger agreement. Even in this
case, however, the provisions in the merger agreement concerning expenses,
termination fees, the confidentiality agreement between Bangor Hydro and Emera,
submission to jurisdiction, waiver of jury trial and enforcement of the merger
agreement will remain in effect.
TERMINATION FEES.
Bangor Hydro will pay Emera a termination fee of $9.0 million plus up to
$1.5 million for reimbursement of documented out-of-pocket expenses:
- if Bangor Hydro terminates the merger agreement because it becomes the
target of an Alternative Proposal, and Bangor Hydro's board of directors
determines in good faith, based upon the advice of outside counsel, that
it is necessary, in order to act consistently with its fiduciary duties to
shareholders under applicable law, to terminate the merger agreement in
order to pursue the Alternative Proposal; or
- if at a time when an Alternative Proposal is pending, the merger agreement
is terminated:
(i) by Emera because the approval of Bangor Hydro's shareholders was
not obtained;
(ii) by Emera because the Bangor Hydro board of directors withdrew or
modified its approval or recommendation of the merger agreement in
a manner adverse to Emera, approved or recommended an Alternative
Proposal, or resolved to take any of the foregoing actions; or
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<PAGE>
(iii) by Bangor Hydro because the merger did not become effective by
June 29, 2001 (or December 29, 2001, if the only barrier to the
consummation of the merger is the inability to obtain the
requisite regulatory approvals)
AND Bangor Hydro enters into a definitive agreement with the party making
the Alternative Proposal within 1 year of termination of the merger agreement.
AMENDMENT.
The merger agreement may be amended by the boards of directors of Bangor
Hydro and Emera at any time before or after Bangor Hydro's shareholders have
voted to approve it and prior to the effective time of the merger. Amendments
made after such shareholder approval can only be made to the extent permitted by
applicable law. Amendments to the merger agreement must be in writing signed by
each of the parties.
WAIVER.
At any time before the effective time of the merger, Emera or Bangor Hydro
may, to the extent permitted by applicable law:
- extend the time for the performance of any of the obligations under the
merger agreement;
- waive any inaccuracies in the representations and warranties contained in
the merger agreement or in any document delivered pursuant thereto; and
- waive compliance with any of the agreements or conditions in the merger
agreement.
The agreement of a party to any such extension or waiver is valid only if it
is in writing and is signed on behalf of that party.
SUBMISSION TO JURISDICTION.
In connection with any dispute arising out of the merger agreement or any of
the transactions contemplated therein, each of Bangor Hydro and Emera submit for
itself and in respect of its property to the nonexclusive jurisdiction of any
court of the United States located in the State of New York and New York state
court.
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<PAGE>
SHARE OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following information pertains to the equity securities of Bangor Hydro
that, to the knowledge of Bangor Hydro, are beneficially owned, directly or
indirectly, individually and as a group, by all directors and executive officers
of Bangor Hydro, as of September 11, 2000, on which date there were outstanding
7,363,424 shares of Bangor Hydro common stock and 47,340 shares of Bangor Hydro
preferred stock.
Under the current rules of the SEC, a person who directly or indirectly has
or shares voting power and/or investment power with respect to a security is
considered a beneficial owner of the security. Voting power is the power to vote
or direct the vote of shares, and investment power is the power to dispose of or
direct the disposition of shares.
<TABLE>
<CAPTION>
DIRECTORS AND EXECUTIVE OFFICERS TITLE OF CLASS OF SHARES NO. OF SHARES*
-------------------------------- ------------------------ --------------
<S> <C> <C>
Robert S. Briggs..................................... Common Stock 6,644
Robert S. Briggs..................................... Preferred Stock 28
William C. Bullock, Jr............................... Common Stock 10,000
Jane J. Bush......................................... Common Stock 303
David M. Carlisle.................................... Common Stock 2,440
Joseph H. Cyr........................................ Common Stock 1,734
Marion M. Kane....................................... Common Stock 260
Paul A. LeBlanc...................................... Common Stock 455
Norman A. Ledwin..................................... Common Stock 180
Carroll R. Lee....................................... Common Stock 1,958
James E. Rier, Jr.................................... Common Stock 300
Frederick S. Samp.................................... Common Stock 814
Directors and Executive Officers as a group.......... Common Stock 25,088
Preferred Stock 28
</TABLE>
------------------------
* The number of shares of Bangor Hydro common stock and preferred stock owned
by the directors and executive officers of Bangor Hydro did not exceed,
individually or in the aggregate, 1% of the total shares then outstanding.
The following table shows, as of September 11, 2000, all persons who are
known to be the beneficial owners of more than 5% of any class of Bangor Hydro's
equity securities, and no independent inquiry has been made to determine whether
any shareholder is the beneficial owner of shares not registered in the name of
such shareholder or whether any shareholder is a member of a shareholder group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF
BENEFICIAL OWNER TITLE OF CLASS OF SHARES NO. OF SHARES SHARES
---------------------------------------- ------------------------ ------------- -------------
<S> <C> <C> <C>
FMR Corp.
82 Devonshire Street Common Stock 736,600 10.0%(1)
Boston, MA 02109
GAMCO Investors, Inc.,
Gabelli Funds, LLC and
related entities(2) Common Stock 430,700(3) 5.85%(3)
One Corporate Center
Rye, NY 10580
</TABLE>
------------------------
(1) According to schedule 13G filed with the SEC on February 11, 2000.
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<PAGE>
(2) Ten entities and two individuals were included in schedule 13D/A filed with
the SEC on August 14, 2000. In addition to the two entities listed above,
Gabelli Asset Management Inc., Gabelli Associates Limited, Gabelli
Associates Fund, Gabelli Performance Partnership L.P., Gabelli Fund, LDC,
Gabelli Advisers, Inc., Gabelli Foundation, Inc., Gabelli Group Capital
Partners, Inc., Marc J. Gabelli and Mario J. Gabelli were included. No
single entity or individual is the beneficial owner of more than 5% of
Bangor Hydro common stock. In the aggregate, these entities and individuals
exceed the 5% threshold.
(3) According to the 13D/A filing with the SEC.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements and the related financial statement
schedules as of December 31, 1999 and 1998 and for each year in the three-year
period ended December 31, 1999 incorporated by reference in this proxy statement
from the Bangor Hydro Annual Report on Form 10-K for the year ended
December 31, 1999 have been audited by PricewaterhouseCoopers LLP, independent
auditors, as stated in their reports, which are incorporated by reference
herein.
Representatives of PricewaterhouseCoopers LLP will be present at the special
meeting and will be available to respond to appropriate questions from
shareholders in attendance.
SHAREHOLDER PROPOSALS FOR THE YEAR 2001 ANNUAL MEETING
If the annual meeting of Bangor Hydro's shareholders for the Year 2001 is to
be held prior to the consummation of the merger, any proposal that you intend to
present at the Year 2001 Annual Meeting must be received by Andrew Landry,
Clerk, Bangor Hydro-Electric Company, 33 State Street, Bangor, Maine 04401 by no
later than December 15, 2000 in order to be included in the proxy statement and
form of proxy relating to that meeting. Under the rules of the SEC, in order to
be eligible to submit a proposal, you must have continuously held at least
$2,000 in market value, or 1%, of Bangor Hydro's shares for at least one year by
the date you submit the proposal, and you must continue to hold such shares
through the date of the meeting.
WHERE YOU CAN FIND MORE INFORMATION
Bangor Hydro is subject to the informational requirements of the Securities
Exchange Act, and files annual, quarterly and current reports, proxy statements,
and other information with the SEC. Anything Bangor Hydro files may be read and
copied at the following locations at the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
Room 1024, Judiciary Plaza Suite 1300 Citicorp Center
450 Fifth Street, N.W. 7 World Trade Center Suite 1400
Washington, DC 20549 New York, New York 10048 500 West Madison Street
Chicago, Illinois 60661-2511
</TABLE>
Please call the SEC at 1-800-732-0330 for further information on the public
reference rooms. Bangor Hydro's SEC filings should also be available to the
public from commercial document retrieval services and at the Internet
world-wide web site that the SEC maintains at http://www.sec.gov. In addition,
materials and information concerning Bangor Hydro can be inspected at the New
York Stock Exchange, 20 Broad Street, 7th Floor, New York, New York 10005, where
Bangor Hydro common stock is listed.
The SEC allows Bangor Hydro to "incorporate by reference" information into
this document, which means that Bangor Hydro can disclose important information
to you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be
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<PAGE>
part of this document, except for any information superseded by information
contained directly in, or incorporated by reference in, this document. This
document incorporates by reference the documents set forth below that were
previously filed with the SEC by Bangor Hydro (SEC File No. 0-505). These
documents contain important information about Bangor Hydro.
- Bangor Hydro's Annual Report on Form 10-K for the year ended December 31,
1999, as amended by Form 10-K/A filed on April 28, 2000;
- Bangor Hydro's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2000 and June 30, 2000; and
- Bangor Hydro's Current Report on Form 8-K dated July 13, 2000.
Bangor Hydro may file other documents pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act between the time this document is sent
to shareholders and the date the special meeting is held. These other documents
will be deemed to be incorporated by reference in this document and to be a part
of it from the date they are filed with the SEC.
YOU MAY OBTAIN ANY OF THE DOCUMENTS WE INCORPORATE BY REFERENCE THROUGH US,
THE SEC, OR THE SEC'S INTERNET WORLD-WIDE WEB SITE AS PREVIOUSLY DESCRIBED.
DOCUMENTS INCORPORATED BY REFERENCE ARE AVAILABLE FROM US WITHOUT CHARGE,
EXCLUDING ALL EXHIBITS UNLESS WE HAVE SPECIFICALLY INCORPORATED BY REFERENCE AN
EXHIBIT IN THIS DOCUMENT. YOU MAY OBTAIN DOCUMENTS INCORPORATED BY REFERENCE IN
THIS DOCUMENT BY REQUESTING THEM IN WRITING OR BY TELEPHONE FROM BANGOR HYDRO AT
THE FOLLOWING ADDRESS:
BANGOR HYDRO-ELECTRIC COMPANY
33 STATE STREET
BANGOR, MAINE 04401
ATTENTION: CLERK
TELEPHONE: (207) 945-5621
If you would like to request documents from Bangor Hydro, please do so
promptly in order to receive them before the special meeting.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS DOCUMENT TO VOTE ON THE MERGER AGREEMENT. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS
CONTAINED IN THIS DOCUMENT. THIS DOCUMENT IS DATED SEPTEMBER 15, 2000. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS DOCUMENT IS ACCURATE AS
OF ANY DATE OTHER THAN THIS DATE. NEITHER THE MAILING OF THIS DOCUMENT TO
SHAREHOLDERS NOR THE COMPLETION OF THE MERGER WILL CREATE ANY IMPLICATION TO THE
CONTRARY.
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<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BANGOR HYDRO-ELECTRIC COMPANY
AND
NS POWER HOLDINGS INCORPORATED
dated as of June 29, 2000
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.01 THE MERGER.................................................. A-1
Section 1.02 EFFECTS OF THE MERGER....................................... A-1
Section 1.03 EFFECTIVE TIME OF THE MERGER................................ A-1
Section 1.04 DIRECTORS................................................... A-1
Section 1.05 OFFICERS.................................................... A-2
ARTICLE II
TREATMENT OF SHARES
Section 2.01 EFFECT OF THE MERGER ON CAPITAL STOCK....................... A-2
Section 2.02 SURRENDER OF SHARES......................................... A-3
Section 2.03 WITHHOLDING RIGHTS.......................................... A-4
ARTICLE III
THE CLOSING
Section 3.01 CLOSING..................................................... A-4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01 ORGANIZATION AND QUALIFICATION.............................. A-5
Section 4.02 SUBSIDIARIES AND JOINT VENTURES............................. A-5
Section 4.03 CAPITALIZATION.............................................. A-5
Section 4.04 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.................................................. A-6
Section 4.05 REPORTS AND FINANCIAL STATEMENTS............................ A-7
Section 4.06 ABSENCE OF CERTAIN CHANGES OR EVENTS........................ A-8
Section 4.07 LITIGATION.................................................. A-8
Section 4.08 INFORMATION SUPPLIED........................................ A-8
Section 4.09 TAX MATTERS................................................. A-9
Section 4.10 EMPLOYEE MATTERS; ERISA..................................... A-10
Section 4.11 ENVIRONMENTAL PROTECTION.................................... A-13
Section 4.12 REGULATION AS A UTILITY..................................... A-15
Section 4.13 VOTE REQUIRED............................................... A-15
Section 4.14 OPINION OF FINANCIAL ADVISOR................................ A-15
Section 4.15 OWNERSHIP OF PARENT COMMON STOCK............................ A-15
Section 4.16 TAKEOVER PROVISIONS......................................... A-15
Section 4.17 NUCLEAR FACILITIES.......................................... A-16
Section 4.18 TITLE TO REAL PROPERTIES.................................... A-16
Section 4.19 MATERIAL CONTRACTS.......................................... A-16
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.01 ORGANIZATION AND QUALIFICATION.............................. A-18
Section 5.02 SUBSIDIARIES................................................ A-18
Section 5.03 CAPITALIZATION.............................................. A-18
Section 5.04 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.................................................. A-18
Section 5.05 REPORTS AND FINANCIAL STATEMENTS............................ A-19
Section 5.06 INFORMATION SUPPLIED........................................ A-20
Section 5.07 REGULATION AS A UTILITY..................................... A-20
Section 5.08 OWNERSHIP OF COMPANY COMMON STOCK........................... A-20
Section 5.09 FINANCING................................................... A-20
Section 5.10 VOTE REQUIRED............................................... A-20
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.01 COVENANTS OF THE PARTIES.................................... A-21
Section 6.02 COVENANT OF THE COMPANY; ALTERNATIVE PROPOSALS.............. A-24
Section 6.03 CONTROL OF OTHER PARTY'S BUSINESS........................... A-25
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 ACCESS TO INFORMATION....................................... A-25
Section 7.02 REGULATORY AND OTHER APPROVALS.............................. A-26
Section 7.03 SHAREHOLDER APPROVAL; PROXY STATEMENT....................... A-27
Section 7.04 DIRECTORS' AND OFFICERS' INDEMNIFICATION.................... A-27
Section 7.05 DISCLOSURE SCHEDULES........................................ A-28
Section 7.06 PUBLIC ANNOUNCEMENTS........................................ A-28
Section 7.07 CERTAIN EMPLOYEE AGREEMENTS AND ARRANGEMENTS................ A-28
Section 7.08 EMPLOYEE BENEFIT PLANS...................................... A-29
Section 7.09 EXPENSES.................................................... A-30
Section 7.10 FURTHER ASSURANCES.......................................... A-30
Section 7.11 CORPORATE OFFICES........................................... A-30
Section 7.12 COMMUNITY INVOLVEMENT....................................... A-30
Section 7.13 TRANSITION STEERING TEAM.................................... A-30
ARTICLE VIII
CONDITIONS
Section 8.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER...................................................... A-31
Section 8.02 CONDITIONS TO OBLIGATION OF PARENT TO EFFECT THE MERGER..... A-31
Section 8.03 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER...................................................... A-32
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01 TERMINATION................................................. A-32
Section 9.02 EFFECT OF TERMINATION....................................... A-34
Section 9.03 TERMINATION FEE; EXPENSES................................... A-34
Section 9.04 AMENDMENT................................................... A-34
Section 9.05 WAIVER...................................................... A-35
ARTICLE X
GENERAL PROVISIONS
Section 10.01 NON-SURVIVAL; EFFECT OF REPRESENTATIONS AND WARRANTIES...... A-35
Section 10.02 BROKERS..................................................... A-35
Section 10.03 NOTICES..................................................... A-35
Section 10.04 MISCELLANEOUS............................................... A-36
Section 10.05 INTERPRETATION.............................................. A-36
Section 10.06 COUNTERPARTS; EFFECT........................................ A-37
Section 10.07 PARTIES IN INTEREST......................................... A-37
Section 10.08 WAIVER OF JURY TRIAL........................................ A-37
Section 10.09 ENFORCEMENT; SUBMISSION TO JURISDICTION; WAIVER............. A-37
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings ascribed
to them in the corresponding Sections of this Agreement listed below:
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"1935 Act" -- Section 4.05
"Agreement" -- Preamble
"Alternative Proposal" -- Section 6.02
"Canceled Shares" -- Section 2.02(b)
"Certificates" -- Section 2.02(b)
"CFIUS" -- Section 7.02(b)
"Closing" -- Section 3.01
"Closing Agreement" -- Section 4.09(i)
"Closing Date" -- Section 3.01
"Code" -- Section 2.03
"Company" -- Preamble
"Company Common Stock" -- Section 2.01(b)
"Company Disclosure Schedule" -- Section 7.05(ii)
"Company Employee Benefit Plan" -- Section 4.10(a)
"Company Financial Statements" -- Section 4.05
"Company Material Adverse Effect" -- Section 4.01
"Company Material Contract" -- Section 4.19
"Company Preferred Stock" -- Section 4.03
"Company Required Consents" -- Section 4.04(b)
"Company Required Statutory Approvals" -- Section 4.04(c)
"Company SEC Reports" -- Section 4.05
"Company Shareholders' Approval" -- Section 4.13
"Company Special Meeting" -- Section 7.03(a)
"Confidentiality Agreement" -- Section 7.01
"Continuing Company Employees" -- Section 7.08(a)
"Disclosure Schedules" -- Section 7.05
"Dissenting Shares" -- Section 2.01(e)
"DOE" -- Section 4.05
"Effective Time" -- Section 1.03
"Environmental Claim" -- Section 4.11(g)(I)
"Environmental Law" -- Section 4.11(g)(ii)
"Environmental Permits" -- Section 4.11(b)
"ERISA" -- Section 4.10(a)
"ERISA Affiliate" -- Section 4.10(c)
"Exchange Act" -- Section 4.05
"Exchange Fund" -- Section 2.02(a)
"Exhibits" -- Section 10.05
"FCC" -- Section 4.05
"FERC" -- Section 4.05
"Final Order" -- Section 8.01(d)
"Governmental Authority" -- Section 4.04(c)
"Hazardous Materials" -- Section 4.11(g)(iii)
"HSR Act" -- Section 7.02(a)
"Indemnified Liabilities" -- Section 7.04(a)
"Indemnified Party" -- Section 7.04(a)
"Initial Termination Date" -- Section 9.01(b)
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"IRS" -- Section 4.10(a)
"joint venture" -- Section 4.02
"Liens" -- Section 4.04(b)
"Maine Yankee" -- Section 4.17
"MBCA" -- Section 1.02
"Merger" -- Section 1.01
"Merger Consideration" -- Section 2.01(c)
"Merger Sub" -- Preamble
"Merger Sub Common Stock" -- Section 5.03(b)
"MPUC" -- Section 4.05
"NRC" -- Section 4.17
"Parent" -- Preamble
"Parent Common Stock" -- Section 5.03(a)
"Parent Disclosure Schedule" -- Section 7.05(i)
"Parent Financial Statements" -- Section 5.05
"Parent Material Adverse Effect" -- Section 5.01
"Parent Preferred Stock" -- Section 5.03(a)
"Parent Reports" -- Section 5.05
"Parent Required Consents" -- Section 5.04(b)
"Parent Required Statutory Approvals" -- Section 5.04(c)
"Paying Agent" -- Section 2.02(a)
"PCBs" -- Section 4.11(g)(iii)(A)
"Per Share Amount" -- Section 2.01(c)
"Post Closing Plans" -- Section 7.08(b)
"Power Act" -- Section 4.05
"Proxy Statement" -- Section 4.08
"Releases " -- Section 4.11(g)(iv)
"Representatives" -- Section 7.01
"SEC" -- Section 4.05
"subsidiary" -- Section 4.01
"Surviving Corporation" -- Section 1.01
"Takeover Laws" -- Section 4.16
"Tax Return" -- Section 4.09
"Tax Ruling" -- Section 4.09(i)
"Taxes" -- Section 4.09
"Transition Steering Team" -- Section 7.13
"U.S. GAAP" -- Section 4.05
"Violation" -- Section 4.04(b)
"WARN Act" -- Section 4.10(m)
"Warrants" -- Section 4.03
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AGREEMENT AND PLAN OF MERGER, dated as of June 29, 2000 (this "Agreement"),
by and among Bangor Hydro-Electric Company, a Maine corporation (the "Company")
and NS Power Holdings Incorporated, a Nova Scotia company ("Parent").
