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Share Name | Share Symbol | Market | Type |
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PNM Resources Inc | NYSE:PNM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.07 | 0.19% | 37.78 | 38.12 | 37.50 | 38.06 | 459,682 | 01:00:00 |
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under Rule 14a-12
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Payment of Filing Fee (Check the appropriate box):
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☐ No fee required.
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☒ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1)
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Title of each class of securities to which transaction applies: Common Stock, no par value
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(2)
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Aggregate number of securities to which transaction applies:
86,417,407 shares of common stock, which consist of (a) 85,834,874 shares of outstanding common stock issued and outstanding as of December 15, 2020, (b) 168,061 shares of common stock issuable on the vesting of restricted stock rights outstanding as of December 15, 2020, (c) 322,795 shares of common stock issuable on the vesting of performance shares as of December 15, 2020 (calculated assuming current above target level of performance is achieved) and (d) 91,677 shares of common stock that participants in the PNM Resources, Inc. Executive Savings Plan II have a right to acquire through this plan as of November 30, 2020.
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
In accordance with Exchange Act Rule 0-11(c), the filing fee of $474,235.40 was determined by multiplying .0001091 by the underlying value of the transaction of $4,346,795,572.10, which has been calculated as the sum of: (a) 85,834,874 shares of outstanding common stock issued and outstanding as of December 15, 2020, multiplied by the merger consideration of $50.30 per share, (b) 168,061 shares of common stock issuable on the vesting of restricted stock rights outstanding as of December 15, 2020, multiplied by the merger consideration of $50.30 per share, (c) 322,795 shares of common stock issuable on the vesting of performance shares as of December 15, 2020 (calculated assuming current above target level of performance is achieved), multiplied by the merger consideration of $50.30 per share and (d) 91,677 shares of common stock that participants in the PNM Resources, Inc. Executive Savings Plan II have a right to acquire through this plan as of November 30, 2020, multiplied by the merger consideration of $50.30 per share.
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(4)
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Proposed maximum aggregate value of transaction:
$4,346,795,572.10
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(5)
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Total fee paid:
$474,235.40
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☐ Fee paid previously with preliminary materials.
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☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Patricia K. Collawn
Chairman, President and Chief Executive Officer
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PNM Resources, Inc.
414 Silver Ave. SW
Albuquerque, NM 87102-3289
www.pnmresources.com
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DATE AND TIME:
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, , 2021 at 9:00 a.m. Mountain Time
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PLACE:
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Due to the public health impact of the ongoing coronavirus (COVID-19) pandemic and in accordance with Executive Order 2020-081 issued by the Governor of the State of New Mexico and to support the health and well-being of our shareholders, the special meeting will be held only through a remote communication in a virtual meeting format and will not be held at a physical location. Therefore, you will not be able to attend the special meeting in-person. To be admitted electronically to the special meeting, you must go to the meeting website at www.virtualshareholdermeeting.com/PNM2021 and enter the 16-digit control number found on your proxy card or your voting instruction form. We encourage you to access the special meeting prior to its start time.
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WHO CAN VOTE:
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You may vote if you were a shareholder of record as of the close of business on , 2020.
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ITEMS OF BUSINESS:
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(1)
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Approve the Agreement and Plan of Merger, dated as of October 20, 2020, or the merger agreement, by and among PNMR, Avangrid and NM Green Holdings, Inc. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement;
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(2)
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Approve, by non-binding, advisory vote, certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger contemplated by the merger agreement; and
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(3)
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Approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.
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VOTING:
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On , 2021, we began mailing to our shareholders our proxy materials.
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After reading the proxy statement, please promptly vote by telephone or Internet or by signing and returning the proxy card so that we can be assured of having a quorum present at the meeting and your shares may be voted in accordance with your wishes. See the questions and answers beginning on page 14 of this proxy statement about the meeting (including how to participate in the meeting by webcast as described in Question 3), voting your shares, how to revoke a proxy and how to vote shares via the Internet.
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By Order of the Board of Directors,
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Patricia K. Collawn
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Chairman, President and Chief Executive Officer
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initiate, solicit, knowingly encourage or knowingly facilitate any inquiries with respect to or that could reasonably be expected to lead to, or the making, submission or announcement of, any acquisition proposal;
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participate or engage in any negotiations or discussions concerning, or furnish or provide access to its properties, books and records or any confidential information or data to, any person relating to an acquisition proposal, or any inquiry or proposal that could reasonably be expected to lead to any acquisition proposal;
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approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any acquisition proposal; or
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execute or enter into any letter of intent, agreement in principle, merger agreement, acquisition agreement or other similar agreement for any acquisition proposal.
