EXHIBIT 2.1
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 9, 2001
among
POTOMAC ELECTRIC POWER COMPANY
NEW RC, INC.
and
CONECTIV
TABLE OF CONTENTS
Page
ARTICLE I THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. The Mergers . . . . . . . . . . . . . . . . . . . . . 1
1.2. Closing . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Effective Time . . . . . . . . . . . . . . . . . . . . 3
1.4. Effects of the Merger . . . . . . . . . . . . . . . . 3
1.5. Certificate of Incorporation . . . . . . . . . . . . . 3
1.6. By-Laws . . . . . . . . . . . . . . . . . . . . . . . 3
1.7. Officers and Directors of Surviving Corporations . . . 3
1.8. Effect on Parent and Conectiv Capital Stock . . . . . 4
1.9. Form of Election . . . . . . . . . . . . . . . . . . . 7
1.10. Deemed Non-Election . . . . . . . . . . . . . . . . . 8
1.11. Cancellation of HoldCo Common Stock . . . . . . . . . 8
1.12. Conversion of Merger Sub A and Merger Sub B Common
Stock . . . . . . . . . . . . . . . . . . . . . . . . 8
1.13. Shares of Dissenting Holders . . . . . . . . . . . . 9
1.14. Anti-Dilution Provisions . . . . . . . . . . . . . . 9
1.15. Further Assurances . . . . . . . . . . . . . . . . . 9
ARTICLE II EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . 10
2.1. Exchange Fund . . . . . . . . . . . . . . . . . . . 10
2.2. Exchange Procedures . . . . . . . . . . . . . . . . 10
2.3. Distributions with Respect to Unexchanged Shares . . 11
2.4. No Further Ownership Rights . . . . . . . . . . . . 11
2.5. No Fractional Shares of HoldCo Common Stock . . . . 11
2.6. Termination of Exchange Fund . . . . . . . . . . . . 11
2.7. No Liability . . . . . . . . . . . . . . . . . . . . 12
2.8. Investment of the Exchange Fund . . . . . . . . . . 12
2.9. Lost Certificates . . . . . . . . . . . . . . . . . 12
2.10. Withholding Rights . . . . . . . . . . . . . . . . 12
2.11. Stock Transfer Books . . . . . . . . . . . . . . . . 12
ARTICLE III REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 13
3.1. Representations and Warranties of Conectiv . . . . . 13
3.2. Representations and Warranties of Parent . . . . . . 23
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . 30
4.1. Covenants of Conectiv . . . . . . . . . . . . . . . 30
4.2. Covenants of Parent . . . . . . . . . . . . . . . . 36
4.3. Advice of Changes; Governmental Filings . . . . . . 39
4.4. Transition Planning . . . . . . . . . . . . . . . . 39
4.5. Control of Other Party's Business . . . . . . . . . 39
4.6. Payment of Dividends . . . . . . . . . . . . . . . . 40
ARTICLE V ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . 40
5.1. Preparation of Proxy Statement; Stockholders
Meeting. . . . . . . . . . . . . . . . . . . . . . . 40
5.2. HoldCo Board of Directors . . . . . . . . . . . . . 41
5.3. Access to Information . . . . . . . . . . . . . . . 41
5.4. Reasonable Best Efforts. . . . . . . . . . . . . . . 42
5.5. Acquisition Proposals . . . . . . . . . . . . . . . 43
5.6. Conectiv Stock Options; Employee Benefits Matters. . 44
5.7. Fees and Expenses . . . . . . . . . . . . . . . . . 46
5.8. Directors' and Officers' Indemnification and
Insurance. . . . . . . . . . . . . . . . . . . . . . 46
5.9. Public Announcements . . . . . . . . . . . . . . . . 48
5.10. Accountants' Letters . . . . . . . . . . . . . . . 48
5.11. Listing of Shares of HoldCo Common Stock . . . . . 48
5.12. Significant Presence; Community Support . . . . . . 48
5.13. Parent Share Repurchase Program. . . . . . . . . . . 48
5.14. Conveyance Taxes . . . . . . . . . . . . . . . . . 48
ARTICLE VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . 49
6.1. Conditions to Each Party's Obligation to Effect the
Mergers . . . . . . . . . . . . . . . . . . . . . . 49
6.2. Additional Conditions to Obligations of Parent . . . 50
6.3. Additional Conditions to Obligations of Conectiv . . 51
ARTICLE VII TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . 51
7.1. Termination . . . . . . . . . . . . . . . . . . . . 51
7.2. Effect of Termination . . . . . . . . . . . . . . . 54
7.3. Amendment . . . . . . . . . . . . . . . . . . . . . 55
7.4. Extension; Waiver . . . . . . . . . . . . . . . . . 55
ARTICLE VIII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 55
8.1. Non-Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . 55
8.2. Notices . . . . . . . . . . . . . . . . . . . . . . 56
8.3. Interpretation . . . . . . . . . . . . . . . . . . . 56
8.4. Counterparts . . . . . . . . . . . . . . . . . . . . 57
8.5. Entire Agreement; Third Party Beneficiaries . . . . 57
8.6. GOVERNING LAW . . . . . . . . . . . . . . . . . . . 57
8.7. Severability . . . . . . . . . . . . . . . . . . . . 57
8.8. Assignment . . . . . . . . . . . . . . . . . . . . . 57
8.9. Submission to Jurisdiction; Waivers . . . . . . . . 57
8.10. Enforcement . . . . . . . . . . . . . . . . . . . . 58
8.11. Definitions . . . . . . . . . . . . . . . . . . . . 58
8.12. Other Agreements . . . . . . . . . . . . . . . . . . 59
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 9,
2001 (this "Agreement"), among POTOMAC ELECTRIC POWER COMPANY, a
corporation organized under the laws of the District of Columbia and the
Commonwealth of Virginia ("Parent"), NEW RC, INC., a Delaware corporation
and a direct wholly-owned subsidiary of Parent ("HoldCo"), and CONECTIV,
a Delaware corporation ("Conectiv").
W I T N E S S E T H :
WHEREAS, Conectiv and Parent have determined to engage
in a business combination;
WHEREAS, in furtherance thereof the respective Boards of
Directors of Conectiv, Parent and HoldCo have approved the consummation
of a reorganization provided for in this Agreement, pursuant to which two
wholly owned, newly formed subsidiaries of HoldCo will merge with and
into Conectiv and Parent on the terms and conditions set forth in this
Agreement (such transactions are referred to herein individually as the
Conectiv Merger and the Parent Merger (as defined in Section 1.1(c)) and
collectively as the "Mergers"), as a result of which the common
stockholders of Conectiv and Parent will together own all of the
outstanding shares of common stock of HoldCo and each share of each other
class of capital stock of Conectiv and Parent shall be unaffected and
remain outstanding;
WHEREAS, Parent, HoldCo and Conectiv desire to make
certain representations, warranties, covenants and agreements in
connection with the transactions contemplated hereby and also to
prescribe various conditions to the transactions contemplated hereby; and
WHEREAS, for federal income tax purposes, it is intended
that the Mergers, taken together, qualify as a transaction described in
Section 351 of the Internal Revenue Code of 1986, as amended (the
"Code");
NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and agreements set
forth herein, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
THE MERGERS
1.1. The Mergers. (a) To effectuate the
transactions contemplated herein, Parent shall cause the following
corporations (together, the "Merger Subs") to be organized as wholly
owned subsidiaries of HoldCo:
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(i) Merger Sub A Corp., a corporation
organized under the laws of the District of Columbia and the
Commonwealth of Virginia ("Merger Sub A"), the articles of
incorporation and bylaws of which shall be in such forms as
shall be determined by Parent with the consent of Conectiv,
which consent shall not be unreasonably withheld, and the
authorized capital stock of which shall initially consist of 100
shares of common stock, without par value, which shall be issued
to HoldCo at a price of $1.00 per share.
(ii) Merger Sub B Corp., a corporation
organized under the laws of the State of Delaware ("Merger
Sub B"), the certificate of incorporation and bylaws of which
shall be in such forms as shall be determined by Parent with the
consent of Conectiv, which consent shall not be unreasonably
withheld, and the authorized capital stock of which shall
initially consist of 100 shares of common stock, par value $.01
per share, which shall be issued to HoldCo at a price of $1.00
per share.
(b) In connection with the organization of the
Merger Subs, as soon as practicable following the creation of the Merger
Subs, HoldCo shall: (a) designate the respective directors and officers
of the Merger Subs; (b) cause the directors and officers of the Merger
Subs to take such steps as may be necessary or appropriate to complete
the organization of the Merger Subs; (c) cause the boards of directors of
the Merger Subs to approve this Agreement; (d) adopt (as sole stockholder
of each of the Merger Subs) this Agreement; (e) cause the Merger Subs to
enter into and become parties to this Agreement; and (f) cause each
Merger Sub to perform its obligations hereunder.
(c) Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.3):
(i) Merger Sub A shall be merged with and
into Parent (the "Parent Merger") in accordance with the
applicable provisions of the laws of the Commonwealth of
Virginia and the District of Columbia. Parent shall be the
surviving corporation in the Parent Merger ("Surviving
Corporation A") and shall continue its corporate existence under
the laws of the District of Columbia and the Commonwealth of
Virginia. As a result of the Parent Merger, Parent shall become
a subsidiary of HoldCo. The effects and consequences of the
Parent Merger shall be as set forth in this Agreement and in
Section 13.1-721 of the Virginia Stock Corporation Act (the
"VSCA") and Section 29-370 of the Business Corporations Act of
the District of Columbia (the "DCBCA").
(ii) Merger Sub B shall be merged with and
into Conectiv (the "Conectiv Merger") in accordance with the
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laws of the State of Delaware. Conectiv shall be the surviving
corporation in the Conectiv Merger ("Surviving Corporation B")
and shall continue its existence under the laws of the State of
Delaware. As a result of the Conectiv Merger, Conectiv shall
become a subsidiary of HoldCo. The effects and consequences of
the Conectiv Merger shall be as set forth in this Agreement and
in Sections 259-261 of the Delaware General Corporation Law (the
"DGCL").
1.2. Closing. The closing of the Mergers (the
"Closing") will take place at 10:00 a.m. (New York City time) on the
fifth Business Day after the satisfaction or waiver of the conditions
(excluding conditions that, by their terms, cannot be satisfied until the
Closing Date) set forth in Article VI (the "Closing Date"), unless
another time or date is agreed to in writing by the parties hereto. The
Closing shall be held at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, unless another place is
agreed to in writing by the parties hereto.
1.3. Effective Time. As part of the Closing, the
parties hereto shall (i) file a certificate of merger (the "Conectiv
Certificate of Merger") in such form as is required by and executed in
accordance with the relevant provisions of the DGCL and make all other
filings or recordings required under the DGCL and (ii) file certificates
of merger (the "Parent Certificates of Merger", and together with the
Conectiv Certificate of Merger, the "Certificates of Merger") with
respect to the Parent Merger with the State Corporation Commission of
Virginia pursuant to the relevant provisions of the VSCA and with the
Mayor of the District of Columbia pursuant to the relevant provisions of
the DCBCA and make all other filings or recordings required under the
VSCA and the DCBCA. The Mergers shall become effective simultaneously
and at such time on the Closing Date as Parent and Conectiv shall agree
and is specified in the Certificates of Merger (the date and time the
Mergers become effective being the "Effective Time").
1.4. Effects of the Merger. At and after the
Effective Time, the Mergers will have the effects set forth in the VSCA,
the DCBCA and the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all property,
rights, privileges, powers and franchises of Parent and Merger Sub A
shall be vested in Surviving Corporation A, and all debts, liabilities
and duties of Parent and Merger Sub A shall become debts, liabilities and
duties of the Surviving Corporation A. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of Conectiv and
Merger Sub B shall be vested in the Surviving Corporation B, and all
debts, liabilities and duties of Conectiv and Merger Sub B shall become
the debts, liabilities and duties of the Surviving Corporation B.
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1.5. Certificate of Incorporation. At or prior to
the Effective Time, HoldCo shall adopt a certificate of incorporation
substantially in the form attached hereto as Exhibit A, which shall be
the certificate of incorporation of HoldCo following the Effective Time,
until duly amended. The articles of incorporation of Parent as in effect
at the Effective Time shall be the articles of incorporation of Surviving
Corporation A until thereafter changed or amended as provided therein and
under applicable law. The certificate of incorporation of Conectiv as in
effect at the Effective Time shall be the certificate of incorporation of
the Surviving Corporation B until thereafter changed or amended as
provided therein and under applicable law.
1.6. By-Laws. At or prior to the Effective Time,
HoldCo shall adopt by-laws substantially in the form attached hereto as
Exhibit B, which shall be the by-laws of HoldCo following the Effective
Time, until duly amended. The by-laws of Merger Sub A as in effect
immediately prior to the Effective Time shall be the by-laws of Surviving
Corporation A following the Effective Time, until duly amended. The by-
laws of Merger Sub B as in effect immediately prior to the Effective Time
shall be the by-laws of Surviving Corporation B following the Effective
Time, until duly amended.
1.7. Officers and Directors of Surviving
Corporations. (a) The officers of Merger Sub A immediately prior to the
Effective Time shall be the officers of Surviving Corporation A, until
the earlier of their resignation or removal or otherwise ceasing to be an
officer or until their respective successors are duly elected and
qualified. The directors of Merger Sub A immediately prior to the
Effective Time shall be the directors of Surviving Corporation A until
the earlier of their resignation or removal or otherwise ceasing to be a
director or until their respective successors are duly elected and
qualified.
(b) The officers of Merger Sub B immediately prior
to the Effective Time shall be the officers of Surviving Corporation B,
until the earlier of their resignation or removal or otherwise ceasing to
be an officer or until the respective successors are duly elected and
qualified. The directors of Merger Sub B immediately prior to the
Effective Time shall be the directors of Surviving Corporation B until
the earlier of their resignation or removal or otherwise ceasing to be a
director or until their respective successors are duly elected and
qualified.
1.8. Effect on Parent and Conectiv Capital Stock.
At the Effective Time, by virtue of the Mergers and without any action on
the part of Parent, Merger Sub A, Merger Sub B, HoldCo, Conectiv or the
holders of any of the following securities:
(a) Cancellation of Certain Common Stock. Each
share of common stock, par value $1.00 per share, of Parent ("Parent
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Common Stock"), each share of common stock, par value $.01 per share, of
Conectiv ("Conectiv Common Stock") and each share of Class A common
stock, par value $.01 per share, of Conectiv ("Class A Stock" and
together with the Conectiv Common Stock, the "Conectiv Stock"), that are
owned by Parent, Conectiv or any of their Subsidiaries (as defined in
Section 8.11), shall be canceled and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(b) Conversion of Certain Common Stock. (i) Each
share of Parent Common Stock issued and outstanding immediately prior to
the Effective Time (other than shares canceled pursuant to Section 1.8(a)
and shares with respect to which the holder thereof duly exercises the
right to dissent under applicable law) shall be converted into the right
to receive one share of common stock, par value $.01 per share, of HoldCo
("HoldCo Common Stock") (the "Parent Merger Consideration").
(ii) (A) Each share of Conectiv Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares
canceled pursuant to Section 1.8(a) and shares with respect to which the
holder thereof duly exercises the right to dissent under applicable law)
shall be converted into the right to receive (x) $25.00 in cash (the
"Conectiv Common Stock Cash Consideration") or (y) the number of validly
issued, fully paid and nonassessable shares of HoldCo Common Stock (the
"Conectiv Common Stock Share Consideration") determined by dividing
$25.00 by the Average Final Price (the "Conectiv Common Stock Exchange
Ratio"); provided, however, that:
(1) if the Average Final Price is less than $19.50,
the Conectiv Common Stock Exchange Ratio shall be 1.28205; and
(2) If the Average Final Price is greater than
$24.50, the Conectiv Common Stock Exchange Ratio shall be 1.02041.
As used herein, the term "Average Final Price" shall mean the
volume-weighted average (rounded to the nearest $0.0001) of the closing
trading prices of Parent Common Stock on the New York Stock Exchange (the
"NYSE"), as reported in the Wall Street Journal, Eastern Edition (or such
other sources as the parties shall agree in writing), for the 20 Trading
Days (as defined in Section 8.11) randomly selected by lot out of 30
consecutive Trading Days ending on the fifth business day immediately
preceding the Closing Date. On the fourth Business Day immediately
preceding the Closing Date, the parties hereto shall announce by press
release the amount of the Average Final Price.
(B) Each share of Class A Stock issued and
outstanding immediately prior to the Effective Time (other than shares
canceled pursuant to Section 1.8(a) and shares with respect to which the
holder thereof duly exercises the right to dissent under applicable law)
shall be converted into the right to receive (x) $21.69 in cash (the
"Class A Cash Consideration" and together with the Conectiv Common Stock
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Cash Consideration, the "Conectiv Cash Consideration") or (y) the number
of validly issued, fully paid and nonassessable shares of HoldCo Common
Stock (the "Class A Share Consideration" and together with the Conectiv
Common Stock Share Consideration, the "Conectiv Share Consideration")
determined by dividing $21.69 by the Average Final Price (the "Class A
Stock Exchange Ratio"); provided, however, that:
(1) if the Average Final Price is less than $19.50,
the Class A Stock Exchange Ratio shall be 1.11227; and
(2) if the Average Final Price is greater than
$24.50, the Class A Stock Exchange Ratio shall be 0.88528.
The Conectiv Common Stock Cash Consideration and the
Conectiv Common Stock Share Consideration are referred to herein together
as the "Common Stock Consideration". The Class A Cash Consideration and
the Class A Share Consideration are referred to herein together as the
"Class A Consideration". The Conectiv Cash Consideration and the Conectiv
Share Consideration are referred to herein together as the "Conectiv
Merger Consideration". The Conectiv Merger Consideration and the Parent
Merger Consideration are referred to herein together as the "Merger
Consideration".
(c) Stock Election. Subject to the immediately
following sentence, each record holder of shares of Conectiv Stock
immediately prior to the Effective Time shall be entitled to elect to
receive shares of HoldCo Common Stock for all or any part of such
holder's shares of Conectiv Stock (a "Stock Election"). Notwithstanding
the foregoing, the sum (the "Stock Election Number") of (i) the aggregate
number of shares of Conectiv Common Stock to be converted into the right
to receive HoldCo Common Stock at the Effective Time and (ii) the product
of 0.86757 and the aggregate number of shares of Class A Stock to be
converted into the right to receive HoldCo Common Stock at the Effective
Time, will be 50% of the sum of (x) the total number of shares of
Conectiv Common Stock issued and outstanding as of the close of business
on the third trading day prior to the Effective Time (excluding for these
purposes shares to be cancelled pursuant to Section 1.8(a)) and (y) the
product of 0.86757 and the total number of shares of Conectiv Class A
Stock issued and outstanding as of the close of business on the third
trading day prior to the Effective Time (excluding for these purposes
shares to be cancelled pursuant to Section 1.8(a)).
(d) Stock Election Shares. As used herein, the
term "Stock Election Shares" means shares of Conectiv Stock for which a
Stock Election has been made and the term "Aggregate Stock Election Share
Number" means the sum of (i) the aggregate number of shares of Conectiv
Common Stock covered by Stock Elections and (ii) the product of (A) the
aggregate number of shares of Class A Stock covered by Stock Elections
and (B) 0.86757. If the Aggregate Stock Election Share Number exceeds the
Stock Election Number, each Stock Election Share shall be converted into
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the right to receive shares of HoldCo Common Stock or cash in the
following manner:
(i) a proration factor (the "Stock Proration
Factor") shall be determined by dividing the Stock Election Number by the
Aggregate Stock Election Share Number;
(ii) the number of Stock Election Shares covered by
each Stock Election that will be converted into the right to receive
HoldCo Common Stock shall be determined by multiplying the Stock
Proration Factor by each of (A) the total number of shares of Conectiv
Common Stock that are covered by such Stock Election and (B) the total
number of Shares of Class A Stock that are covered by such Stock
Election; and
(iii) each Stock Election Share other than those
shares converted into the right to receive HoldCo Common Stock in
accordance with Section 1.8(d)(ii), shall be converted into the right to
receive cash in accordance with Section 1.8(f)(ii).
(e) Cash Election. Subject to the immediately
following sentence, each record holder of shares of Conectiv Stock
immediately prior to the Effective Time shall be entitled to elect to
receive Conectiv Cash Consideration for all or any part of such holders'
shares of Conectiv Stock (a "Cash Election"). Notwithstanding the
foregoing, the sum (the "Cash Election Number") of (i) the aggregate
number of shares of Conectiv Common Stock to be converted into the right
to receive cash at the Effective Time and (ii) the product of 0.86757 and
the aggregate number of shares of Class A Stock to be converted into the
right to receive cash at the Effective Time, will be equal to (x) the sum
of (I) the total number of shares of Conectiv Common Stock issued and
outstanding as of the close of business on the third trading day prior to
the Effective Time (excluding for these purposes shares to be cancelled
pursuant to Section 1.8(a)) and (II) the product of 0.86757 and the total
number of shares of Class A Stock issued and outstanding as of the close
of business on the third trading day prior to the Effective Time
(excluding for these purposes shares to be cancelled pursuant to Section
1.8(a)), minus (y) the Stock Election Number.
