\n| \n Warrants<\/p>\n<\/td>\n | \n 13<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n vi<\/p>\n \n
\n<\/p>\nAGREEMENT AND PLAN OF MERGER, dated as of April 19, 2011 (the
\n“Agreement<\/u>“), by and among DPL Inc., an Ohio corporation (the
\n“Company<\/u>“), The AES Corporation, a Delaware corporation
\n(“Parent<\/u>“), and Dolphin Sub, Inc., an Ohio corporation and a wholly-owned
\ndirect or indirect subsidiary of the Parent (“Merger Sub<\/u>“).<\/p>\n<\/p>\n WITNESSETH<\/u>:<\/p>\n \n WHEREAS, the parties intend that Merger Sub be merged with and into the
\nCompany, with the Company surviving the Merger as a direct or indirect
\nwholly-owned subsidiary of Parent (the “Merger<\/u>“);<\/p>\n<\/p>\n WHEREAS, the Board of Directors of the Company has (i) determined that it is
\nadvisable and in the best interests of the Company and its shareholders, and
\ndeclared it advisable to enter into this Agreement and to consummate the
\ntransactions contemplated hereby, including the Merger (the
\n“Transactions<\/u>“), (ii) approved the execution, delivery and performance of
\nthis Agreement and the consummation of the Transactions and (iii) resolved to
\nrecommend adoption of this Agreement and approval of the Transactions, including
\nthe Merger by the shareholders of the Company;<\/p>\n<\/p>\n WHEREAS, the Board of Directors of Parent has (i) determined that it is in
\nthe best interests of Parent and its shareholders, and declared it advisable, to
\nenter into this Agreement and consummate the Transactions and (ii) approved the
\nexecution, delivery and performance of this Agreement and the consummation of
\nthe Transactions;<\/p>\n<\/p>\n WHEREAS, Parent or its relevant Subsidiary, as the sole shareholder of Merger
\nSub, has approved this Agreement and the Transactions, including the Merger; and\n<\/p>\n<\/p>\n WHEREAS, Parent, Merger Sub and the Company desire to make certain
\nrepresentations, warranties, covenants and agreements specified herein in
\nconnection with the Transactions, including the Merger, and also to prescribe
\ncertain conditions to the Transactions, including the Merger.<\/p>\n<\/p>\n NOW, THEREFORE, in consideration of the foregoing and the representations,
\nwarranties, covenants and agreements contained herein, and intending to be
\nlegally bound hereby, Parent, Merger Sub and the Company agree as follows:<\/p>\n<\/p>\n ARTICLE I<\/strong><\/p>\n\n THE MERGER<\/u><\/strong><\/p>\n\n Section 1.1 The Merger<\/u>. At the Effective Time, upon the terms and
\nsubject to the conditions set forth in this Agreement and in accordance with the
\napplicable provisions of the Ohio General Corporation Law (the “OGCL<\/u>“),
\nMerger Sub shall be merged with and into the Company, whereupon the separate
\ncorporate existence of Merger Sub shall cease, and the Company shall continue
\nits corporate existence under the OGCL as the surviving corporation in the
\nMerger (the “Surviving Corporation<\/u>“) and a direct or indirect
\nwholly-owned subsidiary of Parent.<\/p>\n<\/p>\n
\n<\/p>\n Section 1.2 Closing<\/u>. The closing of the Merger (the “Closing<\/u>“)
\nshall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP,
\nWashington, D.C., at 10:00 a.m. local time, on the third (3rd) business day
\nimmediately following the date on which the last of the conditions set forth in
\nArticle VI<\/u> hereof is satisfied or waived (other than those conditions
\nthat by their nature are to be satisfied by action taken at the Closing, but
\nsubject to the satisfaction or waiver (to the extent permitted by applicable
\nLaw) of such conditions) (such third business day immediately following the date
\non which the last of the conditions set forth in Article VI<\/u> hereof is
\nsatisfied or waived, the “Initial Date<\/u>“). At the election of Parent, the
\n“Closing Date<\/u>” may be at any time during the period beginning on the
\nInitial Date through the date which is seventeen (17) business days after the
\nInitial Date, or such other place, date and time as the Company and Parent may
\nagree in writing.<\/p>\n<\/p>\n Section 1.3 Effective Time<\/u>. Subject to the provisions of this
\nAgreement, on the Closing Date, the parties shall file a certificate of merger
\nor other appropriate document providing for the Merger (the “Certificate of
\nMerger<\/u>“) in a form mutually agreed upon by Parent and the Company (acting
\nreasonably), executed in accordance with, and containing such information as is
\nrequired by, the relevant provisions of the OGCL, with the Secretary of State of
\nthe State of Ohio and shall make all other filings or recordings required under
\nthe OGCL. The Merger shall become effective upon the filing of the Certificate
\nof Merger in accordance with the OGCL, or at such later time as is agreed by the
\nparties hereto and specified in the Certificate of Merger in accordance with the
\nrelevant provisions of the OGCL (such date and time is hereinafter referred to
\nas the “Effective Time<\/u>“).<\/p>\n<\/p>\n Section 1.4 Effects of the Merger<\/u>. The effects of the Merger shall be
\nas provided in this Agreement and in the applicable provisions of the OGCL.
\nWithout limiting the generality of the foregoing, and subject thereto, at the
\nEffective Time, all of the property, rights, privileges, powers, immunities and
\nfranchises of the Company and Merger Sub shall vest in the Surviving
\nCorporation, and all debts, liabilities, duties and obligations of the Company
\nand Merger Sub shall become the debts, liabilities, duties and obligations of
\nthe Surviving Corporation, all as provided under the OGCL and the other
\napplicable Laws.<\/p>\n<\/p>\n Section 1.5 Articles and Regulations of the Surviving Corporation<\/u>. At
\nthe Effective Time, the articles of incorporation and code of regulations of the
\nCompany, as in effect immediately prior to the Effective Time, shall be amended
\nand restated as of the Effective Time to be in the form of (except with respect
\nto the name of the Company) the articles of incorporation and code of
\nregulations of Merger Sub, and as so amended shall be the articles of
\nincorporation and code of regulations of the Surviving Corporation until
\nthereafter amended in accordance with the provisions thereof and hereof and
\napplicable Law, in each case consistent with the obligations set forth in
\nSection 5.9<\/u>. For the avoidance of doubt, the name of the Surviving
\nCorporation shall be the name of the Company.<\/p>\n<\/p>\n 2<\/p>\n \n
\n<\/p>\nSection 1.6 Directors<\/u>. Subject to applicable Law, the directors of
\nMerger Sub immediately prior to the Effective Time shall be the directors of the
\nSurviving Corporation and shall hold office until their respective successors
\nare duly elected or appointed and qualified or their earlier death, resignation
\nor removal in accordance with the articles of incorporation and code of
\nregulations of the Surviving Corporation.<\/p>\n<\/p>\n Section 1.7 Officers<\/u>. The officers of the Company immediately prior to
\nthe Effective Time shall be the officers of the Surviving Corporation and shall
\nhold office until their respective successors are duly elected or appointed and
\nqualified or their earlier death, resignation or removal in accordance with the
\narticles of incorporation and code of regulations of the Surviving Corporation.\n<\/p>\n<\/p>\n Section 1.8 Subsequent Actions<\/u>. If at any time after the Effective
\nTime the Surviving Corporation shall determine that any actions are necessary or
\ndesirable to vest, perfect or confirm of record or otherwise in the Surviving
\nCorporation its right, title or interest in, to or under any of the rights,
\nproperties or assets of either of the Company or Merger Sub acquired or to be
\nacquired by the Surviving Corporation as a result of, or in connection with, the
\nMerger or otherwise to carry out this Agreement, then the officers and directors
\nof the Surviving Corporation shall be authorized to take all such actions as may
\nbe necessary or desirable to vest all right, title or interest in, to and under
\nsuch rights, properties or assets in the Surviving Corporation or otherwise to
\ncarry out this Agreement.<\/p>\n<\/p>\n ARTICLE II<\/strong><\/p>\n\n TREATMENT OF SHARES<\/u><\/strong><\/p>\n\n Section 2.1 Effect on Stock<\/u>. At the Effective Time, by virtue of the
\nMerger and without any action on the part of the Company, Merger Sub or the
\nholders of any securities of the Company or Merger Sub:<\/p>\n<\/p>\n (a) Conversion of Company Common Stock<\/u>. Subject to Sections
\n2.1(b)<\/u>, Section 2.3<\/u> and Section 2.4<\/u>, each issued and
\noutstanding share of common stock, par value $.01 per share, of the Company
\noutstanding immediately prior to the Effective Time (such shares, collectively,
\n“Company Common Stock<\/u>,” and each, a “Share<\/u>“), together with the
\nassociated preferred share purchase rights (the “Rights<\/u>“) under the
\nShareholders Rights Plan shall thereupon be canceled and, subject to the
\nprovisions of Section 2.1(b)<\/u>, shall be converted automatically into and
\nshall thereafter represent the right to receive cash in the amount of thirty
\ndollars ($30.00) per share (the “Merger Consideration<\/u>“), payable without
\ninterest, to the holder of such share of Company Common Stock. As of the
\nEffective Time, all such shares of Company Common Stock and Rights shall no
\nlonger be outstanding and shall automatically be canceled and shall cease to
\nexist, and each holder of a certificate, which immediately prior to the
\nEffective Time represented any such shares of Company Common Stock, shall cease
\nto have any rights with respect thereto, except the right to receive the Merger
\nConsideration, without interest, to be paid in consideration therefor upon
\nsurrender, in accordance with Section 2.2(b)<\/u>, of the certificate formerly
\nevidencing such share. Throughout this Agreement, the term “Shares<\/u>”
\nrefers to the Shares together with the associated Rights.<\/p>\n<\/p>\n 3<\/p>\n \n
\n(b) Cancellation of Shares<\/u>. Each Share that is owned, directly or
\nindirectly, by Parent or Merger Sub immediately prior to the Effective Time or
\nheld by the Company or any Subsidiary of the Company immediately prior to the
\nEffective Time shall, by virtue of the Merger and without any action on the part
\nof the holder thereof, be canceled and retired and shall cease to exist, and no
\nconsideration shall be delivered in exchange for such cancellation and
\nretirement.<\/p>\n<\/p>\n (c) Conversion of Merger Sub Common Stock<\/u>. At the Effective Time, by
\nvirtue of the Merger and without any action on the part of the holder thereof,
\neach share of common stock, par value $0.01 per share, of Merger Sub issued and
\noutstanding immediately prior to the Effective Time shall be converted into and
\nbecome one validly issued, fully paid and nonassessable share of common stock,
\npar value $0.01 per share, of the Surviving Corporation and shall constitute the
\nonly outstanding shares of stock of the Surviving Corporation. No capital stock
\nof the Merger Sub will be issued or used in the Merger.<\/p>\n<\/p>\n Section 2.2 Exchange of Shares<\/u>.<\/p>\n<\/p>\n (a) Paying Agent<\/u>. Prior to the Effective Time, Parent shall designate
\na bank or trust company reasonably acceptable to the Company to act as agent
\n(the “Paying Agent<\/u>“) for the holders of shares of Company Common Stock,
\nthe Restricted Shares and Company RSUs, for the payment of the Merger
\nConsideration in each case in accordance with this Article II<\/u>. At or
\nprior to the Effective Time, Parent shall deposit or cause to be deposited with
\nthe Paying Agent for the benefit of the holders of all of the foregoing shares
\nan amount in cash sufficient to pay the aggregate amount of Merger Consideration
\ndeliverable pursuant to Section 2.1(a)<\/u> and Section 2.4<\/u>, other than
\nin respect of Dissenting Shares or shares canceled pursuant to Section
\n2.1(b)<\/u> (such cash amount being hereinafter referred to as the “Exchange
\nFund<\/u>“). Notwithstanding anything to the contrary contained hereto, the
\nPaying Agent shall not disburse any part of the Exchange Fund prior to the
\nDissenters Determination Date. Pending its disbursement in satisfaction of such
\nobligations, the Exchange Fund shall be invested by the Paying Agent as directed
\nby Parent in (i) short-term direct obligations of the United States of America,
\n(ii) short-term obligations for which the full faith and credit of the United
\nStates of America is pledged to provide for the payment of principal and
\ninterest, (iii) short-term commercial paper rated the highest quality by either
\nMoody’s Investors Service, Inc. or Standard and Poor’s Ratings Services or (iv)
\ncertificates of deposit, bank repurchase agreements or banker’s acceptances of
\ncommercial banks with capital exceeding $1.0 billion. Upon the date that is one
\n(1) business day after the Dissenters Determination Date, the Paying Agent shall
\ndisburse to Parent that portion of the Exchange Fund (if any) attributable to
\nDissenting Shares. If a Dissenting Shareholder effectively withdraws its demand
\nfor, or loses its rights to, payment of fair cash value pursuant to Section
\n1701.85 of the OGCL with respect to any Dissenting Shares, (i) such Company
\nCommon Stock shall cease to be Dissenting Shares and (ii) Parent shall make
\navailable or cause to be made available to the Paying Agent additional funds in
\nan amount equal to the product of (x) the number of Dissenting Shares for which
\nthe Dissenting Shareholder has withdrawn its demand for, or lost its rights to,
\npayment of fair cash value pursuant to Section 1701.85 of the OGCL and (y) the
\nMerger Consideration. Parent shall or shall cause the Surviving Corporation to,
\npromptly replace or restore the cash in the Exchange Fund so as to ensure that
\nthe Exchange Fund is at all times maintained at a level sufficient for the
\nPaying Agent to make such payments under Section 2.1(a)<\/u> and Section
\n2.4<\/u>. Nothing contained in this Section 2.2(a)<\/u> and no investment
\nlosses resulting from investment of the funds deposited with the Paying Agent
\nshall diminish the rights of any holder of Company Common Stock, the Restricted
\nShares and Company RSUs, to receive the Merger Consideration.<\/p>\n<\/p>\n 4<\/p>\n \n
\n(b) Payment Procedures<\/u>. As soon as practicable after the Effective
\nTime, the Surviving Corporation shall cause the Paying Agent to mail to each
\nholder of record of Company Common Stock, (i) a certificate or certificates
\n(each, a “Certificate<\/u>“), which as of the Effective Time represented
\noutstanding shares of Company Common Stock, the Restricted Shares or the Company
\nRSUs, that were canceled or converted and became instead the right to receive
\nthe Merger Consideration pursuant to Section 2.1(a)<\/u> or Section
\n2.4<\/u>, (ii) a letter of transmittal (which shall specify that delivery shall
\nbe effected, and risk of loss and title to the Certificates shall pass, only
\nupon delivery of the Certificates (or affidavits of loss in lieu thereof) to the
\nPaying Agent, and which shall be in such form and shall have such other
\ncustomary provisions as Parent and the Company may reasonably agree prior to the
\nClosing Date) and (iii) instructions for use in effecting the surrender of the
\nCertificates (or affidavits of loss in lieu thereof) in exchange for payment of
\nthe Merger Consideration. Upon surrender of a Certificate (or affidavits of loss
\nin lieu thereof) for cancellation to the Paying Agent, together with such letter
\nof transmittal, duly completed and validly executed in accordance with the
\ninstructions (and such other customary documents as may reasonably be required
\nby the Paying Agent), the holder of such Certificate shall, subject to
\nSection 2.3<\/u>, be entitled to receive in exchange therefor the Merger
\nConsideration, without interest, for each share of Company Common Stock formerly
\nrepresented by such Certificate, and the Certificate so surrendered shall
\nforthwith be canceled. If payment of the Merger Consideration is to be made to a
\nperson other than the person in whose name the surrendered Certificate is
\nregistered, it shall be a condition of payment that (x) the Certificate so
\nsurrendered shall be properly endorsed or shall otherwise be in proper form for
\ntransfer and (y) the person requesting such payment shall have paid all transfer
\nand other Taxes required by reason of the payment of the Merger Consideration to
\na person other than the registered holder of such Certificate surrendered and
\nshall have established to the reasonable satisfaction of the Surviving
\nCorporation that such Tax either has been paid or is not applicable. Until
\nsurrendered as contemplated by this Section 2.2<\/u>, each Certificate shall
\nbe deemed at any time after the Effective Time to represent only the right to
\nreceive the Merger Consideration as contemplated by this Article II<\/u>,
\nwithout interest.<\/p>\n<\/p>\n (c) Withholdings<\/u>. Each of Parent, Merger Sub, the Company, the
\nSurviving Corporation and the Paying Agent shall be entitled to deduct and
\nwithhold, from any consideration payable or otherwise deliverable under this
\nAgreement, such amounts as are required to be withheld or deducted under the
\nInternal Revenue Code of 1986, as amended (the “Code<\/u>“) or any provision
\nof state, local or foreign Law with respect to the making of such payment. To
\nthe extent that amounts are so withheld or deducted, such withheld or deducted
\namounts shall be treated for all purposes of this Agreement as having been paid
\nto the person(s) to whom such amounts would otherwise have been paid.<\/p>\n<\/p>\n 5<\/p>\n \n
\n<\/p>\n(d) No Further Ownership Rights in Company Common Stock; Closing of
\nTransfer Books<\/u>. Subject to Section 2.3<\/u>, from and after the Effective
\nTime, the holders of shares of Company Common Stock, the Company Stock Options,
\nthe Restricted Shares and Company RSUs outstanding immediately prior to the
\nEffective Time shall cease to have any rights with respect to such Shares,
\nCompany Stock Options, Restricted Shares or Company RSUs, except as otherwise
\nprovided herein and by applicable Law. The Merger Consideration paid in respect
\nof shares of Company Common Stock, the Company Stock Options, the Restricted
\nShares and Company RSUs upon the surrender for exchange of Certificates in
\naccordance with the terms of this Article II<\/u> shall be deemed to have been
\npaid in full satisfaction of all rights pertaining to the shares of Company
\nCommon Stock, the Company Stock Options, the Restricted Shares and Company RSUs
\npreviously represented by such Certificates. From and after the Effective Time,
\nthe stock transfer books of the Company shall be closed with respect to the
\nShares, the Company Stock Options, the Restricted Shares and Company RSUs that
\nwere outstanding immediately prior to the Effective Time, and there shall be no
\nfurther registration of transfers on the stock transfer books of the Surviving
\nCorporation of the Shares that were outstanding immediately prior to the
\nEffective Time. Subject to the penultimate sentence of Section 2.2(d)<\/u>,
\nif, after the Effective Time, Shares, Company Stock Options, Restricted Shares
\nor Company RSUs are presented to the Surviving Corporation or the Paying Agent
\nfor any reason, they shall be canceled and exchanged as provided in this
\nArticle II<\/u>.<\/p>\n<\/p>\n (e) Termination of Exchange Fund<\/u>. At any time commencing nine (9)
\nmonths after the Effective Time, Parent shall be entitled to require the Paying
\nAgent to deliver to it any funds (including, without limitation, all interest
\nand other income received by the Paying Agent in respect of all funds made
\navailable to it) that had been made available to the Paying Agent and which have
\nnot been disbursed to holders of Certificates, and thereafter such holders shall
\nbe entitled to look only to Parent and the Surviving Corporation (subject to
\nabandoned property, escheat or other similar Laws) as general creditors thereof
\nwith respect to the payment of any Merger Consideration that may be payable upon
\nsurrender of any Certificates held by such holders, as determined pursuant to
\nthis Agreement, without any interest thereon. Any amounts remaining unclaimed by
\nsuch holders at such time at which such amounts would otherwise escheat to or
\nbecome property of any Governmental Entity shall become, to the extent permitted
\nby applicable Law, the property of Parent or its designee, free and clear of all
\nclaims or interest of any person previously entitled thereto.<\/p>\n<\/p>\n (f) No Liability<\/u>. Notwithstanding anything in this Agreement to the
\ncontrary, none of the Company, Parent, Merger Sub, the Surviving Corporation,
\nthe Paying Agent or any other person shall be liable to any former holder of
\nShares for any amount properly delivered to a public official pursuant to any
\napplicable abandoned property, escheat or similar Law.<\/p>\n<\/p>\n (g) Lost, Stolen or Destroyed Certificates<\/u>. If any Certificate shall
\nhave been lost, stolen or destroyed, upon the making of an affidavit of that
\nfact by the person claiming such Certificate to be lost, stolen or destroyed
\nand, if required by Parent or the Surviving Corporation, the posting by such
\nperson of a bond in such reasonable amount as Parent or the Surviving
\nCorporation may require as indemnity against any claim that may be made against
\nit with respect to such certificate, the Paying Agent will deliver in exchange
\nfor such lost, stolen or destroyed Certificate the applicable Merger
\nConsideration with respect to the Shares formerly represented thereby,
\ndeliverable in respect thereof pursuant to this Agreement.<\/p>\n<\/p>\n (h) Uncertificated Shares<\/u>. In the case of outstanding Shares that are
\nnot represented by Certificates, the parties shall make such adjustments to this
\nSection 2.2<\/u> as are necessary or appropriate to implement the same purpose
\nand effect that this Section 2.2<\/u> has with respect to Shares that are
\nrepresented by Certificates.<\/p>\n<\/p>\n 6<\/p>\n \n
\nSection 2.3 Dissenters Rights<\/u>. Notwithstanding anything in this
\nAgreement to the contrary, to the extent required by the OGCL, shares of Company
\nCommon Stock that are issued and outstanding immediately prior to the Effective
\nTime and which are held by any shareholder who was a record holder of Company
\nCommon Stock as to which such shareholder seeks relief as of the date fixed for
\ndetermination of shareholders entitled to notice of the Company Shareholders’
\nMeeting, and who files with the Company within ten (10) days after such vote at
\nthe Company Shareholders’ Meeting (the “Dissenters Determination Date<\/u>“) a
\nwritten demand to be paid the fair cash value for such shares of Company Common
\nStock that have not been voted in favor of the proposal to adopt this Agreement
\nat the Company Shareholders’ Meeting in accordance with Sections 1701.84 and
\n1701.85 of the OGCL (the “Dissenting Shares<\/u>“), shall not be converted
\ninto the right to receive the Merger Consideration as provided in Section
\n2.1(a)<\/u>, unless and until such shareholder fails to perfect or otherwise
\nwaives, withdraws or loses such shareholder’s rights as a dissenting
\nshareholder, if any, under the OGCL. If any such shareholder (a “Dissenting
\nShareholder<\/u>“) fails to perfect or otherwise waives, withdraws or loses any
\nsuch rights as a Dissenting Shareholder, that shareholder’s Company Common Stock
\nshall thereupon be deemed to have been converted as of the Effective Time into
\nonly the right to receive at the Effective Time the Merger Consideration,
\nwithout interest. Subject to the preceding sentence, from and after the
\nEffective Time, each shareholder who has asserted rights as a Dissenting
\nShareholder as provided in Sections 1701.84 and 1701.85 of the OGCL shall be
\nentitled only to such rights as are granted under those Sections of the OGCL.
\nThe Company shall promptly notify Parent of each shareholder who asserts rights
\nas a Dissenting Shareholder following receipt of such shareholder’s written
\ndemand delivered as provided in Section 1701.85(A)(2) of the OGCL. Prior to the
\nEffective Time, the Company shall not, except with the prior written consent of
\nParent, voluntarily make any payment or commit or agree to make any payment, or
\nsettle or commit or offer to settle, any rights of a Dissenting Shareholder
\nasserted under Section 1701.85 of the OGCL.<\/p>\n<\/p>\n Section 2.4 Stock Options and Other Stock-Based Awards<\/u>.<\/p>\n<\/p>\n (a) Each option to purchase shares of Company Common Stock (each, a
\n“Company Stock Option<\/u>“) granted under the employee and director stock
\nplans of the Company (the “Company Stock Plans<\/u>“), whether vested or
\nunvested, that is outstanding immediately prior to the Effective Time shall, as
\nof the Effective Time, automatically and without any action on the part of the
\nholder thereof, become fully vested and exercisable. With respect to such
\nCompany Stock Options:<\/p>\n<\/p>\n (i) each Company Stock Option for which, as of the Effective Time, the Merger
\nConsideration exceeds the exercise price per Share shall be canceled at the
\nEffective Time and, in exchange therefor, each former holder of such Company
\nStock Option shall be entitled to receive, as soon as practicable, but in no
\nevent later than three (3) business days following the Effective Time, an amount
\nin cash (without interest, and less such amounts as are required to be withheld
\nor deducted under the Code or any provision of state, local or foreign Law with
\nrespect to the making of such payment) equal to the product of (1) the excess,
\nif any, of the Merger Consideration over the exercise price per Share under such
\nCompany Stock Option and (2) the number of shares of Company Common Stock
\nsubject to such Company Stock Option; and<\/p>\n<\/p>\n 7<\/p>\n \n
\n(ii) each Company Stock Option that is outstanding immediately prior to the
\nEffective Time for which, as of the Effective Time, the Merger Consideration
\ndoes not exceed the exercise price per Share shall be amended and converted into
\nan option to acquire, on the same terms and conditions as were applicable under
\nsuch Company Stock Option (giving effect to any terms and conditions resulting
\nfrom the Transactions), the number of shares of common stock of Parent, par
\nvalue $.01 per share (“Parent Common Stock<\/u>“), rounded down to the nearest
\nwhole share, equal to the product of the number of shares of Company Common
\nStock subject to such Company Stock Option and the Exchange Ratio (as defined
\nbelow), at an exercise price per share of Parent Common Stock, rounded up to the
\nnearest whole cent, equal to the quotient obtained by dividing the aggregate
\nexercise price for the shares of Company Common Stock subject to such Company
\nStock Option by the Exchange Ratio (each, as so adjusted, an “Adjusted
\nOption<\/u>“). The adjustments provided in this Section 2.4(a)(ii)<\/u> with
\nrespect to any Company Stock Option to which Section 409A or 421 (a) of the Code
\napplies shall be and are intended to be effected in a manner which is consistent
\nwith Section 409A and 424(a) of the Code, respectively. As soon as practicable
\nfollowing the Effective Time, Parent shall deliver to the holders of Adjusted
\nOptions appropriate notices setting forth such holders’ rights pursuant to the
\nrespective Company Stock Plans and the agreements evidencing the grants of such
\nAdjusted Options, which shall provide, among other things, that such Adjusted
\nOptions and agreements have been assumed by Parent and shall continue in effect
\non the same terms and conditions (subject to the adjustments required by this
\nSection 2.4(a)(ii)<\/u> after giving effect to the Merger and giving effect to
\nany terms and conditions resulting from the Transactions). For purposes of this
\nSection 2.4(a)(ii)<\/u>, “Exchange Ratio<\/u>” shall mean the Merger
\nConsideration divided by the volume weighted average per-share trading price of
\nParent Common Stock on the New York Stock Exchange (the “NYSE<\/u>“) on the
\nfive (5) trading days immediately preceding the Closing Date.<\/p>\n<\/p>\n (b) At the Effective Time, each share of restricted Company Common Stock
\ngranted under a Company Stock Plan (including all restricted common shares
\ngranted under the Career Progression Program) that is outstanding immediately
\nprior to the Effective Time (the “Restricted Shares<\/u>“) shall,
\nautomatically and without any action on the part of the holder thereof, be
\nconverted into the right to receive the Merger Consideration, less such amounts
\nas are required to be withheld or deducted under the Code or any provision of
\nstate, local or foreign Law with respect to the making of such payment.<\/p>\n<\/p>\n<\/p>\n (c) At the Effective Time, each restricted stock unit award in respect of
\nCompany Common Stock granted under a Company Stock Plan whose vesting is based
\nsolely on the satisfaction of service-based conditions and that is outstanding
\nimmediately prior to the Effective Time (collectively, the “Service-Based
\nRSUs<\/u>“) shall, automatically and without any action on the part of the holder
\nthereof, be converted into the right to receive the Merger Consideration for
\neach share of Company Common Stock denominated thereby, less such amounts as are
\nrequired to be withheld or deducted under the Code or any provision of state,
\nlocal or foreign Law with respect to the making of such payment.<\/p>\n<\/p>\n 8<\/p>\n \n
\n(d) At the Effective Time, each performance share unit award in respect of
\nCompany Common Stock granted under a Company Stock Plan whose vesting is not
\nbased solely on the satisfaction of service-based conditions and that is
\noutstanding immediately prior to the Effective Time (collectively, the
\n“Non-Service-Based RSUs<\/u>“, and together with the Service-Based RSUs, the
\n“Company RSUs<\/u>“) shall, automatically and without any action on the part
\nof the holder thereof, be converted into the right to receive the Merger
\nConsideration for the target number of shares of Company Common Stock
\ndenominated by the Non-Service-Based RSUs multiplied by a fraction, the
\nnumerator of which is the number of days in the applicable performance period
\nelapsed through and including the Effective Date and the denominator of which is
\nthe number of days in the applicable performance period, less such amounts as
\nare required to be withheld or deducted under the Code or any provision of
\nstate, local or foreign Law with respect to the making of such payment.<\/p>\n<\/p>\n (e) Prior to the Effective Time, the Company shall pass resolutions to effect
\nthe foregoing provisions of this Section 2.4<\/u>.<\/p>\n<\/p>\n (f) As soon as practicable following the Effective Time, Parent shall prepare
\nand file with the SEC a registration statement on Form S-8 (or another
\nappropriate form) registering shares of Parent Common Stock subject to issuance
\nupon the exercise of the Adjusted Options. The Company shall cooperate with, and
\nassist Parent in the preparation of, such registration statement. Parent shall
\nkeep such registration statement effective (and maintain the current status of
\nthe prospectus required thereby) for so long as any Adjusted Options remain
\noutstanding.<\/p>\n<\/p>\n Section 2.5 Adjustments<\/u>. Notwithstanding any provision of this
\nArticle II<\/u> to the contrary, if between the date of this Agreement and the
\nEffective Time the outstanding shares of Company Common Stock shall have been
\nchanged into a different number of shares or a different class by reason of the
\noccurrence or record date of any stock dividend, subdivision, reclassification,
\nrecapitalization, split, combination, exchange of shares or similar transaction,
\nthe Merger Consideration shall be appropriately adjusted to reflect such stock
\ndividend, subdivision, reclassification, recapitalization, split, combination,
\nexchange of shares or similar transaction. For the avoidance of doubt, there
\nshall not be any adjustment to the Merger Consideration by reason of the
\nissuance of additional shares of Common Stock pursuant to the exercise of the
\nCompany’s outstanding Warrants or other convertible securities.<\/p>\n<\/p>\n Section 2.6 Consent of Surviving Corporation<\/u>. The Surviving
\nCorporation hereby consents to be sued and served with process in the State of
\nOhio and to the irrevocable appointment of the Secretary of State of the State
\nof Ohio as its agent to accept service of process in any proceeding in the State
\nof Ohio to enforce against the Surviving Corporation any obligation of the
\nCompany, or to enforce the rights of a Dissenting Shareholder of the Company.\n<\/p>\n<\/p>\n 9<\/p>\n \n
\nARTICLE III<\/strong><\/p>\n\n REPRESENTATIONS AND WARRANTIES OF THE
\nCOMPANY<\/u><\/strong><\/p>\n\n The Company represents and warrants to Parent and Merger Sub that except (i)
\nas set forth in the “Company Disclosure Schedule<\/u>” (as such term is used
\nin this Agreement), a copy of which has been provided to Parent and Merger Sub,
\nwith specific reference to the particular Article or Section of this Agreement
\nto which the information set forth in such schedule relates (it being agreed
\nthat disclosure of any item in any Article or Section of the Company Disclosure
\nSchedule shall be deemed disclosure with respect to any other Article or Section
\nto which the relevance of such item is reasonably apparent) or (ii) as and to
\nthe extent set forth in the publicly available reports, schedules, forms,
\nstatements and other documents filed by the Company with, or furnished by the
\nCompany to, the SEC on or after January 1, 2010 and before the second (2nd)
\nbusiness day immediately prior to the date hereof, to the extent the relevance
\nof the disclosure is reasonably apparent (excluding any forward-looking
\ndisclosures, whether or not contained under the heading “forward-looking
\nstatements,” other than any specific factual information contained therein):<\/p>\n<\/p>\n Section 3.1 Qualification, Organization, Subsidiaries, etc.<\/u><\/p>\n<\/p>\n (a) Each of the Company and its Subsidiaries is a legal entity duly
\norganized, validly existing and in good standing under the Laws of its
\nrespective jurisdiction of organization and has all requisite corporate or
\nsimilar power and authority to own, lease and operate its properties and assets,
\nto carry on its business as presently conducted and is qualified to do business
\nand is in good standing as a foreign corporation in each jurisdiction where the
\nownership, leasing, character or operation of its assets or properties or
\nconduct of its business requires such qualification, except where the failure to
\nbe so organized, validly existing, qualified or in good standing, or to have
\nsuch power or authority, would not reasonably be expected to have, individually
\nor in the aggregate, a Company Material Adverse Effect. The Company has made
\navailable to Parent prior to the date of this Agreement a true and complete copy
\nof its articles of incorporation and code of regulations (the “Company
\nOrganizational Documents<\/u>“) and has made available to Parent prior to the
\ndate of this Agreement a true and complete copy of the articles of incorporation
\nand code of regulations or other equivalent organizational documents of each of
\nits Subsidiaries, each as amended through the date hereof. Neither the Company
\nnor any Subsidiary of the Company is in material violation of any provision of
\nits articles of incorporation or regulations (or equivalent organizational
\ndocuments).<\/p>\n<\/p>\n 10<\/p>\n \n
\n<\/p>\n(b) Section 3.1(b)(i) of the Company Disclosure Schedule sets forth a
\ncomplete list, as of the date hereof, of each Subsidiary of the Company and its
\njurisdiction of organization or formation and the jurisdictions in which they
\nare qualified to do business. Section 3.1(b)(ii) of the Company Disclosure
\nSchedule sets forth each of the Company’s Subsidiaries and the ownership
\ninterest of the Company in each such Subsidiary, as well as the ownership
\ninterest of any other person or persons in each such Subsidiary. All of the
\noutstanding shares of capital stock or other equity interests of each Subsidiary
\nof the Company have been validly issued and are fully paid and nonassessable.
