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EXHIBIT 2.2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
Among
DTE ENERGY COMPANY
MCN ENERGY GROUP INC.
and
DTE ENTERPRISES, INC.
Dated as of October 4, 1999
As amended as of November 12, 1999
As further amended as of February 28, 2001
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Table of Contents
Page
RECITALS ................................................................. 1
ARTICLE I The Merger; Closing; Effective Time ......................... 1
1.1. The Merger .................................................. 1
1.2. Closing ..................................................... 2
1.3. Effective Time .............................................. 2
ARTICLE II Articles of Incorporation and By-Laws
of the Surviving Corporation ................................ 2
2.1. The Articles of Incorporation ............................... 2
2.2. The By-Laws ................................................. 2
ARTICLE III Officers and Directors of the Surviving
Corporation ................................................. 3
3.1. Directors ................................................... 3
3.2. Officers .................................................... 3
ARTICLE IV Effect of the Merger on Capital Stock;
Election Procedures ......................................... 3
4.1. Effect on Capital Stock ..................................... 3
(a) Merger Consideration .................................. 3
(b) Cancellation of Shares ................................ 4
(c) Merger Sub ............................................ 4
4.2. Allocation of Merger Consideration; Election
Procedures; Exchange Procedures ............................. 4
(a) Allocation ............................................ 4
(b) Election Procedures ................................... 4
(c) Exchange and Payment Procedures ....................... 8
(d) Distributions with Respect
to Unexchanged Shares; Voting ......................... 9
(e) Transfers ............................................. 9
(f) Fractional Shares ..................................... 9
(g) Termination of Exchange Fund .......................... 10
(h) Lost, Stolen or Destroyed
Certificates .......................................... 10
(i) Affiliates ............................................ 11
4.3. Dissenters' Rights .......................................... 11
4.4. Adjustments to Prevent Dilution ............................. 11
4.5. Tax Opinion Adjustment ...................................... 12
4.6. Uncertificated Shares of Parent
Common Stock ................................................ 13
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ARTICLE V Representations and Warranties .............................. 13
5.1. Representations and Warranties of the Company,
Parent and Merger Sub ....................................... 13
(a) Organization, Good Standing and
Qualification ......................................... 13
(b) Capital Structure ..................................... 14
(c) Corporate Authority; Approval and
Fairness .............................................. 17
(d) Governmental Filings; No Violations ................... 18
(e) Reports; Financial Statements ......................... 20
(f) Absence of Certain Changes ............................ 21
(g) Litigation and Liabilities ............................ 21
(h) Employee Benefits ..................................... 22
(i) Compliance with Laws; Permits ......................... 24
(j) Takeover Statutes ..................................... 25
(k) Environmental Matters ................................. 26
(m) Labor Matters ......................................... 28
(n) Intellectual Property ................................. 28
(o) Insurance ............................................. 29
(p) Rights Plan ........................................... 29
(q) Brokers and Finders ................................... 29
(r) Year 2000 ............................................. 30
(s) Regulatory Proceedings ................................ 30
(t) FERC Jurisdiction ..................................... 30
(u) Regulation as a Utility ............................... 31
(v) Ownership of Shares ................................... 31
(w) Schedule 5.1(w) ....................................... 31
ARTICLE VI Covenants ................................................... 31
6.1. Interim Operations .......................................... 31
6.1.A. Supplemental Interim Operations
Covenants ................................................... 36
6.2. Acquisition Proposals ....................................... 37
6.3. Information Supplied ........................................ 39
6.4. Shareholders Meetings ....................................... 40
6.4.A. Second Shareholders Meeting ................................. 40
6.5. Filings; Other Actions; Notification ........................ 40
6.6. Access ...................................................... 42
6.7. Affiliates .................................................. 43
6.7.A. Affiliates .................................................. 44
6.8. Stock Exchange Listing and De-listing ....................... 44
6.9. Publicity ................................................... 44
6.10. Benefits .................................................... 45
(a) Stock Options ......................................... 45
(b) Employee Benefits ..................................... 46
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(c) Election to Parent's Board of
Directors; Management Executive
Committee ............................................. 47
(d) Employees ............................................. 47
6.11. Expenses .................................................... 48
6.12. Indemnification; Directors' and Officers'
Insurance ................................................... 48
6.13. Takeover Statutes ........................................... 50
6.14. Dividends ................................................... 50
6.15. Rate Matters ................................................ 50
6.16. Taxation .................................................... 51
6.17. Transition Matters .......................................... 51
6.18. Community Involvement ....................................... 52
6.19. 1935 Act and Power Act ...................................... 52
6.20. Feline Prides ............................................... 53
ARTICLE VII Conditions .................................................. 53
7.1. Conditions to Each Party's Obligation
to Effect the Merger ........................................ 53
(a) Shareholder Approval .................................. 53
(b) NYSE Listing .......................................... 53
(c) Regulatory Consents ................................... 53
(d) Litigation ............................................ 54
(e) S-4 ................................................... 54
(f) Blue Sky Approvals .................................... 54
(g) Certain Transactions .................................. 54
7.2. Conditions to Obligations of Parent
and Merger Sub .............................................. 54
(a) Performance of Obligations of
the Company ........................................... 54
(b) Accountants Letter .................................... 55
(c) Affiliates Letters .................................... 55
(d) Tax Opinion ........................................... 55
(e) Governmental Consents ................................. 55
7.3. Conditions to Obligation of the Company ..................... 55
(a) Performance of Obligations of
Parent and Merger Sub ................................. 56
(b) Accountants Letter .................................... 56
(c) Tax Opinion ........................................... 56
ARTICLE VIII Termination ................................................. 56
8.1. Termination by Mutual Consent ............................... 56
8.2. Termination by Either Parent or the
Company ..................................................... 56
8.3. Termination by the Company .................................. 57
8.4. Termination by Parent ....................................... 57
8.5. Effect of Termination and Abandonment ....................... 58
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ARTICLE IX Miscellaneous and General ................................... 59
9.1. Survival .................................................... 59
9.2. Modification or Amendment ................................... 59
9.3. Waiver of Conditions ........................................ 59
9.4. Counterparts ................................................ 59
9.5. GOVERNING LAW AND VENUE; WAIVER
OF JURY TRIAL ............................................... 59
9.6. Notices ..................................................... 61
9.7. Entire Agreement ............................................ 61
9.8. No Third Party Beneficiaries ................................ 62
9.9. Obligations of Parent and of the Company .................... 62
9.10. Severability ................................................ 62
9.11. Interpretation .............................................. 62
9.12. Assignment .................................................. 62
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of October 4, 1999 and as amended as of November 12, 1999 and as
further amended as of February 28, 2001 (the "Second Amendment Date"), among DTE
Energy Company, a Michigan corporation ("Parent"), MCN Energy Group Inc., a
Michigan corporation (the "Company"), and DTE Enterprises, Inc., a Michigan
corporation and wholly owned subsidiary of Parent ("Merger Sub," the Company and
Merger Sub sometimes being hereinafter collectively referred to as the
"Constituent Corporations").
RECITALS
WHEREAS, the respective boards of directors of each of Parent, Merger
Sub and the Company have approved the merger of the Company with and into Merger
Sub (the "Merger") and approved the Merger upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, it is intended that, for federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time (as defined in Section 1.3) the
Company shall be merged with and into Merger Sub and the separate corporate
existence of the Company shall thereupon cease. Merger Sub shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation"), and the separate corporate existence of Merger Sub
with all its
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rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Article III. The Merger shall have the
effects specified in the Michigan Business Corporation Act, as amended (the
"MBCA").
1.2. Closing. The closing of the Merger (the "Closing") shall take
place (i) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New
York at 9:00 A.M. on the fifth business day after the last to be fulfilled or
waived of the conditions set forth in Article VII (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions) shall be satisfied or waived in
accordance with this Agreement or (ii) at such other place and time and/or on
such other date as the Company and Parent may agree in writing (the "Closing
Date").
1.3. Effective Time. As soon as practicable following the Closing, the
Company and Parent will cause a Certificate of Merger (the "Michigan Certificate
of Merger") to be executed and filed with the Department of Commerce of the
State of Michigan as provided in Section 450.1707 of the MBCA. The Merger shall
become effective at the time when the Michigan Certificate of Merger has been
duly endorsed by the Department of Commerce of the State of Michigan (the
"Effective Time").
ARTICLE II
Articles of Incorporation and By-Laws
of the Surviving Corporation
2.1. The Articles of Incorporation. The articles of incorporation of
the Surviving Corporation shall be the articles of incorporation of Merger Sub
as in effect immediately prior to the Effective Time (the "Articles"), until
duly amended as provided therein or by applicable law.
2.2. The By-Laws. The by-laws of Merger Sub in effect at the Effective
Time shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable law.
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ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Directors. The directors of Merger Sub at the Effective Time
shall, from and after the Effective Time, be the directors of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Articles and the By-Laws.
3.2. Officers. The officers of the Company at the Effective Time
shall, from and after the Effective Time, be the officers of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Articles and the By-Laws.
ARTICLE IV
Effect of the Merger on Capital Stock;
Election Procedures
4.1. Effect on Capital Stock. At the Effective Time, as a result of
the Merger and without any action on the part of the holder of any capital stock
of the Company:
(a) Merger Consideration. Subject to the allocation and election
procedures in Section 4.2 and subject to Section 4.5, each share of the common
stock, par value $0.01 per share, of the Company (the "Common Stock"), including
the associated right to purchase Series A Junior Participating Preferred Stock
(each a "Right" and together with the Common Stock, a "Share" and, collectively,
the "Shares") issued pursuant to the Rights Agreement, dated as of December 20,
1989, as amended by an amendment dated as of July 23, 1997, by and between the
Company and First Chicago Trust Company of New York, as Rights Agent, (the
"Rights Agreement"), issued and outstanding immediately prior to the Effective
Time (other than Shares owned by Parent or Shares that are owned by the Company
or any direct or indirect Subsidiary of the Company and in each case not held on
behalf of third parties (each, an "Excluded Share" and collectively, "Excluded
Shares")) shall be converted into the right to receive either (i) $24.00 in cash
(the "Cash Consideration") or (ii) .715 shares of common stock, without par
value, of Parent (the "Parent Common Stock") (the "Stock Consideration" and,
together with the Cash Consideration, the "Merger Consideration"). All
references in this
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agreement to Parent Common Stock to be issued pursuant to the Merger shall be
deemed to include the corresponding rights ("Parent Rights") to purchase Series
A Junior Participating Preferred Stock of Parent pursuant to the Parent Rights
Agreement (as defined in Section 5.1(b)(ii)), except where the context otherwise
requires. At the Effective Time, all Shares shall no longer be outstanding and
shall be canceled and retired and shall cease to exist, and each certificate (a
"Certificate") representing any of such Shares (other than Excluded Shares)
shall thereafter represent only the right to receive the Merger Consideration
and the right, if any, to receive pursuant to Section 4.2(f) cash in lieu of
fractional shares into which such Shares have been converted pursuant to this
Section 4.1(a) and any dividends or other distributions pursuant to Section
4.2(d).
(b) Cancellation of Shares. Each Excluded Share shall, by virtue of
the Merger and without any action on the part of the holder thereof, cease to be
outstanding, shall be canceled and retired without payment of any consideration
therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of common stock of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
remain outstanding and each certificate therefor shall continue to evidence one
share of common stock of the Surviving Corporation.
4.2. Allocation of Merger Consideration; Election Procedures; Exchange
Procedures.
(a) Allocation. Subject to Section 4.5, notwithstanding anything in
this Agreement to the contrary, the number of Shares (the "Cash Election
Number") to be converted into the right to receive Cash Consideration in the
Merger shall be equal to 55 percent of the number of Shares issued and
outstanding immediately prior to the Effective Time of the Merger (not including
any Excluded Shares). Subject to Section 4.5, the number of Shares to be
converted into the right to receive Stock Consideration in the Merger (the
"Stock Election Number") shall be equal to the number of Shares issued and
outstanding immediately prior to the Effective Time of the Merger (not including
any Excluded Shares) less the Cash Election Number.
(b) Election Procedures.
(i) As of the Effective Time, Parent shall deposit, or shall cause to
be deposited, with an exchange agent selected by Parent, with the Company's
prior approval,
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which shall not be unreasonably withheld (the "Exchange Agent"),
for the benefit of the holders of Shares, (A) certificates representing the
shares of Parent Common Stock, (B) cash and (C) any dividends or other
distributions with respect to the Parent Common Stock to be issued or paid
pursuant to Sections 4.1 and 4.2(d) in exchange for outstanding Shares upon due
surrender of the Certificates pursuant to the provisions of this Article IV
(such cash and certificates for shares of Parent Common Stock, together with the
amount of any dividends or other distributions payable with respect thereto,
being hereinafter referred to as the "Exchange Fund").
(ii) Subject to allocation and proration in accordance with the
provisions of this Section 4.2 and Section 4.5, if appropriate, each record
holder of Shares (other than Excluded Shares) issued and outstanding immediately
prior to the Election Deadline (as defined below) shall be entitled (A) to elect
to receive in respect of each such Share (x) Cash Consideration (a "Cash
Election") or (y) Stock Consideration (a "Stock Election") or (B) to indicate
that such record holder has no preference as to the receipt of Cash
Consideration or Stock Consideration for such Shares (a "Non-Election"). Shares
in respect of which a Non-Election is made (including shares in respect of which
such an election is deemed to have been made pursuant to this Section 4.2 and
Section 4.3 (collectively, "Non-Election Shares")) shall be deemed by Parent, in
its sole and absolute discretion, subject to Section 4.2(a), to be, in whole or
in part, Shares in respect of which Cash Elections or Stock Elections have been
made.