(f) Cash Election Shares. As used herein, the term
"Cash Election Shares" means the shares of Conectiv Stock for which a
Cash Election has been made and the term "Aggregate Cash Election Share
Number" means the sum of (i) the aggregate number of shares of Conectiv
Common Stock covered by Cash Elections and (ii) the product of (A) the
aggregate number of shares of Class A Stock covered by Cash Elections and
(B) 0.86757. If the Aggregate Cash Election Share Number exceeds the Cash
Election Number, each share of Conectiv Stock that is a Cash Election
Share shall be converted into the right to receive cash or HoldCo Common
Stock in the following manner:
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(i) a proration factor (the "Cash Proration
Factor") shall be determined by dividing the Cash Election Number by the
number of Aggregate Cash Election Share Number;
(ii) the number of Cash Election Shares covered by
each Cash Election that will be converted into the right to receive
Conectiv Cash Consideration shall be determined by multiplying the Cash
Proration Factor by each of (A) the total number of shares of Conectiv
Common Stock covered by such Cash Election and (B) the total number of
shares of Class A Stock covered by such Cash Election; and
(iii) each Cash Election Share other than those
shares converted into the right to receive cash in accordance with
Section 1.8(f)(ii), shall be converted into the right to receive HoldCo
Common Stock in accordance with Section 1.8(d)(ii) (and cash in lieu of
fractional shares).
(g) Mixed Election. Subject to the immediately
following sentence, each record holder of shares of Conectiv Stock
immediately prior to the Effective Time shall be entitled to elect to
receive shares of HoldCo Common Stock for part of such holder's shares of
Conectiv Stock and cash for the remaining part of such holder's shares of
Conectiv Stock (the "Mixed Election" and, collectively with Stock
Election and Cash Election, the "Election"). With respect to each holder
of Conectiv Stock who makes a Mixed Election, the shares of Conectiv
Stock such holder elects to be converted into the right to receive
Conectiv Share Consideration shall be treated as Stock Election Shares
for purposes of the provisions contained in Sections 1.8(c) and (d) and
the shares such holder elects to be converted into the right to receive
Conectiv Cash Consideration shall be treated as Cash Election Shares for
purposes of the provisions contained in Sections 1.8(e) and (f).
(h) Preferred Stock Unchanged. Each share of the
Parent Preferred Stock (as defined in Section 3.2(c)) shall be unchanged
and shall remain outstanding as Parent Preferred Stock after the Mergers.
1.9. Form of Election. (a) Prior to the Effective
Time, Parent shall appoint a bank or trust company as may be approved by
Conectiv (which approval shall not be unreasonably withheld) as the
exchange and paying agent (the "Exchange Agent") for the payment and
exchange of the Merger Consideration.
(b) Parent shall prepare a form of election (the
"Form of Election") which shall be subject to the approval of Conectiv
(which approval shall not be unreasonably withheld or delayed) to be
mailed by the Exchange Agent to the record holders of Conectiv Stock not
more than 60 Business Days nor less than 20 Business Days prior to the
Election Date. The Form of Election shall be used by each record holder
of shares of Conectiv Stock who wishes to elect to receive HoldCo Common
Stock or cash for any or all shares of Conectiv Stock held by such
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holder, subject to the provisions of Section 1.8. The Exchange Agent
shall use reasonable efforts to make the Form of Election available to
all persons who become holders of Conectiv Stock during the period
between the record date (for the mailing of the Form of Election) and the
Election Date. Any holder's election shall have been properly made only
if the Exchange Agent shall have received at its designated office, by
5:00 p.m., New York City time, on the Business Day specified in the Form
of Election (or a later Business Day specified by Parent in a subsequent
press release) (the "Election Date"), which Election Date shall be two
Business Days prior to the date on which the Effective Time will occur, a
Form of Election properly completed and signed and accompanied by
certificates that immediately prior to the Effective Time represented
issued and outstanding shares of Conectiv Stock (the "Conectiv
Certificates") representing the shares of Conectiv Stock to which such
Form of Election relates, duly endorsed in blank or otherwise in form
acceptable for transfer on the books of Conectiv (or by an appropriate
guarantee of delivery of such Conectiv Certificates as set forth in such
Form of Election from a firm which is an "eligible guarantor institution"
(as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended the "Exchange Act")); provided that such Conectiv Certificates
are in fact delivered to the Exchange Agent by the time set forth in such
guarantee of delivery).
(c) Any Form of Election may be revoked by the
stockholder submitting it to the Exchange Agent only by written notice
received by the Exchange Agent prior to 5:00 p.m., New York City time, on
the Election Date. If a Form of Election is revoked, the Conectiv
Certificate or Conectiv Certificates (or guarantees of delivery, as
appropriate) for the shares of Conectiv Stock to which such Form of
Election relates shall be promptly returned by the Exchange Agent to the
stockholder of Conectiv submitting the same.
(d) Parent 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 Parent or the Exchange Agent in such matters shall be
conclusive and binding. Neither Parent 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 Section 1.8, and all such
computations shall be conclusive and binding on the holder of shares of
Conectiv Stock.
1.10. Deemed Non-Election. For the purposes hereof,
a holder of shares of Conectiv Stock who does not submit a Form of
Election which is subsequently received by the Exchange Agent prior to
the Election Date (the "Non Election Shares") shall be deemed not to have
made a Cash Election, Stock Election or Mixed Election. If Parent or the
Exchange Agent shall determine that any purported Election was not
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properly made, the shares subject to such improperly made Election shall
be treated as Non Election Shares. Non Election Shares may be treated as
Cash Election Shares or Stock Election Shares, as Parent shall determine.
1.11. Cancellation of HoldCo Common Stock. Each
share of HoldCo Common Stock issued and outstanding immediately prior to
the Effective Time shall be canceled, and no consideration shall be
delivered in exchange therefor.
1.12. Conversion of Merger Sub A and Merger Sub B
Common Stock. (a) Each share of common stock, without par value, of
Merger Sub A that is issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, without
par value, of Surviving Corporation A.
(b) Each share of common stock, par value $.01 per
share, of Merger Sub B that is issued and outstanding immediately prior
to the Effective Time shall be converted into one share of common stock,
par value $.01 per share, of Surviving Corporation B.
1.13. Shares of Dissenting Holders. Any issued and
outstanding shares of Conectiv Stock, Parent Common Stock or Parent
Preferred Stock held by a person who objects to the Mergers and complies
with all applicable provisions of Section 262 of the DGCL, Section 13.1-
730 of the VSCA and/or Section 29-373 of the DCBCA, as applicable,
concerning the right of such person to dissent from the Mergers and
demand appraisal of such shares ("Dissenting Holder") shall from and
after the Effective Time represent only the right to receive such
consideration as may be determined to be due to such Dissenting Holder
with respect to such shares pursuant to applicable provisions of the
DGCL, the VSCA and the DCBCA and, in the case of shares of Conectiv Stock
and Parent Common Stock, shall not be converted as described in Section
1.8(b); provided, however, that shares outstanding immediately prior to
the Effective Time and held by a Dissenting Holder who shall withdraw the
demand for appraisal, or lose the right of appraisal of such shares,
pursuant to Section 262 of the DGCL, Section 13.1-730 of the VSCA and/or
Section 29-373 of the DCBCA shall (i) in the case of shares of Conectiv
Stock or Parent Common Stock, be deemed to be converted, as of the
Effective Time, into the right to receive HoldCo Common Stock specified
in Section 1.8(b) and cash in lieu of fractional shares in accordance
with Section 2.5, without interest, and (ii) in the case of shares of
Parent Preferred Stock be unchanged in and remain outstanding after the
Mergers, without interest.
1.14. Anti-Dilution Provisions. In the event
Conectiv or Parent, as applicable, (i) changes (or establishes a record
date for changing) the number of shares of Conectiv Stock or Parent
Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, stock combination,
recapitalization, reclassification, reorganization or similar transaction
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with respect to the outstanding Conectiv Stock or Parent Common Stock or
(ii) pays or makes an extraordinary dividend or distribution in respect
of Conectiv Stock or Parent Common Stock (other than a distribution
referred to in clause (i) of this sentence) and, in either case, the
record date therefor shall be prior to the Effective Time, the Conectiv
Merger Consideration and/or the Parent Merger Consideration, as
appropriate, shall be proportionately adjusted. Regular quarterly cash
dividends and changes thereto shall not be considered extraordinary for
purposes of the preceding sentence.
1.15. Further Assurances. At and after the Effective
Time, the officers and directors of Surviving Corporation A will be
authorized to execute and deliver, in the name and on behalf of Parent or
Merger Sub A, any deeds, bills of sale, assignments or assurances and to
take and do, in the name and on behalf of Parent or Merger Sub A, any
other actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation A any and all right, title and
interest in, to and under any of the rights, properties or assets
acquired or to be acquired by Surviving Corporation A as a result of, or
in connection with, the Parent Merger. At and after the Effective Time,
the officers and directors of Surviving Corporation B will be authorized
to execute and deliver, in the name and on behalf of Conectiv or Merger
Sub B, any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of Conectiv or Merger Sub B, any other
actions and things to vest, perfect or confirm of record or otherwise in
Surviving Corporation B any right, title and interest in, to and under
any of the rights, properties or assets acquired or to be acquired by
Surviving Corporation B as a result of, or in connection with, the
Conectiv Merger.
ARTICLE II
EXCHANGE OF CERTIFICATES
2.1. Exchange Fund. At or prior to the Effective
Time, Parent and HoldCo shall deposit with the Exchange Agent, in trust
for the benefit of holders of shares of Parent Common Stock and Conectiv
Stock, sufficient cash and certificates representing HoldCo Common Stock
to make all payments and deliveries pursuant to Article II. Any cash and
certificates for HoldCo Common Stock deposited with the Exchange Agent
shall hereinafter be referred to as the "Exchange Fund."
2.2. Exchange Procedures. As soon as reasonably
practicable after the Effective Time (and in any case no later than 5
days thereafter), Surviving Corporation A and Surviving Corporation B
shall cause the Exchange Agent to mail (a) to each record holder of a
certificate that immediately prior to the Effective Time represented
issued and outstanding shares of Parent Common Stock ("Parent
Certificates" and together with the Conectiv Certificates, the
"Certificates") and (b) to each record holder of an Conectiv Certificate
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immediately prior to the Effective Time who has not surrendered Conectiv
Certificates representing all of the shares of Conectiv Stock owned by
such holder pursuant to Section 1.9(b), a letter of transmittal which
shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent, and which letter shall be in customary form and have
such other provisions as HoldCo may reasonably specify and (ii)
instructions for effecting the surrender of such Certificates in exchange
for the Parent Merger Consideration or the Conectiv Merger Consideration,
as the case may be. Upon surrender of a Certificate to the Exchange
Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other
documents as may reasonably be required by the Exchange Agent, the holder
of such Certificate shall be entitled to receive in exchange therefor (A)
a certificate representing, in the aggregate, the whole number of shares
of HoldCo Common Stock that such holder has the right to receive pursuant
to Section 1.8 (after taking into account all shares of Conectiv Stock or
Parent Common Stock, as the case may be, then held by such holder) and/or
(B) a check in the amount equal to the cash that such holder has the
right to receive pursuant to Sections 1.8, 2.3 and/or 2.5. No interest
will be paid or will accrue on any cash payable pursuant to Section 1.8,
2.3 or 2.5. In the event of a transfer of ownership of Conectiv Stock or
Parent Common Stock, as the case may be, which is not registered in the
transfer records of Conectiv or Parent, as the case may be, a certificate
representing, in the aggregate, the proper number of shares of HoldCo
Common Stock and/or a check in the proper amount pursuant to Sections
1.8, 2.3 and/or 2.5 may be issued with respect to such Conectiv Stock or
Parent Common Stock, as the case may be, to such a transferee if the
Certificate formerly representing such shares of Conectiv Stock or Parent
Common Stock, as the case may be, is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have
been paid. Persons who have submitted an effective Form of Election as
provided in Section 1.9(b) and surrendered Certificates as provided
therein shall be treated as if they have properly surrendered
Certificates together with the letter of transmittal pursuant to this
Section 2.2.
2.3. Distributions with Respect to Unexchanged
Shares. No dividends or other distributions declared or made with
respect to shares of HoldCo Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of HoldCo Common Stock that such
holder would be entitled to receive upon surrender of such Certificate
until such holder shall surrender such Certificate in accordance with
Section 2.2. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to such holder of
shares of HoldCo Common Stock issuable in exchange therefor, without
interest, (a) promptly after the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective
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Time theretofore paid with respect to such whole shares of HoldCo Common
Stock and (b) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior
to such surrender and a payment date subsequent to such surrender payable
with respect to such whole shares of HoldCo Common Stock.
2.4. No Further Ownership Rights. All shares of
HoldCo Common Stock issued and cash paid upon conversion of shares of
Parent Common Stock and Conectiv Common Stock in accordance with the
terms of Article I and this Article II (including any cash paid pursuant
to Section 2.3 or 2.5) shall be deemed to have been issued or paid in
full satisfaction of all rights pertaining to the shares of Parent Common
Stock and Conectiv Stock, as the case may be.
2.5. No Fractional Shares of HoldCo Common Stock.
(a) No fractional shares of HoldCo Common Stock and no certificates or
scrip representing fractional shares of HoldCo Common Stock shall be
issued upon the surrender for exchange of Certificates and such
fractional share interests will not entitle the owner thereof to vote or
to have any rights of a shareholder of HoldCo or a holder of shares of
HoldCo Common Stock.
(b) Notwithstanding any other provision of this
Agreement, each holder of shares of Parent Common Stock or Conectiv Stock
exchanged pursuant to the Mergers who would otherwise have been entitled
to receive a fraction of a share of HoldCo Common Stock (after taking
into account all Certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to the product
of (i) such fractional part of a share of HoldCo Common Stock multiplied
by (ii) the last sales price per share of Parent Common Stock reported on
the NYSE Composite Tape as reported in The Wall Street Journal, Eastern
edition, with respect to the Closing Date.
2.6. Termination of Exchange Fund. Any portion of
the Exchange Fund which remains undistributed to the holders of
Certificates for twelve months after the Effective Time shall be
delivered to HoldCo or otherwise on the instruction of HoldCo, and any
holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to HoldCo for the Merger
Consideration with respect to the shares of Conectiv Stock formerly
represented thereby to which such holders are entitled pursuant to
Sections 1.8 and 2.2, any cash in lieu of fractional shares of HoldCo
Common Stock to which such holders are entitled pursuant to Section 2.5
and any dividends or distributions with respect to shares of HoldCo
Common Stock to which such holders are entitled pursuant to Section 2.3.
2.7. No Liability. None of Parent, Merger Sub A,
Merger Sub B, HoldCo, Conectiv, Surviving Corporation A, Surviving
Corporation B or the Exchange Agent shall be liable to any Person in
respect of any Merger Consideration from the Exchange Fund delivered to a
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public official pursuant to any applicable abandoned property, escheat or
similar law.
2.8. Investment of the Exchange Fund. The Exchange
Agent shall invest any cash included in the Exchange Fund as reasonably
directed by HoldCo; provided that, such investments shall be in
obligations of or guaranteed by the United States of America and backed
by the full faith and credit of the United States of America or in
commercial paper obligations rated P-1 and A-1 or better by Xxxxx'x
Investors Service, Inc. and Standard & Poor's Corporation, respectively.
Any interest and other income resulting from such investments shall be
payable to HoldCo.
2.9. Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by HoldCo, the posting by such Person of a
bond in such reasonable amount as HoldCo may direct as indemnity against
any claim that may be made against it with respect to such Certificate,
the Exchange Agent will deliver in exchange for such lost, stolen or
destroyed Certificate the applicable Merger Consideration with respect to
the shares of Parent Common Stock or Conectiv Stock formerly represented
thereby, any cash in lieu of fractional shares of HoldCo Common Stock and
unpaid dividends and distributions on shares of HoldCo Common Stock
deliverable in respect thereof, pursuant to this Agreement.
2.10. Withholding Rights. Each of Surviving
Corporation A, Surviving Corporation B and HoldCo shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to
this Agreement to any holder of shares of Parent Common Stock or Conectiv
Stock such amounts as it is required to deduct and withhold with respect
to the making of such payment under the Code and the rules and
regulations promulgated thereunder, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Surviving
Corporation A, Surviving Corporation B or HoldCo, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of Parent Common Stock or
Conectiv Stock in respect of which such deduction and withholding was
made by Surviving Corporation A, Surviving Corporation B or HoldCo, as
the case may be.
2.11. Stock Transfer Books. At the close of
business, New York City time, on the day the Effective Time occurs, the
stock transfer books of (a) Parent with respect to Parent Common Stock
issued and outstanding prior to the Effective Time shall be closed and,
thereafter, there shall be no further registration of transfers on the
records of Parent of shares of Parent Common Stock issued and outstanding
prior to the Effective Time, and (b) Conectiv with respect to Conectiv
Stock issued and outstanding prior to the Effective Time shall be closed
and, thereafter, there shall be no further registration of transfers on
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the records of Conectiv of shares of Conectiv Stock issued and
outstanding prior to the Effective Time. From and after the Effective
Time, the holders of Certificates shall cease to have any rights with
respect to such shares of Conectiv Stock or Parent Common Stock, as the
case may be, formerly represented thereby, except as otherwise provided
herein or by law. On or after the Effective Time, any Certificates
presented to the Exchange Agent or HoldCo for any reason shall be
exchanged for the applicable Merger Consideration with respect to the
shares of Conectiv Stock or Parent Common Stock, as the case may be,
formerly represented thereby, any cash in lieu of fractional shares of
HoldCo Common Stock to which the holders thereof are entitled pursuant to
Section 2.5 and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 2.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Conectiv.
Except as set forth in the Disclosure Schedule delivered by Conectiv to
Parent prior to the execution of this Agreement (the "Conectiv Disclosure
Schedule") and except as set forth in the Conectiv SEC Reports (as
defined in Section 3.1(f)) filed prior to the date of this Agreement,
Conectiv represents and warrants to Parent as follows:
(a) Organization, Standing and Power. (i)
Conectiv and each of its Subsidiaries (as defined in Section 8.11) is a
corporation or other entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of its jurisdiction
of incorporation or organization, has all requisite power and authority
to own, lease and operate its properties and to carry on its business as
now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary
other than in such jurisdictions where the failure to so qualify or be in
good standing would not reasonably be expected to result in a Material
Adverse Effect (as defined in Section 8.11) on Conectiv. The copies of
the certificate of incorporation and by-laws of Conectiv which were
previously furnished to Parent are true, complete and correct copies of
such documents as in effect on the date of this Agreement.
(ii) Each of Conectiv's Joint Ventures (as defined
below) is a corporation duly incorporated or an entity otherwise
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite power
and authority to own, lease and operate its properties and to carry on
its business as now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification necessary, except in each case as would not reasonably be
-15-
expected to result in a Material Adverse Effect on Conectiv. As used in
this Agreement, "Joint Venture" with respect to any person shall mean any
corporation or other entity (including partnerships and other business
associations and joint ventures) 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 investment purposes that are less than 20% of
any class of the outstanding voting securities or equity.
(b) Subsidiaries. Section 3.1(b) of the Conectiv
Disclosure Schedule contains a description as of the date hereof of all
Subsidiaries and Joint Ventures of Conectiv, including the name of each
such entity, the state or jurisdiction of its incorporation or
organization, a brief description of the principal line or lines of
business conducted by each such entity and Conectiv's interest therein.
(c) Capital Structure.
(i) As of January 3, 2001, the authorized
capital stock of Conectiv consisted of (A) 150,000,000 shares of
Conectiv Common Stock, of which 82,977,813 shares were
outstanding, (B) 10,000,000 shares of Class A Stock, of which
5,742,315 shares were outstanding, and (C) 20,000,000 shares of
Preferred Stock, of which no shares were outstanding but of
which 1,200,000 shares have been designated as Series One Junior
Preferred Stock and 65,606 shares have been designated as Series
Two Junior Preferred Stock, in each case reserved for issuance
upon exercise of the Preferred Stock Purchase Rights (the
"Rights") distributed to the holders of Conectiv Stock pursuant
to the Stockholders Rights Agreement, dated as of April 23,
1998, between Conectiv and Conectiv Resource Partners, Inc., as
Rights Agent (the "Rights Plan"). From January 3, 2001 to the
date of this Agreement, there have been no issuances of shares
of the capital stock of Conectiv or any other securities of
Conectiv other than issuances of shares (and accompanying
Rights) pursuant to options or rights outstanding as of January
3, 2001 under the Benefit Plans (as defined in Section 8.11) of
Conectiv. All issued and outstanding shares of the capital
stock of Conectiv are duly authorized, validly issued, fully
paid and nonassessable, and no class of capital stock is
entitled to preemptive rights. There were outstanding as of
January 3, 2001 no options, warrants or other rights to acquire
capital stock from Conectiv other than (x) the Rights and (y)
options representing in the aggregate the right to purchase up
to 3,036,600 shares of Conectiv Common Stock (collectively, the
"Conectiv Stock Options") under the Conectiv Incentive
Compensation Plan (the "Conectiv Stock Option Plan"). As of
January 3, 2001, Conectiv had further reserved 1,678,300 shares
of Conectiv Common Stock for purchase pursuant to the Conectiv
Stock Option Plan. Other than the associated Rights issued with
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the shares issued as described above, no options or warrants or
other rights to acquire capital stock from Conectiv have been
issued or granted from January 3, 2001 to the date of this
Agreement.