\nExcept as set forth in Section 3.1(b)(ii) of the Company Disclosure Schedule,
\nall of the outstanding shares of capital stock or other equity interests of each
\nSubsidiary of the Company are owned by the Company, by one or more Subsidiaries
\nof the Company or by the Company and one or more Subsidiaries of the Company, in
\neach case free and clear of all Liens, except for Company Permitted Liens.
\nExcept as set forth in Section 3.1(b)(iii) of the Company Disclosure Schedule,
\nexcept for the capital stock and other equity interests of its Subsidiaries,
\nneither the Company nor any of its Subsidiaries owns, directly or indirectly,
\nany capital stock or other equity interest in any other person (including
\nthrough participation in any joint venture or similar arrangement), other than
\nthe ownership of securities primarily for investment purposes as part of routine
\ncash management or investments of two percent (2%) or less in publicly traded
\ncompanies, and there are no Company Joint Ventures. The Company does not own,
\ndirectly or indirectly, any minority interest in any person that requires an
\nadditional filing by the Parent under the HSR Act in connection with the
\nconsummation of the Transactions. “Company Joint Venture<\/u>” means any
\ncorporation, limited liability company, partnership, joint venture, trust or
\nother entity which is not a Subsidiary of the Company and in which (i) the
\nCompany, directly or indirectly, owns or controls any shares of any class of the
\noutstanding voting securities or other equity interests (other than the
\nownership of securities primarily for investment purposes as part of routine
\ncash management or investments of two percent (2%) or less in publicly traded
\ncompanies) or (ii) the Company or a Subsidiary of the Company is a general
\npartner.<\/p>\n<\/p>\n (c) Prior to the date hereof, the Company has made available to the Parent
\ntrue, complete and correct copies of the approved minutes of all meetings of the
\nshareholders, the Board of Directors and each committee of the Board of
\nDirectors of the Company since January 1, 2009 through January 25, 2011. Parent
\nacknowledges that certain provisions of such minutes relating to the Company’s
\nstrategic alternatives have been omitted.<\/p>\n<\/p>\n 11<\/p>\n \n
\n<\/p>\n(d) As used in this Agreement, a “Company Material Adverse Effect<\/u>”
\nmeans an event, change, effect, development, state of facts, condition or
\noccurrence that, individually or in the aggregate, is or would reasonably be
\nexpected to be materially adverse to the business, financial condition, assets,
\nliabilities, operations or results of operations of the Company and its
\nSubsidiaries, taken as a whole, or on the ability of the Company to consummate
\nthe Transactions, but shall not be deemed to include and shall not be determined
\nby taking into account, either alone or in combination, any event, change,
\neffect, development, state of facts, condition or occurrence: (i) in or
\naffecting the economy or the financial, securities or commodities markets in the
\nUnited States or elsewhere in the world, the industry or industries in which the
\nCompany or its Subsidiaries operate generally or in any specific jurisdiction or
\ngeographical area or (ii) resulting from or arising out of (A) any changes or
\ndevelopments in international, national, regional, state or local wholesale or
\nretail markets for electric power, capacity or fuel or related products
\nincluding any changes or developments resulting from or arising out of (1)
\nchanges in commodities prices or hedging markets therefor, (2) decisions made by
\nthe Company’s customer base relating to its selection of a power supplier or (3)
\nproceedings relating to or governed by Ohio Revised Code Chapter 4928, (B) any
\nchanges or developments in national, regional, state or local electric
\ntransmission or distribution systems or decreases in planned spending with
\nrespect thereto, (C) the negotiation, execution, announcement or the existence
\nof, or compliance with, this Agreement or the Transactions, including any
\nlitigation or administrative proceedings and related comments resulting
\ntherefrom, any adverse change in customer, employee or shareholder relationships
\nresulting therefrom or any possible Union activity, (D) any taking of any action
\nat the written request of Parent or Merger Sub or with the written consent of
\nParent or Merger Sub, (E) any adoption, implementation, promulgation, repeal,
\nmodification, reinterpretation, change or proposal of any rule, regulation,
\nordinance, order, protocol or any other Law of or by any national, regional or
\nstate Governmental Entity, including PJM and the Midwest Independent
\nTransmission System Operator, Inc., or their successors, (F) any changes in GAAP
\nor accounting standards or interpretations thereof, (G) acts of war (whether or
\nnot declared), the commencement, continuation or escalation of a war, acts of
\narmed hostility, sabotage or terrorism, (H) any decline in the market price, or
\nchange in trading volume, of the Company Common Stock (it being understood and
\nagreed that the facts and circumstances giving rise to such change that are not
\notherwise excluded from the definition of Company Material Adverse Effect may be
\ndeemed to constitute, or be taken into account in determining whether there has
\nbeen, or would reasonably be expected to be, a Company Material Adverse Effect),
\n(I) any reduction in the credit rating of the Company or any of its Subsidiaries
\nto the extent attributable to the expected consummation of the Merger or the
\nTransactions (it being understood and agreed that the facts and circumstances
\ngiving rise to such change that are not otherwise excluded from the definition
\nof Company Material Adverse Effect may be deemed to constitute, or be taken into
\naccount in determining whether there has been, or would reasonably be expected
\nto be, a Company Material Adverse Effect), (J) any change resulting from or
\narising out of the identity of, or any facts or circumstances relating to,
\nParent, Merger Sub or their respective Subsidiaries, (K) any failure by the
\nCompany to meet any internal or published industry analyst projections or
\nforecasts or estimates of revenues or earnings for any period (it being
\nunderstood and agreed that the facts and circumstances giving rise to such
\nchange that are not otherwise excluded from the definition of Company Material
\nAdverse Effect may be deemed to constitute, or be taken into account in
\ndetermining whether there has been, or would reasonably be expected to be, a
\nCompany Material Adverse Effect), (L) any hurricane, earthquake, flood or other
\nnatural disasters or acts of God or (M) any change resulting from weather
\nconditions; provided<\/u>, however<\/u>, that any event, change, effect,
\ndevelopment, state of facts, circumstance, condition or occurrence described in
\neach of clauses (i) and (ii)(F) or (G) above shall not constitute or give rise
\nto a Company Material Adverse Effect only if and to the extent that such event,
\nchange, effect, development, state of facts, circumstance, condition or
\noccurrence does not have a materially disproportionate effect on the Company and
\nits Subsidiaries, taken as a whole, as compared to other relevant entities
\nengaged in the relevant business in Ohio or other relevant geographical areas.\n<\/p>\n<\/p>\n Section 3.2 Stock<\/u>.<\/p>\n<\/p>\n (a) The authorized stock of the Company consists of 250,000,000 shares of
\nCompany Common Stock, with a par value of $.01 per share, and 8,000,000 shares
\nof preferred stock, without par value (the “Company Preferred Stock<\/u>“).
\nSection 3.2(a) of the Company Disclosure Schedule lists the authorized stock of
\neach of the Company’s Subsidiaries (collectively, the “Subsidiaries’ Equity
\nInterests<\/u>“) and the issued and outstanding Subsidiaries’ Equity Interests
\nfor each of the Company’s Subsidiaries. As of the close of business on the
\nbusiness day immediately preceding the date of this Agreement (i) 117,221,579
\nshares of Company Common Stock were issued and outstanding, which includes all
\nof the Restricted Shares outstanding as of such date, (ii) 46,786,869 shares of
\nCompany Common Stock were held in treasury, (iii) 573,082 shares of Company
\nCommon Stock were issuable pursuant to Company Stock Plans in respect of Company
\nStock Options and Company RSUs and (iv) no shares of Company Preferred Stock
\nwere issued and outstanding. All outstanding shares of Company Common Stock and
\nall of the outstanding Subsidiaries’ Equity Interests are duly authorized,
\nvalidly issued, fully paid and nonassessable and were not issued in violation of
\nany pre-emptive right, purchase option, call, right of first refusal or any
\nsimilar right and all shares of Company Common Stock reserved for issuance under
\nCompany Stock Plans as noted in clause (iii) hereof, when issued in accordance
\nwith the respective terms thereof, will be duly authorized, validly issued,
\nfully paid and nonassessable and not issued in violation of any pre-emptive
\nright, purchase option, call, right of first refusal or any similar right. No
\nshares of Company Common Stock are held by any Subsidiary of the Company. Except
\nas set forth in this Section 3.2(a)<\/u> or Section 3.2(a) of the Company
\nDisclosure Schedule, at the close of business on the business day immediately
\npreceding the date of this Agreement, no shares of stock or voting securities
\nof, or other equity interests in, the Company or any of its Subsidiaries were
\nissued, reserved for issuance or outstanding.<\/p>\n<\/p>\n 12<\/p>\n \n
\n<\/p>\n(b) Except as set forth in subsection (a) above or Section 3.2(a) of the
\nCompany Disclosure Schedule (and other than the 1,700,000 outstanding warrants
\nissued pursuant to the Warrant to Purchase Common Shares of DPL Inc. (the
\n“Warrants<\/u>“), granted by the Company to Dayton Ventures LLC, pursuant to
\nthe Securities Purchase Agreement, dated as of February 1, 2000, among the
\nCompany, DPL Capital Trust I, Dayton Ventures LLC, and Dayton Ventures, Inc.
\n(the “Warrant Agreement<\/u>“) entitling the holders thereof to purchase an
\naggregate of 1,700,000 shares of Company Common Stock), as of the date hereof,
\nthere are no outstanding subscriptions, options, warrants, calls, convertible
\nsecurities or other similar rights, agreements or commitments relating to the
\nissuance or repurchase of capital stock or other equity interests to which the
\nCompany or any of its Subsidiaries is a party, or by which any of them is bound,
\nobligating the Company or any of its Subsidiaries to (i) issue, transfer or sell
\nor cause to be issued, transferred or sold, any shares of capital stock or other
\nequity interests of the Company or any Subsidiary of the Company or securities
\nconvertible into or exchangeable for such shares or equity interests, (ii)
\ngrant, extend or enter into any such subscription, option, warrant, call,
\nconvertible securities or other similar right, agreement or arrangement, (iii)
\nredeem or otherwise acquire any such shares of capital stock or other equity
\ninterests or (iv) provide a material amount of funds to, or make any material
\ninvestment (in the form of a loan, capital contribution or otherwise) in, any
\nSubsidiary.<\/p>\n<\/p>\n (c) Except for the Warrants and awards to acquire shares of Company Common
\nStock under the Company Stock Plans, neither the Company nor any of its
\nSubsidiaries has any outstanding bonds, debentures, notes or other indebtedness
\nof the Company or any of its Subsidiaries, the holders of which have the right
\nto vote (or which are convertible into or exercisable for securities having the
\nright to vote) with the shareholders of the Company or any of its Subsidiaries
\non any matter.<\/p>\n<\/p>\n (d) Except as set forth in Section 3.2(d)<\/u> of the Company Disclosure
\nSchedule, there are no voting trusts or other agreements or understandings to
\nwhich the Company or any of its Subsidiaries is a party with respect to the
\nvoting or registration of, or restricting any person from purchasing, selling,
\npledging or otherwise disposing of, the capital stock or other equity interest
\nof the Company or any of its Subsidiaries. Except as set forth in Section
\n3.2(d)<\/u> of the Company Disclosure Schedule, neither the Company nor any of
\nits Subsidiaries is under any obligation, or is bound by any contract pursuant
\nto which it may become obligated, to repurchase, redeem or otherwise acquire any
\noutstanding shares of Company Common Stock or any Subsidiaries’ Equity
\nInterests.<\/p>\n<\/p>\n 13<\/p>\n \n
\n(e) The Company has delivered or made available to Parent an accurate and
\ncomplete copy of the Company Stock Plans and the forms of award agreements for
\nCompany Stock Options, Restricted Shares or Company RSUs (collectively,
\n“Company Equity Awards<\/u>“). There have been no repricings of any Company
\nStock Options through amendments, cancellation and reissuance or other means
\nduring the current or prior two (2) calendar years. Except as set forth in
\nSection 3.2(e) of the Company Disclosure Schedule, none of the Company Equity
\nAwards have been granted in contemplation of the Merger or the transactions
\ncontemplated in this Agreement and no Company Equity Awards have been granted
\nsince February 28, 2011. None of the Company Stock Options were granted with an
\nexercise price below or deemed to be below fair market value on the date of
\ngrant. All grants of Company Equity Awards were validly made and properly
\napproved by the Board of Directors of the Company (or a duly authorized
\ncommittee or subcommittee thereof) in compliance with all applicable Laws and
\nrecorded on the consolidated financial statements of the Company in accordance
\nwith GAAP, and, where applicable, no such grants involved any “back dating,”
\n“forward dating” or similar practices with respect to grants of Company Stock
\nOptions. The Company has delivered or made available to Parent an accurate and
\ncomplete copy of the Warrant Agreement and any agreements, forms or instruments
\ncontemplated thereby.<\/p>\n<\/p>\n (f) All outstanding shares of Company Common Stock, all outstanding Company
\nStock Options, all outstanding Warrants and all outstanding Subsidiaries’ Equity
\nInterests have been issued and granted in compliance with (i) all applicable
\nLaws and (ii) all requirements set forth in Company Material Contracts
\napplicable to the issuance of Company Common Stock, granting of Company Stock
\nOptions, the issuance of Warrants and\/or the issuance of equity interests of the
\nCompany or any Subsidiary of the Company.<\/p>\n<\/p>\n Section 3.3 Corporate Authority Relative to this Agreement; No
\nViolation<\/u>.<\/p>\n<\/p>\n (a) The Company has requisite corporate power and authority to enter into
\nthis Agreement, to perform its obligations hereunder and, subject to receipt of
\nthe Company Shareholder Approval, to consummate the Transactions. The execution
\nand delivery of this Agreement and the consummation of the Transactions have
\nbeen duly and validly authorized by the Board of Directors of the Company and,
\nexcept for the Company Shareholder Approval, no other corporate proceedings on
\nthe part of the Company are necessary to authorize the Merger or the
\nconsummation of the Transactions. The Board of Directors of the Company at a
\nmeeting duly called and held at which all directors of the Company were present
\nhas (i) determined that the Merger is fair to, and in the best interests of, the
\nCompany and its shareholders, (ii) approved this Agreement and the Transactions,
\n(iii) unanimously resolved, subject to Section 5.3<\/u>, to recommend that the
\nCompany’s shareholders approve this Agreement and the Transactions (the
\n“Company Recommendation<\/u>“) and (iv) directed that such matter be submitted
\nfor consideration of the shareholders of the Company at the Company
\nShareholders’ Meeting, and such resolutions have not been subsequently
\nrescinded, modified or withdrawn in any way. This Agreement has been duly and
\nvalidly executed and delivered by the Company and, assuming this Agreement
\nconstitutes the legal, valid and binding agreement of Parent and Merger Sub,
\nconstitutes the legal, valid and binding agreement of the Company, enforceable
\nagainst the Company in accordance with its terms, except that (i) such
\nenforcement may be subject to applicable bankruptcy, insolvency, reorganization,
\nmoratorium or other similar Laws, now or hereafter in effect, relating to
\ncreditors’ rights generally and (ii) equitable remedies of specific performance
\nand injunctive and other forms of equitable relief may be subject to equitable
\ndefenses and to the discretion of the court before which any proceeding therefor
\nmay be brought.<\/p>\n<\/p>\n 14<\/p>\n \n
\n(b) Other than in connection with or in compliance with (i) the OGCL, (ii)
\nthe Securities Exchange Act of 1934, as amended (the “Exchange Act<\/u>“),
\n(iii) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
\n“HSR Act<\/u>“), (iv) the Federal Power Act, as amended (the “FPA<\/u>“),
\nand the approval of the Federal Energy Regulatory Commission (the
\n“FERC<\/u>“) thereunder (the “FERC Approval<\/u>“), (v) the Public Utilities
\nCommission of Ohio (the “PUCO<\/u>“), (vi) pre-approvals of license transfers
\nby the Federal Communications Commission (the “FCC<\/u>“) or (vii) as set
\nforth in Section 3.3(b) of the Company Disclosure Schedule (collectively, the
\n“Company Approvals<\/u>“), and, subject to the accuracy of the representations
\nand warranties of Parent and Merger Sub in Section 4.2(b)<\/u>, no
\nauthorization, consent, order, license, permit or approval of, or registration,
\ndeclaration, notice or filing with, or action by, the United States, any state
\nof the United States or any foreign governmental or regulatory agency,
\ncommission, court, panel, body, entity or authority (each, a “Governmental
\nEntity<\/u>“) is necessary or required to be obtained or made under applicable
\nLaw in connection with the execution and delivery of this Agreement by the
\nCompany, the performance by the Company of its obligations hereunder or the
\nconsummation of the Transactions by the Company, except for such authorizations,
\nconsents, approvals or filings that, if not obtained or made, would not
\nreasonably be expected to have, individually or in the aggregate, a Company
\nMaterial Adverse Effect.<\/p>\n<\/p>\n (c) Except as set forth in Section 3.3(c) of the Company Disclosure Schedule,
\nthe execution and delivery by the Company of this Agreement do not, and,
\nprovided the Company Approvals are obtained, the consummation of the
\nTransactions and compliance with the provisions hereof will not (i) conflict
\nwith, result in any violation of, or default (with or without notice or lapse of
\ntime, or both) under, or give rise to a right of termination, cancellation or
\nacceleration of any obligation or to the loss of a material benefit under any
\nmaterial loan, guarantee of indebtedness or credit agreement, note, bond,
\nmortgage, indenture, deed of trust, lease, agreement, contract, instrument,
\npermit, concession, franchise, right or license binding upon the Company or any
\nof its Subsidiaries or result in the creation of any liens, claims, mortgages,
\nencumbrances, pledges, security interests, equities or charges of any kind
\n(each, a “Lien<\/u>“), other than any such Lien (A) for Taxes or governmental
\nassessments, charges or claims of payment not yet due or delinquent or being
\ncontested in good faith and for which adequate accruals or reserves have been
\nestablished in accordance with GAAP as shown on the Company’s most recent
\naudited consolidated balance sheet, (B) which is a carriers’, warehousemen’s,
\nmechanics’, materialmen’s, repairmen’s or other similar lien arising in the
\nordinary course of business, (C) which is disclosed on the most recent
\nconsolidated balance sheet of the Company or notes thereto or securing
\nliabilities reflected on such balance sheet, (D) which does not and would not
\nreasonably be expected to materially impair the continued use and operation of
\nthe assets to which they relate as operated as of the date hereof or any
\nproperty at which the material operations of the Company or any of its
\nSubsidiaries are conducted as of the date hereof (each of the foregoing (A)
\nthrough (D), a “Company Permitted Lien<\/u>“), upon any of the properties or
\nassets of the Company or any of its Subsidiaries, (ii) conflict with or result
\nin any violation of any provision of the Company Organizational Documents or
\nother equivalent organizational document of any Subsidiaries of the Company or
\n(iii) conflict with or violate any applicable Laws, other than, in the case of
\nclauses (i) and (iii), any such violation, conflict, default, termination,
\ncancellation, acceleration, right, loss or Lien that would not reasonably be
\nexpected to have, individually or in the aggregate, a Company Material Adverse
\nEffect.<\/p>\n<\/p>\n 15<\/p>\n \n
\nSection 3.4 SEC Reports, Financial Statements and Utility Reports<\/u>.<\/p>\n<\/p>\n (a) The Company and each of its Subsidiaries has filed or furnished all
\nforms, documents and reports required to be filed or furnished by it with the
\nSecurities and Exchange Commission (the “SEC<\/u>“) since January 1, 2010 (the
\n“Company SEC Documents<\/u>“). As of their respective dates or, if amended, as
\nof the date of such amendment, the Company SEC Documents complied in all
\nmaterial respects with the requirements of the Securities Act, the Exchange Act
\nand the Sarbanes-Oxley Act, as the case may be, and the applicable rules and
\nregulations promulgated thereunder, and none of the Company SEC Documents
\ncontained any untrue statement of a material fact or omitted to state any
\nmaterial fact required to be stated therein or necessary to make the statements
\ntherein, in light of the circumstances under which they were made, not
\nmisleading. As of the date of this Agreement, there are no outstanding or
\nunresolved comments in comment letters received from the SEC or its staff. There
\nhas been no material correspondence between the SEC and the Company since March
\n18, 2011 that is not available on the SEC’s Electronic Data Gathering and
\nRetrieval database. As of the date of this Agreement, other than The Dayton
\nPower and Light Company (“DP&L<\/u>“), none of the Company’s Subsidiaries
\nis subject to the reporting requirements of Section 13(a) or 15(d) under the
\nExchange Act.<\/p>\n<\/p>\n (b) The Company has established and maintains disclosure controls and
\nprocedures and internal control over financial reporting (as such terms are
\ndefined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the
\nExchange Act) as required by Rule 13a-15(e) under the Exchange Act. The
\nCompany’s disclosure controls and procedures are reasonably designed to ensure
\nthat all material information required to be disclosed by the Company in the
\nreports that it files or furnishes under the Exchange Act is recorded,
\nprocessed, summarized and reported within the time periods specified in the
\nrules and forms of the SEC, and that all such material information is
\naccumulated and communicated to the Company’s management as appropriate to allow
\ntimely decisions regarding required disclosure and to make the certifications
\nrequired pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (the
\n“Sarbanes-Oxley Act<\/u>“), and all such required certifications have been
\nmade. The Company’s management has completed an assessment of the effectiveness
\nof the Company’s internal control over financial reporting in compliance with
\nthe requirements of Section 404 of the Sarbanes-Oxley Act for the year ended
\nDecember 31, 2010, and such assessment concluded that such controls were
\neffective. Neither the Company nor, to the knowledge of the Company, the
\nCompany’s independent registered public accounting firm, has identified or been
\nmade aware of “significant deficiencies” or “material weaknesses” (as defined by
\nthe Public Company Accounting Oversight Board) in the design or operation of the
\nCompany’s internal controls and procedures which would reasonably be expected to
\nadversely affect the Company’s ability to record, process, summarize and report
\nfinancial data, in each case which has not been subsequently remediated.<\/p>\n<\/p>\n 16<\/p>\n \n
\n(c) The audited consolidated financial statements and unaudited interim
\nconsolidated financial statements (including all related notes and schedules) of
\nthe Company included in the Company SEC Documents complied as to form in all
\nmaterial respects with the rules and regulations of the SEC then in effect,
\nfairly present in all material respects the consolidated financial position of
\nthe Company and its consolidated Subsidiaries, as at the respective dates
\nthereof, and the consolidated results of their operations and their consolidated
\ncash flows for the respective periods then ended (subject, in the case of the
\nunaudited statements, to normal recurring year-end audit adjustments that were
\nnot or are not expected to be, individually or in the aggregate, materially
\nadverse to the Company), and were prepared in accordance with United States
\ngenerally accepted accounting principles (“GAAP<\/u>“) applied on a consistent
\nbasis during the periods involved (except as may be indicated therein or in the
\nnotes thereto).<\/p>\n<\/p>\n (d) Prior to the date of the Agreement, the Company has made available to
\nParent copies of the following financial statements, in each case together with
\nthe exhibits, schedules and notes thereto and any affirmations and
\ncertifications filed therewith: the audited annual financial statements of Miami
\nValley Insurance Company (the “Captive Insurer<\/u>“), as filed with the
\nVermont Department of Banking, Insurance, Securities & Health Care
\nAdministration (the “Vermont Department<\/u>“), as of and for the years ended
\nDecember 31, 2009 and 2008 (the “Captive Insurer Financial Statements<\/u>“).
