EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
between
FIRSTENERGY CORP.
and
GPU, INC.
Dated as of August 8, 2000
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DEFINED TERMS
DEFINED TERM REFERENCE
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"1935 Act" Section 3.05(c)
"AEA" Section 3.05(f)
"Aggregate Consideration" Section 2.02(b)(ii)
"Aggregate Stock Amount" Section 2.01(l)
"Agreement" Heading of the Agreement
"Blue-Sky Filings" Section 4.05(d)
"Blue-Sky Laws" Section 4.05(d)
"Business Combination" Section 9.05(b)(ii)
"Cash Consideration" Section 2.01(c)
"Cash Election" Section 2.01(d)
"Cash Election Number" Section 2.01(d)
"Cash Election Shares" Section 2.01(e)
"Cash Fraction" Section 2.01(e)
"Certificates of Merger" Section 1.03
"CEI" Section 6.01
"Closing" Section 1.02
"Closing Date" Section 1.02
"Code" 2nd Recital
"Confidentiality Agreement" Section 7.04(b)
"Disclosure Schedules" Section 7.17(b)
"Dissenting Shares" Section 2.01(n)
"DOJ" Section 3.05(a)
"Effective Time" Section 1.03
"Election" Section 2.01(f)
"Election Deadline" Section 2.01(k)
"End Date" Section 9.01(d)
"Environmental Claim" Section 3.19(g)(i)
"Environmental Laws" Section 3.19(g)(ii)
"Environmental Permits" Section 3.19(b)
"ERISA" Section 3.12(a)
"Exchange Act" Section 2.01(c)
"Exchange Agent" Section 2.02(a)
"Exchange Ratio" Section 2.01(c)
"Extended End Date" Section 9.01(d)
"FCC" Section 3.05(g)
"FCC Approvals" Section 3.05(g)
"FERC" Section 3.05(e)
"FERC Approvals" Section 3.05(e)
"Final Order" Section 8.01(c)(i)
"FirstEnergy" Heading of the Agreement
"FirstEnergy Advisor" Section 4.14
"FirstEnergy Common Stock" Section 2.01(a)
"FirstEnergy Controlled Group Plans" Section 4.12(a)
"FirstEnergy Deferred Unit" Section 2.02(h)(ii)
"FirstEnergy Disclosure Schedule" Article IV, 1st paragraph
"FirstEnergy Indemnified Liabilities" Section 7.13(d)(i)
"FirstEnergy Indemnified Parties" Section 7.13(d)
"FirstEnergy Indemnifying Party" Section 7.13(d)
"FirstEnergy Material Adverse Effect" Section 3.01(a)
"FirstEnergy Option" Section 2.02(h)(i)
"FirstEnergy Option Plan" Section 2.02(h)(i)
"FirstEnergy Performance Unit" Section 2.02(h)(ii)
"FirstEnergy Permits" Section 4.09(a)
"FirstEnergy Permitted Acquisition" Section 6.07(c)
"FirstEnergy Preferred" Section 4.02(a)
"FirstEnergy Rights" Section 4.02(c)
"FirstEnergy Rights Agreement" Section 4.02(c)
"FirstEnergy SEC Documents" Section 4.06(a)
"FirstEnergy Share Price" Section 2.01(c)
"FirstEnergy Shares" Section 2.02(b)(ii)
"FirstEnergy Subs Preferred" Section 4.13(b)(ii)
"FirstEnergy Takeover Proposal" Section 6.05(c)
"Foreign Approvals" Section 3.05(j)
"Form of Election" Section 2.01(d)
"FPA" Section 3.05(e)
"FTC" Section 3.05(a)
"GAAP" 3rd Recital
"Governmental Entity" Section 3.04(c)
"GPU" Heading of the Agreement
"GPU Advisor" Section 3.14
"GPU Affiliates" Section 7.07(a)
"GPU Capital Budget" Section 5.15
"GPU Certificates" Section 2.01(i)
"GPU Common Stock" Section 2.01(b)
"GPU Controlled Group Plans" Section 3.12(a)
"GPU Deferred Unit" Section 2.02(h)(ii)
"GPU Designees" Section 7.12(a)
"GPU Director" Section 7.12(b)
"GPU Disclosure Schedule" Article III, 1st paragraph
"GPU Indemnified Liabilities" Section 7.13(a)(i)
"GPU Indemnified Parties" Section 7.13(a)
"GPU Indemnifying Party" Section 7.13(a)
"GPU Material Adverse Effect" Section 3.01(a)
"GPU Option" Section 2.02(h)(i)
"GPU PCN Committee" Section 2.02(h)(ii)
"GPU Performance Unit" Section 2.02(h)(ii)
"GPU Permits" Section 3.09(a)
"GPU Rights" Section 3.02(c)
"GPU Rights Agreement" Section 3.02(c)
"GPU SEC Documents" Section 3.06(a)
"GPU Service" Section 7.09(d)
"GPU Stock Plan", "GPU Stock Plans" Section 2.02(h)(i)
"GPU Stock Price" Section 2.02(h)(ii)
"GPU Stock Units Section 2.02(h)(ii)
"GPU Subs Preferred" Section 3.13(b)
"GPU Takeover Proposal" Section 5.05(c)
"Hazardous Materials" Section 3.19(g)(iii)
"HSR Act" Section 3.05(a)
"Injunction" Section 8.01(e)
"IRS" Section 3.11(c)
"JCP&L" Section 5.05(c)
"Joint Proxy Statement" Section 3.05(b)(i)
"joint venture" Section 3.18(c)
"Local Approvals" Section 3.05(h)
"Material Adverse Effect" Section 3.01(a)
"Merger" 1st Recital
"Merger Consideration" Section 2.01(c)
"MetEd" Section 5.05(c)
"Minimum Tax Ratio" Section 2.01(l)
"No Election Shares" Section 2.01(j)
"Non-Convertible Preferred Securities" Section 3.18(b)
"NRC" Section 3.05(f)
"NRC Approvals" Section 3.05(f)
"NYSE" Section 2.01(c)
"OE" Section 6.01
"Ohio GCL" Section 1.04(d)
"PCBs" Section 3.19(g)(iii)(A)
"Penelec" Section 5.05(c)
"Pennsylvania BCL" Section 1.04(d)
"PP" Section 6.01
"Reduction Amount" Section 2.01(l)
"Registration Statement" Section 4.05(b)(ii)
"Release" Section 3.19(g)(iv)
"SEC" 3rd Recital
"SEC '35 Act Order" Section 3.05(c)
"Securities Act" Section 2.02(h)(vi)
"Significant Subsidiary" Section 3.01(b)
"State Takeover Approvals" Section 3.05(i)
"Stock Consideration" Section 2.01(c)
"Stock Election" Section 2.01(f)
"Stock Election Number" Section 2.01(f)
"Stock Election Shares" Section 2.01(g)
"Stock Fraction" Section 2.01(g)
"Subsidiary" Section 3.01(b)
"Surviving Corporation" Section 1.01
"Surviving Corporation Material
Adverse Effect" Section 7.06(f)
"Takeover Proposal" Section 6.05(c)
"Target Party" Section 9.05(b)(i)(C)
"Task Force" Section 7.20(a)
"Tax", "Taxable", "Taxes", "Taxing" Section 3.11(g)
"Tax Ratio" Section 2.01(l)
"TE" Section 6.01
"to the knowledge of the executive
officers" Section 10.04(d)
"Violation" Section 3.04
"Voting Debt" Section 3.02(a)
"wholly owned Subsidiary" Section 3.18(b)
TABLE OF CONTENTS
Page
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ARTICLE I
THE MERGER
Section 1.01 The Merger 1
Section 1.02 Closing 1
Section 1.03 Effective Time of the Merger 2
Section 1.04 Effects of the Merger 2
Section 1.05 Directors and Officers of the Surviving Corporation 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
RESPECTIVE CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.01 Manner of Converting Shares 2
Section 2.02 Exchange of Certificates 7
Section 2.03 Stated Capital of Surviving Corporation Shares. 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GPU
Section 3.01 Organization, Standing and Power. 12
Section 3.02 Capital Structure. 13
Section 3.03 Corporate Authority. 14
Section 3.04 No Violation. 14
Section 3.05 Consents and Approvals. 15
Section 3.06 GPU SEC Documents. 16
Section 3.07 No Undisclosed Liabilities. 16
Section 3.08 Information Supplied. 17
Section 3.09 Compliance with Applicable Laws. 17
Section 3.10 Litigation. 18
Section 3.11 Taxes. 18
Section 3.12 Employee Matters. 19
Section 3.13 Absence of Certain Changes or Events. 21
Section 3.14 Opinion of GPU Financial Advisor. 21
Section 3.15 Vote Required. 22
Section 3.16 Accounting Matters. 22
Section 3.17 Ownership of FirstEnergy Stock. 22
Section 3.18 GPU Subsidiaries. 22
Section 3.19 Environmental Protection. 22
Section 3.20 Regulation as a Utility. 25
Section 3.21 Insurance. 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIRSTENERGY
Section 4.01 Organization, Standing and Power. 26
Section 4.02 Capital Structure. 26
Section 4.03 Corporate Authority. 27
Section 4.04 No Violation. 27
Section 4.05 Consents and Approvals. 28
Section 4.06 FirstEnergy SEC Documents. 29
Section 4.07 No Undisclosed Liabilities. 29
Section 4.08 Information Supplied. 29
Section 4.09 Compliance with Applicable Laws. 30
Section 4.10 Litigation. 30
Section 4.11 Taxes. 31
Section 4.12 Employee Matters. 31
Section 4.13 Absence of Certain Changes or Events. 34
Section 4.14 Opinion of FirstEnergy Financial Advisor. 34
Section 4.15 Vote Required. 34
Section 4.16 Accounting Matters. 34
Section 4.17 Ownership of GPU Stock. 35
Section 4.18 FirstEnergy Subsidiaries. 35
Section 4.19 Environmental Protection. 35
Section 4.20 Regulation as a Utility. 36
Section 4.21 Insurance. 37
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS OF GPU
Section 5.01 Ordinary Course. 37
Section 5.02 Dividends; Changes in Stock. 38
Section 5.03 Issuance of Securities. 38
Section 5.04 Constituent Documents. 39
Section 5.05 Solicitations. 39
Section 5.06 Acquisitions. 40
Section 5.07 Dispositions. 40
Section 5.08 Financings. 40
Section 5.09 No Actions. 41
Section 5.10 Cooperation, Notification. 41
Section 5.11 Rights Agreement. 41
Section 5.12 Collective Bargaining Agreements. 41
Section 5.13 Employee Benefit Covenant. 42
Section 5.14 Tax Covenant. 42
Section 5.15 Capital Expenditures. 42
Section 5.16 Transmission, Generation. 43
Section 5.17 Modifications to Facilities. 43
Section 5.18 Accounting. 43
Section 5.19 Tax-Free Status. 43
Section 5.20 Affiliate Transactions. 43
Section 5.21 Rate Matters. 43
Section 5.22 Third-Party Consents. 44
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS OF FIRSTENERGY
Section 6.01 Ordinary Course. 44
Section 6.02 Dividends; Changes in Stock. 45
Section 6.03 Issuance of Securities. 45
Section 6.04 Constituent Documents. 46
Section 6.05 Solicitations. 46
Section 6.06 Financings. 47
Section 6.07 No Actions. 47
Section 6.08 Cooperation, Notification. 48
Section 6.09 Rights Agreement. 48
Section 6.10 Accounting. 48
Section 6.11 Tax-Free Status. 48
Section 6.12 Affiliate Transactions. 48
Section 6.13 Third-Party Consents. 48
Section 6.14 Tax-Exempt Status. 48
Section 6.15 Certain Acquisitions. 49
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 Preparation of Registration Statement and
the Joint Proxy Statement. 49
Section 7.02 Letters of GPU's Accountants. 49
Section 7.03 Letters of FirstEnergy's Accountants. 49
Section 7.04 Access to Information. 50
Section 7.05 Shareholder Approvals. 50
Section 7.06 Satisfaction of Conditions to the Merger. 50
Section 7.07 Rule 145 Affiliates. 52
Section 7.08 Stock Exchange Listing. 52
Section 7.09 Employee Benefit Plans. 52
Section 7.10 Expenses. 53
Section 7.11 Brokers or Finders. 54
Section 7.12 Surviving Corporation Board of Directors and Officers. 54
Section 7.13 Indemnification; Directors' and Officers' Insurance. 55
Section 7.14 Further Assurances. 58
Section 7.15 Tax Treatment. 58
Section 7.16 Accounting Treatment. 58
Section 7.17 Disclosure Schedules. 58
Section 7.18 Public Announcements. 58
Section 7.19 Employee Agreements. 59
Section 7.20 Transition Management. 59
Section 7.21 Charitable Commitments; Offices; Name. 60
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.01 Conditions to Each Party's Obligation To Effect
the Merger. 60
Section 8.02 Conditions to Obligations of FirstEnergy. 61
Section 8.03 Conditions to Obligations of GPU. 62
ARTICLE IX
TERMINATION AND AMENDMENT
Section 9.01 Termination. 63
Section 9.02 Effect of Termination. 64
Section 9.03 Amendment. 65
Section 9.04 Extension; Waiver. 65
Section 9.05 Termination Fee; Expenses. 65
ARTICLE X
GENERAL PROVISIONS
Section 10.01 Nonsurvival of Representations and Warranties. 67
Section 10.02 Further Assurances. 67
Section 10.03 Notices. 67
Section 10.04 Interpretation. 68
Section 10.05 Descriptive Headings. 68
Section 10.06 Counterparts. 68
Section 10.07 Entire Agreement. 69
Section 10.08 No Third Party Beneficiaries. 69
Section 10.09 Governing Law. 69
Section 10.10 Severability. 69
Section 10.11 Binding Effect. 69
Section 10.12 Assignment. 69
Section 10.13 Amendments; Waiver. 69
EXHIBITS
Exhibit A Form of Letter Identifying Rule 145 Affiliates
Exhibit B Form of Affiliate Agreement with Form of Rule 145
Compliance Letter attached thereto as Annex A
AGREEMENT AND PLAN OF MERGER dated as of August 8, 2000 (the
"Agreement"), between FIRSTENERGY CORP., an Ohio corporation with its
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principal executive offices in Akron, Ohio ("FirstEnergy"), and GPU, INC.,
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a Pennsylvania corporation with its principal executive offices in
Morristown, New Jersey ("GPU").
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WHEREAS, the respective Boards of Directors of FirstEnergy and GPU
deem it advisable and in the best interests of their respective
shareholders to consummate, and have approved, the business combination
transaction contemplated herein pursuant to which the businesses of GPU
and FirstEnergy will be combined by means of the merger of GPU with and
into FirstEnergy (the "Merger"); and
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WHEREAS, for Federal income tax purposes, it is intended that the
Merger will be treated as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
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WHEREAS, for accounting purposes, it is intended that the Merger will
be accounted for on a purchase accounting basis in accordance with
generally accepted accounting principles ("GAAP") and applicable
----
regulations of the Securities and Exchange Commission (the "SEC"); and
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WHEREAS, GPU and FirstEnergy desire to make certain representations,
warranties and agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties intending to be legally bound agree as follows:
ARTICLE I
THE MERGER
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Section 1.01 The Merger. Upon the terms and subject to the
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conditions of this Agreement, at the Effective Time (as defined in Section
1.03), GPU shall be merged with and into FirstEnergy in accordance with
the laws of the Commonwealth of Pennsylvania and the State of Ohio.
FirstEnergy shall be the surviving corporation in the Merger and shall
continue its corporate existence under the laws of the State of Ohio. The
effects and the consequences of the Merger shall be as set forth in
Section 1.04. Throughout this Agreement, the term "Surviving Corporation"
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shall refer to FirstEnergy in its capacity as the surviving corporation in
the Merger.
Section 1.02 Closing. The closing of the Merger (the "Closing")
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will take place at 10:00 A.M. (local time), on a date to be specified by
the parties, which shall be no later than the second business day
following the date on which the last of the closing conditions set forth
in Article VIII has been met or waived, at the offices of Winthrop,
Stimson, Xxxxxx & Xxxxxxx, Xxx Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, XX 00000,
unless another date or place is agreed to in writing by the parties hereto
(the "Closing Date").
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Section 1.03 Effective Time of the Merger. Subject to the
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provisions of this Agreement, articles or certificates of merger shall be
duly prepared, executed and acknowledged by an appropriate officer of each
of the corporations involved in the Merger (the "Certificates of Merger")
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and thereafter delivered as soon as practicable on the Closing Date to the
Department of State of the Commonwealth of Pennsylvania for filing as well
as to the Secretary of State of the State of Ohio as provided by
Pennsylvania law and Ohio law. The Merger shall become effective upon the
filing of the Certificates of Merger with the Department of State of the
Commonwealth of Pennsylvania and the Secretary of State of the State of
Ohio or at such time thereafter as is agreed by the parties and provided
in the Certificates of Merger (the "Effective Time").
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Section 1.04 Effects of the Merger. At the Effective Time,
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(a) the separate existence of GPU shall cease and GPU shall be
merged with and into FirstEnergy with FirstEnergy continuing as the
Surviving Corporation,
(b) pursuant to the Merger, Article IV.A of the Amended
Articles of Incorporation of FirstEnergy shall be amended by replacing
"305 million" and "300 million" contained therein with "380 million" and
"375 million", respectively, and as so amended such Amended Articles of
Incorporation shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Articles
of Incorporation,
(c) the Regulations of FirstEnergy, as in effect immediately
prior to the Effective Time, shall be the Regulations of the Surviving
Corporation until thereafter amended as provided by law, the Articles of
Incorporation of the Surviving Corporation and such Regulations, and
(d) the Merger shall have all the effects of applicable law,
including without limitation as provided in Section 1701.82 of the Ohio
General Corporation Law (the "Ohio GCL") and Section 1929 of the
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Pennsylvania Business Corporation Law (the "Pennsylvania BCL").
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Section 1.05 Directors and Officers of the Surviving Corporation.
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As of the Effective Time, the directors and officers of the Surviving
Corporation shall be designated as provided in Section 7.12 of this
Agreement.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
RESPECTIVE CORPORATIONS; EXCHANGE OF CERTIFICATES
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Section 2.01 Manner of Converting Shares. As of the Effective
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Time, by virtue of the Merger and without any action on the part of the
holder of any shares of capital stock of the corporations involved:
(a) Capital Stock of FirstEnergy. Each share of common stock,
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par value $0.10 per share, of FirstEnergy ("FirstEnergy Common Stock")
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that is issued and outstanding immediately prior to the Effective Time
shall remain outstanding unchanged by reason of the
Merger as one fully paid and nonassessable share of common stock, par
value $0.10 per share, of the Surviving Corporation.
(b) Cancellation of Certain GPU Common Stock. Each share of
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common stock, par value $2.50 per share, of GPU ("GPU Common Stock") that
is owned by GPU as treasury stock shall be canceled and cease to exist,
and no stock or other consideration shall be delivered in exchange
therefor.
(c) Conversion of GPU Common Stock. Each share of GPU Common
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Stock, other than Dissenting Shares (as defined in Section 2.01(n)) and
shares canceled pursuant to Section 2.01(b), issued and outstanding
immediately prior to the Effective Time shall by virtue of the Merger and
without any action on the part of the holder thereof, be converted into
the right to receive (i) $36.50 in cash, without interest (the "Cash
----
Consideration"), (ii) a number of validly issued, fully paid and
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nonassessable shares of FirstEnergy Common Stock equal to the Exchange
Ratio (as defined below) or (iii) a combination of cash and shares as
provided in Sections 2.01(e), (g) and (h) below ((i), (ii) or (iii) as
applicable, the "Merger Consideration"). The "Exchange Ratio" shall be
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equal to the quotient (rounded to the nearest ten thousandth, or if there
is no nearest ten thousandth, the next higher ten thousandth) of the Cash
Consideration divided by the FirstEnergy Share Price (as defined below);
provided, however, that if the FirstEnergy Share Price is less than
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$24.2438, the "Exchange Ratio" shall be 1.5055, and if the FirstEnergy
Share Price is greater than $29.6313, the "Exchange Ratio" shall be
1.2318. The "FirstEnergy Share Price" shall be equal to the average of
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the closing prices of the shares of FirstEnergy Common Stock on the New
York Stock Exchange ("NYSE") Composite Transactions Reporting System, as
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reported in The Wall Street Journal (but subject to correction for
typographical or other manifest errors in such reporting), over the 20
trading days ending on the trading day immediately preceding the fifth
Business Day (as defined in Rule 14d-1(g)(3) under the Securities Exchange
Act of 1934 and the rules and regulations promulgated thereunder (the
"Exchange Act")) prior to the Election Deadline. FirstEnergy shall make a
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public announcement of the Exchange Ratio and the Election Deadline (as
defined below) no later than 9:00 a.m., New York City time, on the fifth
Business Day prior to the date of the Election Deadline by issuing a
release to the Dow Xxxxx News Service or similar U.S. news service.
(d) Cash Election. Subject to the immediately following
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sentence, each record holder of shares of GPU Common Stock immediately
prior to the Effective Time shall be entitled to elect to receive cash,
without interest, for all or any part of such holder's shares of GPU
Common Stock (a "Cash Election"). Notwithstanding the foregoing and
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subject to Section 2.01(l), the aggregate number of shares of GPU Common
Stock that will be converted into the right to receive cash in the Merger
(the "Cash Election Number") will be 50% of the total number of shares of
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GPU Common Stock issued and outstanding as of the Effective Time. Cash
Elections shall be made on a form reasonably acceptable to GPU and
FirstEnergy designed for that purpose (a "Form of Election").
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(e) Oversubscribed Cash Election. If the aggregate number of
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shares of GPU Common Stock covered by Cash Elections (the "Cash Election
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Shares") exceeds the Cash Election Number, (1) each Cash Election Share
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shall be converted into (i) the right to receive an amount of cash,
without interest, equal to the product of (a) the Cash Consideration and
(b) a fraction (the "Cash Fraction"), the numerator of which shall be the
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Cash Election Number and
the denominator of which shall be the total number of Cash Election
Shares, and (ii) a number of shares of FirstEnergy Common Stock equal to
the product of (a) the Exchange Ratio and (b) a fraction equal to one
minus the Cash Fraction and (2) each Stock Election Share and each No
Election Share (each as defined below) shall be converted into the right
to receive a number of shares of FirstEnergy Common Stock equal to the
Exchange Ratio.
(f) Stock Election. Subject to the immediately following
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sentence, each record holder of shares of GPU Common Stock immediately
prior to the Effective Time shall be entitled to elect to receive shares
of FirstEnergy Common Stock for all or any part of such holder's shares of
GPU Common Stock (a "Stock Election", and together with a Cash Election,
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the "Election"). Notwithstanding the foregoing and subject to Section
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2.01(l), the aggregate number of shares of GPU Common Stock that will be
converted into the right to receive shares of FirstEnergy Common Stock in
the Merger (the "Stock Election Number") shall be 50% of the total number
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of shares of GPU Common Stock issued and outstanding as of the Effective
Time. Stock Elections shall be made on a Form of Election.
(g) Oversubscribed Stock Election. If the aggregate number of
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shares of GPU Common Stock covered by Stock Elections (the "Stock Election
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Shares") exceeds the Stock Election Number, (1) each Stock Election Share
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shall be converted into (i) the right to receive a number of shares of
FirstEnergy Common Stock, equal to the product of (a) the Exchange Ratio
and (b) a fraction (the "Stock Fraction"), the numerator of which shall be
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the Stock Election Number and the denominator of which shall be the total
number of Stock Election Shares, and (ii) an amount of cash, without
interest, equal to the product of (a) the Cash Consideration and (b) a
fraction equal to one minus the Stock Fraction and (2) each Cash Election
Share and No Election Share shall be converted into the right to receive
an amount of cash, without interest, equal to the Cash Consideration.