WHEREAS, the Company and Parent have determined to engage in a business
combination transaction on the terms stated herein; and
WHEREAS, the Boards of Directors of the Company and Parent have approved and
deemed it advisable and in the best interests of their respective shareholders
to consummate the transactions contemplated hereby under which the businesses of
the Company and Parent would be combined by means of the merger of a
wholly-owned indirect subsidiary of Parent to be formed by Parent ("Merger Sub")
with and into the Company, with the Company being the surviving entity, as a
result of which Parent will own directly all of the outstanding shares of common
stock of the Company.
NOW THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.01 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.03), Merger Sub
shall be merged with and into the Company (the "Merger") in accordance with the
laws of the State of Maine. The Company shall be the surviving corporation in
the Merger and shall continue its corporate existence under the laws of the
State of Maine. The effects and the consequences of the Merger shall be as set
forth in Section 1.02. Throughout this Agreement, the term "Merger Sub" shall
refer to Merger Sub prior to the Merger and the term "Surviving Corporation"
shall refer to Company in its capacity as the surviving corporation in the
Merger.
Section 1.02 EFFECTS OF THE MERGER. At the Effective Time, (i) the
Articles of Incorporation, as amended, of the Company, as in effect immediately
prior to the Effective Time, shall be the articles of incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
articles of incorporation, and (ii) the by-laws of the Company, as in effect
immediately prior to the Effective Time, shall be the by-laws of the Surviving
Corporation until thereafter amended as provided by law, the articles of
incorporation of the Surviving Corporation and such by-laws. Subject to the
foregoing, the additional effects of the Merger shall be as provided in
Section 905 of the Maine Business Corporation Act (the "MBCA").
Section 1.03 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, on the Closing Date (as defined in Section 3.01), articles of
merger complying with Section 903 of the MBCA, with respect to the Merger, shall
be filed with the Secretary of the State of Maine. The Merger shall become
effective upon the filing of the articles of merger with the Secretary of the
State of Maine, or at such later date and time as may be set forth in the
articles of merger (the "Effective Time").
Section 1.04 DIRECTORS. There shall be at least nine members on the Board
of Directors of the Surviving Corporation as of the Effective Time. The initial
directors of the Surviving Corporation (at least four of whom shall be directors
of the Company immediately prior to the Effective Time) shall be designated in
writing by Parent before the Effective Time and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualified in the manner
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provided in the articles of incorporation and by-laws of the Surviving
Corporation, or as otherwise provided by the MBCA. In addition, as promptly as
reasonably practicable after the Effective Time, in accordance with the by-laws
of Parent, the Board of Directors of Parent shall increase by one the number of
directors on the Board of Directors of Parent and shall thereupon appoint as a
director, one director of the Company designated by Parent who is not a
full-time employee of the Surviving Corporation.
Section 1.05 OFFICERS. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of, and shall hold the same
positions with, the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualified in the manner provided in the articles of organization and by-laws
of the Surviving Corporation, or as otherwise provided by the MBCA.
ARTICLE II
TREATMENT OF SHARES
Section 2.01 EFFECT OF THE MERGER ON CAPITAL STOCK. At the Effective Time,
by virtue of the Merger and without any action on the part of any holder
thereof:
(a) Shares of Merger Sub Common Stock. Each share of common stock of
Merger Sub (the "Merger Sub Common Stock") that is issued and outstanding
immediately prior to the Effective Time shall be converted into one fully paid
and nonassessable share of common stock, no par value, of the Surviving
Corporation.
(b) Cancellation of Certain Company Common Stock. Each share of common
stock, par value $5.00 per share, of the Company (the "Company Common Stock")
that is owned by the Company as treasury stock and all shares of Company Common
Stock that are owned by Parent (if any) shall be canceled and shall cease to
exist, and no cash or other consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
Dissenting Shares (as defined in Section 2.01(e)) and shares to be canceled in
accordance with Section 2.01(b)) shall be canceled and converted in accordance
with the provisions of this Section 2.01 into the right to receive cash in U.S.
dollars in the amount (the "Per Share Amount") of $26.50, as such amount may
hereafter be adjusted in accordance with Section 2.01(d) hereof (the "Merger
Consideration"), payable, without interest, to the holder of such share of
Company Common Stock, upon surrender, in the manner provided in Section 2.02, of
the certificate formerly evidencing such share.
(d) Adjustment in Amount of Merger Consideration. In the event that
(i) the Closing Date (as defined in Section 3.01) shall not have occurred on or
prior to the date which is twelve (12) months from the date hereof, and
(ii) all conditions to closing of the Merger have been satisfied or are capable
of being satisfied except for (A) any Parent Required Statutory Approvals and/or
(B) the receipt of authorizations described in Section 7.02(c), then the Per
Share Amount shall be increased, for each day after such date up to and
including the day which is one day prior to the Closing Date, by an amount equal
to U.S.$.003.
(e) Dissenting Shares. Each outstanding share of Company Common Stock the
holder of which has perfected his right to dissent under applicable law and has
not effectively withdrawn or lost such right as of the Effective Time (the
"Dissenting Shares") shall not be converted into or represent a right to receive
the Merger Consideration, and the holder thereof shall be entitled only to such
rights as are
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granted by applicable law; provided, however, that any Dissenting Share held by
a person at the Effective Time who shall, after the Effective Time, withdraw the
demand for payment for shares or lose the right to payment for shares, in either
case pursuant to the MBCA, shall be deemed to be converted into, as of the
Effective Time, the right to receive cash pursuant to Section 2.01(c). The
Company shall give Parent prompt notice upon receipt by the Company of any such
written demands for payment of the fair value of such shares of Company Common
Stock and of withdrawals of such notice and any other instruments provided
pursuant to applicable law. Any payments made in respect of Dissenting Shares
shall be made by the Surviving Corporation.
(f) Shares of Company Preferred Stock. Each share of Company Preferred
Stock (as defined in Section 4.03) that is issued and outstanding immediately
prior to the Effective Time shall remain outstanding as one fully paid and
nonassessable share of preferred stock, par value $100 per share, of the
Surviving Corporation.
(g) Cancellation and Settlement with Respect to Warrants. From and after
the Effective Time, each Warrant (as defined in Section 4.03), whether vested or
unvested, shall entitle the holder thereof, in cancellation and settlement
therefor, to a payment in cash by the Company (less any applicable withholding
taxes), promptly following the Effective Time, equal to the product of (i) the
total number of shares of Company Common Stock then subject to such Warrant,
whether vested or unvested, and (ii) the excess, if any, of the Per Share Amount
over the exercise price per share of the Company Common Stock subject to such
Warrant.
Section 2.02 SURRENDER OF SHARES. (a) Deposit with Paying Agent. Prior to
the Effective Time, Parent or Merger Sub shall designate a bank or trust company
in the United States to act as agent (the "Paying Agent") for the benefit of the
holders of Company Common Stock to receive the funds to which holders of Company
Common Stock shall become entitled pursuant to Section 2.01(c) (the "Exchange
Fund"). From time to time at, immediately prior to or after the Effective Time,
Parent or Merger Sub shall make or cause to be made available to the Paying
Agent immediately available funds in amounts and at the times necessary for the
payment of the Merger Consideration upon surrender of Certificates (as defined
in Section 2.02(b)) in accordance with Section 2.02(b), it being understood that
any and all interest or other income earned on funds made available to the
Paying Agent pursuant to this Section 2.02(a) shall belong to and shall be paid
(at the time provided for in Section 2.02(e)) as directed by Parent or Merger
Sub. Any such funds deposited with the Paying Agent by Parent or Merger Sub
shall be invested by the Paying Agent as directed by Parent or Merger Sub.
(b) Exchange Procedure. As soon as practicable after the Effective Time,
the Paying Agent shall mail to each holder of record of a certificate or
certificates (the "Certificates") which immediately prior to the Effective Time
represented outstanding Company Common Stock (the "Canceled Shares") that were
canceled and became instead the right to receive the Merger Consideration
pursuant to Section 2.01(c): (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon actual delivery of the Certificates to the Paying Agent),
and (ii) instructions for effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate or
Certificates to the Paying Agent for cancellation (or to such other agent or
agents as may be appointed by Parent and are reasonably acceptable to the
Company), together with a duly executed letter of transmittal and such other
documents as the Paying Agent shall require, the holder of such Certificate or
Certificates shall be entitled to receive the Merger Consideration in exchange
for each share of Company Common Stock formerly evidenced by such Certificate or
Certificates which such holder has the right to receive pursuant to
Section 2.01(c). In the event of a transfer of ownership of Canceled Shares
which is not registered in the transfer records of the Company, the Merger
Consideration in respect of such Canceled Shares may be given to the transferee
thereof if the Certificate or Certificates representing such Canceled Shares is
presented
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to the Paying Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence satisfactory to the Paying Agent that any
applicable stock transfer taxes have been paid. At any time after the Effective
Time, each Certificate shall be deemed to represent only the right to receive
the Merger Consideration subject to and upon the surrender of such Certificate
as contemplated by this Section 2.02. No interest shall be paid or will accrue
on the Merger Consideration payable to holders of Certificates pursuant to
Section 2.01(c).
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid upon the surrender of Certificates in accordance with the
terms of Section 2.01(c) shall be deemed to have been paid at the Effective Time
in full satisfaction of all rights pertaining to the shares of Company Common
Stock represented thereby. From and after the Effective Time, the share transfer
books of the Company shall be closed and there shall be no further registration
of transfers thereon of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to Parent for any reason, they shall be
canceled and exchanged as provided in this Section 2.02.
(d) Lost, Stolen or Destroyed Certificates. In the event any owner of any
Certificate shall claim that such Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the owner of such
Certificate and delivery of that affidavit to the Paying Agent and, if required
by Parent or Merger Sub, the posting by such person of a bond in customary
amount as indemnity against any claim that may be made against Parent, the
Company or the Surviving Corporation with respect to such Certificate, the
Paying Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration payable upon due surrender of, and
deliverable pursuant to this Section 2.02 in respect of, the shares of Company
Common Stock to which such Certificate relates.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the shareholders of the Company for one (1) year after
the Effective Time shall be delivered to the Surviving Corporation upon demand,
and any shareholders of the Company who have not theretofore complied with this
Article II shall thereafter look only to the Surviving Corporation (subject to
abandoned property, escheat and other similar laws) as general creditors for
payment of their claim for the Merger Consideration payable upon due surrender
of the Certificates held by them. Neither Parent, Merger Sub nor the Surviving
Corporation shall be liable to any former holder of shares of Company Common
Stock for the Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
Section 2.03 WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Company Common Stock, such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code"),
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by the Surviving Corporation or Parent, as the case may be, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or Parent, as
the case may be.
ARTICLE III
THE CLOSING
Section 3.01 CLOSING. The closing of the Merger (the "Closing") shall take
place at the offices of Winthrop, Stimson, Putnam & Roberts, New York, New York,
at 10:00 a.m., New York City time, on the fifth business day immediately
following the date on which the last of the conditions set forth in
Article VIII hereof is fulfilled or waived (other than conditions that by their
nature are required to be performed on the Closing Date, but subject to
satisfaction of such conditions), or at such other time, date and place as the
Company and Parent shall mutually agree (the "Closing Date").
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
Section 4.01 ORGANIZATION AND QUALIFICATION. Except as set forth in
Section 4.01 of the Company Disclosure Schedule (as defined in
Section 7.05(ii)), the Company and each of its subsidiaries (as defined below)
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Maine, has all requisite corporate power and authority, and
has been duly authorized by all necessary approvals and orders, to own, lease
and operate its assets and properties to the extent owned, leased and operated
and to carry on its business as it is now being conducted and is duly qualified
and in good standing to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of its assets and properties makes such
qualification necessary, other than in such jurisdictions where the failure to
be so qualified and in good standing would not, when taken together with all
other such failures, reasonably be expected to have a material adverse effect on
the business, properties, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries taken as a whole or on the
consummation of the transactions contemplated by this Agreement (any such
material adverse effect being hereafter referred to as a "Company Material
Adverse Effect"). As used in this Agreement, the term "subsidiary" of a person
shall mean any corporation or other entity (including partnerships and other
business associations) of which a majority of the outstanding capital stock or
other voting securities having voting power under ordinary circumstances to
elect directors or similar members of the governing body of such corporation or
entity shall at the time be held, directly or indirectly, by such person. True
and complete copies of the Articles of Incorporation, as amended, and by-laws of
the Company as in effect on the date hereof, have been made available to Parent.
Section 4.02 SUBSIDIARIES AND JOINT VENTURES. Section 4.02 of the Company
Disclosure Schedule sets forth a description as of the date hereof, of all
subsidiaries and joint ventures of the Company, including the name of each such
entity, the state or jurisdiction of its incorporation or organization, the
Company's interest therein and a brief description of the principal line or
lines of business conducted by each such entity. Except as set forth in
Section 4.02 of the Company Disclosure Schedule, all of the issued and
outstanding shares of capital stock of each subsidiary of the Company are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. All of such shares, and the Company's outstanding equity interests in
the joint ventures listed on Section 4.02 of the Company Disclosure Schedule are
owned, directly or indirectly, by the Company free and clear of any liens,
claims, encumbrances, security interests, equities, charges and options of any
nature whatsoever, and there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating any subsidiary of the Company to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of its capital stock
or obligating the Company or any of any of its subsidiaries to grant, extend or
enter into any such agreement or commitment. As used in this Agreement, the term
"joint venture" of a person shall mean any corporation or other entity
(including partnerships and other business associations) that is not a
subsidiary of such person, in which such person or one or more of its
subsidiaries owns an equity interest, other than equity interests held for
passive investment purposes which are less than ten (10) percent of any class of
the outstanding voting securities or equity of any such entity.
Section 4.03 CAPITALIZATION. The authorized capital stock of the Company
consists of 10,000,000 shares of Company Common Stock and 600,000 shares of
preferred stock, par value $100 per share ("Company Preferred Stock"). As of the
date hereof, there were issued and outstanding 7,363,424 shares of Company
Common Stock and 47,340 shares of Company Preferred Stock. The
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shares of Company Preferred Stock are not listed for trading on any securities
exchange and the holders thereof have no rights to require the Company to obtain
such listing. All of the issued and outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid, nonassessable and free
of preemptive rights. Except for outstanding warrants to purchase Company Common
Stock on a one-for-one basis at a current exercise price of $7.00 per share of
Company Common Stock (subject to future adjustment), of which 1,503,215 are
outstanding as of the date hereof (the "Warrants"), there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating the Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of the Company, or obligating the
Company to grant, extend or enter into any such agreement or commitment. As of
the Effective Time, each Warrant will provide the Company with the exclusive
right, exercisable at its sole discretion, to pay cash upon any exercise thereof
in lieu of issuing Company Common Stock in the amount calculated pursuant to
such Warrant. Section 4.03 of the Company Disclosure Schedule sets forth the
dates the Warrants are exercisable and the expiration dates of the Warrants. A
true and accurate copy of the form of Warrant has been delivered to Parent.
Section 4.04 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE. (a) Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to obtaining the Company
Shareholders' Approval (as defined in Section 4.13) and the Company Required
Statutory Approvals (as defined in Section 4.04(c)), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company subject to obtaining the Company Shareholders' Approval with respect to
the consummation of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by the other signatories hereto,
constitutes a legal, valid and binding obligation of the Company enforceable
against it in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether such enforceability is considered in a proceeding
in equity or at law).