(iii) Elections pursuant to Section 4.2(b)(ii) shall be made on a form
with such other provisions to be reasonably agreed upon by the Company and
Parent (a "Form of Election") to be provided by the Exchange Agent for that
purpose to holders of record of Shares (other than holders of Excluded Shares),
together with appropriate transmittal materials, at a time approximately one
month prior to the anticipated Closing Date (as defined in Section 1.2) or on
such other date as the Company and Parent shall mutually agree. Elections shall
be made by mailing to the Exchange Agent a duly completed Form of Election. To
be effective, a Form of Election must be (x) properly completed, signed and
submitted to the Exchange Agent at its designated office, by 9:00 a.m., on the
Closing Date (which date shall be publicly announced by Parent as soon as
practicable but in no event less than five trading days prior to the Closing
Date) or such other date as the Company and Parent shall mutually agree (the
"Election Deadline") and (y) accompanied by the
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Certificate(s) representing the Shares as to which the election is being made
(or by an appropriate guarantee of delivery of such Certificate(s) by a
commercial bank or trust company in the United States or a member of a
registered national security exchange or of the National Association of
Securities Dealers, Inc., provided that such Certificates are in fact delivered
to the Exchange Agent within three trading days after the date of execution of
such guarantee of delivery). A holder of record of Shares who holds such shares
as nominee, trustee or in another representative capacity (a "Holder
Representative") may submit multiple Forms of Election, provided that such
Holder Representative certifies that each such Form of Election delivered to the
Exchange Agent covers all the Shares held by such Holder Representative on
behalf of a particular beneficial owner. The Company shall use its best efforts
to make a Form of Election available to all Persons (as defined below) who
become holders of record of Shares (other than Excluded Shares) between the date
of mailing described in the first sentence of this Section 4.2(b)(iii) and the
Election Deadline. Parent shall determine, in its sole and absolute discretion,
which authority it may delegate in whole or in part to the Exchange Agent,
whether Forms of Election have been properly completed, signed and submitted or
revoked. The decision of Parent (or the Exchange Agent, as the case may be) in
such matters shall be conclusive and binding. Neither Parent nor the Exchange
Agent will be under any obligation to notify any Person of any defect in a Form
of Election submitted to the Exchange Agent. A holder of Shares that does not
submit an effective Form of Election prior to the Election Deadline shall be
deemed to have made a Non-Election. For the purposes of this Agreement, the term
"Person" shall mean any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, Governmental Entity (as defined in
Section 5.1(d)) or other entity of any kind or nature organized or existing
under the laws of any jurisdiction.
(iv) An election may be revoked, but only by written notice received
by the Exchange Agent prior to the Election Deadline. Any Certificate(s)
representing Shares that have been submitted to the Exchange Agent in connection
with an election shall be returned without charge to the holder thereof in the
event such election is revoked as aforesaid and such holder requests in writing
the return of such Certificate(s). Upon any such revocation, unless a duly
completed Form of Election is thereafter submitted in accordance with paragraph
(b)(ii), such Shares shall be Non-Election Shares. In the event that this
Agreement is terminated pursuant to the provisions hereof, any Shares
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that have been transmitted to the Exchange Agent pursuant to the provisions
hereof shall promptly be returned without charge to the Person submitting the
same.
(v) If the aggregate number of Shares covered by Cash Elections (the
"Cash Election Shares") exceeds the Cash Election Number, all Non-Election
Shares shall be deemed to be Shares in respect of which Stock Elections have
been made and (x) each Cash Election Share shall be converted into (i) the right
to receive an amount in cash, without interest, equal to the product of (A) the
Cash Consideration and (B) a fraction (the "Cash Fraction"), the numerator of
which shall be the Cash Election Number and the denominator of which shall be
the total number of Cash Election Shares, and (ii) a number of shares of Parent
Common Stock equal to the product of (A) the Exchange Ratio and (B) a fraction
equal to one minus the Cash Fraction and (y) each Stock Election Share
(including those deemed to be Stock Election Shares (as defined below) pursuant
to this Section 4.2(b)(v)) shall be converted into the right to receive the
Stock Consideration.
(vi) If the aggregate number of Shares covered by Stock Elections (the
"Stock Election Shares") exceeds the Stock Election Number, all Non-Election
Shares shall be deemed to be Shares in respect of which Cash Elections have been
made and (x) each Stock Election Share shall be converted into (i) the right to
receive a number of shares of Parent Common Stock, equal to the product of (A)
the Exchange Ratio and (B) a fraction (the "Stock Fraction"), the numerator of
which shall be the Stock Election Number and the denominator of which shall be
the total number of Stock Election Shares, and (ii) an amount in cash, without
interest, equal to the product of (A) the Cash Consideration and (B) a fraction
equal to one minus the Stock Fraction and (y) each Cash Election Share
(including those deemed to be Cash Election Shares) shall be converted into the
right to receive the Cash Consideration.
(vii) In the event that neither clause (v) nor clause (vi) of this
Section 4.2(b) is applicable, a number of Non-Election Shares shall be deemed
Stock Election Shares such that the total Stock Election Shares equals the Stock
Election Number and any remaining Non-Election Shares shall be deemed Cash
Election Shares and (x) all Cash Election Shares and all Non-Election Shares in
respect of which Cash Elections are deemed to have been made shall be converted
into the right to receive Cash Consideration, and (y) all Stock Election Shares
and all Non-Election Shares in respect of which Stock Elections are deemed to
have been made shall
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be converted into the right to receive Stock Consideration (and cash in lieu of
fractional interests).
(viii) Each record holder of Shares immediately prior to the Effective
Time shall be entitled to elect to receive the Stock Consideration for part of
such holder's Shares and the Cash Consideration for the remaining part of such
holder's Shares (a "Mixed Election" and, collectively with a Stock Election and
a Cash Election, an "Election"). Mixed Elections shall be made on a Form of
Election. With respect to each holder of Shares who makes a Mixed Election, the
Shares such holder elects to be converted into the right to receive Cash
Consideration shall be treated as Cash Election Shares for purposes of this
Section 4.2 and Section 4.5, and the Shares such holder elects to be converted
into the right to receive shares of Parent Common Stock shall be treated as
Stock Election Shares for purposes of this Section 4.2 and Section 4.5.
(ix) The Exchange Agent, in consultation with Parent and the Company,
shall make all computations to give effect to this Section 4.2.
(c) Exchange and Payment Procedures. As soon as practicable after the
Election Deadline, Parent shall cause the Exchange Agent to mail to each record
holder of Shares who did not submit a Form of Election or who did not submit a
Certificate or Certificates to the Exchange Agent with such holder's properly
submitted Form of Election: (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon actual delivery of the Certificates to the Exchange Agent)
and (ii) instructions for effecting the surrender of the Certificates and
receiving the Merger Consideration to which such holder shall be entitled
therefor pursuant to this Article IV. Upon surrender of a Certificate (or
affidavits of loss in lieu thereof) to the Exchange Agent for cancellation,
together with a duly executed letter of transmittal or Form of Election, as the
case may be, and such other documents as the Exchange Agent may require, the
holder of such Certificate shall be entitled to receive in exchange therefor (i)
a certificate representing that number of shares of Parent Common Stock into
which the Shares previously represented by such Certificate are converted in
accordance with this Article IV, (ii) the cash to which such holder is entitled
in accordance with this Article IV, (iii) cash in lieu of fractional shares, if
any, which such holder has the right to receive pursuant to Section 4.2(f) and
(iv) any dividends or other distributions pursuant to Section 4.2(d). In the
event the Merger Consideration and
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cash in lieu of fractional shares, if any, which such holder has the right to
receive pursuant to Section 4.2(f), and any dividend or other distributions
pursuant to Section 4.2(d), is to be delivered to any person who is not the
person in whose name the Certificate surrendered in exchange therefor is
registered in the transfer records of the Company, the Merger Consideration, and
cash in lieu of fractional shares which such holder has the right to receive
pursuant to Section 4.2(f), and any dividends or other distributions pursuant to
Section 4.2(d) may be delivered to a transferee if the Certificate is presented
to the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence satisfactory to the Exchange Agent that any
applicable stock transfer taxes have been paid or are not payable.
(d) Distributions with Respect to Unexchanged Shares; Voting. All
Shares of Parent Common Stock to be issued pursuant to the Merger shall be
deemed issued and outstanding as of the Effective Time and whenever a dividend
or other distribution is declared by Parent in respect of the Parent Common
Stock, the record date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in respect of all
shares issuable pursuant to this Agreement. No dividends or other distributions
in respect of the Parent Common Stock shall be paid to any holder of any
unsurrendered Certificate until such Certificate is surrendered for exchange in
accordance with this Article IV. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be issued and/or paid
to the holder of the certificates representing Parent Common Stock issued in
exchange therefor, without interest, (A) at the time of such surrender, the
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to such Parent Common Stock and not paid and
(B) at the appropriate payment date, the dividends or other distributions
payable with respect to such Parent Common Stock with a record date after the
Effective Time but with a payment date subsequent to surrender.
(e) Transfers. After the Effective Time, there shall be no transfers
on the stock transfer books of the Company of the Shares that were outstanding
immediately prior to the Effective Time.
(f) Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of Parent Common Stock will be issued to holders
of Shares and in lieu of any such fractional shares, each holder of Shares who
would otherwise have been entitled to receive a fractional
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share of Parent Common Stock upon surrender of Certificates for exchange
pursuant to this Article IV will be paid an amount in cash (without interest)
equal to such holder's proportionate interest in the net proceeds from the sale
or sales in the open market by the Exchange Agent, on behalf of all such
holders, of the aggregate fractional shares of Parent Common Stock issued to the
Exchange Agent on behalf of such holders pursuant to this Article IV. As soon as
practicable following the Effective Time, the Exchange Agent shall determine the
excess of (i) the number of full shares of Parent Common Stock delivered to the
Exchange Agent by Parent over (ii) the aggregate number of full shares of Parent
Common Stock to be distributed to holders of Shares (such excess being herein
called the "Excess Parent Common Shares"). The Exchange Agent, as agent for the
former holders of Shares, shall sell the Excess Parent Common Shares at the
prevailing prices on the New York Stock Exchange, Inc. (the "NYSE"). The sales
of the Excess Parent Common Shares by the Exchange Agent shall be executed on
the NYSE through one or more member firms of the NYSE and shall be executed in
round lots to the extent practicable. Parent shall pay all commissions, transfer
taxes and other out-of-pocket transaction costs, if any, including the expenses
and compensation of the Exchange Agent, incurred in connection with such sale of
Excess Parent Common Shares. Until the net proceeds of such sale have been
distributed to the former holders of Shares, the Exchange Agent will hold such
proceeds in trust for such former holders.
(g) Termination of Exchange Fund. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any Parent Common Stock)
that remains unclaimed by the shareholders of the Company for 180 days after the
Effective Time shall be returned to Parent. Any shareholders of the Company who
have not theretofore complied with this Article IV shall thereafter look only to
Parent for payment of the Cash Consideration, their shares of Parent Common
Stock and any cash, dividends and other distributions in respect thereof payable
and/or issuable pursuant to Section 4.1 and Section 4.2(c) upon due surrender of
their Certificates (or affidavits of loss in lieu thereof), in each case,
without any interest thereon. Notwithstanding the foregoing, none of Parent, the
Surviving Corporation, the Exchange Agent or any other Person shall be liable to
any former holder of Shares for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(h) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by
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the Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such Person of a bond in customary amount as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate and subject to compliance with the terms of Section 4.2,
shares of Parent Common Stock and any cash payable and any unpaid dividends or
other distributions in respect thereof pursuant to Section 4.1 and Section
4.2(d) upon due surrender of, and deliverable in respect of, the Shares
represented by such Certificate pursuant to this Agreement.
(i) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any "affiliate" (as determined pursuant
to Section 6.7) of the Company shall not be exchanged until Parent has received
a written agreement from such Person as provided in Section 6.7 hereof.
4.3. Dissenters' Rights. In accordance with Section 450.1762 of the
MBCA, no dissenters' rights shall be available to holders of Shares in
connection with the Merger.
4.4. Adjustments to Prevent Dilution. (a) In the event that the
Company changes the number of Shares issued and outstanding prior to the
Effective Time as a result of a reclassification, stock split (including a
reverse split), stock dividend or distribution, recapitalization, merger,
subdivision, issuer tender or exchange offer, or other similar transaction, the
Merger Consideration shall be equitably adjusted to reflect such change.
(b) In the event Parent (i) changes or establishes a record date for
changing the number of shares of 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 with respect to the outstanding Parent Common Stock or (ii) pays or
makes an extraordinary dividend or distribution in respect of 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 Stock Consideration shall be proportionately adjusted. Regular
quarterly cash dividends and increases thereon shall not be considered
extraordinary for purposes of the preceding sentence. If, between the date
hereof and the Effective Time, Parent shall merge or consolidate with or
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into any other corporation (a "Business Combination") and the terms thereof
shall provide that Parent Common Stock shall be converted into or exchanged for
the shares of any other corporation or entity, then provision shall be made so
that shareholders of the Company who would be entitled to receive shares of
Parent Common Stock pursuant to this Agreement shall be entitled to receive, in
lieu of each share of Parent Common Stock issuable to such shareholders as
provided herein, the same kind and amount of securities or assets as shall be
distributable upon such Business Combination with respect to one share of Parent
Common Stock and, if necessary or advisable, the parties hereto shall agree on
an appropriate restructuring of the transactions contemplated herein.
4.5. Tax Opinion Adjustment. In the event that either the condition
set forth in Section 7.2(d) or the condition set forth in Section 7.3(c) is not
satisfied but would be capable of being satisfied if the number of Shares being
converted into Parent Common Stock were increased, and all other conditions set
forth in Article VII have been satisfied (or, with respect to conditions to be
satisfied at the Effective Time, will in fact be satisfied), then the number of
Shares being converted into Parent Common Stock shall be increased (and the
number of Shares converted into cash shall be decreased) to the extent necessary
to permit the satisfaction of the conditions set forth in each of Sections
7.2(d) and 7.3(c), provided, that, each additional Share that is converted into
the right to receive shares of Parent Common Stock solely as a result of the
operation of this Section 4.5, to the extent that the conversion is necessary so
that the value of the Parent Common Stock paid as consideration for Shares is
not less than 41% of the value of the total consideration for Shares, shall be
converted into the right to receive a number of shares of Parent Common Stock
having a value of $24.00 (it being understood that value, in each case, shall be
calculated consistent with the methods used in connection with the provision of
the tax opinions contemplated by Section 7.2(d) and 7.3(c)). For purposes of
Section 4.2(b), such additional Shares shall continue to be treated as part of
the Cash Election Number and the shares of Parent Common Stock issued in respect
thereof shall be treated as Cash Consideration. If required by law or the rules
of the NYSE, Parent will use its best reasonable efforts to obtain the requisite
approval of its shareholders for the issuance of a number of shares of Parent
Common Stock sufficient to take into account the revised number of shares of
Parent Common Stock. On the Closing Date, Parent and the Company each shall
obtain from its respective counsel a determination whether the conditions set
forth in Section 7.2(d) or
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7.3(c), as the case may be, can be satisfied without making any adjustment set
forth in this Section 4.5 and, if such condition cannot be satisfied without
such an adjustment, a determination as to the minimum percentage of the Merger
Consideration that the Stock Consideration must constitute in order for such
counsel to render such opinion. Parent and the Company shall jointly inform the
Exchange Agent whether any adjustment pursuant to this Section 4.5 is required;
and, if so, the extent of any such adjustment.
4.6. Uncertificated Shares of Parent Common Stock. The Company agrees
that if Parent establishes procedures for book-entry transfer of shares of
Parent Common Stock (or other similar system for uncertificated shares of Parent
Common Stock) prior to the Effective Time, issuance of Parent Common Stock
pursuant to this Agreement may be made pursuant to such book-entry or similar
procedures.