(ii) As of the date of this Agreement, no
bonds, debentures, notes or other indebtedness of Conectiv
having the right to vote on any matters on which stockholders
may vote ("Conectiv Voting Debt") are issued or outstanding.
(iii) All of the outstanding shares of
capital stock of, or other equity interests in, each of
Conectiv's Subsidiaries have been duly authorized and validly
issued and are fully paid and nonassessable and are owned
directly or indirectly by Conectiv, free and clear of all
pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively,
"Liens"). To Conectiv's knowledge, all of the shares of capital
stock or other equity interests which Conectiv owns in all of
its Joint Ventures, have been duly authorized and validly issued
and are fully paid and nonassessable. All such shares of capital
stock or other equity interests are owned directly or indirectly
by Conectiv, free and clear of all Liens (other than any
customary provisions contained in the applicable investment,
shareholder, joint venture or similar agreements governing such
Joint Venture). Except as otherwise set forth in this Section
3.1(c) or as contemplated by Section 5.6, as of the date of this
Agreement, there are no securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of
any kind to which Conectiv or any of its Subsidiaries is a
party, or by which any of them is bound, obligating Conectiv or
any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock
or other voting securities of Conectiv or any of its
Subsidiaries or obligating Conectiv or any of its Subsidiaries
to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no
outstanding obligations of Conectiv or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital
stock of Conectiv or any of its Subsidiaries.
(d) Authority; No Violations.
(i) Conectiv has all requisite corporate
power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby, subject in the
case of the consummation of the Conectiv Merger to the adoption
of this Agreement by the Required Conectiv Vote (as defined in
Section 3.1(i)). The execution and delivery of this Agreement
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and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on
the part of Conectiv, subject in the case of the consummation of
the Conectiv Merger to the adoption of this Agreement by the
Required Conectiv Vote. This Agreement has been duly executed
and delivered by Conectiv and constitutes a valid and binding
agreement of Conectiv, enforceable against it in accordance with
its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting creditors generally, by general
equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by an implied
covenant of good faith and fair dealing.
(ii) Conectiv is not currently in violation
of, or in default under, (A) any provision of the certificate of
incorporation or by-laws of Conectiv or (B) except as would not
reasonably be expected to result in a Material Adverse Effect on
Conectiv, any loan or credit agreement, contract, note,
mortgage, bond, indenture, lease, benefit plan or other
agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Conectiv or any of
its Subsidiaries or their respective properties or assets. The
execution and delivery of this Agreement by Conectiv do not, and
the consummation by Conectiv of the Conectiv Merger and the
other transactions contemplated hereby will not, result in any
violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of
termination, amendment, cancellation or acceleration of any
obligation or the loss of a material benefit under, or the
creation of a lien, pledge, security interest, charge or other
encumbrance on any assets (any such conflict, violation,
default, right of termination, amendment, cancellation or
acceleration, loss or creation, a "Violation") pursuant to:
(C) any provision of the certificate of incorporation or by-laws
of Conectiv or (D) except as would not reasonably be expected to
result in a Material Adverse Effect on Conectiv, subject to
obtaining or making the consents, approvals, orders, permits,
authorizations, registrations, declarations, notices and filings
referred to in paragraph (iii) below, any loan or credit
agreement, note, contract, mortgage, bond, indenture, lease,
benefit plan or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation of any kind to which
Conectiv or any of its Subsidiaries is now subject to, a party
to or by which any of them or any of their respective properties
or assets may be bound or affected.
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(iii) No material consent, approval, order,
permit or authorization of, or registration, declaration, notice
or filing with, any supranational, national, state, municipal or
local government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof,
or any quasi-governmental or private body exercising any
regulatory, taxing, importing or other governmental or quasi-
governmental authority (a "Governmental Entity"), is required by
or with respect to Conectiv or any Subsidiary of Conectiv in
connection with the execution and delivery of this Agreement by
Conectiv or the consummation by Conectiv of the Conectiv Merger
and the other transactions contemplated hereby, except for those
required under or in relation to (A) the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
(B) state securities or "blue sky" laws (the "Blue Sky Laws"),
(C) the Securities Act of 1933, as amended (the "Securities
Act"), (D) the Exchange Act, (E) the DGCL with respect to the
filing of the Certificates of Merger, (F) rules and regulations
of the NYSE and (G) the consents, approvals, orders, permits,
authorizations, registrations, declarations, notices and filings
set forth in Section 3.1(d)(iii) of the Conectiv Disclosure
Schedule. Consents, approvals, orders, permits, authorizations,
registrations, declarations, notices and filings required under
or in relation to any of the foregoing clauses (A) through (F)
are hereinafter referred to as "Necessary Approvals" and those
required under or in relation to clause (G) are hereinafter
referred to as "Conectiv Required Statutory Approvals."
(e) Compliance; Permits. Neither Conectiv nor any
of its Subsidiaries is in violation of any law, rule, regulation, order,
judgment or decree applicable to Conectiv or any of its Subsidiaries or
by which its or any of their respective properties are bound, except for
any such violation which would not reasonably be expected to result in a
Material Adverse Effect on Conectiv. Conectiv and its Subsidiaries have
all permits, licenses, authorizations, exemptions, orders, consents,
approvals and franchises from Governmental Entities required to conduct
their respective businesses as now being conducted, except for any such
permit, license, authorization, exemption, order, consent, approval or
franchise the absence of which would not reasonably be expected to result
in a Material Adverse Effect on Conectiv.
(f) Reports and Financial Statements. Conectiv and
its Subsidiaries have filed all reports, schedules, forms, statements,
declarations, applications and other documents required to be filed by
them with the Securities and Exchange Commission (the "SEC") since
January 1, 1999 (collectively, including all exhibits thereto, the
"Conectiv SEC Reports"). None of Conectiv SEC Reports, as of their
respective dates (and, if amended or superseded by a filing prior to the
date of this Agreement or the Closing Date, then on the date of such
filing), contained or will contain any untrue statement of a material
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fact or omitted or will omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
financial statements of Conectiv (including the related notes) included
in the Conectiv SEC Reports presents fairly, in all material respects,
the consolidated financial position and consolidated results of
operations and cash flows of Conectiv and its consolidated Subsidiaries
as of the respective dates or for the respective periods set forth
therein, all in conformity with United States generally accepted
accounting principles ("GAAP") consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case of
the unaudited interim financial statements, to the absence of footnotes
and to normal year-end adjustments that have not been and are not
expected to be material in amount. All of such Conectiv SEC Reports, as
of their respective dates (and as of the date of any amendment to the
respective Conectiv SEC Report), complied as to form in all material
respects with the applicable requirements of the Securities Act, the
Exchange Act and the Public Utility Holding Company Act of 1935, as
amended (the "1935 Act"), and the rules and regulations promulgated
thereunder.
(g) Absence of Certain Changes or Events; Absence
of Undisclosed Liabilities. (i) Since December 31, 1999, Conectiv and
its Subsidiaries have conducted their business in the ordinary course of
business and no event has occurred which has had, and no fact or
circumstance exists that would reasonably be expected to result in, a
Material Adverse Effect on Conectiv.
(ii) Neither Conectiv nor any of its Subsidiaries
has any liabilities or obligations (whether absolute, contingent, accrued
or otherwise) of a nature required by GAAP to be reflected in a
consolidated corporate balance sheet, except liabilities, obligations or
contingencies that are accrued or reserved against in the consolidated
financial statements of Conectiv or are reflected in the notes thereto
for the year ended December 31, 1999, that were incurred in the ordinary
course of business since December 31, 1999 or that would not reasonably
be expected to result in a Material Adverse Effect on Conectiv.
(h) Board Approval. The Board of Directors of
Conectiv, by resolutions duly adopted at a meeting duly called and held
and not subsequently rescinded or modified in any way (the "Conectiv
Board Approval"), has duly (i) determined that this Agreement and the
Conectiv Merger are advisable and in the best interests of Conectiv and
its stockholders, (ii) approved this Agreement and the Mergers and (iii)
recommended that the stockholders of Conectiv adopt this Agreement and
the Mergers. Assuming the accuracy of the representations and warranties
set forth in Section 3.2(p), the Conectiv Board Approval constitutes
approval of this Agreement and the Mergers for purposes of Section 203 of
the DGCL.
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(i) Vote Required. Assuming the accuracy of the
representations and warranties set forth in Section 3.2(p), the
affirmative vote of the holders of a majority of the total voting power
of the outstanding shares of Conectiv Common Stock and Class A Stock,
voting together as a single class, to adopt this Agreement (the "Required
Conectiv Vote") is the only vote of the holders of any class or series of
Conectiv capital stock necessary to adopt this Agreement and approve the
transactions contemplated hereby.
(j) Rights Plan. Conectiv has heretofore provided
Parent with a complete and correct copy of the Rights Plan, including all
amendments and exhibits thereto. The Board of Directors of Conectiv has
approved an amendment to the Rights Plan, and the Rights Plan has been so
amended, so that neither the execution of this Agreement nor the
consummation of the Merger will (i) cause the Rights to become
exercisable, (ii) cause Parent or Merger Sub B to become an Acquiring
Person (as such term is defined in the Rights Plan) or (iii) give rise to
a Stock Acquisition Date or a Distribution Date (as each such term is
defined in the Rights Plan).
(k) Takeover Statutes. No "fair price,"
"moratorium," "control share acquisition" or other similar antitakeover
statute or regulation enacted under state or federal laws in the United
States (with the exception of Section 203 of the DGCL) applicable to
Conectiv is applicable to the Conectiv Merger or the other transactions
contemplated hereby (other than the Parent Merger).
(l) Brokers or Finders. 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 similar
commission or fee in connection with any of the transactions contemplated
by this Agreement based on arrangements made by or on behalf of Conectiv,
except Credit Suisse First Boston Corporation (the "Conectiv Financial
Advisor"), whose fees and expenses will be paid by Conectiv in accordance
with Conectiv's agreement with such firm, based upon arrangements made by
or on behalf of Conectiv and previously disclosed to Parent.
(m) Opinion of Conectiv Financial Advisor.
Conectiv has received the opinion of Conectiv Financial Advisor, dated
the date of this Agreement, to the effect that, as of such date, the
Common Stock Consideration is fair to the holders of Conectiv Common
Stock from a financial point of view and the Class A Consideration is
fair to the holders of Conectiv Class A Stock from a financial point of
view.
(n) Regulation as a Utility; 1935 Act. Conectiv is
a public utility holding company registered under, and subject to the
provisions of, the 1935 Act and Conectiv has the following two
"subsidiary companies" that are "public utility companies" (as such terms
are defined in the 1935 Act): Atlantic City Electric Company ("ACE") and
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Delmarva Power & Light Company ("DP&L"). ACE is subject to regulation as
a public utility or public service company (or similar designation) in
the States of New Jersey and Pennsylvania and DP&L is subject to
regulation as a public utility or public service company (or similar
designation) in the States of Delaware, Maryland, Pennsylvania and
Virginia. Except as set forth in the two preceding sentences, neither
Conectiv nor any "subsidiary company" or "affiliate" (as such terms are
defined in the 0000 Xxx) of Conectiv is subject to regulation as a public
utility holding company, a public utility or public service company (or
similar designation) by any state in the United States or any
municipality or political subdivision of any state, by the United States
or any agency or instrumentality of the United States (including under
the 0000 Xxx) or by any foreign country.
(o) Taxes. Except for matters which would not
reasonably be expected to result in a Material Adverse Effect on
Conectiv, (i) Conectiv and each of its Subsidiaries, and any
consolidated, combined, unitary or aggregate group for tax purposes of
which Conectiv or any of its Subsidiaries is or has been a member has
timely filed all Tax Returns (as defined below) required to be filed by
it in the manner provided by law; (ii) all such Tax Returns filed by
Conectiv or any of its Subsidiaries are true, complete and accurate in
all material respects; (iii) all Taxes (as defined below) with respect to
Conectiv and its Subsidiaries due and payable (without regard to whether
such Taxes have been assessed) have been timely paid or adequate reserves
have been established for the payment of such Taxes; (iv) there are no
Tax liens upon the assets of Conectiv or any of its Subsidiaries except
liens for Taxes not yet due; (v) no audits or other administrative
proceedings or court proceedings are presently pending with regard to any
Taxes or Tax Returns of Conectiv or any of its Subsidiaries and no issue
that has not yet been resolved has been raised in writing after December
31, 1993 by any Tax authority in connection with any income or gross
receipt Tax or Tax Return; (vi) Conectiv and its Subsidiaries have made
available to Parent complete and accurate copies of (A) the most recently
filed material income Tax Returns and any amendments thereto as of the
date of this Agreement and (B) any Tax Rulings issued or entered into
after December 31, 1993 by Conectiv or any of its Subsidiaries with any
Tax authority that could materially impact income or gross receipt Taxes
of Conectiv or any of its Subsidiaries with respect to any Tax Return
that has not been filed; (vii) with respect to the assessment of all
income or gross receipt Taxes for all taxable periods of Conectiv and its
Subsidiaries through December 31, 1992, either (A) the statute of
limitations has expired for all applicable Tax Returns of Conectiv and
its Subsidiaries or (B) those Tax Returns have been examined by the
appropriate taxing authorities; (viii) no deficiency for any income or
gross receipt Taxes has been proposed, asserted or assessed against
Conectiv or any of its Subsidiaries that has not been resolved and paid
in full; (ix) neither Conectiv nor any of its Subsidiaries has any
liability for Taxes of any person other than Conectiv and its
Subsidiaries (A) under Treasury Regulations Section 1.1502-6 (or any
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similar provision of state, local or foreign law), (B) as a transferee or
successor, (C) by contract or (D) otherwise; and (x) neither Conectiv nor
any of its Subsidiaries has constituted a "distributing corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code (A) in the past 24-month period or (B) in a distribution
which could otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code).
"Tax(es)," as used in this Agreement, means any federal, state, county,
local or foreign taxes, charges, fees, levies, or other assessments,
including all net income, gross income, sales and use, ad valorem,
transfer, gains, profits, windfall profits, excise, franchise, real and
personal property, gross receipts, capital stock, production, business
and occupation, disability, employment, payroll, license, estimated,
stamp, custom duties, severance or withholding taxes or other taxes or
similar charges imposed by any governmental authority, and includes any
interest and penalties (civil or criminal) on or additions to any such
taxes or in respect of a failure to comply with any requirement relating
to any Tax Return and any expenses incurred in connection with the
determination, settlement or litigation of any tax liability. "Tax
Return," as used in this Agreement, means a report, return or other
information supplied to a governmental authority with respect to Taxes
including, where permitted or required, combined or consolidated returns
for any group of entities that includes Conectiv or any of its
Subsidiaries, on the one hand, or Parent or any of its Subsidiaries, on
the other hand. "Tax Ruling," as used in this Agreement, shall mean a
written ruling of a Tax authority relating to Taxes.
(p) Benefit Plans. (i) Section 3.1(p)(i) of the
Conectiv Disclosure Schedule sets forth a list of each material Benefit
Plan (as defined in Section 8.11) of Conectiv. The Benefit Plans of
Conectiv have been administered and operated in accordance with their
terms, and with all applicable requirements of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), the Code and other
applicable laws, except where the failure to so comply would not
reasonably be expected to result in a Material Adverse Effect on
Conectiv. Except as would not reasonably be expected to result in a
Material Adverse Effect on Conectiv, there are no pending or, to the
knowledge of Conectiv, threatened claims and no pending or, to the
knowledge of Conectiv, threatened litigation with respect to any Benefit
Plan of Conectiv, other than ordinary and usual claims for benefits by
participants and beneficiaries.
(ii) Each Benefit Plan of Conectiv that is intended
to be "qualified" within the meaning of Section 401(a) of the Code or its
predecessor(s) has received a favorable determination letter from the IRS
and, to the knowledge of Conectiv, no event has occurred and no condition
exists that would reasonably be expected to result in the revocation of
any such determination.
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(iii) No unsatisfied liability that would reasonably
be expected to result in a Material Adverse Effect on Conectiv has been,
or would reasonably be expected to be, incurred under Title IV of ERISA
(other than for benefits payable in the ordinary course or Pension
Benefit Guaranty Corporation insurance premiums) or Sections 412(f) or
(n) of the Code by Conectiv or by any entity required to be aggregated
with Conectiv pursuant to Section 4001 of ERISA and/or Section 414 of the
Code and the regulations promulgated thereunder (an "ERISA Affiliate").
No Benefit Plan of Conectiv or of any ERISA Affiliate of Conectiv that is
subject to Title IV of ERISA has been terminated or is or has been the
subject of termination proceedings pursuant to Title IV of ERISA which
termination would reasonably be expected to result in a Material Adverse
Effect on Conectiv.
(iv) No Benefit Plan of Conectiv is a "multiemployer
plan" (as defined in Section 4001(a)(3) of ERISA) and neither Conectiv
nor any ERISA Affiliate has been obligated to contribute to any
multiemployer plan or has incurred or would reasonably be expected to
incur any withdrawal liability under Subtitle E of Title IV of ERISA with
respect to any multiemployer plan which liability would reasonably be
expected to result in a Material Adverse Effect on Conectiv.
(v) No Benefit Plan of Conectiv nor any Benefit
Plan of an ERISA Affiliate of Conectiv has incurred any "accumulated
funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code) whether or not waived.
(vi) Neither Conectiv nor any of its Subsidiaries,
or, to the knowledge of Conectiv, any other "disqualified person" or
"party in interest" (as defined in Section 4975(e)(2) of the Code and
Section 3(14) of ERISA, respectively), has engaged in any transaction in
connection with any Benefit Plan of Conectiv that has resulted in, or
could reasonably be expected to result in, the imposition of a penalty
pursuant to Section 502(i) of ERISA, damages pursuant to Section 409 of
ERISA or a tax pursuant to Section 4975(a) of the Code which liability
would reasonably be expected to result in a Material Adverse Effect on
Conectiv.
(vii) Neither the execution nor performance of this
Agreement nor the consummation of the transactions contemplated hereby,
whether alone or in conjunction with a termination of employment, will
accelerate the time of payment or vesting, or increase the amount of
compensation owed to any current or former employee, officer or director
of Conectiv or any of its Subsidiaries (including under the Delmarva Sub-
Plan of the Conectiv Retirement Plan).
(viii) With respect to each Benefit Plan of Conectiv,
Conectiv has made available to the Parent true and complete copies of the
following documents, as applicable: (i) all plan documents, with all
amendments thereto; (ii) the current summary plan description with any
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applicable summaries of material modifications thereto; (iii) all current
trust agreements and/or other documents establishing plan funding
arrangements; (iv) the most recent IRS determination letter and, if a
request for such a letter is currently pending, a copy of such filing;
(v) the most recently prepared actuarial valuation report; and (vi) the
most recently prepared financial statements.
(ix) No Benefit Plan of Conectiv provides for the
payment of severance benefits solely by reason of the consummation of the
transaction contemplated in this Agreement.
(q) Litigation. Except for claims, actions, suits,
proceedings or investigations that would not reasonably be expected to
result in a Material Adverse Effect on Conectiv, there are no claims,
actions, suits, proceedings or investigations pending or, to Conectiv's
knowledge, threatened against Conectiv or any of its Subsidiaries, or any
of their respective properties, before or by any Governmental Entity. As
of the date hereof, neither Conectiv nor any of its Subsidiaries nor any
of their respective properties is or are subject to any order, writ,
judgment, injunction, decree or award having, or which would reasonably
be expected to result in, a Material Adverse Effect on Conectiv.