(b) Non-Contravention. Except as set forth in Section 4.04(b) of the
Company Disclosure Schedule, the execution and delivery of this Agreement by the
Company do not, and the consummation of the transactions contemplated hereby
will not, violate, conflict with, or result in a breach of any provision of, or
constitute a default (with or without notice or lapse of time or both) under, or
result in a right of termination, cancellation, or acceleration of any
obligation under, or the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance ("Liens") upon
any of the properties or assets of the Company, any of its subsidiaries or, to
the knowledge of the Company, any of its joint ventures (any such violation,
conflict, breach, default, right of termination, cancellation or acceleration,
loss or creation, a "Violation" with respect to the Company (such term when used
in Article V having a correlative meaning with respect to Parent)) pursuant to
any provisions of (i) the Articles of Incorporation or by-laws of the Company or
any of its subsidiaries or joint ventures, (ii) subject to obtaining the Company
Required Statutory Approvals and the receipt of the Company Shareholders'
Approval, any statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any Governmental Authority (as
defined in Section 4.04(c)) applicable to the Company or any of its
subsidiaries, or any of their respective properties or assets, or (iii) subject
to obtaining the third-party consents or other approvals set forth in Section
4.04(b) of the Company Disclosure Schedule (the "Company Required Consents"),
any note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which the Company or any of its subsidiaries or joint ventures is a
party or by which the Company or any of its subsidiaries or joint ventures or
any of their respective
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properties or assets may be bound or affected, excluding from the foregoing
clauses (ii) and (iii) such Violations as would not reasonably be expected to
have, in the aggregate, a Company Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section 4.04(c) of the
Company Disclosure Schedule, (i) no 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") and (ii) no declaration, filing or registration with,
or notice to any Governmental Authority (other than any declaration, filing or
registration with, or notice to any local Governmental Authority), is necessary
for the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, the failure
to obtain, make or give which would have, in the aggregate, a Company Material
Adverse Effect (the "Company Required Statutory Approvals").
(d) Compliance. Except as set forth in Section 4.04(d) or Section 4.11 of
the Company Disclosure Schedule, or as disclosed in the Company SEC Reports (as
defined in Section 4.05) filed prior to the date hereof, neither the Company,
any of its subsidiaries nor, to the knowledge of the Company, any of its joint
ventures is in violation of or has been given notice of any purported violation
of, any law, statute, order, rule, regulation or judgment (including, without
limitation, any applicable Environmental Law, as defined in
Section 4.11(g)(ii)) of any Governmental Authority (including, without
limitation, those Governmental Authorities identified in Section 4.05) except
for violations that, in the aggregate, are not reasonably expected to have a
Company Material Adverse Effect. Except as set forth in Section 4.04(d) or
Section 4.11 of the Company Disclosure Schedule, or as disclosed in the Company
SEC Reports filed prior to the date hereof, the Company, its subsidiaries and,
to the knowledge of the Company, its joint ventures have all permits, licenses,
franchises and other governmental authorizations, consents and approvals
necessary to conduct their respective businesses as currently conducted in all
respects, except those which the failure to obtain would, in the aggregate, not
reasonably be expected to have a Company Material Adverse Effect. The Company
and each of its subsidiaries are not in breach or violation of or in default in
the performance or observance of any term or provision of, and no event has
occurred which, with lapse of time (including, without limitation, the
expiration of a temporary waiver) or action by a third party, could result in a
default under, (i) its Articles of Incorporation 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 it is bound or to which any of its property is subject, except for
breaches, violations or defaults under the foregoing clause (ii) that, in the
aggregate, are not reasonably expected to have a Company Material Adverse
Effect.
(e) Except as set forth in Section 4.04(e) of the Company Disclosure
Schedule, there is no "non-competition" or other similar consensual contract or
agreement that restricts the ability of the Company, any of its subsidiaries or,
to the knowledge of the Company, any of its joint ventures to conduct any
business in any geographic area or that would reasonably be expected to restrict
the Surviving Corporation or any of its affiliates to conduct business in any
geographic area.
Section 4.05 REPORTS AND FINANCIAL STATEMENTS. The filings required to be
made by the Company or any of its subsidiaries since December 31, 1998 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Public
Utility Holding Company Act of 1935, as amended (the "1935 Act"), the Federal
Power Act, as amended (the "Power Act"), the Communications Act of 1934, and
applicable state laws and regulations have been filed with the Securities and
Exchange Commission (the "SEC"), the Federal Energy Regulatory Commission (the
"FERC"), the Department of Energy (the "DOE"), the Federal Communications
Commission (the "FCC") or any appropriate state public utilities commission
(including, without limitation, to the extent required, the Maine Public
Utilities Commission (the "MPUC")), as the case may be, including all forms,
statements, reports,
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agreements (oral or written) and all documents, exhibits, amendments and
supplements appertaining thereto, including, but not limited to, all rates,
tariffs, franchises, services agreements and related documents, and all such
filings complied, as of their respective dates, 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 form, report, schedule, registration statement,
registration exemption, if applicable, definitive proxy statement and other
document (together with all amendments thereof and supplements thereto) filed by
the Company or any of its subsidiaries with the SEC since December 31, 1998 (as
such documents have since the time of their filing been amended, the "Company
SEC Reports"), which are all the documents (other than preliminary materials)
that the Company and its subsidiaries were required to file with the SEC under
the Exchange Act, the Securities Act of 1933, as amended, and the 1935 Act since
such date. As of their respective dates, the Company SEC Reports (i) complied as
to form in all material respects with the requirements of the Exchange Act and
the 1935 Act, and (ii) did not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the audited consolidated financial statements and unaudited interim financial
statements (including, in each case, the notes, if any, thereto) included in the
Company SEC Reports (collectively, the "Company 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 U.S. generally
accepted accounting principles ("U.S. GAAP") applied on a consistent basis
during the periods involved (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 (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 the Company and its subsidiaries, taken as a whole)) the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of operations and cash flows for the
periods then ended. Except as set forth in Section 4.05 of the Company
Disclosure Schedule, each subsidiary of the Company is treated as a consolidated
subsidiary of the Company in the Company Financial Statements for all periods
covered thereby.
Section 4.06 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 4.06 of the Company Disclosure Schedule, since December 31, 1999, the
Company and each of its subsidiaries have conducted their business only in the
ordinary course of business consistent with past practice, and there has not
been, and no fact or condition exists which has or could reasonably be expected
to have, a Company Material Adverse Effect.
Section 4.07 LITIGATION. Except as disclosed in the Company SEC Reports
filed prior to the date hereof or as set forth in Section 4.07, Section 4.09 or
Section 4.11 of the Company Disclosure Schedule, (i) there are no claims, suits,
actions or proceedings, pending or threatened, nor are there any investigations
or reviews pending or threatened against, relating to or affecting the Company
or any of its subsidiaries (collectively, "Claims"), and (ii) there are no
judgments, decrees, injunctions, rules or orders of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
applicable to the Company or any of its subsidiaries, except (A) in the case of
new Claims or developments in existing Claims arising after the date hereof, and
(B) any of the foregoing under clause (ii), that individually or in the
aggregate would not reasonably be expected to have a Company Material Adverse
Effect.
Section 4.08 INFORMATION SUPPLIED. 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 proxy statement relating to the Company Special Meeting (as
defined in Section 7.03(a)), as amended or supplemented from time to time (as so
amended and supplemented, the "Proxy Statement"), and (ii) any other
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documents to be filed with the SEC (including, without limitation, under the
1935 Act) or any other Governmental Authority in connection with the Merger and
other transactions contemplated hereby shall, on the date of their respective
filings or, in the case of the Proxy Statement, on the date mailed to the
shareholders of the Company and on the date of the Company Special Meeting,
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided that no representation or
warranty is made by the Company with respect to statements made or incorporated
by reference in the Proxy Statement based on information supplied by Parent or
Merger Sub for inclusion or incorporation by reference therein. The Proxy
Statement and any other documents to be filed with the SEC (including, without
limitation, under the 1935 Act) or any other Governmental Authority in
connection with the Merger and other transactions contemplated hereby shall
comply as to form in all material respects with the requirements of the Exchange
Act, the 1935 Act, and applicable state laws and regulations.
Section 4.09 TAX MATTERS. "Taxes," as used in this Agreement, means any
federal, state, county, local or foreign taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income, sales
and use, ad valorem, transfer, gains, profits, excise, franchise, real and
personal property, gross receipts, capital stock, production, business and
occupation, environmental (including taxes under Section 59 of the Code),
disability, employment, social security, unemployment, payroll, license,
estimated, alternative or add-on minimum, stamp, registration, custom duties,
severance or withholding taxes or charges imposed by any governmental entity,
and includes any interest and penalties (civil or criminal) on or additions to
any such taxes, whether disputed or not, including any transferee liability with
respect of any of the foregoing. "Tax Return," as used in this Agreement, means
a report, return or other written information required to be supplied to a
governmental entity with respect to Taxes.
Except as disclosed in Section 4.09 of the Company Disclosure Schedule:
(a) Filing of Timely Tax Returns. The Company and each of its subsidiaries
have duly filed (or there has been filed on its behalf) within the time
prescribed by law all Tax Returns required to be filed by each of them under
applicable law. All such Tax Returns were and are in all material respects
complete and correct.
(b) Payment of Taxes. The Company and each of its subsidiaries have,
within the time and in the manner prescribed by law, paid all Taxes that are
currently due and payable except for those contested in good faith and for which
adequate reserves have been taken as reflected on the Company's Financial
Statements.
(c) Tax Reserves. The Company and each of its subsidiaries have recorded
on their books and records adequate reserves for all Taxes and for any liability
for deferred Taxes in accordance with U.S. GAAP.
(d) Extensions of Time for Filing Tax Returns. Neither the Company nor any
of its subsidiaries has requested any extension of time within which to file any
Tax Return, which Tax Return has not since been filed.
(e) Waivers of Statute of Limitations. Neither the Company nor any of its
subsidiaries has in effect any extension, outstanding waivers or comparable
consents regarding the application of the statute of limitations with respect to
any Taxes or Tax Returns.
(f) Expiration of Statute of Limitations. The Tax Returns of the Company
and each of its subsidiaries either have been examined and settled with the
appropriate Tax authority or closed by virtue of the expiration of the
applicable statute of limitations for all years through and including 1996.
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(g) Audit, Administrative and Court Proceedings. No material audits or
other administrative proceedings are presently pending or threatened with regard
to any Taxes or Tax Returns of the Company or any of its subsidiaries and no
issues have been raised in writing or orally by any Tax authority in connection
with any Tax or Tax Return.
(h) Tax Liens. There are no Tax liens upon any asset of the Company or any
of its subsidiaries except liens for Taxes not yet due.
(i) Tax Rulings. Neither the Company nor any of its subsidiaries has
received a Tax Ruling (as defined below) or entered into a Closing Agreement (as
defined below) with any taxing authority that would have a continuing adverse
effect after the Closing Date. "Tax Ruling," as used in this Agreement, shall
mean a written ruling of a taxing authority relating to Taxes. "Closing
Agreement," as used in this Agreement, shall mean a written and legally binding
agreement with a taxing authority relating to Taxes.
(j) Availability of Tax Returns. The Company has provided or made
available to Parent complete and accurate copies of (i) all Tax Returns, and any
amendments thereto, filed by the Company or any of its subsidiaries covering all
years ending on or after December 31, 1996, (ii) all audit reports and notices
of assessment received from any taxing authority relating to any Tax Return
filed by the Company or any of its subsidiaries covering all years ending on or
after December 31, 1996 and (iii) any Closing Agreements entered into by the
Company or any of its subsidiaries with any taxing authority since December 31,
1996.
(k) Tax Sharing Agreements. Neither the Company nor any of its
subsidiaries is a party to any agreement relating to allocating or sharing of
Taxes.
(l) Liability for Others. Neither the Company nor any of its subsidiaries
has any liability for any Taxes of any person other than the Company and its
subsidiaries (i) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), (ii) as a transferee or successor,
(iii) by contract or (iv) otherwise.
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 other
agreement or arrangement relating to employment or fringe benefits with or for
the benefit of any current or former employees or other personnel of the Company
or any of its subsidiaries or their dependents or beneficiaries effective as of
the date hereof 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, is in material compliance with applicable law, and has been
administered and operated in all material respects in accordance with its terms
and applicable law. All reports to governmental agencies and all disclosures to
participants and beneficiaries have been timely filed and distributed in
accordance with applicable law. Each Company Employee Benefit Plan which is
intended to be qualified within the meaning of Sections 401(a) and 501(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service (the "IRS") 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 materially adverse effect
on, the qualification of such plans.
(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 or insurance contracts, (ii) the
most current summary descriptions of each Company Employee Benefit Plan subject
to ERISA, (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
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of the IRS with respect to the qualified status of each Company Employee Benefit
Plan that is intended to qualify under Sections 401(a) and 501(a) of the Code,
(v) the most recent accountings with respect to each Company Employee Benefit
Plan funded through a trust or other funding arrangement, (vi) the most recent
actuarial report of the qualified actuary of each Company Employee Benefit Plan
with respect to which actuarial valuations are conducted and (vii) a summary of
any Company Employee Benefit Plan for which there are no written documents.
(c) Each Company Employee Benefit Plan subject to the requirements of
Section 601 of ERISA and Section 4980B of the Code has been operated in material
compliance therewith. Neither the Company nor any subsidiary has contributed to
a nonconforming group health plan (as defined in Code Section 5000(c)) and no
person under common control with the Company within the meaning of Section 414
of the Code ("ERISA Affiliate") has incurred a tax liability under Code Section
5000(a) that is or could reasonably be expected to become a liability of the
Company or any subsidiary.
(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 subsidiary (or former employees or dependents or
beneficiaries of any such employees or former employees) with respect to service
with the Company or a subsidiary.
(e) Except as set forth in Section 4.10(e) of the Company Disclosure
Schedule, neither the Company, any subsidiary, any ERISA Affiliate nor any other
corporation or organization controlled by or under common control with any of
the foregoing within the meaning of Section 4001 of ERISA is, or within the
six-year period preceding the date of this Agreement, was at any time obligated
to contribute to or otherwise was a party to any "multiemployer plan," as that
term is defined in Section 4001 of ERISA.
(f) No event has occurred, and there exists no condition or set of
circumstances under which the Company or any subsidiary, directly or indirectly
(through any indemnification agreement or otherwise), could be subject to any
liability under Section 302 of ERISA, Section 409 of ERISA, Section 502(i) of
ERISA, Title IV of ERISA, Section 412 of the Code or Section 4975 of the Code
or, to the knowledge of the Company, Section 406 of ERISA, except for instances
of non-compliance in connection with any Company Employee Benefit Plan which,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect. The Pension Plan for Bargaining Unit and Non-
Bargaining Unit Employees is fully funded on a plan termination basis.
(g) Neither the Company nor any ERISA Affiliate has incurred any liability
to the Pension Benefit Guaranty Corporation 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. As of the date of this
Agreement, no "reportable event" within the meaning of Section 4043 of ERISA has
occurred with respect to any Company Employee Benefit Plan that is a defined
benefit plan under Section 3(35) of ERISA. Each of the Company and any ERISA
Affiliate has paid all amounts due to the Pension Benefit Guaranty Corporation
pursuant to Section 4007 of ERISA.
(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 or can be included in the assets of any Company Employee Benefit
Plan.
(i) Full payment has been timely made of all contributions, insurance
premiums, benefits and other payments which the Company or any affiliate thereof
was required under the terms of any Company Employee Benefit Plan and/or
applicable law to have paid on or prior to the Effective Time (excluding any
amounts not yet due) and no Company Employee Benefit Plan which is subject to
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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 paid or payable under any Company Employee Benefit Plan or
other agreement, contract, or arrangement has failed or will fail to be
deductible for federal income tax purposes by virtue of Section 280G or Section
162(m) of the Code. No amount or any asset of any Company Employee Benefit Plan
or Company VEBA (as defined in Section 501(c)(9) of the Code) is subject to tax
as unrelated business taxable income.
(k) Except as set forth in Section 4.10(k) of the Company Disclosure
Schedule, there are no actions, suits or claims pending or, to the knowledge of
the Company, threatened (other than routine claims for benefits in the ordinary
course) with respect to any Company Employee Benefit Plan.
(l) Except as set forth in Section 4.10(l) of the Company Disclosure
Schedule, participants' rights in all terminated Company Employee Benefit Plans
qualified under the Code have been fully satisfied.
(m) The Company and its subsidiaries are parties to the collective
bargaining agreements described in Section 4.10(m) of the Company Disclosure
Schedule. True and complete copies of such collective bargaining agreements have
been provided to Parent. Except as set forth in Section 4.10(m) of the Company
Disclosure Schedule, since January 1, 1998, neither the Company nor any of its
subsidiaries has been a party to any collective bargaining agreement or other
labor contract. Except as set forth in Section 4.10(m) of the Company Disclosure
Schedule, since January 1, 1998, no labor organization or group of employees of
the Company or any of its subsidiaries has made a demand, and there is not now
pending any demand, for recognition or certification, and there has not been,
and there is not now, any representation or certification proceeding or petition
seeking a representation proceeding pending with the National Labor Relations
Board or any other labor relations tribunal or authority. To the knowledge of
the Company, no such proceeding or petition is threatened. Except as set forth
in Section 4.10(m) of the Company Disclosure Schedule, since January 1, 1998,
there has not been and there is not now any organizing activities, strikes, work
stoppages, slowdowns, lockouts, arbitrations or grievances, or other labor
disputes pending or, to the knowledge of the Company, threatened against or
involving the Company or any of its subsidiaries which could reasonably be
expected to have a Company Material Adverse Effect. Except as set forth in
Section 4.10(m) of the Company Disclosure Schedule, since January 1, 1998, each
of the Company and its subsidiaries has complied and is in compliance with, and
there are no outstanding orders or charges against the Company or any of its
subsidiaries regarding, all applicable laws and collective bargaining agreements
respecting labor, employment and employment practices, including, without
limitation, terms and conditions of employment, wages and hours, occupational
safety and health, equal employment opportunity, non-discrimination,
immigration, benefits, collective bargaining, and the payment of withholding and
similar taxes, except for non-compliances which, in the aggregate, could not
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth in Section 4.10(m) of the Company Disclosure Schedule, since January 1,
1998, there has not been and there is not now any arbitration proceedings
arising out of or under any collective bargaining agreement pending against the
Company or any of its subsidiaries, and there are no administrative charges,
grievances or court complaints, actions, investigations or litigation against
the Company or any of its subsidiaries concerning alleged employment
discrimination, labor relations, unfair labor practices or other employment
related matters pending or, to the knowledge of the Company, threatened before
the National Labor Relations Board, U.S. Equal Employment Opportunity Commission
or any other Governmental Authority. Except as set forth in Section 4.10(m) of
the Company Disclosure Schedule, neither the Company nor any of its subsidiaries
are in violation of the Federal Worker Adjustment and Retraining Notification
Act of 1988 (the "WARN Act") or 26 M.R.S.A. Section 625-B. The Company and its
subsidiaries have paid all levies, assessments and penalties pursuant to any
applicable workers' compensation legislation in jurisdictions in which the
Company and its subsidiaries conduct business.