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company, Parent and Merger
Sub. Except as set forth in the corresponding sections or subsections of the
disclosure letter, dated October 4, 1999, delivered by the Company to Parent or
by Parent to the Company (each, a "Disclosure Letter", and the "Company
Disclosure Letter" and the "Parent Disclosure Letter", respectively), as the
case may be, the Company (except for subparagraphs (b)(ii), (b)(iii), (c)(ii),
(q)(ii) and (v)(ii) below and references in paragraphs (a), (e) and (l) below to
documents made available by Parent to the Company) hereby represents and
warrants to Parent and Merger Sub, and Parent (except for subparagraphs (b)(i),
(c)(i), (j), (p), (q)(i), (s), (t), (v)(i) and (w) below and references in
paragraphs (a), (e) and (l) below to documents made available by the Company to
Parent), on behalf of itself and Merger Sub, hereby represents and warrants to
the Company, that:
(a) Organization, Good Standing and Qualification. Each of it and its
Subsidiaries is a corporation or other entity duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each
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jurisdiction where the ownership or operation of its assets or properties or
conduct of its business requires such qualification, except where the failure to
be so organized, qualified or in good standing, or to have given power or
authority when taken together with all other such failures, is not reasonably
likely to have a Material Adverse Effect (as defined below). It has made
available to Parent, in the case of the Company, and to the Company, in the case
of Parent, a complete and correct copy of its Subsidiaries' articles of
incorporation and by-laws or comparable governing documents for non-corporate
entities ("Organizational Documents"), each as amended to date. Such
Organizational Documents as so made available are in full force and effect.
Section 5.1(a) of the Disclosure Letters contains a correct and complete list of
each jurisdiction where the Company, in the case of the Company Disclosure
Letter, and Parent, in the case of the Parent Disclosure Letter, and in each
case, each of its Subsidiaries is organized.
As used in this Agreement, the term (i) "Subsidiary" means, with
respect to the Company, Parent or Merger Sub, as the case may be, any entity,
whether incorporated or unincorporated, of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions is directly or indirectly owned or controlled by such party or by one
or more of its respective Subsidiaries or by such party and any one or more of
its respective Subsidiaries and (ii) "Material Adverse Effect" means, with
respect to the Company or Parent, as the case may be, a material adverse effect
on the condition (financial or otherwise), properties, business, operations,
results of operations or prospects of the Company or Parent, as the case may be,
and its respective Subsidiaries taken as a whole (other than any change or
effect arising out of (i) any transaction taken to comply with Section 6.17(c),
(ii) the Company's recognition of a write-down of its gas and oil properties
under the full cost method of accounting as prescribed by Rule 4-10 of
Regulation S-X under the Securities Act and Exchange Act, (iii) general economic
conditions or (iv) conditions generally affecting the electric or gas utility
industries).
(b) Capital Structure. (i) The authorized capital stock of the Company
consists of 250,000,000 Shares (which are entitled to vote as a class), of which
85,655,381 Shares were outstanding as of the close of business on the date
hereof, and 25,000,000 shares of preferred stock, without par value (the
"Preferred Shares"), none of which were outstanding as of the date hereof. All
of the
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outstanding Shares have been duly authorized and are validly issued, fully paid
and nonassessable. Other than up to 4,560,345 shares subject to issuance related
to the 2,645,000 outstanding Preferred Redeemable Increased Dividend Equity
Securities (the "Feline Prides") and 250,000 shares of Series A Junior
Participating Preferred Stock subject to issuance pursuant to the Rights
Agreement, none of which were outstanding as of the close of business on the
date hereof, the Company has no Shares or Preferred Shares subject to issuance,
except that, as of the date hereof, there were 2,515,914 Shares subject to
issuance pursuant to the Company's Stock Incentive Plan, Long Term Incentive
Performance Share Plan, Mandatory Deferred Compensation Plan and Non-employee
Directors Compensation Plan (the "Stock Plans"). Section 5.1(b) of the Company
Disclosure Letter contains a correct and complete list of each outstanding
option to purchase Shares under the Stock Plans (each a "Company Option"), date
of grant, exercise price, expiration date and number of Shares subject thereto.
Each of the outstanding shares of capital stock or other securities of each of
the Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned by a direct or indirect wholly owned Subsidiary of the
Company, free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth in this Section 5.1(b), there are no preemptive
or other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind that obligate the Company
or any of its Subsidiaries to issue or sell any shares of capital stock or other
securities of the Company or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire, any securities of the Company or any
of its Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. After the Effective Time, the Feline Prides
will be convertible only into, with respect to each Purchase Contract (as
defined in the Purchase Contract Agreement dated March 25, 1997, between the
Company and First National Bank of Chicago (the "Purchase Contract Agreement")),
for each Share issuable on account of such Purchase Contract the right to
receive on the Purchase Contract Settlement Date (as defined in the Purchase
Contract Agreement) the Merger Consideration and cash in lieu of fractional
shares, if any, pursuant to Section 4.2(f) into which a Share would be converted
pursuant to Section 4.2 if such Share were a Non-Election Share, assuming for
purposes of such conversion that the Purchase Contract Settlement Date had
occurred immediately prior to the Effective Time. The Company does not have
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outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the shareholders of the Company on any matter
("Voting Debt"). Section 5.1(b) of the Company Disclosure Letter sets forth a
true and complete list of each Person in which the Company owns, directly or
indirectly, any voting interest that may require a filing by Parent under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR Act").
(ii) The authorized capital stock of Parent consists of 400,000,000
shares of Parent Common Stock (which are entitled to vote as a class), of which
145,045,159 shares were outstanding as of the close of business on September 30,
1999, 5,000,000 shares of preferred stock, without par value (the "Parent
Preferred Shares"), none of which were outstanding as of the date hereof. All of
the outstanding shares of Parent Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable. Other than 1,500,000 shares of
Series A Junior Participating Preferred Stock reserved for issuance pursuant to
the Rights Agreement, dated as of September 23, 1997, between Parent and The
Detroit Edison Company, as Rights Agent (the "Parent Rights Agreement"), none of
which were outstanding as of the date hereof, Parent has no shares of Parent
Common Stock or Parent Preferred Shares subject to issuance, except that, as of
September 30, 1999, there were 997,575 shares of Parent Common Stock subject to
issuance pursuant to Parent's Long-Term Incentive Plan (the "Parent Stock
Plan"). Section 5.1(b) of the Parent Disclosure Letter contains a correct and
complete list of each outstanding option to purchase shares of Parent Common
Stock under the Parent Stock Plan, including the date of grant, exercise price,
expiration date and number of shares of Parent Common Stock subject thereto.
Each of the outstanding shares of capital stock or other securities of each of
Parent's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned by a direct or indirect wholly owned Subsidiary of
Parent, free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth above, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements, calls,
commitments or rights of any kind that obligate Parent or any of its
Subsidiaries to issue or sell any shares of capital stock or other securities of
it or any of its Subsidiaries or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe
for or acquire, any securities of Parent
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or any of its Subsidiaries, and no securities or obligations evidencing such
rights are authorized, issued or outstanding. Parent does not have outstanding
any bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the shareholders of Parent on any matter ("Parent Voting
Debt"). As of the date hereof, Parent has not granted registration rights to any
person or entity which rights are currently exercisable or will become
exercisable between the date hereof and the Effective Time.
(iii) The authorized capital stock of Merger Sub consists of 60,000
shares of common stock (entitled to vote as a class), 1,000 of which are validly
issued, fully paid, nonassessable and outstanding as of the date hereof. All of
the issued and outstanding capital stock of Merger Sub is, and at the Effective
Time will be, owned by Parent, and there are (A) no other voting securities of
Merger Sub, (B) no securities of Merger Sub convertible into or exchangeable for
shares of capital stock or voting securities of Merger Sub and (C) no options or
other rights to acquire from Merger Sub, and no obligations of Merger Sub to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Merger Sub. Merger Sub
was formed solely for the purpose of engaging in the transactions contemplated
in this Agreement and has not conducted any business prior to the date hereof
and has no, and prior to the Effective Time will have no, assets, liabilities or
obligations of any nature other than those incident to its formation and
pursuant to this Agreement and the Merger and the other transactions
contemplated by this Agreement.
(c) Corporate Authority; Approval and Fairness. (i) The Company has
all requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform (in the case of consummation
of the Merger, subject to obtaining requisite shareholder approval) its
obligations under this Agreement and to consummate, subject only to approval of
this Agreement by the holders of a majority of the outstanding Shares (the
"Company Requisite Vote"), the Merger. Assuming the due authorization, execution
and delivery of this Agreement by Parent and Merger Sub, this Agreement is a
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles (the
"Bankruptcy and Equity Exception").
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The board of directors of the Company (A) has unanimously adopted this Agreement
and (B received, on October 4, 1999, and has received, as of the Second
Amendment Date, the opinion of its financial advisor, Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), to the effect that the
consideration to be received by the holders of the Shares in the Merger is fair
to such holders from a financial point of view, a copy of which opinions have
been delivered to Parent.
(ii) Each of the Parent and Merger Sub has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute, deliver and perform (in the case of consummation of the Merger, subject
to obtaining requisite shareholder approval) its obligations under this
Agreement and to consummate, subject only to any shareholder approval necessary
to permit the issuance of the shares of Parent Common Stock required to be
issued pursuant to Article IV (the "Parent Requisite Vote"), the Merger.
Assuming the due authorization, execution and delivery of this Agreement by the
Company, this Agreement is a valid and binding agreement of Parent enforceable
against Parent in accordance with its terms, subject to the Bankruptcy and
Equity Exception. Assuming the due authorization, execution and delivery of this
Agreement by the Company, this Agreement is a valid and binding agreement of
Merger Sub enforceable against Merger Sub in accordance with its terms. The
Boards of Directors of Parent and Merger Sub (A) have adopted this Agreement and
(B) received, on October 4, 1999, and has received as of the Second Amendment
Date, the opinion of Parent's financial advisor, Warburg Dillon Read LLC, to the
effect that the consideration to be paid by Parent to the holders of Shares in
the Merger is fair to Parent from a financial point of view. Prior to the
Effective Time, Parent will have taken all necessary action to permit it to
issue the number of shares of Parent Common Stock required to be issued pursuant
to Article IV. The Parent Common Stock, when issued, will be validly issued,
fully paid and nonassessable, and no shareholder of Parent will have any
preemptive right of subscription or purchase in respect thereof. The Parent
Common Stock, when issued, will be registered under the Securities Act and the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder, the "Exchange Act") and registered or exempt from
registration under any applicable state securities or "blue sky" laws.
(d) Governmental Filings; No Violations. (i) Other than the reports,
filings and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act, the
Exchange Act and the Securities Act, (C) required to be made
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with the NYSE or the Chicago Stock Exchange, (D) to comply with state securities
or "blue sky" laws, (E) with, to or of the Federal Energy Regulatory Commission
(the "FERC") pursuant to the Federal Power Act, as amended (the "Power Act"), if
required, (F) under the Public Utility Holding Company Act of 1935, as amended
(the "1935 Act"), (G) with, to or of federal or state regulatory bodies pursuant
to Environmental Laws (as defined in Section 5.1(k)) and (H) identified in
Section 5.1(d) of the respective Disclosure Letter, no notices, reports or other
filings are required to be made by it or any of its Subsidiaries with, nor are
any consents, registrations, approvals, permits or authorizations required to be
obtained by it or any of its Subsidiaries from, any governmental or regulatory
authority, agency, commission, body or other governmental entity ("Governmental
Entity"), in connection with the execution and delivery of this Agreement by it
and the consummation by it of the Merger and the other transactions contemplated
hereby, except those that the failure to make or obtain are not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect or
prevent, materially delay or materially impair the ability of it to consummate
the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by it
do not, and the consummation by it of the Merger and the other transactions
contemplated hereby will not, constitute or result in (A) a breach or violation
of, or a default under, its articles of incorporation or by-laws or the
Organizational Documents of any of its Subsidiaries, (B) a breach or violation
of, a default under, or the acceleration of any obligations or the creation of a
lien, pledge, security interest or other encumbrance on the assets of it or any
of its Subsidiaries (with or without notice, lapse of time or both) pursuant to,
any agreement, lease, license, contract, note, mortgage, indenture, arrangement
or other obligation ("Contracts") binding upon it or any of its Subsidiaries or
any Law (as defined in Section 5.1(i)) or governmental or non-governmental
permit or license to which it or any of its Subsidiaries is subject or (C) any
change in the rights or obligations of any party under any of the Contracts,
except, in the case of clause (B) or (C) above, for any breach, violation,
default, acceleration, creation or change that, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect or
prevent, materially delay or materially impair the ability of it to consummate
the transactions contemplated by this Agreement. Section 5.1(d) of the Company
Disclosure Letter, with respect to the Company, and the Parent Disclosure
Letter, with respect to Parent, sets forth a correct and complete list of
material Contracts of
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the Company, in the case of the Company Disclosure Letter, and of Parent, in the
case of the Parent Disclosure Letter, and any of its respective Subsidiaries
pursuant to which consents or waivers are or may be required prior to
consummation of the transactions contemplated by this Agreement (whether or not
subject to the exception set forth with respect to clauses (B) and (C) above).
(e) Reports; Financial Statements. All material filings required to be
made by it and its Subsidiaries since December 31, 1995 under the Securities
Act, the Exchange Act, the 1935 Act, the Power Act and state law applicable to
public utilities, and under regulations applicable to public utilities in the
United States, have been made in accordance with the requirements of the
relevant Governmental Entities, except for such failures to make filings that
are not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect, and it has complied as of their respective dates, in all
material respects with all applicable requirements of appropriate statutes and
rules and regulations. It has delivered to the other party each registration
statement, report, proxy statement or information statement prepared by it since
December 31, 1998 (the "Audit Date"), including (i) its Annual Report on Form
10-K for the year ended December 31, 1998, and (ii) its Quarterly Reports on
Form 10-Q for the periods ended March 31, 1999, and June 30, 1999, each in the
form (including exhibits, annexes and any amendments thereto) filed with the
Securities and Exchange Commission (the "SEC") (collectively, including any such
reports filed subsequent to the date hereof and as amended, the "Reports"). As
of their respective dates, (or, if amended, as of the date of such amendment)
the Reports did not, and any Reports filed with the SEC subsequent to the date
hereof will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Reports (including the related notes and
schedules) presents fairly, or will present fairly, in all material respects,
the consolidated financial position of it and its Subsidiaries as of its date
and each of the consolidated statements of income, cash flows and changes in
shareholders' equity included in or incorporated by reference into the Reports
(including any related notes and schedules) presents fairly, or will present
fairly, the results of operations, cash flows and changes in shareholders'
equity, as the case may be, of it and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and
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normal year-end audit adjustments that will not be material in amount or
effect), in each case in accordance with generally accepted accounting
principles in the United States ("U.S. GAAP") consistently applied during the
periods involved, except as may be noted therein.