(h) Undersubscribed Cash Election and Stock Election. If (x)
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the aggregate number of Cash Election Shares is equal to or less than the
Cash Election Number and (y) the aggregate number of Stock Election Shares
---
is equal to or less than the Stock Election Number, (1) each Cash Election
Share shall be converted into the right to receive an amount of cash,
without interest, equal to the Cash Consideration, (2) each Stock Election
Share shall be converted into the right to receive a number of shares of
FirstEnergy Common Stock equal to the Exchange Ratio and (3) each No
Election Share shall be converted into the right to receive (A) an amount
of cash, without interest, equal to the product of (i) the Cash
Consideration and (ii) a fraction (x) the numerator of which shall be the
Cash Election Number less the number of Cash Election Shares and the (y)
denominator of which shall be the aggregate number of No Election Shares
and (B) a number of shares of FirstEnergy Common Stock equal to the
product of (i) the Exchange Ratio and (ii) a fraction (x) the numerator of
which shall be the Stock Election Number less the number of Stock Election
Shares and (y) the denominator of which shall be the aggregate number of
No Election Shares.
(i) Form of Election. To be effective, a Form of Election must
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be properly completed, signed and submitted to the Exchange Agent (defined
below), and accompanied by the certificates representing the shares of GPU
Common Stock ("GPU Certificates") as to which the election is being made
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(or by an appropriate guarantee of delivery of such GPU Certificate signed
by a firm that is a member of any registered national securities exchange
or a member of
the National Association of Securities Dealers, Inc. or a bank, broker,
dealer, credit union, savings association or other entity that is a member
in good standing of a recognized Medallion Program approved by the
Securities Transfer Association Inc.). FirstEnergy shall have the
discretion, which it may delegate in whole or in part to the Exchange
Agent, to determine whether Forms of Election have been properly
completed, signed and submitted or revoked and to disregard immaterial
defects in Forms of Election. The decision of FirstEnergy (or the
Exchange Agent) in such matters shall be conclusive and binding. Neither
FirstEnergy nor the Exchange Agent shall be under any obligation to notify
any person of any defect in a Form of Election submitted to the Exchange
Agent. The Exchange Agent shall also make all computations contemplated
by Sections 2.01(e), (g) and (h), and all such computations shall be
conclusive and binding on the holders of shares of GPU Common Stock
(absent manifest error).
(j) Deemed Non-Election. For the purposes hereof, a holder of
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shares of GPU Common Stock who does not submit a Form of Election that is
received by the Paying Agent prior to the Election Deadline (as defined in
Section 2.01(k)) (the "No Election Shares") shall be deemed not to have
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made a Cash Election or Stock Election. If FirstEnergy or the Exchange
Agent shall determine that any purported Election was not properly made
prior to the Election Deadline, the shares subject to such improperly made
Election shall be treated as No Election Shares.
(k) Election Deadline. Not more than 90 days nor less than 20
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Business Days prior to the Election Deadline, FirstEnergy shall cause
copies of the Form of Election, together, in the case of holders of GPU
Common Stock who became such after the record date for the meeting
referred to therein, with a copy of the Joint Proxy Statement (as defined
in Section 3.05), to be mailed to the holders of record of GPU Common
Stock (as of a record date as close as practicable to the date of mailing
and mutually agreed by GPU and FirstEnergy). FirstEnergy shall use best
efforts to make the Form of Election, together with a copy of the Joint
Proxy Statement, available to all persons who become record holders of GPU
Common Stock subsequent to the record date with respect to such mailing
and prior to the Election Deadline. A Form of Election must be received by
the Exchange Agent by 5:00 p.m., New York City time, on the Business Day
prior to the Effective Time (the "Election Deadline"), in order to be
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effective. All Elections may be revoked until the Election Deadline in
writing by the record holders submitting Forms of Election. In addition,
all Elections shall automatically be revoked if the Merger Agreement is
terminated in accordance with Section 9.01. If an Election is revoked,
the GPU Certificates (or guarantee of delivery, as applicable) to which
the Election relates shall be promptly returned to the shareholder
submitting those GPU Certificates in respect of such Election. Nothing
contained herein shall be interpreted to prohibit a holder of shares of
GPU Common Stock from making Cash Elections with respect to those shares.
(l) Adjustment Per Tax Opinion. Notwithstanding anything in
--------------------------
this Article II to the contrary (other than the last sentence of Section
2.01(m)), if, based on the Exchange Ratio determined in accordance with
Section 2.01(c), the Tax Ratio (as defined below) is less than 45% (or
such lesser percentage, not below 40%, as shall be reasonably agreed to by
tax counsel to FirstEnergy and GPU to enable such tax counsel to deliver
the tax opinions referred to in Section 8.02(c) and 8.03(c)) (the "Minimum
-------
Tax Ratio"), the amount of cash to be delivered (but for this Section
---------
2.01(l)) with respect to each share of GPU Common Stock convertible, in
whole or in part, into a right to receive cash shall be reduced to the
minimum extent necessary (the
amount of such reduction, the "Reduction Amount") (and FirstEnergy shall
----------------
deliver with respect to each such share of GPU Common Stock, in lieu of
the Reduction Amount, that number of shares of FirstEnergy Common Stock
having an aggregate value (based on the closing price of the FirstEnergy
Common Stock on the Closing Date) equal to the Reduction Amount) so that
the Tax Ratio is equal to the Minimum Tax Ratio. "Tax Ratio" shall mean
---------
the ratio of (i) the product of (A) the closing price per share of
FirstEnergy Common Stock on the Closing Date times (B) the excess of (x)
the aggregate number of shares of FirstEnergy Common Stock to be issued
pursuant to this Section 2.01 over (y) the number of shares of FirstEnergy
Common Stock that tax counsel to FirstEnergy or GPU reasonably deems
necessary to exclude for purposes of the "continuity-of-interest"
requirements under applicable federal income tax principles relating to
reorganizations described in the Code (the "Aggregate Stock Amount"), to
----------------------
(ii) the sum of (u) the Aggregate Stock Amount plus (v) the aggregate cash
payable pursuant to this Section 2.01 (plus the aggregate estimated amount
of cash payable in lieu of fractional shares of FirstEnergy Common Stock
pursuant to Section 2.02(e)(ii)) plus (w) the number of Dissenting Shares
times the per share fair value of such shares determined pursuant to
applicable law or, if such fair value has not been determined as of the
date the calculation required by this Section 2.01(l) is required to be
made, then times the greater of (A) the Cash Consideration and (B) the
value of the number of shares of FirstEnergy Common Stock equal to the
Exchange Ratio (based on the closing price per share of FirstEnergy Common
Stock on the Closing Date), plus (x) any other amounts paid by GPU (or any
affiliate thereof) to, or on behalf of, any holder of shares of GPU Common
Stock in connection with the sale, redemption or other disposition of any
GPU Common Stock in connection with the Merger for purposes of Treasury
Regulation Sections 1.368-1(e) and 1.368-1T(e) plus (y) any extraordinary
dividend distributed by GPU prior to and in connection with the Merger for
purposes of Treasury Regulation Sections 1.368-1(e) and 1.368-1T(e), plus
(z) the amount of any other items that tax counsel to FirstEnergy or GPU
reasonably deems necessary to take into account for purposes of making the
Merger satisfy the "continuity-of-interest" requirements under applicable
federal income tax principles relating to reorganizations described in the
Code.
(m) Anti-Dilution Provisions. In the event FirstEnergy (i)
------------------------
changes (or establishes a record date for changing) the number of shares
of FirstEnergy Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, stock combination,
recapitalization, reclassification, reorganization or similar transaction
with respect to the outstanding FirstEnergy Common Stock or (ii) pays or
makes a dividend or distribution not permitted by Section 6.02 in respect
of FirstEnergy Common Stock (other than a distribution referred to in
clause (i) of this sentence) and, in either case, the record date therefor
or the effective time thereof shall be prior to the Effective Time, the
Exchange Ratio shall be adjusted appropriately. Regular quarterly cash
dividends and increases thereon shall not be considered extraordinary for
purposes of the preceding sentence. If, between the date hereof and the
Effective Time, FirstEnergy shall merge or consolidate with or into any
other corporation in an transaction otherwise permitted by the terms of
this Agreement and the terms thereof shall provide that FirstEnergy Common
Stock shall be converted into or exchanged for the shares of any other
corporation or entity, then provision shall be made so that shareholders
of GPU who would be entitled to receive shares of FirstEnergy Common Stock
pursuant to this Agreement shall be entitled to receive, in lieu of each
share of FirstEnergy Common Stock issuable to such shareholders as
provided herein, the same kind and amount of securities or assets as shall
be distributable upon such merger or consolidation with respect to one
share of FirstEnergy
Common Stock and the parties hereto shall agree on an appropriate
restructuring of the transactions contemplated herein.
(n) Dissenting Shares. Each outstanding share of GPU Common
-----------------
Stock the holder of which has perfected his right to dissent under
applicable law and has not effectively withdrawn or lost such right as of
the Effective Time (the "Dissenting Shares") shall not be converted into
-----------------
or represent a right to receive the Merger Consideration, and the holder
thereof shall be entitled only to such rights as are granted by applicable
law; provided however, that any Dissenting Share
-------- -------
held by a person at the Effective Time who shall, after the Effective
Time, withdraw the demand for payment for shares or lose the right to
payment for shares, in either case pursuant to the Pennsylvania BCL, shall
be deemed to be converted into, as of the Effective Time, the right to
receive the Merger Consideration as provided in Section 2.01, without
interest thereon, upon surrender of the GPU Certificates representing such
Dissenting Shares in accordance with Section 2.02 hereof. GPU shall give
(i) FirstEnergy prompt notice upon receipt by GPU of any written demands
for payment of the fair value of any shares of GPU Common Stock and of
withdrawals of any such demands and any other instruments provided
pursuant to applicable law and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
the Pennsylvania BCL. GPU shall not voluntarily make any payment with
respect to any demands for appraisal and shall not, except with the prior
written consent of FirstEnergy, settle or offer to settle any such
demands. Any payments made in respect of Dissenting Shares shall be made
by the Surviving Corporation.
Section 2.02 Exchange of Certificates. (a) Deposit with Exchange
------------------------ ---------------------
Agent. As soon as practicable after the Effective Time, the Surviving
-----
Corporation shall deposit with a bank or trust company mutually agreeable
to FirstEnergy and GPU (the "Exchange Agent"), pursuant to an agreement in
--------------
form and substance reasonably acceptable to FirstEnergy and GPU, an amount
of cash and certificates representing the shares of FirstEnergy Common
Stock required to effect the conversion of GPU Common Stock into
FirstEnergy Common Stock and cash in accordance with Section 2.01.
(b) Exchange and Payment Procedures. (i) As soon as
-------------------------------
reasonably practicable after the Merger, FirstEnergy shall cause the
Exchange Agent to mail to each holder of record as of the Effective
Time of one or more GPU Certificates in respect of which the holder
failed to return a properly completed Form of Election,
(A) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the
GPU Certificates shall pass, only upon delivery of the GPU
Certificates to the Exchange Agent) and
(B) instructions for effecting the surrender of the
GPU Certificates and receiving the Aggregate Consideration (as
defined below) to which such holder shall be entitled pursuant
to Section 2.01.
(ii) Upon surrender of a GPU Certificate for cancellation to
the Exchange Agent or to such other agent or agents as may be
appointed by FirstEnergy for such purpose, together with such letter
of transmittal, duly executed, the holder of such GPU Certificate
shall be entitled to receive in exchange therefor (x) a certificate
representing
that number of shares of FirstEnergy Common Stock ("FirstEnergy
-----------
Shares") into which the shares of GPU Common Stock previously
------
represented by such GPU Certificate are converted in accordance with
Section 2.01, (y) the cash to which such holder is entitled in
accordance with Section 2.01, and (z) the cash in lieu of fractional
FirstEnergy Shares which such holder has the right to receive
pursuant to Section 2.02(e) (the shares of FirstEnergy Common Stock
and cash described in clauses (x), (y) and (z) above being referred
to collectively as the "Aggregate Consideration"). In the event the
-----------------------
Aggregate Consideration is to be delivered to any person who is not
the person in whose name the GPU Certificate surrendered in exchange
therefor is registered in the transfer records of GPU, the Aggregate
Consideration may be delivered to a transferee if the GPU Certificate
is presented to the Exchange Agent, accompanied by all documents
reasonably required to evidence and effect such transfer and by
evidence reasonably satisfactory to the Exchange Agent that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02, each GPU Certificate (other than a
GPU Certificate representing shares of GPU Common Stock to be
canceled in accordance with Section 2.01(b)) shall be deemed at any
time after the Effective Time to represent only the right to receive
upon such surrender the Aggregate Consideration contemplated by this
Section 2.02. No interest will be paid or will accrue on any cash
payable to holders of GPU Certificates pursuant to provisions of this
Article II.
(c) Distributions with Respect to Unexchanged Shares. No
------------------------------------------------
dividends or other distributions declared or paid after the Effective Time
with respect to FirstEnergy Shares with a record date after the Effective
Time shall be paid to the holder of any unsurrendered GPU Certificate with
respect to the FirstEnergy Shares represented thereby and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant to
Section 2.02(e) until the holder of record of such GPU Certificate shall
surrender such GPU Certificate. Subject to the effect of unclaimed
property, escheat and other applicable laws, following surrender of any
such GPU Certificate, there shall be paid to the record holder of the
certificates representing whole FirstEnergy Shares issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount
of any cash payable in lieu of a fractional share of FirstEnergy Common
Stock to which such holder is entitled pursuant to Section 2.02(e) and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole FirstEnergy
Shares and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole FirstEnergy Shares.
(d) No Further Ownership Rights in GPU Common Stock. (i) The
-----------------------------------------------
payment of the Aggregate Consideration to be made to holders of GPU
Certificates upon conversion of shares of GPU Common Stock in
accordance with the terms hereof (including any cash paid in lieu of
fractional shares pursuant to Section 2.02(e)) shall be deemed to
have been issued and paid in full satisfaction of all rights
pertaining to such shares of GPU Common Stock, subject, however, to
the obligation of FirstEnergy to pay any dividends or make any other
distributions pursuant to Section 2.02(c) above.
(ii) If, after the Effective Time, GPU Certificates are
presented to FirstEnergy for any reason, they shall be canceled and
exchanged as provided in this Article II.
(e) No Fractional Shares. No certificates or scrip
--------------------
representing fractional shares of FirstEnergy Common Stock shall be issued
upon the surrender for exchange of GPU Certificates, and such fractional
share interests will not entitle the owner thereof to vote or to any
rights of a shareholder of FirstEnergy.
(ii) To the extent a holder of GPU Common Stock would
otherwise have been entitled to receive a fractional share of
FirstEnergy Common Stock, such holder shall be entitled to receive in
lieu thereof a payment in cash, without interest, in an amount equal
to (x) such fraction multiplied by (y) the average of the closing
prices of the shares of FirstEnergy Common Stock on the NYSE over the
five trading day period ending on the trading day immediately prior
to the Closing Date, as reported in The Wall Street Journal (but
subject to correction for typographical or other manifest errors in
such reporting). The fractional shares of FirstEnergy Common Stock
shall be aggregated and no holder of GPU Common Stock shall be
entitled to receive cash in an amount equal to or greater than the
value of one full share of FirstEnergy Common Stock as calculated
above.
(f) Termination of Exchange Agent. Any certificates
-----------------------------
representing FirstEnergy Shares deposited with the Exchange Agent pursuant
to Section 2.02(a) and not exchanged within one year after the Effective
Time pursuant to this Section 2.02 shall be returned by the Exchange Agent
to FirstEnergy, which shall thereafter act as Exchange Agent. All funds
held by the Exchange Agent for payment to the holders of unsurrendered GPU
Certificates and unclaimed at the end of one year from the Effective Time
shall be returned to FirstEnergy, after which time any holder of
unsurrendered GPU Certificates shall look as a general creditor only to
FirstEnergy for payment of such funds to which such holder may be due,
subject to applicable law.
(g) Withholding Rights. FirstEnergy shall be entitled to
------------------
deduct and withhold from the consideration otherwise payable pursuant to
this Agreement to any holder of GPU Common Stock (or to any person
pursuant to Section 2.02(h)) such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts
are so withheld by FirstEnergy, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the
shares of GPU Common Stock (or to any person pursuant to Section 2.02(h))
in respect of which such deduction and withholding was made by
FirstEnergy.
(h) Stock Options of GPU. (i) At the Effective Time, each
--------------------
unexpired and unexercised option to purchase GPU Common Stock (each,
a "GPU Option") granted under each of GPU's stock plans including but
----------
not limited to the GPU 1990 Employee Stock Plan, as amended, the GPU
Deferred Stock Unit Plan for Outside Directors, the 1989, 1990, 1992,
1995 and 1999 Stock Option and Restricted Stock Plans of MYR Group
Inc. and the 1993 Non-Employee Director Stock Option Plan of MYR
Group Inc. (the "GPU Stock Plans", and each, a "GPU Stock Plan"),
--------------- --------------
shall become, subject to the next sentence, an option (a "FirstEnergy
-----------
Option") to purchase a number of shares of FirstEnergy Common Stock
------
equal to the number of shares of GPU Common Stock that could have
been purchased under the GPU Option multiplied by the Exchange Ratio
as adjusted in accordance with Section 2.01(m) (with the
resulting number of shares rounded up or down to the nearest whole
share), at an exercise price per share of
FirstEnergy Common Stock equal to the option exercise price of the
GPU Option determined pursuant to the GPU Option divided by the
Exchange Ratio as adjusted in accordance with Section 2.01(m)
(with the resulting exercise price rounded up or down to the nearest
whole cent). Notwithstanding the foregoing, any holder of a GPU
Option the current terms of which entitle the holder, upon
consummation of the Merger, to a cash payment in respect of that
option shall be entitled to that cash payment in accordance with the
current terms of the option unless, within 30 days after the
Effective Date, that holder elects, by written notice to FirstEnergy,
that the holder's GPU Option shall become a FirstEnergy Option in
accordance with the prior sentence of this Section 2.02(h). Prior to
the Closing Date, the Board of Directors of GPU and GPU shall take,
or cause the appropriate committee to take, all action necessary to
effectuate the foregoing, including the adoption of necessary
amendments to the GPU Stock Plans.
(ii) As of the Effective Time all outstanding performance
units (each, a "GPU Performance Unit") granted under the GPU Stock
--------------------
Plans in respect of shares of GPU Common Stock will, in accordance
with their terms, vest and become payable upon the consummation of
the Merger, and all outstanding deferred vested units (each, a "GPU
---
Deferred Unit" and together with a GPU Performance Unit, the "GPU
------------- ---
Stock Units") granted under the GPU Stock Plans in respect of shares
-----------
of GPU Common Stock may, in accordance with their terms and prior
elections made by the holders thereof, become payable upon the
consummation of the Merger. Each holder of a GPU Stock Unit which
becomes payable upon the consummation of the Merger shall be entitled
to receive at the Effective Time, (i) if the GPU Stock Units are
payable in cash, a cash payment equal to the number of GPU Stock
Units held at the Effective Time multiplied by the highest closing
price per share of GPU Common Stock, as reported on the New York
Stock Exchange Composite Tape, occurring during the 90-day period
immediately preceding the Effective Time (the "GPU Stock Price"), and
---------------
(ii) if the GPU Stock Unit is payable in stock, a number of shares of
FirstEnergy Common Stock equal to the quotient of (1) the product of
the number of such GPU Stock Units, multiplied by the GPU Stock
Price, divided by (2) the per share closing price of FirstEnergy
Common Stock on the last business day immediately preceding the
Effective Time. Each GPU Deferred Unit that does not become payable
upon consummation of the Merger, shall, at the written election of
the holder thereof delivered to FirstEnergy within 30 days after the
Effective Time, be converted at the Effective Time into either (i) a
deferred vested unit (a "FirstEnergy Deferred Unit") in respect of a
-------------------------
number of shares of FirstEnergy Common Stock equal to the quotient of
(1) the product of the number of such GPU Deferred Units, multiplied
by the GPU Stock Price, divided by (2) the per share closing price of
FirstEnergy Common Stock on the last business day immediately
preceding the Effective Time, or (ii) a deferred cash account to be
established and maintained by FirstEnergy or one of its Subsidiaries
with an initial balance equal to the number of shares of GPU Common
Stock covered by the GPU Deferred Unit multiplied by the GPU Stock
Price, which balance shall be credited with interest at an annual
rate not less than the Citibank, N.A. prime rate as in effect from
time to time. In accordance with the terms of the GPU Stock Plans
and the GPU Stock Units, the personnel, compensation and nominating
committee of the Board of Directors of GPU (the "GPU PCN Committee")
-----------------
shall prior to the Effective Time determine whether all or a portion
of each GPU Stock Unit that becomes payable upon the consummation of
the Merger or thereafter shall entitle the holder thereof to
payment in cash or in shares of FirstEnergy Common Stock. Prior to
the Effective Time, GPU shall take, or cause the appropriate
committee to take, all action necessary to effectuate the foregoing,
including the adoption of necessary amendments to the applicable GPU
Stock Plan.
(iii) From and after the Effective Time, each substituted
FirstEnergy Option and FirstEnergy Deferred Unit provided for in this
Section 2.02(h) shall otherwise be subject to the same terms and
conditions as the corresponding GPU Option or GPU Stock Unit, as
applicable (subject to the adjustments provided for in this Section
2.02(h), the GPU Stock Plans and the option or deferred vested unit
agreements pursuant to which any such option or deferred vested unit
was granted).
(iv) The date of grant of the substituted FirstEnergy
Option or FirstEnergy Deferred Unit provided for in this Section
2.02(h) shall be the date on which the corresponding GPU Option or
GPU Deferred Unit was granted.
(v) FirstEnergy shall
(A) At the Effective Time, assume all of GPU's
obligations with respect to all GPU Options and GPU Stock Units
as contemplated by this Section 2.02(h),
(B) At the Effective Time, have reserved for issuance
the number of shares of FirstEnergy Common Stock that will
become subject to or payable in respect of FirstEnergy Options,
GPU Stock Units and FirstEnergy Deferred Units pursuant to this
Section 2.02(h),
(C) from and after the Effective Time, upon exercise
of the FirstEnergy Options or upon the payment of GPU Stock
Units or FirstEnergy Deferred Units, in each case, in accordance
with the terms thereof, make available for issuance all shares
of FirstEnergy Common Stock covered thereby, and
(D) as soon as practicable after the Effective Time,
issue to each holder of an outstanding GPU Option or GPU Stock
Unit a document evidencing the foregoing assumption by
FirstEnergy.
(vi) FirstEnergy shall use reasonable best efforts to
ensure that the shares of FirstEnergy Common Stock issuable or
deliverable upon the exercise of the FirstEnergy Options or upon the
payment of the GPU Stock Units or FirstEnergy Deferred Units are
listed on the NYSE upon issuance or delivery, as applicable. Prior
to the Effective Time, FirstEnergy shall file with the SEC a
registration statement on Form S-8 (or any successor form), or an
amendment to a registration statement previously filed, under the
Securities Act of 1933 and the rules and regulations promulgated
thereunder (the "Securities Act"), with respect to the shares of
--------------
FirstEnergy Common Stock deliverable upon exercise of the FirstEnergy
Options or upon the payment of the GPU Stock Units or FirstEnergy
Deferred Units. FirstEnergy shall take all necessary action so that
newly filed registration statement or amendment to the previously
filed registration statement, as the case may be, shall be effective
at the Effective Time. FirstEnergy shall use
reasonable best efforts to (1) maintain the current status of the
prospectus or prospectuses relating to any registration statement
applicable to the FirstEnergy Options and/or GPU Stock Units and/or
FirstEnergy Deferred Units and (2) comply with any applicable state
securities or "blue sky" laws, in each case so long as any
FirstEnergy Options and/or GPU Stock Units and/or FirstEnergy
Deferred Units remain outstanding.