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(n) Each Company VEBA (as defined in Section 501(c)(9) of the Code) is
exempt from federal income tax. No event has occurred and, to the knowledge of
the Company, no circumstance exists that will or could give rise to
disqualification or loss of tax-exempt status of any Company VEBA or related
trust.
(o) The most recent actuarial report for each Company's (or for any
subsidiary's) defined benefit pension plan fairly presents the financial
condition and the results of operations of each such plan in accordance with
GAAP. Since the last valuation of each such plan, no event has occurred or
circumstance exists that would increase the amount of benefits under such plan
or that would cause the excess of plan assets over benefit liabilities (as
defined in ERISA Section 4001) to decrease (other than decreases caused by
fluctuations in the market values of plan assets).
(p) Except to the extent required under ERISA Section 601 et seq. and
Section 4980B of the Code and except as set forth in Section 4.10(p) of the
Company Disclosure Schedule, the Company and its ERISA Affiliates are not
obligated to provide health or welfare benefits to any retired or former
employee or any active employee following such employee's retirement or other
termination of service, other than the benefits reflected in the FAS 106 report
dated January 4, 2000. Except as set forth in Section 4.10(p) of the Company
Disclosure Schedule, the liability of the Company or any ERISA Affiliate for
such post retirement benefits will not increase due to the merger contemplated
herein.
(q) The Company and its ERISA Affiliates have provided complete disclosure
of all material financial costs of all obligations owed under any Company
Employee Benefit Plan. Except as set forth in Section 4.10(q) of the Company
Disclosure Schedule, there are no costs or liabilities of any kind or nature,
either relating to pension or welfare benefit plans, not otherwise disclosed in
full on the audited financial statements of the Company and its affiliates as of
December 31, 1999, which exceed $500,000 for all such plans in the aggregate.
This provision shall include, but not be limited to, liabilities under
self-funded medical, disability or workers' compensation plans not covered by
insurance, so-called "incurred but not reported" or "IBNR" liabilities, unfunded
deferred compensation plans and similar employee benefit liabilities.
(r) The Company is not aware that any employee or director of the Company or
any of its subsidiaries is a party to, or is otherwise bound by, any agreement
or arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee, officer or director and any other
person or entity ("Proprietary Rights Agreement") that in any way adversely
affects or will affect (i) the performance of his duties as an employee, officer
or director of the Company or any of its subsidiaries, or (ii) the ability of
the Company or any of its subsidiaries to conduct its business. The Company has
not been informed that any director, officer, or other key employee of the
Company or any subsidiary intends to terminate his employment with such company.
Section 4.11 ENVIRONMENTAL PROTECTION. Except as set forth in Section 4.11
of the Company Disclosure Schedule or in the Company SEC Reports filed prior to
the date hereof:
(a) Compliance. The Company and each of its subsidiaries are in compliance
with all applicable Environmental Laws (as defined in Section 4.11(g)(ii))
except where the failure to be in such compliance would not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, and neither
the Company nor any of its subsidiaries has received any written communication
from any Governmental Authority that alleges that the Company or any of its
subsidiaries is not in compliance with applicable Environmental Laws.
(b) Environmental Permits. The Company and each of its subsidiaries have
obtained or have applied for renewals of all environmental, health and safety
permits and governmental authorizations (collectively, the "Environmental
Permits") necessary for the construction of their respective facilities or the
conduct of their respective operations, and all such Environmental Permits are
in good standing
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or, where applicable, a renewal application has been timely filed and is pending
agency approval, and the Company and its subsidiaries are in compliance with all
terms and conditions of the Environmental Permits, except where the failure to
obtain or to be in such compliance would not, in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(c) Environmental Claims; Judgments. There is no Environmental Claim (as
defined in Section 4.11(g)(i)) pending (i) against the Company or any of its
subsidiaries, or (ii) against any real or personal property or operations that
the Company or any of its subsidiaries owns, leases or manages, in whole or in
part that, if adversely determined, would reasonably be expected to have, in the
aggregate, a Company Material Adverse Effect. Neither the Company nor any of its
subsidiaries (i) has entered into or agreed to any consent decree or order, or
(ii) is subject to any judgment, decree or judicial order, in each case,
relating to compliance with any Environmental Law or to investigation or cleanup
of Hazardous Materials under any Environmental Law.
(d) CERCLA. Neither the Company nor any of its subsidiaries has received
any written request for information, or been notified (or otherwise has
knowledge) that the Company or any of its subsidiaries is a potentially
responsible party, under the Federal Comprehensive Environmental Response,
Compensation and Liability Act, as amended, or any similar state law.
(e) Releases. Except for Releases of Hazardous Materials the liability for
which would not reasonably be expected to have, in the aggregate, a Company
Material Adverse Effect, there have been no Releases (as defined in
Section 4.11(g)(iv)) of any Hazardous Material (as defined in
Section 4.11(g)(iii)) that would reasonably be expected to form the basis of any
Environmental Claim against the Company or any of its subsidiaries.
(f) Predecessors. The Company has no knowledge of any Environmental Claim
pending or threatened, or of any Release of Hazardous Materials that would
reasonably be expected to form the basis of any Environmental Claim, in each
case against any person or entity (including, without limitation, any
predecessor of the Company or any of its subsidiaries) whose liability the
Company or any of its subsidiaries has or may have retained or assumed either
contractually or by operation of law, except for Releases of Hazardous Materials
the liability for which would not reasonably be expected to have, in the
aggregate, a Company Material Adverse Effect.
(g) As used in this Agreement:
(i) "Environmental Claim" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, directives, claims,
liens, investigations, proceedings or notices of noncompliance or violation
by any person or entity (including any Governmental Authority) alleging
potential liability (including, without limitation, potential responsibility
for or liability for enforcement costs, investigatory costs, cleanup costs,
governmental response costs, removal costs, remedial costs,
natural-resources damages, property damages, personal injuries, fines or
penalties) arising out of, based on or resulting from (A) the presence, or
Release or threatened Release into the environment, of any Hazardous
Materials at any location, whether or not owned, operated, leased or managed
by the Company or any of their respective subsidiaries or joint ventures; or
(B) circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law; or (C) any and all claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation
or injunctive relief resulting from the presence or Release of any Hazardous
Materials.
(ii) "Environmental Laws" means all federal, state, local laws, rules,
ordinances and regulations, relating to pollution, the environment
(including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata) or protection of human health as it
relates to the environment including, without limitation, laws and
regulations relating to Releases
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or threatened Releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" means (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, coal tar residue, and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls ("PCBs") in regulated concentrations; and (B) any
chemicals, materials or substances which are now defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," "hazardous constituents" or words of
similar import, under any Environmental Law; and (C) any other chemical,
material, substance or waste, exposure to which is now prohibited, limited
or regulated under any Environmental Law in a jurisdiction in which the
Company or any of its subsidiaries or joint ventures operates or has stored,
treated or disposed of Hazardous Materials.
(iv) "Release" means any release, spill, emission, leaking, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
atmosphere, soil, surface water, groundwater or property.
Section 4.12 REGULATION AS A UTILITY. Except as set forth in Section 4.12
of the Company Disclosure Schedule, neither the Company nor any "subsidiary
company" or "affiliate" (as such terms are defined in the 1935 Act) of the
Company is subject to regulation as (i) a "holding company," a "public-utility
company," a "subsidiary company" or an "affiliate" of a "holding company,"
within the meaning of Sections 2(a)(7), 2(a)(5), 2(a)(8) or 2(a)(11),
respectively, of the 1935 Act, (ii) a "public utility" under the Power Act,
(iii) a "natural-gas company" under the Natural Gas Act, or (iv) a public
utility or public service company (or similar designation) by the federal
government of the United States, any state in the United States or any political
subdivision thereof, or by any foreign country.
Section 4.13 VOTE REQUIRED. A majority of the votes represented by the
outstanding shares of Company Common Stock and Company Preferred Stock, voting
together as a class, in favor of the Merger and the other transactions
contemplated hereby (the "Company Shareholders' Approval") is the only vote of
the holders of any class or series of the capital stock of the Company or any of
its subsidiaries required to approve this Agreement, the Merger and the other
transactions contemplated hereby.
Section 4.14 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Salomon Smith Barney Inc., dated the date of this Agreement, to the
effect that, as of such date, the Merger Consideration is fair from a financial
point of view to the holders of Company Common Stock. A true and complete copy
of the written opinion will be delivered to Parent promptly after receipt
thereof by the Company.
Section 4.15 OWNERSHIP OF PARENT COMMON STOCK. Except as set forth in
Section 4.15 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries "beneficially owns" (as such term is defined for purposes of
Section 13(d) of the Exchange Act) any shares of the capital stock of Parent.
Section 4.16 TAKEOVER PROVISIONS. The Company has taken all necessary
actions within its control so that this Agreement and the transactions
contemplated hereby are exempt from (i) the requirements of any "moratorium,"
"control share," "fair price" or other anti-takeover laws and regulations
(collectively, "Takeover Laws") of the State of Maine, including, without
limitation, Section 611-A and Section 910 of the MBCA, and (ii) the
anti-takeover provisions contained in the
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articles of organization of the Company. The Company is not a party to a
shareholders' rights plan or other similar anti-takeover agreement or
arrangement.
Section 4.17 NUCLEAR FACILITIES. The Company is a seven (7) percent common
stockholder of Maine Yankee Atomic Power Company ("Maine Yankee"), which owns a
nuclear generating plant in Wiscasset, Maine that has permanently ceased
operations and is in the process of being decommissioned. Maine Yankee holds its
own license from the Nuclear Regulatory Commission (the "NRC"). The Company does
not have responsibility for the operation of Maine Yankee, it being understood
that the Company maintains two (2) representatives on the Maine Yankee Board of
Directors. Except as set forth in Section 4.17 of the Company Disclosure
Schedule or in the Company SEC Reports filed prior to the date hereof, to the
knowledge of the Company, neither the Company, any of its subsidiaries nor Maine
Yankee, is in violation of any applicable health, safety, regulatory,
environmental or other legal requirements, including NRC laws and regulations,
applicable to Maine Yankee, except for such failure to comply that would not
reasonably be expected to have a Company Material Adverse Effect. To the
knowledge of the Company, Maine Yankee maintains emergency plans designed to
respond to an unplanned release therefrom of radioactive materials into the
environment and insurance coverages consistent with industry practice. The
Company has paid its portion of the decommissioning cost of Maine Yankee and the
storage of spent fuel billed to date consistent with the most recently approved
plan for Maine Yankee and FERC authorized rates. Except as set forth in
Section 4.17 of the Company Disclosure Schedule, to the knowledge of the
Company, Maine Yankee is not as of the date of this Agreement on the List of
Nuclear Power Plants Warranting Increased Regulatory Attention maintained by the
NRC.
Section 4.18 TITLE TO REAL PROPERTIES. To the knowledge of the Company,
the Company and each of its subsidiaries has good title to, or in the case of
leased property and assets have valid leasehold interests in, all real property
reflected on the Company Financial Statements or acquired after December 31,
1999, except for (i) properties sold since December 31, 1999 in the ordinary
course of business consistent with past practice, and (ii) such imperfections in
title and easements, if any, which (A) are not substantial in character, amount
or extent and do not materially detract from the value, or materially interfere
with the present use of the property subject thereto or affected thereby, or
(B) otherwise do not materially impair the Company's business operations. None
of such property is subject to any Lien, except:
(a) Liens disclosed in the Company Financial Statements;
(b) Liens for Taxes not yet due or being contested in good faith and for
which adequate accruals or reserves have been established on the Company
Financial Statements; or
(c) Liens which do not materially detract from the value or materially
interfere with any present use of such property or assets.
Section 4.19 MATERIAL CONTRACTS. (a) Except for purchase orders the
Company has provided Parent with a complete and accurate list of any of the
following to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound (each, a "Company Material
Contract"), together with copies thereof:
(i) all written management, compensation, employment or other contracts
entered into with any executive officer or director of the Company;
(ii) all contracts or arrangements under which the Company or any of its
subsidiaries has any outstanding indebtedness, obligation or liability for
borrowed money or the deferred purchase price of property or has the right
or obligation to incur any such indebtedness, obligation or liability, in
each case, in an amount greater than $200,000;
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(iii) all bonds or agreements of guarantee or indemnification in which
the Company or any of its subsidiaries acts as surety, guarantor or
indemnitor with respect to any obligation (fixed or contingent) in an amount
or potential amount greater than $100,000, other than any such bonds or
agreements entered into in connection with an asset or stock acquisition or
disposition made by the Company or any of its subsidiaries and other than
any such guarantees of the obligations of the Company or any of its
subsidiaries;
(iv) all non-competition agreements to which the Company or any of its
affiliates (other than any director of the Company) is a party;
(v) all partnership and joint venture agreements;
(vi) each other material contract or agreement listed as an exhibit to
the Company's most recent Annual Report on Form 10-K and the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000; and
(vii) all agreements relating to material business acquisitions or
dispositions during the last three years, including any separate tax or
indemnification agreements.
To the knowledge of the Company, no party to any Company Material Contract
(other than the Company and any of its subsidiaries) is in default in any
material respect under the terms of such Company Material Contract, and each
Company Material Contract is in full force and effect, except for any such
defaults or failures to be in full force and effect which, individually and in
the aggregate, would not reasonably be expected to result in a Company Material
Adverse Effect. To the Company's knowledge, the Company Material Contracts are
enforceable by the Company in accordance with their terms.
(b) Neither (i) any of the Company Material Contracts copies of which were
delivered to Parent or its advisors in the period June 26, 2000 through the date
hereof, nor (ii) any other Material Contracts amended, modified or affected in
any material respect by such first-mentioned Material Contracts,
(A) contains any restriction or prohibition, direct or indirect, on the
ability of the Company to pay dividends on the Company Common Stock,
(B) contains any waiver or forbearance of any covenant or restriction in
respect of indebtedness under which the Company is currently operating,
(C) obligates the Company to make any expenditure of funds outside of the
ordinary course of business,
(D) constitutes an incurrence of indebtedness not reflected on the Company
Financial Statements,
(E) constitutes a nuclear-related obligation (other than with respect to
Maine Yankee),
(F) results in the imposition of any taxes outside of the ordinary course of
business,
(G) contains any indemnities by the Company in favor of any third parties
(other than indemnities in favor of lenders and trustees customary in
financing transactions), or
(H) is a partnership or joint venture agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.01 ORGANIZATION AND QUALIFICATION. Except as set forth in
Section 5.01 of the Parent Disclosure Schedule (as defined in Section 7.05(i)),
Parent and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite corporate power and authority,
and has been duly authorized by all necessary approvals and orders, to own,
lease and operate its assets and properties to the extent owned, leased and
operated and to carry on its business as it is now being conducted and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its assets and properties
makes such qualification necessary, other than in such jurisdictions where the
failure to be so qualified and in good standing would not, when taken together
with all other such failures, reasonably be expected to have a material adverse
effect on the business, properties, condition (financial or otherwise) or
results of operations of Parent and its subsidiaries taken as a whole or on the
consummation of the transactions contemplated by this Agreement (any such
material adverse effect being hereafter referred to as a "Parent Material
Adverse Effect"). True and complete copies of the articles of organization and
by-laws of each of Parent and Merger Sub as in effect on the date hereof, have
been made available to the Company.
Section 5.02 SUBSIDIARIES. Section 5.02 of the Parent Disclosure Schedule
sets forth a description as of the date hereof of all material subsidiaries and
joint ventures of Parent, including the name of each such entity, the state or
jurisdiction of its incorporation or organization, Parent's interest therein,
and a brief description of the principal line or lines of business conducted by
each such entity. Except as set forth in Section 5.02 of the Parent Disclosure
Schedule, all of the issued and outstanding shares of capital stock of each
subsidiary of Parent are validly issued, fully paid, nonassessable and free of
preemptive rights, and are owned directly or indirectly by Parent free and clear
of any liens, claims, encumbrances, security interests, equities, charges and
options of any nature whatsoever, and there are no outstanding subscriptions,
options, calls, contracts, voting trusts, proxies, rights or warrants, including
any right of conversion or exchange under any outstanding security, instrument
or other agreement, obligating any such subsidiary of Parent to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of its
capital stock or obligating it to grant, extend or enter into any such agreement
or commitment, except for any of the foregoing that could not reasonably be
expected to have a Parent Material Adverse Effect.
Section 5.03 CAPITALIZATION. Except as set forth in Section 5.03 of the
Parent Disclosure Schedule, the authorized capital stock of Parent consists of
an unlimited number of shares of common stock, no par value, of Parent ("Parent
Common Stock"), and an unlimited number of shares of preferred stock, of Parent
("Parent Preferred Stock"). As of the close of business on June 21, 2000, there
were issued and outstanding 87,172,909.8462 shares of Parent Common Stock and no
shares of Parent Preferred Stock. All of the issued and outstanding shares of
the capital stock of Parent are validly issued, fully paid, nonassessable and
free of preemptive rights. Except as set forth in Section 5.03 of the Parent
Disclosure Schedule, as of the date hereof, there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating Parent or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of the capital stock of Parent, or obligating Parent to
grant, extend or enter into any such agreement or commitment.
Section 5.04 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE. (a) Authority. Each of Parent and Merger Sub has all requisite
corporate power
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and authority to enter into this Agreement and, subject to the applicable Parent
Required Statutory Approvals (as defined in Section 5.04(c)), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by each of Parent and Merger Sub, and the consummation by each of Parent and
Merger Sub of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of each of Parent and Merger Sub.
This Agreement has been duly and validly executed and delivered by each of
Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
each of Parent and Merger Sub enforceable against each of Parent and Merger Sub
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether such enforceability is considered in a proceeding
in equity or at law).