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granting a waiver, amendment or release under any confidentiality or standstill agreement to the extent necessary to allow for a confidential acquisition proposal to be made to PNMR or the PNMR board or to allow for the engagement in discussions regarding an acquisition proposal or a proposal that would reasonably be expected to lead to an acquisition proposal so long as neither PNMR nor any of its subsidiaries nor any of their respective representatives has violated the merger agreement and certain other requirements are met;
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providing access to PNMR’s properties, books and records and providing information or data in response to a request therefor by a person or group who has made a bona fide written acquisition proposal after the date of the merger agreement that, in each case, did not result from a breach of PNMR’s non-solicitation obligations under the merger agreement, so long as certain requirements are met; or
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participating and engaging in any negotiations or discussions with any person or group and their respective representatives who has made a bona fide written acquisition proposal after the date of the merger agreement that, in each case, did not result from a breach of PNMR’s non-solicitation obligations under the merger agreement and certain requirements are met.
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withhold, withdraw, qualify or modify, or resolve to or propose to withhold, withdraw, qualify or modify, its recommendation that the PNMR shareholders vote in favor of approving the merger and the merger agreement in a manner adverse to Avangrid;
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make any public statement inconsistent with such recommendation;
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approve, adopt or recommend any acquisition proposal, or any inquiry or proposal that could reasonably be expected to lead to any acquisition proposal;
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fail to reaffirm or re-publish such recommendation within ten business days of being requested by Avangrid to do so, provided that Avangrid will not be entitled to request such a reaffirmation or re-publishing more than one time with respect to any single acquisition proposal other than in connection with an amendment to any financial terms of such acquisition proposal or any other material amendment to such acquisition proposal;
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fail to include such recommendation in this proxy statement;
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fail to announce publicly, within five business days after a tender offer or exchange offer relating to any PNMR securities has been commenced that would constitute an acquisition proposal, that the PNMR board recommends rejection of such tender or exchange offer;
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resolve, publicly propose or agree to do any of the foregoing;
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authorize, cause or permit PNMR or any of its subsidiaries to enter into a merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar contract (other than an acceptable confidentiality agreement) or recommend any tender offer providing for, with respect to, or in connection with any acquisition proposal or requiring PNMR to abandon, terminate, delay or fail to consummate the merger or any other transaction contemplated by the merger agreement; or
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take any action pursuant to which any person (other than Avangrid, merger sub or their respective affiliates) or acquisition proposal would become exempt from or not otherwise subject to any take-over statute or articles of incorporation provision relating to an acquisition proposal.
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change its recommendation in response to the occurrence of a specified intervening event (as defined in the merger agreement); or
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if the PNMR board determines in good faith, after consultation with its financial advisor and outside legal counsel, in response to an acquisition proposal from a third party that did not otherwise result from a breach of PNMR’s non-solicitation obligations under the merger agreement, that such acquisition proposal constitutes a superior proposal, and such acquisition proposal is not withdrawn, PNMR or the PNMR board may (A) change its recommendation and/or (B) terminate the merger agreement to enter into a definitive agreement with respect to such superior proposal, in each case, if (1) after consultation with its financial advisor and outside legal counsel, the PNMR board determines that the failure to change its recommendation or to terminate the merger agreement would be reasonably expected to result in a breach of its fiduciary duties under applicable laws and (2) the merger agreement is terminated, PNMR pays Avangrid the required PNMR termination fee.
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approval of the merger agreement by an affirmative vote of the holders of at least a majority of the outstanding shares of PNMR common stock entitled to vote at the special meeting to consider and vote upon a proposal to approve the merger agreement, which we refer to as the special meeting;
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absence of any law (whether temporary, preliminary or permanent) which prohibits, restrains or enjoins the consummation of the merger;
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all required consents and filings by or with any governmental authorities having been obtained, made or given and being in full force and effect and not subject to appeal, and all applicable waiting periods imposed by any government entity (including under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or the HSR Act) having been terminated or expired; and
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the CFIUS approval (as defined in the merger agreement) having been obtained.