(vii) The Board of Directors or compensation committee of
FirstEnergy and Board of Directors of GPU or the GPU PCN Committee
will each grant all approvals and take all other actions required
pursuant to Rules 16b-3(d) and 16b-3(e) under the Exchange Act to
cause the disposition in the Merger of GPU Common Stock, GPU Options
and GPU Stock Units and the acquisition in the Merger of FirstEnergy
Common Stock, FirstEnergy Options and FirstEnergy Deferred Units to
be exempt from the provisions of Section 16(b) of the Exchange Act.
(i) No Liability. No party to this Agreement shall be liable
------------
to any holder of shares of GPU Common Stock for payment of the Merger
Consideration (or dividends or distributions relating thereto) delivered
to a public official pursuant to any applicable abandoned property,
escheat or similar law.
Section 2.03 Stated Capital of Surviving Corporation Shares.
----------------------------------------------
At the Effective Time, the stated capital of each class of shares of the
Surviving Corporation shall equal the par value of such shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GPU
-------------------------------------
Except as set forth in (x) the GPU SEC Documents (as defined in
Section 3.06) filed with the SEC prior to or as of the date of this
Agreement and (y) the disclosure schedule delivered to FirstEnergy by GPU
pursuant to Section 7.17(a)(ii) (the "GPU Disclosure Schedule"), GPU
-----------------------
represents and warrants to FirstEnergy as follows:
Section 3.01 Organization, Standing and Power. (a) Each of GPU
--------------------------------
and its Significant Subsidiaries
(i) is a corporation or other organization duly organized,
validly existing and in good standing (with respect to jurisdictions
that recognize the concept of good standing) under the laws of its
jurisdiction of incorporation or organization,
(ii) has all requisite corporate or similar power and
authority, and has been duly authorized by all necessary approvals
and orders of Governmental Entities (as defined in Section 3.04), to
own, lease and operate its properties and to carry on its business as
now being conducted, and
(iii) is duly qualified and in good standing (with respect
to jurisdictions that recognize the concept of good standing) to transact
business in each jurisdiction in which
the nature of its business or the ownership or leasing of its
properties makes such qualification necessary,
except with respect to each of clauses (ii) and (iii) above where the
failure to have such power and authority, or to be so qualified or in good
standing, would not, when taken together with all other such failures,
have a GPU Material Adverse Effect. "Material Adverse Effect" shall mean,
-----------------------
with respect to GPU or FirstEnergy, as applicable, a material adverse
effect on the business, operations, properties, assets, financial
condition or the reported or future results of operations of that party
and its Subsidiaries taken as a whole or on that party's ability to
consummate the Merger; provided, however, that events, consequences or
-------- -------
conditions arising out of or caused by the following shall not be
considered in determining whether a "Material Adverse Effect" has occurred
or would occur: (a) changes to general economic conditions, and (b)
changes resulting from the adoption, amendment or issuance of any law,
regulation, ruling, order or decree, or any new interpretation of any of
the foregoing, by any Governmental Entity, unless, in the case of a
ruling, order or decree, such ruling, order or decree is applicable solely
to GPU or FirstEnergy, as applicable, or any of its Subsidiaries. A
"Material Adverse Effect" on GPU or FirstEnergy is referred to
respectively as a "GPU Material Adverse Effect" or a "FirstEnergy Material
--------------------------- --------------------
Adverse Effect". FirstEnergy and GPU have exchanged certain internal
--------------
businesses projections; FirstEnergy and GPU agree that such business
projections are not covered by the representations or warranties of
FirstEnergy or GPU, as the case may be, contained in this Agreement and
will not form the basis for a determination by either FirstEnergy or GPU
that a Material Adverse Effect has occurred or would occur.
(b) As used in this Agreement, (x) a "Significant Subsidiary"
----------------------
means any Subsidiary that would constitute a significant subsidiary within
the meaning of Rule 1-02(w) of Regulation S-X of the SEC and (y) a
"Subsidiary" means, with respect to any corporation or other entity, any
----------
other corporation or other entity in which the first entity owns, directly
or indirectly, more than fifty percent of the securities or other
ownership interests having by their terms ordinary voting power to elect
at least a majority of the board of directors or other persons performing
similar functions.
Section 3.02 Capital Structure. (a) As of the date hereof, (i)
-----------------
the authorized capital stock of GPU consists of 350,000,000 shares of GPU
Common Stock of which, as of August 4, 2000, 121,285,419 shares were
issued and outstanding and 11,497,919 shares were held by GPU in its
treasury or by any of its wholly owned Subsidiaries; (ii) options under
the GPU Stock Plans to purchase not more than 1,196,374 shares of GPU
Common Stock are outstanding; and (iii) no bonds, debentures, notes or
other indebtedness having the right to vote (or convertible into
securities having the right to vote) ("Voting Debt") on any matters on
-----------
which shareholders of GPU may vote are issued or outstanding.
(b) All outstanding shares of GPU's capital stock are validly
issued, fully paid and nonassessable and are not subject to preemptive
rights.
(c) As of the date of this Agreement (except as set forth in
paragraph (a) above and except for rights ("GPU Rights") issued under the
----------
Rights Agreement, dated as of August 6, 1998, between GPU and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "GPU Rights
----------
Agreement")), there are no options, warrants, calls, rights, commitments
---------
or
agreements of any character to which GPU or any Subsidiary of GPU is a
party or by which it is bound obligating GPU or any Subsidiary of GPU to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or any Voting Debt of, or other equity
interest in, GPU or securities convertible or exchangeable for such
shares, Voting Debt or other equity interests, or obligating GPU or any
Subsidiary of GPU to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement.
Section 3.03 Corporate Authority. (a) GPU has all requisite
-------------------
corporate power and authority to enter into this Agreement and, subject to
the approval of this Agreement and the transactions contemplated hereby by
the shareholders of GPU, to consummate the transactions contemplated
hereby.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of GPU, subject
to the approval of this Agreement by the shareholders of GPU.
(c) This Agreement has been duly executed and delivered by GPU
and constitutes a valid and binding obligation of GPU enforceable in
accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance or other
similar laws affecting the enforcement of creditors' rights generally, and
except that the availability of equitable remedies, including specific
performance, may be subject to the discretion of any court before which
any proceeding may be brought.
Section 3.04 No Violation. Except as contemplated by Section 3.05,
------------
the execution and delivery of this Agreement do not, and the consummation
of the transactions contemplated hereby will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or
the creation of a lien, pledge, security interest or other encumbrance on
assets pursuant to (any such conflict, violation, default, right of
termination, cancellation or acceleration, loss or creation, a
"Violation"),
---------
(a) any provision of the Articles of Incorporation, as amended,
or By-Laws of GPU or the articles of incorporation, by-laws or similar
constitutional documents of any Subsidiary of GPU,
(b) any provision of any loan or credit agreement, note, bond,
mortgage, indenture, lease, GPU Controlled Group Plan (as defined in
Section 3.12(a)) or other agreement, obligation, instrument, permit,
concession, franchise, license of any kind to which GPU or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or affected, which Violation would have
a GPU Material Adverse Effect, or
(c) any judgment, order, injunction, writ, decision, decree,
statute, law, ordinance, rule, regulation, permit or license of any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity") applicable
-------------------
to GPU or any of its Subsidiaries or their respective properties or
assets, which Violation would have a GPU Material Adverse Effect.
Section 3.05 Consents and Approvals. No consent, approval, order
----------------------
or authorization of, or registration, declaration or filing with, any
Governmental Entity, is required to be obtained by GPU with respect to GPU
or any of its Subsidiaries in connection with the execution and delivery
of this Agreement by GPU or the consummation by GPU of the transactions
contemplated hereby, the failure of which to obtain would have a GPU
Material Adverse Effect, except for:
(a) the filing of a premerger notification report with the
Federal Trade Commission (the "FTC") and the Department of Justice (the
---
"DOJ") under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
---
amended (the "HSR Act"), and the expiration or termination of the
-------
applicable waiting period under the HSR Act,
(b) the filing with, and to the extent applicable, the
declaration of effectiveness by, the SEC of
(i) a proxy statement in definitive form relating to the
meeting of GPU's and FirstEnergy's shareholders to be held in
connection with the Merger (the "Joint Proxy Statement"), and
---------------------
(ii) such reports and other filings under the Securities
Act or the Exchange Act, as may be required in connection with this
Agreement and the transactions contemplated hereby, and the obtaining
from the SEC of such orders as may be so required under the
Securities Act or the Exchange Act,
(c) the filing and notices required under the Public Utility
Holding Company Act of 1935 and the rules and regulations promulgated
thereunder (the "1935 Act") and the obtaining from the SEC of an order
pursuant to Section 10 of the 1935 Act approving the transactions
contemplated hereby (the "SEC '35 Act Order"),
-----------------
(d) the filing of Certificates of Merger with the Department of
State of the Commonwealth of Pennsylvania and the Secretary of State of
the State of Ohio in accordance with applicable law,
(e) such filings, notices, authorizations, orders and approvals
with, of, to or from, the Federal Energy Regulatory Commission (the
"FERC") under the Federal Power Act, as amended (the "FPA"), that may be
---- ---
required in connection with the transactions contemplated by this
Agreement (the "FERC Approvals"),
--------------
(f) such filings, notices, authorizations, orders and approvals
with, of, to or from, of the Nuclear Regulatory Commission (the "NRC")
---
under the Atomic Energy Act, as amended (the "AEA"), that may be required
---
in connection with the transactions contemplated by this Agreement (the
"NRC Approvals"),
-------------
(g) such filings, notices, authorizations, orders and approvals
as may be required of the Federal Communications Commission (the "FCC")
---
under the Federal Communications Act, as amended that may be required in
connection with the transactions contemplated by this Agreement (the "FCC
---
Approvals"),
---------
(h) such filings, authorizations, orders and approvals as may be
required of state and local governmental authorities, including state and
local utility commissions (the "Local Approvals"),
---------------
(i) such filings and approvals as may be required pursuant to
state takeover laws ("State Takeover Approvals"), and
------------------------
(j) such filings and approvals as may be required under the laws
of foreign countries or their political subdivisions (the "Foreign
-------
Approvals").
---------
Section 3.06 GPU SEC Documents. (a) GPU has made available to
-----------------
FirstEnergy a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by GPU with
the SEC since January 1, 2000 (as such documents have since the time of
their filing been amended, the "GPU SEC Documents") which are all the
-----------------
documents (other than preliminary material) that GPU was required to file
with the SEC since such date.
(b) As of their respective dates of filing, (x) the GPU SEC
Documents complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may
be, to the extent applicable to such GPU SEC Documents, and (y) none of
the GPU SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) The consolidated financial statements of GPU included in the
GPU SEC Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, and present fairly, in all
material respects, the financial position of GPU and its subsidiary
companies at the dates indicated, and the results of their operations and
cash flows for the periods indicated, in conformity with GAAP applied on a
consistent basis during the periods involved (except (x) as may be
indicated in the notes thereto and (y) in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC and for normal, recurring
adjustments).
Section 3.07 No Undisclosed Liabilities. (a) Except as and to the
--------------------------
extent set forth in GPU's Annual Report on Form 10-K for the year ended
December 31, 1999 and Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 2000 and June 30, 2000, as of June 30, 2000,
neither GPU nor any of its Subsidiaries had any liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise, except for
liabilities or obligations that would not be required by GAAP to be
reflected on a consolidated balance sheet (including the notes thereto) of
GPU or which would not, individually or in the aggregate, be reasonably
likely to have a GPU Material Adverse Effect.
(b) Since June 30, 2000, except as set forth in the GPU SEC
Documents filed by GPU with the SEC since June 30, 2000 and prior to the
date of this Agreement, neither GPU nor any of its Subsidiaries has
incurred any liabilities or obligations of any nature, whether or not
accrued, absolute, contingent, threatened or otherwise, which would,
individually or in the aggregate, have a GPU Material Adverse Effect.
Section 3.08 Information Supplied. (a) None of the information
--------------------
supplied or to be supplied by GPU for inclusion or incorporation by
reference in
(i) the Registration Statement (as defined in Section
4.05(b)(ii)) will, at the time it is filed with the SEC and at the
time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, and
(ii) the Joint Proxy Statement will, at the date mailed to
the shareholders of GPU and the shareholders of FirstEnergy and at
the time of the meetings of such shareholders to be held in
connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they are made, not
misleading.
(b) The Joint Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act.
Section 3.09 Compliance with Applicable Laws. (a) GPU and its
-------------------------------
Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities which are material to the operation
of the businesses of GPU and its Subsidiaries, taken as a whole (the "GPU
---
Permits").
-------
(b) GPU and its Subsidiaries are in compliance with the terms of
the GPU Permits, except where any such failures so to comply would not,
individually or in the aggregate, have a GPU Material Adverse Effect.
(c) The businesses of GPU and its Subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which would not
individually or in the aggregate, have a GPU Material Adverse Effect.
(d) As of the date of this Agreement,
(i) no investigation or review by any Governmental Entity
with respect to GPU or any of its Subsidiaries is pending or, to the
knowledge of the executive officers of GPU, threatened, and
(ii) to the knowledge of the executive officers of GPU, no
Governmental Entity has indicated an intention to conduct any such
investigation or review,
other than, in each case, those the outcome of which would not have a GPU
Material Adverse Effect.
Section 3.10 Litigation. As of the date of this Agreement:
----------
(a) there is no suit, action or proceeding pending or, to the
knowledge of the executive officers of GPU, threatened against GPU or any
of its Subsidiaries which is reasonably likely to have a GPU Material
Adverse Effect, and
(b) there is no judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against GPU or any of
its Subsidiaries having, or which is reasonably likely to have, a GPU
Material Adverse Effect.
Section 3.11 Taxes. (a) Each of GPU and its Subsidiaries
-----
(including any predecessors) has timely filed when due all Tax returns
required to be filed by any of them and has paid (or GPU has paid on its
behalf), or has established an adequate accrual or reserve (determined in
accordance with GAAP) for the payment of, all Taxes required to be paid in
respect of all periods for which returns have been filed or are due
(whether or not shown as being due on any Tax returns) or which are
otherwise due and payable, except as would not have a GPU Material Adverse
Effect. The most recent balance sheet contained in the GPU SEC Documents
reflects an adequate accrual or reserve (determined in accordance with
GAAP) for Taxes payable by GPU and its Subsidiaries accrued through the
date of such balance sheet, except as would not have a GPU Material
Adverse Effect.
(b) Except as would not have a GPU Material Adverse Effect, (i)
no deficiencies for any Taxes have been proposed, asserted or assessed in
writing or, to the knowledge of the executive officers of GPU, orally, by
any Taxing authority against GPU or any of its Subsidiaries, and (ii) no
audit of the Tax returns of GPU or any of its Subsidiaries is currently
being conducted by any Taxing authority.
(c) Except with respect to any claims for refunds, the Federal
income Tax returns of GPU and each of its Subsidiaries consolidated in
such returns for all such periods ended on or before December 31, 1995
have been examined by and settled with the United States Internal Revenue
Service (the "IRS"), or the applicable statute of limitations with respect
---
to such years, including extensions thereof, has expired. As of the date
of this Agreement, none of GPU or any of its Subsidiaries (i) has
requested any extension of time within which to file any material Federal
income Tax return, which Tax return has not since been filed and (ii) has
in effect any extension, outstanding waivers or comparable consents with
respect to any material Federal income Taxes or material Federal income
Tax returns.
(d) Copies of all Federal Tax returns required to be filed by
GPU or any of its Subsidiaries (including any predecessors) for each of
the last three years, together with all schedules and attachments thereto,
have been delivered or made available by GPU to FirstEnergy.
(e) None of GPU or any of its Subsidiaries (including any
predecessors) is a party to, is bound by, or has any obligation under any
Tax sharing or similar agreement.
(f) None of GPU or any of its Subsidiaries (i) has received a
Tax ruling from any Federal Taxing authority or entered into a closing
agreement with any Federal Taxing authority that would have a continuing
material effect after the Closing Date or (ii) is required to
include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by it for any
tax year, and, to the knowledge of the executive officers of GPU, the IRS
has not proposed any such adjustment or change in accounting method for
any tax year for which the statute of limitations remains open. None of
GPU or any of its Subsidiaries has constituted a "distributing
corporation" in a distribution of stock qualifying for tax-free treatment
under Section 355 of the Code in the past 24 month period or in a
distribution which could otherwise constitute part of a "plan" or a series
of "related transactions" within the meaning of Section 355(e) of the
Code.
(g) GPU has not taken any actions, nor is it aware of any facts
or circumstances, which would, or would be reasonably likely to, prevent
the Merger from constituting a reorganization within the meaning of
Section 368(a) of the Code.
(h) For the purpose of this Agreement, the term "Tax"
---
(including, with correlative meaning, the terms "Taxes", "Taxing", and
----- ------
"Taxable") shall include all Federal, state, local and foreign income,
-------
profits, franchise, gross receipts, payroll, sales, employment, use,
property, gains, transfer, recording, license, value-added, withholding,
excise and other taxes, duties or assessments of any nature whatsoever
(whether payable directly or by withholding), together with any and all
estimated Tax interest, penalties and additions to Tax imposed with
respect to such amounts and any obligations in respect thereof under any
Tax sharing, Tax allocation, Tax indemnity or similar agreement as well as
any obligations arising pursuant to Regulation 1.1502-6 promulgated under
the Code or comparable state, local or foreign provision.
Section 3.12 Employee Matters. (a) With respect to each employee
----------------
benefit plan (including, without limitation, any "employee benefit plan",
as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), and any bonus, pension, profit sharing,
-----
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, insurance or other material
plan, arrangement or understanding (whether or not legally binding) (all
the foregoing being herein called the "GPU Controlled Group Plans"),
--------------------------
maintained or contributed to by GPU, any of its Subsidiaries or any other
organization which is a member of a controlled group of organizations
(within the meaning of Sections 414(b), (c), (m) or (o) of the Code) of
which GPU is a member, GPU has made available to FirstEnergy, or will
deliver to FirstEnergy within 30 days after the date hereof, a true and
correct copy of
(i) the most recent annual report (Form 5500) filed with
the IRS,
(ii) any such GPU Controlled Group Plan,
(iii) each trust agreement and group annuity contract, if
any, relating to any such GPU Controlled Group Plan, and
(iv) the most recent actuarial report or valuation relating
to any such GPU Controlled Group Plan subject to Title IV of ERISA.
(b) Each of the GPU Controlled Group Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has been
determined by the IRS to be so qualified, and, to the knowledge of the
executive officers of GPU, no circumstances
exist that are reasonably expected by GPU to result in the revocation of
any such determination.
(ii) Except as would not have a GPU Material Adverse
Effect, GPU is in compliance with, and each GPU Controlled Group Plan
is and has been operated in compliance with, all applicable laws,
rules and regulations governing such plan, including, without
limitation, ERISA and the Code.
(iii) Except as would not have a GPU Material Adverse
Effect, each GPU Controlled Group Plan intended to provide for the
deferral of income, the reduction of salary or other compensation or
to afford other income tax benefits complies with the requirements of
the applicable provisions of the Code or other laws, rules and
regulations required to provide such income tax benefits.
(c) With respect to the GPU Controlled Group Plans, individually
and in the aggregate, no event has occurred, and to the knowledge of any
of the executive officers of GPU or any of its Subsidiaries, there exists
no condition or set of circumstances in connection with which GPU or any
of its Subsidiaries could be subject to any liability that is reasonably
likely to exceed $1,000,000 (except liability for benefits claims and
funding obligations payable in the ordinary course) under ERISA, the Code
or any other applicable law.
(d) Except as would not have a GPU Material Adverse Effect, with
respect to each GPU Controlled Group Plan, there are no material funded
benefit obligations for which contributions have not been made or in
accordance with GAAP properly accrued and there are no material unfunded
benefit obligations which have not been accounted for in accordance with
GAAP, on the financial statements of GPU or any of its Subsidiaries.
(e) Except as provided for in this Agreement, as of the date of
this Agreement, neither GPU nor any of its Subsidiaries is a party to any
union or collective bargaining agreement.
(f) No GPU Controlled Group Plan is a multiemployer plan (within
the meaning of Section 3(37) or Section 4001(a)(3) of ERISA or Section
414(f) of the Code).
(g) No GPU Controlled Group Plan is intended to be an employee
stock ownership plan (within the meaning of Section 4975(e)(7) of the
Code) or a tax credit employee stock ownership plan (within the meaning of
Section 409(a) of the Code).
(h) None of the GPU Controlled Group Plans that are welfare
plans (within the meaning of Section 3(l) of ERISA) provides for any
retiree benefits.
(i) Except as would not have a GPU Material Adverse Effect,
(i) the consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in any
(A) payment (whether of severance pay or otherwise)
becoming due from GPU or any of its Subsidiaries to any officer,
employee, former employee or director thereof or to the trustee
under any "rabbi trust" or similar arrangement, or
(B) benefit under any GPU Controlled Group Plan being
established or becoming accelerated, vested or payable, and
(ii) neither GPU nor any of its Subsidiaries is a party to
(A) any management, employment, deferred
compensation, severance (including any payment, right or benefit
resulting from a change in control), bonus or other contract for
personal services with any officer, director or employee,
(B) any consulting contract with any person who prior
to entering into such contract was a director or officer of GPU,
or
(C) any plan, agreement, arrangement or understanding
similar to any of the foregoing.
Section 3.13 Absence of Certain Changes or Events. Between June 30,
------------------------------------
2000 and the date of this Agreement, GPU and its Subsidiaries have
conducted their respective businesses in all material respects in the
ordinary and usual course, and, as of the date of this Agreement, there
has not been
(a) any damage, destruction or loss, whether covered by
insurance or not, which has, or would have, a GPU Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to
any of GPU's or its Subsidiaries' capital stock, except for (i) regular
quarterly cash dividends of $.545 per share on GPU Common Stock; (ii)
regular dividends on GPU's Subsidiaries' preferred stock (the "GPU Subs
--------
Preferred") with usual record and payment dates for such dividends; and
---------
(iii) dividends on common stock paid by wholly owned Subsidiaries of GPU;
or
(c) any transaction, commitment, dispute or other event or
condition (financial or otherwise) of any character (whether or not in the
ordinary course of business) individually or in the aggregate having, or
which is reasonably likely to have, a GPU Material Adverse Effect.
Section 3.14 Opinion of GPU Financial Advisor. GPU has received the
--------------------------------
opinion of Xxxxxxx Xxxxx Xxxxxx, Inc. (hereinafter referred to as "GPU
---
Advisor"), dated as of the date hereof, to the effect that, subject to the
-------
limitations and qualifications contained in that opinion, as of the date
of the opinion, the Merger Consideration is fair from a financial point of
view to the holders of GPU Common Stock, and copies of such opinion have
been previously or will be delivered to FirstEnergy.
Section 3.15 Vote Required. The affirmative vote of a majority of
-------------
the votes cast by holders of shares of GPU Common Stock with respect to
the adoption of this Agreement (at a meeting of shareholders duly called,
noticed and held and at which a quorum is present (whether in person or by
proxy)) is the only vote of the holders of any class or series of GPU
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
Section 3.16 Accounting Matters. Neither GPU nor, to the knowledge
------------------
of the executive officers of GPU, any of its affiliates has through the
date of this Agreement taken or agreed to take any action that would
prevent FirstEnergy from accounting for the business combination to be
effected by the Merger on a purchase accounting basis in accordance with
GAAP and applicable regulations of the SEC.