\nThe Captive Insurer Financial Statements (1) were derived from and are
\nconsistent in all material respects with the books and records of the Captive
\nInsurer, (2) were prepared in all material respects with all applicable Laws and
\nGAAP, applied in each case on a consistent basis during the periods involved
\n(except as may be indicated therein or in the notes thereto), (3) fairly
\npresent, in all material respects, the financial position of the Captive Insurer
\nat the dates thereof and the results of operations, capital and surplus of the
\nCaptive Insurer for the periods then ended and (4) were prepared in compliance
\nwith the internal control procedures of the Captive Insurer and\/or Parent. No
\nmaterial deficiency has been asserted by any Governmental Entity with respect to
\nany of the Captive Insurer Financial Statements.<\/p>\n<\/p>\n (e) The liabilities for unpaid losses and loss adjustment expenses of the
\nCaptive Insurer recorded in the Captive Insurer Financial Statements, as of
\ntheir respective dates: (1) have been computed in accordance with presently
\naccepted actuarial standards consistently applied and were fairly stated, in
\naccordance with sound actuarial principles and (2) have complied in all material
\nrespects with applicable Law and regulatory requirements of the Vermont
\nDepartment.<\/p>\n<\/p>\n (f) All filings (other than immaterial filings) required to be made by the
\nCompany or any of its Subsidiaries since January 1, 2009, with the FERC under
\nthe FPA or the Public Utility Holding Company Act of 2005, the North American
\nElectric Reliability Corporation, the Department of Energy, any regional
\ntransmission organization and the PUCO under applicable Law, as the case may be,
\nhave been made, including all forms, statements, reports, agreements and all
\ndocuments, exhibits, amendments and supplements appertaining thereto, including
\nall rates, tariffs, franchises, service agreements and related documents, and
\nall such filings complied, as of their respective dates, with all applicable
\nrequirements of applicable statutes and the rules and regulations thereunder,
\nexcept for filings the failure of which to make or the failure of which to make
\nin compliance with all applicable requirements of applicable statutes and the
\nrules and regulations thereunder, would not reasonably be expected to have,
\nindividually or in the aggregate, a Company Material Adverse Effect.<\/p>\n<\/p>\n 17<\/p>\n \n
\n<\/p>\n(g) Neither the Company nor any of its Subsidiaries is a party to, or has any
\ncommitment to become a party to, any joint venture, off-balance sheet
\npartnership or any similar contract (including any contract or arrangement
\nrelating to any transaction or relationship between or among the Company or any
\nof its Subsidiaries, on the one hand, and any unconsolidated affiliate,
\nincluding any structured finance, special purpose or limited purpose entity or
\nperson, on the other hand, or any “off-balance-sheet arrangement” (as defined in
\nItem 303(a) of Regulation S-K under the Exchange Act)), where the result,
\npurpose or intended effect of such contract is to avoid disclosure of any
\nmaterial transaction involving, or material liabilities of, the Company or any
\nof its Subsidiaries or affiliates.<\/p>\n<\/p>\n (h) The proxy statement to be sent to the shareholders of the Company in
\nconnection with the Company Shareholders’ Meeting (including any amendment or
\nsupplement thereto or document incorporated by reference therein) (the
\n“Proxy Statement<\/u>“) shall not, (i) on the date the Proxy Statement is
\nfirst mailed to shareholders of the Company, or (ii) at the time of the Company
\nShareholders’ Meeting or (iii) on the date the Proxy Statement is filed with the
\nSEC, contain any statement which, at the time and in the light of the
\ncircumstances under which it is made, is false or misleading with respect to any
\nmaterial fact, or which omits to state any material fact necessary in order to
\nmake the statements therein not false or misleading or necessary to correct any
\nstatement in any earlier communication with respect to the solicitation of
\nproxies for the Company Shareholders’ Meeting or subject matter which has become
\nfalse or misleading. The Proxy Statement will comply as to form in all material
\nrespects with the requirements of the Exchange Act. Notwithstanding the
\nforegoing, the Company makes no representation with respect to statements made
\nor incorporated by reference therein based on information supplied by or on
\nbehalf of Parent or Merger Sub for inclusion or incorporation by reference in
\nthe Proxy Statement.<\/p>\n<\/p>\n Section 3.5 No Undisclosed Liabilities<\/u>. Except (a) as set forth in
\nSection 3.5 of the Company Disclosure Schedule, (b) as reflected or reserved
\nagainst in the Company’s most recent audited consolidated balance sheets (or
\nstated in the notes thereto) included in the Company SEC Documents and (c) for
\nliabilities and obligations incurred since December 31, 2010 in the ordinary
\ncourse of business consistent with past practice, neither the Company nor any
\nSubsidiary of the Company has any liabilities or obligations of any nature,
\nwhether or not accrued, absolute, contingent or otherwise, that would be
\nrequired by GAAP to be reflected on a consolidated balance sheet of the Company
\nand its consolidated Subsidiaries (or in the notes thereto) other than those
\nwhich would not reasonably be expected to have, individually or in the
\naggregate, a Company Material Adverse Effect.<\/p>\n<\/p>\n Section 3.6 Absence of Certain Changes or Events<\/u>. Except as set forth
\nin Section 3.6 of the Company Disclosure Schedule, since December 31, 2010
\nthrough the date of this Agreement, (a) the Company and each Subsidiary of the
\nCompany has conducted its business in the ordinary course of business consistent
\nwith past practice in all material respects and (b) there has not been a Company
\nMaterial Adverse Effect.<\/p>\n<\/p>\n Section 3.7 Discontinued Business<\/u>. The Company has disposed of the
\nDiscontinued Business. The Company has no liabilities or ongoing obligations
\nwith respect to the Discontinued Business, including with respect to capital
\ncalls or associated guarantees. The term “Discontinued Business<\/u>” means
\nany interests that the Company or any of its Subsidiaries held, directly or
\nindirectly, in any private equity funds.<\/p>\n<\/p>\n 18<\/p>\n \n
\n<\/p>\nSection 3.8 Investigations; Litigation<\/u>.<\/p>\n<\/p>\n (a) Except as set forth in Section 3.8 of the Company Disclosure Schedule and
\nexcept for investigations, audits and reviews conducted by Governmental Entities
\nin the ordinary course of the Company’s business which are not material, (i)
\nthere is no investigation, audit or review pending (or, to the knowledge of the
\nCompany, threatened in writing) by any Governmental Entity with respect to the
\nCompany or any of its Subsidiaries, (ii) there are no actions, suits, inquiries,
\narbitrations, investigations or proceedings pending (or, to the knowledge of the
\nCompany, threatened in writing) against, relating to or affecting the Company or
\nany of its Subsidiaries (including against or in respect of any Company Benefit
\nPlan), or any of their respective properties at law or in equity before and
\n(iii) there are no orders, judgments or decrees of, or before, any Governmental
\nEntity except, in the case of clauses (i) through (iii), as would not reasonably
\nbe expected to have, individually or in the aggregate, a Company Material
\nAdverse Effect.<\/p>\n<\/p>\n (b) Notwithstanding anything contained in this Section 3.8<\/u>, no
\nrepresentation or warranty shall be deemed to be made in this Section 3.8<\/u>
\nin respect of Tax, employee benefits, labor, intellectual property,
\nenvironmental or real property matters.<\/p>\n<\/p>\n Section 3.9 Compliance with Law; Permits<\/u>.<\/p>\n<\/p>\n (a) The Company and each of its Subsidiaries are, and since January 1, 2008
\nhave been, in compliance with and not in default under or in violation of any
\napplicable federal, state, local or foreign law, statute, ordinance, rule,
\nregulation, judgment, order, injunction, decree or agency requirement of any
\nGovernmental Entity (collectively, “Laws<\/u>” and each, a “Law<\/u>“),
\nexcept where such non-compliance, default or violation would not reasonably be
\nexpected to have, individually or in the aggregate, a Company Material Adverse
\nEffect. Within the past three years, neither the Company nor any of its
\nSubsidiaries has received any written notice or, to the Company’s knowledge,
\nother communication from any Governmental Entity regarding any actual or
\npossible violation of, or failure to comply with, any Law, except as would not
\nreasonably be expected to have, individually or in the aggregate, a Company
\nMaterial Adverse Effect.<\/p>\n<\/p>\n (b) The Company and its Subsidiaries are in possession of all franchises,
\ngrants, authorizations, licenses, permits, easements, variances, exceptions,
\nconsents, certificates, approvals, clearances, permissions, qualifications and
\nregistrations and orders of any Governmental Entity, and all rights under any
\nmaterial contract with any Governmental Entity, necessary for the Company and
\nits Subsidiaries to own, lease and operate their properties and assets or to
\ncarry on their businesses as they are now being conducted (the “Company
\nPermits<\/u>“), except where the failure to have any of the Company Permits would
\nnot reasonably be expected to have, individually or in the aggregate, a Company
\nMaterial Adverse Effect. All Company Permits are valid and in full force and
\neffect, except where the failure to be in full force and effect would not
\nreasonably be expected to have, individually or in the aggregate, a Company
\nMaterial Adverse Effect. The Company is, and each of its Subsidiaries is, and
\ntheir respective businesses as currently conducted are, in compliance in all
\nrespects with the terms and requirements of such Company Permits, except where
\nthe failure to be in compliance would not reasonably be expected to have,
\nindividually or in the aggregate, a Company Material Adverse Effect.<\/p>\n<\/p>\n 19<\/p>\n \n
\n<\/p>\n(c) Notwithstanding anything contained in this Section 3.9<\/u>, no
\nrepresentation or warranty shall be deemed to be made in this Section 3.9<\/u>
\nin respect of Tax, employee benefits, labor, intellectual property,
\nenvironmental or real property matters.<\/p>\n<\/p>\n Section 3.10 Regulatory Proceedings<\/u>.<\/p>\n<\/p>\n (a) Except as set forth in Section 3.10(a) of the Company Disclosure
\nSchedule, as of the date hereof, neither the Company nor any of its Subsidiaries
\nall or part of whose rates or services are regulated by a Governmental Entity
\n(1) is a party to any rate proceeding before a Governmental Entity with respect
\nto rates charged by the Company or any of its Subsidiaries other than in the
\nordinary course of business consistent with past practice, (2) has rates in any
\namounts that have been or are being collected subject to refund, pending final
\nresolution of any rate proceeding pending before a Governmental Entity or on
\nappeal to a court (other than rates based on estimated costs and\/or revenues
\nthat are subject to adjustment once the actual costs and\/or revenues become
\nknown) or (3) is a party to any contract with any Governmental Entity entered
\ninto other than in the ordinary course of business consistent with past practice
\nimposing conditions on rates or services in effect as of the date hereof or
\nwhich, to the knowledge of the Company, are as of the date hereof scheduled to
\ngo into effect at a later time, except in the case of clauses (1) through (3)
\nthat would not, individually or in the aggregate, reasonably be expected to have
\na Company Material Adverse Effect.<\/p>\n<\/p>\n (b) Except as set forth in Section 3.10(b) of the Company Disclosure
\nSchedule, as of the date hereof, the Company and its Subsidiaries have no
\npending proceedings under Ohio Revised Code Chapter 4928.<\/p>\n<\/p>\n Section 3.11 Tax Matters<\/u>.<\/p>\n<\/p>\n Except as set forth in Section 3.11 of the Company Disclosure Schedule and
\nexcept as would not reasonably be expected to have, individually or in the
\naggregate, a Company Material Adverse Effect:<\/p>\n<\/p>\n (a) The Company and its Subsidiaries (i) have timely filed or caused to be
\nfiled (taking into account any extension of time within which to file) all Tax
\nReturns required to have been filed by the Company or any of its Subsidiaries,
\nall such Tax Returns are true, correct and complete, and all such Tax Returns
\nfiled on or before December 31, 2007 have been examined by the appropriate
\nGovernmental Entity or the period for assessment of the Taxes in respect of
\nwhich such Tax Returns were required to be filed has expired, (ii) have timely
\npaid, collected or withheld or caused to be paid, collected or withheld (taking
\ninto account any extension of time within which to pay) all Taxes (including
\nTaxes required to have been withheld and paid in connection with amounts paid or
\nowing to any employee, independent contractor, creditor, stockholder, or other
\nthird party) due with respect to the periods covered by such Tax Returns other
\nthan Taxes that are being contested in good faith in appropriate proceedings and
\nfor which adequate accruals or reserves have been established in accordance with
\nGAAP as shown on the Company’s most recent audited consolidated balance sheet,
\n(iii) have established adequate accruals and reserves, in accordance with GAAP,
\non the Company’s most recent audited consolidated balance sheet for all Taxes
\npayable by the Company and its Subsidiaries for all taxable periods and portions
\nthereof through the date of the Company’s most recent audited consolidated
\nbalance sheet and (iv) have not incurred any liability for Taxes since the date
\nof the Company’s most recent audited consolidated balance sheet other than in
\nthe ordinary course of business consistent with past practice.<\/p>\n<\/p>\n 20<\/p>\n \n
\n<\/p>\n(b) Neither the Company nor any of its Subsidiaries has received written
\nnotice from any Governmental Entity that a deficiency, delinquency, claim,
\naudit, suit, proceeding, request for information or investigation is now
\npending, outstanding or, to the knowledge of the Company, threatened against or
\nwith respect to the Company or any of its Subsidiaries with respect to Taxes.
\nThere are no Liens for Taxes on any of the assets of the Company or any of its
\nSubsidiaries other than Company Permitted Liens. Within the preceding four
\nyears, no claim has been made in writing by a Governmental Entity of a
\njurisdiction where the Company or one of its Subsidiaries has not filed Tax
\nReturns that the Company or such Subsidiary is or may be subject to taxation by
\nthat jurisdiction.<\/p>\n<\/p>\n (c) Neither the Company nor any of its Subsidiaries (i) is a party to or
\nbound by any Tax allocation, indemnification, sharing or similar agreement
\n(other than an agreement solely among two or more of the Company and its
\nSubsidiaries) or owes any amount under any such agreement or arrangement
\n(excluding customary agreements to indemnify lenders in respect of Taxes and
\ncustomary indemnity provisions in agreements for the acquisition or divestiture
\nof assets) or (ii) is or could be liable for any Tax of any person (other than
\nthe Company and its Subsidiaries) under Section 1.1502-6 of the Treasury
\nregulations promulgated under the Code (or any similar provision of state, local
\nor foreign Law) by virtue of membership in any affiliated, consolidated,
\ncombined or unitary group (other than a group the common parent of which was the
\nCompany), or as a transferee or successor, or by contract.<\/p>\n<\/p>\n (d) Neither the Company nor any of its Subsidiaries was a “distributing
\ncorporation” or “controlled corporation” in a transaction intended to qualify
\nunder Section 355 of the Code within the past two years or otherwise as part of
\na plan that includes any of the Transactions.<\/p>\n<\/p>\n (e) Neither the Company nor any of its Subsidiaries has participated in any
\n“listed transaction” or “transaction of interest” within the meaning of Section
\n1.6011-4(b)(2) and (6), respectively, of the Treasury regulations promulgated
\nunder the Code.<\/p>\n<\/p>\n (f) Neither the Company nor any of its Subsidiaries (i) has filed any
\nextension of time within which to file any Tax Returns that have not been filed
\n(except for extensions of time to file Tax Returns other than income Tax Returns
\nor gross receipts Tax Returns, which extensions were obtained in the ordinary
\ncourse), (ii) has entered into any agreement waiving or extending the statute of
\nlimitations or the period of assessment or collection of any Taxes, which
\nstatute of limitations or period, as applicable, has not expired, (iii) has
\ngranted any power of attorney that is in force with respect to any matters
\nrelating to any Taxes, (iv) has proposed to enter into an agreement relating to
\nTaxes with a Governmental Entity, which proposal is pending or (v) has, since
\nDecember 31, 2007, been issued any private letter ruling, technical advice
\nmemorandum or other similar agreement or ruling from a Governmental Entity with
\nrespect to Taxes.<\/p>\n<\/p>\n 21<\/p>\n \n
\n<\/p>\n(g) Neither the Company nor any of its Subsidiaries will be required to
\ninclude any item of income in taxable income or exclude any item of deduction
\nfrom taxable income, in each case, for any taxable period (or portion thereof)
\nending after the Closing Date (whether or not under Section 481 of the Code or
\nany corresponding or similar provision of applicable state, local or foreign
\nLaw) as a result of any (i) transaction undertaken or accounting method adopted
\nor changed by the Company or any of its Subsidiaries on or prior to the Closing
\nDate, (ii) “closing agreement” as described in Section 7121 of the Code (or any
\ncorresponding or similar provision of state, local or foreign Law) executed on
\nor prior to the Closing Date by the Company or any of its Subsidiaries, (iii)
\nintercompany transaction within the meaning of Section 1.1502-13 of Treasury
\nregulations promulgated under the Code or excess loss account within the meaning
\nof Section 1.1502-19 of Treasury regulations promulgated under the Code (or any
\ncorresponding or similar provision of state, local or foreign Law) entered into
\nor created, as applicable, by the Company or any of its Subsidiaries on or prior
\nto the Closing Date, (iv) installment sale or open transaction disposition made
\nby the Company or any of its Subsidiaries on or prior to the Closing Date or (v)
\nprepaid amount received by the Company or any of its Subsidiaries on or prior to
\nthe Closing Date.<\/p>\n<\/p>\n (h) As used in this Agreement, (i) “Taxes<\/u>” means any and all domestic
\nor foreign, federal, state, local or other taxes of any kind (together with any
\nand all interest, penalties, additions to tax and additional amounts imposed
\nwith respect thereto) imposed by any Governmental Entity, including taxes on or
\nwith respect to income, franchises, windfall or other profits, gross receipts,
\noccupation, property, transfer, sales, use, capital stock, severance,
\nalternative minimum, payroll, employment, unemployment, social security,
\nworkers’ compensation or net worth, and taxes in the nature of excise,
\nwithholding, ad valorem<\/em>, value added or other taxes, fees, duties,
\nlevies, customs, tariffs, imposts, assessments, obligations and charges of the
\nsame or a similar nature to any of the foregoing and (ii) “Tax Return<\/u>”
\nmeans any return, report or similar filing (including any elections,
\nnotifications, declarations, schedules or attachments thereto, and any amendment
\nthereof) required to be filed with respect to Taxes, including any information
\nreturn, claim for refund, amended return or declaration of estimated Taxes.<\/p>\n<\/p>\nSection 3.12 Employee Benefit Plans<\/u>.<\/p>\n<\/p>\n (a) Section 3.12(a) of the Company Disclosure Schedule lists all material
\ncompensation or employee benefit plans, programs, policies, agreements or other
\narrangements, whether or not “employee benefit plans” (within the meaning of
\nSection 3(3) of the Employee Retirement Income Security Act of 1974, as amended
\n(“ERISA<\/u>“), whether or not subject to ERISA), providing cash- or
\nequity-based incentives, health, medical, dental, disability, accident or life
\ninsurance benefits or vacation, severance, retention, change in control,
\nretirement, pension or savings benefits, that are sponsored, maintained or
\ncontributed to by the Company or any of its Subsidiaries for the benefit of
\ncurrent or former employees or directors of the Company or its Subsidiaries (the
\n“Company Benefit Plans<\/u>“).<\/p>\n<\/p>\n 22<\/p>\n \n
\n<\/p>\n(b) Except as set forth in Section 3.12(b) of the Company Disclosure
\nSchedule, each Company Benefit Plan has been maintained, operated and
\nadministered in all material respects in accordance with its terms and all
\napplicable Laws, including ERISA and the Code. Each Company Benefit Plan
\nintended to be “qualified” within the meaning of Section 401(a) of the Code is
\nthe subject of a favorable determination letter from the Internal Revenue
\nService as to its qualification or, if no such determination has been made, an
\napplication for such determination is pending with the Internal Revenue Service
\nand, to the Company’s knowledge, no event has occurred that would reasonably be
\nexpected to result in the disqualification of such Company Benefit Plan.<\/p>\n<\/p>\n (c) Other than routine claims for benefits, no liability under Title IV of
\nERISA has been incurred by the Company or any its Subsidiaries that has not been
\nsatisfied in full when due, and, to the knowledge of the Company, no condition
\nexists that could reasonably be expected to result in a material liability to
\nthe Company or its Subsidiaries under Title IV of ERISA.<\/p>\n<\/p>\n (d) Except as set forth in Section 3.12(d) of the Company Disclosure
\nSchedule, the consummation of the Transactions will not (i) entitle any current
\nor former employee, consultant, officer or director of the Company or any of its
\nSubsidiaries to severance, retention or change in control pay, unemployment
\ncompensation or any other payment or (ii) accelerate the time of payment or
\nvesting, or increase the amount, of compensation due any such current or former
\nemployee, consultant, officer or director.<\/p>\n<\/p>\n (e) There are no material pending or, to the Company’s knowledge, threatened
\nclaims against, by or on behalf of, or any Liens filed against or with respect
\nto, any of the Company Benefit Plans or otherwise involving any Company Benefit
\nPlan, other than claims made or Liens filed in the ordinary course of business
\nwhich are not, individually or in the aggregate, material.<\/p>\n<\/p>\n (f) Except as set forth in Section 3.12(f) of the Company Disclosure
\nSchedule, neither the Company nor any of its Subsidiaries is a party to any
\nagreement, contract or arrangement that could result, separately or in the
\naggregate, in the payment of any “excess parachute payments” within the meaning
\nof Section 280G of the Code.<\/p>\n<\/p>\n (g) Except as set forth in Section 3.12(g) of the Company Disclosure
\nSchedule, no Company Benefit Plan provides benefits, including death or medical
\nbenefits (whether or not insured), with respect to current or former employees
\nor directors of the Company or any of its Subsidiaries beyond their retirement
\nor other termination of service, other than (i) coverage mandated solely by
\napplicable Law, (ii) death benefits or retirement benefits under any “employee
\npension benefit plan” (as defined in Section 3(2) of ERISA), (iii) deferred
\ncompensation benefits accrued as liabilities on the books of the Company or its
\nSubsidiaries or (iv) benefits the full costs of which are borne by the current
\nor former employee or director or his or her beneficiary.<\/p>\n<\/p>\n 23<\/p>\n \n
\nSection 3.13 Employment and Labor Matters<\/u>.<\/p>\n<\/p>\n (a) Except for the Compact by and between the Company and Local 175, Utility
\nWorkers Union of America, AFL-CIO, as of the date of this Agreement: (i) neither
\nthe Company nor any of its Subsidiaries is a party to or bound by any collective
\nbargaining agreement, work rules or other agreement with any labor union, labor
\norganization, employee association, or works council (each, a “Union<\/u>“)
\napplicable to employees of the Company or any of its Subsidiaries (“Company
\nEmployees<\/u>“), (ii) none of the Company Employees is represented by any Union
\nwith respect to his or her employment with the Company or any of its
\nSubsidiaries, (iii) to the Company’s knowledge, within the past three years, no
\nUnion has attempted to organize employees at the Company or any of its
\nSubsidiaries or filed a petition with the National Labor Relations Board seeking
\nto be certified as the bargaining representative of any Company Employees, (iv)
\nwithin the past three years, there have been no actual or, to the Company’s
\nknowledge, threatened (A) work stoppages, lock-outs or strikes, (B) slowdowns,
\nboycotts, handbilling, picketing, walkouts, demonstrations, leafleting, sit-ins
\nor sick-outs by Company Employees, causing significant disruption to the
\noperations of a Company facility or (C) other form of Union disruption at the
\nCompany or any of its Subsidiaries and (v) except as would not reasonably be
\nexpected to have, individually or in the aggregate, a Company Material Adverse
\nEffect, there is no unfair labor practice, labor dispute or labor arbitration
\nproceeding pending or, to the knowledge of the Company, threatened with respect
\nto Company Employees.<\/p>\n<\/p>\n (b) Except for such matters that would not reasonably be expected to have,
\nindividually or in the aggregate, a Company Material Adverse Effect and except
\nas set forth in Section 3.13(b) of the Company Disclosure Schedule: (i) the
\nCompany and its Subsidiaries are, and within the past three years have been, in
\ncompliance with all applicable state, federal, and local Laws respecting labor
\nand employment, including all Laws relating to discrimination, disability, labor
\nrelations, unfair labor practices, hours of work, payment of wages, employee
\nbenefits, retirement benefits, compensation, immigration, workers’ compensation,
\nworking conditions, occupational safety and health, family and medical leave,
\nreductions in force, plant closings, notification of employees, and employee
\nterminations and (ii) neither the Company nor any of its Subsidiaries has any
\nliabilities under the Worker Adjustment and Retraining Notification Act (the
\n“WARN Act<\/u>“) or any state or local Laws requiring notice with respect to
\nsuch layoffs or terminations.<\/p>\n<\/p>\n (c) Except as set forth in Section 3.13(c) of the Company Disclosure
\nSchedule, to the knowledge of the Company, in the past three years, (i) no
\nGovernmental Entity has threatened or initiated any material complaints,
\ncharges, lawsuits, grievances, claims, arbitrations, administrative proceedings
\nor other proceeding(s) or investigation(s) with respect to the Company or its
\nSubsidiaries arising out of, in connection with, or otherwise relating to any
\nCompany Employees or any Laws governing labor or employment and (ii) no
\nGovernmental Entity has issued or, to the Company’s knowledge, threatened to
\nissue any significant citation, order, judgment, fine or decree against the
\nCompany or any of its Subsidiaries with respect to any Company Employees or any
\nLaws governing labor or employment.<\/p>\n<\/p>\n (d) Except as set forth in Section 3.12(d) of the Company Disclosure
\nSchedule, the execution of this Agreement and the consummation of the
\ntransactions contemplated by this Agreement will not result in any material
\nbreach or violation of, or cause any payment to be made under, any collective
\nbargaining agreement, employment agreement, consulting agreement or any other
\nemployment-related agreement to which the Company or any of its Subsidiaries is
\na party.<\/p>\n<\/p>\n 24<\/p>\n \n
\n<\/p>\nSection 3.14 Environmental Laws and Regulations<\/u>.<\/p>\n<\/p>\n (a) Except as set forth in Section 3.14(a) of the Company Disclosure Schedule
\nand except as would not reasonably be expected to have, individually or in the
\naggregate, a Company Material Adverse Effect:<\/p>\n<\/p>\n (i) there is no pending or, to the knowledge of the Company, threatened in
\nwriting, claim, lawsuit, third-party investigation or administrative proceeding
\nagainst the Company or any of its Subsidiaries, under or pursuant to any
\nEnvironmental Law, and neither the Company nor any of its Subsidiaries has
\nreceived written notice from any person, including any Governmental Entity, (1)
\nalleging that the Company has been or is in violation or potentially in
\nviolation of any applicable Environmental Law or otherwise may be liable under
\nany applicable Environmental Law, which violation or liability is unresolved or
\n(2) requesting information with respect to matters that could result in a claim
\nof liability pursuant to applicable Environmental Law;<\/p>\n<\/p>\n (ii) the Company and its Subsidiaries are and, since January 1, 2006, have
\nbeen in compliance with all applicable Environmental Laws and with all material
\npermits, licenses and approvals required under Environmental Laws for the
\nconduct of their business or the operation of their facilities;<\/p>\n<\/p>\n (iii) the Company and its Subsidiaries have all material permits, licenses
\nand approvals required for the operation of the businesses and the operation of
\ntheir facilities pursuant to applicable Environmental Law, all such permits,
\nlicenses and approvals are in effect, and, to the knowledge of the Company,
\nthere is no actual or alleged proceeding to revoke, modify or terminate such
\npermits, licenses and approvals;<\/p>\n<\/p>\n (iv) to the knowledge of the Company, there has been no release of Hazardous
\nMaterials at any real property currently or formerly owned, leased or operated
\nby the Company or any Subsidiary in concentrations or under conditions or
\ncircumstances that (A) would reasonably be expected to result in liability to
\nthe Company or any of its Subsidiaries under any Environmental Laws or (B) would
\nrequire reporting, investigation, remediation or other corrective or response
\naction by the Company or any Subsidiary under any Environmental Law and that has
\nnot otherwise been addressed through such reporting, investigation, remediation
\nor other corrective or responsive action by the Company or any Subsidiary; and\n<\/p>\n<\/p>\n (v) the Company is not party to any order, judgment or decree that imposes
\nany obligations under any Environmental Law and, to the knowledge of the
\nCompany, has not, either expressly or by operation of Law, undertaken any such
\nobligations, including any obligation for corrective or remedial action, of any
\nother person.<\/p>\n<\/p>\n 25<\/p>\n \n
\n<\/p>\n(b) Notwithstanding any provision to the contrary in this Agreement,
\nincluding Section 3.9<\/u>, the Company makes no representation or warranty
\nwith respect to the Company’s or any of its Subsidiaries’ compliance with
\nEnvironmental Laws relating to federal or state new source review or prevention
\nof significant deterioration air permit laws or regulations, except to the
\nextent that the Company or a Subsidiary has, as of the date of this Agreement,
\nreceived a written notice or been subject to a judicial or administrative
\nproceeding alleging non-compliance with such laws or regulations.<\/p>\n<\/p>\n (c) Except as may be subject to attorney privileges or third-party
\nconfidentiality agreements, the Company has provided or made available to Parent