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the representations and warranties of PNMR with respect to the organization and qualification of PNMR and with respect to the authority, absence of conflicts with organizational documents, and ownership of subsidiaries of PNMR and its subsidiaries being true and correct in all material respects as of the date of the merger agreement and as of the effective time of the merger (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case as of such earlier date);
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the representations and warranties of PNMR with respect to PNMR and its subsidiaries related to capitalization being true and correct in all but de minimis respects as of the date of the merger agreement and as of the effective time of the merger (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case as of such earlier date);
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the representation and warranty of PNMR with respect to the absence of any material adverse effect being true and correct in all respects as of the date of the merger agreement;
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all other representations and warranties of PNMR being true and correct in all respects, without giving effect to materiality qualifiers, as of the effective time of the merger (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case such representation and warranty being true and correct as of such earlier date), except where the failures of any such representations and warranties to be so true and correct, in the aggregate, do not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on PNMR;
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PNMR’s performance in all material respects of all obligations, and compliance in all material respects with all agreements and covenants, required to be performed or complied with by it under the merger agreement;
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receipt by Avangrid of a certificate of an executive officer of PNMR certifying that the five preceding conditions have been satisfied;
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there not having occurred since the date of the merger agreement any event, development, change, effect or occurrence that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on PNMR;
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the absence of any final order of the New Mexico Public Regulation Commission, or NMPRC, the Public Utility Commission of Texas, or PUCT, or the Committee on Foreign Investment in the United States, or CFIUS, imposing terms or conditions that, individually or in the aggregate (when taken together with the other final orders of the NMPRC, the PUCT or CFIUS), could reasonably be expected to have a burdensome effect;
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not more than 15% of the issued and outstanding shares of PNMR common stock as of immediately prior to the effective time of the merger will constitute dissenting shares; and
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each of the definitive agreements related to the divestiture of the Four Corners Power Plant, or Four Corners, having been duly executed and delivered by each of the parties thereto and remaining in full force and effect as of the effective time of the merger, and PNM having made all applicable regulatory filings to obtain required approvals from applicable governmental entities, including for abandonment authority and securitization from the NMPRC.
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the representations and warranties of Avangrid and merger sub being true and correct in all respects, without giving effect to materiality qualifiers, as of the effective time of the merger (except to the
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Avangrid’s and merger sub’s performance in all material respects of all obligations, and compliance in all material respects with all agreements and covenants, required to be performed or complied with by them under the merger agreement; and
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receipt by PNMR of a certificate of an executive officer of Avangrid certifying that the preceding conditions have been satisfied.
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By either Avangrid or PNMR:
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if any court of competent jurisdiction or other governmental entity has issued an order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the merger and such order, decree, ruling or other action is or has become final and nonappealable and the party seeking to terminate the merger agreement has complied with its obligations under the merger agreement related to obtaining or making the required consents and filings (provided a party cannot exercise this termination right if the order, decree or ruling issued, or other action taken, was primarily due to the material breach of the merger agreement by such party);
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if the merger has not been completed on or before 5:00 p.m. New York City time on January 20, 2022 (the “End date”) and the failure of the effective time to occur on or before the End date was not primarily caused by the breach of the obligations under the merger agreement of the party seeking to terminate the merger agreement (the End date is subject to a three-month extension if the only closing conditions outstanding are the conditions relating to required regulatory approvals, including CFIUS); or
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PNMR shareholder approval of the merger agreement is not obtained at the special meeting;
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Unilaterally by Avangrid:
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if PNMR has breached or failed to perform its representations, warranties, covenants or agreements contained in the merger agreement, which breach or failure to perform (i) would cause certain of the conditions to Avangrid’s and merger sub’s obligation to consummate the merger to not be satisfied, and (ii) cannot be cured by PNMR through the exercise of its reasonable best efforts or has not been cured by the earlier of 30 days after written notice thereof has been given by Avangrid to PNMR or three business days prior to the End date, but Avangrid will not have such a termination right if it or merger sub is then in breach of any of its representations, warranties, covenants or agreements in the merger agreement and such breach would result in a failure of certain of the conditions to PNMR’s obligation to consummate the merger to not be satisfied; or
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if the PNMR board changes its recommendation to PNMR shareholders to approve the merger agreement.