Section 3.17 Ownership of FirstEnergy Stock. As of the date of this
------------------------------
Agreement, GPU and its affiliates do not "beneficially own" (as such term
is defined in the FirstEnergy Rights Agreement) any shares of FirstEnergy
Common Stock.
Section 3.18 GPU Subsidiaries. (a) Section 3.18(a) of the GPU
---------------- ---------------
Disclosure Schedule sets forth a description as of the date hereof of all
Significant Subsidiaries and material joint ventures of GPU, including the
name of each such entity, a brief description of the principal line or
lines of business conducted by each such entity and GPU's interest
therein.
(b) All of the issued and outstanding shares of capital stock
of each Significant Subsidiary of GPU are validly issued, fully paid,
nonassessable and free of preemptive rights, and, other than outstanding
shares of preferred stock or similar securities that are not convertible
into common equity securities ("Non-Convertible Preferred Securities"),
------------------------------------
are owned directly or indirectly by GPU free and clear of any material
liens, claims, encumbrances, security interests, equities, charges and
options of any nature whatsoever, and there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating any such
Significant Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of its capital stock, other than Non-
Convertible Preferred Securities, or obligating it to grant, extend or
enter into any such agreement or commitment. As used in this Agreement,
the term "wholly owned Subsidiary" shall include Subsidiaries the
-----------------------
preferred stock or similar securities of which may not be owned by the
entity as to which such Subsidiary is otherwise a wholly owned Subsidiary.
(c) 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) in which such person or one or more of
its subsidiaries owns an equity interest that is less than a majority of
any class of the outstanding voting securities or equity, other than
equity interests held for passive investment purposes which are less than
5% of any class of the outstanding voting securities or equity of any such
entity.
Section 3.19 Environmental Protection. (a) Compliance. Each of
GPU
------------------------ ----------
and its Subsidiaries is in compliance with all applicable Environmental
Laws (as hereinafter
defined), except for failures to be in compliance which would not have a
GPU Material Adverse Effect.
(ii) Neither GPU nor any of its Subsidiaries has received
any written communication or, to the knowledge of the executive
officers of GPU, any oral communication, from any person or
Governmental Entity that alleges that GPU or any of its Subsidiaries
is not in compliance with applicable Environmental Laws, except where
the failure to be in compliance would not have a GPU Material Adverse
Effect.
(b) Permits. Each of GPU and its Subsidiaries has obtained or
-------
has applied for all environmental, health and safety permits and
governmental authorizations (collectively, the "Environmental Permits")
---------------------
necessary for the construction of its facilities or the conduct of its
operations, and all such permits are in effect or, where applicable, a
renewal application has been timely filed and is pending agency approval,
and GPU and each of its Subsidiaries is in material compliance with all
terms and conditions of the Environmental Permits, in each case, except
for failures to obtain or be in compliance with such Environmental Permit,
or of such Environmental Permits to be in effect, which would not have a
GPU Material Adverse Effect.
(c) Claims. To the knowledge of the executive officers of GPU,
------
no Environmental Claim (as hereinafter defined) is pending
(i) against GPU or any of its Subsidiaries or any joint
ventures to which GPU or any of its Subsidiaries is a party,
(ii) against any person or entity whose liability for any
Environmental Claim GPU or any of its Subsidiaries or joint ventures
has or may have retained or assumed either contractually or by
operation of law, or
(iii) against any real or personal property or operations
which GPU or any of its Subsidiaries or joint ventures owns, leases
or manages, in whole or in part,
which would have, in the aggregate, a GPU Material Adverse Effect.
(d) The executive officers of GPU have no knowledge of any
Releases (as hereinafter defined) of any Hazardous Material (as
hereinafter defined) that would be reasonably likely to form the basis of
any Environmental Claim against GPU or any Subsidiaries or joint ventures
of GPU, or its Subsidiaries, or against any person or entity whose
liability for any Environmental Claim GPU or any Subsidiaries or joint
ventures of GPU or 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 have, in the
aggregate, a GPU Material Adverse Effect.
(e) The executive officers of GPU have no knowledge, with
respect to any predecessor of GPU or any Subsidiary or joint venture of
GPU, of any Environmental Claim pending or threatened, or of any Release
of Hazardous Materials that would be reasonably likely to form the basis
of any Environmental Claim, which would have a GPU Material Adverse
Effect.
(f) To the knowledge of the executive officers of GPU, GPU has
disclosed to FirstEnergy all material facts which GPU reasonably believes
form the basis of a GPU Material Adverse Effect arising from
(i) the cost of pollution control equipment currently
required or known to be required in the future; or
(ii) current remediation costs or remediation costs known to
be required in the future.
(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 (written or
oral) by any person or entity (including any Governmental Entity)
alleging potential liability (including, without limitation,
potential liability for enforcement, investigatory costs, cleanup
costs, governmental response costs, removal costs, remedial costs,
natural resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from
(A) the presence, or Release or threatened Release
into the environment, of any Hazardous Materials at any
location, whether or not owned, operated, leased or managed by
GPU or any Subsidiary or joint venture of GPU or its
Subsidiaries (for purposes of this Section 3.19) or by
FirstEnergy or any of its Subsidiary or joint ventures of
FirstEnergy or its Subsidiaries (for purposes of Section 4.19);
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
------------------
and foreign laws, rules and regulations relating to pollution
(including without limitation, indoor or ambient air, surface water,
groundwater, land surface or subsurface strata), including, without
limitation, laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" means
-------------------
(A) any petroleum or petroleum products, radioactive
materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, and transformers or other
equipment that contain dielectric fluid containing
polychlorinated biphenyls ("PCBs"); 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", 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 GPU or any
Subsidiary or joint venture of GPU operates (for purposes of
this Section 3.19) or in which FirstEnergy or any Subsidiary or
joint venture of FirstEnergy operates (for purposes of Section
4.19).
(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 3.20 Regulation as a Utility. (a) Except as set forth in
-----------------------
paragraphs (b), (c) and (d) of this Section 3.20 (including the sections
of the GPU Disclosure Schedule referred to in those paragraphs), neither
GPU nor any "subsidiary company" or "affiliate" of GPU is subject to
regulation as a public utility or public service company (or similar
designation) by the United States, by any state in the United States or by
any foreign country or political subdivision thereof.
(b) GPU is a public utility holding company registered under the
1935 Act.
(c) Section 3.20(c) of the GPU Disclosure Schedule sets forth
---------------
each "affiliate" and each "subsidiary company" of GPU which may be deemed
to be a "public-utility company" or a "holding company" within the meaning
of the 1935 Act.
(d) Section 3.20(d) of the GPU Disclosure Schedule sets forth
---------------
each "affiliate" and each "subsidiary company" of GPU which is an "exempt
wholesale generator" or a "foreign utility company" within the meaning of
the 1935 Act.
Section 3.21 Insurance. Except in each case as would not have a GPU
---------
Material Adverse Effect,
(a) Each of GPU and its Subsidiaries is as of the date hereof,
and has been continuously since January 1, 1995 (or such later date as
such entity may have been formed) through the date hereof, insured with
financially responsible insurers in such amounts and against such risks
and losses as are customary for companies conducting the businesses as
conducted by GPU and its Subsidiaries during such time period.
(b) GPU hereby covenants and agrees (i) to maintain all such
insurance for itself and its Subsidiaries from the date of this Agreement
through the Effective Time so long as such insurance is available on
commercially reasonable terms and at a cost substantially comparable to
the cost to GPU to maintain such insurance as of the date of this
Agreement and (ii) to notify FirstEnergy promptly of any failure by GPU
to maintain any such insurance that is permitted by the preceding clause.
(c) (i) Neither GPU nor its Subsidiaries have received any
notice of cancellation or termination with respect to any material
insurance policy of GPU or its Subsidiaries.
(ii) The insurance policies of GPU and each of its
Subsidiaries are valid and enforceable policies.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIRSTENERGY
---------------------------------------------
Except as set forth in (x) the FirstEnergy SEC Documents (as defined
in Section 4.06) filed with the SEC prior to or as of the date of this
Agreement and (y) the disclosure schedule delivered to GPU by FirstEnergy
pursuant to Section 7.17(a)(i) (the "FirstEnergy Disclosure Schedule"),
-------------------------------
FirstEnergy represents and warrants to GPU as follows:
Section 4.01 Organization, Standing and Power. (a) Each of
--------------------------------
FirstEnergy and its Significant Subsidiaries
(i) is a corporation or other organization duly organized,
validly existing and in good standing (with respect to jurisdictions
that recognize the concept of good standing) under the laws of its
jurisdiction of incorporation or organization,
(ii) has all requisite corporate or similar power and
authority, and has been duly authorized by all necessary approvals
and orders of Governmental Entities, to own, lease and operate its
properties and to carry on its business as now being conducted, and
(iii) is duly qualified and in good standing (with respect
to jurisdictions that recognize the concept of good standing) to
transact business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification necessary, except with respect to each of clauses (ii)
and (iii) above where the failure to have such power and authority,
or to be so qualified or in good standing, would not, when taken
together with all other such failures, have a FirstEnergy Material
Adverse Effect.
Section 4.02 Capital Structure. (a) As of the date hereof, (i) the
-----------------
authorized capital stock of FirstEnergy consists of (1) 300,000,000 shares
of FirstEnergy Common Stock of which, as of August 4, 2000, 228,615,241
shares were issued and outstanding and no shares were held by FirstEnergy
in its treasury or by any of its wholly owned Subsidiaries and no shares
of FirstEnergy Common Stock were reserved for any purpose and (2)
5,000,000 shares of Preferred Stock, $100 par value (the "FirstEnergy
-----------
Preferred") of which, as of the date hereof, no shares were issued and
---------
outstanding and no shares were held by FirstEnergy in its treasury or by
any of its wholly owned Subsidiaries; (ii) options under the FirstEnergy
Controlled Group Plans (as defined in Section 4.12) to purchase not more
than 3,799,153 shares of FirstEnergy Common Stock are outstanding; and
(iii) no Voting Debt on any matters on which shareholders of FirstEnergy
may vote are issued or outstanding. As of the Effective Time, the
authorized number of shares of FirstEnergy Common Stock referred to in (1)
above shall be increased to 375,000,000 shares subject to receipt of the
approval of the shareholders of FirstEnergy.
(b) All outstanding shares of FirstEnergy's capital stock are
validly issued, fully paid and nonassessable and are not subject to
preemptive rights.
(c) As of the date of this Agreement (except pursuant to this
Agreement or as set forth in paragraph (a) above and except for rights
("FirstEnergy Rights") issued under the Rights Agreement, dated as of
------------------
November 18, 1997, between FirstEnergy and The Bank of New York, as Rights
Agent (the "FirstEnergy Rights Agreement")), there are no options,
----------------------------
warrants, calls, rights, commitments or agreements of any character to
which FirstEnergy or any Subsidiary of FirstEnergy is a party or by which
it is bound obligating FirstEnergy or any Subsidiary of FirstEnergy to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or any Voting Debt of, or other equity
interest in, FirstEnergy or securities convertible or exchangeable for
such shares, Voting Debt or other equity interests, or obligating
FirstEnergy or any Subsidiary of FirstEnergy to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement.
Section 4.03 Corporate Authority. (a) FirstEnergy has all
-------------------
requisite corporate power and authority to enter into this Agreement and,
subject to the approval of this Agreement and the transactions
contemplated hereby by the shareholders of FirstEnergy, to consummate the
transactions contemplated hereby.
(b) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of FirstEnergy,
subject to the approval of this Agreement by the shareholders of
FirstEnergy.
(c) This Agreement has been duly executed and delivered by
FirstEnergy and constitutes a valid and binding obligation of FirstEnergy
enforceable in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance
or other similar laws affecting the enforcement of creditors' rights
generally, and except that the availability of equitable remedies,
including specific performance, may be subject to the discretion of any
court before which any proceeding may be brought.
Section 4.04 No Violation. Except as contemplated by Section 4.05,
------------
the execution and delivery of this Agreement do not, and the consummation
of the transactions contemplated hereby will not, result in a Violation
with, under or pursuant to,
(a) any provision of the Amended Articles of Incorporation or
Regulations of FirstEnergy or the articles of incorporation, by-laws or
similar constitutional documents of any Subsidiary of FirstEnergy,
(b) any provision of any loan or credit agreement, note, bond,
mortgage, indenture, lease, FirstEnergy Controlled Group Plan (as defined
in Section 4.12) or other agreement, obligation, instrument, permit,
concession, franchise, license of any kind to which FirstEnergy or any of
its Subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound or affected, which Violation
would have a FirstEnergy Material Adverse Effect, or
(c) any judgment, order, injunction, writ, decision, decree,
statute, law, ordinance, rule, regulation, permit or license of any
Governmental Entity applicable to FirstEnergy or any of its Subsidiaries
or their respective properties or assets, which Violation would have a
FirstEnergy Material Adverse Effect.
Section 4.05 Consents and Approvals. No consent, approval, order or
----------------------
authorization of, or registration, declaration or filing with, any
Governmental Entity, is required to be obtained by FirstEnergy with
respect to FirstEnergy or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by FirstEnergy or the
consummation by FirstEnergy of the transactions contemplated hereby, the
failure of which to obtain would have a FirstEnergy Material Adverse
Effect, except for:
(a) the filing of a premerger notification report with the FTC
and the DOJ under the HSR Act and the expiration or termination of the
applicable waiting period under the HSR Act,
(b) the filing with, and to the extent applicable, the
declaration of effectiveness by, the SEC of
(i) the Joint Proxy Statement,
(ii) a registration statement on Form S-4 to be filed by
FirstEnergy in connection with the issuance of shares of FirstEnergy
Common Stock in the Merger (the "Registration Statement"), and
(iii) such reports and other filings under the Securities Act
or the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby, and the obtaining
from the SEC of such orders as may be required under the Securities
Act or the Exchange Act,
(c) the SEC '35 Act Order,
(d) the filing of such documents with, and the qualification
with, the various state securities authorities under state securities or
legal investment laws (the "Blue-Sky Laws"), that are required in
-------------
connection with the transactions contemplated by this Agreement (the
"Blue-Sky Filings"),
----------------
(e) the filing of Certificates of Merger with the Department of
State of the Commonwealth of Pennsylvania and the Secretary of State of
the State of Ohio in accordance with applicable law,
(f) the FERC Approvals,
(g) the NRC Approvals,
(h) the FCC Approvals,
(i) the Local Approvals, and
(j) State Takeover Approvals.
Section 4.06 FirstEnergy SEC Documents. (a) FirstEnergy has made
-------------------------
available to GPU a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by FirstEnergy
with the SEC since January 1, 2000 (as such documents have since the time
of their filing been amended, the "FirstEnergy SEC Documents") which are
-------------------------
all the documents (other than preliminary material) that FirstEnergy was
required to file with the SEC since such date.
(b) As of their respective dates of filing, (x) the FirstEnergy
SEC Documents complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may
be, to the extent applicable to such FirstEnergy SEC Documents, and (y)
none of the FirstEnergy SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) The consolidated financial statements of FirstEnergy
included in the FirstEnergy SEC Documents comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and
present fairly, in all material respects, the financial position of
FirstEnergy and its Subsidiaries as at the dates indicated, and the
results of their operations and their cash flows for the periods
indicated, in conformity with GAAP applied on a consistent basis during
the periods involved (except (x) as may be indicated in the notes thereto
and (y) in the case of the unaudited statements, as permitted by Form 10-Q
of the SEC and for normal, recurring adjustments).
Section 4.07 No Undisclosed Liabilities. (a) Except as and to the
--------------------------
extent set forth in FirstEnergy's Annual Report on Form 10-K for the year
ended December 31, 1999 and Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000, as of March 31, 2000, neither
FirstEnergy nor any of its Subsidiaries had any liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise, except for
liabilities or obligations that would not be required by GAAP to be
reflected on a consolidated balance sheet (including the notes thereto) of
FirstEnergy or which would not, individually or in the aggregate, be
reasonably likely to have a FirstEnergy Material Adverse Effect.
(b) Since March 31, 2000, except as set forth in the FirstEnergy
SEC Documents filed by FirstEnergy with the SEC since March 31, 2000 and
prior to the date of this Agreement, neither FirstEnergy nor any of its
Subsidiaries has incurred any liabilities or obligations of any nature,
whether or not accrued, absolute, contingent, threatened or otherwise,
which would, individually or in the aggregate, have a FirstEnergy Material
Adverse Effect.
Section 4.08 Information Supplied. (a) None of the information
--------------------
supplied or to be supplied by FirstEnergy for inclusion or incorporation
by reference in
(i) the Registration Statement will, at the time it is
filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
(ii) the Joint Proxy Statement will, at the date mailed to
the shareholders of FirstEnergy and the shareholders of GPU and at
the time of the meetings of such shareholders to be held in
connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they are made, not
misleading.
(b) The Joint Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the
Registration Statement will comply as to form in all material respects
with the provisions of the Securities Act.
Section 4.09 Compliance with Applicable Laws. (a) FirstEnergy and
-------------------------------
its Subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities which are material to the
operation of the businesses of FirstEnergy and its Subsidiaries, taken as
a whole (the "FirstEnergy Permits").
-------------------
(b) FirstEnergy and its Subsidiaries are in compliance with the
terms of the FirstEnergy Permits, except where any such failures so to
comply would not, individually or in the aggregate, have a FirstEnergy
Material Adverse Effect.
(c) The businesses of FirstEnergy and its Subsidiaries are not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which would not,
individually or in the aggregate, have a FirstEnergy Material Adverse
Effect.
(d) As of the date of this Agreement,
(i) no investigation or review by any Governmental Entity
with respect to FirstEnergy or any of its Subsidiaries is pending or,
to the knowledge of the executive officers of FirstEnergy,
threatened, and
(ii) to the knowledge of the executive officers of
FirstEnergy, no Governmental Entity has indicated an intention to
conduct any such investigation or review,
other than, in each case, those the outcome of which would not have a
FirstEnergy Material Adverse Effect.
Section 4.10 Litigation. As of the date of this Agreement:
----------
(a) there is no suit, action or proceeding pending or, to the
knowledge of the executive officers of FirstEnergy, threatened against
FirstEnergy or any of its Subsidiaries which is reasonably likely to have
a FirstEnergy Material Adverse Effect, and
(b) there is no judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against FirstEnergy or
any of its Subsidiaries having, or which is reasonably likely to have, a
FirstEnergy Material Adverse Effect.
Section 4.11 Taxes. (a) Each of FirstEnergy and its Subsidiaries
-----
(including any predecessors) has timely filed when due all Tax returns
required to be filed by any of them and has paid (or FirstEnergy has paid
on its behalf), or has established an adequate accrual or reserve
(determined in accordance with GAAP) for the payment of, all Taxes
required to be paid in respect of all periods for which returns have been
filed or are due (whether or not shown as being due on any Tax returns) or
which are otherwise due and payable, except as would not have a
FirstEnergy Material Adverse Effect. The most recent balance sheet
contained in the FirstEnergy SEC Documents reflects an adequate accrual or
reserve (determined in accordance with GAAP) for Taxes payable by
FirstEnergy and its Subsidiaries accrued through the date of such balance
sheet, except as would not have a FirstEnergy Material Adverse Effect.
(b) Except as would not have a FirstEnergy Material Adverse
Effect, (i) no deficiencies for any Taxes have been proposed, asserted or
assessed in writing, or to the knowledge of the executive officers of
FirstEnergy, orally, by any Taxing authority against FirstEnergy or any of
its Subsidiaries, and (ii) no audit of the Tax returns of FirstEnergy or
any of its Subsidiaries is currently being conducted by any Taxing
authority.
(c) Except with respect to any claims for refunds, the Federal
income Tax returns of FirstEnergy and each of its Subsidiaries
consolidated in such returns for all such periods ended on or before
December 31, 1994 have been examined by and settled with the IRS or the
applicable statute of limitations with respect to such years, including
extensions thereof, has expired. None of FirstEnergy or any of its
Subsidiaries (i) has requested any extension of time within which to file
any material Federal income Tax return, which Tax return has not since
been filed and (ii) has in effect any extension, outstanding waivers or
comparable consents with respect to any material Federal income Taxes or
material Federal income Tax returns.
(d) Copies of all Federal Tax returns required to be filed by
FirstEnergy or any of its Subsidiaries (including any predecessors) for
each of the last three years, together with all schedules and attachments
thereto, have been delivered or made available by FirstEnergy to GPU.
(e) None of FirstEnergy or any of its Subsidiaries (including
any predecessors) is a party to, is bound by, or has any obligation under
any Tax sharing or similar agreement.
(f) FirstEnergy has not taken any actions, nor is it aware of
any facts or circumstances, which would, or would be reasonably likely to,
prevent the Merger from constituting a reorganization within the meaning
of Section 368(a) of the Code.
Section 4.12 Employee Matters. (a) With respect to each employee
----------------
benefit plan (including, without limitation, any "employee benefit plan,"
as defined in Section 3(3) of the ERISA), and any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, insurance or other
material plan, arrangement or
understanding (whether or not legally binding) (all the foregoing being
herein called the "FirstEnergy Controlled Group Plans"), maintained or
----------------------------------
contributed to by FirstEnergy, any of its Subsidiaries or any other
organization which is a member of a controlled group of organizations
(within the meaning of Sections 414(b), (c), (m) or (o) of the Code) of
which FirstEnergy is a member, FirstEnergy has made available to GPU, or
will deliver to GPU within 30 days after the date hereof, a true and
correct copy of
(i) the most recent annual report (Form 5500) filed with
the IRS,
(ii) any such FirstEnergy Controlled Group Plan,
(iii) each trust agreement and group annuity contract, if
any, relating to any such FirstEnergy Controlled Group Plan and
(iv) the most recent actuarial report or valuation relating
to any such FirstEnergy Controlled Group Plan subject to Title IV of
ERISA.
(b) (i) Each of the FirstEnergy Controlled Group Plans intended
to be "qualified" within the meaning of Section 401(a) of the Code
has been determined by the IRS to be so qualified, and, to the
knowledge of the executive officers of FirstEnergy, no circumstances
exist that are reasonably expected by FirstEnergy to result in the
revocation of any such determination.
(ii) Except as would not have a FirstEnergy Material Adverse
Effect, FirstEnergy is in compliance with, and each FirstEnergy
Controlled Group Plan is and has been operated in compliance with,
all applicable laws, rules and regulations governing such plan,
including, without limitation, ERISA and the Code.
(iii) Except as would not have a FirstEnergy Material Adverse
Effect, each FirstEnergy Controlled Group Plan intended to provide
for the deferral of income, the reduction of salary or other
compensation or to afford other income tax benefits complies with the
requirements of the applicable provisions of the Code or other laws,
rules and regulations required to provide such income tax benefits.
(c) With respect to the FirstEnergy Controlled Group Plans,
individually and in the aggregate, no event has occurred, and to the
knowledge of any of the executive officers of FirstEnergy or any of its
Subsidiaries, there exists no condition or set of circumstances in
connection with which FirstEnergy or any of its Subsidiaries could be
subject to any liability that is reasonably likely to exceed $1,000,000
(except liability for benefits claims and funding obligations payable in
the ordinary course) under ERISA, the Code or any other applicable law.