\nall of the following in its possession, as of the date of this Agreement: (i)
\nall material environmental reports, studies or audits conducted or prepared
\nsince January 1, 2006, including, without limitation, reports or studies with
\nrespect to potential enforcement actions and strategies to comply with existing
\nor upcoming regulations pursuant to the federal Clean Air Act, Clean Water Act,
\nResource Conservation and Recovery Act and similar Ohio laws, (ii) all material
\norders, decrees or judgments pursuant to applicable Environmental Laws,
\nexcluding any such matters that have been terminated or have no remaining
\nmaterial obligations or responsibilities on the part of the Company or its
\nSubsidiaries, (iii) all written notices received since January 1, 2006 alleging
\nliability, complaints, notices of violation or requests for information, and the
\nresponses to same, relating to material claims, investigations, proceedings,
\norders, judgments or decrees pursuant to applicable Environmental Laws,
\nexcluding any such matters that have been resolved with no further obligations
\nor responsibilities on the part of the Company or its Subsidiaries and (iv) all
\nexisting material permits issued, and pending material permit applications
\nsubmitted, pursuant to the federal Clean Air Act, the Clean Water Act, the
\nResource Conservation and Recovery Act and corresponding Ohio laws.<\/p>\n<\/p>\n (d) The representations and warranties set forth herein are the Company’s
\nsole representations and warranties relating to Environmental Law protection of
\nthe Environment and releases or management of Hazardous Materials.<\/p>\n<\/p>\n (e) As used in this Agreement:<\/p>\n<\/p>\n (i) “Environment<\/u>” means the indoor and outdoor environment, including
\nany ambient air, surface water, drinking water, groundwater, land surface
\n(whether below or above water), subsurface strata, sediment, building, surface,
\nplant or animal life and natural resources.<\/p>\n<\/p>\n (ii) “Environmental Law<\/u>” means any Law or any binding agreement issued
\nor entered by or with any Governmental Entity relating to: (A) the protection of
\nthe Environment, including pollution, contamination, cleanup, preservation,
\nprotection and reclamation of the Environment; (B) any exposure to or release or
\nthreatened release of any Hazardous Materials, including investigation,
\nassessment, testing, monitoring, containment, removal, remediation and cleanup
\nof any such release or threatened release; (C) the management of any Hazardous
\nMaterials, including the use, labeling, processing, disposal, storage,
\ntreatment, transport or recycling of any Hazardous Materials and recordkeeping,
\nnotification, disclosure and reporting requirements respecting Hazardous
\nMaterials; or (D) the presence of Hazardous Materials in any building, physical
\nstructure, product or fixture.<\/p>\n<\/p>\n 26<\/p>\n \n
\n<\/p>\n(iii) “Hazardous Materials<\/u>” means all substances defined as Hazardous
\nSubstances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
\nSubstances Pollution Contingency Plan, 40 C.F.R. \u00a7 300.5, or defined as such by,
\nor regulated as such under, any Environmental Law, including any regulated
\npollutant or contaminant (including any constituent, product or by-product
\nthereof), petroleum, asbestos or asbestos-containing material, polychlorinated
\nbiphenyls, lead paint, any hazardous, industrial or solid waste, and any toxic,
\nradioactive, infectious or hazardous substance, material or agent.<\/p>\n<\/p>\n Section 3.15 Real Property<\/u>.<\/p>\n<\/p>\n (a) With respect to each material real property owned by the Company or any
\nof its Subsidiaries as of the date hereof or in which the Company or any of its
\nSubsidiaries owns an undivided interest (such property collectively, the
\n“Company Owned Real Property<\/u>“), except as would not reasonably be
\nexpected to have, individually or in the aggregate, a Company Material Adverse
\nEffect, and except as set forth in Section 3.15(a) of the Company Disclosure
\nSchedule, (i) either the Company or a Subsidiary of the Company has insurable
\nfee simple title to such Company Owned Real Property or in the case of undivided
\ninterest, insurable title thereto, free and clear of all Liens other than
\nCompany Permitted Liens and conditions, encroachments, easements, rights-of-way,
\nrestrictions and other encumbrances that do not materially and adversely affect
\nthe existing use of the real property subject thereto by the owner (or lessee to
\nthe extent a leased property) thereof in the operation of its business in the
\nordinary course (“Permitted Encumbrances<\/u>“), (ii) there are no leases,
\nsubleases or licenses affecting any portion of the Company Owned Real Property
\nthat would reasonably be expected to materially and adversely affect the
\nexisting use of the Company Owned Real Property by the Company in the operation
\nof its business thereon in the ordinary course and (iii) there are no
\noutstanding options or rights of first refusal in favor of any other party to
\npurchase such Company Owned Real Property or any portion thereof or interest
\ntherein that would reasonably be expected to materially and adversely affect the
\nexisting use of the Company Owned Real Property by the Company in the operation
\nof its business thereon in the ordinary course. As of the date hereof, neither
\nthe Company nor any of its Subsidiaries has received written notice of any
\npending, and to the knowledge of the Company there is no threatened,
\ncondemnation proceeding with respect to any Company Owned Real Property, except
\nproceedings which would not reasonably be expected to have, individually or in
\nthe aggregate, a Company Material Adverse Effect.<\/p>\n<\/p>\n 27<\/p>\n \n
\n(b) Except as would not reasonably be expected to have, individually or in
\nthe aggregate, a Company Material Adverse Effect, (i) each material lease and
\nsublease (collectively, the “Company Real Property Leases<\/u>“) under which
\nthe Company or any of its Subsidiaries uses or occupies or has the right to use
\nor occupy any material real property (the “Company Leased Real
\nProperty<\/u>“) at which the material operations of the Company or any of its
\nSubsidiaries are conducted as of the date hereof, is valid, binding and in full
\nforce and effect, (ii) neither the Company nor any of its Subsidiaries is
\ncurrently subleasing, licensing or otherwise granting any person the right to
\nuse or occupy a material portion of a Company Leased Real Property that would
\nreasonably be expected to materially and adversely affect the existing use of
\nthe Company Leased Real Property by the Company in the operation of its business
\nin the ordinary course thereon and (iii) the Company has not received written
\nnotice of any uncured default of a material nature on the part of the Company
\nand, if applicable, its Subsidiary or, to the knowledge of the Company, the
\nlandlord thereunder, with respect to any Company Real Property Lease, and to the
\nknowledge of the Company no event has occurred or circumstance exists which,
\nwith the giving of notice, the passage of time, or both, would constitute a
\nmaterial breach or default under a Company Real Property Lease. Except as would
\nnot reasonably be expected to have, individually or in the aggregate, a Company
\nMaterial Adverse Effect, the Company and each of its Subsidiaries has a good and
\nvalid leasehold interest, subject to the terms of the Company Real Property
\nLeases, in each parcel of Company Leased Real Property, free and clear of all
\nLiens, except for Company Permitted Liens and Permitted Encumbrances. As of the
\ndate hereof, neither the Company nor any of its Subsidiaries has received
\nwritten notice of any pending, and, to the knowledge of the Company, there is no
\nthreatened, condemnation proceeding with respect to any Company Leased Real
\nProperty, except such proceeding which would not reasonably be expected to have,
\nindividually or in the aggregate, a Company Material Adverse Effect.<\/p>\n<\/p>\n Section 3.16 Condition of Assets<\/u>. Except as set forth in Section 3.16
\nof the Company Disclosure Schedule, each item of material tangible personal
\nproperty of the Company and its Subsidiaries, or in which the Company or any of
\nits Subsidiaries owns an undivided interest, is in all material respects in good
\nworking order and is adequate and sufficient for the Company or its
\nSubsidiaries’ current use, ordinary wear and tear excepted and except for any
\nfailures which, individually or in the aggregate, would not have a Company
\nMaterial Adverse Effect. Except as set forth in Section 3.16 of the Company
\nDisclosure Schedule, all of the electric generating facilities owned, in whole
\nor in part, leased or operated by the Company or its Subsidiaries (the
\n“Facilities<\/u>“) have been operated in all material respects in the ordinary
\ncourse of business consistent with past practice, and, to the knowledge of the
\nCompany, there are no pending material claims for defective work, equipment or
\nmaterials relating to the Facilities made by the Company or any of its
\nSubsidiaries.<\/p>\n<\/p>\n Section 3.17 No Ownership of Nuclear Power Plants<\/u>. Neither the Company
\nnor any of its Subsidiaries owns, directly or indirectly, any interest in any
\nnuclear generation station or manages or operates any nuclear generation
\nstation.<\/p>\n<\/p>\n Section 3.18 Insurance<\/u>.<\/p>\n<\/p>\n (a) Except for failures to maintain insurance that, individually or in the
\naggregate, have not had and would not reasonably be expected to have a Company
\nMaterial Adverse Effect, from December 30, 2010 through the date of this
\nAgreement and except as set forth in Section 3.18(a) of the Company Disclosure
\nSchedule, each of the Company and its Subsidiaries has been continuously insured
\nwith recognized insurers or has self-insured, in each case in such amounts and
\nwith respect to such risks and losses as are consistent with the past practice
\nof the Company. Neither the Company nor any of its Subsidiaries has received any
\nwritten notice of cancellation or termination with respect to any material
\ninsurance policy of the Company or any of its Subsidiaries, except as would not
\nbe reasonably expected to have a Company Material Adverse Effect.<\/p>\n<\/p>\n 28<\/p>\n \n
\n<\/p>\n(b) Section 3.18(b) of the Company Disclosure Schedule sets forth a list of
\nall Captive Insurer Policies, including for each Captive Insurer Policy, the
\nname of the insured, the type of coverage provided, the policy limit and
\ndeductible, the issue and expiration dates, and the annual premium amount. For
\npurposes of the Agreement, the term “Captive Insurer Policy<\/u>” means any
\ncontract of insurance or reinsurance issued or assumed by the Captive Insurer
\nwhich (1) is in force as of the date of the Agreement or (2) is terminated or
\nexpired as of the date of the Agreement but under which the Captive Insurer may
\ncontinue to receive benefits or have obligations.<\/p>\n<\/p>\n (c) All benefits claimed by, or paid, payable, or credited to, any insured
\nunder any Captive Insurer Policy have been paid or credited in accordance with
\nthe terms of the applicable Captive Insurer Policy, and such payments, credits
\nor provisions were not materially delinquent and were paid or credited (or will
\nbe paid or credited) without fines or penalties (excluding interest), except for
\nany such claim for benefits for which there is a reasonable basis to contest
\npayment and except for such claims for benefits that, if not paid or credited,
\nwould not reasonably be expected to have, individually or in the aggregate, a
\nCompany Material Adverse Effect.<\/p>\n<\/p>\n (d) As of the date of the Agreement, the Captive Insurer has not entered into
\nand is not bound or obligated under any reinsurance treaties or contracts that
\nwould reasonably be expected to have, individually or in the aggregate, a
\nCompany Material Adverse Effect.<\/p>\n<\/p>\n (e) The Company has made available for inspection to Parent (1) copies of all
\nexamination reports (including financial, market conduct and similar
\nexaminations) issued by an insurance regulatory authority with respect to the
\nCaptive Insurer which have been completed and issued since December 31, 2007;
\n(2) any draft or incomplete examination reports (including financial, market
\nconduct and similar examinations) provided to the Captive Insurer or the Company
\nby any insurance regulatory authority with respect to the Captive Insurer
\npursuant to any currently ongoing or incomplete examinations; (3) all material
\nfilings or submissions made by the Captive Insurer or the Company with any
\ninsurance regulatory authority since December 31, 2007; and (4) all other
\nmaterial correspondence, inquires and other materials relating to the Captive
\nInsurer received from or delivered to any insurance regulatory authority since
\nDecember 31, 2007. Since December 31, 2007, no material deficiencies or
\nviolations with respect to the Captive Insurer have been asserted in writing by
\nany insurance regulatory authority, other than any deficiency or violation which
\nhas been cured or otherwise resolved to the satisfaction of the insurance
\nregulatory authority that noted such deficiency or violation.<\/p>\n<\/p>\n 29<\/p>\n \n
\nSection 3.19 Intellectual Property<\/u>. Except as would not, individually
\nor in the aggregate, reasonably be expected to have a Company Material Adverse
\nEffect, the Company and its Subsidiaries own or have a valid right to use all
\npatents, trademarks, trade names, service marks, domain names, copyrights and
\nany applications and registrations therefor, trade secrets, know-how and
\ncomputer software (collectively, “Intellectual Property Rights<\/u>“) used in
\nconnection with and reasonably necessary for the business of the Company and its
\nSubsidiaries as currently conducted. To the knowledge of the Company, since
\nDecember 31, 2009, neither the Company nor any of its Subsidiaries has
\ninfringed, misappropriated or violated in any material respect any Intellectual
\nProperty Rights of any third party except where such infringement,
\nmisappropriation or violation would not, individually or in the aggregate,
\nreasonably be expected to have a Company Material Adverse Effect. To the
\nknowledge of the Company, no third party is infringing, misappropriating or
\nviolating any Intellectual Property Rights owned or exclusively licensed by or
\nto the Company or any of its Subsidiaries, except where such infringement,
\nmisappropriation or violation would not, individually or in the aggregate,
\nreasonably be expected to have a Company Material Adverse Effect.<\/p>\n<\/p>\n Section 3.20 Material Contracts<\/u>. Except as set forth in Section 3.20
\nof the Company Disclosure Schedule, as of the date hereof, neither the Company
\nnor any of its Subsidiaries is a party to or bound by any Contract that (i) is a
\n“material contract” (as such term is defined in Item 601(b)(10) of Regulation
\nS-K promulgated by the SEC), (ii) would, after giving effect to the Merger,
\nmaterially limit or restrict the Surviving Corporation or any of its
\nSubsidiaries or any successor thereto, from engaging or competing in any line of
\nbusiness or in any geographic area that it currently engages in or that contains
\nexclusivity or non-solicitation provisions with respect to customers, (iii)
\nlimits or otherwise restricts the ability of the Company or any of its
\nSubsidiaries to pay dividends or make distributions to its shareholders or (iv)
\nprovides for the operation or management of any material operating assets of the
\nCompany or its Subsidiaries by any person other than the Company or its
\nSubsidiaries. Each Contract of the type described in this Section 3.20<\/u>,
\nwhether or not set forth on Section 3.20 of the Company Disclosure Schedule is
\nreferred to herein as a “Company Material Contract<\/u>.” Each Company
\nMaterial Contract is a valid and binding obligation of the Company or its
\nSubsidiary party thereto enforceable against the Company or its Subsidiary party
\nthereto and, to the knowledge of the Company, each other party thereto, in
\naccordance with its terms (except that (i) such enforcement may be subject to
\napplicable bankruptcy, insolvency, reorganization, moratorium or other similar
\nLaws, now or hereafter in effect, relating to creditors’ rights generally and
\n(ii) equitable remedies of specific performance and injunctive and other forms
\nof equitable relief may be subject to equitable defenses and to the discretion
\nof the court before which any proceeding therefor may be brought) and, is in
\nfull force and effect, and each of the Company and each of its Subsidiaries
\nwhich is a party thereto has performed in all material respects all obligations
\nrequired to be performed by it to the date hereof under each Company Material
\nContract and, to the knowledge of the Company, each other party to each Company
\nMaterial Contract has performed in all material respects all obligations
\nrequired to be performed by it under such Company Material Contract, except, in
\neach case, as would not, individually or in the aggregate, reasonably be
\nexpected to have a Company Material Adverse Effect. None of the Company or any
\nof its Subsidiaries has knowledge of, or has received written notice of, any
\nviolation of or default under (or any condition which with the passage of time
\nor the giving of written notice would cause such a violation of or default
\nunder) any Company Material Contract to which it is a party or by which it or
\nany of its properties or assets is bound, except for violations or defaults that
\nwould not, individually or in the aggregate, reasonably be expected to have a
\nCompany Material Adverse Effect or, after giving effect to the Merger, a Parent
\nMaterial Adverse Effect. “Contract<\/u>” or “contract<\/u>” means any
\nwritten agreement, undertaking, contract, commitment, lease, license, permit,
\nfranchise, concession, deed of trust, contract, note, bond, mortgage, indenture,
\narrangement or other instrument or obligation.<\/p>\n<\/p>\n 30<\/p>\n \n
\n<\/p>\nSection 3.21 Affiliate Transactions<\/u>. To the knowledge of the Company,
\nsince December 30, 2010, there have been no transactions, or series of related
\ntransactions, agreements, arrangements or understandings, nor are there any
\ncurrently proposed transactions, or series of related transactions, that would
\nbe required to be disclosed under Item 404 of Regulation S-K promulgated under
\nthe Exchange Act that have not been otherwise disclosed in the Company SEC
\nDocuments publicly filed prior to the date hereof.<\/p>\n<\/p>\n Section 3.22 Trading<\/u>. The Company has established risk parameters,
\nlimits and guidelines in compliance with the risk management policy approved by
\nthe Company’s Board of Directors (the “Company Trading Policies<\/u>“) to
\nrestrict the level of risk that the Company and its Subsidiaries are authorized
\nto take with respect to, among other things, the net position resulting from all
\nphysical commodity transactions (including the anticipated output from the
\nCompany’s merchant generation fleet and the contracted price of coal),
\nexchange-traded futures and options transactions, over-the-counter transactions
\nand derivatives thereof and similar transactions (the “Net Company
\nPosition<\/u>“) and monitors compliance by the Company and its Subsidiaries with
\nsuch Company Trading Policies. The Company Trading Policies are consistent with
\napplicable Laws of the State of Ohio and the Federal Power Act, in all material
\nrespects. The Company has provided the Company Trading Policies to Parent prior
\nto the date of this Agreement. Except as set forth in Section 3.22 of the
\nCompany Disclosure Schedule, as of the date hereof, the Net Company Position is
\nwithin the risk parameters that are set forth in the Company Trading Policies.\n<\/p>\n<\/p>\n Section 3.23 Required Vote of the Company Shareholders<\/u>. The vote (in
\nperson or by proxy) of the holders of two-thirds of the outstanding shares of
\nCompany Common Stock entitled to vote on this Agreement and the Transactions,
\nincluding the Merger, at the Company Shareholders’ Meeting, or any adjournment
\nor postponement thereof, in favor of the adoption of this Agreement and the
\napproval of the Transactions, including the Merger (the “Company Shareholder
\nApproval<\/u>“) is the only vote or approval of the holders of any class or
\nseries of capital stock or other securities of the Company or any of its
\nSubsidiaries that is required to adopt this Agreement and approve the
\nTransactions, including the Merger.<\/p>\n<\/p>\n Section 3.24 Antitakeover Statutes; Rights Plan<\/u>.<\/p>\n<\/p>\n (a) Subject to the accuracy of the representations and warranties of Parent
\nand Merger Sub in Section 4.4<\/u>, the Board of Directors of the Company has
\ntaken all actions necessary so that, to the extent applicable, the restrictions
\ncontained in Sections 1701.83, 1701.831 and 1701.832 of the OGCL will not apply
\nto the execution, delivery or performance of this Agreement or the consummation
\nof the Transactions, including the Merger, and no other Takeover Laws are
\napplicable to the Merger, this Agreement or any of the Transactions. As used in
\nthis Agreement, “Takeover Laws<\/u>” shall mean any “moratorium,” “control
\nshare acquisition,” “fair price,” or “business combination statute or
\nregulation” or other similar state antitakeover Laws and regulations.<\/p>\n<\/p>\n (b) The Company has approved an amendment to the Rights Agreement, dated
\nSeptember 25, 2001, between the Company and Computershare, f\/k\/a Equiserve Trust
\nCompany, N.A. (the “Shareholders Rights Plan<\/u>“) so that Parent, Merger Sub
\nand their affiliates are not “Acquiring Persons” and the Transactions, including
\nthe Merger, are not “Business Combinations,” in each case as such terms are
\ndefined therein, and to cause the Shareholders Rights Plan to continue as
\namended through the End Date. Other than the Shareholders Rights Plan, the
\nCompany is not a party to any anti-takeover plan or agreement.<\/p>\n<\/p>\n 31<\/p>\n \n
\n<\/p>\nSection 3.25 Opinion of Financial Advisor<\/u>. The Board of Directors of
\nthe Company has received the opinion of UBS Securities LLC (“UBS<\/u>“) to the
\neffect that, as of the date of such opinion and based upon and subject to the
\nfactors and assumptions set forth therein, the Merger Consideration to be
\nreceived by the holders of Company Common Stock is fair, from a financial point
\nof view, to such holders. The Company shall, following receipt of said opinion
\nin written form, furnish an accurate and complete copy of said opinion to Parent
\nsolely for informational purposes.<\/p>\n<\/p>\n Section 3.26 Finders or Brokers<\/u>. Except for UBS (the fees and expenses
\nof which will, prior to the Closing, be the responsibility of the Company),
\nneither the Company nor any of its Subsidiaries has employed any investment
\nbanker, broker or finder in connection with the Transactions who might be
\nentitled to any fee or any commission in connection with or upon consummation of
\nthe Merger or the Transactions. The Company has furnished to Parent accurate and
\ncomplete copies of its agreements with UBS related to the Merger and the
\nTransactions.<\/p>\n<\/p>\n Section 3.27 No Additional Representations<\/u>. The Company acknowledges
\nthat neither Parent nor Merger Sub makes any representation or warranty as to
\nany matter whatsoever except as expressly set forth in this Agreement or in any
\ncertificate delivered by Parent or Merger Sub to the Company in accordance with
\nthe terms hereof, and specifically (but without limiting the generality of the
\nforegoing) that neither Parent nor Merger Sub makes any representation or
\nwarranty with respect to (a) any projections, estimates or budgets delivered or
\nmade available to the Company (or any of their respective affiliates, officers,
\ndirectors, employees or Representatives) of future revenues, results of
\noperations (or any component thereof), cash flows or financial condition (or any
\ncomponent thereof) of Parent and its Subsidiaries or (b) the future business and
\noperations of Parent and its Subsidiaries in each case except as expressly set
\nforth in this Agreement.<\/p>\n<\/p>\n ARTICLE IV<\/strong><\/p>\n\n REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
\nSUB<\/u><\/strong><\/p>\n\n Parent and Merger Sub represent and warrant to the Company that except as set
\nforth in the “Parent Disclosure Schedule<\/u>” (as such term is used in this
\nAgreement), a copy of which has been provided to the Company, with specific
\nreference to the particular Article or Section of this Agreement to which the
\ninformation set forth in such schedule relates (it being agreed that disclosure
\nof any item in any Article or Section of the Parent Disclosure Schedule shall be
\ndeemed disclosure with respect to any other Article or Section to which the
\nrelevance of such item is reasonably apparent):<\/p>\n<\/p>\n 32<\/p>\n \n
\n<\/p>\nSection 4.1 Qualification; Organization, Subsidiaries, etc.<\/u><\/p>\n<\/p>\n (a) Each of Parent and Merger Sub is a legal entity duly organized, validly
\nexisting and in good standing under the Laws of its respective jurisdiction of
\norganization and has all requisite corporate or similar power and authority to
\nown, lease and operate its properties and assets and to carry on its business as
\npresently conducted and is qualified to do business and is in good standing as a
\nforeign corporation in each jurisdiction where the ownership, leasing, character
\nor operation of its assets or properties or conduct of its business requires
\nsuch qualification, except where the failure to be so organized, validly
\nexisting, qualified or in good standing or to have such power or authority,
\nwould not reasonably be expected to have, individually or in the aggregate, a
\nParent Material Adverse Effect.<\/p>\n<\/p>\n (b) As used in this Agreement, a “Parent Material Adverse Effect<\/u>”
\nmeans any event, change, effect, development, condition or occurrence that,
\nindividually or in the aggregate, is or would reasonably be expected to prevent,
\ndelay or impair the ability of the Parent and the Merger Sub to perform their
\nrespective obligations hereunder and to consummate the Transactions in a timely
\nfashion.<\/p>\n<\/p>\n Section 4.2 Corporate Authority Relative to this Agreement; No
\nViolation<\/u>.<\/p>\n<\/p>\n (a) Each of Parent and Merger Sub has all requisite corporate power and
\nauthority to enter into this Agreement, to perform its obligations hereunder and
\nto consummate the Transactions. The execution and delivery of this Agreement and
\nthe consummation of the Transactions have been duly and validly authorized by
\nthe Boards of Directors of Parent and Merger Sub and by Parent or its relevant
\nSubsidiary, as the sole shareholder of Merger Sub, and no other corporate
\nproceedings on the part of Parent or Merger Sub are necessary to authorize the
\nMerger or the consummation of the Transactions. This Agreement has been duly and
\nvalidly executed and delivered by Parent and Merger Sub, and, assuming this
\nAgreement constitutes the legal, valid and binding agreement of the Company,
\nthis Agreement constitutes the legal, valid and binding agreement of each of
\nParent and Merger Sub, enforceable against Parent and Merger Sub in accordance
\nwith its terms, except that (i) such enforcement may be subject to applicable
\nbankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or
\nhereafter in effect, relating to creditors’ rights generally and (ii) equitable
\nremedies of specific performance and injunctive and other forms of equitable
\nrelief may be subject to equitable defenses and to the discretion of the court
\nbefore which any proceeding therefor may be brought.<\/p>\n<\/p>\n (b) Other than in connection with or in compliance with (i) the HSR Act, (ii)
\nthe FPA and the FERC Approval and (iii) the PUCO (collectively, the “Parent
\nApprovals<\/u>“), no authorization, consent, order, license, permit or approval
\nof, or registration, declaration, notice or filing with, or action by, any
\nGovernmental Entity is necessary or required to be obtained or made under
\napplicable Law in connection with the execution and delivery of this Agreement
\nby Parent and Merger Sub, the performance by Parent and Merger Sub of their
\nrespective obligations hereunder or the consummation of the Transactions by
\nParent and Merger Sub, except for such authorizations, consents, approvals or
\nfilings, that, if not obtained or made, would not reasonably be expected to
\nhave, individually or in the aggregate, a Parent Material Adverse Effect (it
\nbeing understood that Parent is not making any representations or warranties
\nwith respect to the Company’s or any of its Subsidiary’s assets in Kentucky).\n<\/p>\n<\/p>\n 33<\/p>\n \n
\n<\/p>\n(c) The execution and delivery by Parent and Merger Sub of this Agreement do
\nnot, and, provided the Parent Approvals are obtained, the consummation of the
\nTransactions and compliance with the provisions hereof will not (i) conflict
\nwith, result in any violation of, or default (with or without notice or lapse of
\ntime, or both) under, or give rise to a right of termination, cancellation or
\nacceleration of any obligation or to the loss of a benefit under any loan,
\nguarantee of indebtedness or credit agreement, note, bond, mortgage, indenture,
\ndeed of trust, lease, agreement, contract, instrument, permit, concession,
\nfranchise, right, license or other agreement binding upon Parent or Merger Sub
\nor result in the creation of any Lien, other than any such Lien (A) for Taxes or
\ngovernmental assessments, charges or claims of payment not yet due or
\ndelinquent, being contested in good faith or for which adequate accruals or
\nreserves have been established, (B) which is a carriers’, warehousemen’s,
\nmechanics’, materialmen’s, repairmen’s or other similar lien arising in the
\nordinary course of business, (C) which is disclosed on the most recent
\nconsolidated balance sheet of Parent or notes thereto or securing liabilities
\nreflected on such balance sheet, (D) which was incurred in the ordinary course
\nof business since the date of the most recent consolidated balance sheet of the
\nParent or (E) which does not and would not reasonably be expected to materially
\nimpair the continued use and operation of the assets to which they relate as
\noperated as of the date hereof or any property at which the material operations
\nof Parent or Merger Sub are conducted as of the date hereof, upon any of the
\nproperties or assets of Parent or Merger Sub, (ii) conflict with or result in
\nany violation of any provision of the articles of incorporation or bylaws or
\nother equivalent organizational document of Parent or Merger Sub or (iii)
\nconflict with or violate any applicable Laws, other than, in the case of clauses
\n(i) and (iii), any such violation, conflict, default, termination, cancellation,
\nacceleration, right, loss or Lien that would not reasonably be expected to have,
\nindividually or in the aggregate, a Parent Material Adverse Effect.<\/p>\n<\/p>\n Section 4.3 Investigations; Litigation<\/u>. (a) There is no investigation,
\naudit or review pending (or, to the knowledge of Parent, threatened) by any
\nGovernmental Entity with respect to Parent or Merger Sub, (b) there are no
\nactions, suits, inquiries, arbitrations, investigations or proceedings pending
\n(or, to the knowledge of Parent, threatened) against, relating to or affecting
\nParent or Merger Sub, or any of their respective properties at law or in equity
\nbefore and (c) there are no orders, injunctions, rulings, stipulations, awards,
\njudgments, writs imposed on or decrees of, or before, any Governmental Entity