(b) Non-Contravention. Except as set forth in Section 5.04(b) of the
Parent Disclosure Schedule, the execution and delivery of this Agreement by each
of Parent and Merger Sub do not, and the consummation of the transactions
contemplated hereby will not, result in a Violation pursuant to any provisions
of (i) the articles of organization or by-laws of Parent or any of its
subsidiaries, (ii) subject to obtaining Parent Required Statutory Approvals (as
defined in Section 5.04(c)) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any Governmental
Authority applicable to Parent or any of its subsidiaries, or any of their
respective properties or assets, or (iii) subject to obtaining the third-party
consents or other approvals set forth in Section 5.04(b) of the Parent
Disclosure Schedule (the "Parent Required Consents"), any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which Parent
or any of its subsidiaries is a party or by which Parent or any of its
subsidiaries, or any of their respective properties or assets may be bound or
affected, excluding from the foregoing clauses (ii) and (iii) such Violations as
would not reasonably be expected to have, in the aggregate, a Parent Material
Adverse Effect.
(c) Statutory Approvals. Except as described in Section 5.04(c) of the
Parent Disclosure Schedule, no declaration, filing or registration with, or
notice to or authorization, consent or approval of, any Governmental Authority
is necessary for the execution and delivery of this Agreement by Parent or
Merger Sub or the consummation by Parent or Merger Sub of the transactions
contemplated hereby, the failure to obtain, make or give which would reasonably
be expected to have, in the aggregate, a Parent Material Adverse Effect (the
"Parent Required Statutory Approvals").
Section 5.05 REPORTS AND FINANCIAL STATEMENTS. The filings required by law
or regulation to be made by Parent or any of its subsidiaries since
December 31, 1998 have been filed with the appropriate Governmental Authority,
including all forms, statements, reports, agreements (oral or written) and all
documents, exhibits, amendments and supplements required by law or regulation
appertaining thereto, including, but not limited to, all rates, tariffs,
franchises, services agreements and related documents, and all such filings
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 form, report, schedule, registration statement,
registration exemption, if applicable, and other document (together with all
amendments thereof and supplements thereto) filed by Parent or any of its
subsidiaries with the Nova Scotia Securities Commission and The Toronto Stock
Exchange since December 31, 1998 (as such documents have since the time of their
filing been amended, the "Parent Reports"), which are all the documents (other
than preliminary materials) that Parent and its subsidiaries were required to
file by law or regulation since such date. As of their respective dates, the
Parent Reports (i) complied as to form in all material respects with all
applicable legal requirements, and (ii) did not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the audited consolidated financial statements and
unaudited interim financial statements (including, in each case,
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the notes, if any, thereto) included in the Parent Reports (collectively, the
"Parent Financial Statements") complied as to form in all material respects with
all applicable rules and regulations, were prepared in accordance with generally
accepted accounting principles of Parent's country of origin applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) 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 its subsidiaries, taken as a whole)) the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and the consolidated results of operations and cash flows
for the periods then ended. Except as set forth in Section 5.05 of the Parent
Disclosure Schedule, each subsidiary of Parent is treated as a consolidated
subsidiary of Parent in the Parent Financial Statements for all periods covered
thereby.
Section 5.06 INFORMATION SUPPLIED. None of the information supplied or to
be supplied by or on behalf of Parent or Merger Sub for inclusion or
incorporation by reference in (i) the Proxy Statement and (ii) any other
documents to be filed with the SEC (including, without limitation, under the
1935 Act) or any other Governmental Authority in connection with the Merger and
other transactions contemplated hereby shall, on the date of their respective
filings or, in the case of the Proxy Statement, at the date mailed to the
shareholders of the Company, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided
that no representation or warranty is made by Parent with respect to statements
made or incorporated by reference in the Proxy Statement based on information
supplied by the Company for inclusion or incorporation by reference therein. Any
documents to be filed with the SEC by or on behalf of Parent or Merger Sub
(including, without limitation, under the 1935 Act) or any other Governmental
Authority in connection with the Merger and other transactions contemplated
hereby shall comply as to form in all material respects with the requirements
of, as applicable, the 1935 Act, any applicable federal securities laws or state
or provincial laws and regulations.
Section 5.07 REGULATION AS A UTILITY. Except as set forth in Section 5.07
of the Parent Disclosure Schedule and without giving effect to the transactions
contemplated by this Agreement, neither Parent nor any "subsidiary company" (as
such term is defined in the 1935 Act) of Parent is subject to regulation as
(i) a "holding company," or a "public-utility company" or, to the actual
knowledge of Parent, a "subsidiary company" or an "affiliate" of a "holding
company," within the meaning of Sections 2(a)(7), 2(a)(5), 2(a)(8) or 2(a)(11),
respectively, of the 1935 Act, (ii) a "public utility" under the Power Act,
(iii) a "natural-gas company" under the Natural Gas Act, or (iv) a public
utility or public service company (or similar designation) by the federal
government of the United States, any state in the United States or any political
subdivision thereof, or by any foreign country or political subdivision thereof.
Section 5.08 OWNERSHIP OF COMPANY COMMON STOCK. Except as set forth in
Section 5.08 of the Parent Disclosure Schedule, Parent does not "beneficially
own" (as such term is defined for purposes of Section 13(d) of the Exchange Act)
any shares of Company Common Stock.
Section 5.09 FINANCING. Parent has sufficient funds available to it or has
received binding written commitments subject only to customary terms and
conditions from third parties to provide sufficient funds to pay the Merger
Consideration on the Closing Date and to consummate the Merger and other
transactions contemplated hereby.
Section 5.10 VOTE REQUIRED. Parent has approved the Merger, and such
approval is the only vote of the holders of any class or series of the capital
stock of Parent required to approve this Agreement, the Merger and the other
transactions contemplated hereby.
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ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.01 COVENANTS OF THE PARTIES. After the date hereof and prior to
the Effective Time or earlier termination of this Agreement, Parent and the
Company each agree as follows, each as to itself and to each of its
subsidiaries, except as expressly contemplated or permitted in this Agreement,
or to the extent the other parties hereto shall otherwise consent in writing:
(a) Ordinary Course of Business. The Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course
consistent with good utility or other practice, as applicable, and in
substantially the same manner as heretofore conducted. Without limiting the
generality of the foregoing, the Company shall, and shall cause its subsidiaries
to, use all commercially reasonable efforts to (i) preserve intact their present
business organizations and goodwill and preserve the goodwill and relationships
with customers, suppliers and others having significant business dealings with
them, (ii) subject to prudent management of workforce needs and ongoing programs
currently in force, keep available the services of their present officers and
employees as a group (provided that voluntary terminations of employment by
officers or employees shall not be deemed a violation of this susection),
(iii) maintain and keep material properties and assets in as good repair and
condition as at present, subject to ordinary wear and tear, and maintain
supplies and inventories in quantities consistent with past practice, and
(iv) comply in all material respects with all laws, orders and regulations of
all Governmental Authorities applicable to them.
(b) Dividends. The Company shall not, nor shall it permit any of its
subsidiaries to: (i) declare or pay any dividends on, or make other
distributions in respect of, any capital stock other than (A) dividends by a
direct or indirect subsidiary to the Company, (B) regular dividends on the
Company Preferred Stock, (C) regular quarterly dividends on Company Common Stock
that do not exceed the current regular dividends on Company Common Stock;
provided that, the Company may increase the rate of such dividends to not more
than $0.25 per quarter beginning on the first regular quarterly dividend payment
date in 2001, and (D) if the Effective Time does not occur between a record date
and payment date of a regular quarterly dividend, a special dividend on Company
Common Stock with respect to the quarter in which the Effective Time occurs with
a record date on or prior to the date on which the Effective Time occurs, which
does not exceed an amount equal to the product of (x) the number of days between
the last payment date of a regularly quarterly dividend and the record date of
such special dividend, multiplied by (y) the then-effective regular quarterly
dividend, (ii) split, combine or reclassify any capital stock or the capital
stock of any subsidiary or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of, or in substitution for, shares of
capital stock or the capital stock of any subsidiary, or (iii) redeem,
repurchase or otherwise acquire any shares of capital stock or the capital stock
of any subsidiary other than (A) acquisitions of shares of capital stock in
connection with the administration of the Company's dividend reinvestment plan
as in effect on the date hereof in the ordinary course consistent with past
practice, (B) cash payments to holders of Warrants in lieu of issuing Company
Common Stock upon exercise of such Warrants, or (C) intercompany acquisitions of
capital stock.
(c) Issuance of Securities. The Company shall not, nor shall it permit any
of its subsidiaries to, issue, agree to issue, deliver, sell, pledge, dispose of
or otherwise encumber any shares of their capital stock of any class or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares or convertible or exchangeable securities,
other than in the case of subsidiaries, for issuances of capital stock to the
Company or another subsidiary.
(d) Charter Documents; Other Actions. The Company shall not, nor shall it
permit any of its subsidiaries to, amend its respective articles of
organization, by-laws or regulations, or similar organic
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documents, and the Company shall not, nor shall it permit any of its
subsidiaries to take or fail to take any other action which would reasonably be
expected to prevent or materially impede or interfere with the Merger (except to
the extent permitted by Section 6.02 and Article IX).
(e) Acquisitions. Except as disclosed in Section 6.01(e) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
subsidiaries to, acquire or agree to acquire, by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or business organization or division thereof, or
otherwise acquire or agree to acquire any material amount of assets other than
(i) in the ordinary course of business, and (ii) acquisitions having an
aggregate acquisition consideration payable by the Company of not more than
$1,000,000. With respect to the acquisitions identified in Section 6.01(e) of
the Company Disclosure Schedule, the Company has provided Parent true and
complete copies of any existing relevant agreement relating thereto.
(f) Capital Expenditures. Except (i) as may be required by law or (ii) as
reasonably deemed necessary by the Company following a catastrophic event, the
Company shall not, nor shall it permit any of its subsidiaries to, make capital
expenditures in excess of 110% of the aggregate amount budgeted by the Company
or its subsidiaries for capital expenditures as set forth in Section 6.01(f) of
the Company Disclosure Schedule.
(g) No Dispositions. Except as set forth in Section 6.01(g) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
subsidiaries to, sell, lease, or otherwise dispose of, any of its respective
assets, other than (i) encumbrances or dispositions in the ordinary course of
business consistent with past practice, and (ii) dispositions of assets having
an aggregate fair market value of not more than $500,000.
(h) Indebtedness. Except as set forth in Section 6.01(h) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
subsidiaries to, incur or guarantee any indebtedness for borrowed money
(including any such debt guaranteed or otherwise assumed including, without
limitation, the issuance of debt securities or warrants or rights to acquire
debt) or enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, other than (i) short-term indebtedness
and "keep well" or similar assurances for the benefit of customers, in each case
in the ordinary course of business consistent with past practice,
(ii) arrangements between the Company and its subsidiaries or among its
subsidiaries, or (iii) after prior consultation with Parent, indebtedness to the
extent necessary to repay maturing debt in accordance with its terms.
(i) Compensation; Benefits. Except as set forth in Section 6.01(i) of the
Company Disclosure Schedule, or as may be required by applicable law or
collective bargaining agreements in effect on the date hereof, the Company shall
not, nor shall it permit any of its subsidiaries to, (i) enter into, adopt or
amend or increase the amount or accelerate the payment or vesting of any benefit
or amount payable under any employee benefit plan, or otherwise increase the
compensation or benefits of any director, officer or other employee of the
Company or any of its subsidiaries, except for normal increases in compensation
and benefits in the ordinary course of business consistent with past practice
that, with respect to employees who are not officers, in the aggregate, do not
result in an increase in benefits or compensation expense to the Company or any
of its subsidiaries in excess of five (5) percent per year, or (ii) enter into
or amend any employment, severance or special pay arrangement with respect to
the termination of employment or other similar contract, agreement or
arrangement with any director or other employee other than with respect to
employees who are not officers of the Company in the ordinary course of business
consistent with current industry practice not to exceed $300,000 in the
aggregate. Prior to the Closing Date, the Company shall take all necessary
actions in a manner satisfactory to Parent, so that at and after the Closing
Date, none of the capital stock or securities of the Company, the Surviving
Corporation or their subsidiaries will be required to be held in, or
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distributed pursuant to, any of the Company's employee benefit plans or
employment or similar contracts, agreements or arrangements with any director or
other employee.
(j) Labor Matters. Notwithstanding any other provision in this Agreement
to the contrary, the Company and its subsidiaries may negotiate successor
collective bargaining agreements to the agreements identified in Section
4.10(m), and may negotiate other collective bargaining agreements or
arrangements as required by law or for the purpose of implementing such
agreements. The Company will keep Parent informed as to the status of, and will
consult with Parent as to the strategy for, all negotiations with collective
bargaining representatives. The Company and its subsidiaries shall act prudently
and reasonably and consistent with their obligation under applicable law in such
negotiations.
(k) 1935 Act. Except as required or contemplated by this Agreement, the
Company shall not, nor shall it permit any of its subsidiaries to, engage in any
activities which would cause a change in its status, or that of its
subsidiaries, under the 1935 Act.
(l) Accounting. The Company shall not, nor shall it permit any of its
subsidiaries to, make any changes in their accounting methods, except as
required by law, rule, regulation or U.S. GAAP.
(m) Cooperation; Notification. The Company shall, and shall cause its
subsidiaries to, (i) confer on a regular and frequent basis with one or more
representatives of Parent to discuss, subject to applicable law, material
operational and business matters, (ii) promptly notify Parent of any significant
changes in its business, properties, assets, condition (financial or other),
results of operations or prospects, and (iii) advise Parent of any change or
event which has had or could reasonably be expected to result in a Company
Material Adverse Effect. Each party will promptly provide the other party with
copies of all filings made by such party or any of its subsidiaries with any
state or federal court, administrative agency, commission or other Governmental
Authority in connection with this Agreement and the transactions contemplated
hereby; provided that no party shall be required to make any disclosure to the
extent such disclosure would constitute a violation of any applicable law or
regulation.
(n) Third-Party Consents. The Company shall, and shall cause its
subsidiaries to, use all commercially reasonable efforts to obtain all the
Company Required Consents. The Company shall promptly notify Parent of any
failure or prospective failure to obtain any such consents and, if requested by
Parent shall provide copies of all the Company Required Consents obtained by the
Company to Parent. Parent shall, and shall cause its subsidiaries to, use all
commercially reasonable efforts to obtain all Parent Required Consents. Parent
shall promptly notify the Company of any failure or prospective failure to
obtain any such consents and, if requested by the Company, shall provide copies
of all Parent Required Consents obtained by Parent to the Company.
(o) No Breach, Etc. No party shall, nor shall any party permit any of its
subsidiaries to, willfully take any action that would or reasonably be expected
to result in a material breach of any provision of this Agreement or in any of
its representations and warranties set forth in this Agreement being untrue on
and as of the Closing Date.
(p) Discharge of Liabilities. The Company shall not pay, discharge or
satisfy any material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of business consistent with
past practice (which includes the payment of final and unappealable judgments)
or in accordance with their terms, of liabilities reflected or reserved against
in, or contemplated by, the most recent consolidated financial statements (or
the notes thereto) of the Company included in the Company's reports filed with
the SEC, or incurred in the ordinary course of business consistent with past
practice.
(q) Contracts. Except as set forth in Section 6.01(q) of the Company
Disclosure Schedule, the Company shall not, except in the ordinary course of
business consistent with past practice, modify,
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amend, terminate, renew or fail to use reasonable business efforts to renew any
material contract or agreement to which the Company or any of its subsidiaries
is a party or waive, release or assign any material rights or claims.
(r) Insurance. The Company shall, and shall cause its subsidiaries to,
maintain with financially responsible insurance companies, insurance in such
amounts and against such risks and losses as are at least equal to what is
currently maintained by the Company and described in Section 6.01(r) of the
Company Disclosure Schedule.
(s) Permits. The Company shall, and shall cause its subsidiaries to, use
reasonable efforts to maintain in effect all existing governmental permits
pursuant to which the Company or any of its subsidiaries operate except for
those permits the expiration or termination of which would not reasonably be
expected to have a Company Material Adverse Effect.
(t) Takeover Laws. Neither party shall take any action that would cause
the transactions contemplated by this Agreement to be subject to requirements
imposed by any Takeover Law, and each of them shall take all necessary steps
within its control to exempt (or ensure the continued exemption of) the
transactions contemplated by this Agreement from any applicable Takeover Law.
(u) No Rights Triggered. The Company shall ensure that the entering into
of this Agreement and the consummation of the transactions contemplated hereby
do not and will not result, directly or indirectly, in the grant of any rights
to any person under any material agreement (other than the agreements disclosed
in Section 6.01(u) of the Company Disclosure Schedule) to which it or any of its
subsidiaries is a party.
(v) Taxes. The Company shall not, and shall cause its subsidiaries not to,
(i) make or rescind any express or deemed material election relating to Taxes,
(ii) settle or compromise any claim, audit, dispute, controversy, examination,
investigation or other proceeding relating to Taxes, or (iii) change any of its
methods of reporting income or deductions for Tax purposes, except as may be
required by applicable law.
(w) Organization and Conduct of Business of Merger Sub. As soon as
reasonably practicable following the date hereof, Parent will take all necessary
action to incorporate Merger Sub under the laws of a state of the United States
as an indirect wholly-owned subsidiary of Parent. Prior to the Effective Time,
except as may be required by applicable law and subject to the other provisions
of this Agreement, Parent 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 activities of any type or kind and not enter
into any agreements or arrangements with any person, or be subject to or bound
by any obligation or undertaking, which would reasonably be expected to prevent
Parent or Merger Sub from performing their respective obligations under this
Agreement. Parent will remain the indirect owner of 100% of Merger Sub until the
Effective Time.
(x) Regulatory 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 implementing any
material changes in its or any of its subsidiaries' rates or charges, standards
of service or accounting or executing any agreement with respect thereto that is
otherwise permitted under this Agreement, and the Company shall, and shall cause
its subsidiaries to, deliver to Parent a copy of each such filing or agreement
prior to the filing or execution thereof so that Parent may comment thereon.