(r) Environmental Matters. Except as would not
reasonably be expected to result in a Material Adverse Effect on
Conectiv: (i) Conectiv and each of its Subsidiaries comply with all
applicable Environmental Laws (as defined below), and possess and comply
with all applicable Environmental Permits (as defined below) and all
requirements for application, renewal or modification thereof, as well as
air emission allowances and air emissions reduction credits required
under such laws to operate as it presently operates; (ii) to the
knowledge of Conectiv, there are no Materials of Environmental Concern
(as defined below) at any current or former assets, facilities,
businesses or properties owned or operated by Conectiv or any of its
Subsidiaries, under circumstances that are reasonably likely to result in
liability of Conectiv or any Subsidiary under any applicable
Environmental Law; (iii) neither Conectiv nor any of its Subsidiaries has
received any written notification alleging that it is liable for, or has
received any request for information pursuant to section 104(e) of the
Comprehensive Environmental Response, Compensation and Liability Act or
similar state statute or any other similar applicable Environmental Laws,
concerning any release or threatened release of Materials of
Environmental Concern at any location; (iv) to the knowledge of Conectiv,
no capital expenditures will be required to achieve or maintain
compliance with Environmental Laws; and (v) to the knowledge of Conectiv,
neither Conectiv nor any of its Subsidiaries has contractually assumed or
retained from any person or entity (including any Governmental Entity),
liability for any matters arising under or pursuant to any Environmental
Laws. For purposes of this Agreement, the following terms shall have the
following meanings: (x) "Environmental Laws" shall mean all foreign,
federal, state, or local statutes, regulations, ordinances, codes, or
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decrees and any binding administrative or judicial interpretation thereof
protecting the quality of the ambient air, soil, natural resources,
surface water or groundwater, in effect as of the date of this Agreement;
(y) "Environmental Permits" shall mean all permits, licenses,
registrations, and other authorizations required under applicable
Environmental Laws; and (z) "Materials of Environmental Concern" shall
mean any hazardous, acutely hazardous, or toxic substance or waste
defined, characterized or regulated as such under Environmental Laws,
including without limitation the federal Comprehensive Environmental
Response, Compensation and Liability Act and the federal Clean Air Act,
Clean Water Act, Toxic Substances Control Act, Resource Conservation and
Recovery Act and any analogous state and local laws and regulations.
(s) No Parent Capital Stock. Conectiv does not own
or hold directly or indirectly any shares of Parent Common Stock or any
other capital stock of Parent, or any options, warrants or other rights
to acquire any shares of Parent Common Stock or any other capital stock
of Parent, or in each case, any interests therein.
(t) Intellectual Property. Conectiv and its
Subsidiaries have all right, title and interest in, or a valid and
binding license to use, all Intellectual Property (as defined below)
material to the conduct of the business of Conectiv and its Subsidiaries
taken as a whole. Neither Conectiv nor any Subsidiary of Conectiv is in
default (or with the giving of notice or lapse of time or both, would be
in default) under any license to use such Intellectual Property and, to
the knowledge of Conectiv, such Intellectual Property is not being
infringed by any third party, and neither Conectiv nor any Subsidiary of
Conectiv is infringing any Intellectual Property of any third party,
except for such defaults and infringements which would not reasonably be
expected to result in a Material Adverse Effect on Conectiv. For purposes
of this Agreement "Intellectual Property" means patents and patent
rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service xxxx rights, service names and service
name rights, copyrights and copyright rights and other proprietary
intellectual property rights and all pending applications for and
registrations of any of the foregoing.
(u) Nuclear Operations and NRC Actions.
(i) Conectiv's Subsidiaries hold minority-
interest ownerships in those facilities set forth in Section 3.1(u) of
the Conectiv Disclosure Schedule (the "Company Nuclear Facilities"). Such
Subsidiaries hold the required operating licenses with respect to the
Company Nuclear Facilities. To the knowledge of Conectiv, the operations
of the Company Nuclear Facilities are and have at all times been
conducted in compliance with applicable health, safety, regulatory and
other legal requirements, and no Company Nuclear Facility is or has been
in violation of any applicable health, safety, regulatory or other legal
requirements applicable to the Company Nuclear Facilities, except for
-26-
such failures to comply as would not reasonably be expected to result in
a Material Adverse Effect on Conectiv. To the knowledge of Conectiv, the
Company Nuclear Facilities maintain or have maintained emergency plans
designed to respond to an unplanned release therefrom of radioactive
materials into the environment and liability insurance to the extent
required by law, and such further insurance (other than liability
insurance) as is consistent with the Company's view of the risks inherent
in the operation of a nuclear power facility and with the general
practices of the nuclear power industry.
(ii) Neither Conectiv nor any of its Subsidiaries
has been given written notice of or been charged with actual or potential
violation of, or, to the knowledge of Conectiv, is the subject of any
ongoing proceeding, inquiry, special inspection, diagnostic evaluation or
other Nuclear Regulatory Commission ("NRC") action of which Conectiv or
any of its Subsidiaries has received notice under the Atomic Energy Act,
any applicable regulations thereunder or the terms and conditions of any
license granted to Conectiv or any of its Subsidiaries regarding the
Company Nuclear Facilities that would reasonably be expected to result in
likely to have, a Material Adverse Effect on Conectiv. No Company
Nuclear Facility is, as of the date of this Agreement, on the List of
Nuclear Power Plants Warranting Increased Regulatory Attention maintained
by the NRC.
(v) Insurance. Conectiv and each of Conectiv's
Subsidiaries is, and has been continuously since January 1, 1996, insured
with financially responsible insurers (or maintained self-insurance) in
such amounts and against such risks and losses as are customary for
companies conducting the business as conducted by Conectiv and its
Subsidiaries during such time period.
(w) Commodity Matters. As of February 6, 2001,
Conectiv and its Subsidiaries do not have open forward price exposure
exceeding, in the aggregate (as qualified on a xxxx-to-market basis,
using FASB 133 guidelines, and calculated with respect to its physical
and financial position exposure) $5.3 million of one-day value at risk
and $11.9 million of five-day value at risk for the following energy
related commodity products, including but not limited to: natural gas and
natural basis, oil and oil related products, coal, emissions allowances,
weather derivatives, and electricity, including installed capacity,
transmission capacity and other ancillary products.
3.2. Representations and Warranties of Parent.
Except as set forth in the Disclosure Schedule delivered by Parent to
Conectiv prior to the execution of this Agreement (the "Parent Disclosure
Schedule") and except as set forth in the Parent SEC Reports (as defined
in Section 3.2(f)) filed prior to the date of this Agreement, Parent
represents and warrants to Conectiv as follows:
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(a) Organization, Standing and Power. (i) Parent
and each of its Subsidiaries (including HoldCo, Merger Sub A and Merger
Sub B) is a corporation or other entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite power
and authority to own, lease and operate its properties and to carry on
its business as now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the
failure to so qualify or be in good standing would not reasonably be
expected to result in a Material Adverse Effect on Parent. The copies of
the articles of incorporation and by-laws of Parent and HoldCo, which
were previously furnished to Conectiv are true, complete and correct
copies of such documents as in effect on the date of this Agreement.
HoldCo is a direct wholly-owned Subsidiary of Parent.
(ii) Each of Parent's Joint Ventures is a corporation
duly incorporated or an entity otherwise organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization, has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except in
each case as would not reasonably be expected to result in a Material
Adverse Effect on Parent.
(b) Subsidiaries. Section 3.2(b) of the Parent
Disclosure Schedule contains a description as of the date hereof of all
Subsidiaries of Parent, including the name of each such entity, the state
or jurisdiction of its incorporation or organization, a brief description
of the principal line or lines of business conducted by each such entity
and Parent's interest therein.
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(c) Capital Structure.
(i) As of January 31, 2001, the authorized
capital stock of Parent consisted of (A) 200,000,000 shares of
Parent Common Stock, par value $1.00 per share, of which
110,751,976 shares were outstanding, (B) 8,800,000 shares of
Preference Stock, par value $25 per share, of which no shares
were outstanding and 7,750,000 shares of preferred stock, par
value $50 per share (the "Parent Preferred Stock"), of which
1,806,543 shares are outstanding. From January 31, 2001 to the
date of this Agreement, there have been no issuances of shares
of the capital stock of Parent or any other securities of Parent
other than issuances of shares pursuant to options or rights
outstanding as of January 31, 2001 under the Benefit Plans of
Parent. All issued and outstanding shares of the capital stock
of Parent are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock is entitled to
preemptive rights. There were outstanding as of January 31, 2001
no options, warrants or other rights to acquire capital stock
from Parent other than the right to purchase up to 1,332,441
shares of Parent Common Stock. No options or warrants or other
rights to acquire capital stock from Parent have been issued or
granted from January 31, 2001 to the date of this Agreement.
The issuance by HoldCo of HoldCo Common Stock to the holders of
Conectiv Stock pursuant to this Agreement has been duly
authorized by all requisite corporate action of HoldCo and
Parent and, upon such issuance, all such shares of HoldCo Common
Stock will be validly issued, fully paid and nonassessable.
(ii) As of the date of this Agreement, no
bonds, debentures, notes or other indebtedness of Parent having
the right to vote on any matters on which stockholders may vote
("Parent Voting Debt") are issued or outstanding.
(iii) All of the outstanding shares of
capital stock of, or other equity interests in, each of Parent's
Subsidiaries have been duly authorized and validly issued and
are fully paid and nonassessable and are owned directly or
indirectly by Parent, free and clear of all Liens. To Parent's
knowledge, all of the shares of capital stock or other equity
interests which Parent owns in all of its Joint Ventures, have
been duly authorized and validly issued and are fully paid and
nonassessable. All such shares of capital stock or other equity
interests are owned directly or indirectly by Parent, free and
clear of all Liens (other than any customary provisions
contained in the applicable investment, shareholder, joint
venture or similar agreements governing such Joint Venture).
Except as otherwise set forth in this Section 3.2(c), as of the
date of this Agreement, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements
-29-
or undertakings of any kind to which Parent or any of its
Subsidiaries is a party, or by which any of them is bound,
obligating Parent or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of Parent or
any of its Subsidiaries or obligating Parent or any of its
Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. As of the date of this Agreement,
there are no outstanding obligations of Parent or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of Parent or any of its Subsidiaries.
(d) Authority; No Violations.
(i) Each of Parent, Merger Sub A, Merger
Sub B and HoldCo have all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent, Merger Sub A, Merger Sub
B and HoldCo. This Agreement has been duly executed and
delivered by each of Parent, Merger Sub A, Merger Sub B and
HoldCo and constitutes a valid and binding agreement of each of
Parent, Merger Sub A, Merger Sub B and HoldCo, enforceable
against each of them in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or
affecting creditors generally, by general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) or by an implied covenant of
good faith and fair dealing.
(ii) Parent is not currently in violation
of, or in default under, (A) any provision of the articles of
incorporation or by-laws of Parent or (B) except as would not
reasonably be expected to result in a Material Adverse Effect on
Parent, any loan or credit agreement, contract, note, mortgage,
bond, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or any of its Subsidiaries or
their respective properties or assets. The execution and
delivery of this Agreement by Parent, Merger Sub A, Merger Sub B
and HoldCo do not, and the consummation by Parent, Merger Sub A,
Merger Sub B and HoldCo of the Mergers and the other
transactions contemplated hereby will not, result in a Violation
pursuant to: (C) any provision of the articles of incorporation
or by-laws of Parent or (D) except as would not reasonably be
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expected to result in a Material Adverse Effect on Parent,
subject to obtaining or making the consents, approvals, orders,
permits, authorizations, registrations, declarations, notices
and filings referred to in paragraph (iii) below, any loan or
credit agreement, note, contract, mortgage, bond, indenture,
lease, benefit plan or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation of any kind to which
Parent or any of its Subsidiaries is now subject to or a party
to or by which any of them or any of their respective properties
or assets may be bound or affected.
(iii) No material consent, approval, order,
permit or authorization of, or registration, declaration, notice
or filing with, any Governmental Entity is required by or with
respect to Parent or any Subsidiary of Parent in connection with
the execution and delivery of this Agreement by Parent, Merger
Sub A, Merger Sub B and HoldCo or the consummation by Parent,
Merger Sub A, Merger Sub B and HoldCo of the Mergers and the
other transactions contemplated hereby, except for (A) the
Necessary Approvals and (B) the consents, approvals, orders,
permits, authorizations, registrations, declarations, notices
and filings set forth in Section 3.2(d)(iii) of the Parent
Disclosure Schedule (the "Parent Required Statutory Approvals").
(e) Compliance; Permits. Neither Parent nor any of
its Subsidiaries is in violation of any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its Subsidiaries or by
which its or any of their respective properties are bound, except for any
such violation which would not reasonably be expected to result in a
Material Adverse Effect on Parent. Parent and its Subsidiaries have all
permits, licenses, authorizations, exemptions, orders, consents,
approvals and franchises from Governmental Entities required to conduct
their respective businesses as now being conducted, except for any such
permit, license, authorization, exemption, order, consent, approval or
franchise the absence of which would not reasonably be expected to result
in a Material Adverse Effect on Parent.
(f) Reports and Financial Statements. Parent and
its Subsidiaries have filed all reports, schedules, forms, statements,
declarations, applications and other documents required to be filed by
them with the SEC since January 1, 1999 (collectively, including all
exhibits thereto, the "Parent SEC Reports"). None of the Parent SEC
Reports, as of their respective dates (and, if amended or superseded by a
filing prior to the date of this Agreement or the Closing Date, then on
the date of such filing), contained or will contain any untrue statement
of a material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the financial statements of Parent (including the
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related notes) included in the Parent SEC Reports presents fairly, in all
material respects, the consolidated financial position and consolidated
results of operations and cash flows of Parent and its consolidated
Subsidiaries as of the respective dates or for the respective periods set
forth therein, all in conformity with GAAP consistently applied during
the periods involved except as otherwise noted therein, and subject, in
the case of the unaudited interim financial statements, to the absence of
footnotes and to normal year-end adjustments that have not been and are
not expected to be material in amount. All of such Parent SEC Reports, as
of their respective dates (and as of the date of any amendment to the
respective Parent SEC Report), complied as to form in all material
respects with the applicable requirements of the Securities Act, the
Exchange Act and the 1935 Act and the rules and regulations promulgated
thereunder.
(g) Absence of Certain Changes or Events; Absence
of Undisclosed Liabilities. (i) Since December 31, 1999, Parent and its
Subsidiaries have conducted their business in the ordinary course of
business and no event has occurred which has had, and no fact or
circumstance exists that would reasonably be expected to result in, a
Material Adverse Effect on Parent.
(ii) Neither Parent nor any of its Subsidiaries has
any liabilities or obligations (whether absolute, contingent, accrued or
otherwise) of a nature required by GAAP to be reflected in a consolidated
corporate balance sheet, except liabilities, obligations or contingencies
that are accrued or reserved against in the consolidated financial
statements of Parent or are reflected in the notes thereto for the year
ended December 31, 1999, that were incurred in the ordinary course of
business since December 31, 1999 or that would not reasonably be expected
to result in a Material Adverse Effect on Parent.
(h) Brokers or Finders. 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 similar
commission or fee in connection with any of the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent,
except Xxxxxxx Xxxxx & Co., Inc. (the "Parent Financial Advisor"), whose
fees and expenses will be paid by Parent in accordance with Parent's
agreement with such firm based upon arrangements made by or on behalf of
Parent and previously disclosed to Conectiv.
(i) Opinion of Parent Financial Advisor. Parent
has received the opinion of Parent Financial Advisor, dated the date of
this Agreement, to the effect that, as of such date, the Parent Merger
Consideration is fair, from a financial point of view, to each of the
holders of Parent Common Stock.
(j) Regulation as a Utility; 1935 Act. Parent is
not a public utility holding company within the meaning of the 1935 Act,
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but is a "public-utility company" within the meaning of the 1935 Act.
Parent is regulated as a public utility in the District of Columbia and
the State of Maryland and, to a limited extent, in the Commonwealths of
Pennsylvania and Virginia and in no other state. Except as set forth in
the two preceding sentences, neither Parent nor any "subsidiary company"
or "affiliate" (as such terms are defined in the 0000 Xxx) of Parent is
subject to regulation as a public utility holding company, a public
utility or public service company (or similar designation) by any state
in the United States or any municipality or political subdivision of any
state, by the United States or any agency or instrumentality of the
United States (including under the 0000 Xxx) or by any foreign country.
(k) Taxes. Except for matters which would not
reasonably be expected to result in a Material Adverse Effect on Parent,
(i) Parent and each of its Subsidiaries, and any consolidated, combined,
unitary or aggregate group for tax purposes of which Parent or any of its
Subsidiaries is or has been a member has timely filed all Tax Returns
required to be filed by it in the manner provided by law; (ii) all such
Tax Returns filed by Parent or any of its Subsidiaries are true, complete
and accurate in all material respects; (iii) all Taxes with respect to
Parent and its Subsidiaries due and payable (without regard to whether
such Taxes have been assessed) have been timely paid or adequate reserves
have been established for the payment of such Taxes; (iv) there are no
Tax liens upon the assets of Parent or any of its Subsidiaries except
liens for Taxes not yet due; (v) no audits or other administrative
proceedings or court proceedings are presently pending with regard to any
Taxes or Tax Returns of Parent or any of its Subsidiaries and no issue
that has not yet been resolved has been raised in writing after December
31, 1995 by any Tax authority in connection with any income or gross
receipt Tax or Tax Return; (vi) with respect to the assessment of all
income or gross receipt Taxes for all taxable periods of Parent and its
Subsidiaries through December 31, 1995, either (A) the statute of
limitations has expired for all applicable Tax Returns of Parent and its
Subsidiaries or (B) those Tax Returns have been examined by the
appropriate taxing authorities; (vii) no deficiency for any income or
gross receipt Taxes has been proposed, asserted or assessed against
Parent or any of its Subsidiaries that has not been resolved and paid in
full; (viii) neither Parent nor any of its Subsidiaries has any liability
for Taxes of any person other than Parent and its Subsidiaries (A) under
Treasury Regulations Section 1.1502-6 (or any similar provision of state,
local or foreign law), (B) as a transferee or successor, (C) by contract
or (D) otherwise; and (ix) neither Parent nor any of its Subsidiaries has
constituted a "distributing corporation" in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code (A) in
the past 24-month period or (B) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within
the meaning of Section 355(e) of the Code).
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(l) Benefit Plans.
(i) Each Benefit Plan of Parent has been
administered and operated in accordance with its terms, and with all
applicable requirements of ERISA, the Code and other applicable laws,
except where the failure to so comply would not reasonably be expected to
result in a Material Adverse Effect on Parent. Except as would not
reasonably be expected to result in a Material Adverse Effect on Parent,
there are no pending or, to the knowledge of Parent, threatened claims
and no pending or, to the knowledge of Parent, threatened litigation with
respect to any Benefit Plan of Parent, other than ordinary and usual
claims for benefits by participants and beneficiaries.
(ii) Each Benefit Plan of Parent that is intended to
be "qualified" within the meaning of Section 401(a) of the Code or its
predecessor(s) has received a favorable determination letter from the IRS
and, to the knowledge of Parent, no event has occurred and no condition
exists that would reasonably be expected to result in the revocation of
any such determination except to the extent failure to have received a
favorable determination letter or revocation of such determination letter
would not reasonably be expected to result in a Material Adverse Effect
on Parent.
(iii) No unsatisfied liability that would reasonably
be expected to result in a Material Adverse Effect on Parent, has been,
or would reasonably be expected to be, incurred under Section 502(i) or
409 or Title IV of ERISA (other than for benefits payable in the ordinary
course or Pension Benefit Guaranty Corporation insurance premiums) or
Sections 412(f), 412(n) or 4975(a) of the Code by Parent or by any ERISA
Affiliate. No Benefit Plan of Parent nor any Benefit Plan of an ERISA
Affiliate of Parent has incurred any "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA or Section 412 of the Code)
whether or not waived except to the extent such deficiency would not
reasonably be expected to result in a Material Adverse Effect on Parent.
(m) Litigation. Except for claims, actions, suits,
proceedings or investigations that would not reasonably be expected to
result in a Material Adverse Effect on Parent, there are no claims,
actions, suits, proceedings or investigations pending or, to Parent's
knowledge, threatened against Parent or any of its Subsidiaries, or any
of their respective properties, before or by any Governmental Entity. As
of the date hereof, neither Parent nor any of its Subsidiaries nor any of
their respective properties is or are subject to any order, writ,
judgment, injunction, decree or award having, or which would reasonably
be expected to result in, a Material Adverse Effect on Parent.
(n) Environmental Matters. Except as would not
reasonably be expected to result in a Material Adverse Effect on Parent:
(i) Parent and each of its Subsidiaries comply with all applicable
Environmental Laws, and possess and comply with all applicable
Environmental Permits and all requirements for application, renewal or
modification thereof, as well as air emission allowances and air
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emissions reduction credits required under such laws to operate as it
presently operates; (ii) to the knowledge of Parent, there are no
Materials of Environmental Concern at any current or former assets,
facilities, businesses or properties owned or operated by Parent or any
of its Subsidiaries, under circumstances that are reasonably likely to
result in liability of Parent or any Subsidiary under any applicable
Environmental Law; (iii) neither Parent nor any of its Subsidiaries has
received any written notification alleging that it is liable for, or has
received any request for information pursuant to section 104(e) of the
Comprehensive Environmental Response, Compensation and Liability Act or
similar state statute or any other similar applicable Environmental Laws,
concerning any release or threatened release of Materials of
Environmental Concern at any location; (iv) to the knowledge of Parent,
no capital expenditures will be required to achieve or maintain
compliance with Environmental Laws; and (v) to the knowledge of Parent,
neither Parent nor any of its Subsidiaries has contractually assumed or
retained from any person or entity (including any Governmental Entity),
liability for any matters arising under or pursuant to any Environmental
Laws.