\nexcept, in the case of clauses (a) through (c), as would not reasonably be
\nexpected to have, individually or in the aggregate, a Parent Material Adverse
\nEffect.<\/p>\n<\/p>\n Section 4.4 Ownership of Company Common Stock<\/u>. As of the date hereof,
\nneither the Parent nor the Merger Sub (i) either individually or as part of a
\ngroup beneficially owns (as defined in Rule 13d-3 under the Exchange Act),
\ndirectly or indirectly or (ii) is a party to any agreement, arrangement or
\nunderstanding for the purpose of acquiring, holding, voting or disposing of, in
\neach case, shares of capital stock of the Company.<\/p>\n<\/p>\n Section 4.5 No Required Vote of Parent Shareholders; Merger Sub
\nApproval<\/u>.<\/p>\n<\/p>\n (a) No vote of the holders of any class or series of Parent capital stock is
\nnecessary to approve this Agreement or the Transactions.<\/p>\n<\/p>\n 34<\/p>\n \n
\n<\/p>\n(b) The Board of Directors of Merger Sub, by written consent duly adopted
\nprior to the date hereof, (i) determined that this Agreement and the
\nTransactions, including the Merger, are advisable and in the best interests of
\nMerger Sub and its shareholder, (ii) duly approved this Agreement and the
\nTransactions, including the Merger, which approval has not been rescinded or
\nmodified and (iii) submitted this Agreement for adoption, and the Transactions,
\nincluding the Merger for approval, by Parent, or its relevant Subsidiary, as the
\nsole shareholder of Merger Sub. Parent or its relevant Subsidiary, as the sole
\nshareholder of Merger Sub, has duly adopted this Agreement and approved the
\nTransactions, including the Merger.<\/p>\n<\/p>\n Section 4.6 Finders or Brokers<\/u>. Except for Merrill Lynch, Pierce,
\nFenner & Smith, Incorporated (the fees and expenses of which will be the
\nresponsibility of Parent), neither Parent nor any of its Subsidiaries has
\nemployed any investment banker, broker or finder in connection with the
\nTransactions who might be entitled to any fee or any commission in connection
\nwith or upon consummation of the Merger or the Transactions.<\/p>\n<\/p>\n Section 4.7 Availability of Funds<\/u>. On the Closing Date, Parent will
\nhave sufficient funds to pay (i) the aggregate Merger Consideration in
\naccordance with Article II<\/u> hereof and to consummate the Transactions,
\nincluding the Merger and (ii) all fees and expenses required to be paid by
\nParent and Merger Sub in connection with the Transactions.<\/p>\n<\/p>\n Section 4.8 No Additional Representations<\/u>.<\/p>\n<\/p>\n (a) Notwithstanding anything contained in this Agreement to the contrary,
\neach of Parent and Merger Sub acknowledges and agrees that neither the Company
\nnor any person has made or is making any representations or warranties relating
\nto the Company or its Subsidiaries whatsoever, express or implied, beyond those
\nexpressly given by the Company in Article III<\/u> hereof, including any
\nimplied representation or warranty as to the accuracy or completeness of any
\ninformation regarding the Company furnished or made available to Parent, Merger
\nSub or any of their respective affiliates, officers, directors, employees or
\nRepresentatives. Without limiting the generality of the foregoing, each of
\nParent and Merger Sub acknowledges that no representations or warranties are
\nmade with respect to (a) any projections, estimates or budgets delivered or made
\navailable to Parent or Merger Sub (or any of their respective affiliates,
\nofficers, directors, employees or Representatives) of future revenues, results
\nof operations (or any component thereof), cash flows or financial condition (or
\nany component thereof) of the Company and its Subsidiaries or (b) the future
\nbusiness and operations of the Company and its Subsidiaries, in each case except
\nas expressly set forth in this Agreement.<\/p>\n<\/p>\n (b) Parent and Merger Sub each acknowledge and agree that it (i) has had the
\nopportunity to meet with the management of the Company and to discuss the
\nbusiness, assets and liabilities of the Company and its Subsidiaries, (ii) has
\nbeen afforded the opportunity to ask questions of and receive answers from
\nofficers of the Company and (iii) has conducted its own independent
\ninvestigation of the Company and its Subsidiaries, their respective businesses,
\nassets, liabilities and the Transactions contemplated by this Agreement.<\/p>\n<\/p>\n 35<\/p>\n \n
\n<\/p>\nSection 4.9 Ownership and Operations of Merger Sub<\/u>. Parent owns, and
\nat the Effective Time will own, beneficially and of record, all of the
\noutstanding capital stock of Merger Sub either directly or indirectly through
\none or more of its wholly-owned Subsidiaries. Merger Sub was formed solely for
\nthe purpose of engaging in the Transactions, has engaged in no other business
\nactivities, has not incurred any material obligations or liabilities except
\npursuant to this Agreement and has conducted its operations only as contemplated
\nby this Agreement.<\/p>\n<\/p>\n Section 4.10 Information Supplied<\/u>. The information supplied by Parent
\nand Merger Sub for inclusion or incorporation by reference in the Proxy
\nStatement will, at the time the Proxy Statement is filed with the SEC, and at
\nthe time the Proxy Statement is first sent to the shareholders of the Company,
\nnot contain any untrue statement of material fact or omit to state any material
\nfact required to be stated therein or necessary to make the statements therein,
\nin light of the circumstances under which they are made, not misleading.<\/p>\n<\/p>\n Section 4.11 Solvency<\/u>. Immediately following the Effective Time,
\nassuming (a) satisfaction of the conditions to Parent’s and Merger Sub’s
\nobligation to consummate the Merger, or waiver of such conditions and (b) the
\naccuracy of the representations and warranties of the Company set forth in
\nArticle III<\/u> hereof, the Surviving Corporation will be solvent (assuming
\nfor the purposes of this representation that the Company and each of its
\nSubsidiaries was solvent immediately prior to the Effective Time). For the
\npurposes of this Agreement, the term “Solvent<\/u>” when used with respect to
\neach of Merger Sub and the Surviving Corporation, means that, as of any date of
\ndetermination (i) Merger Sub and the Surviving Corporation will be able to pay
\ntheir debts as of such date as they become due and shall own property having a
\nfair saleable value greater than the amounts required to pay their debts
\n(including a reasonable estimate of the amount of all contingent liabilities) as
\nthey become absolute and mature; and (ii) Merger Sub and the Surviving
\nCorporation shall not have, as of such date, unreasonably small capital to carry
\non their business.<\/p>\n<\/p>\n ARTICLE V<\/strong><\/p>\n\n COVENANTS AND AGREEMENTS<\/u><\/strong><\/p>\n\n Section 5.1 Conduct of Business by the Company<\/u>. From and after the
\ndate hereof and prior to the earlier of the Effective Time or the date, if any,
\non which this Agreement is earlier terminated pursuant to Section 7.1<\/u>
\nand except (i) as may be required by applicable Law or the regulations or
\nrequirements of any stock exchange or regulatory agency or commission applicable
\nto the Company, (ii) as may be agreed to in writing by Parent (which consent
\nshall not be unreasonably withheld, delayed or conditioned), (iii) as may be
\nexpressly contemplated or required by this Agreement or (iv) as set forth in
\nSection 5.1 of the Company Disclosure Schedule:<\/p>\n<\/p>\n (a) Ordinary Course<\/u>. The Company covenants and agrees with Parent that
\nthe business of the Company and its Subsidiaries shall be conducted in, and that
\nsuch entities shall not take any action except in, the ordinary course of
\nbusiness consistent with past practice (which shall be deemed to include the
\nretail business), and, to the extent consistent therewith, the Company and its
\nSubsidiaries shall use commercially reasonable efforts to preserve intact their
\npresent business organizations, to keep available the services of their key
\nofficers and employees, to preserve their assets and properties, to continue to
\nprocure fuel in the ordinary course of business consistent with past practice,
\nto preserve their relationships with Governmental Entities, customers and
\nsuppliers and others having significant business dealings with them and to
\ncomply in all material respects with all Laws, orders and permits of all
\nGovernmental Entities applicable to them; provided<\/u>, however<\/u>, that
\nno action by the Company or its Subsidiaries with respect to matters
\nspecifically addressed by any provision of Section 5.1(b)<\/u> shall be deemed
\na breach of this sentence unless such action would constitute a breach of such
\nother provision; and<\/p>\n<\/p>\n 36<\/p>\n \n
\n<\/p>\n(b) the Company agrees with Parent, on behalf of itself and its Subsidiaries,
\nthat between the date hereof and the Effective Time, without the prior written
\nconsent of Parent (which consent shall not be unreasonably withheld, delayed or
\nconditioned);<\/p>\n<\/p>\n (i) Governing Documents<\/u>. Except as set forth in Section 5.1(b)(i) of
\nthe Company Disclosure Schedule, the Company shall not adopt any amendments to
\nits articles of incorporation or code of regulations or similar applicable
\norganizational documents, and shall not permit DP&L to adopt any amendments
\nto its articles of incorporation or code of regulations or similar applicable
\norganizational documents;<\/p>\n<\/p>\n (ii) Dividends<\/u>. The Company shall not, and shall not permit any of its
\nSubsidiaries to, declare, set aside or pay any dividends on or make any
\ndistribution with respect to its outstanding shares of capital stock (whether in
\ncash, assets, stock or other securities of the Company or its Subsidiaries),
\nexcept (1) the declaration and payment of quarterly cash dividends with respect
\nto the Company Common Stock not to exceed the current dividend rate, with record
\ndates and payment dates consistent with the Company’s past dividend practice (2)
\nthe declaration and payment of quarterly cash dividends with respect to the
\nCompany’s Subsidiary’s Preferred Stock not to exceed the current dividend rate,
\nwith record dates and payment dates consistent with the Company’s Subsidiary’s
\npast dividend practice, (3) the declaration and payment of dividends from a
\nSubsidiary of the Company to the Company or to another wholly-owned Subsidiary
\nof the Company and (4) a special dividend on Company Common Stock with respect
\nto the quarter in which the Effective Time occurs with a record date on or prior
\nto the Effective Time, which does not exceed an amount equal to the current
\ndividend rate multiplied by a fraction, the numerator of which is the number of
\ndays in such quarter prior to the Effective Time, and the denominator of which
\nis the total number of days in such fiscal quarter;<\/p>\n<\/p>\n (iii) Changes in Stock<\/u>. The Company shall not, and shall not permit
\nany of its Subsidiaries to, split, combine, reclassify, issue or authorize any
\nsecurities, in lieu or substitution of, or take similar actions with respect to
\nany of its capital stock, except for any such transaction in the ordinary course
\nby a wholly-owned Subsidiary of the Company which remains a wholly-owned
\nSubsidiary after consummation of such transaction and that does not adversely
\naffect the Company;<\/p>\n<\/p>\n 37<\/p>\n \n
\n<\/p>\n(iv) Fundamental Changes<\/u>. The Company shall not, and shall not permit
\nany of its Subsidiaries to, adopt a plan of complete or partial liquidation,
\ndissolution, merger, consolidation, restructuring, recapitalization or other
\nreorganization, or enter into a letter of intent or agreement in principle with
\nrespect thereto, other than the Merger and other than any merger, consolidation,
\nrestructurings or reorganizations among the Company’s wholly-owned Subsidiaries
\nin the ordinary course and that do not adversely affect the Company and other
\nthan any such transaction that is expressly permitted under Section 5.3<\/u>
\nof this Agreement to the extent that the Company is in compliance with all
\nprovisions of Section 5.3<\/u>;<\/p>\n<\/p>\n (v) Repayment of Indebtedness<\/u>. Except for transactions between (x) the
\nCompany and its wholly-owned Subsidiaries or (y) among the Company’s
\nwholly-owned Subsidiaries, in each case in the ordinary course and that do not
\nadversely affect the Company, the Company shall not, and shall not permit any of
\nits Subsidiaries to, redeem, repurchase, defease, cancel or otherwise acquire
\nany indebtedness for borrowed money of the Company or any of its Subsidiaries,
\nother than (x) at or within one hundred twenty (120) days of stated maturity,
\n(y) any required amortization payments and mandatory prepayments and (z)
\nindebtedness for borrowed money arising in connection with the amending or
\nrefinancing of the indebtedness disclosed in Section 5.1(b)(v) of the Company
\nDisclosure Schedule or as contemplated by Section 5.14<\/u> of this Agreement;\n<\/p>\n<\/p>\n (vi) Acquisitions<\/u>. Except as made in connection with any transaction
\nsolely between (x) the Company and a wholly-owned Subsidiary of the Company or
\n(y) between wholly-owned Subsidiaries of the Company, in each case in the
\nordinary course and that do not adversely affect the Company, the Company shall
\nnot, and shall not permit any of its Subsidiaries to, acquire or agree to
\nacquire (whether by merger, consolidation, purchase or otherwise) any person or
\nassets for consideration valued in excess of $2.0 million individually or $10.0
\nmillion in the aggregate;<\/p>\n<\/p>\n (vii) Capital Expenditures<\/u>. Except (A) capital expenditures made in
\naccordance with, and not exceeding the amounts included in the Company’s capital
\nexpenditures budgets for 2011 or 2012, in each case set forth on Section
\n5.1(b)(vii) of the Company Disclosure Schedule (except to the extent that any
\ncapital expenditure proposed to be made on a transmission or distribution
\nproject when taken together with all other capital expenditures already made
\nduring the current year on transmission or distribution projects would, if made,
\ncause the aggregate amount of capital expenditures on transmission or
\ndistribution projects to exceed $130 million during 2011 or $110 million during
\n2012) or (B) capital expenditures (1) required by Law or Governmental Entities,
\n(2) incurred in connection with the repair or replacement of facilities
\ndestroyed or damaged due to casualty or accident (whether or not covered by
\ninsurance), (3) relating to obligations required by written operating agreements
\nwith respect to the William H. Zimmer Generating Station, located at Moscow,
\nOhio or (4) relating to obligations required by written operating agreements and
\nunder which the Company or its Subsidiaries have no consent rights with respect
\nto Facilities (other than the William H. Zimmer Generating Station) that are
\npartially owned by the Company or any of its Subsidiaries and which are not
\noperated by the Company or its Subsidiaries, the Company shall not, and shall
\nnot permit any of its Subsidiaries to make any capital expenditure;
\nprovided<\/u>, that the Company may make any emergency capital expenditure or
\nexpenditures it deems necessary in its reasonable judgment to restore or
\nmaintain the provision of energy to firm wholesale and retail customers; and
\nprovided<\/u> further<\/u>, that, with respect to any proposed transmission
\nor distribution project involving capital expenditures in excess of $1 million,
\nthe Company shall first consult with Parent, and use commercially reasonable
\nefforts to incorporate the views of Parent, prior to commencing any such
\nproposed transmission or distribution project;<\/p>\n<\/p>\n 38<\/p>\n \n
\n<\/p>\n(viii) Dispositions<\/u>. Except (A) dispositions among the Company and its
\nwholly-owned Subsidiaries, (B) dispositions among the Company’s wholly-owned
\nSubsidiaries, (C) dispositions of obsolete equipment or assets or dispositions
\nof assets being replaced, including allowing ceasing use of, abandoning, or
\nallowing to lapse any Intellectual Property Rights owned or used by the Company
\nor its Subsidiaries, in each case in the ordinary course of business consistent
\nwith past practice, (D) dispositions in amounts less than $2.0 million
\nindividually or $10.0 million in the aggregate, (E) pledges and mortgages of
\nproperty acquired by the Company and any of its Subsidiaries as required
\npursuant to Company debt instruments or any debt instruments of any Subsidiary
\nand (F) except as set forth in Section 5.1(b)(viii) of the Company Disclosure
\nSchedule, the Company shall not, and shall not permit any of its Subsidiaries to
\nsell, lease, exchange, mortgage, pledge, transfer or otherwise dispose of any
\nperson, Facilities or other assets;<\/p>\n<\/p>\n (ix) Compensation Matters<\/u>. Except as required by the terms of a
\nCompany Benefit Plan set forth on Section 3.12(a) of the Company Disclosure
\nSchedule as of the date of this Agreement and except as set forth in Section
\n5.1(b)(ix) of the Company Disclosure Schedule, by applicable Law, or as
\notherwise permitted by this Agreement, the Company shall not, and shall not
\npermit any of its Subsidiaries, (x) except in the ordinary course of business
\nconsistent with past practice, to (A) increase the compensation or other
\nbenefits (including equity-based awards) payable or provided to the Company’s
\ndirectors, executive officers, managers or employees (other than as required by
\nany applicable collective bargaining agreement), (B) enter into any employment,
\nchange of control, severance or retention agreement with any current or future
\nemployee of the Company or (C) establish, adopt, enter into, accelerate any
\nrights or benefits under, or amend (other than any amendment that is immaterial
\nor administrative in nature) any plan, policy, program or arrangement for the
\nbenefit of any current or former directors, officers or employees or any of
\ntheir beneficiaries, except as permitted pursuant to clause (B) above or (y) to
\nenter into, accelerate any rights or benefits under, amend or renew any
\nagreements with labor unions, including any pamphlets or collective bargaining
\nagreements without, (A) prior consultation with Parent, and the Transition
\nCommittee taking commercially reasonable efforts to incorporate the views of
\nParent and the Transition Committee and (B) the consent of Parent (such consent
\nnot to be unreasonably withheld, conditioned or delayed) to such terms or
\nconditions of any such agreement which are not customary or are outside of
\nmarket parameters in the Company’s or its Subsidiary’s industry for such terms
\nor conditions;<\/p>\n<\/p>\n 39<\/p>\n \n
\n<\/p>\n(x) Employee Headcount<\/u>. The Company shall not, and shall not permit
\nany of its Subsidiaries to, (A) increase its employee headcount in the aggregate
\nin excess of the headcount projected in the Company’s budget set forth on
\nSection 5.1(b)(x) of the Company Disclosure Schedule or (B) reduce the number of
\nemployees in a manner which would implicate the WARN Act or any state or local
\nLaws requiring notice with respect to layoffs or terminations;<\/p>\n<\/p>\n (xi) Capital Stock of the Company<\/u>. Except for transactions (x) among
\nthe Company and its wholly-owned Subsidiaries or (y) among the Company’s
\nwholly-owned Subsidiaries, in each case in the ordinary course and that do not
\nadversely affect the Company and except as set forth in Section 5.1(b)(xi) of
\nthe Company Disclosure Schedule, the Company shall not, and shall not permit any
\nof its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or
\nauthorize the issuance, sale, pledge, disposition or encumbrance of, any shares
\nof its capital stock or other ownership interest in the Company or any of its
\nSubsidiaries or any securities convertible into or exchangeable for any such
\nshares or ownership interest, or any rights, warrants or options to acquire or
\nwith respect to any such shares of capital stock, ownership interest or
\nconvertible or exchangeable securities or take any action to cause to be
\nexercisable any otherwise unexercisable option under any existing stock option
\nplan (except as otherwise provided by the terms of this Agreement, as required
\nby the terms of any Company Benefit Plan, or the express terms of any
\nunexercisable or unexercised equity awards outstanding on the date hereof),
\nother than (A) issuances of shares of Company Common Stock in respect of any
\nexercise of Company Stock Options and settlement of any Company RSUs outstanding
\non the date hereof or as may be granted after the date hereof as permitted under
\nthis Section 5.1(b)<\/u>, (B) the sale of shares of Company Common Stock
\npursuant to the exercise of options exercisable into, or the vesting of awards
\nwith respect to, Company Common Stock, to purchase Company Common Stock if
\nnecessary to effectuate an optionee direction upon exercise or for withholding
\nof Taxes, (C) the grant of equity compensation awards in the ordinary course of
\nbusiness in accordance with the Company’s customary compensation practices and
\n(D) the issuance of shares of Company Common Stock pursuant to the exercise of
\nWarrants issued pursuant to the Warrant Agreement; provided<\/u> that any such
\nawards granted after the date hereof shall be granted on terms pursuant to which
\nsuch awards shall not vest or accelerate as a result of the Merger or the
\noccurrence of the Closing; and provided<\/u>, further<\/u>, that in no event
\nshall additional matching shares’ be issued from and after March 31, 2011 in
\nrespect of Restricted Shares outstanding as of such date (which shall in no
\nevent exceed 8,900 matching shares in the aggregate or at any time thereafter);\n<\/p>\n<\/p>\n 40<\/p>\n \n
\n(xii) Redemptions or Repurchases of Subsidiaries’ Stock<\/u>. Except for
\ntransactions (x) among the Company and its wholly-owned (directly or indirectly)
\nSubsidiaries or (y) among the Company’s wholly-owned (directly or indirectly)
\nSubsidiaries, in each case in the ordinary course and that do not adversely
\naffect the Company, the Company shall not, and shall not permit any of its
\nSubsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire
\nany shares of the capital stock of any of them or any rights or options to
\nacquire any such shares, other than pursuant to the terms of any Company Benefit
\nPlan or the express terms of an equity award;<\/p>\n<\/p>\n (xiii) Incurrence of Indebtedness<\/u>. Except as set forth in Section
\n5.1(b)(xiii) of the Company Disclosure Schedule, or as contemplated by Section
\n5.14 of this Agreement, the Company shall not, and shall not permit any of its
\nSubsidiaries to, create, incur, assume, suffer to exist or otherwise be liable
\nwith respect to any indebtedness for borrowed money or guarantees thereof or
\nenter into any “keep well” or other agreement to maintain any financial
\ncondition of another person or enter into any arrangement having the economic
\neffect of any of the foregoing (including any capital leases, “synthetic” leases
\nor conditional sale or other title retention agreement) or issue or sell any
\ndebt securities, other than (1) in the ordinary course of business consistent
\nwith past practice on terms that allow for prepayment at any time without
\npenalty or (2) in connection with a refinancing of existing indebtedness as
\ncontemplated by the financial budgets of the Company previously provided to
\nParent, provided<\/u>, however<\/u>, that in the case of each of clauses (1)
\nor (2) such actions are not reasonably likely to cause any two of Fitch Ratings,
\nLtd., Standard & Poor’s or Moody’s Investors Service to recognize the
\nCompany’s corporate credit rating to be less than the date hereto;
\nprovided<\/u> further<\/u>, however<\/u>, that in the case of clause (1)
\nsuch indebtedness shall not exceed $50.0 million in the aggregate;<\/p>\n<\/p>\n (xiv) Changes in Accounting Methods<\/u>. The Company shall not, and shall
\nnot permit any of its Subsidiaries to, materially change financial accounting
\npolicies or procedures or any of its methods of reporting income, deductions or
\nother material items for financial accounting purposes, except as required by
\nGAAP, SEC rule or policy or applicable Law;<\/p>\n<\/p>\n (xv) Company Trading Policies<\/u>. Except as set forth in Section
\n5.1(b)(xv) of the Company Disclosure Schedule, the Company shall not materially
\namend or terminate the Company Trading Policies or fail to monitor compliance by
\nthe Company and its Subsidiaries with the Company Trading Policies consistent
\nwith past practices;<\/p>\n<\/p>\n (xvi) Tax Matters<\/u>. The Company shall not, and shall not permit any of
\nits Subsidiaries, to (A) initiate, settle or compromise any claim, action or
\nproceeding relating to a material amount of Taxes, provided<\/u> that the
\nCompany may settle or compromise the current Internal Revenue Service audit of
\nthe Company’s 2008 consolidated U.S. federal income Tax Return for an amount
\nthat does not exceed $5.0 million, (B) make, change or revoke any material Tax
\nelection, (C) change any method of Tax accounting that is not required by GAAP,
\n(D) file any material amended Tax Return or claim for refund of a material
\namount of Taxes, (E) enter into any closing agreement affecting any material Tax
\nliability or refund of a material amount of Taxes or (F) extend or waive the
\napplication of any statute of limitations regarding the assessment or collection
\nof any material Taxes, provided<\/u>, however<\/u>, that the Company shall
\nuse reasonable efforts to consult with Parent in advance of any action under
\nclause (A) above (determined without regard to materiality) and any other
\nmaterial Tax action under this Section 5.1(b)(xvi)<\/u>;<\/p>\n<\/p>\n 41<\/p>\n \n
\n<\/p>\n(xvii) Legal Proceedings<\/u>. The Company shall not, and shall not permit
\nany of its Subsidiaries to, pay or settle any material legal proceedings, other
\nthan payments or settlements (A) that do not exceed $10.0 million in the
\naggregate in any consecutive 12-month period, (B) that have become due and
\npayable prior to the date hereof or (C) that are reflected or reserved against
\nin, or contemplated by, the most recent financial statements of the Company (in
\namounts not in excess of the amounts so reflected, reserved or contemplated)
\n(provided<\/u> that the exceptions set forth in clauses (A) or (B) shall not
\napply to any proceedings arising out of or related to this Agreement or the
\nTransactions);<\/p>\n<\/p>\n (xviii) New Lines of Business<\/u>. The Company shall not, and shall not
\npermit any of its Subsidiaries to, (A) enter into any new line of business or
\n(B) conduct any business outside the United States or any of the States in which
\nthe Company is currently conducting business, except in the ordinary course of
\nbusiness consistent with past practice and except for the expansion of the
\nCompany’s retail business;<\/p>\n<\/p>\n (xix) Material Agreements with Governmental Entities<\/u>. The Company
\nshall not, and shall not permit any of its Subsidiaries to, agree or consent to
\nany material agreements or material modifications of existing agreements or
\ncourse of dealings with any Governmental Entities in respect of the operations
\nof their businesses, except that the Company may (A) renew Permits, (B) enter
\ninto or amend agreements, both in the ordinary course of business consistent
\nwith past practice, (C) enter into or amend agreements relating to or governed
\nby Ohio Revised Code Chapter 4928 or (D) enter into or amend agreements relating
\nto or governed by federal law or regulation, including the FPA and federal
\nEnvironmental Laws except, with respect to clause (C) and (D), in consultation
\nwith Parent and after using commercially reasonable efforts to incorporate the
\nviews of Parent;<\/p>\n<\/p>\n (xx) Insurance<\/u>. The Company shall, and shall cause its Subsidiaries,
\nto maintain with financially responsible insurance companies (or through
\nself-insurance not inconsistent with such party’s past practice), insurance in
\nsuch amounts and against such risks and losses as are reasonable for the nature
\nof the property so insured and consistent with past practice;<\/p>\n<\/p>\n 42<\/p>\n \n
\n<\/p>\n(xxi) Regulated Rate Changes<\/u>. To the extent permitted by applicable
\nLaw, the Company shall, and shall cause its Subsidiaries to, on a reasonable
\nbasis, (1) discuss with Parent any changes in its or its Subsidiaries’ regulated
\nrates or charges (other than pass-through charges, including rate changes in
\naccordance with existing formula rates), standards of service or regulatory
\naccounting from those in effect on the date of this Agreement and (2) discuss
\nwith Parent, and use commercially reasonable efforts to incorporate the views of
\nParent, prior to making any filing (or any amendment thereto), or effecting any
\nagreement, commitment, arrangement or consent, whether written or oral, formal
\nor informal, with respect thereto (other than to implement rate changes in
\naccordance with existing formula rates), including any such filings related to
\nor governed by Ohio Revised Code Chapter 4928; provided<\/u>, however<\/u>,
\nthat without the consent of Parent (such consent not to be unreasonably
\nwithheld, conditioned or delayed), the Company will not, or permit any
\nSubsidiary to, (x) make any Electric Security Plan (ESP) filing, any Market Rate
\nOffer (MRO) filing or any other filing that changes its rates in a material
\nmanner that may, individually or in the aggregate, impact its revenue for a
\nperiod of longer than one (1) year or (y) joining any regional transmission
\norganization to which it does not currently belong. Notwithstanding the
\nforegoing, neither the Company nor any of its Subsidiaries shall be required to
\nhave discussions or consult with Parent prior to entering into arrangements with
\ncustomers in the ordinary course of business consistent with past practice,
\nprovided<\/u>, further<\/u>, that, in no event shall the Company be
\nobligated to have discussions or consult with Parent with respect to any of the
\nforegoing if, in the opinion of the Company’s outside counsel, to do so would be
\ninconsistent with applicable Law;<\/p>\n<\/p>\n (xxii) Material Agreements and Power Sales Contracts<\/u>. Except as set
\nforth in Section 5.1(b)(xxii) of the Company Disclosure Schedule, the Company
\nshall not, and shall not permit its Subsidiaries to, enter into, terminate or
\nmaterially modify or amend any contract that is or would be a (v) Company
\nMaterial Contract, (w) any agreement or practice relating to fuel procurement
\nthat is not in the ordinary course of business consistent with past practice,
\n(x) any agreement or course of dealing with or among any of the other owners of
\nthe Facilities that are partially owned by the Company or any of its
\nSubsidiaries, (y) power sale contract which has a term of longer than five (5)
\nyears or (z) coal purchase contract which has a term of longer than five (5)
\nyears; provided<\/u> that (A) the foregoing shall apply solely to the extent
\npermitted by applicable Law, (B) the Company and its Subsidiaries may enter into
\nany power sale contract awarded in a competitive procurement process
\nirrespective of the terms of such contract and (C) for the avoidance of doubt,
\nthis subsection Section 5.1(b)(xxii) shall not prohibit the Company or any of
\nits Subsidiaries from entering into those contracts which are otherwise
\nexpressly permitted to be entered into pursuant to Section 5.1(b)<\/u>;<\/p>\n<\/p>\n (xxiii) Consummation of Transactions<\/u>. Except as otherwise expressly
\nprovided for under Section 5.3<\/u> of this Agreement, and only to the extent
\nthe Company is in compliance with all provisions of Section 5.3<\/u>, the