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Unilaterally by PNMR:
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if Avangrid or merger sub has breached or failed to perform its representations, warranties, covenants or agreements contained in the merger agreement, which breach or failure to perform (i) would cause certain of the conditions to PNMR’s obligation to consummate the merger to not be satisfied and (ii) cannot be cured by Avangrid or merger sub through the exercise of its reasonable best efforts or has not been cured by the earlier of 30 days after written notice thereof has been given by PNMR to Avangrid or three business days prior to the End date, but PNMR
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in order to enter into a definitive agreement with respect to a superior proposal, if such termination occurs before PNMR shareholders approve the merger agreement and so long as PNMR complies with its obligations with respect to a superior proposal, if prior to or concurrently with such termination, PNMR pays the PNMR termination fee to Avangrid (as described below); or
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if (i) all conditions to the obligation of the parties to consummate the merger have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the effective time, each of which is capable of being satisfied at the effective time), (ii) PNMR has given written notice to Avangrid and merger sub that it is prepared, willing and able to consummate the merger and (iii) Avangrid and merger sub fail to consummate the transactions contemplated by the merger agreement on the date specified for such consummation in the merger agreement and fail to consummate such transactions by the close of business on the fifth business day following receipt of such notice from PNMR.
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the merger agreement is terminated by PNMR as permitted by the merger agreement in order to enter into a definitive agreement with respect to a superior proposal, if such termination occurs before PNMR shareholders approve the merger agreement;
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the merger agreement is terminated by Avangrid because the PNMR board (i) changes its recommendation to the PNMR shareholders for approval of the merger agreement, (ii) withholds, withdraws, qualifies or modifies (or resolves to do so) such recommendation in a manner adverse to Avangrid, (iii) makes any public statement inconsistent with such recommendation, (iv) approves, adopts or recommends any acquisition proposal, or any inquiry or proposal that could reasonably be expected to lead to any acquisition proposal, (v) fails to reaffirm or re-publish such recommendation within ten business days of being requested by Avangrid to do so, (vi) fails to include such recommendation in this proxy statement, (vii) fails to announce publicly, within five business days after a tender offer or exchange offer relating to any securities of PNMR has been commenced that would constitute an acquisition proposal, that the PNMR board recommends rejection of such tender or exchange offer or (viii) resolves, publicly proposes or agrees to do any of the foregoing;
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the merger agreement is terminated (i) by either Avangrid or PNMR (A) prior to the convening of the special meeting of the PNMR shareholders to approve the merger agreement and due to the occurrence of the End date where the primary cause of the failure of closing to occur on or before the End date was not the breach of the obligations under the merger agreement of the party seeking to terminate the merger agreement or (B) because of a failure to obtain PNMR shareholder approval of the merger agreement at the special meeting, or (ii) by Avangrid as a result of PNMR having breached its representations or warranties or failed to perform its covenants or agreements contained in the merger agreement, which breach or failure to perform (I) would cause the conditions to Avangrid’s and merger sub’s obligation to consummate the merger related to the accuracy of the Company’s representations and warranties and the performance of its covenants and agreements, in each case, as of the effective time, to not be satisfied, and (II) cannot be cured by PNMR through the exercise of its reasonable best efforts or has not been cured by the earlier of (x) 30 days after written notice thereof has been given by
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at any time after the date of the merger agreement and prior to such termination an acquisition proposal has been made to PNMR, or to the PNMR board or shareholders, or an acquisition proposal has otherwise become publicly known, and within 12 months after such termination, PNMR has entered into a definitive agreement with respect to an acquisition proposal or has consummated an acquisition proposal.