(d) Except as would not have a FirstEnergy Material Adverse
Effect, with respect to each FirstEnergy Controlled Group Plan, there are
no material funded benefit obligations for which contributions have not
been made or in accordance with GAAP properly accrued and there are no
material unfunded benefit obligations which have not been accounted for in
accordance with GAAP, on the financial statements of FirstEnergy or any of
its Subsidiaries.
(e) Except as provided for in this Agreement, as of the date of
this Agreement, neither FirstEnergy nor any of its Subsidiaries is a party
to any union or collective bargaining agreement.
(f) No FirstEnergy Controlled Group Plan is a multiemployer plan
(within the meaning of Section 3(37) or Section 4001(a)(3) of ERISA or
Section 414(f) of the Code).
(g) For each FirstEnergy Controlled Group Plan which is intended
to be an employee stock ownership plan (within the meaning of Section
4975(e)(7) of the Code) or a tax credit employee stock ownership plan
(within the meaning of Section 409(a) of the Code), each of the following
is true:
(i) there is no securities acquisition loan (within the
meaning of Section 133 of the Code) outstanding with respect to the
plan;
(ii) except for the transactions contemplated in this
Agreement, no event has occurred and no condition exists which would
give rise to the recapture of any Tax credit previously claimed with
respect to the plan or to any Tax or penalties assessable against
FirstEnergy or any of its Subsidiaries; and
(iii) except for the transactions contemplated in this
Agreement, no event has occurred and no condition exists which would
cause the termination of the plan and the distribution of all amounts
held thereunder to give rise to the recapture of any Tax credit
previously claimed with respect to the plan or to any Tax or
penalties assessable against FirstEnergy or any of its Subsidiaries.
(h) None of the FirstEnergy Controlled Group Plans that are
welfare plans (within the meaning of Section 3(l) of ERISA) provides for
any retiree benefits.
(i) Except as would not have a FirstEnergy Material Adverse
Effect,
(i) the consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in any
(A) payment (whether of severance pay or otherwise)
becoming due from FirstEnergy or any of its Subsidiaries to any
officer, employee, former employee or director thereof or to the
trustee under any "rabbi trust" or similar arrangement, or
(B) benefit under any FirstEnergy Controlled Group
Plan being established or becoming accelerated, vested or
payable, and
(ii) neither FirstEnergy nor any of its Subsidiaries is a
party to
(A) any management, employment, deferred
compensation, severance (including any payment, right or benefit
resulting from a change in
control), bonus or other contract for personal services with any
officer, director or employee,
(B) any consulting contract with any person who prior
to entering into such contract was a director or officer of
FirstEnergy, or
(C) any plan, agreement, arrangement or understanding
similar to any of the foregoing.
Section 4.13 Absence of Certain Changes or Events. Between March 31,
------------------------------------
2000 and the date of this Agreement, FirstEnergy and its Subsidiaries
have conducted their respective businesses in all material respects in the
ordinary and usual course, and, as of the date of this Agreement, there
has not been
(a) any damage, destruction or loss, whether covered by
insurance or not, which has, or would have, a FirstEnergy Material Adverse
Effect;
(b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to
any of FirstEnergy's or its Subsidiaries' capital stock, except for (i)
regular quarterly cash dividends of $.375 per share on FirstEnergy Common
Stock; (ii) regular dividends on FirstEnergy's Subsidiaries' preferred
securities (the "FirstEnergy Subs Preferred") with usual record and
--------------------------
payment dates for such dividends; and (3) dividends on common stock paid
by wholly owned Subsidiaries of FirstEnergy; or
(c) any transaction, commitment, dispute or other event or
condition (financial or otherwise) of any character (whether or not in the
ordinary course of business) individually or in the aggregate having, or
which is reasonably likely to have, a FirstEnergy Material Adverse Effect.
Section 4.14 Opinion of FirstEnergy Financial Advisor. FirstEnergy has
----------------------------------------
received the opinion of Xxxxxx Xxxxxxx & Co. Incorporated (hereinafter
referred to as "FirstEnergy Advisor") dated the date hereof, to the effect
-------------------
that, subject to the limitations and qualifications contained in that
opinion, as of such date, the Merger Consideration is fair from a
financial point of view to FirstEnergy, and copies of such opinion have
been previously or will be delivered to GPU.
Section 4.15 Vote Required. The affirmative vote of the holders of
-------------
a majority of the outstanding shares of FirstEnergy Common Stock is the
only vote of the holders of any class or series of FirstEnergy capital
stock necessary to approve this Agreement and the transactions
contemplated hereby.
Section 4.16 Accounting Matters. Neither FirstEnergy nor, to the
------------------
knowledge of the executive officers of FirstEnergy, any of its affiliates
has through the date of this Agreement taken or agreed to take any action
that would prevent FirstEnergy from accounting for the business
combination to be effected by the Merger on a purchase accounting basis in
accordance with GAAP and applicable regulations of the SEC.
Section 4.17 Ownership of GPU Stock. As of the date of this
----------------------
Agreement, FirstEnergy and its affiliates do not "beneficially own" (as
such term is defined in the GPU Rights Agreement) any shares of GPU Common
Stock.
Section 4.18 FirstEnergy Subsidiaries. (a) Section 4.18(a) of the
------------------------ ---------------
FirstEnergy Disclosure Schedule sets forth a description as of the date
hereof of all Significant Subsidiaries and material joint ventures of
FirstEnergy, including the name of each such entity, a brief description
of the principal line or lines of business conducted by each such entity
and FirstEnergy's interest therein.
(b) All of the issued and outstanding shares of capital stock of
each Significant Subsidiary of FirstEnergy are validly issued, fully paid,
nonassessable and free of preemptive rights, and, other than outstanding
Non-Convertible Preferred Securities, are owned directly or indirectly by
FirstEnergy free and clear of any material liens, claims, encumbrances,
security interests, equities, charges and options of any nature
whatsoever, and there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating any such Significant Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of its
capital stock, other than Non-Convertible Preferred Securities, or
obligating it to grant, extend or enter into any such agreement or
commitment.
Section 4.19 Environmental Protection. (a) Compliance.
------------------------ ----------
Each of FirstEnergy and its Subsidiaries is in compliance with all
applicable Environmental Laws, except for failures to be in
compliance which would not have a FirstEnergy Material Adverse
Effect.
(ii) Neither FirstEnergy nor any of its Subsidiaries has
received any written communication or, to the knowledge of the
executive officers of FirstEnergy, any oral communication, from any
person or Governmental Entity that alleges that FirstEnergy or any of
its Subsidiaries is not in compliance with applicable Environmental
Laws, except where the failure to be in compliance would not have a
FirstEnergy Material Adverse Effect.
(b) Permits. Each of FirstEnergy and its Subsidiaries has
-------
obtained or has applied for all Environmental Permits necessary for the
construction of its facilities or the conduct of its operations, and all
such permits are in effect or, where applicable, a renewal application has
been timely filed and is pending agency approval, and FirstEnergy and each
of its Subsidiaries is in material compliance with all terms and
conditions of the Environmental Permits, in each case except for failures
to obtain or be in compliance with such Environmental Permit, or of such
Environmental Permits to be in effect, which would not have a FirstEnergy
Material Adverse Effect.
(c) Claims. To the knowledge of the executive officers of
------
FirstEnergy, no Environmental Claim is pending
(i) against FirstEnergy or any of its Subsidiaries or any
joint ventures to which FirstEnergy or any of its Subsidiaries is a
party,
(ii) against any person or entity whose liability for any
Environmental Claim FirstEnergy or any of its Subsidiaries or joint
ventures has or may have retained or assumed either contractually or
by operation of law, or
(iii) against any real or personal property or operations
which FirstEnergy or any of its Subsidiaries or joint ventures owns,
leases or manages, in whole or in part,
which would have, in the aggregate, a FirstEnergy Material Adverse Effect.
(d) The executive officers of FirstEnergy have no knowledge of
any Releases of any Hazardous Material that would be reasonably likely to
form the basis of any Environmental Claim against FirstEnergy or any
Subsidiaries or joint ventures of FirstEnergy, or its Subsidiaries, or
against any person or entity whose liability for any Environmental Claim
FirstEnergy or any Subsidiaries or joint ventures of FirstEnergy or 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 have, in the aggregate, a FirstEnergy
Material Adverse Effect.
(e) The executive officers of FirstEnergy have no knowledge,
with respect to any predecessor of FirstEnergy or any Subsidiary or joint
venture of FirstEnergy, of any Environmental Claim pending or threatened,
or of any Release of Hazardous Materials that would be reasonably likely
to form the basis of any Environmental Claim which would have a
FirstEnergy Material Adverse Effect.
(f) To the knowledge of the executive officers of FirstEnergy,
FirstEnergy has disclosed to GPU all material facts which FirstEnergy
reasonably believes form the basis of a FirstEnergy Material Adverse
Effect arising from
(i) the cost of pollution control equipment currently
required or known to be required in the future; or
(ii) current remediation costs or remediation costs known to
be required in the future.
Section 4.20 Regulation as a Utility. (a) Except as set forth in
-----------------------
paragraphs (b), (c) and (d) of this Section 4.20 (including the sections
of the FirstEnergy Disclosure Schedule referred to in those paragraphs),
neither FirstEnergy nor any "subsidiary company" or "affiliate" of
FirstEnergy is subject to regulation as a public utility or public service
company (or similar designation) by the United States, by any state in the
United States or by any foreign country or political subdivision thereof.
(b) FirstEnergy is a holding company exempt under Section
3(a)(1) of the 1935 Act.
(c) Section 4.20(c) of the FirstEnergy Disclosure Schedule sets
---------------
forth each "affiliate" and each "subsidiary company" of FirstEnergy which
may be deemed to be a "public-utility company" or a "holding company"
within the meaning of the 1935 Act.
(d) Section 4.20(d) of the FirstEnergy Disclosure Schedule sets
---------------
forth each "affiliate" and each "subsidiary company" of FirstEnergy which
is an "exempt wholesale generator" or a "foreign utility company" within
the meaning of the 1935 Act.
Section 4.21 Insurance. Except in each case as would not have a
---------
FirstEnergy Material Adverse Effect,
(a) Each of FirstEnergy and its Subsidiaries is as of the date
hereof, and has been continuously since January 1, 1995 (or such later
date as such entity may have been formed) through the date hereof, insured
with financially responsible insurers in such amounts and against such
risks and losses as are customary for companies conducting the businesses
as conducted by FirstEnergy and its Subsidiaries during such time period.
(b) FirstEnergy hereby covenants and agrees (i) to maintain all
such insurance for itself and its Subsidiaries from the date of this
Agreement through the Effective Time so long as such insurance is
available on commercially reasonable terms and at a cost substantially
comparable to the cost incurred by FirstEnergy to maintain such insurance
as of the date of this Agreement and (ii) to notify GPU promptly of any
failure by FirstEnergy to maintain any such insurance that is permitted by
the preceding clause.
(c) (i) Neither FirstEnergy nor its Subsidiaries have received
any notice of cancellation or termination with respect to any
material insurance policy of FirstEnergy or its Subsidiaries.
(ii) The insurance policies of FirstEnergy and each of its
Subsidiaries are valid and enforceable policies.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS OF GPU
------------------------------------------------
During the period from the date of this Agreement and continuing
until the Effective Time (except as expressly contemplated or permitted by
this Agreement or as set forth in the GPU Disclosure Schedule or to the
extent that FirstEnergy shall otherwise consent in writing, such consent
not to be unreasonably withheld), GPU agrees that:
Section 5.01 Ordinary Course. GPU shall, and shall cause each of
---------------
its Subsidiaries to, carry on its respective business in all material
respects in the ordinary course and, to the extent consistent therewith,
use all commercially reasonable efforts to preserve intact in all material
respects its present business organizations and goodwill, preserve its
goodwill and relationships with customers, suppliers and others having
business dealings with it and, subject to prudent management of workforce
needs and ongoing programs currently in force, keep available the services
of its officers and employees.
Section 5.02 Dividends; Changes in Stock. GPU shall not, nor shall
---------------------------
GPU permit any of its Subsidiaries to,
(a) declare or pay any dividends on or make other distributions
in respect of any of its capital stock, except that
(i) subject to Section 5.02(d), GPU may continue the
declaration and payment of regular quarterly cash dividends not in
excess of $.545 per share of GPU Common Stock, and
(ii) Subsidiaries of GPU may continue the declaration and
payment of regularly scheduled dividends on, and other distributions
required by the terms of, GPU Subs Preferred,
in each case, subject to Section 5.02(d), with usual record and payment
dates for such dividends in accordance with GPU's past dividend practice
or as otherwise required by the terms of the GPU Subs Preferred, and
except for dividends or other distributions on common stock declared and
paid by a wholly owned Subsidiary of GPU.
(b) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
or
(c) repurchase, redeem or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire, any shares of its capital
stock, other than:
(i) redemptions, purchases or acquisitions required by the
respective terms of any series of GPU Subs Preferred,
(ii) in connection with refunding of any GPU Subs Preferred,
(iii) in connection with intercompany purchases, or
(iv) for the purpose of funding or issuing pursuant to any
employee stock ownership plan, the GPU Stock Plans or any dividend
reinvestment or stock purchase plan, in the ordinary course.
(d) GPU shall coordinate with FirstEnergy regarding the
declaration of any dividends in respect of GPU Common Stock and the record
and payment dates relating thereto, it being the intention of GPU and
FirstEnergy that the holders of GPU Common Stock shall receive a final
dividend on their GPU Common Stock equal to GPU's regular quarterly
dividend payment prorated from GPU's most recent previous quarterly
dividend payment date to the Effective Time and shall not receive an
overlapping dividend on any FirstEnergy Common Stock that they receive in
exchange for their GPU Common Stock.
Section 5.03 Issuance of Securities. GPU shall not, nor shall GPU
----------------------
permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock
of any class, any Voting Debt or any securities convertible into, or
any rights, warrants or options to acquire, any such shares, Voting Debt
or convertible securities, other than
(a) the issuance of common stock, stock options, performance
units, stock appreciation or similar rights, as the case may be, pursuant
to the GPU Stock Plans, in each case consistent in amount with past
practice and in the ordinary course of business under such GPU Stock Plans
in accordance with their present terms,
(b) issuances of Non-Convertible Preferred Securities of
Subsidiaries of GPU to the extent permitted by Section 5.08, and
(c) the issuance and reservation of GPU capital stock pursuant
to the GPU Rights Agreement.
Section 5.04 Constituent Documents. GPU shall not amend or propose
---------------------
to amend its articles of incorporation or its by-laws.
Section 5.05 Solicitations. (a) GPU shall not, nor shall GPU
-------------
permit any of its Subsidiaries to, nor shall it authorize or permit any of
its officers, directors or employees or any investment banker, financial
advisor (including the GPU Advisor), attorney, accountant or other
representative retained by it or any of its Subsidiaries to, solicit or
encourage (including by way of furnishing information), or take any other
action to facilitate, any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any GPU Takeover
Proposal (as defined below), or agree to, or subject to the proviso in
Section 7.05(b), endorse, recommend or approve, any GPU Takeover Proposal.
(b) GPU shall promptly advise FirstEnergy orally and in writing
of any such inquiries or GPU Takeover Proposals.
(c) As used in this Agreement, "GPU Takeover Proposal" shall mean
---------------------
any tender or exchange offer, proposal for a merger, consolidation or
other business combination involving GPU or any Significant Subsidiary of
GPU or any proposal or offer to acquire in any manner (i) a 20% or greater
common equity interest (including any security convertible into,
exchangeable or exercisable for, or otherwise entitling the owner thereof
to acquire such common equity interest) in, or 20% or more of the assets
on a consolidated basis of, GPU, other than the Merger, or (ii) any equity
interest (other than Non-Convertible Preferred Securities) in, or, other
than as permitted by Section 5.07, any of the assets of, any of Jersey
Central Power & Light Company ("JCP&L"), Metropolitan Edison Company
-----
("MetEd") or Pennsylvania Electric Company ("Penelec").
----- -------
(d) Notwithstanding anything in this Section 5.05 to the
contrary, unless the approvals of the shareholders of GPU have been
obtained, GPU or a Significant Subsidiary of GPU, may, to the extent that
the Board of Directors of GPU determines in good faith, after consultation
with outside counsel, that its fiduciary duties under applicable law so
require, participate in discussions or negotiations with, furnish
information to, and afford access to the properties, books and records of
GPU and its Subsidiaries to, any person in connection with a possible GPU
Takeover Proposal with respect to GPU by such person.
(e) Nothing contained in this Agreement shall prohibit GPU from
taking and disclosing to its shareholders a position contemplated by Rule
14e-2 under the Exchange Act or from making any disclosure to its
shareholders if, in the good faith judgment of the Board of Directors of
GPU, after consultation with outside counsel, that disclosure is required
pursuant to its obligations under applicable law.
Section 5.06 Acquisitions. GPU shall not, nor shall it permit any
------------
of its Subsidiaries to (a) 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 other business
organization or division thereof that would constitute a Significant
Subsidiary of GPU or otherwise acquire or agree to acquire any assets not
in the ordinary course of business or (b) except as included in the GPU
Capital Budget (as defined in Section 5.15 hereof) enter into a new line
of business or make any change, except in the ordinary course of business,
in the lines of business it engages in as of the date hereof; provided, in
each case, that GPU and its Subsidiaries may enter into or consummate any
such transaction so long as (1) no such individual transaction involves
payment by GPU or any of its Subsidiaries of consideration or investment
of assets or resources or exposure to liability or loss in excess of $25
million and (2) all such transactions entered into after the date of this
Agreement do not involve payment of consideration or investment of assets
or resources or exposure to liability or loss in excess of $75 million, in
the aggregate.
Section 5.07 Dispositions. Other than (x) sales, leases, licenses
------------
or other dispositions, including dispositions of accounts receivable, in
the ordinary course of business, (y) sales, leases, licenses, encumbrances
or other dispositions outside the ordinary course of business that
individually do not involve assets of GPU or its Subsidiaries with a value
(which in the case of a sale shall be the sale price) in excess of $5
million or that, in the aggregate do not involve assets of GPU and its
Subsidiaries with an aggregate value (which in the case of a sale shall be
the sale price) in excess of $25 million, and (z) encumbrances incurred in
connection with any transaction permitted by Section 5.08, in the case of
each of (x), (y) and (z), not involving the disposition of electric
generating plants located in the United States, GPU shall not, nor shall
GPU permit any of its Subsidiaries to, sell, lease, license, encumber or
otherwise dispose of, or agree to sell, lease, license, encumber or
otherwise dispose of, any of its assets.
Section 5.08 Financings. GPU shall not, nor shall GPU permit any of
----------
its Subsidiaries to, incur (which shall not be deemed to include entering
into credit agreements, lines of credit or similar arrangements until
borrowings are made under such arrangements) any indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell any debt
securities or Non-Convertible Preferred Securities or warrants or rights
to acquire any debt securities or Non-Convertible Preferred Securities of
such party or any of its Subsidiaries or guarantee any debt securities of
others other than
(a) for short-term indebtedness in the ordinary course of
business, consistent with past practice,
(b) as may be necessary in connection with acquisitions
permitted by Section 5.06 (including acquisitions listed in Section 5.06
------------
of the GPU Disclosure Schedule),
(c) the incurrence of long-term indebtedness and/or issuances of
debt securities or guarantees by GPU or any of its Subsidiaries, and/or
issuances of Non-Convertible Preferred Securities of Subsidiaries of GPU,
not aggregating in excess of $50 million (not including incurrences or
issuances pursuant to clauses (a), (b) and (d) of this Section 5.08), or
(d) indebtedness of GPU or any of its Subsidiaries, and/or Non-
Convertible Preferred Securities of Subsidiaries of GPU, incurred or
issued to refund or refinance outstanding indebtedness or Non-Convertible
Preferred Securities of such party or such Subsidiary so long as the
amount of such indebtedness or Non-Convertible Preferred Securities so
incurred or issued does not materially exceed the amount of the
indebtedness or Non-Convertible Preferred Securities so refunded or
refinanced and any accrued interest or dividends and premium, if any,
thereon.
Section 5.09 No Actions. GPU shall not, nor shall GPU permit any of
----------
its Subsidiaries to, take any action that would or is reasonably likely to
(a) result in any of the conditions to the Merger set forth in
Article VIII not being satisfied, or
(b) prevent, materially delay or materially impede the
consummation of the Merger.
Section 5.10 Cooperation, Notification. To the extent permitted by
-------------------------
law, GPU shall, and shall cause its Subsidiaries to, (i) confer on a
regular and reasonably frequent basis with one or more representatives of
FirstEnergy to discuss material operational matters and the general status
of its ongoing operations; (ii) promptly notify FirstEnergy of any
significant changes, of which its executive officers have knowledge, in
its business, properties, assets, financial condition or reported or
future results of operations; (iii) advise FirstEnergy of any change or
event which has had, or in so far as reasonably can be foreseen, is
reasonably likely to result in, a GPU Material Adverse Effect; and (iv)
promptly provide FirstEnergy (or FirstEnergy's counsel) with copies of all
filings made by GPU or any of its Subsidiaries with any state, Federal or
foreign court, administrative agency, commission or other Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.
Section 5.11 Rights Agreement. (a) Except as otherwise provided in
----------------
this Section 5.11, GPU shall not redeem the GPU Rights, or amend (other
than to delay the "Distribution Date" (as defined in the GPU Rights
Agreement) or to render the GPU Rights inapplicable to the Merger) or
terminate the GPU Rights Agreement prior to the Effective Time unless
required to do so by order of a court of competent jurisdiction.
(b) GPU shall take all action so that the GPU Rights will expire
immediately prior to the Effective Time.
Section 5.12 Collective Bargaining Agreements. During the period
--------------------------------
from the date of this Agreement and continuing until the Effective Time,
GPU agrees, as to itself and its Subsidiaries, that it will consult with
FirstEnergy prior to entering into any substantive negotiations (x) with
respect to any collective bargaining agreement, or any material
modification or amendment thereof, that cover employees of the regulated
business of GPU's
Subsidiaries conducted in the United States or (y) with respect to any
other collective bargaining agreement, or any material modification or
amendment thereof, if the scope and type of the negotiations are
reasonably expected to be materially different than the scope and type of
negotiations previously conducted with respect to such agreement.
Section 5.13 Employee Benefit Covenant. During the period from the
-------------------------
date of this Agreement and continuing until the Effective Time, except as
set forth in Section 5.13 of the GPU Disclosure Schedule, as may be
------------
required by applicable law or as contemplated by this Agreement, GPU
agrees as to itself and its Subsidiaries that it will not, and will not
permit any of its Subsidiaries to, without the prior written consent of
FirstEnergy (which consent shall not be unreasonably withheld),
(a) enter into, adopt, amend (except as may be required by law)
or terminate any GPU Controlled Group Plan or any other agreement,
arrangement, plan or policy between GPU and one or more of the directors
or officers of GPU, or
(b) except for normal increases in the ordinary course of
business consistent with past practice that, in the aggregate, do not
result in a material increase in benefits or compensation expense to GPU,
increase in any manner the compensation or fringe benefits of any director
or officer of GPU, or
(c) pay any benefit not required by any GPU Controlled Group
Plan or arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights,
restricted stock or performance units) to any director or officer of GPU,
or
(d) enter into any contract, agreement, commitment or
arrangement to do any of the foregoing, or enter into or amend any
employment, severance or special pay arrangement with respect to the
termination of employment or other similar contract, agreement or
arrangement with any director or officer or other employee of GPU or any
of its Subsidiaries, or
(e) make any change in any defined benefit Plan of GPU or any of
its Subsidiaries which accelerates or increases benefits thereunder
(except as may be required by law).