(f) Absence of Certain Changes. Except as disclosed in its Reports
filed prior to the date hereof, since the Audit Date it and its Subsidiaries
have conducted their respective businesses only in, and have not engaged in any
material transaction other than according to, the ordinary and usual course of
such businesses and there has not been (i) any change in the condition
(financial or otherwise), properties, business, operations, results of
operations or prospects of it and its Subsidiaries or any development or
combination of developments of which its officers have actual knowledge that,
individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect; (ii) any declaration, setting aside or payment of any
dividend, or other distribution in cash, stock or property in respect of its
capital stock, except for dividends or other distributions on its capital stock
publicly announced prior to the date hereof and except as expressly permitted
hereby; (iii) any split in its capital stock, combination, subdivision or
reclassification of any of its capital stock or issuance or authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, except as expressly contemplated hereby; or
(iv) any change by it in accounting principles, or material change in its
accounting practices or methods. Since the Audit Date, except as provided for
herein or as disclosed in the Reports filed prior to the date hereof, there has
not been any increase in the compensation payable or that could become payable
by it or any of its Subsidiaries to officers or key employees or any amendment
of any of the Compensation and Benefit Plans (as defined in Section 5.1(h)(i))
other than increases or amendments in the ordinary and usual course.
(g) Litigation and Liabilities. Except as disclosed in the Reports
filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the actual knowledge of its officers, threatened against it or
any of its Affiliates (as defined below), (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise and whether or not required to
be disclosed, or any facts or circumstances of which its officers have actual
knowledge that could reasonably be expected to result in any claims against, or
obligations or liabilities of, it or any of its Affiliates or
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(iii) developments since the date of such Reports with respect to such disclosed
actions, suits, claims, hearings, investigations or proceedings, except, in each
case, for those that, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect or prevent or materially burden or
materially impair the ability of it to consummate the transactions contemplated
by this Agreement. As used herein, the term "Affiliate" shall have the meaning
ascribed to such term in Rule 12b-2 under the Exchange Act.
(h) Employee Benefits.
(i) A copy (or, if not in writing, a summary) of each bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock, stock option,
employment, termination, severance, compensation, medical, health or other plan,
agreement, policy or arrangement that covers employees, directors, former
employees or former directors of it and its Subsidiaries (the "Compensation and
Benefit Plans") (other than immaterial policies and arrangements not related to
severance) and any trust agreement or insurance contract forming a part of such
Compensation and Benefit Plans has been provided or made available to the other
party prior to the date hereof. The Compensation and Benefit Plans are listed in
Section 5.1(h) of its Disclosure Letter and those containing any "change of
control" or similar provisions are specifically identified in Section 5.1(h) of
its Disclosure Letter.
(ii) All Compensation and Benefit Plans are in substantial compliance
with all applicable law, including the Code and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Each Compensation and Benefit Plan
that is an "employee pension benefit plan" within the meaning of Section 3(2) of
ERISA (a "Pension Plan") and that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service (the "IRS"), nor are there any existing circumstances
likely to result in revocation of any such favorable determination letter. No
actions, suits, or claims (other than routine claims for benefits) have been
filed or, to the actual knowledge of its officers, are contemplated or
threatened against any Compensation and Benefits Plan or against the assets of
any Compensation and Benefits Plan; and, to the actual knowledge of its
officers, there is no basis for such action, suit or claim. Neither it nor any
of its Subsidiaries has engaged in a transaction with respect to any
Compensation and Benefit Plan that,
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assuming the taxable period of such transaction expired as of the date hereof,
would subject it or any of its Subsidiaries to a material tax or penalty imposed
by either Section 4975 of the Code or Section 502 of ERISA that has not
previously been satisfied.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by it or any Subsidiary with respect to any
ongoing, frozen or terminated "single-employer plan", within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or the single-employer plan of any entity which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). It and its Subsidiaries have not incurred and do not expect to
incur any withdrawal liability with respect to a multiemployer plan under
Subtitle E to Title IV of ERISA regardless of whether based on contributions of
an ERISA Affiliate. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof or will be
required to be filed in connection with the transactions contemplated by this
Agreement.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely made or
have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports prior to the date hereof.
Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has
an "accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA. Neither it nor its
Subsidiaries has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Pension Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Pension
Plan, and there has been no material
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change in the financial condition of such Pension Plan since the last day of the
most recent plan year.
(vi) Neither it nor its Subsidiaries have any obligations for retiree
health and life benefits under any Compensation and Benefit Plan, except as set
forth in the SEC filings or Section 5.1(h) of the Company Disclosure Letter; the
terms of each such plan provide that such retiree health and life benefits may
be amended or terminated at any time, except to the extent limited by any
collective bargaining agreement.
(vii) The consummation of the Merger and the other transactions
contemplated by this Agreement will not (x) entitle any employees of it or its
Subsidiaries to severance pay or any increase in severance pay upon any
termination of employment prior to or after the date hereof, (y) accelerate the
time of payment or vesting or trigger any payment or funding (through a grantor
trust or otherwise) of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the
Compensation and Benefit Plans, or (z) result in any breach or violation of, or
a default under, any of the Compensation and Benefit Plans.
(viii) The Company has amended the terms of any and all Compensation
and Benefit Plans, as applicable, to eliminate the automatic funding of accrued
benefits under such plans via the Rabbi Trust established effective January 3,
1991, in connection with the consummation of the Merger and the other
transactions contemplated by this Agreement.
(ix) No Compensation and Benefit Plan is maintained outside the United
States.
(i) Compliance with Laws; Permits. Except as set forth in the Reports
filed prior to the date hereof, the businesses of each of it and its
Subsidiaries have not been, and are not being, conducted in violation of any
federal, state, local or foreign law, statute, ordinance, rule, regulation,
judgment, order, injunction, decree, arbitration award, agency requirement,
license or permit of any Governmental Entity (collectively, "Laws"), except for
violations that, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect or prevent or materially burden or materially
impair the ability of it to consummate the transactions contemplated by this
Agreement. Except as set forth in the Reports filed prior to the date hereof, no
investigation or review by any Governmental Entity with respect to it or any of
its
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Subsidiaries is pending or, to the actual knowledge of its officers, threatened,
nor has any Governmental Entity indicated an intention to conduct the same,
except for those the outcome of which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect or prevent or materially
burden or materially impair its ability to consummate the transactions
contemplated by this Agreement. Each of it and its Subsidiaries has all permits,
licenses, franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct its business as
presently conducted, except those the absence of which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect or
prevent or materially burden or materially impair its ability to consummate the
Merger and the other transactions contemplated by this Agreement.
(j) Takeover Statutes. No "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation (each a
"Takeover Statute") or any anti-takeover provision in the Company's articles of
incorporation or by-laws is, or at the Effective Time will be, applicable to the
Company, the Shares, the Merger or the other transactions contemplated by this
Agreement.
(k) Environmental Matters. Except as disclosed in the Reports prior to
the date hereof and except as has not had and is not reasonably likely to have a
Material Adverse Effect: (i) each of it and its Subsidiaries is in compliance
with all applicable Environmental Laws; (ii) no property (including soils,
groundwater, surface water, buildings or other structures) currently owned or
operated by it or any of its Subsidiaries is contaminated with any Hazardous
Substance which could reasonably be expected to result in liability relating to
or require remediation under any Environmental Law; (iii) no property formerly
owned or operated by it or any of its Subsidiaries has been contaminated with
any Hazardous Substance during or prior to such period of ownership or operation
which could reasonably be expected to result in liability relating to or require
remediation under any Environmental Law; (iv) neither it nor any of its
Subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither it nor any of its
Subsidiaries has been associated with any release or threat of release of any
Hazardous Substance which could reasonably be expected to result in liability
relating to or require remediation under any Environmental Law; (vi) neither it
nor any of its Subsidiaries has received any notice, demand, letter, claim or
request for information alleging that it or any of its
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Subsidiaries may be in violation of or subject to liability under any
Environmental Law; (vii) neither it nor any of its Subsidiaries is subject to
any order, decree, injunction or other arrangement with any Governmental Entity
or any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; (viii) there
are no other circumstances or conditions involving it or any of its Subsidiaries
or the transactions contemplated in this Agreement that could reasonably be
expected to result in any claim, liability, investigation, cost or restriction
on the ownership, use, or transfer of any property pursuant to any Environmental
Law; and (ix) the Company has delivered to Parent, and Parent has made available
to the Company, copies of all environmental reports, studies, assessments,
sampling data and other environmental information in its possession relating to
it or its Subsidiaries or their respective current and former properties or
operations.
As used herein, the term "Environmental Law" means any federal, state,
local or foreign statute, law, regulation, order, decree, permit, authorization,
opinion, common law or agency requirement relating to: (A) the protection,
investigation or restoration of the environment, health, safety, or natural
resources, (B) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance or (C) noise, odor, indoor air, employee
exposure, wetlands, pollution, contamination or any injury or threat of injury
to persons or property relating to any Hazardous Substance.
As used herein, the term "Hazardous Substance" means any substance
that is: (A) listed, classified or regulated pursuant to any Environmental Law;
(B) any petroleum or coal product or by-product, any waste, ash or sludge,
asbestos-containing material, lead-containing paint or plumbing, polychlorinated
biphenyls, radioactive material or radon; and (C) any other substance which may
be the subject of regulatory action by any Government Entity in connection with
any Environmental Law.
(l) Taxes. Except for failures and inaccuracies that are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect, each of it and its Subsidiaries (i) have prepared in good faith and duly
and timely filed (taking into account any extension of time within which to
file) all Tax Returns (as defined below) required to be filed by any of them and
all such filed Tax Returns are complete and accurate; (ii) has paid all Taxes
(as defined below) that are shown as due on such filed Tax Returns or that it or
any of its Subsidiaries are obligated
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to withhold from amounts owing to any employee, creditor or third party, except
with respect to matters contested in good faith; and (iii) has not waived any
statute of limitations with respect to Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency. Except as set forth in the
Company Disclosure Letter, (i) neither it nor any of its Subsidiaries is a party
to any Tax allocation, indemnity or sharing agreement (other than such an
agreement between it and any of its Subsidiaries) and (ii) neither it nor any of
its Subsidiaries has any liability for Taxes as a result of its or any of its
Subsidiaries inclusion in any group's consolidated or combined Tax returns other
than a group of which it is a common parent, except, in the case of clause (ii),
as is not reasonably likely to have a Material Adverse Effect. As of the date
hereof, there are not pending or, to the actual knowledge of its officers
threatened in writing, any audits, examinations, investigations or other
proceedings in respect of Taxes or Tax matters that, individually or in the
aggregate are reasonably likely to have a Material Adverse Effect. There are
not, to the actual knowledge of its officers, any unresolved questions or claims
concerning its or any of its Subsidiaries' Tax liability that, individually or
in the aggregate, are reasonably likely to have a Material Adverse Effect.
Neither it nor any of its Subsidiaries has any liability with respect to Taxes
in excess of the amounts accrued with respect thereto that are reflected in the
financial statements included in the Reports filed on or prior to the date
hereof, except as is not, individually or in the aggregate reasonably likely to
have a Material Adverse Effect.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes", and "Taxable") includes all federal,
state, local and foreign income, profits, alternative minimum tax, franchise,
gross receipts, environmental, customs duty, capital stock, severances, stamp,
payroll, sales, employment, unemployment, disability, use, property,
withholding, excise, add-on, production, value added, occupancy and other taxes,
duties or assessments of any nature whatsoever, together with all interest,
penalties and additions imposed with respect to such amounts and any interest in
respect of such penalties and additions, and (ii) the term "Tax Return" includes
all returns and reports (including elections, declarations, disclosures,
schedules, estimates and information returns) required to be supplied to a Tax
authority relating to Taxes.
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(m) Labor Matters. Except as set forth in Section 5.1(m) of its
Disclosure Letter, neither it nor any of its Subsidiaries is a party to or
otherwise bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is it
or any of its Subsidiaries the subject of any material proceeding asserting that
it or any of its Subsidiaries has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization nor
is there pending or, to the actual knowledge of its officers, threatened, nor
has there been for the past five years, any labor strike, dispute, walk-out,
work stoppage, slow-down or lockout involving it or any of its Subsidiaries.
Each party has previously made available to the other correct and complete
copies of all labor and collective bargaining agreements, Contracts or other
agreements or understandings with a labor union or labor organization to which
it or any of its Subsidiaries is party or by which any of them are otherwise
bound (collectively, the "Labor Agreements"). The consummation of the Merger and
the other transactions contemplated by this Agreement will not entitle any third
party (including any labor union or labor organization) to any payments under
any of the Labor Agreements.
(n) Intellectual Property.
(i) It or its Subsidiaries own (free and clear of any and all liens,
claims or encumbrances), or is licensed or otherwise possesses sufficient
legally enforceable rights to use, all patents, trademarks, trade names, service
marks, brand marks, brand names, copyrights, and any applications therefor,
technology, know-how, computer software programs or applications, databases,
industrial designs and tangible or intangible proprietary information or
materials that are currently used (or, with respect to trademarks, trade names,
brand marks, brand names and service marks, have been used within the last five
years) in its and its Subsidiaries' businesses (collectively, "Intellectual
Property Rights"), except for any such failures to own, be licensed or possess
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect.
(ii) Except as disclosed in the Reports filed prior to the date
hereof, and except for such matters that, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect, (i) the use of the
Intellectual Property Rights by it or its Subsidiaries does not conflict with,
infringe upon, violate or interfere with or constitute an appropriation of any
right, title, interest or goodwill including, without limitation, any
intellectual
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property right, patent, trademark, trade name, service mark, brand mark, brand
name, copyright, technology, know-how, computer software program or application,
database or industrial design of any other Person and (ii) there have been no
claims made and neither it nor any of its Subsidiaries has received notice of
any claim or otherwise knows that any Intellectual Property Right is invalid,
conflicts with the asserted right of any other Person, has not been used or
enforced or has been failed to be used or enforced in a manner that would result
in the abandonment, cancellation or unenforceability of any Intellectual
Property Right of it or any of its Subsidiaries.
(o) Insurance. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by it or any of its Subsidiaries are with
reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of it and its Subsidiaries and their respective
properties and assets, and are in character and amount at least equivalent to
that carried by persons engaged in similar businesses and subject to the same or
similar perils or hazards, except for any such failures to maintain insurance
policies that, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect.
(p) Rights Plan. (i) The Company has amended the Rights Agreement to
provide that (x) Parent shall not be deemed an Acquiring Person (as defined in
the Rights Agreement), (y) the Distribution Date (as defined in the Rights
Agreement) shall not be deemed to occur and (z) the Rights will not separate
from the Shares, in each case, as a result of entering into this Agreement or
consummating the Merger and/or the other transactions contemplated hereby.