Section 6.02 COVENANT OF THE COMPANY; ALTERNATIVE PROPOSALS. From and
after the date hereof, the Company agrees (a) that it and its subsidiaries will
not, and it will use its best efforts to cause its and its subsidiaries'
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
subsidiaries or any
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of the foregoing) not to, directly or indirectly, knowingly encourage, initiate
or solicit (including by way of furnishing information) any inquiries or the
making of any proposal or offer (including, without limitation, any proposal or
offer to its shareholders) which constitutes or may reasonably be expected to
lead to an Alternative Proposal (as defined below) from any person or engage in
any discussion or negotiations concerning, or provide any non-public information
or data to make or implement an Alternative Proposal, (b) that it will
immediately cease and cause to be terminated any existing solicitation,
initiation, encouragement, activity, discussions or negotiations with any
parties conducted heretofore with a view of formulating an Alternative Proposal,
and (c) that it will immediately notify Parent orally and in writing of the
receipt of any such inquiry, offer or proposals, and that it shall keep Parent
informed of the status of any such inquiry, offer or proposal.
Notwithstanding any other provision hereof, the Company may at any time
prior to the time the shareholders of the Company shall have voted to approve
this Agreement (i) engage in discussions or negotiations with a third party who,
without solicitation in violation of the terms hereof, seeks to initiate such
discussions or negotiations and may furnish such third party information
concerning the Company and its business, properties and assets if, and only to
the extent that, (A)(x) the third party has first made an Alternative Proposal
that, in the good faith judgment of the Company Board of Directors, is likely to
be more favorable to the shareholders of the Company than the Merger, and has
demonstrated that it will have adequate sources of financing to consummate such
Alternative Proposal, and (y) the Company Board of Directors shall conclude in
good faith, based upon the advice of outside counsel and such other matters as
the Company Board of Directors deems relevant, that such actions are necessary
for the Company Board of Directors to act in a manner consistent with its
fiduciary duties to shareholders under applicable law, and (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, the Company (x) provides prompt written notice to
Parent to the effect that it intends to furnish information to, or intends to
enter into discussions or negotiations with, such person or entity, and of the
identity of the person or group making the Alternative Proposal and the material
terms thereof, and (y) receives from such person an executed confidentiality
agreement in reasonably customary form except that such confidentiality
agreement shall not prohibit such person from making an unsolicited Alternative
Proposal, (ii) comply with Rule 14e-2 promulgated under the Exchange Act with
regard to a tender or exchange offer, and/or (iii) accept an Alternative
Proposal from a third party, provided the Company terminates this Agreement
pursuant to Section 9.01(e). "Alternative Proposal" shall mean any merger,
acquisition, consolidation, reorganization, share exchange, tender offer,
exchange offer or similar transaction involving the Company or any proposal or
offer to acquire in any manner, directly or indirectly (x) ten (10) percent or
more of the outstanding Company Common Stock, or (y) all or a substantial
portion of the assets of the Company and its subsidiaries taken as a whole.
Nothing herein shall prohibit a disposition permitted by Section
6.01(g) hereof.
Section 6.03 CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control or
direct the Company's operations prior to the Effective Time. Nothing contained
in this Agreement shall give the Company, directly or indirectly, the right to
control or direct Parent's operations prior to the Effective Time. Prior to the
Effective Time, each of the Company and Parent shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its respective operations.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 ACCESS TO INFORMATION. Upon reasonable notice and during
normal business hours, the Company shall, and shall cause its subsidiaries to,
afford to the officers, directors,
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employees, agents and accountants of Parent (collectively, "Representatives")
reasonable access, throughout the period prior to the Effective Time, to all of
its properties, books, contracts, commitments and records to the extent that the
Company or any of its subsidiaries is not under a legal obligation not to
provide access or to the extent that such access would not constitute a waiver
of the attorney-client privilege and does not unreasonably interfere with the
business and operations of the Company; provided that such right of access shall
not include random environmental testing with respect to any properties of the
Company or its subsidiaries. During such period, the Company shall, and shall
cause its subsidiaries to, furnish promptly to Parent (i) access to each
material report, schedule and other document filed or received by it or any of
its subsidiaries pursuant to the requirements of federal, state or provincial
securities laws or filed with or sent to the SEC, the FERC, the Department of
Justice, the Federal Trade Commission or any other Governmental Authority, and
(ii) access to the Company, its subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably requested by Parent in
connection with any filings, applications or approvals required or contemplated
by this Agreement. The Company shall, and shall cause its subsidiaries and
Representatives to, hold in strict confidence all Evaluation Material (as
defined in the Confidentiality and Standstill Agreement) concerning Parent
furnished to it in connection with the transactions contemplated by this
Agreement in accordance with the Confidentiality and Standstill Agreement, dated
March 28, 2000, between the Company and Parent, as it may be amended from time
to time (the "Confidentiality Agreement").
Section 7.02 REGULATORY AND OTHER APPROVALS. (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
Merger and other transactions contemplated hereby. Such parties 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 promptly prepare and file all necessary documentation, to
effect all necessary applications, notices (including, without limitation,
notice to the Committee on Foreign Investment in the United States ("CFIUS")
with respect to the Exon-Florio review process), petitions, filings and other
documents, and to use all commercially reasonable efforts to obtain no later
than the Initial Termination Date, as such date may be extended pursuant to
Section 9.01(b), all permits, consents, approvals and authorizations of all
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement, including, without limitation, the Company Required Statutory
Approvals and 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, such consultation
to include review of drafts of all applications for such approvals.
(c) 1935 Act Matters. In furtherance of the foregoing susection (b),
Parent agrees to register under Section 5 of the 1935 Act if such registration
is necessary under applicable law (i) for Parent to obtain authorization from
the SEC to consummate the Merger (if required), and/or (ii) for Parent to obtain
authorization from the SEC to own the Company as a direct or indirect subsidiary
following the Merger. Parent agrees that it will use commercially reasonable
efforts to complete all actions prior to the Initial Termination Date with
respect to its present and proposed corporate, financial and business structure
as may be necessary or appropriate in the opinion of United States counsel
experienced in 1935 Act matters in order for the authorizations referred to
above to be obtained prior to the Initial Termination Date, as such date may be
extended pursuant to Section 9.01(b). Parent agrees that its application for
approval of the Merger under the 1935 Act, and its application for registration
under Section 5 of the 1935 Act, shall be made on the basis that each of its
non-U.S. public-utility company subsidiaries (and such non-utility subsidiaries
or businesses, if any, as Parent determines to place under
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or within any of such non-U.S. public utility company subsidiaries) shall claim
the status of a "foreign utility company" under Section 33 of the 1935 Act. As
used in this susection (c), the term "subsidiary" means a subsidiary as defined
in the 1935 Act.
Section 7.03 SHAREHOLDER APPROVAL; PROXY STATEMENT. (a) The Company's
Shareholders. The Company shall, as soon as reasonably practicable after the
date hereof (i) take all steps necessary to duly call, give notice of, convene
and hold a meeting of its shareholders (the "Company Special Meeting") for the
purpose of securing the Company Shareholders' Approval, (ii) subject to the
fiduciary duties of its Board of Directors, recommend to its shareholders the
approval of this Agreement and the Merger and the transactions contemplated
hereby and thereby, and (iii) cooperate and consult with Parent with respect to
each of the foregoing matters.
(b) Proxy Statement. As soon as reasonably practicable after the date
hereof, the Company shall prepare, file with the SEC and distribute to its
shareholders the Proxy Statement in accordance with applicable federal and state
law and with its articles of organization and by-laws. The Company and Parent
shall cooperate with each other in the preparation of the Proxy Statement, and
the Company shall promptly notify Parent of the receipt of any comments of the
SEC with respect to the Proxy Statement and of any requests by the SEC for any
amendment or supplement thereto or for additional information, and shall
promptly provide to Parent copies of all correspondence between the Company or
any of its Representatives and the SEC with respect to the Proxy Statement
(except reports from financial advisors other than with the consent of such
financial advisors). Each party hereto shall furnish all information concerning
itself which is required or customary for inclusion in the Proxy Statement. The
Company shall give Parent and its counsel the opportunity to review the Proxy
Statement and all responses to requests for additional information by and
replies to comments of the SEC before their being filed with, or sent to, the
SEC. Each of the Company and Parent agrees to use its reasonable best efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC. The Company shall also include in the
Proxy Statement the recommendation of its Board of Directors that its
shareholders approve this Agreement and the Merger as contemplated by clause
(a)(ii) of this Section 7.03.
Section 7.04 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) Indemnification. To the extent, if any, not provided by an existing right
of indemnification or other agreement or policy, from and after the Effective
Time, Parent and the Surviving Corporation shall, to the fullest extent
permitted by applicable law, indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date hereof, or who becomes prior
to the Effective Time, an officer, director or employee of the Company or any of
its subsidiaries (each, an "Indemnified Party" and collectively, the
"Indemnified Parties") against (i) all losses, expenses (including reasonable
attorney's fees and expenses), claims, damages or liabilities or, subject to the
proviso of the next succeeding sentence, amounts paid in settlement, arising out
of actions or omissions occurring at or prior to the Effective Time (whether
asserted or claimed prior to, at or after the Effective Time) that are, in whole
or in part, based on or arising out of the fact that such person is or was a
director, officer or employee of the Company or a subsidiary of the Company (the
"Indemnified Liabilities"), and (ii) all Indemnified Liabilities to the extent
they are based on or arise out of or pertain to the transactions contemplated by
this Agreement. In the event of any such loss, expense, claim, damage or
liability (whether or not arising before the Effective Time), (i) Parent shall
pay the reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to Parent, promptly
after statements therefor are received and otherwise advance to such Indemnified
Parties upon request reimbursement of documented expenses reasonably incurred.
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 or any significant issue between the position of such Indemnified Party
and any other Indemnified Party or Indemnified Parties. Any determination
required to be made with respect to whether an Indemnified Party's conduct
complies with the standards set forth in Section 719 of the MBCA, and the
articles of organization or by-laws, shall be made as provided in such Section
719.
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(b) Insurance. For a period of six (6) years after the Effective Time,
Parent shall (i) cause to be maintained in effect policies of directors' and
officers' liability insurance for the benefit of those persons who are currently
covered by such policies of the Company on terms no less favorable than the
terms of such current insurance coverage, or (ii) provide tail coverage for such
persons which provides coverage for a period of six (6) years for acts prior to
the Effective Time on terms no less favorable than the terms of such current
insurance coverage.
(c) Successors. In the event Parent or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers all or substantially all of its properties and assets to any
person, then, and in either such case, proper provisions shall be made so that
the successors and assigns of Parent shall assume the obligations set forth in
this Section 7.04.
(d) Survival of Indemnification. To the fullest extent permitted by law,
from and after the Effective Time, all rights to indemnification as of the date
hereof in favor of the employees, agents, directors and officers of the Company,
and its subsidiaries with respect to their activities as such prior to the
Effective Time, as provided in its respective articles of organization and
by-laws in effect on the date hereof, or otherwise in effect on the date hereof,
shall survive the Merger and shall continue in full force and effect for a
period of not less than six (6) years from the Effective Time.
(e) Benefit. The provisions of this Section 7.04 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 7.05 DISCLOSURE SCHEDULES. On the date hereof, (i) Parent has
delivered to the Company a schedule (the "Parent Disclosure Schedule"),
accompanied by a certificate signed by its Chief Financial Officer stating that
the Parent Disclosure Schedule is being delivered pursuant to this
Section 7.05(i), and (ii) the Company has delivered to Parent a schedule (the
"Company Disclosure Schedule"), accompanied by a certificate signed by its Chief
Financial Officer stating that the Company Disclosure Schedule is being
delivered pursuant to this Section 7.05(ii). The Company Disclosure Schedule and
the Parent Disclosure Schedule are collectively referred to herein as the
"Disclosure Schedules." The Disclosure Schedules constitute an integral part of
this Agreement and modify the respective representations, warranties, covenants
or agreements of the parties hereto contained herein to the extent that such
representations, warranties, covenants or agreements expressly refer to the
Disclosure Schedules. Anything to the contrary contained herein or in the
Disclosure Schedules notwithstanding, any and all statements, representations,
warranties or disclosures set forth in the Disclosure Schedules shall be deemed
to have been made on and as of the date hereof.
Section 7.06 PUBLIC ANNOUNCEMENTS. Subject to each party's disclosure
obligations imposed by law or the rules of any applicable securities exchange or
Governmental Authority, the Company and Parent will cooperate with each other in
the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby and shall not issue any public announcement or
statement with respect hereto without the consent of the other party (which
consent shall not be unreasonably withheld).
Section 7.07 CERTAIN EMPLOYEE AGREEMENTS AND ARRANGEMENTS. Subject to
Section 7.08 and to applicable law and collective bargaining agreements, Parent
and the Surviving Corporation and its subsidiaries shall honor, all contracts,
agreements, collective bargaining agreements and commitments of the Company
prior to the date hereof which have been disclosed in the Company Disclosure
Schedule and which apply to any current or former employee or current or former
director of the Company; provided, however, that the foregoing shall not prevent
Parent or the Surviving Corporation from enforcing such contracts, agreements,
collective bargaining agreements and commitments in accordance with their terms,
including, without limitation, any right to amend, modify,
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suspend, revoke or terminate any such contract, agreement, collective bargaining
agreement or commitment. Any workforce reductions affecting employees of the
Company carried out within the twelve-month period following the Effective Time
by Parent or the Surviving Corporation or their respective subsidiaries shall be
done in accordance with (i) the provisions of this Agreement, (ii) the
recommendations of the Transition Steering Team to be established pursuant to
Section 7.13 hereof, and (iii) all applicable collective bargaining agreements
and all laws and regulations governing the employment relationship and
termination thereof including, without limitation, the WARN Act and regulations
promulgated thereunder, and any comparable state or local law.
Section 7.08 EMPLOYEE BENEFIT PLANS. (a) For a period of twelve (12)
months immediately following the Closing Date, the basic compensation, benefits
and coverage provided to those individuals who do not have the benefit of a
collective bargaining agreement with the Company and who continue to be
employees of the Surviving Corporation, Parent or their respective subsidiaries
("Continuing Company Employees") pursuant to employee benefit plans or
arrangements maintained by Parent, the Surviving Corporation or their respective
subsidiaries shall be not less favorable in the aggregate (as determined by
Parent and the Surviving Corporation using reasonable assumptions and benefit
valuation methods) than those provided to such Continuing Company Employees
immediately prior to the Closing Date. For purposes of the foregoing, Parent and
the Surviving Corporation shall not be required to take into account the fact
that any Company Employee Benefit Plan allows for investment of funds in Company
Common Stock. In addition to the foregoing, Parent shall, or shall cause the
Surviving Corporation, Parent or their respective subsidiaries to, pay any
employee whose employment is terminated by Parent, the Surviving Corporation or
their respective subsidiaries within twelve (12) months of the Closing Date
(other than for cause) a severance benefit package having the terms described in
Section 7.08 of the Company Disclosure Schedule.
(b) Parent shall, or shall cause the Surviving Corporation to, give the
Continuing Company Employees full credit for purposes of eligibility, vesting
and determination of seniority-based levels of benefits under any employee
benefit plans or arrangements maintained by Parent or the Surviving Corporation,
as applicable, in effect as of the Closing Date for such Continuing Company
Employees' service with the Company or any subsidiary of the Company (or any
prior employer) to the same extent recognized by the Company or such subsidiary
immediately prior to the Closing Date. With respect to any employee benefit plan
or arrangement established by Parent or the Surviving Corporation after the
Closing Date (the "Post Closing Plans"), service shall be credited in accordance
with the terms of such Post Closing Plans, provided that the Continuing Company
Employees shall be treated no less favorably in this respect than other
similarly situated Employees of Parent or its affiliates who are covered under
these same or similar plans. Notwithstanding the foregoing, if Parent or the
Surviving Corporation or another affiliate of Parent (i) continues to maintain
the Company's defined benefit pension plan (the "Company Pension Plan") on and
after the Closing Date, or (ii) covers some or all of the Continuing Company
Employees under an alternative defined benefit plan (an "Alternative Pension
Plan"), then subject to applicable laws Parent shall cause the Company Pension
Plan or such Alternative Pension Plan to count for benefit accrual purposes all
prior service of the Continuing Company Employees that was counted for such
purposes under the Company Pension Plan immediately prior to the Closing Date.
Nothing in this Section 7.08(b), however, shall require that the Continuing
Company Employees be given duplicative pension benefits with respect to service
performed prior to the Closing Date.
(c) Parent shall, or shall cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Continuing
Company Employees under any welfare benefit plan established to replace any
Company welfare benefit plans in which such Continuing Company 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 Continuing
Company Employees and that have not be satisfied as of the Closing Date under
any welfare plan maintained for the Continuing Company
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Employees immediately prior to the Closing Date and (ii) provide each Continuing
Company Employee with credit for any co-payments and deductibles paid within the
same plan year as the Closing Date in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such Continuing Company
Employees are eligible to participate in after the Closing Date.
Section 7.09 EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses.
Section 7.10 FURTHER ASSURANCES. (a) Each party will, and will cause its
subsidiaries to, execute such further documents and instruments and take such
further actions as may reasonably be requested by any other party in order to
satisfy the conditions set forth in Article VIII and to consummate the Merger in
accordance with the terms hereof.
(b) The parties expressly acknowledge and agree that, although it is their
current intention to effect a business combination among themselves in the form
contemplated by this Agreement, it may be preferable to effectuate such a
business combination by means of an alternative structure in light of the
conditions set forth in Section 8.01(d) or Sections 8.02(f) or (g). Accordingly,
if the only conditions to the parties' obligations to consummate the Merger
which are not satisfied or waived are receipt of any one or more of the Company
Required Statutory Approvals or Parent Required Statutory Approvals, and the
adoption of an alternative structure (that otherwise substantially preserves for
Parent and the Company the economic benefits of the Merger and does not require
any additional filings with, or authorizations, consents or approvals from, any
Governmental Authority other than supplements or amendments to filings already
made, to reflect such alternative structure) would result in such conditions
being satisfied or waived, then the parties shall use their respective
commercially reasonable efforts to effect a business combination among
themselves by means of a mutually agreed upon structure other than the Merger
that so preserves such benefits; provided that, prior to the Closing, any such
restructured transaction, all material third party and Governmental Authority
declarations, filings, registrations, notices, authorizations, consents or
approvals for the effectuation of such alternative business combination shall
have been obtained and all other conditions to the parties' obligations to
consummate the Merger, as applied to such alternative business combination,
shall have been satisfied or waived. This susection shall not be construed as
extending the Initial Termination Date (as it may otherwise be extended in
accordance with Section 9.01(b)).