\nCompany shall not, and shall not permit its Subsidiaries to, enter into or amend
\nany contract, or take any other action, if such contract, amendment of a
\ncontract or action would reasonably be expected to prevent or materially impede,
\ninterfere with, hinder or delay the consummation of the Merger or the
\nTransactions; and<\/p>\n<\/p>\n 43<\/p>\n \n
\n<\/p>\n(xxiv) General<\/u>. The Company shall not, and shall not permit any of its
\nSubsidiaries to, agree or commit, in writing or otherwise, to take any of the
\nforegoing actions.<\/p>\n<\/p>\n Section 5.2 Investigation<\/u>.<\/p>\n<\/p>\n (a) Upon reasonable notice, the Company shall, and shall cause its
\nSubsidiaries to, afford to (x) the officers and employees and (y) the
\naccountants, consultants, legal counsel, financial advisors and agents and other
\nrepresentatives (such persons described in this clause (y), collectively,
\n“Representatives<\/u>“) of Parent reasonable access upon reasonable advance
\nnotice, during normal business hours throughout the period prior to the earlier
\nof the Effective Time and the termination of this Agreement, to all of its
\navailable employees, properties, books, contracts and records (including, but
\nnot limited to, Tax Returns) and, during such period, the Company shall, and
\nshall cause the Company Subsidiaries to, furnish promptly to Parent or its
\naffiliates, officers, directors, employees and Representative, (i) access to
\neach report, schedule and other document filed or received by the Company or any
\nof the Company Subsidiaries pursuant to the requirements of federal or state
\nsecurities laws or filed with or sent to the SEC, FERC, the DOJ, the FTC, the
\nPUCO or any other federal or state regulatory agency or commission and (ii)
\naccess to all information concerning the Company, the Company’s Subsidiaries,
\nand their respective directors, officers and shareholders and such other matters
\nas may be reasonably requested by Parent or its affiliates, officers, directors,
\nemployees and Representatives in connection with any filings, applications or
\napprovals required or contemplated by this Agreement, but only to the extent
\nthat such access does not unreasonably interfere with the business or operations
\nof the Company and its Subsidiaries (and, to the extent required by applicable
\nLaw, access to personnel records will be provided only if authorized by the
\nspecific employees); provided<\/u>, however<\/u>, that the Company may
\nrestrict the foregoing access and the disclosure of information to the extent
\nthat (i) in the reasonable judgment of the Company, any Law applicable to the
\nCompany requires the Company or its Subsidiaries to restrict or prohibit access
\nto any such properties or information, (ii) in the reasonable judgment of the
\nCompany, the information is subject to confidentiality obligations to a third
\nparty, (iii) such disclosure would result in disclosure of any trade secrets or
\nconfidential strategic analyses and evaluations of the Company or of third
\nparties or (iv) disclosure of any such information or document could result in
\nthe loss of attorney-client privilege (provided that the Company and\/or its
\ncounsel shall use their commercially reasonable efforts to enter into such joint
\ndefense agreements or other arrangements, as appropriate, so as to allow for
\nsuch disclosure in a manner that does not result in the loss of attorney client
\nprivilege); provided<\/u> further<\/u>, however<\/u>, that with respect to
\nclauses (i) through (iv) of this Section 5.2(a)<\/u>, the Company shall use
\nits commercially reasonable efforts to (A) obtain the required consent of such
\nthird party to provide such access or disclosure or (B) develop an alternative
\nto providing such information so as to address such matters that is reasonably
\nacceptable to Parent and the Company; provided<\/u> further<\/u>,
\nhowever<\/u>, that no investigation pursuant to this Section 5.2<\/u> shall
\naffect or be deemed to modify any representation or warranty made by the Company
\nherein. Parent agrees to indemnify and hold the Company and its Subsidiaries
\nharmless from any and all claims and liabilities, including costs and expenses
\nfor loss, injury to or death of any director, officer, employee or
\nRepresentative of Parent, and any damage to or destruction of any property owned
\nby the Company or any of its Subsidiaries or others (including claims or
\nliabilities for loss of use of any property) resulting from the action of any of
\nthe directors, officers, employees or Representatives of Parent (other than as
\ndirected by the Company or any of its Subsidiaries or any of their respective
\ndirectors, officers, employees or Representatives) during any visit to the
\nbusiness or property sites of the Company or its Subsidiaries prior to the
\nClosing Date, whether pursuant to this Section 5.2<\/u> or otherwise. During
\nany visit to the business or property sites of the Company or any of its Company
\nSubsidiaries, Parent shall, and shall cause its affiliates, officers, directors,
\nemployees or Representatives accessing such properties to, comply with all
\napplicable laws and all of the Company’s and its Subsidiaries’ safety and
\nsecurity procedures and conduct itself in a manner that would not be reasonably
\nexpected to interfere with the operation, maintenance or repair of the assets of
\nthe Company or its Subsidiaries. Access shall be provided for site inspections
\nin accordance with the conditions and procedures of this Section 5.2<\/u>, but
\nParent’s affiliates, officers, directors, employees and Representatives shall
\nnot conduct any environmental sampling, monitoring, probing, excavation or other
\ninvasive actions.<\/p>\n<\/p>\n 44<\/p>\n \n
\n(b) The parties hereto hereby agree that all information provided to them or
\ntheir respective affiliates, officers, directors, employees and Representatives
\nin connection with this Agreement and the consummation of the Transactions shall
\nbe deemed to be “Evaluation Material” as such term is used in, and shall be
\ntreated in accordance with, the Confidentiality Agreement, dated as of July 30,
\n2010, between the Company and AES North American Development, LLC (the
\n“Confidentiality Agreement<\/u>“).<\/p>\n<\/p>\n Section 5.3 Acquisition Proposals<\/u>.<\/p>\n<\/p>\n (a) The Company agrees that neither it nor any of its Subsidiaries nor any of
\ntheir respective officers and directors shall, and that it shall use its
\nreasonable best efforts to cause its and its Subsidiaries’ respective
\nRepresentatives not to, directly or indirectly: (i) solicit, initiate, seek or
\nknowingly encourage or facilitate (including by way of furnishing information)
\nany inquiries or the making or submission of any Company Acquisition Proposal,
\n(ii) furnish any nonpublic information regarding the Company or any of its
\nSubsidiaries to any person (other than Parent or Merger Sub) in connection with
\nor in response to a Company Acquisition Proposal, (iii) engage or participate in
\nany discussions or negotiations with any person (other than Parent or Merger
\nSub) with respect to any Company Acquisition Proposal, (iv) approve, endorse or
\nrecommend any Company Acquisition Proposal or (v) enter into any letter of
\nintent, agreement in principle or other agreement providing for any Company
\nAcquisition Transaction (except as contemplated by Section
\n7.1(h)<\/u>);<\/u> provided<\/u>, however<\/u>, that this Section
\n5.3<\/u> shall not prohibit (A) the Company, or the Board of Directors of the
\nCompany, directly or indirectly through any affiliate, director, officer,
\nemployee or Representative, prior to the receipt of the Company Shareholder
\nApproval, from furnishing nonpublic information regarding the Company or any of
\nits Subsidiaries to, or entering into or participating in discussions or
\nnegotiations with, any person in response to (x) an unsolicited, written Company
\nAcquisition Proposal that the Board of Directors of the Company concludes in
\ngood faith, after consultation with its financial advisors and outside legal
\ncounsel, constitutes or could reasonably lead to a Company Superior Offer or (y)
\nan unsolicited inquiry relating to a Company Acquisition Proposal by a person
\nthat the Board of Directors of the Company determines is credible and reasonably
\ncapable of making a Company Superior Offer (an “Inquiry<\/u>“), if (1) such
\nCompany Acquisition Proposal or Inquiry did not result from a breach of this
\nSection 5.3(a)<\/u> (other than any such breach that is unintentional and
\nimmaterial in effect), (2) the Company gives to Parent the notice required by
\nSection 5.3(b)<\/u> and (3) the Company furnishes any nonpublic information
\nprovided to the maker of the Company Acquisition Proposal or Inquiry only
\npursuant to a confidentiality agreement between the Company and such person on
\nterms no less favorable to the Company than the Confidentiality Agreement
\n(provided<\/u>, that such confidentiality agreement shall not in any way
\nrestrict the Company from complying with its disclosure obligations under this
\nAgreement, including with respect to such proposal), and such furnished
\ninformation is delivered promptly to Parent (to the extent such information has
\nnot been previously furnished or made available by the Company to Parent) or (B)
\nthe Company from taking and disclosing to its shareholders a position
\ncontemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act
\nwith regard to any Company Acquisition Proposal; provided<\/u>,
\nhowever<\/u>, that compliance with such rules shall not in any way limit or
\nmodify the effect that any action taken pursuant to such rules has under any
\nother provision of this Agreement and in no event shall the Company or the
\nCompany’s Board of Directors or a committee thereof take any action that would
\nconstitute a Company Change of Recommendation in respect of a Company
\nAcquisition Proposal other than in compliance with Section 5.3(c)<\/u>.<\/p>\n<\/p>\n 45<\/p>\n \n
\n<\/p>\n(b) The Company shall promptly, and in no event later than 48 hours, after
\nits receipt of any Company Acquisition Proposal or any request for nonpublic
\ninformation relating to the Company or any of its Subsidiaries in connection
\nwith a Company Acquisition Proposal, advise Parent orally and in writing of such
\nCompany Acquisition Proposal or request, including providing the identity of the
\nperson making or submitting such Company Acquisition Proposal or request, and,
\n(x) if it is in writing, a copy of such Company Acquisition Proposal and any
\nrelated draft agreements and (y) if oral, a reasonably detailed summary of any
\nsuch Company Acquisition Proposal or request. The Company shall keep Parent
\nreasonably informed in all material respects on a prompt basis with respect to
\nthe status of, including any change to the status or material terms of, any such
\nCompany Acquisition Proposal.<\/p>\n<\/p>\n (c) Except as contemplated by this Section 5.3(c)<\/u>, neither the Board
\nof Directors of the Company nor any committee thereof shall (i) (A) withhold,
\nwithdraw, qualify or modify, or resolve to or publicly propose to withhold,
\nwithdraw, qualify or modify the Company Recommendation in a manner adverse to
\nParent, (B) following the date any Company Acquisition Proposal or any material
\nmodification thereto is first made public, sent or given to the shareholders of
\nthe Company, fail to issue a press release that expressly reaffirms the Company
\nRecommendation within five (5) business days following Parent’s written request
\nto do so (which request may only be made once with respect to any such Company
\nAcquisition Proposal and each material modification thereto) or (C) approve,
\nadopt or recommend any Company Acquisition Proposal (each such action set forth
\nin clauses (A) through (C) above being a “Company Change of
\nRecommendation<\/u>“) or (ii) approve, adopt or recommend, or publicly propose to
\napprove, adopt or recommend, a merger agreement, letter of intent, agreement in
\nprinciple, share purchase agreement, asset purchase agreement, share exchange
\nagreement, option agreement or other similar contract (other than the
\nconfidentiality agreement referred to in Section 5.3(a)<\/u>) or any tender
\noffer providing for, with respect to, or in connection with any Company
\nAcquisition Proposal. Notwithstanding the foregoing, the Board of Directors of
\nthe Company may at any time prior to receipt of the Company Shareholder
\nApproval, in respect of a Company Acquisition Proposal, (i) make a Company
\nChange of Recommendation and\/or (ii) terminate this Agreement pursuant to
\nSection 7.1(h)<\/u> of this Agreement, if and only if: (A) a Company
\nAcquisition Proposal is made to the Company by a third party, and such offer is
\nnot withdrawn; (B) the Company’s Board of Directors determines after
\nconsultation with its financial advisors and outside legal counsel that such
\noffer constitutes a Company Superior Offer and (C) the Company Board of
\nDirectors has provided to Parent five (5) business days prior written notice of
\nits intent to take such action (which notice shall include the reasonable
\ndetails regarding the cause for, and nature of, the Company Change of
\nRecommendation) and, if requested by Parent, negotiated in good faith with
\nParent during such five (5) business day period regarding revisions to this
\nAgreement which would avoid such Company Change of Recommendation and\/or
\ntermination.<\/p>\n<\/p>\n 46<\/p>\n \n
\n<\/p>\nThe Board of Directors of the Company may not, in respect of a Company
\nAcquisition Proposal, make a Company Change of Recommendation in a manner
\nadverse to Parent except in compliance in all respects with this Section
\n5.3(c)<\/u>and Section 7.1(h)<\/u>. For the avoidance of doubt, a change of the
\nCompany Recommendation to “neutral” is a Company Change of Recommendation.<\/p>\n<\/p>\n (d) As used in this Agreement:<\/p>\n<\/p>\n (i) “Company Acquisition Proposal<\/u>” shall mean any bona fide offer,
\ninquiry, proposal or indication of interest received from a third party (other
\nthan an offer, inquiry, proposal or indication of interest by a party to this
\nAgreement) relating to any Company Acquisition Transaction;<\/p>\n<\/p>\n (ii) “Company Acquisition Transaction<\/u>” shall mean any transaction or
\nseries of transactions involving: (a) any merger, consolidation, share exchange,
\nrecapitalization, business combination or similar transaction involving the
\nCompany other than the Transactions; (b) any direct or indirect acquisition of
\nsecurities, tender offer, exchange offer or other similar transaction in which a
\nperson or “Group<\/u>” (as defined in the Exchange Act) of persons directly or
\nindirectly acquires beneficial or record ownership of securities representing
\ntwenty percent (20%) or more of any class of equity securities of the Company;
\n(c) any direct or indirect acquisition of any business or businesses or of
\nassets that constitute or account for twenty percent (20%) or more of the
\nconsolidated net revenues, net income or assets of the Company and its
\nSubsidiaries, taken as a whole; or (d) any liquidation or dissolution of the
\nCompany or any of its Subsidiaries; and<\/p>\n<\/p>\n (iii) “Company Superior Offer<\/u>” shall mean a Company Acquisition
\nProposal (provided<\/u> that for purposes of this definition, references to
\ntwenty percent (20%) in the definition of Company Acquisition Transaction shall
\nbe deemed to be references to fifty percent (50%)) that the Company’s Board of
\nDirectors determines, in good faith after consultation with its financial
\nadvisors and outside legal counsel taking into account all financial, legal and
\nregulatory terms and conditions of the Company Acquisition Proposal (including
\nany conditions to and expected timing of consummation and, any risks of
\nnon-consummation of such Company Acquisition Proposal) to be more favorable to
\nthe Company and its shareholders (in their capacity as shareholders) as compared
\nto the Transactions, including the Merger, and to any alternative transaction
\n(including any modifications to the terms of this Agreement) proposed by Parent.\n<\/p>\n<\/p>\n 47<\/p>\n \n
\n<\/p>\nSection 5.4 Proxy Statement; Company Shareholders’ Meeting<\/u>.<\/p>\n<\/p>\n (a) As soon as reasonably practicable following the date of this Agreement
\n(but in no event later than 60 days), the Company shall prepare and file with
\nthe SEC the preliminary Proxy Statement. Each of the preliminary Proxy Statement
\nand the Proxy Statement will comply in all material respects with the applicable
\nrequirements of the Exchange Act and the rules and regulations thereunder. The
\nCompany will respond as promptly as practicable to any comments or requests of
\nthe SEC on the preliminary Proxy Statement and the Company shall use reasonable
\nbest efforts to cause the Proxy Statement to be mailed to the Company’s
\nshareholders, in each case as promptly as reasonably practicable after the
\nCompany learns that the Proxy Statement will not be reviewed or that the SEC
\nstaff has no further comments thereon. Each of Parent and Merger Sub shall
\nfurnish to the Company all information concerning itself that is required or
\ncustomary for inclusion in the Proxy Statement. The information provided by any
\nparty for use in or incorporation by reference in the Proxy Statement shall be
\ntrue and correct, in all material respects, at the dates mailed to the Company’s
\nshareholders and at the time of the Company Shareholders’ Meeting, without
\nomission of any material fact that is required to make such information not
\nfalse or misleading. Except for annual, quarterly and current reports filed or
\nfurnished with the SEC under the Exchange Act, which may be incorporated by
\nreference therein (but subject to Section 5.8<\/u>), no filing of, or
\namendment or supplement to the Proxy Statement will be made by the Company
\nwithout Parent’s prior consent (which shall not be unreasonably withheld,
\ndelayed or conditioned) and without providing Parent the opportunity to review
\nand comment thereon. The Company will advise Parent promptly after it receives
\noral or written notice of any oral or written request by the SEC for amendment
\nof the Proxy Statement or comments thereon and responses thereto or requests by
\nthe SEC for additional information, and will promptly provide Parent with copies
\nof any written communication from the SEC or any state securities commission. If
\nat any time prior to the Effective Time any information relating to Parent or
\nthe Company, or any of their respective affiliates, officers or directors,
\nshould be discovered by Parent or the Company which should be set forth in an
\namendment or supplement to the Proxy Statement, so that any of such documents
\nwould not include any misstatement of a material fact or omit to state any
\nmaterial fact necessary to make the statements therein, in light of the
\ncircumstances under which they were made, not misleading, the party which
\ndiscovers such information shall promptly notify the other parties hereto and an
\nappropriate amendment or supplement describing such information shall be
\npromptly filed with the SEC and, to the extent required by law, disseminated to
\nthe shareholders of the Company. No representation, covenant or agreement is
\nmade by any party hereto with respect to information supplied by any other party
\nfor inclusion on the Proxy Statement.<\/p>\n<\/p>\n 48<\/p>\n \n
\n(b) The Company shall promptly take all action necessary in accordance with
\napplicable Laws and the Company Organizational Documents to duly give notice of,
\na meeting of its shareholders to be held as promptly as practicable to consider
\nthe adoption of this Agreement and the approval of the Transactions including
\nthe Merger (the “Company Shareholders’ Meeting<\/u>“). Unless there shall have
\nbeen a Company Change of Recommendation in accordance with the terms of this
\nAgreement, the Company will, through its Board of Directors, convene and hold
\nthe Company Shareholders’ Meeting, recommend that its shareholders adopt this
\nAgreement and approve the Transactions, including the Merger, and will use
\ncommercially reasonable efforts to solicit from its shareholders proxies in
\nfavor of the adoption of this Agreement and the approval of the Transactions,
\nincluding the Merger, and to take all other action necessary or advisable to
\nsecure the vote or consent of its shareholders required by the rules of the NYSE
\nor applicable Laws to obtain such approvals.<\/p>\n<\/p>\n (c) The Company shall take all action necessary to comply timely with
\napplicable notification requirements under applicable Law in respect of any
\nCompany Benefit Plan holding Company Common Stock, including causing any Company
\nBenefit Plan administrator to issue any such notices.<\/p>\n<\/p>\n Section 5.5 Employee Matters<\/u>.<\/p>\n<\/p>\n (a) For a period of at least two (2) years following the Effective Time (the
\n“Continuation Period<\/u>“), Parent shall provide, or shall cause to be
\nprovided, to each current and former Company Employee, other than such employees
\ncovered by collective bargaining agreements, compensation and employee benefits
\n(exclusive of equity-based compensation or benefits) that are no less favorable,
\nin the aggregate, than the compensation and benefits provided to current and
\nformer Company Employees (as the case may be) immediately before the Effective
\nTime; provided<\/u>, that Parent shall be entitled to make modifications
\nthereto to the extent such modifications do not result in compensation and
\nbenefits for the Company Employees not covered by collective bargaining
\nagreements that are less favorable in the aggregate than that which is then
\nprovided to similarly situated employees of Parent not covered by collective
\nbargaining agreements; provided<\/u>, further<\/u>, that nothing herein
\nshall prohibit Parent or the Surviving Corporation from terminating the
\nemployment of any Company Employee to the extent permitted by applicable Laws;
\nand provided<\/u>, further, that, to the extent permitted by applicable Law,
\nnotwithstanding the foregoing provisions of this Section 5.5(a)<\/u>, (i)
\nduring the period beginning at the Effective Time and ending December 31, 2013,
\nParent shall cause The Dayton Power and Light Retirement Income Plan to remain
\nin effect in respect of Company Employees (exclusive of those employed subject
\nto a collective bargaining agreement) hired before January 1, 2011 and
\nparticipating therein immediately before the Effective Time on terms and
\nconditions no less favorable than those in effect immediately before the
\nEffective Time and (ii) if benefit accruals in respect of such Company Employees
\nare reduced or eliminated under The Dayton Power and Light Retirement Income
\nPlan after December 31, 2013, such Company Employees shall be fully vested in
\ntheir benefit accrued under such plan as of the effective time of such reduction
\nor elimination.<\/p>\n<\/p>\n 49<\/p>\n \n
\n(b) For purposes of vesting, eligibility to participate and accrual and level
\nof benefits under the employee benefit plans of Parent and its Subsidiaries
\nproviding benefits to any Company Employees after the Effective Time (the
\n“New Plans<\/u>“), each Company Employee shall be credited for his or her
\nyears of service with the Company and its Subsidiaries and their respective
\npredecessors before the Effective Time, to the same extent as such Company
\nEmployee was entitled, before the Effective Time, to credit for such service
\nunder any similar Company employee benefit plan in which such Company Employee
\nparticipated or was eligible to participate immediately prior to the Effective
\nTime, provided<\/u>, however<\/u>, that the foregoing shall not apply to the
\nextent that its application would result in a duplication of benefits or to
\nbenefit accrual under a defined benefit pension plan. In addition, and without
\nlimiting the generality of the foregoing, (A) Parent shall cause each Company
\nEmployee to be immediately eligible to participate, without any waiting time, in
\nany and all New Plans to the extent coverage under such New Plan is comparable
\nto a Company Benefit Plan set forth on Section 3.12(a) of the Company Disclosure
\nSchedule in which such Company Employee participated immediately before the
\nEffective Time (such plans, collectively, the “Old Plans<\/u>“) and (B) for
\npurposes of each New Plan providing medical, dental, pharmaceutical or vision
\nbenefits to any Company Employee, Parent shall cause all pre-existing condition
\nexclusions and actively-at-work requirements of such New Plan to be waived for
\nsuch employee and his or her covered dependents, unless such conditions would
\nnot have been waived under the comparable plans of the Company or its
\nSubsidiaries in which such employee participated immediately prior to the
\nEffective Time, and Parent shall cause any eligible expenses incurred by such
\nemployee and his or her covered dependents during the portion of the plan year
\nof the Old Plan ending on the date such employee’s participation in the
\ncorresponding New Plan begins to be taken into account under such New Plan for
\npurposes of satisfying all deductible, coinsurance and maximum out-of-pocket
\nrequirements applicable to such employee and his or her covered dependents for
\nthe applicable plan year as if such amounts had been paid in accordance with
\nsuch New Plan.<\/p>\n<\/p>\n (c) With respect to any employee actively employed by the Company or its
\nSubsidiaries at the Effective Time whose terms and conditions of employment are
\ngoverned by the Compact by and between the Company and Local 175, Utility
\nWorkers Union of America, AFL-CIO (the “Compact<\/u>“) (each, a
\n“Represented Employee<\/u>“), Parent agrees to honor or cause to be honored
\nthe Compact in effect as of the Effective Time and to continue all terms and
\nconditions of employment applicable to such Represented Employee under their
\nrespective collective bargaining agreements through the expiration, modification
\nor termination of such agreements in conformity with applicable Law.<\/p>\n<\/p>\n (d) The Company shall adopt a retention program for key employees prior to
\nthe Closing in accordance with Section 5.5(d) of the Company Disclosure
\nSchedule.<\/p>\n<\/p>\n (e) If and to the extent not paid by the Company prior to the Closing, Parent
\nshall, or shall cause the Surviving Corporation to, pay, when such payments
\nwould have been due in the ordinary course, to each person who, as of
\nimmediately prior to the Closing, was eligible to and participated in the
\nCompany’s annual bonus plans with respect to fiscal year 2011 (each an
\n“Eligible Company Employee<\/u>“), the amount earned and payable to such
\nEligible Company Employee for the performance period ending December 31, 2011,
\ndetermined in accordance with the individual and other performance targets
\nestablished under such plans in respect of such period, adjusted for costs
\nincurred by the Company in connection with the Transactions.<\/p>\n<\/p>\n (f) During the period beginning at the Effective Time and ending December 31,
\n2013, Parent shall cause the Company and its Subsidiaries not to implement any
\ninvoluntary workforce reductions that would result in the Company and its
\nSubsidiaries employing substantially fewer individuals in the aggregate than
\nthey employed (exclusive of officers and management employees of the Company who
\nare covered by change in control agreements) immediately before the Effective
\nTime; provided<\/u>, that, the requirements of this sentence shall not apply
\nif a material adverse effect on the Surviving Corporation or any of its
\nSubsidiaries or any of their respective material assets shall have occurred and
\nis continuing; and, provided<\/u>, further<\/u>, that, for avoidance of
\ndoubt, nothing herein shall prohibit Parent, Surviving Corporation or any of or
\ntheir respective Subsidiaries from terminating the employment of any Company
\nEmployee to the extent permitted by applicable Laws.<\/p>\n<\/p>\n 50<\/p>\n \n
\n<\/p>\nSection 5.6 Regulatory Approvals; Third-Party Consents; Reasonable Best
\nEfforts<\/u>.<\/p>\n<\/p>\n (a) Subject to the terms and conditions set forth in this Agreement, each of
\nthe parties hereto shall use its reasonable best efforts (subject to, and in
\naccordance with, applicable Law) to take promptly, or cause to be taken, all
\nactions, and to do promptly, or cause to be done, and to assist and cooperate
\nwith the other parties in doing, all things necessary, proper or advisable under
\napplicable Laws to consummate and make effective the Transactions, including (i)
\nthe obtaining of all necessary actions or nonactions, waivers, consents and
\napprovals, including the Company Approvals and the Parent Approvals, from
\nGovernmental Entities and the making of all necessary registrations and filings
\nand the taking of all steps as may be necessary to obtain an approval or waiver
\nfrom, or to avoid an action or proceeding by, any Governmental Entity, (ii) the
\nobtaining of all necessary consents, approvals or waivers from third parties,
\n(iii) the defending of any lawsuits or other legal proceedings, whether judicial
\nor administrative, challenging this Agreement or the consummation of the
\nTransactions and (iv) the execution and delivery of any additional instruments
\nnecessary to consummate the Transactions.<\/p>\n<\/p>\n (b) Subject to the terms and conditions herein provided and without limiting
\nthe foregoing, the Company and Parent shall as promptly as practicable following
\nthe date of this Agreement, but in any event within thirty (30) days, use
\nreasonable best efforts to (i) make all necessary filings and thereafter make
\nany other required submissions in respect of each of the Company Approvals and
\nthe Parent Approvals, (ii) cooperate with each other in (A) determining whether
\nany filings are required to be made with, or consents, permits, authorizations,
\nwaivers or approvals are required to be obtained from, any third parties or
\nother Governmental Entities in connection with the execution and delivery of
\nthis Agreement and the consummation of the Transactions and (B) timely making
\nall such filings and timely seeking all such consents, permits, authorizations
\nor approvals, (iii) subject to Section 5.6(d)<\/u>, take, or cause to be
\ntaken, all other actions and do, or cause to be done, all other things
\nnecessary, proper or advisable to consummate and make effective the
\nTransactions, including taking all such further action as may be necessary to
\nresolve such objections, if any, as the FERC, the United States Federal Trade
\nCommission (the “FTC<\/u>“), the PUCO, the SEC, the FCC, the Antitrust
\nDivision of the United States Department of Justice (the “DOJ<\/u>“) or
\ncompetition authorities of any other nation may assert under Regulatory Law with
\nrespect to the Transactions so as to enable the Closing to occur as soon as
\nreasonably possible (and in any event no later than the End Date), including (A)
\nproposing, negotiating, committing to and effecting, by consent decree, hold
\nseparate order or otherwise, the sale, divestiture, disposition or limitation on
\nusage of such assets or businesses of Parent or its Subsidiaries or affiliates
\nor of the Company or its Subsidiaries, (B) otherwise taking or committing to
\ntake actions that after the Closing Date would limit Parent’s or its
\nSubsidiaries’ (including the Surviving Corporation’s) or its affiliates’ freedom
\nof action with respect to, or its or their ability to retain, one or more of its
\nor its Subsidiaries’ (including the Surviving Corporation’s) businesses, product
\nlines or assets, in each case as may be required in order to avoid the entry of,
\nor to effect the dissolution of, any injunction, temporary restraining order or