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the merger agreement is terminated by PNMR when (i) all conditions to the obligation of the parties to consummate the merger have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the effective time, each of which is capable of being satisfied at the effective time), (ii) PNMR has given written notice to Avangrid and merger sub that PNMR is prepared, willing and able to consummate the merger and (iii) Avangrid and merger sub fail to consummate the transactions contemplated by the merger agreement on the date specified for such consummation in the merger agreement and fail to consummate such transactions by the close of business on the fifth business day following receipt of such notice from PNMR;
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(i) the merger agreement is terminated by (A) Avangrid or PNMR (x) because a court of competent jurisdiction or other governmental entity has issued an order, decree or ruling or taken any other final action, in each case, arising in connection with obtaining the required regulatory approvals, and which restrains, enjoins or otherwise prohibits the merger and such order, decree, ruling or other action is or has become final and nonappealable and the party seeking to terminate the merger agreement has complied with its obligations under the merger agreement related to obtaining or making the required consents and filings, and the order, decree or ruling issued, or other action taken, was not primarily due to the material breach of the merger agreement by such party, or (y) due to the occurrence of the End date where the primary cause of the failure of closing to occur on or before the End date was not the breach of the obligations under the merger agreement of the party seeking to terminate the merger; or (B) by PNMR due to Avangrid or merger sub breaching or failing to perform its covenants or agreements contained in the merger agreement with respect to obtaining or making required consents and filings, which breach or failure causes certain of the conditions to PNMR’s obligation to consummate the merger to not be satisfied, and which cannot be cured by Avangrid or merger sub through the exercise of its reasonable best efforts or has not been cured in accordance with the terms of the merger agreement; and, (ii) in each case above:
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at the time of such termination, (i) any of the required regulatory approvals have not been obtained, made or given or applicable waiting periods imposed by any government entity have not terminated or expired or (ii) any law (whether temporary, preliminary or permanent) solely in connection with the required regulatory approvals is in effect which prohibits, restrains or enjoins the consummation of the merger;
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Avangrid is in breach of its obligations under the merger agreement with respect to obtaining or making required consents or filings from or with any regulatory authorities, and PNMR has notified Avangrid promptly (and in any event no later than five business days) after becoming aware of any such breach;
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each of the conditions to Avangrid’s and merger sub’s obligations (other than with respect to obtaining or making required consents or filings from or with any regulatory authorities) to
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either (i) a required regulatory approval or the CFIUS approval (as defined in the merger agreement) has not been obtained or (ii) a final order granting the required regulatory approvals or the CFIUS approval imposes a burdensome effect; and
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Avangrid’s breach of its covenants relating to obtaining the required regulatory approvals has materially contributed to the failure of to obtain such approvals.
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the expiration of the waiting period under the HSR Act and the rules and regulations thereunder;
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notices to and filings under, and compliance with all requirements of CFIUS, pursuant to Section 721 of the Defense Production Act of 1950 as amended (section 721), and as implemented by Executive Order 11858, as amended, and the regulations at chapter VIII of title 31 of the Code of Federal Regulations;
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approval by the NMPRC pursuant to New Mexico Public Utility Act and NMPRC Rule 450;
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approval by the PUCT pursuant to the Public Utility Regulatory Act;
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approval from the Federal Energy Regulatory Commission, or FERC, pursuant to Section 203 of the Federal Power Act, or FPA;
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approval from the Federal Communications Commission, or FCC, under the Communications Act of 1934 for the transfer of control over wireless and microwave licenses held by certain PNMR subsidiaries; and
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approval from the United States Nuclear Regulatory Commission, or NRC.
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Q1:
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Why am I receiving this proxy statement and proxy card?
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A1:
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PNMR has agreed to combine with Avangrid under the terms of the merger agreement, as further described in this proxy statement. If the merger agreement is approved by PNMR shareholders and the other conditions to closing under the merger agreement are satisfied or waived, merger sub will merge with and into PNMR and PNMR will continue as a wholly-owned subsidiary of Avangrid upon completion of the merger.
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Q2:
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When and where is the special meeting?
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A2:
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The special meeting will be held on , 2021, at 9:00 a.m. Mountain time, solely through a remote communication in a virtual meeting format.
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Q3:
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Will the special meeting be held virtually due to concerns about the COVID-19 pandemic?
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A3:
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Yes. Due to the public health impact of the ongoing coronavirus (COVID-19) pandemic and in accordance with Executive Order 2020-081 issued by the Governor of the State of New Mexico and to support the health and well-being of our shareholders, the special meeting will be held only through a remote communication in a virtual meeting format and will not be held at a physical location. Therefore, you will not be able to attend the special meeting in-person. To be admitted electronically to the special meeting, you must go to the meeting website at www.virtualshareholdermeeting.com/PNM2021, and enter the 16-digit control number found on your proxy card or your voting instruction form. Attendance at the virtual special meeting is limited to shareholders of record or their legal proxy holder and beneficial owners as of , 2020, and invited guests of PNMR. We encourage you to access the special meeting prior to its start time.
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Q4:
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Who may vote at the special meeting?
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A4:
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You may vote all of the shares of PNMR common stock that you own at the close of business on the record date of , 2020. Each PNMR shareholder is entitled to one vote for each share of PNMR
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Q5:
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What am I being asked to vote on at the special meeting and how does the PNMR board recommend that I vote?