Section 7.11 CORPORATE OFFICES. For a period of not less than 10 years
subsequent to the Effective Time, the corporate headquarters of the Surviving
Corporation shall be located in the State of Maine.
Section 7.12 COMMUNITY INVOLVEMENT. After the Effective Time, Parent will
permit the Surviving Corporation to make charitable contributions to the
communities served by the Surviving Corporation and otherwise maintain a
substantial level of involvement in community activities in the State of Maine
that is similar to, or greater than, the level of contributions, community
development and related activities currently carried on by the Company.
Section 7.13 TRANSITION STEERING TEAM. As soon as reasonably practicable
after the date hereof, Parent and the Company shall create a special transition
steering team (the "Transition Steering Team"), with representation from Parent
and the Company, that will develop recommendations concerning the future
structure and operations of the Company after the Effective Time, subject to
applicable law. The members of the Transition Steering Team shall be appointed
by the Chief Executive Officers of Parent and the Company. The functions of the
Transition Steering Team shall include (i) the direction of the exchange of
information and documents between the parties, including as contemplated by
Section 7.01, and (ii) the development of regulatory plans and proposals,
corporate organizational and management plans, workforce combination proposals,
and such other matters as they deem appropriate.
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ARTICLE VIII
CONDITIONS
Section 8.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction or waiver on or prior to the Closing Date of each of the
following conditions:
(a) Shareholder Approval. The Company Shareholders' Approval shall have
been obtained.
(b) HSR Act. Any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act, shall have expired or been
terminated.
(c) No Injunction. No temporary restraining order or preliminary or
permanent injunction or other order by any federal or state court preventing
consummation of the Merger shall have been issued and be continuing in effect,
and the Merger and the other transactions contemplated hereby shall not have
been prohibited under any applicable federal or state law or regulation.
(d) Statutory Approvals. The Company Required Statutory Approvals and
Parent Required Statutory Approvals shall have been obtained at or prior to the
Effective Time, and such approvals shall have become Final Orders (as defined
below). A "Final Order" means action by the relevant regulatory authority which
has not been reversed, stayed, enjoined, set aside, annulled or suspended, with
respect to which any waiting period prescribed by law before the transactions
contemplated hereby may be consummated has expired, and as to which all
conditions to the consummation of such transactions prescribed by law,
regulation or order have been satisfied.
Section 8.02 CONDITIONS TO OBLIGATION OF PARENT TO EFFECT THE MERGER. The
obligation of Parent to effect the Merger shall be further subject to the
satisfaction (or waiver by Parent), on or prior to the Closing Date, of each of
the following conditions:
(a) Performance of Obligations of the Company. The Company shall have
performed in all material respects each of its agreements and covenants required
by this Agreement to be so performed by the Company at or prior to the Closing.
(b) Representations and Warranties. The representations and warranties of
the Company set forth in this Agreement shall be true and correct on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date (except for
representations and warranties that expressly speak only as of a specific date
or time other than the date hereof or the Closing Date, which need only be true
and correct as of such date or time) except for such failures of representations
or warranties to be true and correct (without regard to any materiality
qualifications contained therein) which, individually and in the aggregate,
would not reasonably be expected to result in a Company Material Adverse Effect.
(c) Closing Certificates. Parent shall have received a certificate signed
by the Chief Executive Officer or 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 8.02(a) and Section 8.02(b) have been
satisfied.
(d) No Company Material Adverse Effect. No Company Material Adverse Effect
shall have occurred, and there shall exist no fact or circumstance other than
facts and circumstances described in Section 4.06 of the Company Disclosure
Schedule or the Company SEC Reports filed prior to the date hereof which could
reasonably be expected to have a Company Material Adverse Effect.
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(e) MPUC Authorization. The Final Order or Orders of the MPUC in respect
of the transactions contemplated by this Agreement shall not impose terms or
conditions specifically in relation to the Merger which, in the reasonable
judgment of Parent, could be expected to have a material adverse effect on the
business, properties, financial condition or results of operations of the
Surviving Corporation and its subsidiaries taken as a whole if the Merger were
consummated.
(f) 1935 Act Order. The Final Order or Orders of the SEC with respect to
the Merger and the transactions contemplated by this Agreement and the
subsequent registration of Parent as a holding company under the 1935 Act shall
not impose terms or conditions which, in the reasonable judgment of Parent,
would be expected to have a material adverse effect on the business, properties,
financial condition or results of operations of Parent and its subsidiaries
taken as a whole or the Surviving Corporation and its subsidiaries taken as a
whole.
(g) FERC Order. The Final Order or Orders of the FERC in respect of the
transactions contemplated by this Agreement shall not impose terms or conditions
specifically in relation to the Merger which, in the reasonable judgment of
Parent, could be expected to have a material adverse effect on the business,
properties, financial condition or results of operations of Parent and its
subsidiaries taken as a whole or the Surviving Corporation and its subsidiaries
taken as a whole.
(h) Company Required Consents. The Company Required Consents shall have
been obtained.
Section 8.03 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 (or waiver by the Company), on or prior to the
Closing Date, of each of the following conditions:
(a) Performance of Obligations of Parent. Parent shall have performed in
all material respects each of its agreements and covenants required by this
Agreement to be so performed by Parent at or prior to the Closing.
(b) Representations and Warranties. The representations and warranties of
Parent set forth in this Agreement shall be true and correct on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except for representations and
warranties that expressly speak only as of a specific date or time other than
the date hereof or the Closing Date, which need only be true and correct as of
such date or time) except for such failures of representations or warranties to
be true and correct (without regard to any materiality qualifications contained
therein) which, individually and in the aggregate, would not reasonably be
expected to result in a Parent Material Adverse Effect.
(c) Closing Certificates. The Company shall have received a certificate
signed by the Chief Executive Officer or Chief Financial Officer of Parent,
dated the Closing Date, to the effect that, to the best of such officer's
knowledge, the conditions set forth in Section 8.03(a) and Section 8.03(b) have
been satisfied.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01 TERMINATION. This Agreement may be terminated, and the Merger
and other transactions contemplated hereby may be abandoned, at any time prior
to the Effective Time, whether before or after approval by the shareholders of
the respective parties hereto contemplated by this Agreement:
(a) by mutual written consent of the Boards of Directors of the Company and
Parent;
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(b) by Parent or the Company, by written notice to the other parties hereto,
if the Effective Time shall not have occurred on or before the date which is
twelve (12) months from the date hereof (the "Initial Termination Date");
provided, however, that the right to terminate this Agreement under this Section
9.01(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted directly or
indirectly in, the failure of the Effective Time to occur on or before such
date; and provided, further, that if on the Initial Termination Date the
conditions to the Closing with respect to Company Required Statutory Approvals
and/or Parent Required Statutory Approvals set forth in Section 8.01(d) shall
not have been fulfilled but all other conditions to the Closing shall be
fulfilled or shall be capable of being fulfilled, then the Initial Termination
Date shall be extended to the 18th-month anniversary of the date hereof;
(c) by Parent or the Company, by written notice to the other parties hereto,
if the Company Shareholders' Approval shall not have been obtained at a duly
held Company Special Meeting, including any adjournments thereof;
(d) by Parent or the Company, if any federal or state 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
if any court of competent jurisdiction in the United States or any state in the
United States 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; (provided that the
right to terminate this Agreement under this Section 9.01(d) shall not be
available to any party that has not defended such lawsuit or other legal
proceeding (including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Authority vacated or reversed));
(e) by the Company upon ten (10) days' prior notice to Parent if the Board
of Directors of the Company determines in good faith that termination of this
Agreement is necessary for the Board of Directors of the Company to act in a
manner consistent with its fiduciary duties to shareholders under applicable law
by reason of an Alternative Proposal meeting the requirements of Section 6.02
having been made; provided that:
(A) the Board of Directors of the Company shall determine based on advice of
outside counsel with respect to the Board of Directors' fiduciary duties
that notwithstanding a binding commitment to consummate an agreement of
the nature of this Agreement entered into in the proper exercise of its
applicable fiduciary duties, and notwithstanding all concessions which
may be offered by Parent in negotiation entered into pursuant to clause
(B) below, it is necessary pursuant to such fiduciary duties that the
directors reconsider such commitment as a result of such Alternative
Proposal, and
(B) prior to any such termination, the Company shall, and shall cause its
respective financial and legal advisors to, negotiate with Parent to
make such adjustments in the terms and conditions of this Agreement as
would enable the Company to proceed with the Merger or other
transactions contemplated hereby on such adjusted terms.
(f) by the Company, by written notice to Parent, if (i) there exist breaches
of the representations and warranties of Parent made herein as of the date
hereof which breaches, individually or in the aggregate, would or would
reasonably be expected to result in a Parent Material Adverse Effect, and such
breaches shall not have been remedied within twenty (20) days after receipt by
Parent of notice in writing from the Company, specifying the nature of such
breaches and requesting that they be remedied, or (ii) there shall have been a
material breach of any agreement or covenant of Parent hereunder, and such
breach shall not have been remedied within twenty (20) days after receipt by
Parent of notice in writing from the Company, specifying the nature of such
failure and requesting that it be remedied; or
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(g) by Parent, by written notice to the Company, if (i) there exist material
breaches of the representations and warranties of the Company made herein as of
the date hereof which breaches, individually or in the aggregate, would or would
reasonably be expected to result in a Company Material Adverse Effect, and such
breaches shall not have been remedied within twenty (20) days after receipt by
the Company of notice in writing from Parent, specifying the nature of such
breaches and requesting that they be remedied, (ii) there shall have been a
material breach of any agreement or covenant of the Company hereunder, and such
failure to perform or comply shall not have been remedied within twenty (20)
days after receipt by the Company of notice in writing from Parent, specifying
the nature of such failure and requesting that it be remedied, or (iii) the
Board of Directors of the Company (A) shall withdraw or modify in any manner
adverse to Parent its approval or recommendation of this Agreement or the
transactions contemplated herein, (B) shall approve or recommend an Alternative
Proposal, or (C) shall resolve to take any of the actions specified in clause
(A) or (B).
Section 9.02 EFFECT OF TERMINATION. In the event of a valid termination of
this Agreement by either the Company or Parent pursuant to Section 9.01, this
Agreement shall forthwith become null and void and there shall be no liability
on the part of either the Company or Parent or their respective officers or
directors hereunder, except that Section 7.09, Section 9.03, the agreement
contained in the last sentence of Section 7.01, Section 10.08 and Section 10.09
shall survive the termination.
Section 9.03 TERMINATION FEE; EXPENSES. (a) In the event that (i) this
Agreement is terminated by the Company pursuant to Section 9.01(e) or (ii) any
person or group shall have made an Alternative Proposal that has not been
withdrawn and this Agreement is terminated by (A) Parent pursuant to Section
9.01(c) or Section 9.01(g)(iii) or (B) by the Company pursuant to
Section 9.01(b) and, in the case of this clause (ii) only, a definitive
agreement with respect to such Alternative Proposal is executed within one
(1) year after such termination, then the Company shall pay to Parent, by wire
transfer of same day funds within five (5) business days after (x) such
termination (in the case of clause (i)) or (y) such execution (in the case of
clause (ii)), a termination fee of $9.0 million, plus an amount equal to all
documented out-of-pocket expenses and fees incurred by Parent arising out of, or
in connection with or related to, the Merger and other transactions contemplated
hereby, not in excess of $1.5 million in the aggregate.
(b) Nature of Fees. The parties agree that the agreements contained in
this Section 9.03 are an integral part of the Merger and the other 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 Section 9.03(a), 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 additional amounts thereunder.
Notwithstanding anything to the contrary contained in this Section 9.03, if one
party fails to promptly pay to the other any fee or expense due under this
Section 9.03, 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 Bank
Boston in Boston, Massachusetts from the date such fee was required to be paid.
Section 9.04 AMENDMENT. This Agreement may be amended by the Boards of
Directors of the parties hereto, at any time before or after approval hereof by
the shareholders of the Company and prior to the Effective Time, but after such
approval only to the extent permitted by applicable law. This
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Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 9.05 WAIVER. At any time prior to the Effective Time, Parent or
the Company may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein, to the extent permitted by applicable
law. Any agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed on behalf of such
party. No waiver by any party of any term or condition of this Agreement, in any
one or more instances, shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any future occasion.
ARTICLE X
GENERAL PROVISIONS
Section 10.01 NON-SURVIVAL; EFFECT OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties and agreements in this Agreement shall not survive
the Merger, except as otherwise provided in this Agreement and except for the
agreements contained in this Section 10.01, in Articles I and II and in Sections
7.04, 7.07, 7.08, 7.09, 7.11, 7.12, 7.13, 10.07, 10.08 and 10.09. Parent may
rely fully on the representations and warranties of the Company in Article IV
hereof and on the accuracy of any schedule and the genuineness of any document
attached hereto or referred to herein or delivered by the Company in connection
with this Agreement, notwithstanding any due diligence investigation of the
Company by Parent prior to the date hereof.
Section 10.02 BROKERS. The Company represents and warrants that, except
for Salomon Smith Barney Inc. whose fees have been disclosed to Parent prior to
the date hereof, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company. Parent represents and warrants that, except for BMO
Nesbitt Burns, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent.
Section 10.03 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if (i) delivered personally,
(ii) sent by reputable overnight courier service, (iii) telecopied (which is
confirmed), or (iv) five (5) days after being mailed by registered or certified
mail (return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) If to the Company, to:
Bangor Hydro-Electric Company
33 State Street
Bangor, ME 04401
Attention: President
Telephone: 207-941-6607
Telecopy: 207-973-2965
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with a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
Attention: David P. Falck, Esq.
Telephone: (212) 858-1000
Telecopy: (212) 858-1500
(b) If to Parent, to:
NS Power Holdings Incorporated
P.O. Box 910
Halifax, Nova Scotia
Canada
Attention: Secretary and General Counsel
Telephone: 902-428-6520
Telecopy: 902-428-6171
with a copy to:
Fulbright & Jaworski LLP
801 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2615
Attention: Marilyn Mooney
Telephone: 202-662-4678
Telecopy: 202-662-4643
Section 10.04 MISCELLANEOUS. This Agreement (including the documents and
instruments referred to herein) (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof
other than the Confidentiality Agreement, (ii) shall not be assigned by
operation of law or otherwise, and (iii) shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
executed in and to be fully performed in such State, without giving effect to
its conflicts of law, rules or principles.
Section 10.05 INTERPRETATION. (a) 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," and whenever the phrase "to the knowledge of the Company" is used
in this Agreement, it shall be deemed to be followed by the words "after due
inquiry."
(b) Notwithstanding the use of the phrase "could reasonably be expected to"
with regard to any material qualifications in any of the representations or
warranties in Article IV or Article V of this Agreement, such phrase shall be
deemed not to apply to matters addressed by such representations and warranties
that constitute facts and circumstances existing at the date of execution of
this Agreement.
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Section 10.06 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 10.07 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and, except for
Article II and for rights of Indemnified Parties as set forth in Section 7.04,
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 10.08 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 TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HEREBY (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.
Section 10.09 ENFORCEMENT; SUBMISSION TO JURISDICTION; WAIVER. (a) The
parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of New York or
in New York state court, this being in addition to any other remedy to which
they are entitled at law or in equity.
(b) With respect to any dispute arising out of this Agreement or any of the
transactions contemplated by this Agreement, each of Parent, Merger Sub and the
Company hereby irrevocably submits for itself and in respect to its property,
generally and unconditionally, to the nonexclusive jurisdiction of the courts
referred to in susection (a) of this Section. Any service of process to be made
in any action or proceeding may be made by delivery of process in accordance
with the notice provisions contained in Section 10.03. Each of Parent, Merger
Sub 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, (i) the defense of sovereign immunity, (ii) 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 10.09, (iii) 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 (iv) to the fullest extent permitted by applicable law that (A) the suit,
action or proceeding in any such court is brought in an inconvenient forum,
(B) the venue of such suit, action or proceeding is improper and (C) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
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IN WITNESS WHEREOF, the Company and Parent have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
<TABLE>
<S> <C> <C>
BANGOR HYDRO-ELECTRIC COMPANY
By: /s/ Robert S. Briggs
-----------------------------------------
Name: Robert S. Briggs
Title: President
NS POWER HOLDINGS INCORPORATED
By: /s/ David McD. Mann
-----------------------------------------
Name: David McD. Mann
Title: President and Chief Executive
Officer
By: /s/ Richard Smith
-----------------------------------------
Name: Richard Smith
Title: Corporate Secretary and General
Counsel
</TABLE>
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APPENDIX B
[LOGO]
June 29, 2000
The Board of Directors
Bangor Hydro-Electric Company
33 State Street
Bangor, Maine 04401
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the common stock of Bangor Hydro-Electric Company
("Bangor") of the Merger Consideration (defined below) provided for in the
Agreement and Plan of Merger, dated as of June 29, 2000 (the "Merger
Agreement"), by and between Bangor and NS Power Holdings Inc. ("NS Power"). As
more fully described in the Merger Agreement, (i) a wholly owned subsidiary of
NS Power will be merged with and into Bangor (the "Merger") and (ii) each
outstanding share of the common stock, par value $5.00 per share, of Bangor
("Bangor Common Stock") will be converted into the right to receive $26.50 in
cash (the "Merger Consideration"), subject to upward adjustment as specified in
the Merger Agreement if the closing date of the Merger has not occurred within
12 months of the date of the Merger Agreement and all conditions to closing,
other than certain governmental and regulatory approvals, have been satisfied or
are capable of being satisfied.