(ii) The Company has taken all necessary action with respect to all of
the outstanding Rights (as defined in the Rights Agreement) so that, as of
immediately prior to the Effective Time, the Rights Agreement will expire
without any payment by the Company in respect of the Rights.
(q) Brokers and Finders. Neither it nor any of its officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with the Merger or the
other transactions contemplated in this Agreement except (i) that the Company
has employed Merrill Lynch as its financial advisor, the arrangements with which
have been disclosed to Parent prior to the date hereof and (ii) for the
arrangements set forth on Parent's Supplemental
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Disclosure Schedule and that Parent has employed Warburg Dillon Read LLC as it
financial advisor, the arrangements with which have been disclosed to the
Company prior to the date hereof. As used in this subsection, "Parent's
Supplemental Disclosure Schedule" means the disclosure schedule delivered by
Parent to the Company dated the Second Amendment Date.
(r) Year 2000. Except as disclosed in the Reports filed prior to the
date hereof, all computer systems and computer software used by it or any of its
Subsidiaries, and the material computer systems and computer software of its
material commercial counterparties, recognize or are being adapted so that,
prior to December 31, 1999, they shall recognize the advent of the year A.D.
2000 and can correctly recognize or are being adapted so that they can correctly
recognize and manipulate date information relating to dates on or after January
1, 2000 and the operation and functionality of such computer systems and such
computer software will not be adversely affected by the advent of the year A.D.
2000 or any manipulation of data featuring information relating to dates before,
on or after January 1, 2000 ("Millennium Functionality"), except in each case
for such computer systems and computer software, the failure of which to achieve
Millennium Functionality, individually or in the aggregate, has not had and is
not reasonably likely to have a Material Adverse Effect. Except as disclosed in
the Reports filed prior to the date hereof, the costs of the adaptions necessary
to achieve Millennium Functionality are not reasonably likely to have a Material
Adverse Effect.
(s) Regulatory Proceedings. Except as set forth in the Reports,
neither the Company nor any of its Subsidiaries, all or part of whose rates or
services are regulated by a Governmental Entity, (i) has rates which have been
or are being collected subject to refund, pending final resolution of any
proceeding pending before a Governmental Entity or on appeal to the courts or
(ii) is a party to any proceeding before a Governmental Entity or on appeal from
orders of a Governmental Entity which have had or are reasonably likely to
result in orders having a Material Adverse Effect.
(t) FERC Jurisdiction. To the actual knowledge of its officers,
neither the Company nor any of its Subsidiaries, nor any other entity in which
the Company, directly or indirectly owns or expects to retain any interest, owns
or operates any FERC jurisdictional facilities giving rise to a requirement for
approval of the Merger by the FERC.
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(u) Regulation as a Utility. (i) It is not regulated as a public
utility or public service company by any state. Other than as set forth in
Section 5.1(u) of its Disclosure Letter, none of its Subsidiaries or Affiliates
is subject to regulation as a public utility or public service company (or
similar designation) by any state in the United States or in any foreign
country.
(ii) Each of Parent and the Company is a holding company exempt from
registration pursuant to Section 3(a)(1) of the 1935 Act, as amended.
(v) Ownership of Shares. (i) Neither the Company nor any of its
Subsidiaries "Beneficially Owns" (as such term is defined in the Parent Rights
Agreement) any shares of Parent Common Stock.
(ii) Neither Parent nor any of its Subsidiaries "Beneficially Owns"
(as such term is defined in the Rights Agreement) any Shares.
(w) Schedule 5.1(w). Except with respect to the items set forth on
Schedule 5.1(w) hereto, as of the Second Amendment Date, the executive officers
of the Company have no knowledge of any fact, occurrence, event, effect or
change that, individually or in the aggregate with any other fact, occurrence,
event, effect or change has had or is reasonably likely, as of the Closing Date,
to have a Material Adverse Effect on the Company. As of the Second Amendment
Date, the Company has disclosed to Parent all material information relating to
the events, circumstances and facts set forth on Schedule 5.1(w), and such
disclosure does not contain any untrue statement of a material fact and such
disclosure does not omit any material fact necessary to make the disclosure, in
light of the circumstances, not misleading.
ARTICLE VI
Covenants
6.1. Interim Operations.
(a) Subject to Section 6.1.A., the Company covenants and agrees as to
itself and its Subsidiaries that after the Second Amendment Date and prior to
the Effective Time (unless Parent shall otherwise approve in writing, which
approval shall not be unreasonably withheld or delayed, and except as otherwise
expressly contemplated by this Agreement):
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(i) the business of the Company and its Subsidiaries shall be
conducted in the ordinary and usual course and, to the extent consistent
therewith, it and its Subsidiaries shall use their respective best reasonable
efforts to (A) preserve its business organization intact and maintain its
existing relations and goodwill with customers, suppliers, distributors,
creditors, lessors, employees and business associates and (B) maintain and keep
material properties and assets in as good repair and condition as such are in as
of the date hereof, subject to ordinary wear and tear;
(ii) the Company shall not (A) issue, sell, pledge, dispose of or
encumber any capital stock owned by it in any of its Subsidiaries; (B) amend its
articles of incorporation or by-laws or amend, modify or terminate the Rights
Agreement; (C) split, combine, subdivide or reclassify its outstanding shares of
capital stock; (D) declare, set aside or pay any dividend payable in cash, stock
or property in respect of any capital stock (other than dividends from its
direct or indirect wholly owned Subsidiaries and other than regular quarterly
cash dividends not in excess of $0.255 per Share and regular quarterly cash
dividends on the preferred and preference stock of its Subsidiaries); or (E)
repurchase, redeem or otherwise acquire (except for (I) mandatory sinking funds
obligations existing on the date hereof and (II) open market repurchases
pursuant to the terms of the Company's Direct Stock Purchase Plan and Dividend
Reinvestment Plan), or permit any of its Subsidiaries to purchase or otherwise
acquire, any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock;
(iii) neither the Company nor any of its Subsidiaries shall (A) issue,
sell, pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital stock of
any class or any other property or assets (other than (I) Shares issuable
pursuant to options and other rights outstanding on the date hereof under the
Stock Plans, issuances of additional options or rights to acquire Shares granted
pursuant to the terms of the Stock Plans as in effect on the date hereof in the
ordinary and usual course of the operation of such Stock Plans and issuances of
Shares pursuant to options granted after the date hereof pursuant to the Stock
Plans and (II) Shares issuable pursuant to the terms of the outstanding Feline
Prides); (B) (I) transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of or encumber any of its
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coal fines property or assets, or, (II) except as identified on Section
6.1(a)(iii) of the Company Disclosure Letter, other than in the ordinary and
usual course of business and other than sales not in excess of $10,000,000 in
the aggregate or $1,000,000 in respect of any transaction or series of related
transactions, transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of or encumber any other property or assets; (C) make or authorize or
commit for any capital expenditures or operation and maintenance expenditures in
excess of 100% of those contemplated to be spent pursuant to the year 1999, 2000
or 2001 capital appropriations/spending budgets set forth in Section 6.1(a) of
the Company Disclosure Letter; or (D) by any means, make any acquisition of, or
investment in, assets or stock of, or other interest in, any other Person or
entity in excess of $10,000,000 in the aggregate or $3,000,000 in respect of any
transaction or series of related transactions;
(iv) except as set forth in Section 6.1(a)(iv) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries shall (A)
accelerate or delay collection of notes or accounts receivable in advance of or
beyond their regular due dates or the dates consistent with past practice or (B)
change any significant accounting principle, practice or method, except to the
extent required by U.S. GAAP as advised by the Company's regular independent
accountants and after consultation with Parent;
(v) neither the Company nor any of its Subsidiaries shall take or fail
to take any action that is reasonably likely to make any representation or
warranty of the Company contained herein inaccurate in any material respect at,
or as of any time prior to, the Effective Time, or that is, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect;
(vi) except as required by applicable Law, an existing collective
bargaining agreement or other Contract identified in Section 6.1(a)(vi) of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries shall
terminate, establish, adopt, enter into, make any new grants or awards under,
amend or otherwise modify, any Compensation and Benefit Plans (other than
issuances of additional options, performance shares or rights to acquire Shares
granted pursuant to the terms of the Stock Plans as in effect on the date hereof
in the ordinary and usual course of the operation of such Stock Plans, provided,
that any such additional options, performance shares or rights to acquire Shares
shall not vest in connection with the Merger and the other transactions
contemplated by this Agreement),
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or except as required by any existing contract with a non-officer employer
increase the salary, wage, bonus or other compensation of any employees, except
increases occurring in the ordinary and usual course of business (which shall
include normal periodic performance reviews and related compensation and benefit
increases);
(vii) except as required by applicable law, an existing collective
bargaining agreement or other Contract identified in Section 6.1(a)(vii) of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries shall
grant any severance or termination pay to, or enter into any employment or
severance agreement with any director or officer of it or such Subsidiaries,
provided, that the foregoing shall not require the Company to violate any of its
obligations existing prior to the date hereof as set forth in Section 5.1(h) of
the Company Disclosure Letter;
(viii) neither the Company nor any of its Subsidiaries shall settle or
compromise any material claims or litigation or amend or terminate any of its
material Contracts or waive, release or assign any material rights or claims;
(ix) neither the Company nor any of its Subsidiaries shall make any
Tax election (other than in the ordinary and usual course or as is required by
Law) or permit any insurance policy naming it as a beneficiary or loss-payable
payee to be canceled or terminated except in the ordinary and usual course of
business;
(x) neither the Company nor any of its Subsidiaries shall make any
filing (other than in the ordinary and usual course) with the MPSC, SEC or MPSC;
and
(xi) neither the Company nor any of its Subsidiaries will authorize or
enter into an agreement to do any of the foregoing.
(b) Parent covenants and agrees as to itself and its Subsidiaries that
after the date hereof and prior to the Effective Time (unless the Company shall
otherwise approve, which approval shall not be unreasonably withheld or delayed,
and except as otherwise expressly contemplated by this Agreement):
(i) the business of Parent and its Subsidiaries shall be conducted in
the ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use their respective best reasonable efforts to (A)
preserve its business organization intact and maintain
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its existing relations and goodwill with customers, suppliers, distributors,
creditors, lessors, employees and business associates and (B) maintain and keep
material properties and assets in as good repair and condition as such are in as
of the date hereof, subject to ordinary wear and tear;
(ii) it shall not (A) amend its articles of incorporation or by-laws;
(B) split, combine, subdivide or reclassify its outstanding shares of capital
stock; (C) declare, set aside or pay any dividend payable, in cash, stock or
property in respect of any capital stock, other than dividends from its direct
or indirect wholly owned Subsidiaries and other than regularly quarterly cash
dividends not in excess of $0.515 per share of Parent Common Stock and regularly
quarterly cash dividends on the preferred and preference stock of its
Subsidiaries; or (D) repurchase, redeem or otherwise acquire, or permit any of
its Subsidiaries to purchase or otherwise acquire, any shares of Parent Common
Stock or any securities convertible into or exchangeable or exercisable for any
shares of Parent Common Stock (other than repurchases, redemptions or other
acquisitions which are made at the then-prevailing market price of Parent Common
Stock on the NYSE and which in the aggregate do not exceed ten percent of the
shares of Parent Common Stock outstanding as of the date hereof);
(iii) neither Parent nor any of its Subsidiaries shall, (A) issue,
sell, pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of Parent Common Stock
(other than (I) shares of Parent Common Stock issuable pursuant to options
outstanding on the date hereof under the Parent Stock Plan, issuances of
additional options or rights to acquire shares of Parent Common Stock granted
pursuant to the terms of the Parent Stock Plan as in effect on the date hereof
in the ordinary and usual course of the operation of such Parent Stock Plan and
issuances of shares of Parent Common Stock pursuant to options granted after the
date hereof pursuant to the Parent Stock Plan and (II) issuances of Parent
Common Stock, or securities convertible with or exchangeable or exercisable for,
or options, warrants, calls, commitments or rights of any kind to acquire,
shares of Parent Common Stock, to a third-party on arms-length terms not in
excess of 20% of the number of shares of Parent Common Stock outstanding as of
the date hereof) or (B) acquire "Beneficial Ownership" (as such term is defined
in the Rights Agreement) of any Shares;
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(iv) neither Parent nor any of its Subsidiaries shall take or fail to
take any action that is reasonably likely to make any representation or warranty
of such party contained herein inaccurate in any material respect at, or as of
any time prior to, the Effective Time, or that is, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect; and
(v) neither Parent nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
6.1.A. Supplemental Interim Operations Covenants.
(a) Notwithstanding any other provision of this Agreement, the Company
covenants and agrees as to itself and its Subsidiaries that after the Second
Amendment Date and prior to the Effective Time, neither the Company nor any of
its Subsidiaries shall:
(i) transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of or encumber any property or assets located outside of the Company's
service territory with a value of more than $1,000,000;
(ii)(A) incur, assume or prepay any long-term debt or incur or assume
any short-term debt, except for the incurrence of long-term indebtedness in
connection with the refinancing of existing indebtedness either at its stated
maturity or at a lower cost of funds or (B) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any third-party, including by means of any
"keep well" or other agreement to support or maintain any financial statement
condition of another person;
(iii)(A) enter into any new contracts or agreements (including hedging
contracts) relating to the supply of natural gas or any other commodity or the
marketing of natural gas or any other commodity with either a duration in excess
of 90 days or a notional value in excess of $1,000,000 or (B) transfer,
decrement, lease, license, sell, mortgage, pledge, dispose of or encumber any
natural gas properties or reserves;
(iv) authorize or enter into an agreement to do any of the foregoing.
(b) Notwithstanding any other provision of this Agreement, the Company
covenants and agrees as to itself and its Subsidiaries that after the receipt of
the Company
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Requisite Vote at the Second Shareholders Meeting and prior to the Effective
Time, the Company shall provide Parent with reasonable advance notice of, and
permit Parent to review (i) all business decisions that the Company believes are
reasonably likely to involve, or relate to, any expenditure (or group of related
expenditures) or financial exposure (or group of related financial exposures) of
more than $1,000,000 and (ii) all transfers, leases, licenses, guarantees,
sales, mortgages, pledges, dispositions of or encumbrances of any property or
assets with a value of more than $5,000,000 (any action contemplated by clause
(i) or (ii) being a "Significant Action"). In addition, the Company shall, to
the extent practicable and not inappropriate, give Parent advance notice of and
permit appropriate representatives of Parent to attend all significant internal
business meetings involving any of the employees of the Company set forth on
Schedule 6.1.A(b) after the receipt of the Company Requisite Vote at the Second
Shareholders Meeting and prior to the Effective Time, and the Company covenants
and agrees that neither it nor any of its Subsidiaries shall take any
Significant Action (or authorize or enter into an agreement to take any
Significant Action) without the prior written consent of Parent (which shall not
be unreasonably withheld); provided, however, that nothing in this Section
6.1.A(b) shall prevent the Company or any of its Subsidiaries from complying
with applicable Law or any contractual arrangement entered into prior to the
Second Amendment Date.