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A5:
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The following three proposals will be considered and voted on at the special meeting:
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Description of Proposal
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Proposal discussed on
following pages:
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Board Recommendation
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PROPOSAL 1
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Approval of the merger agreement
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FOR
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See the section entitled “The Merger—PNMR’s Reasons for the Merger” beginning on page 49 of this proxy statement.
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PROPOSAL 2
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Approval, by non-binding, advisory vote, of certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger
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FOR
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PROPOSAL 3
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Approval of one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement
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FOR
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Q6:
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Does my vote matter?
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A6:
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Yes. Your vote is important. You are encouraged to submit your proxy as promptly as possible. The merger cannot be completed unless the merger agreement is approved by the PNMR shareholders. If you fail to submit a proxy or vote via the Internet at the special meeting, or abstain, or you do not provide your bank, broker or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement. Our board of directors, or the PNMR board, unanimously recommends that shareholders vote “FOR” the proposal to approve the merger agreement and the related matters.
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Q7:
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How do I vote my shares?
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A7:
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For your convenience, we have established three easy methods for voting shares held in your name:
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By Internet:
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Access www.proxyvote.com and follow the instructions. (You will need the control number on your proxy card or voting instruction form to vote your shares.) Shareholders voting through the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies that must be paid by the shareholder.
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By Telephone:
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For automated telephone voting, call 1-800-690-6903 (toll free) from any touch-tone telephone and follow the instructions. (You will need the control number on your proxy card or voting instruction form to vote your shares.)
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By Mail:
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Simply return your executed proxy card in the enclosed postage-paid envelope.
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If you send the proxy by mail, there may be unexpected delays in mail processing times as a result of the COVID-19 pandemic. You should allow a sufficient number of days to ensure delivery.
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Q8:
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What is a proxy?
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A8:
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A proxy is your legal designation of another person (the “proxy”) to vote on your behalf. By voting by telephone or the Internet, or by completing and mailing a printed proxy card, you are giving the proxy committee appointed by the PNMR board (consisting of Patricia K. Collawn and Norman P. Becker) the authority to vote your shares in the manner you indicate. If you are a shareholder of record and sign and return your proxy card without indicating how you want your shares to be voted, or if you vote by telephone or Internet in accordance with the PNMR board’s voting recommendations, the proxy committee will vote your shares as follows:
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FOR approval of the merger agreement;
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FOR approval of certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger; and
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FOR approval of one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.
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Q9:
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Can I change my vote or revoke my proxy?
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A9:
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Yes. Any subsequent vote by any means will change your prior vote. The last vote actually received before the special meeting will be the one counted. You may also revoke your proxy by voting via the Internet at the special meeting.
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Q10:
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What constitutes a quorum and why is a quorum required?
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A10:
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A quorum of shareholders is necessary to conduct business at the special meeting. If at least a majority of all of the PNMR common stock outstanding on the record date is represented at the special meeting, in person via the Internet or by proxy (by voting by telephone or on the Internet or by properly submitting a proxy card or voting instruction form by mail), a quorum will exist. Abstentions and withheld votes will be counted as present for quorum purposes.
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Q11:
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What is the vote required to approve each proposal at the special meeting?
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A11:
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Except for the adjournment proposal, the vote required to approve each of the proposals listed below assumes the presence of a quorum at the special meeting.
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Proposal
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Affirmative Vote Requirement
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Effect of Abstentions
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PROPOSAL 1 - Approve the merger agreement
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Majority of shares of PNMR common stock outstanding as of , 2020, the record date for the special meeting.
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Because the affirmative vote required to approve the merger agreement is based upon the total number of outstanding shares of PNMR common stock, if you fail to submit a proxy or vote via the Internet during the special meeting, or abstain, or if your shares of PNMR common stock are held through a bank, broker or other nominee and you do not provide your bank, broker or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement.
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Proposal
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Affirmative Vote Requirement
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Effect of Abstentions
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PROPOSAL 2 - Approve, by non-binding, advisory vote, certain existing compensation arrangements for PNMR’s named executive officers in connection with the merger
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The approval of the merger-related executive compensation requires the affirmative vote of the owners of a majority of the shares of PNMR common stock present in person via the Internet or represented by proxy and entitled to vote thereon; however, such vote is non-binding and advisory only.
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Any shares not present at the special meeting, including due to the failure of any shareholder holding their shares in “street name” to provide any voting instructions to their bank, broker or other nominee with respect to the special meeting, will have no effect on the outcome of the merger-related compensation proposal. However, an abstention will have the same effect as a vote “AGAINST” the merger-related compensation proposal.