\nother order in any suit or proceeding which would otherwise have the effect of
\npreventing or materially delaying the Closing, (C) taking or committing to take
\nactions to maintain the credit rating of DP&L at investment grade levels,
\n(D) accepting financial restrictions on Parent or its Subsidiaries or affiliates
\nor on the Company or its Subsidiaries and (E) accepting governance and
\noperational restrictions, including restrictions on the scope of the business of
\nParent or its Subsidiaries or affiliates or of the Company or its Subsidiaries
\nand taking or committing to take actions related to customary “ring-fencing” at
\nthe Company and (iv) subject to applicable legal limitations and the
\ninstructions of any Governmental Entity, keep each other apprised of the status
\nof matters relating to the completion of the Transactions, including promptly
\nfurnishing the other with copies of notices or other communications received by
\nthe Company or Parent, as the case may be, or any of their respective
\nSubsidiaries, from any third party or any Governmental Entity with respect to
\nthe Transactions. The Company and Parent will include in their applications
\nfiled for approval with the PUCO their intention to (i) use customary
\nring-fencing protection at the Company with respect to the Transactions and (ii)
\nreasonably provide for Company officials in Ohio related to the resolution of
\nconsumer disputes. The Company and Parent shall permit counsel for the other
\nparty reasonable opportunity to review in advance, and consider in good faith
\nthe views of the other party in connection with, any proposed written
\ncommunication to any Governmental Entity. Each of the Company and Parent agrees
\nnot to participate in any substantive meeting or discussion, either in person or
\nby telephone, with any Governmental Entity in connection with the proposed
\nTransactions unless it consults with the other party in advance and, to the
\nextent not prohibited by such Governmental Entity, gives the other party the
\nopportunity to attend and participate.<\/p>\n<\/p>\n 51<\/p>\n \n
\n<\/p>\n(c) In furtherance and not in limitation of the covenants of the parties
\ncontained in this Section 5.6<\/u>, if any administrative or judicial action
\nor proceeding, including any proceeding by a private party, is instituted (or
\nthreatened to be instituted) challenging any of the Transactions as violative of
\nany Regulatory Law, each of the Company and Parent shall (i) give the other
\nparty prompt notice of the commencement or threat of commencement of any such
\naction or proceeding by or before any Governmental Entity with respect to any of
\nthe Transactions, (ii) keep the other party informed as to the status of any
\nsuch action or proceeding or threat thereof and (iii) cooperate in all respects
\nwith each other and use their respective reasonable best efforts to contest and
\nresist any such action or proceeding and to have vacated, lifted, reversed or
\noverturned any decree, judgment, injunction or other order, whether temporary,
\npreliminary or permanent, that is in effect and that prohibits, prevents or
\nrestricts consummation of the Transactions.<\/p>\n<\/p>\n (d) Notwithstanding anything in this Agreement to the contrary, “reasonable
\nbest efforts” shall not require, any party to sell, or agree to sell, hold or
\nagree to hold separate, or otherwise dispose or agree to dispose of any asset,
\nor conduct or agree to conduct its business in any particular manner, agree to
\nor accept any condition or take any other action, as may be required to resolve
\nobjections if any, of the FERC, the FTC, the PUCO or the DOJ, in each case if
\nsuch sale, separation or disposition, agreement, conduct or action with respect
\nthereto would individually or in the aggregate reasonably be expected to have,
\n(x) for the Company, a Company Material Adverse Effect or (y) for Parent, a
\nmaterial adverse effect on the business, financial condition, assets,
\nliabilities, operations or results of operations of Parent and its Subsidiaries,
\ntaken as a whole, after giving effect to the Merger and the terms and conditions
\nof the Company Approvals and the Parent Approvals (provided that for the purpose
\nof determining whether a potential adverse effect on the Parent and its
\nSubsidiaries would constitute a material adverse effect for the purposes of this
\nSection 5.6<\/u>, Parent and its Subsidiaries, taken as a whole, shall be
\ndeemed to be a consolidated group of entities of the size and scale of a
\nhypothetical company that is 100% of the size and scale of the Company, together
\nwith each of its Subsidiaries, taken as a whole). The Company, Parent and their
\nrespective Subsidiaries will consult with each other prior to agreeing to any
\nmerger requirements sought by any regulator. Nothing in this Section 5.6<\/u>
\nshall obligate Parent or the Company or any of their respective Subsidiaries to
\ntake any action that is not conditioned on the Closing.<\/p>\n<\/p>\n 52<\/p>\n \n
\n<\/p>\n(e) Parent shall not, and shall cause its Subsidiaries not to, enter into a
\ndefinitive agreement to acquire (i) any regulated electric or gas distribution
\nutility in the State of Ohio, other than the Transactions contemplated in this
\nAgreement, that would present a material risk of materially delaying or making
\nit materially more difficult for the Parent, Merger Sub or the Company to obtain
\nthe approval of the PUCO with respect to the Transactions contemplated in this
\nAgreement, or (ii) significant electric generation assets of clearly sufficient
\nmagnitude in the relevant market, that would present a material risk of
\nmaterially delaying or making it materially more difficult for the Parent,
\nMerger Sub or the Company to obtain the approval of FERC with respect to the
\nTransactions contemplated in this Agreement (any such acquisition, a
\n“Contrary Action<\/u>“).<\/p>\n<\/p>\n (f) As used in this Agreement, “Regulatory Law<\/u>” means the Sherman Act
\nof 1890 as amended, the Clayton Antitrust Act of 1914 as amended, the HSR Act,
\nthe FPA, the Atomic Energy Act, the rules and regulations of the PUCO and all
\nother federal, state or foreign statutes, rules, regulations, orders, decrees,
\nadministrative and judicial doctrines and other Laws, including any antitrust,
\ncompetition or trade regulation Laws, that are designed or intended to (i)
\nprohibit, restrict or regulate actions having the purpose or effect of
\nmonopolization or restraint of trade or lessening competition through merger or
\nacquisition or (ii) protect the national security or the economy of any nation.\n<\/p>\n<\/p>\n Section 5.7 Takeover Statute; Shareholder Rights Plan<\/u>. If any Takeover
\nLaw may become, or may purport to be, applicable to the Transactions, each of
\nthe Company and Parent shall grant such approvals and take such actions as are
\nreasonably necessary so that the Transactions may be consummated as promptly as
\npracticable on the terms contemplated hereby and otherwise act to eliminate or
\nminimize the effects of such statute or regulation on the Transactions. If any
\ntakeover plan or agreement may become, or purport to be, applicable to the
\nTransactions, the Company shall grant such approvals and take such actions as
\nare reasonably necessary so that the Transactions may be consummated as promptly
\nas practicable on the terms contemplated hereby and otherwise act to eliminate
\nor minimize the effects of such plan or agreement on the Transactions.<\/p>\n<\/p>\n Section 5.8 Public Announcements<\/u>. Except with respect to a Company
\nChange of Recommendation or any action taken by the Company or Parent or their
\nBoards of Directors pursuant to, and in accordance with, Section 5.3<\/u> (or
\nin response thereto), so long as this Agreement is in effect, the parties shall
\nuse reasonable best efforts to consult with each other before issuing any press
\nrelease or making any public announcement relating to this Agreement or the
\nTransactions and, except for any press release or public announcement as may be
\nrequired by applicable Law, court process or any listing agreement with any
\nnational securities exchange, shall use reasonable efforts not to issue any such
\npress release or make any such public announcement without consulting the other
\nparties. Parent and the Company agree to issue a mutually acceptable initial
\njoint press release announcing this Agreement.<\/p>\n<\/p>\n 53<\/p>\n \n
\n<\/p>\nSection 5.9 Indemnification and Insurance<\/u>.<\/p>\n<\/p>\n (a) From and after the Effective Time, Parent shall cause the Surviving
\nCorporation to honor all rights to exculpation, indemnification and advancement
\nof expenses now existing in favor of the current or former directors, officers
\nor employees, as the case may be, of the Company or its Subsidiaries as provided
\nin their respective articles of incorporation or codes of regulations or other
\norganization documents or in any agreement to which the Company or any of its
\nSubsidiaries is a party, which rights shall survive the Merger and shall
\ncontinue in full force and effect to the extent permitted by Law. For a period
\nof six (6) years from the Effective Time, Parent shall cause the Surviving
\nCorporation to maintain in effect the exculpation, indemnification and
\nadvancement of expenses provisions of the Company’s and any of the Company’s
\nSubsidiaries’ articles of incorporation or codes of regulations or similar
\norganization documents in effect as of the date hereof or in any indemnification
\nagreements of the Company or its Subsidiaries with any of their respective
\ndirectors, officers or employees in effect immediately prior to the Effective
\nTime, and shall not amend, repeal or otherwise modify any such provisions in any
\nmanner that would adversely affect the rights thereunder of any individuals who
\nimmediately before the Effective Time were current or former directors, officers
\nor employees of the Company or any of its Subsidiaries; provided<\/u>,
\nhowever<\/u>, that all rights to indemnification in respect of any Action
\npending or asserted or any claim made within such period shall continue until
\nthe disposition of such Action or resolution of such claim. At the Effective
\nTime Parent assumes, becomes jointly and severally liable for, and will honor,
\nguaranty and stand surety for, and shall cause the Surviving Corporation and the
\nSubsidiaries of Parent to honor, in accordance with their respective terms, each
\nof the covenants contained in this Section 5.9<\/u> without limit as to time.\n<\/p>\n<\/p>\n (b) Without limitation to the foregoing, from and after the Effective Time,
\neach of Parent and the Surviving Corporation shall, to the fullest extent
\npermitted under applicable Law, indemnify and hold harmless (and advance funds
\nin respect of each of the foregoing) each current and former director, officer
\nand employee of the Company and any of its Subsidiaries and each person who
\nserved as a director, officer, member, trustee or fiduciary of another
\ncorporation, partnership, joint venture, trust, pension or other employee
\nbenefit plan or enterprise if such service was at the request or for the benefit
\nof the Company or any of its Subsidiaries (each, together with such person’s
\nheirs, executors or administrators, an “Indemnified Party<\/u>“) against any
\ncosts or expenses (including advancing attorneys’ fees and expenses in advance
\nof the final disposition of any claim, suit, proceeding or investigation to each
\nIndemnified Party to the fullest extent permitted by law), judgments, fines,
\nlosses, claims, damages, liabilities and amounts paid in settlement
\n(provided<\/u> that any Action may only be settled with the prior written
\nconsent of Parent, not to be unreasonably withheld) in connection with any
\nactual or threatened claim, action, suit, proceeding or investigation, whether
\ncivil, criminal, administrative or investigative (an “Action<\/u>“), arising
\nout of, relating to or in connection with any action or omission relating to
\ntheir position with the Company or its Subsidiaries occurring or alleged to have
\noccurred before or at the Effective Time (including acts or omissions in
\nconnection with such persons approving this Agreement and the transactions
\ncontemplated hereby and serving as an officer, director or other fiduciary in
\nany entity if such service was at the request or for the benefit of the
\nCompany). In the event of any such Action, (i) the Indemnified Party shall have
\nthe right to select its own counsel, which counsel shall be reasonably
\nsatisfactory to the Surviving Corporation, and (ii) any determination required
\nto be made with respect to whether an Indemnified Party’s conduct complies with
\nthe standards set forth under the business corporation law of the Surviving
\nCorporation’s state of incorporation and the certificate of incorporation or
\nby-laws of the Surviving Corporation shall be made by independent counsel
\nmutually acceptable to the Surviving Corporation and the Indemnified Party. The
\nIndemnified Parties as a group may retain only one law firm with respect to each
\nrelated matter except to the extent there is, in the opinion of counsel to an
\nIndemnified Party, under applicable standards of professional conduct, a
\nconflict on any significant issue between positions of such Indemnified Party
\nand any other Indemnified Party or Indemnified Parties. Parent and the Surviving
\nCorporation shall each cooperate with the Indemnified Party in the defense of
\nany such Action.<\/p>\n<\/p>\n 54<\/p>\n \n
\n<\/p>\n(c) For a period of six (6) years from the Effective Time, Parent shall cause
\nto be maintained (on terms and conditions no less advantageous to the
\nindemnified parties) in effect the coverage provided by the policies of
\ndirectors’ and officers’ liability insurance and fiduciary liability insurance
\nin effect as of the Closing Date maintained by the Company and its Subsidiaries
\nwith respect to matters arising on or before the Effective Time either through
\nthe Company’s existing insurance provider or another provider reasonably
\nselected by Parent; provided<\/u>, however<\/u>, that, after the Effective
\nTime, Parent shall not be required to pay annual premiums in excess of 250% of
\nthe last annual premium paid by the Company prior to the date hereof in respect
\nof the coverage required to be obtained pursuant hereto, but in such case shall
\npurchase as much coverage as reasonably practicable for such amount;
\nprovided<\/u> further<\/u>, however<\/u>, that in lieu of the foregoing
\ninsurance coverage, Parent may direct the Company to purchase “tail” insurance
\ncoverage (on terms and conditions no less advantageous to the indemnified
\nparties), at a cost no greater than the aggregate amount which the Surviving
\nCorporation would be permitted to spend during the six-year period provided for
\nin this Section 5.9(c)<\/u>, that provides coverage no materially less
\nfavorable than the coverage described above.<\/p>\n<\/p>\n (d) Parent shall cause the Surviving Corporation to pay all reasonable
\nexpenses, including reasonable attorneys’ fees, that may be incurred by any
\nIndemnified Party in enforcing the indemnity and other obligations provided in
\nthis Section 5.9<\/u>.<\/p>\n<\/p>\n (e) The rights of each Indemnified Party hereunder shall be in addition to,
\nand not in limitation of, any other rights such Indemnified Party may have under
\nthe articles of restatement or bylaws or other organization documents of the
\nCompany or any of its Subsidiaries or the Surviving Corporation, any other
\nindemnification arrangement, the OGCL or otherwise. The provisions of this
\nSection 5.9<\/u> shall survive the consummation of the Merger and expressly
\nare intended to benefit, and are enforceable by, each of the Indemnified
\nParties.<\/p>\n<\/p>\n (f) In the event that the Surviving Corporation or any of its respective
\nsuccessors or assigns (i) consolidates with or merges into any other person and
\nshall not be the continuing or surviving corporation or entity in such
\nconsolidation or merger or (ii) transfers all or substantially all of its
\nproperties and assets to any person, then, and in either such case, proper
\nprovision shall be made so that the successors and assigns of the Surviving
\nCorporation shall assume the obligations set forth in this Section 5.9<\/u>.\n<\/p>\n<\/p>\n 55<\/p>\n \n
\n<\/p>\nSection 5.10 Control of Operations<\/u>. Without in any way limiting any
\nparty’s rights or obligations under this Agreement, the parties understand and
\nagree that (i) nothing contained in this Agreement shall give Parent, directly
\nor indirectly, the right to control or direct the Company’s operations prior to
\nthe Effective Time and (ii) prior to the Effective Time, the Company shall
\nexercise, consistent with the terms and conditions of this Agreement, complete
\ncontrol and supervision over its operations.<\/p>\n<\/p>\n Section 5.11 Transition Committee<\/u>. On or following the date hereof,
\nthe Company and Parent shall form a transition committee (“Transition
\nCommittee<\/u>“) comprised of three members appointed by Parent and two members
\nappointed by the Company, which Transition Committee shall be tasked with
\nmonitoring compliance with the terms of this Agreement, liaising with the
\nCompany’s management team regarding the Transactions and making recommendations
\nto the parties with respect to certain decisions that may be required in advance
\nof the Closing. The Transition Committee will meet as often as its members deem
\nis necessary (but in any event at least two times per month) and upon the call
\nof either party. The Transition Committee will have access, consistent with the
\nterms of this Agreement, to Company personnel and records; provided<\/u>,
\nhowever<\/u>, that the Transition Committee will neither direct nor interfere
\nwith the day to day management or operations of the business of the Company.<\/p>\n<\/p>\n Section 5.12 Notification of Certain Matters; Shareholder Litigation<\/u>.\n<\/p>\n<\/p>\n (a) Each of the Company and Parent shall give prompt written notice to the
\nother (and will subsequently keep the other informed on a current basis of any
\ndevelopments related to such notice) upon its becoming aware of the occurrence
\nor existence of any fact, event or circumstance that is reasonably likely to
\nresult in any of the conditions set forth in Article VI<\/u> not being able to
\nbe satisfied prior to the End Date.<\/p>\n<\/p>\n (b) Prior to the Effective Time, the Company shall give prompt notice to
\nParent, of any actions, suits, claims or proceedings commenced or, to the
\nknowledge of the Company, threatened against the Company or its Subsidiaries
\nwhich relate to this Agreement and the Transactions. The Company shall give
\nParent the opportunity to participate in the defense and settlement of any
\nshareholder litigation against the Company and\/or its directors relating to this
\nAgreement and the Transactions, and no such settlement shall be agreed to
\nwithout Parent’s prior written consent (which shall not be unreasonably
\nwithheld, conditioned or delayed).<\/p>\n<\/p>\n 56<\/p>\n \n
\n<\/p>\nSection 5.13 Financing<\/u>.<\/p>\n<\/p>\n (a) The Company shall, and shall cause its Subsidiaries to, at the sole
\nexpense of the Parent use its and their reasonable best efforts to provide such
\ncooperation as may be reasonably requested by the Parent in connection with the
\nfinancing of the Transactions, if any, including using reasonable best efforts
\nto (i) cause appropriate officers and employees to be available, on a customary
\nand reasonable basis and upon reasonable notice, to meet with ratings agencies
\nand prospective lenders and investors in presentations, meetings, road shows and
\ndue diligence sessions, (ii) provide reasonable assistance with the preparation
\nof any ratings presentations, information memos, offering memoranda or other
\nmarketing and disclosure documents and customary information in connection
\ntherewith, including the preparation of appropriate discussions of business,
\nfinancial statements, pro forma financials, projections, management discussion
\nand analysis, and other customary financial data of the Company and its
\nSubsidiaries, all for use in connection therewith and an audit of the financial
\nstatements in accordance with GAAP and applicable Law by independent certified
\npublic accountants, (iii) provide any financing sources with reasonable access
\nto the properties, books and records of the Company and its Subsidiaries,
\nexecute and deliver any customary certificates, authorization letters, pledge or
\nsecurity documents or other customary definitive financing documents and related
\ndocuments and certificates as may be reasonably requested by the Parent and (iv)
\ndirect its independent accountants and counsel to provide customary and
\nreasonable assistance to the Parent including in connection with providing
\ncustomary comfort letters and opinions of counsel; provided<\/u>, that the
\nactions contemplated in the foregoing clauses (i) through (iv) do not (A)
\nunreasonably interfere with the ongoing operations of the Company or any of its
\nSubsidiaries, (B) cause any representation or warranty in this Agreement to be
\nbreached, (C) cause any condition to Closing set forth in Article VI<\/u> to
\nfail to be satisfied or otherwise cause any breach of this Agreement, (D)
\nrequire the Company or any of its Subsidiaries to pay any out-of-pocket fees or
\nexpenses prior to the Closing that are not promptly reimbursed by the Parent as
\nset forth in Section 5.13(b)<\/u>, (E) involve any binding commitment by the
\nCompany or any of its Subsidiaries which commitment is not conditioned on the
\nClosing and does not terminate without liability to the Company or any of its
\nSubsidiaries upon the termination of this Agreement or (F) cause any director,
\nofficer or employee of the Company or any of its Subsidiaries to incur any
\npersonal liability.<\/p>\n<\/p>\n (b) Parent shall promptly, upon request by the Company, reimburse the Company
\nfor all reasonable out-of-pocket costs and expenses (including reasonable
\nattorneys’ fees) incurred by the Company or any of its Subsidiaries in
\nconnection with the cooperation of the Company and its Subsidiaries contemplated
\nby Section 5.13(a)<\/u> and shall indemnify and hold harmless the Company, its
\nSubsidiaries and their respective Representatives from and against any and all
\nlosses suffered or incurred by any of them in connection with the arrangement of
\nfinancing and any information used in connection therewith. The provisions of
\nthis Section 5.13(b)<\/u> shall survive (i) any termination of this Agreement
\npursuant to Article VII<\/u> and (ii) the consummation of the Merger, and are
\nexpressly intended to benefit, and are enforceable by, the Company, its
\nSubsidiaries and their respective Representatives.<\/p>\n<\/p>\n (c) Notwithstanding anything contained in this Agreement to the contrary, the
\nParent expressly acknowledges and agrees that the Parent’s and Merger Sub’s
\nobligations hereunder are not conditioned in any manner upon the Parent or
\nMerger Sub obtaining any financing. The failure, for any reason, of the Parent
\nand the Merger Sub to have sufficient cash available on the Closing Date to pay
\nthe Merger Consideration in accordance with Article II<\/u> hereof and\/or the
\nfailure to so pay the Merger Consideration on the Closing Date shall constitute
\na willful and material breach of this Agreement.<\/p>\n<\/p>\n Section 5.14 Company’s Credit Facilities and Maturing Debt<\/u>.<\/p>\n<\/p>\n (a) Prior to the Closing, the Company shall use its reasonable best efforts
\nto obtain consents or waivers from the lenders with respect to credit facilities
\nand letter of credit facilities of the Company and any of its Subsidiaries
\ncontaining change in control provisions so as to permit the consummation of the
\nMerger; provided<\/u>, however<\/u>, that the Company shall not be required
\nto make any payment in connection with securing such consents or waivers unless
\nParent agrees to make any such payment on behalf of the Company.<\/p>\n<\/p>\n 57<\/p>\n \n
\n<\/p>\n(b) Prior to Closing, the Company or the relevant Subsidiary of the Company
\nshall use their respective commercially reasonable efforts (including offering
\nthe lenders who commit to any refinancing of credit facilities or other
\noutstanding indebtedness contemplated by Section 5.14(b) of the Company
\nDisclosure Schedule the opportunity to be underwriters in any such refinancing)
\nto take or cause to be taken the actions set forth on Section 5.14(b) of the
\nCompany Disclosure Schedule; provided<\/u>, that the Company or the relevant
\nSubsidiary of the Company may only amend, restate or refinance a credit facility
\nor other outstanding indebtedness pursuant to this Section 5.14(b)<\/u> after
\ngiving Parent a reasonable opportunity to review in advance the terms of such
\namendment, restatement or refinancing and considering in good faith Parent’s
\nreasonable views of such terms. The Company shall keep Parent reasonably
\ninformed in all material respects on a reasonably prompt basis with respect to
\nthe status of, including any change to the status or material terms of, the
\nactions set forth on Section 5.14(b) of the Company Disclosure Schedule. In
\nconnection with taking the actions set forth on Section 5.14(b) of the Company
\nDisclosure Schedule, the Company or the relevant Subsidiary of the Company
\nshall, in connection with any amendment, restatement or refinancing, use its
\nreasonable best efforts to concurrently secure, in a form reasonably acceptable
\nto Parent, fully executed consents, waivers or other approvals from sufficient
\nlenders under each such amended, restated or refinanced credit facility or other
\noutstanding indebtedness, such that the Transactions will not cause, and will
\nnot have the effect of causing, any change of control, put, call, acceleration,
\ndefault, event of default, termination event or other similar consequence under
\nany such amended, restated or refinanced credit facility or other outstanding
\nindebtedness; provided<\/u>, that the Company shall not be required to make
\nany payment in connection with securing such consents or waivers unless Parent
\nagrees to make any such payment on behalf of the Company.<\/p>\n<\/p>\n Section 5.15 Corporate Offices<\/u>. The Surviving Corporation shall cause
\nto maintain the Company’s and DP&L’s operating headquarters in the Dayton,
\nOhio area for a period of at least two (2) years following the Merger (unless
\nrequired to relocate such headquarters as a result of a decision issued by the
\nPUCO or other Governmental Entity).<\/p>\n<\/p>\n Section 5.16 Corporate Name<\/u>. The Surviving Corporation shall (i) cause
\nDP&L to maintain the name “The Dayton Power and Light Company” and (ii)
\ncause DP&L to maintain local decision-making authority in each case for a
\nperiod of at least two (2) years following the Merger (unless required to change
\nany such name as a result of a decision issued by the PUCO or other Governmental
\nEntity).<\/p>\n<\/p>\n Section 5.17 Corporate Contributions<\/u>. After the Effective Time and for
\na period of two (2) years thereafter, the Surviving Corporation shall cause
\nDP&L to provide corporate contributions and community support in the Dayton,
\nOhio area at levels substantially consistent with the levels of charitable
\ncontributions and community support provided by the Company and its Subsidiaries
\nin such region as set forth in the Company’s budget for 2011, the amount of
\nwhich has been previously disclosed to Parent.<\/p>\n<\/p>\n 58<\/p>\n \n
\n<\/p>\nSection 5.18 Parent and Merger Sub Additional Agreements<\/u>.<\/p>\n<\/p>\n (a) Without the prior consent of the Company (which shall not be unreasonably
\nwithheld, conditioned or delayed), Parent and Merger Sub shall not, and shall
\nnot permit their respective Subsidiaries to, enter into or amend any contract,
\nor take any other action, if such contract, amendment of a contract or action
\nwould reasonably be expected to prevent or materially impede, interfere with,
\nhinder or delay the consummation of the Merger or the Transactions.<\/p>\n<\/p>\n (b) Parent hereby guarantees the due, prompt and faithful payment,
\nperformance and discharge by Merger Sub of, and the compliance by Merger Sub
\nwith, all of the covenants, agreements, obligations and undertakings of Merger
\nSub under this Agreement in accordance with the terms of this Agreement, and
\ncovenants and agrees to take all actions necessary or advisable to ensure such
\npayment, performance and discharge by Merger Sub hereunder. Parent shall or
\nshall cause its Subsidiaries to, promptly following execution of this Agreement,
\napprove and adopt this Agreement in its capacity as sole shareholder of Merger
\nSub and deliver to the Company evidence of its vote or action by written consent
\napproving and adopting this Agreement in accordance with applicable Law and the
\narticles of incorporation and code of regulations of Merger Sub.<\/p>\n<\/p>\n ARTICLE VI<\/strong><\/p>\n\n CONDITIONS TO THE MERGER<\/u><\/strong><\/p>\n\n Section 6.1 Conditions to Each Party’s Obligation to Effect the
\nMerger<\/u>. The respective obligations of each party to effect the Merger shall
\nbe subject to the fulfillment (or waiver by all parties) at or prior to the
\nEffective Time of the following conditions:<\/p>\n<\/p>\n (a) The Company Shareholder Approval shall have been obtained.<\/p>\n<\/p>\n (b) No (i) temporary restraining order or preliminary or permanent injunction
\nor other order by any Federal or state court or other tribunal of competent
\njurisdiction preventing consummation of the Merger or (ii) applicable Federal or
\nstate law prohibiting consummation of the Merger (collectively,
\n“Restraints<\/u>“) shall be in effect.<\/p>\n<\/p>\n (c) The FERC Approval and an order of the PUCO approving, or determining that
\nno approval is required, shall have been obtained, the expiration of the waiting
\nperiod required under the HSR Act shall have occurred (all such permits,
\napprovals, filings and consents and the lapse of such waiting period being
\nreferred to as the “Requisite Regulatory Approvals<\/u>“), and all such
\nRequisite Regulatory Approvals shall be in full force and effect.<\/p>\n<\/p>\n Section 6.2 Conditions to Obligation of the Company to Effect the
\nMerger<\/u>. The obligation of the Company to effect the Merger is further
\nsubject to the fulfillment of, or the waiver by the Company on or prior to the
\nEffective Time of, the following conditions:<\/p>\n<\/p>\n (a) The representations and warranties of Parent and Merger Sub set forth
\nherein shall be true and correct both when made and at and as of the Effective
\nTime, as if made at and as of such time (except to the extent expressly made as
\nof an earlier date, in which case as of such date), except where the failure of
\nsuch representations and warranties to be so true and correct (without giving
\neffect to any limitation as to “materiality” or “Parent Material Adverse Effect”
\nset forth therein) does not have, and would not reasonably be expected to have,
\nindividually or in the aggregate, a Parent Material Adverse Effect.<\/p>\n<\/p>\n 59<\/p>\n \n
\n<\/p>\n(b) Each of Parent and Merger Sub shall have in all material respects
\nperformed all obligations and complied with all covenants required by this
\nAgreement to be performed or complied with by it prior to the Effective Time.\n<\/p>\n<\/p>\n (c) Parent shall have delivered to the Company a certificate, dated the
\nClosing Date and signed by its Chief Executive Officer or Chief Financial
\nOfficer, certifying to the effect that the conditions set forth in Sections
\n6.2(a)<\/u> and 6.2(b)<\/u> have been satisfied.<\/p>\n<\/p>\n Section 6.3 Conditions to Obligation of Parent to Effect the Merger<\/u>.