Section 5.14 Tax Covenant. During the period from the date of this
------------
Agreement and continuing until the Effective Time, GPU agrees, as to
itself and its Subsidiaries, that each of them (a) will not, except in the
ordinary course of business consistent with past practice, make any
material Tax election or settle or compromise any Tax liability material
to GPU or any of its Significant Subsidiaries and (b) will promptly notify
FirstEnergy of the making of any request for extension of the time within
which to file any Federal income Tax return for such entity.
Section 5.15 Capital Expenditures. Except as required by law or to
--------------------
provide or maintain reliable electric service, GPU shall not, nor shall
GPU permit any of its Subsidiaries to, make any annual capital
expenditures in excess of GPU's existing capital budget for 2000, a copy
of which has been delivered to FirstEnergy, or any capital budget for
future time periods adopted in accordance with GPU's past practice after
consultation with FirstEnergy (each such capital budget, the "GPU Capital
-----------
Budget").
------
Section 5.16 Transmission, Generation. Except (i) as required
------------------------
pursuant to tariffs on file with the FERC as of the date hereof or (ii) to
the extent necessary, in the reasonable judgment of GPU, to comply with
applicable law, existing contractual obligations, or requirements of
Governmental Entities, or to avoid the incurrence of material liability,
GPU shall not, nor shall GPU permit any of its Subsidiaries to,
(a) commence construction of any additional generating capacity
or transmission or delivery capacity, except for such projects ongoing or
mandated by a binding legal commitment existing on the date hereof or, in
the case of transmission or delivery capacity, required to satisfy such
party's obligation to serve, or
(b) obligate itself to purchase or otherwise acquire, or to sell
or otherwise dispose of, or to share, any additional generation
(including, without limitation, the energy produced by generating
facilities), transmission or delivery capacity pursuant to a contract
agreement or other arrangement the duration of which exceeds twelve months
without the prior approval of FirstEnergy (not to be unreasonably
withheld).
Section 5.17 Modifications to Facilities. Except in the ordinary
---------------------------
course of business, to provide or maintain reliable electric service or in
accordance with the GPU Capital Budget, GPU shall not, nor shall GPU
permit any of its Subsidiaries to, enter into any binding commitment to
make any modification to any of its or its Subsidiaries' existing
facilities that would require any material investment or expenditure
material to GPU or, in the case of investment or expenditure by JCP&L,
MetEd or Penelec, to the affected Subsidiary. GPU shall consult with
FirstEnergy with respect to any binding commitment permitted by the
previous sentence which will, or is reasonably likely to, continue for a
period of twelve months or more.
Section 5.18 Accounting. GPU shall not, nor shall GPU permit any of
----------
its Subsidiaries to, make any changes in its accounting methods, except as
required by law, rule, regulation or GAAP.
Section 5.19 Tax-Free Status. GPU shall not, nor shall GPU permit
---------------
any of its Subsidiaries to, take any actions which would, or would be
reasonably likely to, adversely affect the treatment of the Merger as a
"reorganization" within the meaning of Section 368(a) of the Code.
Section 5.20 Affiliate Transactions. Except as may be required by
----------------------
the 1935 Act, GPU shall not, nor shall GPU permit any of its Subsidiaries
to, enter into any agreement or arrangement with any of their respective
affiliates (other than wholly owned Subsidiaries of GPU) on terms to GPU
or its Subsidiaries materially less favorable than could reasonably be
expected to have been obtained with an unaffiliated third party on an
arm's length basis.
Section 5.21 Rate Matters. To the extent permitted by law, and
------------
except for routine or administrative filings, GPU shall, and shall cause
its Subsidiaries to, discuss with FirstEnergy any changes in its or its
Subsidiaries' rates or charges (other than pass-through charges),
standards of service or regulatory accounting from those in effect on the
date of this Agreement and consult with FirstEnergy prior to making any
filing (or any amendment thereto), or effecting any agreement, commitment,
arrangement or consent, whether written or oral, formal or
informal, with respect thereto, and GPU will not make, or permit any
Subsidiary to make, any filing to change its rates on file with the FERC
or any other regulatory commission that would have, alone or in
conjunction with all previous such filings, a GPU Material Adverse Effect.
Notwithstanding the foregoing, neither GPU nor any of its Subsidiaries
shall be required to consult or have discussions with FirstEnergy prior to
entering into arrangements with customers in the ordinary course of
business consistent with past practices.
Section 5.22 Third-Party Consents. (a) GPU shall, and shall cause
--------------------
its Subsidiaries to, use all commercially reasonable efforts, consistent
with United States and foreign laws, to obtain any third-party consents
necessary to consummate the Merger.
(b) GPU shall promptly notify FirstEnergy of any failure or
prospective failure to obtain any such consents and, if requested, shall
provide copies of all consents obtained to FirstEnergy.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS OF FIRSTENERGY
--------------------------------------------------------
During the period from the date of this Agreement and continuing
until the Effective Time (except as expressly contemplated or permitted by
this Agreement or as set forth in the FirstEnergy Disclosure Schedule or
to the extent that GPU shall otherwise consent in writing, such consent
not to be unreasonably withheld), FirstEnergy agrees that:
Section 6.01 Ordinary Course. FirstEnergy shall, and shall cause
---------------
each of its Subsidiaries to, carry on its business in the ordinary course
and use all commercially reasonable efforts to preserve intact their
goodwill, preserve the goodwill and relationships with customers,
suppliers and others having business dealings with them and, subject to
prudent management of workforce needs and ongoing programs currently in
force, keep available the services of their present officers and
employees, provided, however, that, to the extent permitted by Section
-------- -------
6.15, FirstEnergy may enter into a new line of business, make any change
in the lines of business it engages in as of the date hereof or dispose of
or acquire assets, by merger or otherwise, or divest liabilities (or enter
into any agreement with respect to any of the foregoing) in each case only
if (x)(a) the taking of such action (or in the case of an agreement, the
transaction contemplated thereby) by a holding company registered under
the 1935 Act has generally been permitted or approved by the SEC (or by
the Staff of the SEC acting pursuant to authority delegated by the SEC)
under the 1935 Act and under then applicable SEC orders, or (b) based on
discussions with the Staff of the SEC (the substance of which has been
communicated to GPU), the parties reasonably believe such action (or in
the case of an agreement, the transaction contemplated thereby) would be
approved and (y) obtaining the approval of the SEC (or the Staff of the
SEC pursuant to delegated authority) under the 1935 Act, and the
conditions to, such approval, would not materially delay or impede the
Merger past the End Date in effect at the time of the action (or in the
case of an agreement, as of the date of the agreement), provided further,
-------- -------
however, that if such new line of business, change in any line of business
-------
that FirstEnergy or its Subsidiaries engage in as of the date hereof,
assets disposed of or acquired or divested liability is material, then
such event has been disclosed in the Joint Proxy Statement or an amendment
thereto. FirstEnergy shall not, and shall not permit any of its
Subsidiaries to, sell, lease, license or
otherwise dispose of any of the shares of common stock of Ohio Edison
Company ("OE"), The Cleveland Electric Illuminating Company ("CEI"), The
-- ---
Toledo Edison Company ("TE") or Pennsylvania Power Company ("PP"), except,
-- --
in the case of any such Subsidiary, to FirstEnergy or such Subsidiary's
immediate parent company.
Section 6.02 Dividends; Changes in Stock. FirstEnergy shall not,
---------------------------
nor shall FirstEnergy permit any of its Subsidiaries to,
(a) declare or pay any dividends on or make other distributions
in respect of any of its capital stock, except that
(i) FirstEnergy may continue the declaration and payment of
regular quarterly cash dividends not in excess of $.375 per share of
FirstEnergy Common Stock, and
(ii) Subsidiaries of FirstEnergy may continue the
declaration and payment of regularly scheduled dividends on, and
other distributions required by the terms of, FirstEnergy Subs
Preferred,
in each case, with usual record and payment dates for such dividends in
accordance with such parties' past dividend practice, or as otherwise
required by the terms of the FirstEnergy Subs Preferred, and except for
dividends or other distributions on common stock declared and paid by a
wholly owned Subsidiary of FirstEnergy,
(b) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
or
(c) repurchase, redeem or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire, any shares of its capital
stock, other than
(i) redemptions, purchases or acquisitions required by the
respective terms of any series of FirstEnergy Subs Preferred,
(ii) in connection with refunding of any FirstEnergy Subs
Preferred,
(iii) in connection with intercompany purchases, or
(iv) for the purpose of funding or issuing pursuant to any
FirstEnergy Controlled Group Plan or any employee stock ownership
plan or any dividend reinvestment or stock purchase plan of
FirstEnergy, in the ordinary course.
Section 6.03 Issuance of Securities. Except in a transaction
----------------------
permitted by Section 6.01, FirstEnergy shall not, nor shall FirstEnergy
permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock
of any class, any Voting Debt or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, Voting Debt or
convertible securities, other than
(a) the issuance of common stock, stock options, performance
units, stock appreciation or similar rights, as the case may be, pursuant
to the FirstEnergy Controlled Group Plans in accordance with their present
terms,
(b) issuances of Non-Convertible Preferred Securities of
Subsidiaries of FirstEnergy to the extent permitted by Section 6.06,
(c) the issuance and reservation of FirstEnergy capital stock
pursuant to the FirstEnergy Rights Agreement, and
(d) the issuance, delivery or sale of capital stock by any
Subsidiary of FirstEnergy to FirstEnergy or such Subsidiary's immediate
parent company.
Section 6.04 Constituent Documents. Except as provided in Section
---------------------
4.02, FirstEnergy shall not amend or propose to amend its Amended Articles
of Incorporation or its Regulations.
Section 6.05 Solicitations. (a) FirstEnergy shall not, nor shall
-------------
FirstEnergy permit any of its Subsidiaries to, nor shall it authorize or
permit any of its officers, directors or employees or any investment
banker, financial advisor (including the FirstEnergy Advisor), attorney,
accountant or other representative retained by it or any of its
Subsidiaries to, solicit or encourage (including by way of furnishing
information), or take any other action to facilitate, any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to
lead to, any FirstEnergy Takeover Proposal (as defined below), or agree to
endorse, recommend or approve any FirstEnergy Takeover Proposal.
(b) FirstEnergy shall promptly advise GPU orally and in writing
of any such inquiries or FirstEnergy Takeover Proposals.
(c) As used in this Agreement, "FirstEnergy Takeover Proposal"
-----------------------------
shall mean any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving FirstEnergy or any
Significant Subsidiary of FirstEnergy or any proposal or offer to acquire
in any manner, by any person or a group of affiliated persons, a 20% or
greater common equity interest (including any security convertible into,
exchangeable or exercisable for, or otherwise entitling the owner thereof
to acquire such common equity interest) in, or 20% or more of the assets
on a consolidated basis of, FirstEnergy, other than the Merger. GPU
Takeover Proposals and FirstEnergy Takeover Proposals are sometimes herein
referred to as "Takeover Proposals".
------------------
(d) Notwithstanding anything in this Section 6.05 to the
contrary, unless the approvals of the shareholders of FirstEnergy have
been obtained, FirstEnergy or a Significant Subsidiary of FirstEnergy,
may, to the extent that the Board of Directors of FirstEnergy determines
in good faith, after consultation with outside counsel, that its fiduciary
duties under applicable law so require, participate in discussions or
negotiations with, furnish information to, and afford access to the
properties, books and records of FirstEnergy and its Subsidiaries to, any
person in connection with a possible FirstEnergy Takeover Proposal with
respect to FirstEnergy by such person.
(e) Nothing contained in this Agreement shall prohibit
FirstEnergy from taking and disclosing to its shareholders a position
contemplated by Rule 14e-2 under the Exchange Act or from making any
disclosure to its shareholders if, in the good faith judgment of the Board
of Directors of FirstEnergy, after consultation with outside counsel, that
disclosure is required pursuant to its obligations under applicable law.
Section 6.06 Financings. Except in connection with a transaction
----------
permitted or not prohibited by Section 6.01, Section 6.02, Section 6.07 or
Section 6.15, FirstEnergy shall not, nor shall FirstEnergy permit any of
its Subsidiaries to, incur (which shall not be deemed to include entering
into credit agreements, lines of credit or similar arrangements until
borrowings are made under such arrangements) any indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell any debt
securities or Non-Convertible Preferred Securities or warrants or rights
to acquire any debt securities or Non-Convertible Preferred Securities of
such party or any of its Subsidiaries or guarantee any debt securities of
others other than
(a) for short-term indebtedness in the ordinary course of
business, consistent with prior practice,
(b) the incurrence of long-term indebtedness and/or issuances of
debt securities or guarantees by FirstEnergy or any of its Subsidiaries,
and/or issuances of Non-Convertible Preferred Securities of Subsidiaries
of FirstEnergy, not aggregating in excess of $50 million (not including
incurrences or issuances pursuant to clause (a) and (c) of this Section
6.06), or
(c) indebtedness of FirstEnergy or any of its Subsidiaries,
and/or Non-Convertible Preferred Securities of Subsidiaries of
FirstEnergy, incurred or issued to refund or refinance outstanding
indebtedness or Non-Convertible Preferred Securities of such party or such
Subsidiary so long as the amount of such indebtedness or Non-Convertible
Preferred Securities so incurred or issued does not materially exceed the
amount of the indebtedness or Non-Convertible Preferred Securities so
refunded or refinanced and any accrued interest or dividends and premium,
if any, thereon.
Section 6.07 No Actions. FirstEnergy shall not, nor shall
----------
FirstEnergy permit any of its Subsidiaries to
(a) take any action that would or is reasonably likely to
result in any of the conditions to the Merger set forth in Article VIII
not being satisfied;
(b) take any action (other than entering into a FirstEnergy
Permitted Acquisition (as defined below)) that would or is reasonably
likely to prevent, materially delay or materially impede the consummation
of the Merger; or
(c) make any FirstEnergy Permitted Acquisition (or enter into
any agreement with respect thereto), unless, considering the circumstances
at the time FirstEnergy enters into an agreement for the FirstEnergy
Permitted Acquisition, including the results of discussions with
applicable Governmental Entities, the FirstEnergy Permitted Acquisition
would not prevent consummation of the Merger or materially delay
consummation of the Merger beyond the End Date, or, if the End Date has
been extended in accordance with Section 9.01(d) hereof prior to the time
the agreement with respect to the FirstEnergy Permitted Acquisition is
entered into, the
Extended End Date. "FirstEnergy Permitted Acquisition" means any
---------------------------------
acquisition by FirstEnergy or any of its Subsidiaries permitted by
Sections 6.01 and 6.15 hereof.
Section 6.08 Cooperation, Notification. To the extent permitted by
-------------------------
law, FirstEnergy shall, and shall cause its Subsidiaries to, (i) confer on
a regular and reasonably frequent basis with one or more representatives
of GPU to discuss material operational matters and the general status of
its ongoing operations; (ii) promptly notify GPU of any significant
changes, of which its executive officers have knowledge, in its business,
properties, assets, financial condition or reported or future results of
operations; (iii) advise GPU of any change or event which has had, or is
reasonably likely to result in, a FirstEnergy Material Adverse Effect; and
(iv) promptly provide GPU (or GPU's counsel) with copies of all filings
made by FirstEnergy or any of its Subsidiaries with any state or Federal
court, administrative agency, commission or other Governmental Entity in
connection with this Agreement and the transactions contemplated hereby.
Section 6.09 Rights Agreement. FirstEnergy shall not redeem the
----------------
FirstEnergy Rights or amend (other than to delay the "Distribution Date"
(as defined in the FirstEnergy Rights Agreement)) or terminate the
FirstEnergy Rights Agreement prior to the Effective Time unless required
to do so by order of a court of competent jurisdiction.
Section 6.10 Accounting. FirstEnergy shall not, nor shall
----------
FirstEnergy permit any of its Subsidiaries to, make any changes in its
accounting methods, except as required by law, rule, regulation or GAAP.
Section 6.11 Tax-Free Status. FirstEnergy shall not, nor shall
---------------
FirstEnergy permit any of its Subsidiaries to, take any actions which
would, or would be reasonably likely to, adversely affect the status of
the treatment of the Merger as a "reorganization" within the meaning of
Section 368(a) of the Code.
Section 6.12 Affiliate Transactions. FirstEnergy shall not, nor
----------------------
shall FirstEnergy permit any of its Subsidiaries to, enter into any
agreement or arrangement with any of their respective affiliates (other
than wholly owned Subsidiaries of FirstEnergy) on terms to FirstEnergy or
its Subsidiaries materially less favorable than could reasonably be
expected to have been obtained with an unaffiliated third party on an
arm's length basis.
Section 6.13 Third-Party Consents. (a) FirstEnergy shall, and
--------------------
shall cause its Subsidiaries to, use all commercially reasonable efforts,
consistent with United States and foreign laws, to obtain any third-party
consents necessary to consummate the Merger.
(b) FirstEnergy shall promptly notify GPU of any failure or
prospective failure to obtain any such consents and, if requested, shall
provide copies of all consents obtained to GPU.
Section 6.14 Tax-Exempt Status. FirstEnergy shall not, nor shall
-----------------
FirstEnergy permit any Subsidiary to, take any action that would likely
jeopardize the qualification of the outstanding revenue bonds issued for
the benefit of any of its Subsidiaries which qualify on the date hereof
under Code Section 142(a) as "exempt facility bonds" or as tax-exempt
industrial development bonds under Section 103(b)(4) of the Internal
Revenue Code of 1954, as amended prior to the Tax Reform Act of 1986.
Section 6.15 Certain Acquisitions. Without the consent of GPU,
--------------------
which shall not be unreasonably withheld, FirstEnergy shall not, and shall
not allow any Subsidiary 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 other business
organization or division thereof (a "target") or otherwise acquire or
agree to acquire any assets if not permitted under Section 6.01 or Section
6.07 or if (i) the aggregate consideration (in any form) payable by
FirstEnergy or such Subsidiary shall equal or exceed $1 billion or (ii)
the target is, or the acquisition of such assets would result in their
acquirer becoming, an "electric utility company" as defined in the 1935
Act.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 Preparation of Registration Statement and the Joint
---------------------------------------------------
Proxy Statement. (a) FirstEnergy and GPU shall promptly prepare and file
---------------
with the SEC the Joint Proxy Statement and FirstEnergy shall prepare and
file with the SEC the Registration Statement, in which the Joint Proxy
Statement will be included as a prospectus.
(b) Each of FirstEnergy and GPU shall use its best efforts to
have the Registration Statement declared effective under the Securities
Act as promptly as practicable after such filing.
(c) FirstEnergy and GPU shall also take any action required to
be taken under any applicable Blue-Sky Law in connection with the issuance
of FirstEnergy Common Stock pursuant to the Merger and FirstEnergy and GPU
shall furnish all information concerning themselves and the holders of
their common stock as may be reasonably requested in connection with any
such action.
Section 7.02 Letters of GPU's Accountants. GPU shall use
----------------------------
commercially reasonable efforts to cause to be delivered to FirstEnergy a
"comfort" letter of PricewaterhouseCoopers LLP, GPU's independent
auditors, addressed to FirstEnergy, dated as of the date the Registration
Statement shall become effective, and confirmed in writing as of the
Effective Time, in form and substance reasonably satisfactory to
FirstEnergy and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
Section 7.03 Letters of FirstEnergy's Accountants. FirstEnergy
------------------------------------
shall use commercially reasonable efforts to cause to be delivered to GPU
a "comfort" letter of Xxxxxx Xxxxxxxx LLP, FirstEnergy's independent
auditors, addressed to GPU, dated as of the date the Registration
Statement shall become effective, and confirmed in writing as of the
Effective Time, in form and substance reasonably satisfactory to GPU and
customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to
the Registration Statement.
Section 7.04 Access to Information. (a) To the extent permitted by
---------------------
law, upon reasonable notice, GPU and FirstEnergy shall each (and shall
cause each of their respective Subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of the other,
reasonable access, during normal business hours during the period prior to
the Effective Time, to all its properties, books, contracts, commitments
and records (including, but not limited to, Tax returns but excluding any
documents with respect to which an attorney-client privilege is available)
and, during such period, each of GPU and FirstEnergy shall (and shall
cause each of their respective Subsidiaries to) furnish promptly to the
other
(i) a copy of each report, schedule, registration statement
and other document filed or received by it during such period
pursuant to the requirements of Federal securities laws, or filed
with or sent to the SEC, the FERC, the NRC, the DOE, the Department
of Justice, the FTC, the Public Utilities Commission of Ohio, the
Pennsylvania Public Utility Commission or the New Jersey Board of
Public Utilities or any other Federal, state or foreign regulatory
agency or commission, and
(ii) all other information concerning its business,
properties and personnel as such other party may reasonably request.
(b) Any information delivered by GPU to FirstEnergy, or by
FirstEnergy to GPU, shall be subject to the Confidentiality Agreement,
dated May 19, 2000, between GPU and FirstEnergy (the "Confidentiality
---------------
Agreement").
---------
Section 7.05 Shareholder Approvals. (a) FirstEnergy and GPU shall
---------------------
each call a meeting of their respective shareholders to be held as
promptly as practicable for the purpose of voting upon the adoption of
this Agreement.
(b) FirstEnergy and GPU will, through their respective Boards of
Directors, recommend to their respective shareholders that they vote in
favor of the adoption of this Agreement (including, in the case of
FirstEnergy, the amendment of the Amended Articles of Incorporation of
FirstEnergy to increase the number of authorized shares of FirstEnergy
Common Stock as necessary to issue the shares of FirstEnergy Common Stock
as contemplated by Article II); provided, however, that neither Board of
-------- -------
Directors shall be obligated to recommend the adoption of this Agreement
and the Merger to its respective shareholders if such Board of Directors
determines in good faith, after consultation with outside counsel and
financial advisors, that a change or modification to such recommendation
is required pursuant to its fiduciary duties under applicable law or its
other legal obligations as Directors.
(c) GPU and FirstEnergy will coordinate and cooperate with
respect to the timing of such shareholder approvals and shall use their
best efforts to hold such meetings on the same day and to secure such
approvals as soon as practicable after the date on which the Registration
Statement becomes effective.
Section 7.06 Satisfaction of Conditions to the Merger. (a) Each of
----------------------------------------
FirstEnergy and GPU will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on itself with
respect to this Agreement.
b) Subject to the terms and conditions of this Agreement, each
of the parties hereto agrees to use its best efforts promptly to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement (subject to the appropriate vote of shareholders of FirstEnergy
and GPU, respectively, described in Section 7.05), as promptly as possible
after the date of this Agreement, including fully cooperating with the
other party and providing all necessary information and making all
necessary filings in connection with, among other things, the approvals
and clearance under the HSR Act, the Securities Act and the Exchange Act,
the FERC Approvals, the NRC Approvals, the FCC Approval, the SEC '35 Act
Order, the Blue-Sky Filings, the Local Approvals, the State Takeover
Approvals and the Foreign Approvals.
(c) In connection therewith, the parties agree that, as between
them, FirstEnergy shall be primarily responsible for the preparation and
processing of the filings necessary to obtain the approvals required for
the consummation of the transactions contemplated hereby under the
Securities Act and the Exchange Act, the FERC Approvals, the NRC
Approvals, the FCC Approval, the SEC '35 Act Order and the Local Approvals
required from the State of Ohio and the Commonwealth of Pennsylvania as
well as the Blue-Sky Filings; provided that FirstEnergy shall furnish GPU
-------- ----
with copies of, and an opportunity to comment on, all such filings a
reasonable time prior to filing; and GPU shall be primarily responsible
for the preparation and processing of the filings necessary to obtain the
Local Approvals required from the State of New Jersey and the Foreign
Approvals; provided that, with respect to any Local Approvals and Foreign
-------------
Approvals, GPU shall not (i) make any filing or (ii) agree to any
settlement without the prior consent of FirstEnergy, which consent shall
not be unreasonably withheld.