(c) For the avoidance of doubt only and without limiting the
foregoing, the parties hereto agree that in the event of a conflict between the
provisions of this Section 6.1.A. and the provisions of Section 6.1(a), the
provisions of this Section 6.1.A. shall control. Parent shall be responsible for
developing reasonable procedures for implementing the procedures set forth in
Section 6.1.A(b) and for receiving approval to take any action set forth in
Section 6.1.A.(a) and communicating those procedures to the Company prior to the
receipt of the Company Requisite Vote at the Second Shareholders Meeting. In the
event that such procedures are not in place, or such procedures are not adequate
in a particular circumstance, the Company shall be required to receive the prior
approval of any of the employees of Parent set forth on Schedule 6.1.A(b) prior
to taking any of the actions set forth in Section 6.1.A.(a) or taking any
Significant Action, and Parent shall make such employees reasonably available to
the Company for such purpose.
6.2. Acquisition Proposals. The Company agrees that neither it nor any
of its Subsidiaries nor any of the
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officers and directors of it or its Subsidiaries shall, and that it shall direct
and use its best efforts to cause its and its Subsidiaries' employees, agents
and representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries ("Representatives")) not to, directly
or indirectly, initiate, solicit, encourage or otherwise facilitate any
inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving,
or any purchase of all or, except for transactions in the ordinary course of
business or expressly contemplated by this Agreement that could not interfere
with the transactions contemplated by this Agreement, including by Section
6.1(a)(iii), any of the assets or any equity securities of, it or any of its
Subsidiaries (any such proposal or offer being hereinafter referred to as a
"Company Acquisition Proposal"). The Company further agrees that neither it nor
any of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' Representatives not to, directly or indirectly, engage
in any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any Person relating to a Company Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement a
Company Acquisition Proposal; provided, however, that nothing contained in this
Agreement (including the last preceding sentence and Section 6.1(b)) shall
prevent the Company or its Board of Directors or Parent or its Board of
Directors, as applicable, from (A) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to a Company Acquisition Proposal; (B) providing
information in response to a request therefor by a Person who has made an
unsolicited bona fide written Company Acquisition Proposal if the Company's
Board of Directors receives from the Person so requesting such information an
executed confidentiality agreement on terms, with respect to confidentiality,
substantially similar to those contained in the Confidentiality Agreement (as
defined in Section 9.7); (C) engaging in any negotiations or discussions with
any Person who has made an unsolicited bona fide written Company Acquisition
Proposal; or (D) recommending such Company Acquisition Proposal to the
shareholders of the Company if and only to the extent that, in each such case
referred to in clause (B), (C) or (D) above, prior to the time the Company
Requisite Vote shall have been obtained at the Second Shareholders Meeting (as
defined in Section 6.4.A.), the Board of Directors of the Company determines in
good faith after consultation with outside legal counsel and its financial
advisor and based
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upon such other matters as it deems relevant that failure to take such action
would likely result in a breach of their fiduciary duties under applicable law
and that such Company Acquisition Proposal, if accepted, is reasonably likely to
be consummated, taking into account all legal, financial and regulatory aspects
of the proposal and the Person making the proposal and would, if consummated, be
reasonably likely to result in a transaction more favorable to the Company's
shareholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable Acquisition Proposal being referred to
in this Agreement as a "Superior Proposal"). The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Company Acquisition Proposal. The Company agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this Section 6.2 and
in the Confidentiality Agreement. The Company agrees that it will use its best
reasonable efforts to notify Parent within one day of the receipt thereof if any
such inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its Representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any proposals or offers and thereafter shall keep Parent informed,
on a current basis, on the status and terms of any such proposals or offers and
the status of any such discussions or negotiations. The Company also agrees that
it will promptly request each Person that has heretofore executed a
confidentiality agreement in connection with its consideration of acquiring all
or substantially all of it, Michigan Consolidated Gas Company or MCN Investment
Corporation to return all confidential information heretofore furnished to such
Person by or on behalf of it or any of its Subsidiaries.
6.3. Information Supplied. The Company and Parent each agrees, as to
itself and its Subsidiaries, that none of the information supplied or to be
supplied by it or its Subsidiaries for inclusion or incorporation by reference
in (i) the post-effective amendment to the Registration Statement on Form S-4 to
be filed with the SEC by Parent in connection with the issuance of Parent Common
Stock in the Merger (including the proxy statement and prospectus (the
"Prospectus/Proxy Statement") constituting a part thereof) (the "S-4
Registration Statement") will, at the time the post-effective amendment to the
S-4 Registration Statement becomes effective under the Securities Act, contain
any
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untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (ii) the
Prospectus/Proxy Statement and any amendment or supplement thereto will, at the
date of mailing to shareholders and at the times of the meetings of shareholders
of the Company and Parent to be held in connection with the Merger and the
issuance of Parent Common Stock, respectively, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company and Parent
will cause the Form S-4, as amended, to comply as to form in all material
respects with the applicable provisions of the Securities Act and the rules and
regulations thereunder.
6.4. Shareholders Meetings. The Company will take, in accordance with
applicable law and its articles of incorporation and by-laws, all action
necessary to convene a meeting of holders of Shares (the "Shareholders Meeting")
as promptly as practicable after the S-4 Registration Statement is declared
effective to consider and vote upon the approval of this Agreement. Parent will
take, in accordance with its articles of incorporation and by-laws, all action
necessary to convene a meeting of holders of Parent Common Stock as promptly as
practicable after the S-4 Registration Statement is declared effective to
consider and vote upon the approval of the issuance of Parent Common Stock in
the Merger. Subject to fiduciary obligations under applicable law, each of the
Company's and Parent's Board of Directors shall recommend such approval and
shall take all lawful action to solicit such approval.
6.4.A. Second Shareholders Meeting. The Company will take, in
accordance with applicable law and its articles of incorporation and by-laws,
all action necessary to convene a meeting of holders of Shares (the "Second
Shareholders Meeting") as promptly as practicable after the post-effective
amendment to the S-4 Registration Statement is declared effective to consider
and vote upon the approval of this Agreement. Subject to fiduciary obligations
under applicable law, the Company's Board of Directors shall recommend such
approval and shall take all lawful action to solicit such approval.
6.5. Filings; Other Actions; Notification. (a) Parent and the Company
shall promptly prepare and file with the SEC the Prospectus/Proxy Statement, and
Parent shall prepare and file with the SEC the post-effective
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amendment to the S-4 Registration Statement as promptly as practicable. Parent
and the Company each shall use its best reasonable efforts to have the
post-effective amendment to the S-4 Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing, and
promptly thereafter mail the Prospectus/Proxy Statement to the respective
shareholders of each of the Company and Parent. Parent shall also use its best
reasonable efforts to obtain prior to the effective date of the post-effective
amendment to the S-4 Registration Statement all necessary state securities law
or "blue sky" permits and approvals required in connection with the Merger and
to consummate the other transactions contemplated by this Agreement and will pay
all expenses incident thereto.
(b) The Company and Parent each shall use its best reasonable efforts
to cause to be delivered to the other party and its directors a letter of its
independent auditors, dated (i) the date on which the post-effective amendment
to the S-4 Registration Statement shall become effective and (ii) the Closing
Date, and addressed to the other party and its directors, in form and substance
customary for "comfort" letters delivered by independent public accountants in
connection with registration statements similar to the S-4 Registration
Statement.
(c) The Company and Parent shall cooperate with each other and use
(and shall cause their respective Subsidiaries to use) their respective
commercially reasonable efforts to take or cause to be taken all actions, and do
or cause to be done all things, necessary, proper or advisable on its part under
this Agreement and applicable Laws to consummate and make effective the Merger
and the other transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as promptly as practicable all
documentation to effect all necessary notices, reports and other filings and to
obtain as promptly as practicable all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the Merger or any of
the other transactions contemplated by this Agreement. Subject to applicable
laws relating to the exchange of information (including any obligations pursuant
to any listing agreement with or rules of any national securities exchange),
Parent and the Company shall have the right to review in advance, and to the
extent practicable each will consult the other on, all the information relating
to Parent or the Company, as the case may be, and any of their respective
Subsidiaries, that appear in any filing made with, or written materials
submitted to, any third party and/or any
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Governmental Entity (including any national securities exchange) in connection
with the Merger and the other transactions contemplated by this Agreement. In
exercising the foregoing right, each of the Company and Parent shall act
reasonably and as promptly as practicable.
(d) The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with the Prospectus/Proxy Statement, the
post-effective amendment to the S-4 Registration Statement or any other
statement, filing, notice or application made by or on behalf of Parent, the
Company or any of their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Merger and the transactions
contemplated by this Agreement.
(e) The Company and Parent each shall keep the other apprized of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of any notices or
other communications received by Parent or the Company, as the case may be, or
any of its Subsidiaries, from any third party and/or any Governmental Entity
with respect to the Merger and the other transactions contemplated by this
Agreement. The Company and Parent each shall give prompt notice to the other of
any change that is reasonably likely to result in a Material Adverse Effect on
it or prevent, materially delay or materially impair the ability of the Company
or Parent, as the case may be, to consummate the transactions contemplated by
this Agreement.
(f) In the event any claim, action, suit investigation or other
proceeding by any Governmental Entity or other Person or other legal or
administrative proceeding is commenced that questions the validity or legality
of this Agreement or the Merger or the other transaction contemplated by this
Agreement or claims damages in connection therewith, the Company and Parent each
agree to cooperate and use their best reasonable efforts to defend against and
respond thereto.
6.6. Access. Upon reasonable notice, and except as may otherwise be
required by applicable law, the Company and Parent each shall (and shall cause
its Subsidiaries to) afford the other's officers, employees, counsel,
accountants and other authorized representatives reasonable access during normal
business hours throughout the period prior to the Effective Time, to its
properties, books, contracts and records and, during such period, the Company
and Parent each
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shall (and shall cause its Subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as may reasonably
be requested, provided that no investigation pursuant to this Section shall
affect or be deemed to modify any representation or warranty made by the
Company, Parent or Merger Sub and provided, further, that the foregoing shall
not require the Company or Parent to permit any inspection, or to disclose any
information, that in the reasonable judgment of the Company or Parent (i) would
result in the disclosure of any trade secrets of third parties or violate any of
its obligations with respect to confidentiality if the Company or Parent, as the
case may be, shall have used its best reasonable efforts to obtain the consent
of such third party to such inspection or disclosure or (ii) constitutes
information protected by attorney-client privilege, but only to the extent that
disclosure would impair the Company's or Parent's, as the case may be, ability
to assert such attorney-client privilege. All requests for information made
pursuant to this Section shall be directed to an executive officer of the
Company or Parent, as the case may be, or such Person as may be designated by
either of its executive officers, as the case may be. All such information shall
be governed by the terms of the Confidentiality Agreement.
6.7. Affiliates. At least ten business days prior to the date of the
Shareholders Meeting, the Company shall deliver to Parent a list of names and
addresses of those Persons who are, in the opinion of the Company, as of the
time of the Shareholders Meeting referred to in Section 6.4, "affiliates" of the
Company within the meaning of Rule 145 under the Securities Act. There shall be
added to such list the names and addresses of any other Person subsequently
identified by either Parent or the Company as a Person who may be deemed to be
such an affiliate of the Company; provided, however, that no such Person
identified by Parent shall be added to the list of affiliates of the Company if
Parent shall receive from the Company, on or before the date of the Shareholders
Meeting, an opinion of counsel reasonably satisfactory to Parent to the effect
that such Person is not such an affiliate. The Company shall exercise its best
efforts to deliver or cause to be delivered to Parent, prior to the date of the
Shareholders Meeting, from each affiliate of the Company identified in the
foregoing list (as the same may be supplemented as aforesaid), a letter dated as
of the Closing Date substantially in the form attached as Exhibit A-1 (the
"Affiliates Letter"). Parent shall not be required to maintain the effectiveness
of the S-4 Registration Statement or any other registration statement under the
Securities Act
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for the purposes of resale of Parent Common Stock by such affiliates received in
the Merger and the certificates representing Parent Common Stock received by
such affiliates shall bear a customary legend regarding applicable Securities
Act restrictions and the provisions of this Section.
6.7.A. Affiliates. At least ten business days prior to the date of the
Second Shareholders Meeting, the Company shall deliver to Parent a list of names
and addresses of those Persons who are, in the opinion of the Company, as of the
time of the Second Shareholders Meeting referred to in Section 6.4.A.,
"affiliates" of the Company within the meaning of Rule 145 under the Securities
Act. There shall be added to such list the names and addresses of any other
Person subsequently identified by either Parent or the Company as a Person who
may be deemed to be such an affiliate of the Company; provided, however, that no
such Person identified by Parent shall be added to the list of affiliates of the
Company if Parent shall receive from the Company, on or before the date of the
Second Shareholders Meeting, an opinion of counsel reasonably satisfactory to
Parent to the effect that such Person is not such an affiliate. The Company
shall exercise its best efforts to deliver or cause to be delivered to Parent,
prior to the date of the Second Shareholders Meeting, from each affiliate of the
Company identified in the foregoing list (as the same may be supplemented as
aforesaid), a letter dated as of the Second Shareholders Meeting substantially
in the form attached as Exhibit A-1 (the "Affiliates Letter"). Parent shall not
be required to maintain the effectiveness of the S-4 Registration Statement or
any other registration statement under the Securities Act for the purposes of
resale of Parent Common Stock by such affiliates received in the Merger and the
certificates representing Parent Common Stock received by such affiliates shall
bear a customary legend regarding applicable Securities Act restrictions and the
provisions of this Section.
6.8. Stock Exchange Listing and De-listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the Merger to
be approved for listing on the NYSE subject to official notice of issuance,
prior to the Closing Date. The Surviving Corporation shall use its best efforts
to cause the Shares to be de-listed from the NYSE and de-registered under the
Exchange Act as soon as practicable following the Effective Time.
6.9. Publicity. The initial press release shall be a joint press
release and thereafter the Company and
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Parent each shall consult with each other prior to issuing any press releases or
otherwise making public announcements with respect to the Merger and the other
transactions contemplated by this Agreement.