(o) Vote Required. Assuming the accuracy of the
representations and warranties set forth in Section 3.1(s), the
affirmative vote of (i) the holders of 66 2/3% of outstanding shares or
Parent Common Stock voting separately as a class and (ii) a majority of
all outstanding shares of Parent Common Stock and Parent Preferred Stock,
voting together as a single class (the "Required Parent Vote") is the
only vote of the holders of any class or series of Parent capital stock
necessary to adopt this Agreement and approve the transactions
contemplated hereby.
(p) No Conectiv Capital Stock. Neither Parent nor
any of its Subsidiaries own or hold directly or indirectly any shares of
Conectiv Stock, or any options, warrants or other rights to acquire any
shares of Conectiv Stock, or in each case, any interests therein, other
than pursuant to the Mergers as contemplated by this Agreement.
(q) HoldCo. HoldCo has not conducted any
activities other than in connection with the organization of HoldCo, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. Other than Merger Sub A and Merger Sub
B, HoldCo has no Subsidiaries.
(r) Sufficient Funds. Parent and HoldCo will have
at the Effective Time sufficient immediately available funds and
sufficient authorized but unissued shares or treasury shares of HoldCo
Common Stock to consummate the transactions contemplated hereby and to
pay all related fees and expenses.
(s) Insurance. Parent and each of its Subsidiaries
is, and has been continuously since January 1, 1996, insured with
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financially responsible insurers (or maintained self-insurance) in such
amounts and against such risks and losses as are customary for companies
conducting the business as conducted by Parent and its Subsidiaries
during such time period.
(t) Intellectual Property. Parent and its
Subsidiaries have all right, title and interest in, or a valid and
binding license to use, all Intellectual Property material to the conduct
of the business of Parent and its Subsidiaries taken as a whole. Neither
Parent nor any Subsidiary of Parent is in default (or with the giving of
notice or lapse of time or both, would be in default) under any license
to use such Intellectual Property and, to the knowledge of Parent, such
Intellectual Property is not being infringed by any third party, and
neither Parent nor any Subsidiary of Parent is infringing any
Intellectual Property of any third party, except for such defaults and
infringements which would not reasonably be expected to result in a
Material Adverse Effect on Parent.
(u) Board Approval. The Board of Directors of
Parent, by resolutions duly adopted a meeting duly called and held and
not subsequently rescinded or modified in any way (the "Parent Board
Approval"), has duly (i) determined that this Agreement and the Mergers
are advisable and in the best interests of Parent and its stockholders,
(ii) approved this Agreement and the Mergers and (iii) recommended that
the stockholders of Parent adopt this Agreement and the Mergers. Assuming
the accuracy of the representations and warranties set forth in Section
3.1(s), the Parent Board Approval constitutes approval of this Agreement
and the Mergers for purposes of Sections 13.1-725 through 13.1-727 of the
VSCA.
(v) Rights Plan. Parent does not have a
stockholders rights agreement, shareholders rights plan or any other
similar plan or agreement.
(w) Takeover Statutes. No "fair price,"
"moratorium," "control share acquisition" or other similar antitakeover
statute or regulation enacted under state or federal laws in the United
States (with the exception of Sections 13.1-725 through 13.1-727 of the
VSCA) applicable to Parent is applicable to the Parent Merger or the
other transactions contemplated hereby (other than the Conectiv Merger).
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Covenants of Conectiv. During the period from
the date of this Agreement and continuing until the Effective Time,
Conectiv agrees as to itself and its Subsidiaries that (except as
expressly contemplated or permitted by this Agreement or as otherwise
indicated on the Conectiv Disclosure Schedule or as required by a
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Governmental Entity of competent jurisdiction or by applicable law, rule
or regulation, or to the extent that Parent shall otherwise consent in
writing (which consent not to be unreasonably delayed or withheld)):
(a) Ordinary Course of Business. Conectiv shall,
and shall cause its Subsidiaries to, carry on its and their
businesses in the usual, regular and ordinary course consistent
with past practice and use all commercially reasonable efforts
to preserve intact their present business organizations and
goodwill, preserve the goodwill and relationships with
customers, suppliers and others having business dealings with
them and, subject to prudent management of their workforces and
on-going programs currently in force, keep available the
services of their present officers and employees, to the end
that their goodwill and ongoing businesses shall not be impaired
in any material respect at the Effective Time. Conectiv shall
not, and shall not permit any of its Subsidiaries to, (i) enter
into a new line of business involving any material investment of
assets or resources or any material exposure to liability or
loss (including, without limitation, any loans or capital
contributions to, and the undertaking of any guarantees in favor
of or any "keep well" or other agreements to maintain the
financial condition of, another person), or (ii) make
investments (including without limitation any loans or capital
contributions to, and the undertaking of any guarantees in favor
of or any "keep well" or other agreements to maintain the
financial condition of, another person) in excess of $25 million
in the aggregate, except investments in Subsidiaries and except
investments in the ordinary course of business.
(b) Dividends. Conectiv shall not, and shall not
permit any of its Subsidiaries to: (i) declare or pay any
dividends on or make other distributions in respect of any of
their capital stock other than (A) by a wholly owned Subsidiary
or by a partially owned Subsidiary (provided that Conectiv or a
Subsidiary of Conectiv receives its proportionate share of such
dividend or distribution), (B) dividends required to be paid on
any preferred stock of Subsidiaries in accordance with their
terms, (C) regular dividends on Conectiv Common Stock with usual
record and payment dates at a rate not in excess of $0.22 per
share per quarter, (D) regular dividends on the Class A Stock
with usual record and payment dates (1) at a rate not in excess
of $0.80 per share per quarter for the period through and
including March 31, 2001 and (2) thereafter, at an annual rate
up to (x) 90% of the "Company Net Income Attributable to the
Atlantic Utility Group" (as defined in the certificate of
incorporation of Conectiv) multiplied by (y) the "Outstanding
Atlantic Utility Fraction" (as defined the certificate of
incorporation of Conectiv) and (E) with respect to any quarter
in which the Effective Time occurs, a special dividend with
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respect to each of Conectiv Common Stock and the Class A Stock
in an amount consisting of the pro rata portion of the dividend
permitted under clause (C) or (D), as applicable, for the period
from and including the first day of such quarter through, but
not including, the day of the Effective Time; (ii) split,
combine or reclassify any of their 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 (iii) redeem, repurchase or otherwise acquire
any shares of their capital stock other than (x) redemptions,
repurchases and other acquisitions of shares of capital stock in
the ordinary course of business consistent with past practice
including, without limitation, (1) repurchases, redemptions and
other acquisitions in connection with the administration of
Benefit Plans and dividend reinvestment plans as in effect on
the date hereof in the ordinary course of the operation of such
plans consistent with past practice, (2) redemptions, purchases
or acquisitions required by the terms of any series of preferred
stock of any Subsidiary or (3) in connection with the refunding
of the preferred stock of any Subsidiary through the issuance of
additional preferred stock of any Subsidiary or indebtedness
either at its stated maturity or at a lower cost of funds
(calculating such cost on an aggregate after-tax basis) or
through the incurrence of indebtedness permitted under Section
4.1(g) and (y) intercompany acquisitions of capital stock.
(c) Issuance of Securities. Conectiv shall not,
and shall not permit any of its Subsidiaries to, issue, deliver
or sell, or authorize or propose the issuance, delivery or sale
of, any shares of their capital stock of any class or any
securities convertible into or exchangeable for, or any rights,
warrants or options to acquire, any such shares or convertible
or exchangeable securities, except for (v) in connection with
the refunding of the preferred stock of any Subsidiary through
the issuance of additional preferred stock of any Subsidiary
either at its stated maturity or at a lower cost of funds
(calculating such cost on an aggregate after-tax basis), (w) the
issuance of common stock pursuant to the dividend reinvestment
plans of Conectiv as in effect on the date hereof in the
ordinary course of the operation of such plans, (x) the issuance
of common stock, or stock options, stock appreciation or similar
rights, as the case may be, pursuant to Benefit Plans of
Conectiv as in effect on the date hereof in the ordinary course
of the operation of such plans not to exceed the amounts set
forth in Section 4.1(c) of the Conectiv Disclosure Schedule, (y)
the issuance by a Subsidiary of shares of its capital stock to
its parent and (z) any issuance required under the Rights Plan.
(d) Charter Documents. Conectiv shall not amend or
propose to amend its certificate of incorporation or its bylaws.
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(e) Acquisitions. Except (i) for acquisitions not
exceeding $25 million in the aggregate during any fiscal year,
or more than $50 million in the aggregate during the period from
the date of this Agreement to the Effective Time, or (ii) in the
ordinary course of business consistent with past practice,
Conectiv shall not, and shall not permit any of its Subsidiaries
to, acquire or agree or publicly propose 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,
or otherwise acquire or agree to acquire any material amount of
assets.
(f) No Dispositions. Other than (i) dispositions
not exceeding $50 million during any fiscal year, (ii)
dispositions publicly announced prior to the date hereof or
pursuant to agreements in effect on the date hereof, (iii)
dispositions of Conectiv Communications, Inc., Conectiv Thermal
Systems, Inc., Petron Oil Corp. and Conectiv Solutions, LLC,
(iv) dispositions of investments made in or by Enertech Capital
Partners I or Enertech Capital Partners II, (v) dispositions of
assets of Xxxxxx Forest Power (Burney, CA), Vineland
Cogeneration, L.P. (Vineland, NJ), Pedricktown Cogeneration,
L.P. (Pedricktown, NJ), SEGS IV (Xxxxxx Junction, CA) and Hydro
Kennebec (Xxxxxxx, ME), (vi) disposition of transmission and
distribution assets in Vineland, New Jersey or (vii) in the
ordinary course of business consistent with past practice,
Conectiv shall not, and shall not permit any of its Subsidiaries
to, sell, lease, license, encumber or otherwise dispose of, any
material amount of assets. In addition to the above, Conectiv
shall provide to Parent copies of all agreements which Conectiv
or its Subsidiaries propose to enter into in connection with any
disposition described in this paragraph (f) which is material to
Conectiv and its Subsidiaries taken as a whole and shall confer
and consult with Parent prior to execution of any such
agreements which provide for material ongoing obligations on
behalf of Conectiv or its Subsidiaries.
(g) Indebtedness. Conectiv shall not, and shall
not permit any of its Subsidiaries to, incur or guarantee any
indebtedness (including any debt borrowed or guaranteed or
otherwise assumed, including without limitation the issuance of
debt securities or warrants or rights to acquire debt) or enter
into any "keep well" or other agreement to maintain the
financial condition of another person or enter into arrangements
having the effect of any of the foregoing other than (i) short-
term indebtedness in the ordinary course of business consistent
with past practice, (ii) long-term indebtedness in connection
with the refinancing of existing indebtedness either at its
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stated maturity or at a lower cost of funds (calculating such
cost on an aggregate after-tax basis), (iii) long-term
indebtedness in connection with the refunding of the preferred
stock of any Subsidiary either at its stated maturity or at a
lower cost of funds (calculated as aforesaid), (iv) as
contemplated in the Conectiv SEC Reports filed prior to the date
of this Agreement pursuant to the 1935 Act, (v) pursuant to
securitizations to the extent permitted by the applicable
Governmental Entity, (vi) to finance acquisitions or capital
expenditures permitted by Sections 4.1(e) or 4.1(h), (vii) such
indebtedness, guarantees and agreements among Conectiv and its
Subsidiaries and (viii) additional indebtedness in any fiscal
year not exceeding $100 million.
(h) Capital Expenditures. Conectiv shall not, and
shall not permit any of its Subsidiaries to, make any capital
expenditures, other than, with respect to ACE and DP&L, (i)
capital expenditures incurred in connection with the
construction of new facilities, (ii) capital expenditures to
repair or replace facilities destroyed or damaged due to
casualty or accident (whether or not covered by insurance) and
(iii) capital expenditures required to provide or maintain
reliable electric and natural gas service and, with respect to
all other Subsidiaries of Conectiv those which do not exceed, in
the aggregate, capital expenditures provided for in each
category in the budget set forth in Section 4.1(h) of the
Conectiv Disclosure Schedule.
(i) Compensation and Benefits. Conectiv shall not,
and shall not permit any of its Subsidiaries to, enter into,
adopt or amend, or increase the amount or accelerate the payment
or vesting of any benefit or amount payable under, any Benefit
Plan or employee benefit plan or other arrangement that would be
a Benefit Plan of Conectiv or its Subsidiaries if it were in
effect as of the date of this Agreement, or increase the
compensation or benefits of any director, employee or officer of
Conectiv or any of its Subsidiaries, (x) except for any of the
foregoing required by a Benefit Plan of Conectiv or collective
bargaining agreement, (y) except for normal (including
incentive) increases in the ordinary course of business that, in
the aggregate, do not result in a material increase in benefits
or compensation expense to Conectiv and its Subsidiaries taken
as a whole, and (z) except in the case of new hires and
promotions; provided, however, that the Personnel and
Compensation Committee of Conectiv shall be permitted to consult
with participants in the Conectiv Supplemental Retirement Plan
and the Conectiv Deferred Compensation Plan, and to determine
whether benefits under such plans will be distributed in one
lump sum or in accordance with the distribution options
previously selected by each participant upon a participant's
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termination of employment or service for any reason following
the Effective Time.
(j) Accounting. Conectiv shall not, and shall not
permit any of its Subsidiaries to, make any changes in their
accounting methods, except as permitted by GAAP.
(k) Rate Matters; 1935 Act. (i) To the extent
permitted by law, except for currently pending rate filings, any
fuel cost recovery applications, routine or administrative
filings and informational filings in connection with market-
based rates, Conectiv shall, and shall cause its Subsidiaries
to, discuss with Parent prior to initiating any proposed changes
in its or its Subsidiaries' rates or charges (other than cost
pass-through rate adjustment clauses), standards of service or
regulatory accounting from those in effect on the date hereof
and consult with Parent prior to making any filing (or any
amendment thereto), or effecting any agreement, commitment,
arrangement or consent with any Governmental Entity, whether
written or oral, formal or informal, with respect thereto, and
Conectiv and its Subsidiaries shall not make any filing to
change their rates or charges on file with the public utility
commission of any state or FERC that would reasonably be
expected to result in a Material Adverse Effect on Conectiv.
Notwithstanding the foregoing, neither Conectiv nor any of its
Subsidiaries shall be required to consult or have discussions
with Parent prior to entering into arrangements with customers
in the ordinary course of business consistent with past
practice.
(ii) To the extent permitted by law, Conectiv shall,
and shall cause each of its Subsidiaries to, deliver to Parent a
copy of each filing or agreement related to generally applicable
rates, charges, standards of service, accounting or regulatory
policy which could lead to a material change in any of those
areas at least four days prior to the filing or execution
thereof so that Parent may comment thereon. Conectiv shall, and
shall cause its Subsidiaries to, make all such filings only in
the ordinary course of business (i) consistent with past
practice or (ii) as required by a Governmental Entity or
regulatory agency with appropriate jurisdiction or under
existing settlement agreements to which Conectiv is a party.
(iii) Conectiv shall not, and shall not permit any of
its Subsidiaries to, except as required or contemplated by this
Agreement, engage in any activities which would cause a change
in its status, or that of its Subsidiaries, under the 1935 Act;
provided that, in any event, such Subsidiaries shall be
permitted to obtain "exempt wholesale generator" status under
the 1935 Act.
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(l) Insurance. Conectiv shall, and shall cause its
Subsidiaries, to maintain with financially responsible insurance
companies (or through self-insurance not inconsistent with such
party's past practice), insurance in such amounts and against
such risks and losses as are customary for companies engaged in
the utility industry and such other business as conducted by
Conectiv and its Subsidiaries employing methods of generating
electric power and fuel sources similar to those methods
employed and fuels used by Conectiv and its Subsidiaries.
(m) Tax-Free Qualification. Conectiv shall not,
and shall not permit any of its Subsidiaries to, take any action
that would prevent or impede the Mergers, taken together, from
qualifying as a transaction described in Section 351 of the
Code.
(n) Rights Plan. Conectiv shall not amend, modify
or waive any provision of the Rights Plan in any way that is
materially adverse to Parent, and shall not take any action to
redeem the Rights or render the Rights inapplicable to any
transaction in any way that is materially adverse to Parent,
other than, in each case, to permit another transaction that
Conectiv Board has determined is a Superior Proposal (as defined
in Section 8.11), to be consummated after termination of this
Agreement.
(o) Affiliate Letter and Agreements. On or prior
to the Closing Date, Conectiv will deliver to Parent a letter
(the "Conectiv Affiliate Letter") identifying all persons who
are "affiliates" of Conectiv for purposes of Rule 145 under the
Securities Act ("Rule 145"). On or prior to the Closing Date,
Conectiv will use all reasonable efforts to cause each person
identified as an "affiliate" in the Conectiv Affiliate Letter to
deliver a written agreement (an "Affiliate Agreement") in
connection with restrictions on affiliates under Rule 145.
(p) Third Party Standstill Agreements. Subject to
Section 5.5, during the period from the date of this Agreement
through the Effective Time, neither Conectiv nor any of its
Subsidiaries shall terminate, amend, modify or waive any
provision of any standstill agreement or any standstill
provisions of other agreements to which it is a party. Subject
to Section 5.5, during such period, Conectiv shall take all
appropriate steps to enforce the provisions of any such
agreement.
(q) Contracts. Conectiv shall not, and Conectiv
shall not permit any of its Subsidiaries to, except in the
ordinary course of business, modify, amend or terminate any
contract or agreement which Conectiv or any Subsidiary of
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Conectiv is a party (other than a modification, amendment or
termination of any agreement identified in Section 8.11(e)(iv)
of the Conectiv Disclosure Schedule that would not reasonably be
expected to result in a Material Adverse Effect on Conectiv),
that is material to Conectiv and its Subsidiaries taken as a
whole, to waive, release or assign any material rights to claims
therein, or agree to any provisions thereof which would impede
the ability of Conectiv to consummate the Mergers, or in respect
to which the Mergers would constitute a default, or would result
in the Mergers triggering a right of termination by any
unaffiliated parties. Conectiv will confer and consult with
Parent before entering into any new contract or agreement
material to Conectiv and its Subsidiaries taken as a whole.
(r) No Breach, Etc. Conectiv shall not, nor shall
Conectiv permit any of its Subsidiaries to, take any action that
would or is reasonably likely to result in the conditions in
Sections 6.2(a) and (b) not being satisfied.
(s) Environmental Matters. (i) Conectiv shall, and
to the extent applicable shall cause its Subsidiaries to, use
reasonable best efforts to obtain, prior to the Closing Date,
from the New Jersey Department of Environmental Protection
("NJDEP") a written determination that the New Jersey Industrial
Site Recovery Act (N.J. Stat. Xxx. Sec. 13:K1-6 et seq.)
("ISRA") does not apply to the transactions contemplated by this
Agreement. In the event that NJDEP determines that ISRA does
apply, then Conectiv shall use its reasonable best efforts, or
shall cause its Subsidiaries to use their reasonable best
efforts, to obtain from the NJDEP, prior to the Closing Date,
either a letter of "no further action" or a "Negative
Declaration" or, alternatively, execute a Remediation Agreement
with the NJDEP on commercially reasonable terms, which
Remediation Agreement shall be implemented by Conectiv and/or
its Subsidiaries at their sole cost and expense.
(ii) Except as would not reasonably be expected to
result in a Material Adverse Effect on Conectiv: (A) Conectiv
shall, and shall cause its Subsidiaries to, promptly notify
Parent of any information requests by or any communications with
or any enforcement action by Governmental Entities with respect
to the operation or maintenance or improvement of any currently
or formerly owned or operated assets, properties, facilities or
business that may give rise to any allegation of noncompliance
with Environmental Law or violation of Environmental Permit, and
(B) with respect to such noncompliance with Environmental Law or
any violation of Environmental Permit, neither Conectiv nor any
of its Subsidiaries shall enter into any settlement or agreement
with any third parties or Governmental Entities or pay any
judgment or fines or agree to any penalties.
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(t) Tax Matters. Neither Conectiv nor any of its
Subsidiaries shall, other than in the ordinary course of
business and consistent with its past practices, (i) make or
rescind any material express or deemed election relating to
Taxes, (ii) settle or compromise any material claim, action,
suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to Taxes, or (iii) change in any
material respect any of its methods of reporting income or
deductions for federal income tax purposes from those employed
in the preparation of its federal income tax return for the
taxable year ending December 31, 1999; provided, that Conectiv
and its Subsidiaries shall keep Parent reasonably informed and
timely provide Parent with copies of all relevant documents and
consult with Parent on matters described in the foregoing
clauses (i) through (iii).