In arriving at our opinion, we reviewed the Merger Agreement and held
discussions with certain senior officers, directors and other representatives
and advisors of Bangor and certain senior officers and other representatives and
advisors of NS Power concerning the business, operations and prospects of
Bangor. We examined certain publicly available business and financial
information relating to Bangor as well as certain financial forecasts for Bangor
and other information and data for Bangor which were provided to or otherwise
discussed with us by the management of Bangor. We reviewed the financial terms
of the Merger as set forth in the Merger Agreement in relation to, among other
things: current and historical market prices and trading volumes of Bangor
Common Stock; the financial condition and historical and projected earnings and
other operating data of Bangor; and the capitalization of Bangor. We considered,
to the extent publicly available, the financial terms of other transactions
recently effected which we considered relevant in evaluating the Merger and
analyzed certain financial, stock market and other publicly available
information relating to the businesses of other companies whose operations we
considered relevant in evaluating those of Bangor. In connection with our
engagement, we were requested to approach, and we held discussions with, third
parties to solicit indications of interest in the possible acquisition of
Bangor. In addition to the foregoing, we conducted such other analyses and
examinations and considered such other financial, economic and market criteria
as we deemed appropriate in arriving at our opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us. With respect to financial forecasts and other information
and data relating to Bangor provided to or otherwise reviewed by or discussed
with us, we have been advised by the management of Bangor that such forecasts
and other information and data were reasonably prepared on bases reflecting the
best currently available estimates and judgments
<PAGE>
The Board of Directors
Bangor Hydro-Electric Company
June 29, 2000
Page 2
of the management of Bangor as to the future financial performance of Bangor. We
have assumed, with your consent, that in the course of obtaining the necessary
regulatory approvals for the Merger, no limitations, restrictions or conditions
will be imposed that would have a material adverse effect on the contemplated
benefits of the Merger to Bangor. We have not made or been provided with an
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of Bangor nor have we made any physical inspection of the properties
or assets of Bangor. We express no view as to, and our opinion does not address,
the relative merits of the Merger as compared to any alternative business
strategies that might exist for Bangor or the effect of any other transaction in
which Bangor might engage. Our opinion is necessarily based upon information
available to us, and financial, stock market and other conditions and
circumstances existing and disclosed to us, as of the date hereof.
Salomon Smith Barney Inc. has acted as financial advisor to Bangor in connection
with the proposed Merger and will receive a fee for such services, a significant
portion of which is contingent upon the consummation of the Merger. We also will
receive a fee upon delivery of this opinion. We and our affiliates have in the
past provided investment banking services to Bangor unrelated to the proposed
Merger, for which services we have received compensation. In the ordinary course
of our business, we and our affiliates may actively trade or hold the securities
of Bangor and NS Power for our own account or for the account of our customers
and, accordingly, may at any time hold a long or short position in such
securities. In addition, we and our affiliates (including Citigroup Inc. and its
affiliates) may maintain relationships with Bangor, NS Power and their
respective affiliates.
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of Bangor in its evaluation of the
proposed Merger, and our opinion is not intended to be and does not constitute a
recommendation to any stockholder as to how such stockholder should vote on the
proposed Merger.
Based upon and subject to the foregoing, our experience as investment bankers,
our work as described above and other factors we deemed relevant, we are of the
opinion that, as of the date hereof, the Merger Consideration is fair, from a
financial point of view, to the holders of Bangor Common Stock.
Very truly yours,
/s/ Salomon Smith Barney Inc.
SALOMON SMITH BARNEY INC.
<PAGE>
APPENDIX C
MAINE REVISED STATUTES
TITLE 13-A. MAINE BUSINESS CORPORATION ACT
CHAPTER 9. MERGERS AND CONSOLIDATIONS
SECTION 908. RIGHT OF SHAREHOLDERS TO DISSENT
1. Except as provided in subsections 3 and 4, any shareholders of a
domestic corporation, by complying with section 909, shall have the right to
dissent from any of the following corporate actions:
A. Any plan of merger or consolidation in which the corporation is
participating; or
B. Any sale or other disposition, excluding a mortgage or other security
interest, of all or substantially all of the property and assets of
the corporation not made in the usual and regular course of its
business, including a sale in liquidation but not including a sale
pursuant to an order of a court having jurisdiction in the premises
or a sale for cash on terms requiring that all or substantially all
of the net proceeds of sale be distributed to the shareholders in
accordance with their respective interests within one year after the
date of sale; or
C. Any other action as to which a right to dissent is expressly given by
this Act.
2. A shareholder may dissent as to less than all of the shares registered
in his name. In that event, his rights shall be determined as if the shares as
to which he has dissented and his other shares were registered in the names of
different shareholders.
3. There shall be no right of dissent in the case of shareholders of the
surviving corporation in a merger:
A. If such corporation is, on the date of filing of the articles of
merger, the owner of all the outstanding shares of the other
corporations, domestic or foreign, which are parties to the merger,
or
B. If a vote of the shareholders of such surviving corporation was not
necessary to authorize such merger.
4. There shall be no right of dissent in the case of holders of any class
or series of shares in any of the participating corporations in a merger or
consolidation, which shares were, at the record date fixed to determine the
shareholders entitled to receive notice of and to vote at the meeting of
shareholders at which the plan of merger or consolidation was to be voted on,
either:
A. Registered or traded on a national securities exchange; or
B. Registered with the Securities and Exchange Commission pursuant to
section 12(g) of the Act of Congress known as the Securities Exchange
Act of 1934, as the same has been or may hereafter be amended, being
Title 15 of the United States Code Annotated, section 781(g); unless
the articles of incorporation of that corporation provide that there
shall be a right of dissent.
5. The exceptions from the right of dissent provided for in subsection 3,
paragraph B, and in subsection 4 shall not be applicable to the holders of a
class or series of shares of a participating corporation if, under the plan of
merger or consolidation, such holders are required to accept for their shares
anything, except:
A. Shares of the surviving or new corporation resulting from the merger
or consolidation, or such shares plus cash in lieu of fractional
shares; or
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B. Shares, or shares plus cash in lieu of fractional shares, of any
other corporation, which shares were, at the record date fixed to
determine the shareholders entitled to receive notice of and to vote
at the meeting of shareholders at which the plan of merger or
consolidation was acted upon, either:
(1) Registered or traded on a national securities exchange; or
(2) Held of record by not less than 2,000 shareholders; or
C. A combination of shares, or shares plus cash in lieu of fractional
shares, as set forth in paragraphs A and B.
SECTION 909. RIGHT OF DISSENTING SHAREHOLDERS TO PAYMENT FOR SHARES
1. A shareholder having a right under any provision of this Act to dissent
to proposed corporate action shall, by complying with the procedure in this
section, be paid the fair value of his shares if the corporate action to which
he dissented is effected. The fair value of shares shall be determined as of the
day prior to the date on which the vote of the shareholders, or of the directors
in case a vote of the shareholders was not necessary, was taken approving the
proposed corporate action, excluding any appreciation or depreciation of shares
in anticipation of such corporate action.
2. The shareholder, whether or not entitled to vote, shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to the proposed
corporate action. No such objection shall be required from any shareholder to
whom the corporation failed to send notice of such meeting in accordance with
this Act.
3. If the proposed corporate action is approved by the required vote and
the dissenting shareholder did not vote in favor thereof, the dissenting
shareholder shall file a written demand for payment of the fair value of his
shares. Such demand:
A. Shall be filed with the corporation or, in the case of a merger or a
consolidation, with the surviving or new corporation; and
B. Shall be filed by personally delivering it, or by mailing it via
certified or registered mail, to such corporation at its registered
office within this State or to its principal place of business or to
the address given to the Secretary of State pursuant to section 906,
subsection 4, paragraph B; it shall be so delivered or mailed within
15 days after the date on which the vote of shareholders was taken,
or the date on which notice of a plan of merger of a subsidiary into
a parent corporation without vote of shareholders was mailed to
shareholders of the subsidiary; and
C. Shall specify the shareholder's current address; and
D. May not be withdrawn without the corporation's consent.
4. Any shareholder failing either to object as required by subsection 2 or
to make demand in the time and manner provided in subsection 3 shall be bound by
the terms of the proposed corporate action. Any shareholder making such
objection and demand shall thereafter be entitled only to payment as in this
section provided and shall not be entitled to vote or to exercise any other
rights of a shareholder.
5. The right of a shareholder otherwise entitled to be paid for the fair
value of his shares shall cease, and his status as a shareholder shall be
restored, without prejudice to any corporate proceedings which may have been
taken during the interim,
A. If his demand shall be withdrawn upon consent, or
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B. If the proposed corporate action shall be abandoned or rescinded, or
the shareholders shall revoke the authority to effect such action, or
C. If, in the case of a merger, on the date of the filing of the
articles of merger the surviving corporation is the owner of all the
outstanding shares of the other corporations, domestic and foreign,
that are parties to the merger, or
D. If no action for the determination of fair value by a court shall have
been filed within the time provided in this section, or
E. If a court of competent jurisdiction shall determine that such
shareholder is not entitled to the relief provided by this section.
6. At the time of filing his demand for payment for his shares, or within
20 days thereafter, each shareholder demanding payment shall submit the
certificate or certificates representing his shares to the corporation or its
transfer agent for notation thereon that such demand has been made; such
certificates shall promptly be returned after entry thereon of such notation. A
shareholder's failure to do so shall, at the option of the corporation,
terminate his rights under this section, unless a court of competent
jurisdiction, for good and sufficient cause shown, shall otherwise direct. If
shares represented by a certificate on which notation has been so made shall be
transferred, each new certificate issued therefor shall bear a similar notation,
together with the name of the original dissenting holder of such shares, and a
transferee of such shares shall acquire by such transfer no rights in the
corporation other than those which the original dissenting shareholder had after
making demand for payment of the fair value thereof.
7. Within the time prescribed by this subsection, the corporation, or, in
the case of a merger or consolidation, the surviving or new corporation,
domestic or foreign, shall give written notice to each dissenting shareholder
who has made objection and demand as herein provided that the corporate action
dissented to has been effected, and shall make a written offer to each such
dissenting shareholder to pay for such shares at a specified price deemed by
such corporation to be the fair value thereof. Such offer shall be made at the
same price per share to all dissenting shareholders of the same class. The
notice and offer shall be accompanied by a balance sheet of the corporation the
shares of which the dissenting shareholder holds, as of the latest available
date and not more than 12 months prior to the making of such offer, and a profit
and loss statement of such corporation for the 12 months' period ended on the
date of such balance sheet. The offer shall be made within the later of 10 days
after the expiration of the period provided in subsection 3, paragraph B, for
making demand, or 10 days after the corporate action is effected; corporate
action shall be deemed effected on a sale of assets when the sale is
consummated, and in a merger or consolidation when the articles of merger or
consolidation are filed or upon which later effective date as is specified in
the articles of merger or consolidation as permitted by this Act.
8. If within 20 days after the date by which the corporation is required,
by the terms of subsection 7, to make a written offer to each dissenting
shareholder to pay for his shares, the fair value of such shares is agreed upon
between any dissenting shareholder and the corporation, payment therefor shall
be made within 90 days after the date on which such corporate action was
effected, upon surrender of the certificate or certificates representing such
shares. Upon payment of the agreed value the dissenting shareholder shall cease
to have any interest in such shares.
9. If within the additional 20-day period prescribed by subsection 8, one
or more dissenting shareholders and the corporation have failed to agree as to
the fair value of the shares:
A. Then the corporation may, or shall, if it receives a demand as
provided in subparagraph (1), bring an action in the Superior Court
in the county in this State where the registered office of the
corporation is located praying that the fair value of such shares be
found and determined. If, in the case of a merger or consolidation,
the surviving or new
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corporation is a foreign corporation without a registered office in
this State, such action shall be brought in the county where the
registered office of the participating domestic corporation was last
located. Such action:
(1) Shall be brought by the corporation, if it receives a written
demand for suit from any dissenting shareholder, which demand is
made within 60 days after the date on which the corporate action
was effected; and if it receives such demand for suit, the
corporation shall bring the action within 30 days after receipt
of the written demand; or,
(2) In the absence of a demand for suit, may at the corporation's
election be brought by the corporation at any time from the
expiration of the additional 20-day period prescribed by
subsection 8 until the expiration of 60 days after the date on
which the corporate action was effected.
B. If the corporation fails to institute the action within the period
specified in paragraph A, any dissenting shareholder may thereafter
bring such an action in the name of the corporation.
C. No such action may be brought, either by the corporation or by a
dissenting shareholder, more than 6 months after the date on which
the corporate action was effected.
D. In any such action, whether initiated by the corporation or by a
dissenting shareholder, all dissenting shareholders, wherever
residing, except those who have agreed with the corporation upon the
price to be paid for their shares, shall be made parties to the
proceeding as an action against their shares quasi in rem. A copy of
the complaint shall be served on each dissenting shareholder who is a
resident of this State as in other civil actions, and shall be served
by registered or certified mail, or by personal service without the
State, on each dissenting shareholder who is a nonresident. The
jurisdiction of the court shall be plenary and exclusive.
E. The court shall determine whether each dissenting shareholder, as to
whom the corporation requests the court to make such determination,
has satisfied the requirements of this section and is entitled to
receive payment for his shares; as to any dissenting shareholder with
respect to whom the corporation makes such a request, the burden is
on the shareholder to prove that he is entitled to receive payment.
The court shall then proceed to fix the fair value of the shares. The
court may, if it so elects, appoint one or more persons as appraisers
to receive evidence and recommend a decision on the question of fair
value. The appraisers shall have such power and authority as shall be
specified in the order of their appointment or an amendment thereof.
F. All shareholders who are parties to the proceeding shall be entitled
to judgment against the corporation for the amount of the fair value
of their shares, except for any shareholder whom the court shall have
determined not to be entitled to receive payment for his shares. The
judgment shall be payable only upon and concurrently with the
surrender to the corporation of the certificate or certificates
representing such shares. Upon payment of the judgment, the
dissenting shareholder shall cease to have any interest in such
shares.
G. The judgment shall include an allowance for interest at such rate as
the court may find to be fair and equitable in all the circumstances,
from the date on which the vote was taken on the proposed corporate
action to the date of payment. If the court finds that the refusal of
any shareholder to accept the corporate offer of payment for his
shares was arbitrary, vexatious or not in good faith, it may in its
discretion refuse to allow interest to him.
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H. The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or
any part of such costs and expenses may be apportioned and assessed
as the court may deem equitable against any or all of the dissenting
shareholders who are parties to the proceeding to whom the
corporation shall have made an offer to pay for the shares, if the
court shall find that the action of such shareholders in failing to
accept such offer was arbitrary or vexatious or not in good faith.
Such expenses shall include reasonable compensation for and
reasonable expenses of the appraisers, but shall exclude the fees and
expenses of counsel for any party and shall exclude the fees and
expenses of experts employed by any party, unless the court otherwise
orders for good cause. If the fair value of the shares as determined
materially exceeds the amount which the corporation offered to pay
therefor, or if no offer was made, the court in its discretion may
award to any shareholder who is a party to the proceeding such sum as
the court may determine to be reasonable compensation to any expert
or experts employed by the shareholder in the proceeding, and may, in
its discretion, award to any shareholder all or part of his
attorney's fees and expenses; and
I. At all times during the pendency of any such proceeding, the court
may make any and all orders which may be necessary to protect the
corporation or the dissenting shareholders, or which are otherwise
just and equitable. Such orders may include, without limitation,
orders:
(1) Requiring the corporation to pay into court, or post security
for, the amount of the judgment or its estimated amount, either
before final judgment or pending appeal;
(2) Requiring the deposit with the court of certificates representing
shares held by the dissenting shareholders;
(3) Imposing a lien on the property of the corporation to secure the
payment of the judgment, which lien may be given priority over
liens and encumbrances contracted after the vote authorizing the
corporate action from which the shareholders dissent;
(4) Staying the action pending the determination of any similar
action pending in another court having jurisdiction.
10. Shares acquired by a corporation pursuant to payment of the agreed
value therefor or to payment of the judgment entered therefor, as in this
section provided, may be held and disposed of by such corporation as in the case
of other treasury shares, except that, in the case of a merger or consolidation,
they may be held and disposed of as the plan of merger or consolidation may
otherwise provide.
11. The objection required by subsection 2 and the demand required by
subsection 3 may, in the case of a shareholder who is a minor or otherwise
legally incapacitated, be made either by such shareholder, notwithstanding his
legal incapacity, or by his guardian, or by any person acting for him as next
friend. Such shareholder shall be bound by the time limitations set forth in
this section, notwithstanding his legal incapacity.
12. Appeals shall lie from judgments in actions brought under this section
as in other civil actions in which equitable relief is sought.
13. No action by a shareholder in the right of the corporation shall abate
or be barred by the fact that the shareholder has filed a demand for payment of
the fair value of his shares pursuant to this section.
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[FORM OF PROXY CARD]
PROXY PROXY
BANGOR HYDRO-ELECTRIC COMPANY
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 24, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert S. Briggs and Frederick S. Samp, or
either of them, each with full power of substitution, proxies of the
undersigned, to act for and to vote, as and to the extent specified, all shares
of Bangor Hydro-Electric Company held by the undersigned at the special meeting
to be held on October 24, 2000, at 10:00 A.M., local time, at the Pilot's Grill
restaurant, Hammond Street, Bangor, Maine, and any adjournment thereof upon the
matters set forth hereon and upon such other business that may properly come
before the meeting or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED AS AND TO THE
EXTENT SPECIFIED BY THE UNDERSIGNED. WHERE NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED "FOR" PROPOSAL 1.
(continued on reverse side)
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THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the Special Meeting of Shareholders,
you can be sure your shares are represented at the Meeting by promptly
returning your proxy (attached below) in the enclosed envelope. Thank you for
your attention to this important matter.
--------------------------------------------------------------------------------
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FOLD AND DETACH HERE
<PAGE>
PLEASE VOTE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
1. Proposal to approve the Agreement and Plan of Merger Please mark your
dated as of June 29, 2000, by and among Bangor vote as indicated in
Hydro-Electric Company and NS Power Holdings this example /X/
Incorporated (subsequently renamed Emera
Incorporated).
FOR AGAINST ABSTAIN
/ / / / / /
MARK HERE IF YOU PLAN TO ATTEND THE SPECIAL MEETING / /
Please date, sign exactly as name appears below, and return promptly in the
enclosed envelope. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
your full title. When signing for a corporation or partnership, please sign in
that name and indicate your title.
The undersigned hereby also acknowledge(s) receipt of notice of said meeting and
the related proxy statement.
Dated: _________________________, 2000
Signed:_____________________________
Signed:_____________________________