6.10. Benefits.
(a) Stock Options. (i) At the Effective Time, each outstanding option
to purchase Shares (a "Company Option") under the Stock Plans, whether vested or
unvested, shall be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such Company Option, the number of
shares of Parent Common Stock equal to the result (rounded to the nearest whole
share) of multiplying the number of Shares subject to the Company Option
immediately prior to the Effective Time by the Conversion Ratio (as defined
below), at an exercise price per share equal to the result (rounded to the
nearest whole cent) of dividing the per share exercise price of such Company
Option immediately prior to the Effective Time by the Conversion Ratio;
provided, however, that in the case of any Company Option to which Section 422
of the Code applies, the adjustments provided for in this Section shall be
effected in a manner consistent with the requirements of Section 424(a) of the
Code. At or prior to the Effective Time, the Company shall make all necessary
arrangements with respect to the Stock Plans to permit the assumption of the
unexercised Company Options by Parent pursuant to this Section. For purposes of
this Section, the term "Conversion Ratio" means a fraction, the numerator of
which is the average of the high and low sales price of one Share on the NYSE on
the three trading days immediately preceding the Effective Time and the
denominator of which is the average of the high and low sales price of one share
of Parent Common Stock on the NYSE on the trading day immediately preceding the
Effective Time.
(ii) Effective at the Effective Time, Parent shall assume each Company
Option in accordance with the terms of the Stock Plans and the stock option
agreement by which it is evidenced. At or prior to the Effective Time, Parent
shall take all corporate action necessary to reserve for issuance a sufficient
number of shares of Parent Common Stock for delivery upon exercise of Company
Options assumed by it in accordance with this Section. As soon as practicable
after the Effective Time, Parent shall file a registration statement on Form S-8
(or any successor or other appropriate forms), or another appropriate form with
respect to the shares of Parent Common Stock subject to such Company Options,
and shall use its best reasonable efforts to maintain the effectiveness of such
registration statement
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(and maintain the current status of the prospectus or prospectuses contained
therein) for so long as such Company Options remain outstanding.
(iii) Prior to the Effective Time, the Board of Directors of Parent,
or an appropriate committee of non-employee directors thereof, shall adopt a
resolution consistent with the interpretive guidance of the SEC so that the
acquisition of shares of Parent Common Stock or options to acquire shares of
Parent Common Stock pursuant to this Agreement and the Merger and the Merger
shall be an exempt transaction for purposes of Section 16 by any officer or
director of the Company who may become a covered person of Parent for purposes
of Section 16 of the Exchange Act ("Section 16").
(b) Employee Benefits. (i) Parent agrees that, during the period
commencing at the Effective Time and ending on the first anniversary thereof,
the employees of the Company and its Subsidiaries ("Company Employees") will
continue to be provided with compensation and benefits under employee benefit
plans (other than plans involving the issuance of Shares) that are no less
favorable in the aggregate than those currently provided by the Company and its
Subsidiaries to such Company Employees under the Compensation and Benefit Plans
of the Company and its Subsidiaries.
(ii) From and after the Effective Time, Parent shall cause the
Surviving Corporation and The Detroit Edison Company to honor (i) each existing
employment, change of control, severance and termination agreement between the
Company or any of its Subsidiaries, and any officer, director or employee of the
Company or its Subsidiaries and (ii) all Compensation and Benefit Plans of the
Company and its Subsidiaries in accordance with their terms as in effect
immediately before the Effective Time. Notwithstanding the above, nothing in
this Agreement precludes Parent or any of its Subsidiaries from amending,
discontinuing or terminating any Compensation and Benefit Plan in accordance
with the terms thereof. Parent acknowledges that it has been advised by the
Company that the Merger constitutes a change of control for purposes of certain
Company Compensation and Benefit Plans specifically identified in Section
6.10(b) of the Company Disclosure Letter.
(iii) For all purposes under the employee benefit plans of Parent and
its Affiliates providing benefits to any current Company Employees after the
Effective Time (the "New Plans"), each Company Employee shall be credited with
his or her years of service with the Company and its Affiliates
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before the Effective Time, to the same extent as such Company Employee was
entitled, before the Effective Time, to credit for such service for such
purposes under any similar Company Employee Plans, except to the extent such
credit would result in a duplication of benefits. In addition, and without
limiting the generality of the foregoing: (i) each Company Employee shall be
immediately eligible to participate, without any waiting time, in any and all
New Plans to the extent coverage under such New Plan replaces coverage under a
comparable Company Employee Plan in which such Company Employee participated
immediately before the Effective Time (such plans, collectively, the "Old
Plans"); and (ii) for purposes of each New Plan providing medical, dental,
pharmaceutical and/or vision benefits to any Company Employee, Parent shall
cause all pre-existing condition exclusions of such New Plan to be waived for
such employee and his or her covered dependents to the extent that such
exclusions and requirements were waived under the corresponding Company Employee
Plans, and Parent shall cause any eligible expenses incurred by such employee
and his or her covered dependents during the portion of the plan year of the Old
Plan ending on the date that such employee's participation in the corresponding
New Plan begins to be taken into account under such New Plan for purposes of
satisfying all deductible, coinsurance and maximum out-of-pocket requirements
applicable to such employee and his or her covered dependents for the applicable
plan-year as if such amounts had been paid in accordance with such New Plan.
(iv) Between the date hereof and December 31, 1999, the Company shall
take such reasonable and appropriate actions as agreed to by Parent to mitigate
the tax cost to the Company of providing the "change of control" benefits
identified in Section 5.1(h) of the Company Disclosure Letter.
(c) Election to Parent's Board of Directors; Management Executive
Committee. At the Effective Time of the Merger, Parent shall promptly increase
the size of its Board of Directors or exercise its best efforts to secure the
resignation of present directors in order to cause Alfred R. Glancy III and two
additional persons selected by the Company after consultation with Parent from
among the Company's directors as of the date hereof to be appointed to Parent's
Board of Directors.
(d) Employees. It is the present intention of Parent and the Company
that following the Effective Time, there will be no involuntary reductions in
force at the Surviving Corporation or its Subsidiaries, and that Parent, the
Surviving Corporation and their respective Subsidiaries
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will continue Parent's and the Company's present strategy of achieving workforce
reductions through attrition or other voluntary means; provided, however, that
if any reductions in workforce in respect of employees of Parent and its
Subsidiaries, including the Surviving Corporation and its Subsidiaries, become
necessary, they shall be made on a fair and equitable basis, in light of the
circumstances and the objectives to be achieved, giving consideration to
previous work history, job experience, qualifications, and business needs
without regard to whether employment prior to the Effective Time was with the
Company or its Subsidiaries or Parent or its Subsidiaries, and any employees
whose employment is terminated or jobs are eliminated by Parent, the Surviving
Corporation or any of their respective Subsidiaries shall be entitled to
participate on a fair and equitable basis in the job opportunity and employment
placement programs offered by Parent, the Surviving Corporation or any of their
respective Subsidiaries. Any workforce reductions carried out following the
Effective Time by Parent or the Surviving Corporation and their respective
Subsidiaries shall be done in accordance with all applicable collective
bargaining agreements, and all laws and regulations governing the employment
relationship and termination thereof including, without limitation, the Worker
Adjustment and Retraining Notification Act and regulations promulgated
thereunder, and any comparable state or local law.
6.11. Expenses. The Surviving Corporation or Parent shall pay all
charges and expenses of the Company, Merger Sub or Parent, including those of
the Exchange Agent, in connection with the transactions contemplated in Article
IV, and Parent shall reimburse the Surviving Corporation for such charges and
expenses paid by the Surviving Corporation. Except as otherwise provided in
Section 8.5(b), whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement shall be paid by the party incurring
such expense, except that expenses incurred in connection with the filing fee
for the S-4 Registration Statement and printing and mailing the Prospectus/Proxy
Statement and the S-4 Registration Statement shall be shared equally by Parent
and the Company.
6.12. Indemnification; Directors' and Officers' Insurance. (a) From
and after the Effective Time, Parent agrees that it will indemnify and hold
harmless each present and former director and officer of the Company, (when
acting in such capacity) determined as of the Effective Time (the "Indemnified
Parties"), against any costs or expenses
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(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent that the Company would have been
permitted under Michigan law and its articles of incorporation and its by-laws
in effect on the date hereof to indemnify such Person (and Parent shall also
advance expenses as incurred to the fullest extent permitted under applicable
law, provided, the Person to whom expenses are advanced provides an undertaking
to repay such advances if it is ultimately determined that such Person is not
entitled to indemnification).
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 6.12, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent thereof, but the
failure to so notify shall not relieve Parent of any liability it may have to
such Indemnified Party so long as such failure does not materially prejudice
Parent. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Parent
or the Surviving Corporation shall have the right to assume and control the
defense thereof and Parent shall not be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses subsequently incurred
by such Indemnified Parties in connection with the defense thereof, except that
if Parent or the Surviving Corporation elects not to assume such defense or
counsel for the Indemnified Parties advises in writing that there are issues
which raise conflicts of interest between Parent or the Surviving Corporation
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them subject to the consent of Parent, which shall not be
unreasonably withheld, and Parent or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements setting forth such fees and expenses in reasonable detail
are received; provided, however, that Parent shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in
any jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of
any such matter and (iii) Parent shall not be liable for any settlement effected
without its prior written consent; and provided, further, that Parent shall not
have any obligation hereunder to any Indemnified Party if and when a court of
competent jurisdiction shall
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ultimately determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
(c) The Surviving Corporation shall maintain the Company's existing
officers' and directors' liability insurance ("D&O Insurance") for a period of
six years after the Effective Time so long as the annual premium therefor is not
in excess of 200% of the last annual premium paid prior to the date hereof (the
"Current Premium"); provided, however, that (x) the Surviving Corporation may
substitute therefor policies (which may be "tail" policies) containing terms
with respect to coverage and amount no less favorable to such directors and
officers, and (y) if the existing D&O Insurance expires, is terminated or
canceled during such six-year period, the Surviving Corporation will use its
best efforts to obtain as much D&O Insurance as can be obtained for the
remainder of such period for a premium not in excess (on an annualized basis) of
200% of the Current Premium.
(d) The provisions of this Section 6.12 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
6.13. Takeover Statutes. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and the Company and its Board of Directors shall grant
such approvals and take such actions as are necessary so that such transactions
may be consummated as promptly as practicable on the terms contemplated by this
Agreement or by the Merger and otherwise act to eliminate or minimize the
effects of such statute or regulation on such transactions.
6.14. Dividends. The Company shall coordinate with Parent the
declaration, setting of record dates and payment dates of dividends on Shares so
that holders of Shares do not receive dividends on both Shares and Parent Common
Stock received in the Merger in respect of any calendar quarter or fail to
receive a dividend on either Shares or Parent Common Stock received in the
Merger in respect of any calendar quarter.
6.15. Rate Matters. In addition to the obligations set forth in
Section 6.1(a)(x), (I) from the Second Amendment Date until the Effective Time,
the Company shall not, and shall not permit any of its Subsidiaries to, make any
filing, or effect any material agreement, commitment, arrangement or consent,
whether written or oral,
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formal or informal, with the MPSC with respect to MPSC utility cases identified
by case numbers U12761, U12762 and U12766 and any future filing relating to any
proposals with respect to gas cost recovery or gas choice and (II) after the
receipt of the Company Requisite Vote at the Second Shareholders Meeting, the
Company shall, and shall cause its Subsidiaries to, (i) discuss with Parent any
material changes in its or its Subsidiaries regulated rates or charges,
standards of service or accounting from those in effect on the date hereof, and
(ii) obtain the written approval of Parent prior to making any filing with
respect thereto (or any amendment thereto) or effecting any material agreement,
commitment, arrangement or consent, whether written or oral, formal or informal,
with respect thereto.
6.16. Taxation. Subject to Section 6.2, neither Parent nor the Company
shall take or cause to be taken any action, whether before or after the
Effective Time, that would disqualify the Merger as a "reorganization" within
the meaning of Section 368(a) of the Code.
6.17. Transition Matters. (a) Promptly after the date hereof, Parent
and the Company each shall designate three persons (the "Transition
Coordinators") to, subject to applicable laws relating to the exchange of
information, facilitate a full exchange of information concerning the business,
operations, capital spending and budgets and financial results of Parent and the
Company and to identify ways in which the operations of Parent and the Company
can be consolidated or coordinated. The Transition Coordinators shall meet at
least monthly in person and shall meet together quarterly with the Chief
Executive Officers of Parent and the Company. From and after the date hereof,
Parent and the Company agree that they shall consult with each other regarding
all material business plans and decisions.
(b) The Company and Parent each agree to use its reasonable best
efforts to enter into a definitive agreement within 14 days of the date hereof
for the sale to Parent of the Company's 95% membership interest in each of the
following limited liability companies that own and operate synthetic fuel
manufacturing facilities: (i) CRC No. 1, LLC Union City, Kentucky, (ii) CRC No.
3, LLC, Tazewell County Virginia and McDowell County Virginia, (iii) CRC No. 5,
LLC Monongalia County, West Virginia, and (iv) CRC No. 6, LLC Laurel County,
West Virginia. The Company and Parent each agree that the economic terms for
each such sale shall be designed to produce a payment stream to the Company with
a net present value of $40 per ton of capacity, utilizing a 12% discount rate.
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(c) The Company agrees to use its best efforts promptly to enter into,
or to cause its Subsidiaries promptly to enter into, agreements to dispose of
(i) such of its interests as are necessary so that the transactions contemplated
by this Agreement will not jeopardize the status of any facilities in which the
Company directly or indirectly owns any interest as "Qualifying Facilities"
under the Public Utility Regulatory Policies Act of 1978, as amended, and (ii)
all FERC-jurisdictional assets or facilities whether directly or indirectly
owned or wholly or partially owned that would give rise to a requirement for
approval of the Merger by the FERC, in each case prior to the date when all
Governmental Consents (as defined below) are obtained and to use commercially
reasonable efforts to maximize the after-tax proceeds from such sales or
dispositions; provided, that the obligation to use best efforts shall not
require the Company to take any action pursuant to this Section 6.17(c) that
would cause (alone or together with other events) any failure to satisfy any
condition to Closing. The Company agrees to keep Parent informed on a current
basis regarding the status and terms of such dispositions and any other asset
dispositions contemplated by the Company and its Subsidiaries and to work
cooperatively with Parent to maximize the mutual benefit to the parties of such
dispositions.
6.18. Community Involvement. After the Effective Time, Parent intends
to continue, and intends to cause the Surviving Corporation to continue, to make
aggregate annual charitable contributions to the communities served by Parent
and the Surviving Corporation and otherwise maintain a substantial level of
involvement in community activities in the State of Michigan that is similar to,
or greater than, the normal aggregate annual level of charitable contributions,
community development and related activities carried on by Parent and the
Company prior to the date hereof.
6.19. 1935 Act and Power Act. (a) None of the parties hereto shall,
nor shall any such party permit any of its Subsidiaries to, without the other
party's consent, which shall not be unreasonably withheld or delayed, engage in
any activities that would (i) cause a change in its status, or that of its
Subsidiaries, under the 1935 Act, including, without limitation, the
registration of either party pursuant to the 1935 Act or (ii) result in
jurisdiction by the FERC over the Merger.