(u) Tax Rulings. Neither Conectiv nor any of its
Subsidiaries shall make a request for a Tax Ruling (or submit
any material in connection with such Tax Ruling) without first
consulting with Parent (including providing Parent with advance
copies of and reasonable opportunity (not less than ten (10)
Business Days) to review and comment on any submissions to any
Tax authority before such submissions are made) and shall inform
Parent as to the status of the Tax Ruling and communications
with such Tax authority.
(v) Certain Consents. If requested by Parent,
Conectiv shall use reasonable best efforts to obtain the
consents identified in Section 3.1(d)(ii) of the Conectiv
Disclosure Schedule (provided that such consents and any
obligations thereunder shall not be effective until the
Closing).
4.2. Covenants of Parent. During the period from
the date of this Agreement and continuing until the Effective Time,
Parent agrees as to itself and its Subsidiaries that (except as expressly
contemplated or permitted by this Agreement or as otherwise indicated on
the Parent Disclosure Schedule or as required by a Governmental Entity of
competent jurisdiction or by applicable law, rule or regulation, or to
the extent that Conectiv shall otherwise consent in writing (which
consent not to be unreasonably delayed or withheld)):
(a) Ordinary Course of Business. Parent shall and
shall cause its Subsidiaries to, carry on their respective
existing businesses in the usual, regular and ordinary course
and use all commercially reasonable efforts to preserve intact
their respective present business organizations and goodwill,
preserve the goodwill and relationships with customers,
suppliers and others having business dealings with them and,
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subject to prudent management of their workforces and on-going
programs currently in force, keep available the services of
their present officers and employees, to the end that their
goodwill and ongoing businesses shall not be impaired in any
material respect at the Effective Time.
(b) Dividends. Parent shall not, and shall not
permit any of its Subsidiaries to: (i) declare or pay any
dividends on or make other distributions in respect of any of
their capital stock other than (A) by a wholly owned Subsidiary
or by a partially owned Subsidiary (provided that Parent or a
Subsidiary of Parent receives its proportional share of such
dividend or distribution), (B) dividends required to be paid on
any preferred stock of Subsidiaries in accordance with their
terms, (C) regular quarterly dividends on Parent Common Stock
with usual record and payment dates at an annual rate not
greater than $1.00 per share, and (D) with respect to any
quarter in which the Effective Time occurs, a special dividend
with respect to Parent Common Stock in an amount consisting of
the pro rata portion of the dividend permitted under clause (C),
for the period from and including the first day of such quarter
through, but not including, the day of the Effective Time; (ii)
split, combine or reclassify any of their 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 (iii) redeem, repurchase or otherwise acquire
any shares of their capital stock other than (x) redemptions,
repurchases and other acquisitions of shares of capital stock in
the ordinary course of business consistent with past practice
including, without limitation, (1) repurchases, redemptions and
other acquisitions in connection with the administration of
Benefit Plans and dividend reinvestment plans as in effect on
the date hereof in the ordinary course of the operation of such
plans, (2) redemptions, purchases or acquisitions permitted by
the respective terms of any series of preferred stock or (3) in
connection with the refunding of the preferred stock through the
issuance of additional preferred stock or indebtedness either at
its stated maturity or at a lower cost of funds (calculating
such cost on an aggregate after-tax basis) or through the
incurrence of indebtedness permitted under Section 4.2(g) and
(y) intercompany acquisitions of capital stock.
(c) Issuance of Securities. Parent shall not, and
shall not permit any of its Subsidiaries to, issue, deliver or
sell, or authorize or propose the issuance, delivery or sale of,
any shares of their capital stock of any class or any securities
convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares or convertible or
exchangeable securities, except for (x) those so issued,
delivered or sold for consideration as determined in good faith
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by the Board of Directors of Parent, (y) the issuance of common
stock or stock options, stock appreciation or similar rights, as
the case may be, pursuant to Benefit Plans or dividend
reinvestment plans of Parent as in effect on the date hereof in
the ordinary course of the operation of such plans and (z) the
issuance by a Subsidiary of shares of its capital stock to its
parent.
(d) Charter Documents. Parent shall not amend or
propose to amend its articles of incorporation or its bylaws in
a manner that would reasonably be expected to materially impede
or materially delay the Mergers.
(e) Acquisitions. Parent shall not, and shall not
permit any of its Subsidiaries to, acquire or agree or publicly
propose 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
which is inconsistent with the permitted business activities of
a registered holding company under the 1935 Act.
(f) No Dispositions. Other than (i) dispositions
not exceeding $200 million during any fiscal year, (ii)
dispositions publicly announced prior to the date hereof or
pursuant to agreements in effect on the date hereof or (iii) in
the ordinary course of business consistent with past practice,
Parent shall not, and shall not permit any of its Subsidiaries
to, sell, lease, license, encumber or otherwise dispose of, any
material amount of assets.
(g) Indebtedness. Parent shall not, and shall not
permit any of its Subsidiaries to, incur or guarantee any
indebtedness (including any debt borrowed or guaranteed or
otherwise assumed, including without limitation the issuance of
debt securities or warrants or rights to acquire debt) or enter
into any "keep well" or other agreement to maintain the
financial condition of another person or enter into arrangements
having the effect of any of the foregoing, to the extent any
such indebtedness, agreements or arrangements would cause Parent
to fail to maintain at least a "Baa2" rating by Xxxxx'x
Investors Service and a "BBB" rating by Standard and Poor's
Corporation.
(h) Accounting. Parent shall not, and shall not
permit any of its Subsidiaries to, make any changes in their
accounting methods, except as permitted by GAAP.
(i) 1935 Act. Parent shall not, and shall not
permit any of its Subsidiaries to, except as required or
contemplated by this Agreement, engage in any activities which
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would cause a change in its status, or that of its Subsidiaries,
under the 1935 Act.
(j) Insurance. Parent shall, and shall cause its
Subsidiaries, to maintain with financially responsible insurance
companies (or through self-insurance not inconsistent with such
party's past practice), insurance in such amounts and against
such risks and losses as are customary for companies engaged in
the utility industry and such other businesses as conducted by
Parent and its Subsidiaries employing methods of generating
electric power and fuel sources similar to those methods
employed and fuels used by Parent and its Subsidiaries.
(k) Tax-Free Qualification. Parent shall not, and
shall not permit any of its Subsidiaries to, take any action
that would prevent or impede the Mergers, taken together, from
qualifying as a transaction described in Section 351 of the
Code.
(l) Certain Other Actions. Parent shall not, and
shall not permit its Subsidiaries to, (i) acquire or agree to
acquire by merger or consolidation or similar transaction with,
or by purchasing a substantial portion of the assets of or
equity in, any business or any corporation, partnership,
association or other business organization or division thereof
or (ii) enter into or agree to enter into new lines of business,
encumber shares of their capital stock or take any other action,
if the taking of any such action referred to in clause (i) or
(ii) could reasonably be expected to (A) impose any material
delay in the obtaining of, or materially increase the risk of
not obtaining, any authorizations, consents, orders,
declarations or approvals of any Governmental Entity necessary
to consummate the Mergers or the expiration or termination of
any applicable waiting period, (B) materially increase the risk
of any Governmental Entity entering an order prohibiting the
consummation of the Mergers or materially increase the risk of
not being able to remove any such order on appeal or otherwise
or (C) otherwise materially delay or impede the consummation of
the Mergers.
(m) Activities. Prior to the Effective Time,
Parent shall, and shall cause HoldCo, Merger Sub A and Merger
Sub B to, (A) perform its respective obligations under this
Agreement in accordance with its terms and (B) not engage,
directly or indirectly, in any business or activity of the type
or kind, and not enter into any agreement or arrangement with
any person, or be subject to or bound to any obligation or
undertaking, which is not consistent with this Agreement.
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(n) No Breach, Etc. Parent shall not, nor shall
Parent permit any of its Subsidiaries to, take any action that
would or is reasonably likely to result in the conditions set
forth in Sections 6.3(a) and (b) not being satisfied.
4.3. Advice of Changes; Governmental Filings.
Conectiv shall (a) confer with Parent on a regular and frequent basis and
(b) report to Parent (to the extent permitted by law or regulation or any
applicable confidentiality agreement) on operational matters. Conectiv
and Parent shall file all reports required to be filed by each of them
with the SEC (and all other Governmental Entities) between the date of
this Agreement and the Effective Time and shall (to the extent permitted
by law or regulation or any applicable confidentiality agreement) deliver
to the other party copies of all such reports, announcements and
publications promptly after the same are filed. Subject to applicable
laws relating to the exchange of information, each of Conectiv and Parent
shall have the right to review in advance, and will consult with the
other with respect to, all the information relating to the other party
and each of their respective Subsidiaries, which appears in any filings,
announcements or publications made with, or written materials submitted
to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto agrees to act reasonably and as
promptly as practicable. Each party agrees that, to the extent
practicable and as timely as practicable, it will consult with, and
provide all appropriate and necessary assistance to, the other party with
respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary
or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other party apprised of the status
of matters relating to completion of the transactions contemplated
hereby.
4.4. Transition Planning. Conectiv and Parent shall
each appoint one or more representatives to a committee that will be
responsible for coordinating transition planning and implementation
relating to the Mergers.
4.5. Control of Other Party's Business. Nothing
contained in this Agreement shall be deemed to give Conectiv, directly or
indirectly, the right to control or direct Parent's operations prior to
the Effective Time. Nothing contained in this Agreement shall be deemed
to give Parent, directly or indirectly, the right to control or direct
Conectiv's operations prior to the Effective Time. Prior to the
Effective Time, each of Conectiv and Parent shall exercise, consistent
with the terms and conditions of this Agreement, complete control and
supervision over its respective operations.
4.6. Payment of Dividends. Conectiv, HoldCo and Parent
shall coordinate with each other the declaration, setting of record dates
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and payment of dividends on capital stock of Conectiv or any of
Conectiv's Subsidiaries so that holders of capital stock of Conectiv or
any of Conectiv's Subsidiaries do not receive dividends on both capital
stock of Conectiv or any of Conectiv's Subsidiaries and HoldCo Common
Stock received in the Mergers in respect of any calendar quarter or fail
to receive a dividend on either capital stock of Conectiv or any of
Conectiv's Subsidiaries and HoldCo Common Stock received in the Mergers
in respect of any calendar quarter. Nothing in this Section 4.6 shall
prevent or limit the ability of the parties to pay the dividend referred
to in Section 4.1(b)(i)(E) or 4.2(b)(i)(D).
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. Preparation of Proxy Statement; Stockholders
Meeting. (a) As promptly as practicable following the date hereof,
the parties shall prepare and file with the SEC preliminary proxy
materials which shall constitute the Joint Proxy Statement/Prospectus
(such proxy statement/prospectus, and any amendments or supplements
thereto, the "Proxy Statement/Prospectus") and a registration statement
on Form S-4 with respect to the issuance of HoldCo Common Stock in
connection with the Mergers (the "Form S-4"). The Proxy
Statement/Prospectus will be included in the Form S-4 as HoldCo's
prospectus. The Form S-4 and the Proxy Statement/Prospectus shall comply
as to form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act and the rules and regulations
thereunder. Each of Parent and Conectiv shall use reasonable best efforts
to have the Form S-4 cleared by the SEC as promptly as practicable after
filing with the SEC and to keep the Form S-4 effective as long as is
necessary to consummate the Mergers. Each party shall, as promptly as
practicable after receipt thereof, provide copies of any written comments
received from the SEC to the other party with respect to the Proxy
Statement/Prospectus and advise the other party of any oral comments with
respect to the Proxy Statement/Prospectus received from the SEC.
Parent agrees that none of the information supplied or to
be supplied by Parent for inclusion or incorporation by reference in the
Proxy Statement/Prospectus and each amendment or supplement thereto, at
the time of mailing thereof and at the time of the Parent and the Conectiv
Stockholders Meetings (as defined below), will contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Conectiv agrees
that none of the information supplied or to be supplied by Conectiv for
inclusion or incorporation by reference in the Proxy Statement/Prospectus
and each amendment or supplement thereto, at the time of mailing thereof
and at the time of the Parent and the Conectiv Stockholders Meetings,
will contain an untrue statement of a material fact or omit to state a
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material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. For purposes of the foregoing, it is understood
and agreed that information concerning or related to Parent or HoldCo
will be deemed to have been supplied by Parent and information concerning
or related to Conectiv shall be deemed to have been supplied by Conectiv.
Parent will provide Conectiv with a reasonable opportunity to review and
comment on any amendment or supplement to the Proxy Statement/Prospectus
prior to filing such with the SEC, and will provide Conectiv with a copy
of all such filings made with the SEC. No amendment or supplement to the
information supplied by Conectiv for inclusion in the Proxy Statement/Prospectus
shall be made without the approval of Conectiv, which approval shall not
be unreasonably withheld or delayed.
(b) Parent and Conectiv, as promptly as
practicable following the execution of this Agreement, shall each duly
call, give notice of, convene and hold a meeting of its respective
stockholders (the "Conectiv Stockholders Meeting" and the "Parent
Stockholders Meeting") for the purpose of obtaining the Required Conectiv
Vote and the Required Parent Vote with respect to the transactions
contemplated by this Agreement, shall each take all lawful action to
solicit proxies in favor of the adoption of this Agreement by the
Required Conectiv Vote and the Required Parent Vote and the Board of
Directors of each party shall recommend adoption of this Agreement by the
stockholders of such party; provided that, the Board of Directors of
Conectiv shall not be required to solicit such proxies and shall not be
required to make, or may withdraw, modify or change, such recommendation
if it shall have determined in good faith, after consultation with
outside legal counsel, that such action is reasonably necessary for such
Board of Directors to act in a manner consistent with its fiduciary
duties under applicable law.
5.2. HoldCo Board of Directors. At or prior
to the Effective Time, the Board of Directors of HoldCo will take all
action necessary to elect, effective immediately following the Effective
Time, to such Board of Directors at least two persons who were members of
the Conectiv Board of Directors prior to the Effective Time, chosen by
the mutual agreement of Parent and Conectiv.
5.3. Access to Information. Upon reasonable
notice, (i) Conectiv shall (and shall cause its Subsidiaries to) afford
to the officers, employees, accountants, counsel, financial advisors and
other representatives of Parent reasonable access during normal business
hours, during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and personnel
(including Conectiv's environmental, health and safety personnel) and
(ii) Parent shall and shall cause its Subsidiaries to, afford to the
officers, employees and accountants, counsel, financial advisors and
other representatives of Conectiv, reasonable access to senior executives
of Parent for the purpose of discussing Parent's business (with
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reasonable access to the documents related thereto) during the period
prior to the Effective Time. Each party shall (and shall cause its
Subsidiaries to) furnish promptly to the other party (a) a copy of each
report, schedule, registration statement and other document filed,
published, announced or received by it during such period pursuant to the
requirements of Federal or state securities laws, as applicable (other
than documents which such party is not permitted to disclose under
applicable law), and (b) consistent with its legal obligations, all other
information concerning its business, properties and personnel as such
other party may reasonably request (including Tax Returns and related Tax
information); provided, however, that either party may restrict the
foregoing access to the extent that (i) a Governmental Entity requires
such party or any of its Subsidiaries to restrict access to any
properties or information or (ii) any law, treaty, rule or regulation of
any Governmental Entity applicable to such party requires such party or
its Subsidiaries to restrict access to any properties or information. The
parties will hold any such information which is non-public in confidence
to the extent required by, and in accordance with, the provisions of the
letters dated October 6, 2000 and January 19, 2001 between Conectiv and
Parent (the "Confidentiality Agreements"). No investigation conducted
pursuant to this Section 5.3 shall affect or be deemed to modify any
representation or warranty made in this Agreement.
5.4. Reasonable Best Efforts. (a) Subject to the
terms and conditions of this Agreement, each party will, and cause its
respective Subsidiaries to, use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the Mergers and the other transactions contemplated by this
Agreement as soon as practicable after the date hereof. In furtherance and
not in limitation of the foregoing, each party hereto agrees to make an
appropriate filing (and to share equally in the filing fees) of a Notification
and Report Form pursuant to the HSR Act with respect to the transactions
contemplated hereby at a mutually agreed time and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and to take all other actions necessary to
cause the expiration or termination of the applicable waiting periods under
the HSR Act as soon as practicable.
(b) Each of Parent and Conectiv shall, and
shall cause its respective Subsidiaries to, in connection with the
efforts referenced in Section 5.4(a) to obtain all requisite approvals
and authorizations for the transactions contemplated by this Agreement
under the HSR Act or any other applicable law or regulation, use its best
efforts to (i) make all appropriate filings and submissions with any
Governmental Entity that may be necessary, proper or advisable under
applicable laws or regulations in respect of any of the transactions
contemplated by this Agreement, (ii) cooperate in all respects with each
other in connection with any such filing or submission and in connection
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with any investigation or other inquiry, including any proceeding
initiated by a private party, (iii) promptly inform the other party of
any communication received by such party from, or given by such party to,
the Antitrust Division of the Department of Justice (the "DOJ") or any
other Governmental Entity and of any material communication received or
given in connection with any proceeding by a private party, in each case
regarding any of the transactions contemplated hereby and (iv) permit the
other party to review any communication given by it to, and consult with
each other in advance of any meeting or conference with, the DOJ or any
such other Governmental Entity or, in connection with any proceeding by a
private party, with any other Person, and to the extent permitted by the
DOJ or such other applicable Governmental Entity or other Person, give
the other party the opportunity to attend and participate in such
meetings and conferences.
(c) In furtherance and not in limitation of
the covenants of the parties contained in Sections 5.4(a) and 5.4(b), if
any administrative or judicial action or proceeding, including any
proceeding by a private party, is instituted (or threatened to be
instituted) challenging the transactions contemplated by this Agreement
as violative of any applicable law, regulation or agreement, each of
Parent and Conectiv shall, and shall cause its respective Subsidiaries
to, cooperate in all respects with each other and use its reasonable best
efforts to contest and resist any such action or proceeding and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in
effect and that prohibits, prevents or restricts consummation of the
transactions contemplated by this Agreement. Notwithstanding the
foregoing or any other provision of this Agreement, nothing in this
Section 5.4 shall limit a party's right to terminate this Agreement
pursuant to Section 7.1(b) or 7.1(c) so long as such party has up to then
complied in all respects with its obligations under this Section 5.4.
(d) If any objections are asserted with respect to
the transactions contemplated hereby under any applicable law, regulation
or agreement or if any suit is instituted (or threatened to be instituted)
by any Governmental Entity challenging any of the transactions contemplated
hereby as violative of any applicable law, regulation or agreement, each
of Parent and Conectiv shall, and shall cause its respective Subsidiaries
to, use its reasonable best efforts to resolve any such objections or
challenge as such Governmental Entity may have to such transactions under
such law, regulation or agreement so as to permit consummation of the
transactions contemplated by this Agreement.
5.5. Acquisition Proposals. (a) Conectiv shall immediately
cease any existing discussions or negotiations, if any, with any parties
conducted heretofore with respect to any Acquisition Proposal (as defined
below). Conectiv shall not directly or indirectly, and it shall use its
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reasonable best efforts to cause its officers, directors, employees,
representatives, agents or affiliates, including any investment bankers,
attorneys or accountants retained by Conectiv or any of its Subsidiaries or
affiliates, not to, (i) solicit, initiate, knowingly encourage or otherwise
facilitate any inquiries or the making of any proposal or offer with respect to
a merger, recapitalization, consolidation, business combination, sale of
15% or more of the consolidated assets of Conectiv and its Subsidiaries,
taken as a whole, sale of 15% or more of the shares of capital stock
(including by way of a tender offer, share exchange or exchange offer) of
Conectiv or any of its Subsidiaries (whose assets constitute 15% or more
of the consolidated assets of Conectiv and its Subsidiaries, taken as a
whole) or similar or comparable transactions involving Conectiv or any of
its Subsidiaries, other than the transactions contemplated by this
Agreement and the dispositions permitted under Section 4.1(f) of this
Agreement (any such proposal or offer (other than a proposal or offer
made by Parent or an affiliate thereof or such permitted dispositions)
being herein referred to as an "Acquisition Proposal"), or (ii) engage in
negotiations or discussions concerning, or provide any non-public
information to any Person or entity relating to, any Acquisition
Proposal. Notwithstanding any other provision of this Agreement, the
Board of Directors of Conectiv may furnish information (pursuant to a
customary confidentiality agreement no more favorable, in the aggregate,
to the party receiving information than the Confidentiality Agreement (it
being understood that Conectiv may enter into a confidentiality agreement
without a standstill or with a standstill provision less favorable to
Conectiv if it waives or similarly modifies the standstill provision in
the Confidentiality Agreement)) to, or engage in discussions or
negotiations with, any Person in response to an unsolicited bona fide
written Acquisition Proposal of such Person, if, and only to the extent
that, the Board of Directors of Conectiv determines in good faith, after
consultation with outside legal counsel, that such action is reasonably
necessary for the Board of Directors to act in a manner consistent with
its fiduciary duties under applicable law. Nothing contained in this
Section 5.5 shall prohibit Conectiv or its Board of Directors (i) from
taking and disclosing to its stockholders a position contemplated by Rule
14d-9 and Rule 14e-2(a) promulgated under the Exchange Act or from making
any legally required disclosure to the stockholders of Conectiv with
regard to an Acquisition Proposal or (ii) from taking any actions
contemplated by Section 5.1(b) or 7.1(f).