(d) Each of FirstEnergy and GPU will, and will cause its
Subsidiaries to, take all actions necessary to obtain (and will cooperate
with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity required to be
obtained or made by FirstEnergy, GPU or any of their Subsidiaries in
connection with the Merger or the taking of any action contemplated
thereby or by this Agreement.
(e) Notwithstanding anything to the contrary set forth in this
Agreement, neither FirstEnergy nor GPU shall be required to accept or
agree to any material conditions, terms or restrictions on the conduct of
its business or any dispositions of assets or businesses in order to
obtain any consent, waiver, license, permit, approval, authorization,
ruling or order in connection with the Merger if the implementation or
effectiveness of any such condition, terms or restriction, or disposition,
is not conditioned on consummation of the Merger.
(f) Notwithstanding the foregoing, neither FirstEnergy nor GPU
shall be required by this Agreement to take any action or make any
commitment that would reasonably be expected to have a Material Adverse
Effect (as defined in Section 3.01(a) but without reference to GPU or
FirstEnergy) on the (x) business, operations, properties, assets,
financial condition or results of operations of the Surviving Corporation
and its Subsidiaries taken as a whole after consummation of the Merger or
(y) the parties' ability to consummate the Merger (a "Surviving
---------
Corporation Material Adverse Effect").
-----------------------------------
Section 7.07 Rule 145 Affiliates. (a) Prior to the date of the
-------------------
meeting of the shareholders of GPU, GPU shall deliver to FirstEnergy a
letter substantially in the form attached hereto as Exhibit A, identifying
---------
all persons who may be, at the time this Agreement is submitted for
approval to such shareholders, "affiliates" of GPU ("GPU Affiliates") for
--------------
purposes of Rule 145 under the Securities Act.
(b) GPU shall use commercially reasonable efforts to cause to be
delivered to FirstEnergy on or prior to the date of the applicable meeting
of shareholders referred to in Section 7.05 a written agreement from each
of the GPU Affiliates substantially in the form attached hereto as Exhibit
-------
B.
-
Section 7.08 Stock Exchange Listing. FirstEnergy shall use its best
----------------------
efforts to cause the shares of FirstEnergy Common Stock to be issued in
the Merger and, if necessary under the Benefit Plans referred to in
Section 7.09, after the Merger, to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Closing.
Section 7.09 Employee Benefit Plans. (a) FirstEnergy and GPU agree
----------------------
that the FirstEnergy Controlled Group Plans and the GPU Controlled Group
Plans in effect at the date of this Agreement shall, to the extent
practicable, remain in effect until otherwise determined after the
Effective Time.
(b) In the case of GPU Controlled Group Plans which are
continued and under which the employees' interests are based upon or
valued in relation to GPU Common Stock, FirstEnergy and GPU agree that
such interests shall be based on FirstEnergy Common Stock in an equitable
manner (and in the case of any such interests existing at the Effective
Time, on the basis of the Exchange Ratio as adjusted in accordance with
Section 2.01(m)); provided, however, that nothing contained herein
-------
shall be construed as requiring FirstEnergy to continue any specific
plans.
(c) GPU will not make any changes in severance benefits for
officers of GPU or its Subsidiaries from those disclosed in Section
-------
3.12(i) or Section 5.13 of the GPU Disclosure Schedule.
------- ------------
(d) Certain Non-bargaining Unit GPU Employees. (i) If an
applicable GPU Controlled Group Plan is terminated in which non-
bargaining unit employees of GPU, GPU Service, Inc. ("GPU Service"),
-----------
GPU Telcom Services, Inc., GPU Advanced Resources, Inc., GPU
International, Inc. (domestic corporate level employees), JCP&L,
MetEd or Penelec, participate, FirstEnergy shall, and shall cause
each of its Subsidiaries, as applicable, to:
(A) permit such employees to participate in any
similar FirstEnergy Controlled Group Plan established by
FirstEnergy in a manner substantially similar to similarly
situated employees of FirstEnergy and its Subsidiaries,
recognizing that the availability, providers or benefit levels
of such FirstEnergy Controlled Group Plan may reflect differing
circumstances;
(B) grant all such employees credit for all service
with GPU prior to the Effective Time with respect to the
applicable FirstEnergy Controlled Group Plan;
(C) waive any pre-existing condition exclusions and
actively-at-work requirements with respect to the applicable
FirstEnergy Controlled Group Plan; and
(D) provide that any expenses incurred on or before
the Effective Time by any such employee or any such employee's
covered dependent shall be taken into account for purposes of
satisfying applicable deductible, coinsurance and maximum out-
of-pocket provisions with respect to the applicable FirstEnergy
Controlled Group Plan.
(ii) FirstEnergy shall, and shall cause each of its
subsidiaries to:
(A) allow, after the Effective Time such employees to
use the remaining amount of accrued but unused vacation and sick
leave such employees were entitled immediately prior to the
Effective Time;
(B) allow such employees to participate, as soon as
practical, in all job placement, job posting, job training,
career development and educational programs of FirstEnergy and
its Subsidiaries; and
(C) consider such employees for positions at
FirstEnergy and its Subsidiaries resulting from the Merger using
criteria including previous work history, job experience and
qualifications.
(e) Other. Without limiting the generality of the foregoing,
FirstEnergy agrees to the matters set forth in Section 7.09(e) of the
---------------
FirstEnergy Disclosure Schedule.
Section 7.10 Expenses. Except as set forth in Section 9.05, whether
--------
or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such expense, and, in connection
therewith, each of FirstEnergy and GPU shall pay, with its own funds and
not with funds provided by the other party, any and all real property
transfers or gains, sales, use, transfer, stock transfer or stamp Taxes,
any transfer, recording, registration or other fees, or any similar
conveyance Taxes imposed on such party resulting from the Merger, except
that
(a) expenses incurred in connection with printing and mailing
the Joint Proxy Statement and the Registration Statement shall be shared
equally by FirstEnergy and GPU,
(b) all out-of-pocket costs of the parties (including attorneys'
fees) incurred to obtain the FERC Approvals, the FCC Approvals, the SEC
'35 Act Order, the NRC Approvals (including, without limitation, all such
costs incurred for all filings and proceedings relating thereto), the
Local Approvals and the Foreign Approvals shall be shared equally by
FirstEnergy and GPU, and
(c) all other out-of-pocket expenses of a joint nature incurred
in connection with the transactions contemplated by this Agreement shall
be shared equally by FirstEnergy and GPU.
Section 7.11 Brokers or Finders. Each of FirstEnergy and GPU
------------------
represents, as to itself, its Subsidiaries and its affiliates, that no
agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except for the GPU Advisor, whose fees and
expenses will be paid by GPU in accordance with GPU's agreement with such
firm (copies of which have been delivered by GPU to FirstEnergy prior to
the date of this Agreement), and except for the FirstEnergy Advisor, whose
fees and expenses will be paid by FirstEnergy in accordance with
FirstEnergy's agreement with such firm (copies of which have been
delivered by FirstEnergy to GPU prior to the date of this Agreement), and
each of FirstEnergy and GPU agree to indemnify and hold the other harmless
from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses asserted by any person
on the basis of any act or statement alleged to have been made by such
party or its affiliate.
Section 7.12 Surviving Corporation Board of Directors and Officers.
-----------------------------------------------------
(a) FirstEnergy's Board of Directors shall take such actions as may be
necessary to cause (x) the number of Directors comprising the full Board
of Directors of the Surviving Corporation's at the Effective Time to be 16
and (y) at the Effective Time, 10 members of the Board of Directors of the
Surviving Corporation to be persons designated prior to the Effective Time
by FirstEnergy's Board of Directors and 6 members of the Board of
Directors of the Surviving Corporation to be persons designated prior to
the Effective Time by GPU's Board of Directors ("GPU Designees"). At the
-------------
Effective Time, the GPU Designees shall be allocated among the classes of
the Surviving Corporation's Board of Directors as designated by GPU's
Board of Directors prior to the Effective Time so long as the GPU
Designees are allocated among those classes in a manner that is as nearly
equal as possible.
(b) If, at any time during the two year period following the
Effective Time, there are fewer than 6 GPU Directors, the vacancy or
vacancies, as applicable, shall be filled as promptly as practicable by
the appointment by the Surviving Corporation's Board of Directors of a
person or persons recommended by not less than 80% of the remaining
members of the Surviving Corporation's Board of Directors. At all times
during such two year period, the chairman of at least one of the standing
committees of the Surviving Corporation's Board of Directors shall be a
GPU Director. The term "GPU Director" means (i) any GPU Designee who
------------
becomes a Director of the Surviving Corporation at the Effective Time and
(ii) any person who subsequently becomes a Director of the Surviving
Corporation pursuant to this paragraph.
(c) From the Effective Time until the earlier of the date he
reaches the age of 62 or the date he is no longer willing or able to serve
in such capacity, Xx. Xxxxx shall serve as Chairman of the Surviving
Corporation and from such date until otherwise determined by the Surviving
Corporation's Board of Directors, Xx. Xxxx shall serve as Chairman of the
Surviving Corporation.
(d) From the Effective Time until otherwise determined by the
Surviving Corporation's Board of Directors, Xx. Xxxx shall serve as Chief
Executive Officer and, until the date referred to in (c) above, Vice
Chairman of the Surviving Corporation.
(e) All other officers of the Surviving Corporation will be
designated by the Surviving Corporation's Board of Directors.
Section 7.13 Indemnification; Directors' and Officers' Insurance.
---------------------------------------------------
(a) GPU and, from and after the Effective Time, the Surviving Corporation
(each of GPU and the Surviving Corporation, as the case may be, is
referred to herein as a "GPU Indemnifying Party") shall indemnify, defend,
----------------------
and hold harmless each person who is now, or has been at any time prior to
the date of this Agreement or who becomes prior to the Effective Time, an
officer, director, or employee of GPU or any of its Subsidiaries (the "GPU
---
Indemnified Parties") against
-------------------
(i) all losses, claims, damages, costs, expenses,
liabilities or judgments or amounts that are paid in settlement with
the approval of the GPU Indemnifying Party (which approval shall not
be unreasonably withheld) of or in connection with any claim, action,
suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or
was a director, officer or employee of GPU or any of its
Subsidiaries, whether pertaining to any matter existing or occurring
at or prior to the Effective Time and whether asserted or claimed
prior to, or at or after, the Effective Time (the "GPU Indemnified
Liabilities"), and
(ii) all GPU Indemnified Liabilities based in whole or in
part on, or arising in whole or in part out of, or pertaining to this
Agreement or the transactions contemplated hereby, in each case to
the full extent permitted by applicable law (and the applicable GPU
Indemnifying Party will pay expenses as incurred in advance of the
final disposition of any such action or proceeding to each GPU
Indemnified Party to the full extent permitted by applicable law).
(b) (i) Without limiting the foregoing, in the event any such
claim, action, suit, proceeding, or investigation is brought against
any GPU Indemnified Party (whether arising before or after the
Effective Time),
(A) the GPU Indemnified Parties may retain counsel
satisfactory to them and approved by the GPU Indemnifying Party,
which approval shall not be unreasonably withheld,
(B) the GPU Indemnifying Party shall pay all
reasonable fees and expenses of such counsel for the GPU
Indemnified Parties promptly as statements therefor are
received, and
(C) the GPU Indemnifying Party will use all
reasonable efforts to assist in the vigorous defense of any such
matter.
(ii) However, no GPU Indemnifying Party shall be liable for
any settlement of any claim effected without its written consent,
which consent shall not be unreasonably withheld.
(iii) Any GPU Indemnified Party wishing to claim
indemnification under this Section 7.13, upon learning of any such
claim, action, suit, proceeding, or investigation, shall notify the
applicable GPU Indemnifying Party (but the failure so to notify a GPU
Indemnifying Party shall not relieve it from any liability which it
may have under this Section 7.13 except to the extent such failure
prejudices such party).
(iv) The GPU Indemnified Parties as a group may retain only
one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct,
a conflict on any significant issue between the positions of any two
or more GPU Indemnified Parties.
(c) For a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by GPU
(provided that the Surviving Corporation may substitute therefor policies
of at least the same coverage and amounts and otherwise containing terms
and conditions which, in the aggregate, are no less advantageous than the
current policies maintained by GPU with respect to its directors and
officers) with respect to claims arising from facts or events which
occurred before the Effective Time; provided, however, that in no event
-------- -------
shall the Surviving Corporation be required to expend, in order to
maintain or procure insurance coverage pursuant to this Section 7.13(c),
any amount per annum in excess of 200% of the aggregate premiums paid by
GPU in 2000 on an annualized basis for such purpose. For a period of six
years after the Effective Time, the Regulations of the Surviving
Corporation (or similar constitutional documents of any successor entity)
shall contain provisions not less favorable than are set forth in Sections
31-33 of FirstEnergy's Regulations as in effect as of the date of this
Agreement.
(d) FirstEnergy and, from and after the Effective Time, the
Surviving Corporation. (each of FirstEnergy and the Surviving Corporation,
as the case may be, is referred to herein as an "FirstEnergy Indemnifying
------------------------
Party") shall indemnify, defend, and hold harmless each person who is now,
-----
or has been at any time prior to the date of this Agreement or who becomes
prior to the Effective Time, an officer, director, or employee of
FirstEnergy or any of its Subsidiaries (the "FirstEnergy Indemnified
-----------------------
Parties") against
-------
(i) all losses, claims, damages, costs, expenses,
liabilities or judgments or amounts that are paid in settlement with
the approval of the FirstEnergy Indemnifying Party (which approval
shall not be unreasonably withheld) of or in connection with any
claim, action, suit, proceeding or investigation based in whole or in
part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of FirstEnergy or
any of its Subsidiaries, whether pertaining to any matter existing or
occurring at or prior to the Effective Time and whether asserted or
claimed prior to, or at or after, the Effective Time (the
"FirstEnergy Indemnified Liabilities"), and
-----------------------------------
(ii) all FirstEnergy Indemnified Liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining
to this Agreement or the transactions contemplated hereby, in each
case to the full extent permitted by applicable law (and the
applicable FirstEnergy Indemnifying Party will pay expenses as
incurred in advance of
the final disposition of any such action or proceeding to each
FirstEnergy Indemnified Party to the full extent permitted by
applicable law).
(e) (I) Without limiting the foregoing, in the event any such
claim, action, suit, proceeding, or investigation is brought against
any FirstEnergy Indemnified Party (whether arising before or after
the Effective Time),
(A) the FirstEnergy Indemnified Parties may retain
counsel satisfactory to them and approved by the FirstEnergy
Indemnifying Party, which approval shall not be unreasonably
withheld,
(B) the FirstEnergy Indemnifying Party shall pay all
reasonable fees and expenses of such counsel for the FirstEnergy
Indemnified Parties promptly as statements therefor are
received, and
(C) the FirstEnergy Indemnifying Party will use all
reasonable efforts to assist in the vigorous defense of any such
matter.
(ii) However, no FirstEnergy Indemnifying Party shall be
liable for any settlement of any claim effected without its written
consent, which consent shall not be unreasonably withheld.
(iii) Any FirstEnergy Indemnified Party wishing to claim
indemnification under this Section 7.13, upon learning of any such
claim, action, suit, proceeding, or investigation, shall notify the
applicable FirstEnergy Indemnifying Party (but the failure so to
notify a FirstEnergy Indemnifying Party shall not relieve it from any
liability which it may have under this Section 7.13 except to the
extent such failure prejudices such party).
(iv) The FirstEnergy Indemnified Parties as a group may
retain only one law firm to represent them with respect to each such
matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of
any two or more FirstEnergy Indemnified Parties.
(f) For a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by
FirstEnergy (provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage and amounts and otherwise
containing terms and conditions which, in the aggregate, are no less
advantageous than the current policies maintained by FirstEnergy with
respect to its directors and officers) with respect to claims arising from
facts or events which occurred before the Effective Time; provided,
--------
however, that in no event shall the Surviving Corporation be required to
-------
expend, in order to maintain or procure insurance coverage pursuant to
this Section 7.13(f), any amount per annum in excess of 200% of the
aggregate premiums paid by FirstEnergy in 2000 on an annualized basis for
such purpose.
(g) The provisions of this Section 7.13 are intended to be for
the sole benefit of, and shall be enforceable by, each Indemnified Party
and his or her heirs and representatives.
Section 7.14 Further Assurances. In case at any time after the
------------------
Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation or its
Subsidiaries with full title to all properties, assets, rights, approvals,
immunities and franchises of FirstEnergy and GPU, the proper officers and
directors of FirstEnergy and GPU shall take all such necessary action.
Section 7.15 Tax Treatment. FirstEnergy and GPU each agree to treat
-------------
the Merger as a "reorganization" within the meaning of Section 368(a) of
the Code, and each party hereto shall use all reasonable efforts to
achieve such result. Following the Effective Time, FirstEnergy shall not,
nor shall FirstEnergy permit any of its Subsidiaries to, take any actions
which would, or would be reasonably likely to, adversely affect the status
of the treatment of the Merger as a "reorganization" within the meaning of
Section 368(a) of the Code.
Section 7.16 Accounting Treatment. FirstEnergy and GPU each agree
--------------------
to, and to cause the Surviving Corporation to, account for the Merger on a
purchase accounting basis in accordance with GAAP and applicable SEC
regulations.
Section 7.17 Disclosure Schedules. (a) On the date hereof,
--------------------
(i) GPU has delivered to FirstEnergy a GPU Disclosure
Schedule, accompanied by a certificate signed by the chief financial
officer of GPU stating the GPU Disclosure Schedule is being delivered
pursuant to this Section 7.17(a), and
(ii) FirstEnergy has delivered to GPU a FirstEnergy
Disclosure Schedule, accompanied by a certificate signed by the chief
financial officer of FirstEnergy stating the FirstEnergy Disclosure
Schedule is being delivered pursuant to this Section 7.17(a).
(b) The GPU Disclosure Schedule and the FirstEnergy Disclosure
Schedule are collectively referred to herein as the "Disclosure
----------
Schedules."
---------
(c) (i) 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.
(ii) 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.
Disclosure of any matters in one part of the GPU Disclosure Schedule
or the FirstEnergy Disclosure Schedule, in any Section thereof or in this
Agreement shall be deemed to be a disclosure of such matters in response
to any other provision of this Agreement (including any other part of the
GPU Disclosure Schedule or FirstEnergy Disclosure Schedule, as the case
may be) to which such matter may be applicable.
Section 7.18 Public Announcements. Subject to each party's
--------------------
disclosure obligations imposed by law and applicable stock exchange rules,
FirstEnergy and GPU 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 thereto without the consent of the other party,
which consent shall not be unreasonably withheld.
Section 7.19 Employee Agreements. FirstEnergy and GPU shall cause
-------------------
the Surviving Corporation and its Subsidiaries, following the Effective
Time, to honor, without modification, all contracts, agreements,
collective bargaining agreements and commitments of the parties prior to
or at the date hereof or made herein or permitted to be entered into prior
to the Effective Time pursuant to this Agreement which apply to any
current or former employee or current or former director of the parties
hereto; provided, however, that this undertaking is not intended to
-------- -------
prevent the Surviving Corporation or its Subsidiaries from enforcing such
contracts, agreements, collective bargaining agreements and commitments in
accordance with their terms, including, without limitation, any reserved
right to amend, modify, suspend, revoke or terminate any such contract,
agreement, collective bargaining agreement or commitment.
Section 7.20 Transition Management. (a) As promptly as practicable
---------------------
after the date hereof, GPU and FirstEnergy shall create a special
transition management task force (the "Task Force") headed by Xx. Xxxx (or
---- -----
an individual designated by him or by the Board of Directors of
FirstEnergy). Members of the Task Force shall consist of representatives
of FirstEnergy and GPU as designated by Xx. Xxxx in consultation with Xx.
Xxxxx.
(b) The functions of the Task Force shall include
(i) to serve as a conduit for the flow of information and
documents between the companies and their subsidiaries as
contemplated by Sections 5.10 and 6.08,
(ii) development of regulatory plans and proposals,
corporate organizational and management plans, workforce combination
proposals, and such other matters as they deem appropriate, and
(iii) to evaluate and recommend the manner in which best to
organize and manage the business of the Surviving Corporation after
the Effective Time; provided that the Task Force shall not be
responsible for controlling the operations of the businesses of
FirstEnergy, GPU or any of their respective Subsidiaries.
(c) Xx. Xxxx or his designee, shall be responsible for directing
all activities of the Task Force contemplated by this Section 7.20.
(d) Effective from the date hereof to the earlier of the
Effective Time or the termination of this Agreement pursuant to Section
9.01 hereof, the Chairman of the Board of Directors of FirstEnergy may
request of the Chairman of the Board of Directors of GPU to attend any
meeting of the Board of Directors of GPU and the Chairman of the Board of
Directors of GPU may request of the Chairman of the Board of Directors of
FirstEnergy to attend any meeting of the Board of Directors of
FirstEnergy. Each company whose Chairman receives any such request shall
consider the request and, if the company to whose Chairman the request was
made determines in its sole discretion to do so, that company may
accommodate the request of the other party's Chairman.
Section 7.21 Charitable Commitments; Offices; Name. The Surviving
-------------------------------------
Corporation will maintain GPU's charitable commitments substantially at
current levels in the communities which JCP&L, MetEd and Penelec currently
serve for a minimum of three years after the Effective Time. The parties
intend that after this three year period, the Surviving Corporation will
make charitable commitments in such communities in a manner substantially
similar to what FirstEnergy's Subsidiaries do in the communities they
currently serve. After the Effective Time, subject to the authority of
the Surviving Corporation's Board of Directors to manage the affairs of
the Surviving Corporation, GPU's offices and presence will be maintained
in their current general locations in Morristown, New Jersey and Reading,
Pennsylvania, and the headquarters of the Surviving Corporation will be
located in Akron, Ohio. The Surviving Corporation will maintain the use
of the "GPU Energy" name until otherwise determined by the Surviving
Corporation; provided that such name will also reflect the affiliation
-------- ----
with FirstEnergy.
ARTICLE VIII
CONDITIONS PRECEDENT
--------------------
Section 8.01 Conditions to Each Party's Obligation To Effect the
---------------------------------------------------
Merger. The respective obligation of each party to effect the Merger
------
shall be subject to the satisfaction prior to the Closing Date of each of
the following conditions:
(a) Shareholder Approvals. This Agreement shall have been
---------------------
adopted by the shareholders of GPU in accordance with the Pennsylvania BCL
and by the shareholders of FirstEnergy in accordance with the Ohio GCL.
(b) Listing. The shares of FirstEnergy Common Stock issuable to
-------
holders of GPU Common Stock pursuant to this Agreement and such other
shares required to be reserved for issuance in connection with the Merger
shall have been authorized for listing on the NYSE upon official notice of
issuance.