\nThe obligation of Parent and Merger Sub to effect the Merger is further subject
\nto the fulfillment of, or the waiver by the Parent on or prior to the Initial
\nDate or Effective Time (as the case may be) of, the following conditions:<\/p>\n<\/p>\n (a) The representations and warranties of the Company set forth herein (i)
\nwith respect to Section 3.2(a)<\/u>, Section 3.3(a)<\/u>, Section
\n3.23<\/u> and Section 3.24<\/u> shall be true and correct both when made and at
\nand as of the Initial Date, as if made at and as of such time (except to the
\nextent expressly made as of an earlier date, in which case as of such date), in
\nall respects (except in the case of Section 3.2(a)<\/u> for such inaccuracies
\nas are de minimis<\/em> in the aggregate) and (ii) with respect to all other
\nrepresentations and warranties shall be true and correct both when made and at
\nand as of the Initial Date, as if made at and as of such time (except to the
\nextent expressly made as of an earlier date, in which case as of such date),
\nexcept in the case of clause (ii) where the failure of such representations and
\nwarranties to be so true and correct (without giving effect to any limitation as
\nto “materiality” or “Company Material Adverse Effect” set forth therein) does
\nnot have, and would not reasonably be expected to have, individually or in the
\naggregate, a Company Material Adverse Effect.<\/p>\n<\/p>\n(b) The Company shall have in all material respects performed all obligations
\nand complied with all covenants required by this Agreement to be performed or
\ncomplied with by it prior to the Effective Time.<\/p>\n<\/p>\n (c) A Company Material Adverse Effect shall not have occurred, since the date
\nhereof to the Initial Date.<\/p>\n<\/p>\n (d) The Company shall have delivered to Parent a certificate, dated the
\nClosing Date and signed by its Chief Executive Officer or Chief Financial
\nOfficer, certifying to the effect that the conditions set forth in Sections
\n6.3(a)<\/u>, 6.3(b)<\/u>, and 6.3(c)<\/u> have been satisfied.<\/p>\n<\/p>\n 60<\/p>\n \n
\n<\/p>\n(e) (i) the Company Approvals and the Parent Approvals shall have been
\nobtained (including, in each case, the expiration or termination of the waiting
\nperiods (and any extensions thereof) under the HSR Act applicable to the
\nTransactions, including the Merger) at or prior to the Effective Time, and such
\napprovals shall have become Final Orders and (ii) such Final Orders of the FERC,
\nthe FTC, the DOJ or the PUCO shall not impose terms or conditions that would
\nindividually or in the aggregate reasonably be expected to have, (x) for the
\nCompany, a Company Material Adverse Effect or, (y) for Parent, a material
\nadverse effect on the business, financial condition, assets, liabilities,
\noperations or results of operations of Parent and its Subsidiaries, taken as a
\nwhole, after giving effect to the Merger and the terms and conditions of the
\nCompany Approvals and the Parent Approvals (provided that for the purpose of
\ndetermining whether a potential adverse effect on the Parent and its
\nSubsidiaries would constitute a material adverse effect for the purposes of this
\nSection 6.3<\/u>, Parent and its Subsidiaries, taken as a whole, shall be
\ndeemed to be a consolidated group of entities of the size and scale of a
\nhypothetical company that is 100% of the size and scale of the Company, together
\nwith each of its Subsidiaries, taken as a whole). “Final Order<\/u>” means
\naction by the relevant Governmental Entity that has not been reversed, stayed,
\nenjoined, set aside, annulled or suspended, with respect to which any waiting
\nperiod prescribed by Law before the Transactions may be consummated (a
\n“Final Order Waiting Period<\/u>“) has expired and as to which all conditions
\nto the consummation of the Transactions prescribed by Law, regulation or order
\nrequired to be satisfied at or prior to the Effective Time have been satisfied.\n<\/p>\n<\/p>\n Section 6.4 Frustration of Closing Conditions<\/u>. Neither the Company nor
\nParent may rely, as a basis either for not consummating the Transactions,
\nincluding the Merger, or terminating this Agreement and abandoning the
\nTransactions, including the Merger, on the failure of any condition set forth in
\nSection(s) 6.1<\/u>, 6.2<\/u> or 6.3<\/u>, as the case may be, to be
\nsatisfied if such failure was caused by such party’s material breach of any
\nmaterial provision of this Agreement or failure to use its reasonable best
\nefforts to consummate the Transactions, including the Merger, as required by and
\nsubject to Section 5.6<\/u>.<\/p>\n<\/p>\n ARTICLE VII<\/strong><\/p>\n\n TERMINATION<\/u><\/strong><\/p>\n\n Section 7.1 Termination or Abandonment<\/u>. Notwithstanding anything in
\nthis Agreement to the contrary, this Agreement may be terminated and abandoned
\nat any time prior to the Effective Time, whether before or after any approval of
\nthe matters presented in connection with the Merger by the shareholders of the
\nCompany:<\/p>\n<\/p>\n (a) by the mutual written consent of the Company and Parent;<\/p>\n<\/p>\n (b) by either Parent or the Company if the Merger shall not have been
\nconsummated on or prior to the twelve (12) month anniversary of the date hereof
\n(the “End Date<\/u>“), provided<\/u>, however<\/u>, that if all of the
\nconditions to Closing shall have been satisfied or shall be then capable of
\nbeing satisfied (other than the conditions set forth in Section 6.1(b)<\/u>
\nand Section 6.3(e)<\/u>), the End Date may be extended by Parent or the
\nCompany from time to time by written notice to the other party up to a date not
\nbeyond an additional three (3) months after the original End Date, the latest of
\nany of which dates shall thereafter be deemed to be the End Date; and if the End
\nDate (as it may be extended pursuant to this Section 7.1(b)<\/u> shall occur
\nduring any Final Order Waiting Period, the End Date shall be extended until the
\ntwentieth (20th) business day after the expiration of such Final Order Waiting
\nPeriod); provided<\/u>, further<\/u>, that the right to terminate this
\nAgreement pursuant to this Section 7.1(b)<\/u> shall not be available to a
\nparty if the failure of the Closing to occur by such date shall be due to the
\nfailure of such party to perform or comply in all material respects with the
\ncovenants and agreements of such party set forth in this Agreement, which in the
\ncase of Parent, shall include any Contrary Action by Parent or any of its
\nSubsidiaries;<\/p>\n<\/p>\n 61<\/p>\n \n
\n<\/p>\n(c) by either the Company or Parent if any Restraint having any of the
\neffects set forth in Section 6.1(b)<\/u> shall be in effect and shall have
\nbecome final and nonappealable; provided<\/u>, that the party seeking to
\nterminate this Agreement pursuant to this Section 7.1(c)<\/u> shall have used
\nits reasonable best efforts to prevent the entry of and to remove such
\nRestraint;<\/p>\n<\/p>\n (d) by either the Company or Parent if the Company Shareholders’ Meeting
\n(including any adjournments or postponements thereof) shall have concluded and
\nthe Company Shareholder Approval contemplated by this Agreement shall not have
\nbeen obtained; provided<\/u>, however<\/u>, that the right to terminate
\nunder this Section 7.1(d)<\/u> shall not be available to the Company where the
\nfailure to obtain the Company Shareholder Approval shall have been caused by or
\nrelated to the Company’s material breach of this Agreement;<\/p>\n<\/p>\n (e) by the Company, if Parent shall have breached or failed to perform in any
\nmaterial respect any of its representations, warranties, covenants or other
\nagreements contained in this Agreement, which breach or failure to perform (i)
\nwould result in a failure of a condition set forth in Section 6.1<\/u> or
\nSection 6.2<\/u> and (ii) is not cured within thirty (30) days of receipt of
\nthe written notice contemplated by the proviso below in this Section
\n7.1(e)<\/u> or cannot be cured by the End Date, provided<\/u>, that the Company
\nshall have given Parent written notice, delivered at least thirty (30) days
\nprior to such termination (but no later than the expected Closing Date), stating
\nthe Company’s intention to terminate this Agreement pursuant to this Section
\n7.1(e)<\/u> and the basis for such termination;<\/p>\n<\/p>\n (f) by Parent, if the Company shall have breached or failed to perform in any
\nmaterial respect any of its representations, warranties, covenants or other
\nagreements contained in this Agreement, which breach or failure to perform (i)
\nwould result in a failure of a condition set forth in Section 6.1<\/u> or
\nSection 6.3<\/u> and (ii) is not cured within thirty (30) days of receipt of
\nthe written notice contemplated by the proviso below in this Section
\n7.1(f)<\/u> or cannot be cured by the End Date, provided<\/u>, that Parent
\nshall have given the Company written notice, delivered at least thirty (30) days
\nprior to such termination (but no later than the expected Closing Date), stating
\nParent’s intention to terminate this Agreement pursuant to this Section
\n7.1(f)<\/u> and the basis for such termination;<\/p>\n<\/p>\n (g) by Parent, in the event that the Company or any of its Subsidiaries or
\ntheir respective directors or officers shall have breached in any material
\nrespect adverse to Parent any of their respective obligations under Section
\n5.3<\/u>;<\/p>\n<\/p>\n (h) by the Company, at any time prior to obtaining the Company Shareholder
\nApproval, in order to enter into a written definitive agreement for a Company
\nSuperior Offer, if the Company has complied with its obligations under
\nSection 5.3(c)<\/u>; provided<\/u>, however<\/u>, that any such purported
\ntermination by the Company pursuant to this Section 7.1(h)<\/u> shall be void
\nand of no force or effect unless the Company pays to Parent the Company
\nTermination Fee in accordance with Section 7.2<\/u>; and<\/p>\n<\/p>\n 62<\/p>\n \n
\n<\/p>\n(i) by Parent, if there has been a Company Change of Recommendation.<\/p>\n<\/p>\n In the event of termination of this Agreement pursuant to this Section
\n7.1<\/u>, this Agreement shall terminate (except for the provisions of
\nSections 5.13(b)<\/u>, 7.2<\/u>, 8.2<\/u>, 8.4<\/u>, 8.5<\/u> and
\n8.6<\/u>), and there shall be no other liability on the part of the Company or
\nParent to the other except under such provisions, or for liability arising out
\nof fraud or intentional or material breach of this Agreement or as provided for
\nin the Confidentiality Agreement, in which case the aggrieved party shall be
\nentitled to all rights and remedies available at law or in equity.<\/p>\n<\/p>\n Section 7.2 Effect of Termination<\/u>.<\/p>\n<\/p>\n (a) Parent and the Company agree that (i) if this Agreement is terminated by
\n(A) Parent pursuant to Section 7.1(g)<\/u> or Section 7.1(i)<\/u> or (B) the
\nCompany pursuant to Section 7.1(h)<\/u> or (ii) (A) if this Agreement is
\nterminated by Parent pursuant to Section 7.1(f)<\/u> and the breach or other
\ncircumstance giving rise to such termination was willful, or by the Company or
\nParent pursuant to Section 7.1(b)<\/u> or Section 7.1(d)<\/u>, (B) prior to
\nany such termination, any person (other than Parent or its affiliates) shall
\nhave made a Company Acquisition Proposal which shall have been publicly
\nannounced or disclosed (or any person shall have publicly announced a bona fide
\nintention, whether or not conditional, to make a Company Acquisition Proposal)
\nand (C) within twelve (12) months after such termination of this Agreement, the
\nCompany shall have entered into an agreement to consummate, or shall have
\nconsummated, a Company Acquisition Transaction, then the Company shall pay to
\nParent the Company Termination Fee. Any Company Termination Fee shall be paid to
\nParent by the Company in immediately available funds (x) upon termination of
\nthis Agreement in the case of a termination pursuant to clause (i)(B) above, (y)
\nwithin five (5) business days after termination in the case of a termination
\npursuant to clause (i)(A) above and (z) upon the execution of or entrance into a
\ndefinitive agreement with respect to a Company Acquisition Transaction in the
\ncase of a termination pursuant to clause (ii) above.<\/p>\n<\/p>\n (b) As used in this Agreement, “Company Termination Fee<\/u>” shall mean
\n$106,000,000; provided<\/u>, however<\/u>, that (i) if this Agreement is
\nterminated by the Company pursuant to Section 7.1(h)<\/u> in connection with
\nthe execution by the Company of a written definitive agreement for a Company
\nSuperior Offer with an Excluded Party, the “Company Termination Fee<\/u>”
\nshall mean $53,000,000. “Excluded Party<\/u>” means a person from whom the
\nCompany received during the period commencing on the date of this Agreement and
\nending at 11:59 p.m., New York time, on the thirtieth (30th) day following the
\ndate of this Agreement (the “Initial Period<\/u>“), an unsolicited written
\nCompany Acquisition Proposal that the Board of Directors of the Company
\nconcluded in good faith during the 48-hour period commencing upon the expiration
\nof the Initial Period, after consultation with its financial and outside legal
\ncounsel, constitutes or could reasonably lead to a Company Superior Proposal and
\npromptly provides written notification to Parent of the same; provided<\/u>
\nthat a person that is an Excluded Party shall cease to be an Excluded Party upon
\nthe earliest of: (A) 11:59 p.m. on the date that is fifteen (15) days after the
\nexpiration of the Initial Period; (B) the withdrawal, termination or expiration
\nof such Company Acquisition Proposal; or (C) the time as of which such Company
\nAcquisition Proposal, as determined by the Board of Directors of the Company in
\nits sole discretion, no longer constitutes, or could not reasonably lead to a
\nCompany Superior Offer.<\/p>\n<\/p>\n 63<\/p>\n \n
\n<\/p>\n(c) Upon payment of the Company Termination Fee in accordance with this
\nSection 7.2<\/u>, the Company shall have no further liability to the Parent or
\nits shareholders with respect to this Agreement or the Transactions;
\nprovided<\/u>, that nothing herein shall release any party from liability for
\nintentional breach or fraud. The parties acknowledge and agree that in no event
\nshall the Company be required to pay the Company Termination Fee on more than
\none occasion.<\/p>\n<\/p>\n ARTICLE VIII<\/strong><\/p>\n\n MISCELLANEOUS<\/u><\/strong><\/p>\n\n Section 8.1 Survival<\/u>. The parties agree that the terms of the
\nConfidentiality Agreement shall survive any termination of this Agreement
\npursuant to Article VII<\/u> and, in the event of the termination of this
\nAgreement pursuant to Article VII<\/u>, all references to “the date hereof” in
\nthe Confidentiality Agreement shall be deemed to be the date of such
\ntermination. None of the representations, warranties, covenants and agreements
\nin this Agreement or in any certificate, document or instrument delivered
\npursuant to this Agreement shall survive the Effective Time, except for
\ncovenants and agreements which contemplate performance after the Effective Time
\nor otherwise expressly by their terms survive the Effective Time.<\/p>\n<\/p>\n Section 8.2 Expenses<\/u>. Whether or not the Merger is consummated, all
\ncosts and expenses incurred in connection with the Merger, this Agreement and
\nthe Transactions shall be paid by the party incurring or required to incur such
\nexpenses.<\/p>\n<\/p>\n Section 8.3 Counterparts; Effectiveness<\/u>. This Agreement may be
\nexecuted in two or more counterparts (including by facsimile), each of which
\nshall be an original, with the same effect as if the signatures thereto and
\nhereto were upon the same instrument, and shall become effective when one or
\nmore counterparts have been signed by each of the parties and delivered (by
\ntelecopy or otherwise) to the other parties.<\/p>\n<\/p>\n Section 8.4 Governing Law<\/u>. This Agreement shall be governed by and
\nconstrued in accordance with (a) the Laws of the State of Ohio with respect to
\nmatters, issues and questions relating to the Merger or the duties of the Board
\nof Directors of the Company or Merger Sub, (b) the Laws of the State of Delaware
\nwith respect to matters, issues and questions relating to the fiduciary duties
\nof the Board of Directors of Parent and (c) the Laws of the State of New York
\nwith respect to all other matters, issues and questions, without giving effect
\nto any choice or conflict of law provision or rule (whether of the State of New
\nYork or any other jurisdiction) that would cause the application of the Laws of
\nany jurisdiction other than the State of New York.<\/p>\n<\/p>\n 64<\/p>\n \n
\n<\/p>\nSection 8.5 Jurisdiction; Specific Enforcement<\/u>.<\/p>\n<\/p>\n (a) The parties agree that irreparable damage would occur in the event that
\nany of the provisions of this Agreement were not performed, or were threatened
\nto be not performed, in accordance with their specific terms or were otherwise
\nbreached. It is accordingly agreed that, in addition to any other remedy that
\nmay be available to it, including monetary damages, each of the parties shall be
\nentitled to an injunction or injunctions to prevent breaches of this Agreement
\nand to enforce specifically the terms and provisions of this Agreement
\nexclusively in the Federal court located in the Borough of Manhattan in the City
\nof New York. Without limitation of the foregoing and notwithstanding anything in
\nthis Agreement to the contrary, the parties hereby further acknowledge and agree
\nthat prior to the Closing, in addition to any other remedy that may be available
\nto it, including monetary damages, Parent shall be entitled to specific
\nperformance to enforce specifically the terms and provisions of, and to prevent
\nor cure breaches of, Section 5.6<\/u> and the Company shall be entitled to
\nspecific performance, (i) to enforce specifically the terms and provisions of,
\nand to prevent or cure breaches of, Section 5.6<\/u>, and (ii) if (a) all
\nconditions in Section 6.1<\/u> and Section 6.3<\/u> (other than those
\nconditions that by their nature are to be satisfied at the Closing) have been
\nsatisfied and (b) Parent and Merger Sub fail to complete the Closing by the
\nClosing Date, to cause Parent and\/or Merger Sub to prevent or cure breaches of
\nthis Agreement by Parent or Merger Sub and\/or to enforce specifically the terms
\nand provisions of this Agreement, including to cause Parent and\/or Merger Sub to
\nconsummate the transactions contemplated hereby, including to effect the Closing
\nin accordance with Section 1.2<\/u>, on the terms and subject to the
\nconditions in this Agreement. Notwithstanding the foregoing, the Company hereby
\nagrees that it has shall have no right of recovery against, and no liability
\nshall attach to (including, in each case, with respect to any actual or claimed
\nloss of damages of any kind of the Company, its subsidiaries, affiliates,
\nrepresentatives, stockholders or any other person claiming by, through or for
\nthe benefit of the Company) any person or entity (including any financing
\nsources) other than the Parent, whether by or through attempted piercing of the
\ncorporate veil, or by or through a claim by or on behalf of the Parent, by the
\nenforcement of any assessment or by any legal or equitable proceeding, by virtue
\nof any applicable Law, or through a claim based in tort, contract, statute or
\notherwise. The parties further agree that no party to this Agreement shall be
\nrequired to obtain, furnish or post any bond or similar instrument in connection
\nwith or as a condition to obtaining any remedy referred to in this Section
\n8.5<\/u> and each party waives any objection to the imposition of such relief or
\nany right it may have to require the obtaining, furnishing or posting of any
\nsuch bond or similar instrument. In addition, each of the parties hereto
\nirrevocably agrees that any legal action or proceeding with respect to this
\nAgreement and the rights and obligations arising hereunder, or for recognition
\nand enforcement of any judgment in respect of this Agreement and the rights and
\nobligations arising hereunder brought by the other party hereto or its
\nsuccessors or assigns, shall be brought and determined exclusively in the
\nFederal court located in the Borough of Manhattan in the City of New York. Each
\nof the parties hereto hereby irrevocably submits with regard to any such action
\nor proceeding for itself and in respect of its property, generally and
\nunconditionally, to the personal jurisdiction of the aforesaid court and agrees
\nthat it will not bring any action relating to this Agreement or any of the
\nTransactions in any court other than the aforesaid court. Each of the parties
\nhereto hereby irrevocably waives, and agrees not to assert, by way of motion, as
\na defense, counterclaim or otherwise, in any action or proceeding with respect
\nto this Agreement, (a) any claim that it is not personally subject to the
\njurisdiction of the above named court for any reason other than the failure to
\nserve in accordance with this Section 8.5<\/u>, (b) any claim that it or its
\nproperty is exempt or immune from jurisdiction of such court or from any legal
\nprocess commenced in such court (whether through service of notice, attachment
\nprior to judgment, attachment in aid of execution of judgment, execution of
\njudgment or otherwise) and (c) to the fullest extent permitted by the applicable
\nLaws, any claim that (i) the suit, action or proceeding in such court is brought
\nin an inconvenient forum, (ii) the venue of such suit, action or proceeding is
\nimproper or (iii) this Agreement, or the subject matter hereof, may not be
\nenforced in or by such court.<\/p>\n<\/p>\n 65<\/p>\n \n
\n<\/p>\n(b) Notwithstanding the foregoing, each of the parties hereto agrees that it
\nwill not bring or support any action, cause of action, claim, cross-claim or
\nthird-party claim of any kind, whether in law or in equity, whether in contract
\nor in tort or otherwise, against any financing sources in any way relating to
\nthis Agreement or any of the transactions contemplated by this Agreement,
\nincluding but not limited to any dispute arising out of or relating in any way
\nto any debt financing commitments related hereto in any forum other than the
\nSupreme Court of the State of New York, County of New York or, if under
\napplicable Law exclusive jurisdiction is vested in the Federal courts, the
\nFederal courts located in the Borough of Manhattan in the City of New York.<\/p>\n<\/p>\n Section 8.6 WAIVER OF JURY TRIAL<\/u>. EACH OF THE PARTIES HERETO
\nIRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
\nARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
\nHEREBY (INCLUDING ANY LEGAL PROCEEDING INVOLVING ANY FINANCING SOURCES).<\/p>\n<\/p>\n Section 8.7 Notices<\/u>. Any notice required to be given hereunder shall
\nbe sufficient if in writing, and sent by facsimile transmission
\n(provided<\/u>, that any notice received by facsimile transmission or
\notherwise at the addressee’s location on any non-business day or any business
\nday after 5:00 p.m. (addressee’s local time) shall be deemed to have been
\nreceived at 9:00 a.m. (addressee’s local time) on the next business day), by
\nreliable overnight delivery service (with proof of service) or hand delivery,
\naddressed as follows:<\/p>\n<\/p>\n To the Company:<\/p>\n<\/p>\n<\/p>\n DPL Inc.<\/p>\n<\/p>\n 1065 Woodman Drive<\/p>\n<\/p>\n Dayton, Ohio 45432<\/p>\n<\/p>\n Facsimile: (937) 259-7386<\/p>\n<\/p>\n \n\n\n| <\/td>\n | \n Attention:<\/p>\n<\/td>\n | \n Frederick J. Boyle,<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Senior Vice President and Chief Financial Officer<\/p>\n<\/p>\n Arthur G. Meyer<\/p>\n<\/p>\n Senior Vice President and General Counsel<\/p>\n<\/p>\n<\/p>\n with copies to:<\/p>\n<\/p>\n<\/p>\n Cadwalader, Wickersham & Taft LLP<\/p>\n<\/p>\n One World Financial Center<\/p>\n<\/p>\n New York, NY 10281<\/p>\n<\/p>\n Facsimile: (212) 504-6666<\/p>\n<\/p>\n \n\n\n| <\/td>\n | \n Attention:<\/p>\n<\/td>\n | \n Dennis J. Block, Esq.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n William P. Mills, Esq.<\/p>\n<\/p>\n<\/p>\n 66<\/p>\n \n
\n<\/p>\n<\/p>\nTo Parent or Merger Sub:<\/p>\n<\/p>\n<\/p>\n The AES Corporation<\/p>\n<\/p>\n 4300 Wilson Boulevard<\/p>\n<\/p>\n Arlington, Virginia 22203<\/p>\n<\/p>\n Facsimile: (703) 528-4510<\/p>\n<\/p>\n \n\n\n| <\/td>\n | \n Attention:<\/p>\n<\/td>\n | \n Brian A. Miller, Executive Vice President<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n General Counsel and Corporate Secretary<\/p>\n<\/p>\n<\/p>\n with copies to:<\/p>\n<\/p>\n<\/p>\n Skadden, Arps, Slate, Meagher & Flom LLP<\/p>\n<\/p>\n 1440 New York Avenue, N.W.<\/p>\n<\/p>\n Washington, D.C. 20005<\/p>\n<\/p>\n Facsimile: (202) 661-8238<\/p>\n<\/p>\n \n\n\n| <\/td>\n | \n Attention:<\/p>\n<\/td>\n | \n Pankaj K. Sinha, Esq.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n or to such other address as any party shall specify by written notice so
\ngiven, and such notice shall be deemed to have been delivered as of the date so
\ntelecommunicated or personally delivered. Any party to this Agreement may notify
\nany other party of any changes to the address or any of the other details
\nspecified in this paragraph; provided<\/u>, however<\/u>, that such
\nnotification shall only be effective on the date specified in such notice or
\nfive (5) business days after the notice is given, whichever is later. Rejection
\nor other refusal to accept or the inability to deliver because of changed
\naddress of which no notice was given shall be deemed to be receipt of the notice
\nas of the date of such rejection, refusal or inability to deliver.<\/p>\n<\/p>\n Section 8.8 Disclosure Schedules<\/u>. The parties hereto agree that any
\nreference in a particular Section of either the Company Disclosure Schedule or
\nthe Parent Disclosure Schedule shall be deemed to be an exception to (or, as
\napplicable, a disclosure for purposes of) (i) the representations and warranties
\n(or covenants, as applicable) of the relevant party that are contained in the
\ncorresponding Section of this Agreement and (ii) any other representations and
\nwarranties of such party that is contained in this Agreement (regardless of the
\nabsence of an express reference or cross-reference in a particular Section of
\nthis Agreement or a particular Section of either the Company Disclosure Schedule
\nor Parent Disclosure Schedule), but only if the relevance of that reference as
\nan exception to (or a disclosure for purposes of) such representations and
\nwarranties would be reasonably apparent.<\/p>\n<\/p>\n Section 8.9 Assignment; Binding Effect<\/u>. Neither this Agreement nor any
\nof the rights, interests or obligations hereunder shall be assigned by any of
\nthe parties hereto without the prior written consent of the other parties,
\nexcept for assignments by Merger Sub to a wholly-owned direct or indirect
\nSubsidiary of Parent. Subject to the preceding sentence, this Agreement shall be
\nbinding upon and shall inure to the benefit of the parties hereto and their
\nrespective successors and assigns.<\/p>\n<\/p>\n Section 8.10 Severability<\/u>. Any term or provision of this Agreement
\nwhich is invalid or unenforceable in any jurisdiction shall, as to that
\njurisdiction, be ineffective to the extent of such invalidity or
\nunenforceability without rendering invalid or unenforceable the remaining terms
\nand provisions of this Agreement in any other jurisdiction. If any provision of
\nthis Agreement is so broad as to be unenforceable, such provision shall be
\ninterpreted to be only so broad as is enforceable.<\/p>\n<\/p>\n 67<\/p>\n \n
\n<\/p>\nSection 8.11 Entire Agreement; No Third-Party Beneficiaries<\/u>. This
\nAgreement (including the schedules hereto) and the Confidentiality Agreement
\nconstitute the entire agreement, and supersede all other prior agreements and
\nunderstandings, both written and oral, between the parties, or any of them, with
\nrespect to the subject matter hereof and thereof. This Agreement is not intended
\nto and shall not confer upon any person other than the parties hereto any rights
\nor remedies hereunder except (i) as specifically provided in Section 5.9<\/u>
\nand Section 5.13(b)<\/u>, (ii) that the Company shall have the right to pursue
\ndamages on behalf of its shareholders in the event of Parent or Merger Sub’s
\nbreach or wrongful termination of this Agreement, which right is hereby
\nacknowledged by Parent and Merger Sub and (iii) any financing sources shall be
\ndirect and irrevocable third party beneficiaries of the agreements and covenants
\ncontained in Section 8.5<\/u> and Section 8.6<\/u>.<\/p>\n<\/p>\n Section 8.12 Amendments; Waivers<\/u>. At any time prior to the Effective
\nTime, any provision of this Agreement may be amended or waived if, and only if,
\nsuch amendment or waiver is in writing and signed, in the case of an amendment,
\nby the Company, Parent and Merger Sub or, in the case of a waiver, by the party
\nagainst whom the waiver is to be effective; provided<\/u>, however<\/u>,
\nthat after receipt of Company Shareholder Approval, if any such amendment or
\nwaiver shall by applicable Law or in accordance with the rules and regulations
\nof the NYSE require further approval of the shareholders of the Company, the
\neffectiveness of such amendment or waiver shall be subject to the approval of
\nthe shareholders of the Company. Notwithstanding the foregoing, no failure or
\ndelay by the Company or Parent in exercising any right hereunder shall operate
\nas a waiver thereof nor shall any single or partial exercise thereof preclude
\nany other or further exercise of any other right hereunder.<\/p>\n<\/p>\n Section 8.13 Obligations of the Parent and of the Company<\/u>. Whenever
\nthis Agreement requires a Subsidiary of the Company to take any action, such
\nrequirement shall be deemed to include an undertaking on the part of the Company
\nto cause such Subsidiary to take such action and, after the Effective Time, on
\nthe part of the Surviving Corporation to cause such Subsidiary to take such
\naction. Whenever this Agreement requires the Merger Sub to take any action, such
\nrequirements shall be deemed to include an undertaking on the part of the Parent
\nto cause the Merger Sub to take such action.<\/p>\n<\/p>\n Section 8.14 Headings<\/u>. Headings of the Articles and Sections of this
\nAgreement are for convenience of the parties only and shall be given no
\nsubstantive or interpretive effect whatsoever. The table of contents to this
\nAgreement is for reference purposes only and shall not affect in any way the
\nmeaning or interpretation of this Agreement.<\/p>\n<\/p>\n 68<\/p>\n \n
\n<\/p>\nSection 8.15 Interpretation<\/u>. When a reference is made in this
\nAgreement to an Article or Section, such reference shall be to an Article or
\nSection of this Agreement unless otherwise indicated. Whenever the words
\n“include,” “includes” or “including” are used in this Agreement, they shall be
\ndeemed to be followed by the words “without limitation.” The words “hereof,”
\n“herein” and “hereunder” and words of similar import when used in this Agreement
\nshall refer to this Agreement as a whole and not to any particular provision of
\nthis Agreement. All terms defined in this Agreement shall have the defined
\nmeanings when used in any certificate or other document made or delivered
\npursuant thereto unless otherwise defined therein. The definitions contained in
\nthis Agreement are applicable to the singular as well as the plural forms of
\nsuch terms and to the masculine as well as to the feminine and neuter genders of
\nsuch term. Any agreement, instrument or statute defined or referred to herein or
\nin any agreement or instrument that is referred to herein means such agreement,
\ninstrument or statute as from time to time amended, modified or supplemented,
\nincluding (in the case of agreements or instruments) by waiver or consent and
\n(in the case of statutes) by succession of comparable successor statutes and
\nreferences to all attachments thereto and instruments incorporated therein. Each
\nof the parties has participated in the drafting and negotiation of this
\nAgreement. If an ambiguity or question of intent or interpretation arises, this
\nAgreement must be construed as if it is drafted by all the parties, and no
\npresumption or burden of proof shall arise favoring or disfavoring any party by
\nvirtue of authorship of any of the provisions of this Agreement.<\/p>\n<\/p>\n Section 8.16 Further Assurances<\/u>. Each party will execute such further
\ndocuments and instruments and take such further actions as may reasonably be
\nrequested by any other party in order to consummate the Transaction in
\naccordance with the terms hereof.<\/p>\n<\/p>\n Section 8.17 Definitions<\/u>. References in this Agreement to
\n“Subsidiaries<\/u>” of any party shall mean any corporation, partnership,
\nassociation, trust or other form of legal entity of which (i) more than fifty
\npercent (50%) of the voting power of the outstanding voting securities are on
\nthe date hereof directly or indirectly owned by such party or (ii) such party or
\nany Subsidiary of such party is a general partner on the date hereof (excluding
\npartnerships in which such party or any Subsidiary of such party does not have a
\nmajority of the voting interests in such partnership). References in this
\nAgreement (except as specifically otherwise defined) to “affiliates<\/u>”
\nshall mean, as to any person, any other person which, directly or indirectly,
\ncontrols, or is controlled by, or is under common control with, such person. As
\nused in this definition, “control<\/u>” (including, with its correlative
\nmeanings, “controlled by” and “under common control with”) shall mean the
\npossession, directly or indirectly, of the power to direct or cause the
\ndirection of management or policies of a person, whether through the ownership
\nof securities or partnership or other ownership interests, by contract or
\notherwise. References in this Agreement (except as specifically otherwise
\ndefined) to “person<\/u>” shall mean an individual, a corporation, a
\npartnership, a limited liability company, an association, a trust or any other
\nentity, group (as such term is used in Section 13 of the Exchange Act) or
\norganization, including a Governmental Entity, and any permitted successors and
\nassigns of such person. As used in this Agreement, “knowledge<\/u>” means (i)
\nwith respect to Parent, the actual knowledge of the persons listed in Section
\n8.17 of the Parent Disclosure Schedule and (ii) with respect to the Company, the
\nactual knowledge of the persons listed in Section 8.17 of the Company Disclosure
\nSchedule. As used in this Agreement, “business day<\/u>” shall mean any day
\nother than a Saturday, Sunday or other day on which the banks in New York are
\nauthorized by law or executive order to be closed. References in this Agreement
\nto specific laws or to specific provisions of laws shall include all rules and
\nregulations promulgated thereunder. Any statute defined or referred to herein or
\nin any agreement or instrument referred to herein shall mean such statute as
\nfrom time to time amended, modified or supplemented, including by succession of
\ncomparable successor statutes.<\/p>\n<\/p>\n 69<\/p>\n \n
\n<\/p>\nIN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
\nexecuted and delivered as of the date first above written.<\/p>\n<\/p>\n \n\n\n| <\/td>\n | \n DPL INC.<\/p>\n<\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n<\/tr>\n | \n| <\/td>\n | \n By:<\/p>\n<\/td>\n | \n \/s\/ Paul M. Barbas<\/p>\n<\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n | \n Name: Paul M. Barbas<\/p>\n<\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n | \n Title: President and Chief Executive Officer<\/p>\n<\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n<\/tr>\n | \n| <\/td>\n | \n THE AES CORPORATION<\/p>\n<\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n<\/tr>\n | \n| <\/td>\n | \n By:<\/p>\n<\/td>\n | \n \/s\/ Edward Hall, III<\/p>\n<\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n | \n Name: Edward Hall, III<\/p>\n<\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n | \n Title: Executive Vice President<\/p>\n<\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n<\/tr>\n | \n| <\/td>\n | \n DOLPHIN SUB, INC.<\/p>\n<\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n<\/tr>\n | \n| <\/td>\n | \n By:<\/p>\n<\/td>\n | \n \/s\/ Edward Hall, III<\/p>\n<\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n | \n Name: Edward Hall, III<\/p>\n<\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n | \n Title: President<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/p>\n [Signature Page to Merger Agreement]<\/p>\n \n<\/p>\n
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