5.6. Conectiv Stock Options; Employee
Benefits Matters. (a) Options. Conectiv shall take all action
reasonably necessary so that, immediately prior to the Effective Time,
each outstanding stock option issued under the Conectiv Stock Option Plan
shall become vested and exercisable as of the Effective Time and shall,
at the election of the holder thereof, be either (i) canceled and the
holder thereof shall be entitled to receive at the Effective Time from
Conectiv or as soon as practicable thereafter (but in no event later than
10 days after the Effective Time) from HoldCo or Surviving Corporation B
in consideration for such stock option an amount in cash equal to (A) the
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excess, if any, of the Conectiv Common Stock Cash Consideration under
Section 1.8(b)(ii) over the exercise price per share previously subject
to such stock option, less any required withholding taxes, multiplied by
(B) the number of shares of Conectiv Common Stock subject to such stock
option, or (ii) converted into an option to purchase a number of shares
of HoldCo Common Stock (a "Converted Option") equal to the product of the
number of shares of Conectiv Common Stock subject to such stock option
and the number of shares of HoldCo Common Stock equal to the Conectiv
Common Stock Exchange Ratio under Section 1.8(b)(ii) (provided that any
fractional share resulting from such multiplication shall be rounded up
or down to the nearest whole share). The terms and conditions of the
Converted Option shall remain the same as the terms and conditions of the
related stock option of Conectiv, except that the exercise price per
share of each Converted Option shall equal the exercise price per share
of such stock option divided by the number of shares of HoldCo Common
Stock equal to the Conectiv Common Stock Exchange Ratio under Section
1.8(b)(ii) (provided that such exercise price shall be rounded down to
the nearest whole cent). HoldCo shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of HoldCo
Common Stock for delivery upon exercise of the Converted Options. HoldCo
shall use its best efforts to cause the registration of the shares of
HoldCo Common Stock subject to the Converted Options to become effective
as part of the Form S-4, or on the same date as the Form S-4 is declared
effective; and, thereafter, HoldCo shall file one or more registration
statements on appropriate forms with respect to shares of HoldCo Common
Stock subject to the Converted Options and shall use its best efforts to
maintain the effectiveness of such registration statement or registration
statements for so long as the Converted Options remain outstanding.
Conectiv and HoldCo shall take all such steps as may be required to cause
the transactions contemplated by this Section 5.6 and any other
dispositions of Conectiv equity securities (including derivative
securities) or acquisitions of HoldCo equity securities (including
derivative securities) in connection with this Agreement by each
individual who (i) is a director or officer of Conectiv or (ii) at the
Effective Time will become a director or officer of HoldCo to become
exempt under Rule 16b-3 promulgated under the Exchange Act. As soon as
practicable after the Effective Time, HoldCo shall deliver or cause to be
delivered to each holder of Converted Options an appropriate notice
setting forth such holder's rights pursuant to the Conectiv Stock Option
Plan and agreements evidencing the grants of such Converted Options,
after giving effect to the transactions hereunder.
(b) Employment Related Obligations; Employee Benefits.
(i) Obligations of Parent;
Comparability of Benefits. HoldCo shall, or shall
cause Surviving Corporation B to, assume all
employment-related obligations and agreements with
respect to any current and former employees,
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directors and consultants of Conectiv or any of its
Subsidiaries ("Conectiv Employees") (including
without limitation (A) recognizing and, as required
by law, bargaining with, or continuing to recognize
and, as required by law, bargain with, the current
exclusive collective bargaining representatives and
(B) honoring, or continuing to honor, all current
collective bargaining agreements), which
obligations and agreements shall be performed in
accordance with their terms. In addition, each
Benefit Plan listed in Section 3.1(p)(i) of the
Conectiv Disclosure Schedule shall be the
obligation of HoldCo and Surviving Corporation B at
the Effective Time and, for at least two years
thereafter, HoldCo shall, or shall cause Surviving
Corporation B to, provide each Conectiv Employee
with a base salary or wages, as applicable, at
least equal to that provided to such Conectiv
Employee immediately prior to the Effective Time,
and to provide benefits to Conectiv Employees that
are no less favorable than the benefits provided,
in the aggregate, to Conectiv Employees immediately
prior to the Effective Time as set forth in Section
3.1(p)(i) of the Conectiv Disclosure Schedule;
provided, however, that for such two-year (or, if
applicable, such longer) period, each Conectiv
Employee shall receive severance payments and
benefits no less favorable than those provided
under the Conectiv severance plans and policies as
set forth in Section 3.1(p)(i) of the Conectiv
Disclosure Schedule in effect immediately prior to
the Effective Time; provided, further, that nothing
contained in this Agreement shall entitle any
Conectiv Employee to any severance rights that are
more favorable than those provided under the
Conectiv severance plans and policies set forth in
Section 3.1(p)(i) of the Conectiv Disclosure
Schedule, including, without limitation, increased
eligibility to receive severance payments or
benefits or increased level or type of severance
payments or benefits. Notwithstanding the
foregoing, nothing herein shall require the
continuation of any particular Benefit Plan of
Conectiv or prevent the amendment or termination
thereof (subject to the maintenance of the benefits
as provided in the preceding sentence and subject
to satisfaction of any legal duty to bargain with
the collective bargaining representatives of
Conectiv Employees with respect to such matters);
provided, however, that for the two-year period
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following the Effective Time, HoldCo shall, or
shall cause Surviving Corporation B to, subject to
the requirements of this Section 5.6(b)(i), honor
the terms of the Conectiv Supplemental Retirement
Plan ("SERP") and the Conectiv Deferred
Compensation Plan ("DCP"), as well as any action
taken by the Board of Directors or the Personnel
and Compensation Committee of Conectiv with respect
to such plans in accordance with section 4.1(i)
herein, without amendment or termination (except
for the substitution of stock of Parent for stock
of Conectiv). In addition, in the event the
Personnel and Compensation Committee of Conectiv
shall have determined, in its discretion, to
distribute benefits in accordance with the options
previously selected by each participant in each of
the SERP and the DCP upon a participant's
termination of employment or service for any reason
following the Effective Time, Parent, HoldCo or
Surviving Corporation B shall, to the extent
Conectiv has not already done so, contribute cash
to a grantor trust or trusts (maintained by an
institutional trustee independent of the parties
hereto), as soon as practicable after the Effective
Time (but no more than 20 days after the Effective
Time), in an amount not less than the value, as of
the Effective Time, of all participants' benefits
under the SERP and the DCP, respectively, as
determined by Towers Xxxxxx.
(ii) Pre-Existing Limitations;
Deductible; Service Credit. With respect to any
Benefit Plans in which Conectiv Employees
participate after the Effective Time, HoldCo shall,
or shall cause Surviving Corporation B to: (A) to
the extent satisfied or inapplicable under
applicable Benefit Plans of Conectiv immediately
prior to the Effective Time, waive all limitations
as to pre-existing conditions, exclusions and
waiting periods with respect to participation and
coverage requirements applicable to Conectiv
Employees under any Benefit Plan in which such
employees may be eligible to participate after the
Effective Time, (B) provide each Conectiv Employee
with credit for any co-payments and deductibles
paid prior to participation in such Benefit Plan in
satisfying any applicable deductible or out-of-
pocket requirements under any welfare Benefit Plan
in which such employees may be eligible to
participate after the Effective Time, and
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(C) recognize all service except to the extent such
recognition would result in duplication of benefits
(unless such duplication is expressly contemplated
in a plan, agreement or other arrangement of, or
approved by, HoldCo) of Conectiv Employees with
Conectiv and its current and former affiliates for
all purposes (including, without limitation,
purposes of eligibility to participate, vesting
credit, entitlement for benefits and benefit
accrual) in any Benefit Plan in which such
employees may be eligible to participate after the
Effective Time, to the same extent taken into
account under a comparable Benefit Plan of Conectiv
immediately prior to the Effective Time.
(iii) Change of Control. Conectiv
and Parent agree that, for purposes of the Benefit
Plans of Conectiv set forth in Section 3.1(p)(vii)
of the Conectiv Disclosure Schedule (other than the
Delmarva Sub-Plan of the Conectiv Retirement Plan,
as to which, before the Effective Time, subject to
its fiduciary duties under applicable law, the
Board of Directors of DP&L will take all actions
reasonably necessary to ensure that a "change of
control" shall not be deemed to have occurred), the
approval or consummation of the transactions
contemplated by this Agreement, as applicable,
shall constitute a "Change in Control", as
applicable under such Conectiv Benefit Plans.
5.7. Fees and Expenses. Whether or not the
Mergers are consummated, all Expenses (as defined below) incurred in
connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such Expenses, except (a) Expenses
incurred in connection with the filing, printing and mailing of the Proxy
Statement/Prospectus, which shall be shared equally by Parent and
Conectiv, and (b) as provided in Section 7.2 and Section 5.4. As used in
this Agreement, "Expenses" includes all out-of-pocket expenses (including
all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by
a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of
this Agreement and the transactions contemplated hereby, including the
preparation, printing, filing and mailing of the Proxy
Statement/Prospectus and the solicitation of stockholder approvals and
all other matters related to the transactions contemplated hereby.
5.8. Directors' and Officers' Indemnification and
Insurance. (a) After the Effective Time through the sixth anniversary of
the Effective Time, HoldCo and Surviving Corporation B shall, jointly and
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severally, indemnify and hold harmless each present (as of the Effective
Time) or former officer, director or employee of Conectiv and its Subsidiaries
(the "Indemnified Parties"), against all claims, losses, liabilities, damages,
judgments, fines and reasonable fees, costs and expenses (including attorneys'
fees and expenses) incurred in connection with any claim, action, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to (i) the fact that the Indemnified Party
is or was an officer, director or employee of Conectiv or any of its
Subsidiaries or (ii) matters existing or occurring at or prior to the
Effective Time (including this Agreement and the transactions and actions
contemplated hereby), whether asserted or claimed prior to, at or after
the Effective Time, to the fullest extent permitted under applicable law;
provided that no Indemnified Party may settle any such claim without the
prior approval of HoldCo (which approval shall not be unreasonably
withheld or delayed). Each Indemnified Party will be entitled to
advancement of expenses incurred in the defense of any claim, action,
proceeding or investigation from HoldCo or Surviving Corporation B within
ten Business Days of receipt by HoldCo or Surviving Corporation B from
the Indemnified Party of a request therefor; provided that any person to
whom expenses are advanced provides an undertaking, to the extent
required by the DGCL, to repay such advances if it is ultimately
determined that such person is not entitled to indemnification.
(b) HoldCo shall cause Surviving Corporation B to
maintain in effect (i) in its certificate of incorporation and by-laws for a
period of six years after the Effective Time, the current provisions regarding
elimination of liability of directors and indemnification of, and advancement
of expenses to, officers, directors and employees contained in the certificate
of incorporation and by-laws of Conectiv and (ii) at the election of HoldCo,
for a period of six years after the Effective Time, (A) maintain in
effect the current policies of directors' and officers' liability
insurance and fiduciary liability insurance maintained by Conectiv
(provided that Surviving Corporation B may substitute therefor policies
of at least the same coverage and amounts containing terms and conditions
which are, in the aggregate, no less advantageous to the insured) with
respect to claims arising from facts or events that occurred on or before
the Effective Time; provided, however, that in no event shall Surviving
Corporation B be required to expend in any one year an amount in excess
of 200% of the annual premiums currently paid by Conectiv for such
insurance; and, provided, further, that if the annual premiums of such
insurance coverage exceed such amount, Surviving Corporation B shall be
obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount or (B) provide tail coverage for such
persons covered by current policies of directors' and officers' liability
insurance and fiduciary liability insurance maintained by Conectiv which
tail coverage shall provide coverage for a period of six years for acts
prior to the Effective Time on terms no less favorable than the terms of
such current insurance coverage.
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(c) Notwithstanding anything herein to the
contrary, if any claim, action, proceeding or investigation (whether
arising before, at or after the Effective Time) is made against any
Indemnified Party on or prior to the sixth anniversary of the Effective
Time, the provisions of this Section 5.8 shall continue in effect until
the final disposition of such claim, action, proceeding or investigation.
(d) In the event that Surviving Corporation
B or any of its successors or assigns (i) consolidates with or merges
into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers
or conveys all or substantially all of its properties and assets to any
Person, then, and in each such case, proper provision shall be made so
that the successors or assigns of Surviving Corporation B shall succeed
to the obligations set forth in Section 5.6 and this Section 5.8.
5.9. Public Announcements. Conectiv and
Parent shall cooperate to develop a joint communications plan and
cooperate (i) to ensure that all press releases and other public
statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan, and (ii) unless otherwise
required by applicable law or by obligations pursuant to any listing
agreement with or rules of any securities exchange, to consult with each
other before issuing any press release or otherwise making any public
statement with respect to this Agreement or the transactions contemplated
hereby.
5.10. Accountants' Letters. Upon reasonable
notice from the other, Conectiv and Parent shall use best efforts to
cause their respective representatives of PricewaterhouseCoopers LLP to
deliver to Conectiv or Parent, as the case may be, a letter, dated within
two Business Days of the date the Form S-4 is declared effective covering
such matters as are requested by Parent or Conectiv, as the case may be,
and as are customarily addressed in accountant's "comfort" letters. In
connection with Conectiv's efforts to obtain such letter, if requested by
PricewaterhouseCoopers LLP, Parent shall provide a representation letter
to PricewaterhouseCoopers LLP complying with the Statement on Auditing
Standards No. 72 promulgated by the American Institute of Certified
Public Accountants ("SAS 72"), if then required. In connection with
Parent's efforts to obtain such letter, if requested by
PricewaterhouseCoopers LLP, Conectiv shall provide a representation
letter to PricewaterhouseCoopers LLP complying with SAS 72, if then
required.
5.11. Listing of Shares of HoldCo Common Stock.
HoldCo shall use its best efforts to cause the shares of HoldCo Common
Stock to be issued in connection with the Mergers and the shares
of HoldCo Common Stock to be reserved for issuance upon exercise of
Conectiv Stock Options to be approved for listing, upon official notice
of issuance, on the NYSE.
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5.12. Significant Presence; Community Support. After the
Effective Time, Parent intends that Surviving Corporation B shall maintain a
significant presence in Wilmington, Delaware. After the Effective Time,
Surviving Corporation B shall provide charitable contributions and community
support within the service areas of Conectiv and its Subsidiaries at comparable
levels of charitable contributions and community support as have been provided
by Conectiv and its Subsidiaries within their service areas.
5.13. Parent Share Repurchase Program. Parent represents
and warrants that its Board of Directors has authorized the repurchase of up to
$450 million of Parent Common Stock. Parent agrees that it shall not rescind,
nor modify in an adverse manner to Conectiv, such program prior to the Effective
Time. Parent agrees to implement such program in good faith consistent with
past practices and subject to its reasonable business judgment.
5.14. Conveyance Taxes. Conectiv and Parent
shall cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real
property transfer or gains, sales, use, transfer, value added, stock
transfer and stamp Taxes, any transfer, recording, registration and other
fees and any similar Taxes which become payable in connection with the
transactions contemplated by this Agreement that are required or
permitted to be paid on or before the Effective Time. If the Parent
Merger is consummated, the Surviving Corporation A shall pay, or cause to
be paid, any and all property or transfer taxes imposed on Parent or its
Subsidiaries and any real property transfer Tax imposed on any holder of
shares of capital stock of Parent resulting from the Parent Merger; and
if the Conectiv Merger is consummated, the Surviving Corporation B shall
pay, or cause to be paid, any and all property or transfer Taxes imposed
on Conectiv or its Subsidiaries and any real property transfer Tax
imposed on any holder of shares of capital stock of Conectiv resulting
from the Conectiv Merger.
ARTICLE VI
CONDITIONS PRECEDENT
6.1. Conditions to Each Party's Obligation to Effect the
Mergers. The obligations of Conectiv and Parent to effect the Mergers are
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Conectiv Stockholder Approval. Conectiv shall have
obtained the Required Conectiv Vote for the adoption of this Agreement by the
stockholders of Conectiv.
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(b) Parent Stockholder Approval. Parent
shall have obtained the Required Parent Vote for the adoption of this
Agreement by the stockholders of Parent.
(c) No Injunctions or Restraints;
Illegality. No federal, state, local or foreign, if any, law, statute,
regulation, code, ordinance or decree shall have been adopted or
promulgated, and no temporary restraining order, preliminary or permanent
injunction or other order issued by a court or other Governmental Entity
of competent jurisdiction shall be in effect, having the effect of making
the Mergers illegal or otherwise prohibiting consummation of the Mergers;
provided, however, that the provisions of this Section 6.1(c) shall not
be available to any party whose failure to fulfill its obligations
pursuant to Section 5.4 shall have been the cause of, or shall have
resulted in such order or injunction.
(d) Statutory Approvals. The Conectiv
Required Statutory Approvals and the Parent Required Statutory Approvals
shall have been obtained at or prior to the Effective Time, such
approvals shall have become Final Orders and no Final Order shall impose
terms or conditions that would reasonably be expected to result in a
Material Adverse Effect on HoldCo (giving effect to the Mergers). "Final
Order" means action by the relevant Governmental Entity that 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 (but
without the requirement for expiration of any applicable rehearing or
appeal period), and as to which all conditions to the consummation of
such transactions prescribed by law, regulation or order have been
satisfied. Any reference in this Agreement to the "obtaining" of any
such approvals shall mean making such declarations, filings,
registrations, giving such notice, obtaining such authorizations, orders,
consents, permits or approvals and having such waiting periods expire as
are, in each case, necessary to avoid a violation of law.
(e) HSR Act. The waiting period (and any
extension thereof) applicable to the Mergers under the HSR Act shall have
been terminated or shall have expired.
(f) NYSE Listing. The shares of HoldCo
Common Stock to be issued in connection with the Mergers and such other
shares to be reserved for issuance in connection with the Mergers shall
have been approved upon official notice of issuance for listing on NYSE.
(g) Effectiveness of the Form S-4. The
Form S-4 shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the Form S-
4 shall have been issued by the SEC and no proceedings for that purpose
shall have been initiated or threatened by the SEC.
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6.2. Additional Conditions to Obligations of
Parent. The obligations of Parent to effect the Mergers are subject to
the satisfaction of, or waiver by Parent, on or prior to the Closing Date
of the following additional conditions:
(a) Representations and Warranties. The
representations and warranties of Conectiv in this Agreement that are
qualified as to Material Adverse Effect shall be true and correct and
those not so qualified shall be true and correct in all material respects
in each case as of the Closing Date as though made on the Closing Date,
except to the extent such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties
qualified as to Material Adverse Effect shall be true and correct, and
those not so qualified shall be true and correct in all material
respects, on and as of such earlier date); provided that this paragraph
(a) shall be deemed satisfied so long as the failure of all such
representations and warranties which are not qualified as to Material
Adverse Effect to be so true and correct, in the aggregate, has not had
or would not reasonably be expected to have a Material Adverse Effect;
and Parent shall have received a certificate of the chief executive
officer or the chief financial officer of Conectiv to such effect.
(b) Performance of Obligations of Conectiv.
Conectiv shall have performed or complied in all material respects with
all material agreements and covenants required to be performed by it
under this Agreement at or prior to the Closing Date; and Parent shall
have received a certificate of the chief executive officer or the chief
financial officer of Conectiv to such effect.
(c) Tax Opinion. Parent shall have received from
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., counsel to Parent, on the Closing
Date, a written opinion dated as of such date to the effect that the Mergers,
taken together, will be treated for federal income tax purposes as transactions
described in Section 351 of the Code. In rendering such opinion, counsel to
Parent shall be entitled to rely upon representations of officers of Parent
and Conectiv in form and substance reasonably satisfactory to such counsel.
(d) Conectiv Material Adverse Effect.
Except as set forth in the Conectiv Disclosure Schedules or in the
Conectiv SEC Reports filed prior to the date of this Agreement, no
Material Adverse Effect on Conectiv shall have occurred and there shall
exist no fact or circumstance which would reasonably be expected to have
a Material Adverse Effect on Conectiv.
(e) Conectiv Specified Approvals. The
Conectiv Required Statutory Approvals identified in Items 2 and 5 of
Section 3.1(d)(iii) of the Conectiv Disclosure Schedule (the "Specified
Approvals") shall have been obtained, and with respect to the Specified
Approvals such approvals shall have become Final Orders and no such Final
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Order shall impose terms and conditions that would reasonably be expected
to result in a Material Adverse Effect on Conectiv.