(c) Regulatory Approvals. (i) Other than the filings provided
--------------------
for by Section 1.03, all authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of all
applicable waiting periods (including but not limited to the waiting
period under the HSR Act), including extensions thereof, imposed by,
any Governmental Entity or required under any applicable law,
statute, regulations or rule (including but not limited to the FERC
Approvals, the NRC Approvals, the FCC Approvals, the SEC '35 Act
Order, the Local Approvals, the State Takeover Approvals and the
Foreign Approvals) shall have been made or obtained and have become
Final Orders (as hereinafter defined) and, with respect to any
waiting period, including any extension thereof, such waiting period
shall have expired or terminated, except to the extent that failures
(x) to make or obtain these authorizations, consents, orders,
approvals, declarations, and filings, including Final Orders, and (y)
of any applicable waiting period, or extension thereof, to expire or
be terminated would not, in the aggregate, be reasonably expected to
result in a Surviving Corporation
Material Adverse Effect, and the foregoing authorizations, consents,
orders, approvals, declarations and filings, including Final Orders,
shall not impose terms or conditions on FirstEnergy, GPU or any of
its Subsidiaries that would be reasonably expected to result in a
Surviving Corporation Material Adverse Effect. For purposes of this
Section 8.01(c), any requirement in a Final Order that generation
assets of any of FirstEnergy's Subsidiaries which are, in the sole
judgement of FirstEnergy, made on a reasonable basis, material to the
business or operations of FirstEnergy or any of its Subsidiaries, be
divested shall be deemed to be a Surviving Corporation Material
Adverse Effect. 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.
(ii) FirstEnergy shall have received all permits and other
authorizations necessary under the Blue-Sky Laws to issue the
FirstEnergy Common Stock in exchange for the GPU Common Stock and to
consummate the Merger, except to the extent that the failure, in the
aggregate, to receive such permits or other authorizations would not
be reasonably expected to result in a Surviving Corporation Material
Adverse Effect.
(d) Registration Statement Effective. The Registration
--------------------------------
Statement shall have become effective under the Securities Act and shall
not be the subject of any stop order, or proceedings seeking a stop order,
under Section 8 of the Securities Act.
(e) Injunctions or Restraints. No temporary restraining order,
-------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in
----------
effect.
(f) Agreements from Rule 145 Affiliates. The Surviving
-----------------------------------
Corporation shall have received from each person named in the letters from
GPU and FirstEnergy referred to in Section 7.07, an executed copy of an
agreement substantially in the form of Exhibit B hereto.
---------
Section 8.02 Conditions to Obligations of FirstEnergy. The
----------------------------------------
obligation of FirstEnergy to effect the Merger is subject to the
satisfaction of each of the following conditions unless waived by
FirstEnergy:
(a) Representations and Warranties. Except as otherwise
------------------------------
contemplated by this Agreement, the representations and warranties of GPU
set forth in this Agreement shall be true and correct as of the date of
this Agreement (except to the extent such representations and warranties
speak as of an earlier date) and as of the Closing Date as though made on
and as of the Closing Date except to the extent that all failures of GPU's
representations and warranties to be true and correct, taken together,
would not, as of the Closing Date, reasonably be expected to have a GPU
Material Adverse Effect (it being understood that, for purposes of this
paragraph (a), all "GPU Material Adverse Effect" and other materiality
qualifications in GPU's representations and warranties shall be
disregarded), and FirstEnergy shall have received a certificate signed on
behalf of GPU by its chief executive officer and chief financial officer
to such effect.
(b) Performance of Obligations of GPU. GPU shall have performed
---------------------------------
in all material respects all obligations required to be performed by it
under this Agreement at or prior
to the Closing Date, and FirstEnergy shall have received a certificate
signed on behalf of GPU by its chief executive officer to such effect.
(c) Tax Opinion. FirstEnergy shall have received an opinion,
-----------
dated the Closing Date, from Winthrop, Stimson, Xxxxxx & Xxxxxxx, counsel
to FirstEnergy (or, if Winthrop, Stimson, Xxxxxx & Xxxxxxx refuses to
issue this opinion, from other counsel reasonably satisfactory to
FirstEnergy), to the effect that the Merger will be treated for Federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code. In rendering such opinion, Winthrop, Stimson, Xxxxxx
& Xxxxxxx (or such other counsel) shall be entitled to receive and rely
upon customary representations contained in certificates of FirstEnergy
and GPU, and such other persons as such counsel reasonably deems necessary
or appropriate, in each case in form and substance reasonably acceptable
to such counsel.
(d) Rights Agreement. Under the GPU Rights Agreement, no
----------------
"Stock Acquisition Date," as defined therein, shall have occurred with
respect to the GPU Rights Agreement that would increase the number of
shares of FirstEnergy Common Stock to be issued under the Merger.
(e) Regulatory Material Adverse Effect. Since the date of this
----------------------------------
Agreement, no law, regulation, ruling, order or decree (or new
interpretation of any of the foregoing) affecting GPU or any of its
Subsidiaries shall have been adopted, amended or issued that, individually
or in the aggregate, would have a Surviving Corporation Material Adverse
Effect.
(f) Material Adverse Effect. Since June 30, 2000, there shall
-----------------------
not have been any event which constitutes a GPU Material Adverse Effect.
Section 8.03 Conditions to Obligations of GPU. The obligation of
--------------------------------
GPU to effect the Merger is subject to the satisfaction of each of the
following conditions unless waived by GPU:
(a) Representations and Warranties. Except as otherwise
------------------------------
contemplated by this Agreement, the representations and warranties of
FirstEnergy set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement (except to the extent
such representations and warranties speak as of an earlier date) and as of
the Closing Date as though made on and as of the Closing Date, except to
the extent that all failures of FirstEnergy's representations and
warranties to be true and correct taken together, would not, as of the
Closing Date, reasonably be expected to have a FirstEnergy Material
Adverse Effect (it being understood that, for purposes of this paragraph
(a), all "FirstEnergy Material Adverse Effect" and other materiality
qualifications in FirstEnergy's representations and warranties shall be
disregarded) and GPU shall have received a certificate signed on behalf of
FirstEnergy by its chief executive officer and chief financial officer to
such effect.
(b) Performance of Obligations of FirstEnergy. FirstEnergy
-----------------------------------------
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date,
and GPU shall have received a certificate signed on behalf of FirstEnergy
by its chief executive officer to such effect.
(c) Tax Opinion. GPU shall have received an opinion, dated the
-----------
Closing Date, from Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx, counsel to GPU (or, if Fried, Frank, Harris, Xxxxxxx &
Xxxxxxxx refuses to issue this opinion, from other counsel reasonably
satisfactory to GPU), to the effect that the Merger will be treated for
Federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, Fried, Frank,
Harris, Xxxxxxx & Xxxxxxxx (or such other counsel) shall be entitled to
receive and rely upon customary representations contained in certificates
of FirstEnergy and GPU, and such other persons as such counsel reasonably
deems necessary or appropriate, in each case in form and substance
reasonably acceptable to such counsel.
(d) Rights Agreement. Under the FirstEnergy Rights Agreement,
----------------
no "flip-in" or "flip-over" or similar event commonly described in rights
plans, or a "Triggering Event" as defined therein, shall have occurred
with respect to the FirstEnergy Rights Agreement.
(e) Regulatory Material Adverse Effect. Since the date of this
----------------------------------
Agreement, no law, regulation, ruling, order or decree (or new
interpretation of any of the foregoing) affecting FirstEnergy or any of
its Subsidiaries shall have been adopted, amended or issued that would
have a Surviving Corporation Material Adverse Effect.
(f) Material Adverse Effect. Since March 31, 2000, there shall
-----------------------
not have been any event which constitutes a FirstEnergy Material Adverse
Effect.
ARTICLE IX
TERMINATION AND AMENDMENT
-------------------------
Section 9.01 Termination. At any time prior to the Effective Time,
-----------
whether before or after the adoption of this Agreement by the holders of
FirstEnergy Common Stock or by the holders of GPU Common Stock, this
Agreement may be terminated:
(a) by mutual written consent of FirstEnergy and GPU;
(b) by either FirstEnergy or GPU
(i) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the
other party set forth in this Agreement which breach has not been
cured within twenty (20) business days following receipt by the
breaching party of notice of such breach or adequate assurance of
such cure shall not have been given by or on behalf of the breaching
party within such twenty (20) business day period and as a result of
such breach a condition set forth in Sections 8.02(a) or (b) (with
respect to a breach by GPU) or Sections 8.03(a) or (b) (with respect
to a breach by FirstEnergy) shall not be satisfied prior to or as of
the End Date (as defined in (d) below), or
(ii) if any permanent Injunction or other order of a court
or other competent authority preventing the consummation of the
Merger shall have become final and nonappealable, or any state or
Federal law, rule or regulation is adopted or issued, which has the
effect of prohibiting the Merger;
(c) by GPU, upon two days' prior notice to FirstEnergy, if, as a
result of a GPU Takeover Proposal, the Board of Directors of GPU
determines in good faith after consultation with outside counsel that the
termination of this Agreement and the acceptance of such GPU Takeover
Proposal is required pursuant to its fiduciary duties under applicable
law; provided, however, that during the two-day period prior to any such
-------- -------
termination, if requested by FirstEnergy, GPU shall, and shall cause its
respective financial and legal advisors to, negotiate in good faith with
FirstEnergy regarding any adjustments in the terms and conditions of this
Agreement proposed by FirstEnergy that would enable GPU to proceed with
the transactions contemplated herein;
(d) by either FirstEnergy or GPU if the Merger shall not have
been consummated before September 30, 2001 (the "End Date"); provided,
-------- --------
however, that if on the End Date the conditions to the Closing set forth
-------
in Section 8.01(c) shall not have been fulfilled but all other conditions
to the Closing shall be fulfilled or shall be capable of being fulfilled,
then either party shall have the right to extend the End Date to December
31, 2001 and GPU shall have the further right to extend the End Date to
any date up to March 31, 2002 (the End Date, if and as extended, the
"Extended End Date"); provided, however, that the right to terminate the
----------------- -------- -------
Agreement under this Section 9.01(d) shall not be available to any party
whose action, or failure to fulfill any obligation under this Agreement,
has been the cause of, or resulted in, the failure of the Effective Time
to occur on or before September 30, 2001; provided, further that in the
-------- -------
event that (x) after the date hereof FirstEnergy or any of its
Subsidiaries enters into any acquisition transaction (or any agreement
with respect thereto), (y) the Effective Time does not occur on or prior
to December 31, 2001 and (z) the acquisition transaction (or agreement)
referred to in clause (x) is a material factor in delaying the Effective
Time beyond December 31, 2001, then (i) each of the references in Section
8.02(a) to "the Closing Date" shall be deemed to be a reference to
"December 31, 2001", (ii) the phrase "Since the date of this Agreement" in
Section 8.02(e) shall be replaced with: "Between the date of this
Agreement and December 31, 2001", and (iii) the phrase "Since June 30,
2000" in Section 8.02(f) shall be replaced with: "Between June 30, 2000
and December 31, 2001", or
(e) by either FirstEnergy or GPU if the required approval of the
holders of FirstEnergy Common Stock or the holders of GPU Common Stock
shall not have been obtained by reason of the failure to obtain the
required approval upon a vote taken at a duly held meeting of shareholders
or at any adjournment thereof.
Section 9.02 Effect of Termination. In the event of termination of
---------------------
this Agreement by either GPU or FirstEnergy as provided in Section 9.01,
this Agreement shall forthwith become void and there shall be no liability
or obligation on the part of FirstEnergy or GPU or their respective
officers or directors, except
(i) with respect to Sections 7.04(b), 7.10, 7.11, 7.13 and
9.05, and
(ii) to the extent that such termination results from the
willful breach by a party hereto of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
Section 9.03 Amendment. This Agreement may be amended by the
---------
parties hereto, by action taken or authorized by their respective Boards
of Directors, at any time before or after adoption of this Agreement by
the holders of FirstEnergy Common Stock or the holders of GPU Common Stock
but, after this Agreement is so adopted, no amendment shall be made which
by law or applicable rule of the NYSE requires further approval by such
shareholders, unless the amendment is made subject to obtaining such
further approval.
Section 9.04 Extension; Waiver. (a) At any time prior to the
-----------------
Effective Time, the parties hereto, by action duly taken, may, to the
extent legally allowed,
(i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto, and
(iii) waive compliance with any of the agreements or
conditions contained herein.
(b) Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
Section 9.05 Termination Fee; Expenses. (a) Termination Fee Upon
------------------------- --------------------
Breach. If this Agreement is terminated at such time that this Agreement
------
is terminable pursuant to Section 9.01(b)(i) (other than solely pursuant
to a non-curable breach of a representation or warranty unless such breach
was willful) by one of the parties but not the other, then, if requested
in writing by the non-breaching party, the breaching party shall promptly
(but not later than five business days after receipt of notice from the
non-breaching party) pay, in addition to its own expenses, to the non-
breaching party in cash an amount equal to $25,000,000, plus cash in an
amount equal to all documented out-of-pocket expenses and fees incurred by
the non-breaching party (including, without limitation, fees and expenses
payable to all legal, accounting, financial, public relations and other
professional advisors) arising out of, in connection with or related to
the Merger or the transactions contemplated by this Agreement.
(b) Additional Termination Fee. (i) If
--------------------------
(A) this Agreement
(I) is terminated by GPU pursuant to Section
9.01(c), or
(II) is terminated by FirstEnergy as a result of
GPU's material breach of Section 5.05, and
(B) at the time of such termination or prior to the
meeting of GPU's shareholders there shall have been a GPU
Takeover Proposal which at the time of such termination or of
the meeting of GPU's shareholders shall not have been
(I) rejected by GPU and its board of directors,
and
(II) withdrawn by the third-party offeror, and
(C) within two and one-half years of any such
termination described in clause (A) above, GPU or its
Significant Subsidiary which is the subject of the GPU Takeover
Proposal (the "Target Party") becomes a subsidiary of such
------------
third-party offeror or a subsidiary of an affiliate of such
third-party offeror or accepts a written offer to consummate or
consummates a Business Combination with such third-party offeror
or affiliate thereof,
then such third-party offeror, together with its affiliates, on the
one hand, will, at the closing (and as a condition to the closing) of
such Target Party so becoming a subsidiary or of such Business
Combination, pay to FirstEnergy a termination fee equal to
$145,000,000 in cash, plus cash in an amount equal to all documented
out-of-pocket expenses and fees incurred by such other party
(including, without limitation, fees and expenses payable to all
legal, accounting, financial, public relations and other professional
advisors) arising out of, in connection with or related to the Merger
or the transactions contemplated by this Agreement.
(ii) For purposes of this Agreement, a "Business
--------
Combination" shall mean any merger, sale or other business
-----------
combination, in each case involving at least 30% of GPU's assets on a
consolidated basis.
(c) Rights; Expenses. (i) The existence of the rights to
----------------
receive payment pursuant to this Section 9.05 shall not constitute an
election of remedies or in any way limit or impair a party's right to
pursue any other remedy against the other party to which it may be
entitled under this Agreement, at law or in equity, or otherwise;
provided, however, the successful exercise of the rights under this
-------- -------
Section 9.05 shall constitute an election of remedies and shall preclude
that party from any other remedy against the other party to which it may
otherwise be entitled under this Agreement, at law or in equity or
otherwise.
(ii) The parties agree that the agreements contained in this
Section 9.05 are an integral part of the transactions contemplated by
the Agreement, that the damages that would be suffered by a party
upon breach of this Agreement by the other party are inherently
insusceptible of calculation, and that the agreements contained in
this Section 9.05 therefore constitute liquidated damages and not a
penalty.
(iii) If one party fails to pay promptly to the other any fee
due hereunder, the defaulting party shall pay the costs and expenses
(including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid
fee at the publicly announced prime or base rate of Citibank, N.A.,
from the date such fee was required to be paid.
ARTICLE X
GENERAL PROVISIONS
------------------
Section 10.01 Nonsurvival of Representations and Warranties. None
---------------------------------------------
of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the
Effective Time.
Section 10.02 Further Assurances. Each party will execute and
------------------
deliver all such further documents and instruments and take all such
further action as may be necessary in order to consummate the transactions
contemplated hereby.
Section 10.03 Notices. Any notice or communication required or
-------
permitted hereunder, including any request by either party to the other
for modification of the covenants relating to the conduct of business
contained in Article V or Article VI, shall be in writing and either
delivered personally or telecopied (with confirmation of receipt) or sent
by certified or registered mail, postage prepaid, and shall be deemed to
be given, dated and received when so delivered personally or telecopied
(with confirmation of receipt) or, if mailed, five business days after the
date of mailing to the following address or telecopy number, or to such
other address or addresses as such person may subsequently designate by
notice given hereunder.
(a) if to FirstEnergy, to
FirstEnergy Corp.
00 Xxxxx Xxxx Xxxxxx
Xxxxx, Xxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Vice President and General Counsel
with a copy to
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
(b) if to GPU, to
GPU, Inc.
000 Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
Senior Vice President and General Counsel
with a copy to
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Section 10.04 Interpretation. (a) When a reference is made in this
--------------
Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated.
(b) Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation".
(c) The phrase "made available" in this Agreement shall mean
that the information referred to has been made available if requested by
the party to whom such information is to be made available or, with
respect to GPU SEC Documents or FirstEnergy SEC Documents, available on
the SEC's Electronic Data Gathering Analysis, and Retrieval System
(XXXXX).
(d) Whenever the phrase "to the knowledge of the executive
officers" or any party, or any similar phrase is used in this Agreement,
such phrase shall mean to the actual knowledge of those officers of that
party that are subject to the provisions of Section 16 of the Exchange
Act, after inquiry reasonable under the circumstances.
Section 10.05 Descriptive Headings. The descriptive headings herein
--------------------
are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 10.06 Counterparts. This Agreement may be executed in two
------------
or more counterparts, all of which shall be considered one and the same
agreement and shall become
effective when two or more counterparts have been signed by each of the
parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 10.07 Entire Agreement. This Agreement (including the
----------------
documents and the instruments referred to herein) and the Confidentiality
Agreement constitute the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
Section 10.08 No Third Party Beneficiaries. Except as provided in
----------------------------
Section 7.13 (which covenants shall be enforceable by the persons affected
thereby following the Effective Time), this Agreement (including the
Disclosure Schedules, documents and the instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
Section 10.09 Governing Law. This Agreement shall be governed and
-------------
construed in accordance with the internal substantive laws of the
Commonwealth of Pennsylvania without regard to any applicable conflicts of
law, except that with respect to any provision of this Agreement subject
to the Ohio GCL, the provision shall be governed and construed in
accordance with the Ohio GCL.
Section 10.10 Severability. (a) The invalidity or unenforceability
------------
of any provision of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall
remain in full force and effect.
(b) In the event any court or other competent authority holds
any provision of this Agreement to be null, void or unenforceable, the
parties hereto shall negotiate in good faith the execution and delivery of
an amendment to this Agreement in order, as nearly as possible, to
effectuate, to the extent permitted by law, the intent of the parties
hereto with respect to such provision.
Section 10.11 Binding Effect. This Agreement shall be binding upon
--------------
and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
Section 10.12 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties.
Section 10.13 Amendments; Waiver. This Agreement may be amended by
------------------
the parties hereto and the terms and conditions hereof may be waived only
by an instrument in writing signed on behalf of each of the parties
hereto, or, in the case of a waiver, by an instrument signed on behalf of
the party waiving compliance.
IN WITNESS WHEREOF, FirstEnergy and GPU have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as
of the date first above written.
GPU, INC. FIRSTENERGY CORP.
By:_______________________ By: _____________________
Name: Xxxx X. Xxxxx Name: H. Xxxxx Xxxx
Title: Chairman, President and Title: Chairman and Chief Executive
Chief Executive Officer Officer
EXHIBIT A
[LETTERHEAD OF GPU, INC.]
[Date]
FirstEnergy Corp.
00 Xxxxx Xxxx Xxxxxx
Xxxxx, Xxxx 00000
Ladies and Gentlemen:
The following persons may be deemed to be "affiliates" of GPU, Inc.
subject to Rule 145 under the Securities Act of 1933 on the date the
adoption of the Merger is submitted for a vote of the shareholders of GPU,
Inc.:
-------------------
-------------------
-------------------
-------------------
-------------------
-------------------
-------------------
-------------------
-------------------
Very truly yours,
GPU, Inc.
By: ___________________
Name:
Title:
EXHIBIT B
[Date]
Ladies and Gentlemen:
The undersigned, a holder of shares of Common Stock, par value $2.50
per share ("GPU Common Stock"), of GPU, Inc., a Pennsylvania corporation
("GPU"), may receive, in connection with the merger (the "Merger") of GPU
with and into FirstEnergy Corp., an Ohio corporation ("FirstEnergy"), with
FirstEnergy continuing as the surviving corporation, common stock, par
value $.10 per share, of FirstEnergy (the "FirstEnergy Common Stock").
The undersigned acknowledges that the undersigned may be deemed an
"affiliate" of GPU subject to Rule 145 ("Rule 145") promulgated under the
Securities Act of 1933 (the "Act"), although nothing contained herein
should be construed as an admission of such fact.
If in fact the undersigned is an affiliate of GPU under the Act at
the time the Merger is submitted to a vote of shareholders of GPU, the
undersigned's ability to sell, assign or transfer the FirstEnergy Common
Stock received by it in exchange for any shares of GPU Common Stock
pursuant to the Merger may be restricted unless such sale, assignment or
transfer is registered under the Act or an exemption from such
registration is available. The undersigned understands that such
exemptions are limited and the undersigned has obtained advice of counsel
as to the nature and conditions of such exemptions, including information
with respect to the applicability to the sale of such securities of Rules
144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with FirstEnergy
that it will not sell, assign or transfer any of the FirstEnergy Common
Stock received by it in exchange for shares of GPU Common Stock pursuant
to the Merger except
(i) pursuant to an effective registration statement under
the Act,
(ii) in a transaction in conformity with the volume and
other limitations of Rule 145; or
(iii) in a transaction which, in the opinion of independent
counsel reasonably satisfactory to FirstEnergy (the fees of which
counsel will be paid by the undersigned) or as described in a "no-
action" or interpretive letter from the Staff of the Securities and
Exchange Commission is not required to be registered under the Act.
In the event of a sale or other disposition of FirstEnergy Common
Stock other than pursuant to an effective registration statement under the
Act, the undersigned will supply FirstEnergy with evidence of compliance
with Rule 145, in the form of a letter in the form of Annex A hereto or
the opinion of counsel referred to above. The undersigned understands
that FirstEnergy may instruct its transfer agent to withhold the transfer
of any FirstEnergy Common Stock disposed of by it, but that upon receipt
of such letter or opinion the transfer agent shall effectuate the transfer
of such FirstEnergy Common Stock indicated as sold in the letter or sold
in accordance with that opinion.
The undersigned acknowledges and agrees that customary legends will
be placed on certificates representing shares of FirstEnergy Common Stock
received by the undersigned pursuant to the Merger or held by a transferee
thereof (unless the shares were transferred to the transferee pursuant to
an effective registration statement under the Act or in a transaction in
conformity with Rule 145), which legends will be removed in connection
with a transfer thereof pursuant to an effective registration statement
under the Act or in a transaction made in conformity with Rule 145 or by
delivery of substitute certificates upon receipt of an opinion in form and
substance reasonably satisfactory to FirstEnergy from independent counsel
reasonably satisfactory to FirstEnergy (the fees of which counsel will be
paid by the undersigned) to the effect that such legends are no longer
required for purposes of the Act.
The undersigned acknowledges that it has carefully read this letter
and understands the requirements hereto and the limitations imposed upon
the distribution, sale, transfer or other disposition of shares of
FirstEnergy Common Stock.
Very truly yours,
[Name]
Dated:
Annex A
To Exhibit B
[Date]
FirstEnergy
[Address]
Attention:
On ____________________, I sold the securities (the "Securities") of
FirstEnergy ("FirstEnergy") described below in the space provided for that
purpose. The Securities were received by me in connection with the merger
of GPU with and into FirstEnergy.
Based upon the most recent report or statement filed by FirstEnergy
with the Securities and Exchange Commission, the Securities were sold by
me in conformity with Rule 145 promulgated under the Securities Act of
1933 (the "Act").
Very truly yours,
[Name]
[Spaces to be provided for description of Securities]