(b) None of the parties hereto shall, nor shall any such party permit
any of its Subsidiaries to, without the other party's consent, which shall not
be unreasonably
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withheld or delayed, fail to take such actions that are necessary to (i)
preserve existing exemptions from registration under the 1935 Act or (ii) allow
the Merger to proceed without a requirement for approval by the FERC.
6.20. Feline Prides. At or prior to the Effective Time, Parent shall
take all corporate action necessary to reserve for issuance a sufficient number
of shares of Parent Common Stock for delivery upon conversion of the Feline
Prides in accordance with their terms.
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Shareholder Approval. This Agreement shall have been duly approved
by holders of Shares constituting the Company Requisite Vote at the Second
Shareholders Meeting and shall have been duly approved by the sole shareholder
of Merger Sub in accordance with applicable law and the articles of
incorporation and by-laws of each such corporation, and the issuance of Parent
Common Stock pursuant to the Merger shall have been duly approved by the holders
of Parent Common Stock constituting the Parent Requisite Vote.
(b) NYSE Listing. The shares of Parent Common Stock issuable to the
Company shareholders pursuant to this Agreement shall have been authorized for
listing on the NYSE upon official notice of issuance.
(c) Regulatory Consents. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated, and, other than the filing provided for in Section 1.3, all notices,
reports and other filings required to be made prior to the Effective Time by the
Company or Parent or any of their respective Subsidiaries with, and all
consents, registrations, approvals, permits and authorizations required to be
obtained prior to the Effective Time by the Company or Parent or any of their
respective Subsidiaries from, any Governmental Entity (collectively,
"Governmental Consents") in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the other
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transactions contemplated hereby by the Company, Parent and Merger Sub shall
have been made or obtained (as the case may be) and become final, except for
those that the failure to make or to obtain, individually or in the aggregate,
are not reasonably likely to have a Material Adverse Effect on Parent or the
Company, as applicable, or provide a reasonable basis to conclude that the
parties hereto or any of their affiliates or respective directors, officers,
agents, advisors or other representatives would be subject to the risk of
criminal or material financial liability.
(d) Litigation. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, law, ordinance, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Merger or the
other transactions contemplated by this Agreement (collectively, an "Order").
(e) S-4. The post-effective amendment to the S-4 Registration
Statement shall have become effective under the Securities Act. No stop order
suspending the effectiveness of the post-effective amendment to the S-4
Registration Statement shall have been issued, and no proceedings for that
purpose shall have been initiated or be threatened, by the SEC.
(f) Blue Sky Approvals. Parent shall have received all state
securities and "blue sky" permits and approvals necessary to consummate the
transactions contemplated hereby.
(g) Certain Transactions. The Company shall have completed the
disposition of the interests required to be disposed of by Section 6.17(c) of
this Agreement.
7.2. Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are also subject to
the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under Sections 6.1(a)(ii), (iii), (iv), (vi), (vii), (viii), (ix), (x) and
(xi) (as it relates to (a)(ii), (iii), (iv), (vi), (vii), (viii), (ix) and (x)),
Sections 6.1.A(a)(i), (ii), (iii) and (iv) and Sections 6.2, 6.4.A., 6.6, 6.13,
6.14,
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6.15, 6.16 and 6.19 of this Agreement, and Parent shall have received a
certificate signed on behalf of the Company by an executive officer of the
Company to such effect.
(b) Accountants Letter. Parent shall have received, in form and
substance reasonably satisfactory to Parent, from Deloitte & Touche LLP, the
Company's independent auditor, the "comfort" letter described in Section 6.5(b).
(c) Affiliates Letters. Parent shall have received an Affiliates
Letter from each Person identified as an affiliate of the Company pursuant to
Section 6.7.A.
(d) Tax Opinion. Parent shall have received the opinion of Sullivan &
Cromwell, counsel to Parent, dated the Closing Date, to the effect that (based
on customary assumptions and representations and subject to customary
exceptions) the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that each
of Parent, Merger Sub and the Company will be a party to that reorganization
within the meaning of Section 368(b) of the Code. The condition set forth in
this Section 7.2(d) shall not be waivable after the Company Requisite Vote at
the Second Shareholders Meeting or the Parent Requisite Vote has been obtained
unless further shareholder approval is obtained with appropriate disclosure.
(e) Governmental Consents. All Governmental Consents in connection
with the execution and delivery of this Agreement and the consummation of the
Merger and the other transactions contemplated hereby shall have been obtained,
and the approval of the Federal Trade Commission and the U.S. Department of
Justice under the HSR Act shall have been obtained without imposing any terms or
conditions that, individually or in the aggregate, in the reasonable judgment of
Parent, are reasonably likely to have a Material Adverse Effect on Parent, the
Company or the Surviving Corporation. For purposes of this Section 7.2(e) only
and for no other purpose of this Agreement, the term "Material Adverse Effect"
shall exclude (in addition to the exclusions set forth in Section 5.1(a)) any
change or effect arising out of that certain agreement between Exelon Energy
Company, Inc. and Michcon, dated as of February 8, 2001, relating to Exelon's
use of the Michcon's natural gas transportation capacity.
7.3. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is also
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subject to the satisfaction or waiver by the Company at or prior to the
Effective Time of the following conditions:
(a) Performance of Obligations of Parent and Merger Sub. Each of
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under Sections 6.1(b)(ii) and (iii)
and Sections 6.6, 6.14, 6.16 and 6.19 of this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on behalf
of Parent and Merger Sub by the an executive officer of Parent to such effect.
(b) Accountants Letter. The Company shall have received, in form and
substance reasonably satisfactory to the Company, from Deloitte & Touche LLP,
Parent's independent auditor, the "comfort" letter described in Section 6.5(b).
(c) Tax Opinion. The Company shall have received the opinion of
Wachtell, Lipton, Rosen & Katz, counsel to the Company, dated the Closing Date,
to the effect that (based on customary assumptions and representations and
subject to customary exceptions) the Merger will be treated for Federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code, and that each of Parent, Merger Sub and the Company will be a party to
that reorganization within the meaning of Section 368(b) of the Code. The
condition set forth in this Section 7.3(c) shall not be waivable after the
Company Requisite Vote at the Shareholders Meeting or the Parent Requisite Vote
has been obtained unless further shareholder approval is obtained with
appropriate disclosure.
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by shareholders of the Company and Parent referred
to in Section 7.1(a), by mutual written consent of the Company and Parent by
action of their respective Boards of Directors.
8.2. Termination by Either Parent or the Company. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board of Directors of either Parent or the Company if: (i)
the Merger shall not have been consummated
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by December 31, 2001; (ii) the approval of the Company's shareholders required
by Section 7.1(a) shall not have been obtained at a meeting duly convened
therefor or at any adjournment or postponement thereof; or (iii) any Order
permanently restraining, enjoining or otherwise prohibiting consummation of the
Merger shall become final and non-appealable (whether before or after the
approval by the shareholders of the Company or Parent). The right to terminate
this Agreement pursuant to clause (i) of the immediately preceding sentence
shall not be available to any party that has breached in any material respect
its obligations under this Agreement in any manner that shall have proximately
contributed to the occurrence of the failure of the Merger to be consummated.
8.3. Termination by the Company. This Agreement may be terminated and
the Merger may be abandoned by action of the Board of Directors of the Company
if at any time prior to the Effective Time, whether before or after the approval
by shareholders of the Company referred to in Section 7.1(a),(i) the Board of
Directors of Parent shall have withdrawn or adversely modified its approval or
recommendation of this Agreement or (ii) there has been a material breach by
Parent or Merger Sub of any of Sections 6.1(b)(ii), 6.1(b)(iii), 6.6, 6.14, 6.16
or 6.19 of this Agreement that is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given by the Company to
the party committing such breach.
8.4. Termination by Parent. This Agreement may be terminated and the
Merger may be abandoned by action of the Board of Directors of Parent if at any
time prior to the Effective Time, whether before or after the approval by the
shareholders of Parent referred to in Section 7.1(a), (i) the Board of Directors
of the Company shall have withdrawn or adversely modified its approval or
recommendation of this Agreement or, prior to the Second Shareholders Meeting,
failed to reconfirm its recommendation of this Agreement within five business
days after a written request by Parent to do so or (ii) there has been a
material breach by the Company of any of Sections 6.1(a)(ii), (iii), (iv), (vi),
(vii), (viii), (ix), (x) or (xi) (as it relates to (a)(ii), (iii), (iv), (vi),
(vii), (viii), (ix) and (x)), Sections 6.1.A(a)(i), (ii), (iii) or (iv) or
Sections 6.2, 6.4.A., 6.6, 6.13, 6.14, 6.15, 6.16 or 6.19 of this Agreement that
is not curable or, if curable, is not cured within 30 days after written notice
of such breach is given by Parent to the Company.
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8.5. Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement (other than as set forth in Section 9.1) shall
become void and of no effect with no liability on the part of any party hereto
(or of any of its directors, officers, employees, agents, legal and financial
advisors or other representatives); provided, however, except as otherwise
provided herein, no such termination shall relieve any party hereto of any
liability or damages resulting from any breach of this Agreement.
(b) In the event that (i) a Company Acquisition Proposal shall have
been made to the Company or any of its Subsidiaries or any of its shareholders
or any Person shall have publicly announced an intention (whether or not
conditional) to make a Company Acquisition Proposal and thereafter this
Agreement is terminated by either Parent or the Company pursuant to Section
8.2(ii) or (ii) this Agreement is terminated by Parent pursuant to Section
8.4(i) then the Company shall promptly, but in no event later than two days
after the date of such termination, pay Parent a termination fee of $55,000,000
and shall promptly, but in no event later than two days after being notified of
such by Parent, pay all of the charges and expenses, including those of the
Exchange Agent, incurred by Parent or Merger Sub in connection with this
Agreement and the transactions contemplated by this Agreement up to a maximum
amount of $15,000,000, in each case payable by wire transfer of same day funds;
provided, however, that in the event of a termination pursuant to Section
8.2(ii) under the circumstances set forth in clause (i) of this Section 8.5(b),
or a termination pursuant to Section 8.4(a)(i), the Company shall (a) promptly,
but in no event later than two days after being notified of such by Parent, pay
all of the charges and expenses incurred by Parent in connection with this
Agreement and the transactions contemplated by this Agreement up to a maximum
amount of $15,000,000, and, (b) if the Company enters into a definitive
agreement to consummate or consummates a Company Acquisition Proposal within 12
months from the date of such termination, at the time of the entering into of
such agreement or such consummation, as applicable, pay Parent a termination fee
of $55,000,000. The Company acknowledges that the agreements contained in this
Section 8.5(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and Merger Sub would not
enter into this Agreement; accordingly, if the Company fails to promptly pay the
amount due pursuant to this Section 8.5(b), and, in order to obtain such
payment, Parent or Merger Sub commences a suit which results in a judgment
against the Company for
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the fee set forth in this paragraph (b), the Company shall pay to Parent or
Merger Sub its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the fee at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made.
ARTICLE IX
Miscellaneous and General
9.1. Survival. This Article IX and the agreements of the Company,
Parent and Merger Sub contained in Sections 6.8 (Stock Exchange Listing and
Delisting), 6.10 (Benefits), 6.11 (Expenses), 6.12 (Indemnification; Directors'
and Officers' Insurance) and 6.16 (Taxation) shall survive the consummation of
the Merger. This Article IX, the agreements of the Company, Parent and Merger
Sub contained in Section 6.11 (Expenses), Section 8.5 (Effect of Termination and
Abandonment) and the Confidentiality Agreement shall survive the termination of
this Agreement. All other representations, warranties, covenants and agreements
in this Agreement shall not survive the consummation of the Merger or the
termination of this Agreement.
9.2. Modification or Amendment. Subject to the provisions of
applicable law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT
SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF
MICHIGAN WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
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THEREOF. 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 an injunction or injunctions to prevent breaches of covenants in
this Agreement and to enforce specifically the covenants in this Agreement in
any court of the United States located in the State of Michigan or in Michigan
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of Michigan and the Federal courts of
the United States of America located in the State of Michigan solely in respect
of the interpretation and enforcement of the provisions of this Agreement and of
the documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a Michigan State or Federal court. The
parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.6 or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS
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AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 9.5.
9.6. Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
if to Parent or Merger Sub
DTE Energy Company
2000 Second Avenue
Detroit, MI 48226
Attention: General Counsel
fax: (313) 235-0121
(with a copy to Joseph B. Frumkin, Esq.,
Sullivan & Cromwell,
125 Broad Street
New York, NY 10004
fax: (212) 558-3588)
if to the Company
MCN Energy Group Inc.
500 Griswold Street
Detroit, MI 48226
Attention: General Counsel
fax: (313) 965-0009
(with a copy to Seth A. Kaplan, Esq.,
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
fax: (212) 403-2000)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7. Entire Agreement. This Agreement (including any exhibits or
appendices hereto), the Company Disclosure Letter, the Parent Disclosure Letter
and the Confidentiality Agreement, dated August 30, 1999, between Parent and the
Company (the "Confidentiality Agreement") constitute the entire agreement, and
supersede all other prior agreements, understandings, representations and
warranties both written and oral, among the parties, with respect to the subject
matter hereof.
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9.8. No Third Party Beneficiaries. Except as provided in Section 6.12
(Indemnification; Directors' and Officers' Insurance), this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
9.9. Obligations of Parent and of the Company. Whenever this Agreement
requires a Subsidiary of Parent to take any action, such requirement shall be
deemed to include an undertaking on the part of Parent to cause such Subsidiary
to take such action. Whenever this Agreement requires a Subsidiary of the
Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
9.10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents and headings herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
9.12. Assignment. This Agreement shall not be assignable by operation
of law or otherwise; provided, however, that Parent may designate, by written
notice to the Company, another wholly owned direct or indirect subsidiary to be
a Constituent Corporation in lieu of Merger Sub, in
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which event all references herein to Merger Sub shall be deemed references to
such other subsidiary, except that all representations and warranties made
herein with respect to Merger Sub as of the date of this Agreement shall be
deemed representations and warranties made with respect to such other subsidiary
as of the date of such designation.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
MCN ENERGY GROUP INC.
By: /S/ ALFRED R. GLANCY III
-----------------------------
Name: Alfred R. Glancy III
Title: Chairman and CEO
DTE ENERGY COMPANY
By: /S/ ANTHONY F. EARLEY, JR.
-----------------------------
Name: Anthony F. Earley, Jr.
Title: Chairman and CEO
DTE ENTERPRISES, INC.
By: /S/ LARRY G. GARBERDING
-----------------------------
Name: Larry G. Garberding
Title: Treasurer