6.3. Additional Conditions to Obligations of
Conectiv. The obligations of Conectiv to effect the Mergers are subject
to the satisfaction of, or waiver by Conectiv, on or prior to the Closing
Date of the following additional conditions:
(a) Representations and Warranties. The
representations and warranties of Parent in this Agreement that are
qualified as to Material Adverse Effect shall be true and correct and
those not so qualified shall be true and correct in all material respects
in each case as of the Closing Date as though made on the Closing Date,
except to the extent such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties
qualified as to Material Adverse Effect shall be true and correct, and
those not so qualified shall be true and correct in all material
respects, on and as of such earlier date); provided that this paragraph
(a) shall be deemed to be satisfied so long as the failure of all such
representations and warranties which are not qualified as to Material
Adverse Effect to be so true and correct, in the aggregate, has not had
or would not reasonably be expected to have a Material Adverse Effect,
and Conectiv shall have received a certificate of the chief executive
officer or the chief financial officer of Parent to such effect.
(b) Performance of Obligations of Parent.
Parent shall have performed or complied in all material respects with all
material agreements and covenants required to be performed by it under
this Agreement at or prior to the Closing Date, and Conectiv shall have
received a certificate of the chief executive officer or the chief
financial officer of Parent to such effect.
(c) Tax Opinion. Conectiv shall have
received from Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel to Conectiv, on the
Closing Date, a written opinion dated as of such date to the effect that
the Mergers, taken together, will be treated for federal income tax
purposes as a transaction described in Section 351 of the Code. In
rendering such opinion, counsel to Conectiv shall be entitled to rely
upon representations of officers of Parent and Conectiv in form and
substance reasonably satisfactory to such counsel.
(d) Parent Material Adverse Effect. Except
as set forth in the Parent Disclosure Schedules or in the Parent SEC
Reports filed prior to the date of this Agreement, no Material Adverse
Effect on Parent shall have occurred and there shall exist no fact or
circumstance which would reasonably be expected to have a Material
Adverse Effect on Parent.
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ARTICLE VII
TERMINATION AND AMENDMENT
7.1. Termination. This Agreement may be
terminated at any time prior to the Effective Time, by action taken or
authorized by the Board of Directors of the terminating party or parties,
and except as provided below, whether before or after approval of the
matters presented in connection with the Mergers by the stockholders of
Conectiv or Parent:
(a) By mutual written consent of Parent and
Conectiv, by action of their respective Boards of Directors;
(b) By either Conectiv or Parent if the
Effective Time shall not have occurred on or before the 18 month
anniversary date of the date of this Agreement (the "Termination Date");
provided, however, that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement (including without limitation
Section 5.4) has to any extent been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination Date;
provided, further, that if, on such anniversary date, (i) the condition
set forth in Section 6.1(d) has not been satisfied or waived, (ii) all of
the other conditions to the consummation of the Mergers set forth in
Article VI have been satisfied or waived or can readily be satisfied and
(iii) any approvals required in order for the condition set forth in
Section 6.1(d) to be satisfied that have not yet been obtained are being
pursued diligently and in good faith, then the Termination Date shall,
without any action by any of the parties, be extended to the date that is
six months after such anniversary date;
(c) By either Conectiv or Parent if any
Governmental Entity shall have issued an order, decree or ruling or taken
any other action (which the parties shall have used reasonable best
efforts to resist, resolve or lift, as applicable, in accordance with
Section 5.4) permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement, and such order, decree,
ruling or other action shall have become final and nonappealable;
provided, however, that the right to terminate this Agreement under this
Section 7.1(c) shall not be available to any party whose failure to
comply with Section 5.4 has to any extent been the cause of such action
or inaction;
(d) By either Conectiv or Parent (i) if the
Required Conectiv Vote shall not have been obtained by reason of the
failure to obtain the Required Conectiv Vote upon the taking of such vote
at a duly held meeting of stockholders of Conectiv, or at any adjournment
thereof or (ii) if the Required Parent Vote shall not have been obtained
by reason of the failure to obtain the Required Parent Vote upon the
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taking of such vote at a duly held meeting of stockholders of Parent, or
at any adjournment thereof;
(e) By Parent (i) if the Board of Directors
of Conectiv (A) shall withdraw, or modify in any manner adverse to
Parent, the Conectiv Board Approval, (B) shall approve or recommend an
Acquisition Proposal or (C) shall resolve to take any of the actions
specified in clauses (A) or (B) above or (ii) if there shall have
occurred a material breach of the representations, warranties, covenants
or agreements of Conectiv contained in this Agreement such that the
conditions set forth in Sections 6.2(a) and (b) would not be satisfied by
the Termination Date and such breach shall not have been remedied within
30 Business Days after receipt by Conectiv of notice in writing by
Parent, specifying the nature of such breach and requesting that it be
remedied; provided, that Parent shall not have the right to terminate
this Agreement pursuant to this Section 7.1(e)(ii) if Parent, HoldCo,
Merger Sub A or Merger Sub B is then in material breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement;
(f) By Conectiv (i) if the Board of
Directors of Conectiv shall approve a Superior Proposal; provided,
however, that, prior to any such approval, Conectiv shall, and shall
cause its financial and legal advisors to, provide Parent with a
reasonable opportunity (not to exceed a period of three Business Days
unless otherwise agreed in writing) to make adjustments in the terms and
conditions of this Agreement sufficient to cause the Board of Directors
of Conectiv to determine that such Superior Proposal no longer
constitutes a Superior Proposal; provided, however, that it shall be a
condition to termination by Conectiv pursuant to this Section 7.1(f)(i)
that Conectiv shall have made the payment of the Conectiv Termination Fee
to Parent required by Section 7.2(b) or (ii) if there shall have occurred
a material breach of the representations, warranties, covenants or
agreements of Parent, Merger Sub A, Merger Sub B and HoldCo contained in
this Agreement such that the conditions set forth in Sections 6.3(a) and
(b) would not be satisfied by the Termination Date and such breach shall
not have been remedied within 30 Business Days after receipt by Parent of
notice in writing by Conectiv, specifying the nature of such breach and
requesting that it be remedied; provided, that Conectiv shall not have
the right to terminate this Agreement pursuant to this Section 7.1(f)(ii)
if Conectiv is then in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement;
(g) By Conectiv if the Board of Directors
of Parent shall withdraw, or modify in any manner adverse to Conectiv,
the Parent Board Approval or shall resolve to take any such actions; and
(h) By Conectiv at any time during the
three-Business Day period commencing on the date on which the Average
Final Price has been determined, if the Average Final Price is less than
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$16.50, subject, however, to the following: (A) if Conectiv elects to
exercise its termination right pursuant to this Section 7.1(h), it shall
give Parent written notice of its intention to terminate (the
"Termination Notice"), which termination shall be effective at the close
of business on the second Business Day following the delivery of the
Termination Notice (which Termination Notice may be withdrawn by Conectiv
at any time prior to the effectiveness of such termination), (B) prior to
the effectiveness of the termination of this Agreement pursuant to clause
(A), Parent shall have the option (the "Option"), by giving Conectiv
written notice to such effect, of either (x) adjusting (i) the Conectiv
Common Stock Exchange Ratio to equal the quotient determined by dividing
$21.15 by the Average Final Price and (ii) the Class A Stock Exchange
Ratio to equal the quotient determined by dividing $18.35 by the Average
Final Price, or (y) paying (i) under Section 1.8(b)(ii)(A)(y), the
Conectiv Common Stock Share Consideration consisting of shares of HoldCo
Common Stock equal to the Conectiv Common Stock Exchange Ratio and cash
(the "Conectiv Common Stock Cash Top-Up") equal to the difference between
$21.15 and the Conectiv Common Stock Exchange Ratio multiplied by the
Average Final Price, and (ii) under Section 1.8(b)(ii)(B)(y), the Class A
Share Consideration consisting of shares of HoldCo Common Stock equal to
the Class A Stock Exchange Ratio and cash (the "Class A Stock Cash Top-
Up") equal to the difference between $18.35 and the Class A Stock
Exchange Ratio multiplied by the Average Final Price or (z) any
combination of adjusting the amount of stock consideration pursuant to
clause (x) or paying additional cash consideration pursuant to clause (y)
(such combination to be in the same proportion with respect to the
Conectiv Common Stock and the Class A Stock) provided that the sum of (I)
the Conectiv Common Stock Cash Top-Up and (II) the Conectiv Common Stock
Exchange Ratio, as adjusted, multiplied by the Average Final Price,
equals $21.15, and that the sum of (III) the Class A Stock Cash Top-Up
and (IV) the Class A Stock Exchange Ratio, as adjusted, multiplied by the
Average Final Price, equals $18.35 and (C) if Parent exercises the
Option, then this Agreement shall not terminate pursuant to this Section
7.1(h) and this Agreement shall remain in effect in accordance with its
terms (except as modified pursuant to this Section 7.1(h)), and any
references in this Agreement to the terms "the Conectiv Common Stock
Exchange Ratio", "the Class A Stock Exchange Ratio", "the Conectiv Common
Stock Share Consideration" and "the Class A Share Consideration" shall
thereafter be deemed to refer to such terms, as modified pursuant to this
Section 7.1(h).
7.2. Effect of Termination. (a) In the
event of termination of this Agreement by either Conectiv or Parent as
provided in Section 7.1, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of Parent or
Conectiv or their respective officers or directors except with respect to
the third sentence of Section 5.3, Section 5.7, this Section 7.2 and
Article VIII; provided, however, that nothing herein shall relieve any
party from liability for the willful breach of any of its
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representations, warranties, covenants or agreements set forth in this
Agreement.
(b) Parent and Conectiv agree that Conectiv
shall pay to Parent the sum of $60 million (the "Conectiv Termination
Fee") solely as follows: (i) if Conectiv shall terminate this Agreement
pursuant to Section 7.1(f)(i), or (ii) if (A) Conectiv or Parent shall
terminate this Agreement pursuant to Section 7.1(d)(i) due to the failure
of Conectiv's stockholders to adopt this Agreement, (B) at any time after
the date of this Agreement and at or before the time of the Conectiv
Stockholders Meeting, a bona fide Acquisition Proposal shall have been
made public and not been withdrawn and (C) within 12 months of the
termination of this Agreement, Conectiv enters into a definitive
agreement with a third party with respect to an Acquisition Proposal
(which is subsequently consummated) or an Acquisition Proposal is
consummated, or (iii) if Parent shall terminate this Agreement pursuant
to Section 7.1(e)(i) (unless the action of the Board of Directors of
Conectiv giving rise to such termination right was caused by Parent
entering into a definitive agreement with respect to a merger,
recapitalization, consolidation, business combination, sale of
substantially all assets, tender offer, exchange offer, share exchange or
similar transaction involving Parent (a "Parent Transaction") which could
reasonably be expected to materially delay or impede the consummation of
the Mergers) (provided that, for purposes of clause (ii) of this Section
7.2(b), the term Acquisition Proposal shall have the meaning assigned to
such term in Section 5.5 except that the references to "15% or more" in
the definition of "Acquisition Proposal" shall each be deemed to be a
reference to "35% or more").
(c) Conectiv and Parent agree that Parent
shall pay to Conectiv the sum of $60 million (the "Parent Termination
Fee") solely as follows: (i) if Conectiv shall terminate this Agreement
pursuant to Section 7.1(g), or (ii) if (A) Conectiv or Parent shall
terminate this Agreement pursuant to Section 7.1(d)(ii) due to the
failure of the stockholders of Parent to adopt this Agreement, (B) at any
time after the date of this Agreement and at or before the time of the
Parent Stockholders Meeting, a bona fide proposal with respect to a
Parent Transaction shall have been made public and not withdrawn and (C)
within 12 months of the termination of this Agreement, Parent enters into
a definitive agreement with a third party with respect to a Parent
Transaction (which is subsequently consummated) or a Parent Transaction
is consummated.
(d) The Conectiv Termination Fee required
to be paid pursuant to clause (i) of Section 7.2(b) shall be made prior
to, and shall be a pre-condition to the effectiveness of, the termination
of this Agreement by Conectiv pursuant to Section 7.1(f)(i). The Conectiv
Termination Fee required to be paid pursuant to clause (ii) of Section
7.2(b) shall be made to Parent not later than five Business Days after
the consummation of the applicable Acquisition Proposal. The Conectiv
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Termination Fee required to be paid pursuant to clause (iii) of Section
7.2(b) shall be made to Parent not later than five Business Days after
the termination of this Agreement.
(e) The Parent Termination Fee required to
be paid pursuant to clause (i) of Section 7.2(c) shall be made to
Conectiv not later than five Business Days after the termination of this
Agreement. The Parent Termination Fee required to be paid pursuant to
clause (ii) of Section 7.2(c) shall be made to Conectiv not later than
five Business Days after the consummation of the applicable Parent
Transaction.
(f) All payments under this Section 7.2
shall be made by wire transfer of immediately available funds to an
account designated by the party entitled to receive payment.
7.3. 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 approval of
the matters presented in connection with the Mergers by the stockholders
of Conectiv, Parent, Merger Sub A and Merger Sub B, but, after any such
approval, no amendment shall be made which by law or in accordance with
the rules of any relevant stock exchange requires further approval by
such stockholders without such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
7.4. Extension; Waiver. At any time prior
to the Effective Time, the parties hereto, by action taken or authorized
by their respective Boards of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (iii) waive compliance with
any of the agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of those
rights.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Non-Survival of Representations,
Warranties and Agreements. None of the representations, warranties,
covenants and other agreements in this Agreement or in any instrument
delivered pursuant to this Agreement, including any rights arising out of
any breach of such representations, warranties, covenants and other
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agreements, shall survive the Effective Time, except for those covenants
and agreements contained herein and therein that by their terms apply or
are to be performed in whole or in part after the Effective Time and this
Article VIII. Nothing in this Section 8.1 shall relieve any party for any
breach of any representation, warranty, covenant or other agreement in
this Agreement occurring prior to termination.
8.2. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed duly given (a) on the
date of delivery if delivered personally, or by telecopy or telefacsimile,
upon confirmation of receipt, (b) on the first Business Day following the
date of dispatch if delivered by a recognized next-day courier service, or
(c) on the tenth Business Day following the date of mailing if delivered
by registered or certified mail, return receipt requested, postage prepaid.
All notices hereunder shall be delivered as set forth below, or pursuant to
such other instructions as may be designated in writing by the party to
receive such notice:
(a) if to Parent or HoldCo, to
Potomac Electric Power Company
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fax: (000) 000-0000
Attention: Chief Executive Officer
with a copy to
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
(b) if to Conectiv to
Conectiv
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Chief Executive Officer
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with a copy to
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx and Xxxxx Xxxxx
8.3. Interpretation. When a reference is
made in this Agreement to Sections, Exhibits or Schedules, such reference
shall be to a Section of or Exhibit or Schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
8.4. Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall be considered
one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that the parties need not sign the
same counterpart.
8.5. Entire Agreement; Third Party Beneficiaries.
(a) This Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreements, which shall survive the execution and delivery
of this Agreement.
(b) This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any
other Person any right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement, other than Section 5.6 and Section 5.8
(which is intended to be for the benefit of the Persons covered thereby
and may be enforced by such Persons).
8.6. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE.
8.7. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of being
enforced by any law or public policy, all other terms and provisions of
this Agreement shall nevertheless remain in full force and effect so long
as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party.
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Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated
as originally contemplated to the greatest extent possible.
8.8. Assignment. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned
by any of the parties hereto, in whole or in part (whether by operation
of law or otherwise), without the prior written consent of the other
parties, and any attempt to make any such assignment without such consent
shall be null and void. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
8.9. Submission to Jurisdiction; Waivers.
Each of HoldCo, Parent, Merger Sub A, Merger Sub B and Conectiv
irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in
respect hereof brought by any party hereto or its successors or assigns
may be brought and determined in the Chancery or other Courts of the
State of Delaware, or in the United States Courts in or for the District
of Delaware, in each case having subject matter jurisdiction, and each of
HoldCo, Parent, Merger Sub A, Merger Sub B and Conectiv hereby
irrevocably submits with regard to any such action or proceeding for
itself and in respect to its property, generally and unconditionally, to
the nonexclusive jurisdiction of the aforesaid courts. Each of HoldCo,
Parent, Merger Sub A, Merger Sub B and Conectiv hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to
this Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the
failure to serve process in accordance with this Section 8.9, (b) that it
or its property is exempt or immune from jurisdiction of any such court
or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) and (c) to the
fullest extent permitted by applicable law, that (i) the suit, action or
proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is improper and (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by
such courts. This Agreement does not involve less than $100,000, and the
parties intend that 6 Del.C. Section 2708 shall apply to this Agreement.
8.10. Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific
terms. It is accordingly agreed that the parties shall be entitled to
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specific performance of the terms hereof, this being in addition to any
other remedy to which they are entitled at law or in equity.
8.11. Definitions. As used in this
Agreement:
(a) "Benefit Plans" means, with respect to
any Person, each employee benefit plan, program, arrangement and contract
(including any "employee benefit plan," as defined in Section 3(3) of
ERISA, and any bonus, deferred compensation, stock bonus, stock purchase,
restricted stock, stock option, employment, termination, stay agreement
or bonus, change in control and severance plan, program, arrangement and
contract) in effect on the date of this Agreement that covers current or
former employees, consultants or directors of such Person or any of its
Subsidiaries, to which such Person or its Subsidiary is a party, which is
maintained or contributed to by such Person, or with respect to which
such Person could incur material liability under Section 4069, 4201 or
4212(c) of ERISA.
(b) "Board of Directors" means the Board of
Directors of any specified Person and any committees thereof.
(c) "Business Day" means any day on which
banks are not required or authorized to close in The City of New York.
(d) "knowledge" when used with respect to
any party means the knowledge, after reasonable investigation, of any
executive officer of such party.
(e) "Material Adverse Effect" means, with
respect to any entity, any change or effect that would be materially
adverse to the business, financial condition or results of operations of
such entity and its subsidiaries taken as a whole, other than any change
or effect resulting from (i) changes in economic conditions, (ii) the
announcement and performance of this Agreement and the transactions
contemplated hereby and compliance with the covenants set forth herein,
(iii) changes or developments in the industries in which such entity and
its subsidiaries operate, (iv) any failure to consummate the transactions
contemplated by any of the agreements identified in Section 8.11(e)(iv)
of the Conectiv Disclosure Schedule or (v) any other item identified in
Section 8.11(e)(v) of the Conectiv Disclosure Schedule.
(f) "the other party" means, with respect
to Conectiv, Parent and means, with respect to Parent, Conectiv.
(g) "Person" means an individual,
corporation, limited liability company, partnership, association, trust,
unincorporated organization, other entity or group (as defined in the
Exchange Act).
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(h) "Subsidiary" when used with respect to
any party means any corporation or other organization, whether
incorporated or unincorporated, (i) of which such party or any other
Subsidiary of such party is a general partner (excluding partnerships,
the general partnership interests of which held by such party or any
Subsidiary of such party do not have a majority of the voting interests
in such partnership), (ii) at least a majority of the securities or other
interests of which have by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions
with respect to such corporation or other organization or (iii) that is
directly or indirectly controlled by such party or by any one or more of
its Subsidiaries, or by such party and one or more of its Subsidiaries.
(i) "Superior Proposal" means a bona fide
written Acquisition Proposal that the Board of Directors of Conectiv
concludes in good faith (after consultation with its financial advisors
and legal counsel), taking into account all legal, financial, regulatory
and other aspects of the proposal and the Person making the proposal, (i)
would, if consummated, result in a transaction that is more favorable to
Conectiv's stockholders (in their capacities as stockholders), from a
financial point of view, than the transactions contemplated by this
Agreement and (ii) is reasonably capable of being completed, including,
but not limited to, that the Person or group making the proposal will
have adequate sources of financing to complete the Acquisition Proposal
(provided that for purposes of this definition the term Acquisition
Proposal shall have the meaning assigned to such term in Section 5.5
except that the references to "15% or more" in the definition of
"Acquisition Proposal" shall each be deemed to be a reference to "a
majority").
(j) "Trading Day" means a day on which the
NYSE is open for business.
8.12. Other Agreements. The parties hereto
acknowledge and agree that, except as otherwise expressly set forth in
this Agreement, the rights and obligations of Conectiv and Parent under
any other agreement between the parties shall not be affected by any
provision of this Agreement.
____________________________
[Intentionally Left Blank]
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IN WITNESS WHEREOF, Parent, HoldCo and Conectiv
have caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the day and year first above
written.
POTOMAC ELECTRIC POWER COMPANY
By: /s/ Xxxx X. Xxxxxxx, Xx.
____________________________
Name: Xxxx X. Xxxxxxx, Xx.
Title: Chairman and CEO
NEW RC, INC.
By: /s/ Xxxxxx X. Xxxxxx
______________________________
Name: Xxxxxx X. Xxxxxx
Title: President
CONECTIV
By: /s/ Xxxxxx X. Xxxxxxxx
______________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman and CEO
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