If any shareholder who holds their shares in “street name” through a bank, broker or other nominee gives voting instructions to such bank, broker or other nominee with respect to one or more proposals at the special meeting but not with respect to the merger-related compensation proposal such shares will have the same effect as a vote “AGAINST” the merger-related compensation proposal.
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PROPOSAL 3 - Approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement
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If no quorum is present, authorization for proxy holders to vote in favor of one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement requires the affirmative vote of the owners of a majority of shares of PNMR common stock present in person via the Internet or represented by proxy and entitled to vote thereon. If a quorum is present, authorization for proxy holders to vote in favor of one or more adjournments of the special meeting would require the affirmative vote of the owners of a majority of the shares of PNMR common stock present in person via the Internet or represented by proxy and entitled to vote thereon.
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Whether or not a quorum is present, if your shares of PNMR common stock are present at the special meeting but are not voted on the proposal, or if you abstain on the proposal, each will have the effect of a vote “AGAINST” the proposal to approve one or more adjournments of the special meeting. Whether or not a quorum is present, if you fail to submit a proxy or attend the special meeting via the PNMR special meeting website or if your shares of PNMR common stock are held through a bank, broker or other nominee and you do not instruct your bank, broker or other nominee to vote your shares of PNMR common stock, as applicable, your shares of PNMR common stock will not be voted, but this will not have an effect on the vote to approve one or more adjournments of the special meeting.
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Q12:
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What is the difference between a “shareholder of record” and a “street name” holder?
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A12:
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These terms describe how your shares are held. If your shares are registered directly in your name with Computershare, our transfer agent, you are a “shareholder of record” with respect to those shares and the proxy materials were sent directly to you by PNMR.
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Q13:
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Why did I receive more than one set of proxy materials?
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A13:
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You will receive multiple sets of proxy materials if you hold your shares in different ways (e.g., joint tenancy, trusts, custodial accounts) or in multiple accounts. Each set of proxy materials that you receive will contain a specific “control number” with the relevant information to vote the specific shares at issue. Note that the proxy materials for shares registered in your name will include any shares you may hold in the Direct Plan. If your shares are held by a broker (i.e., in “street name”), you will receive proxy materials on how to obtain your proxy materials and vote from your broker. You should vote according to the instructions on each set of proxy materials you receive and vote on, sign and return each proxy card you receive.
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Q14:
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How do I vote my RSP shares?
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A14:
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If you participate in the RSP, PNMR’s 401(k) plan for its employees, and shares have been allocated to your account under the PNMR Stock Fund investment option, you will receive the following materials by mail:
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the proxy materials; and
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a separate vote authorization form and voting instructions for these RSP shares from the PNMR Corporate Investment Committee.
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Q15:
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If my shares of PNMR common stock are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote those shares for me?
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A15:
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Your bank, broker or other nominee will only be permitted to vote your shares of PNMR common stock if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee regarding the voting of your shares of PNMR common stock. Under the NYSE rules, banks, brokers or other nominees who hold shares of PNMR common stock in “street name” on behalf of the beneficial owner of such shares have the authority to vote such shares in their discretion on certain “routine” proposals when they have not received voting instructions from the beneficial owners. Banks, brokers or other nominees, however, are not allowed to exercise their voting discretion with respect to matters that under the NYSE rules are “non-routine.” This can result in a “broker non-vote,” which occurs on an item when (i) a bank, broker or other nominee has discretionary authority to vote on one or more “routine” proposals to be voted on at a meeting of shareholders, but is not permitted to vote on other “non-routine” proposals without instructions from the beneficial owner of the shares and (ii) the beneficial owner fails to provide the bank, broker or other nominee with voting instructions on a “non-routine” matter. All of the proposals before the special meeting are considered “non-routine” matters under NYSE rules, and banks, brokers or other nominees will not have discretionary authority to vote on any matter before the meeting. As a result, if you hold your shares of PNMR common stock in “street name,” your shares will not be
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Q16:
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What is the proposed merger and what effect will it have on PNMR?
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A16:
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The proposed merger is the merger of merger sub, a direct, wholly-owned subsidiary of Avangrid, with and into PNMR, with PNMR continuing as the surviving company and a direct, wholly-owned subsidiary of Avangrid. As a result of the merger, PNMR will no longer be a publicly held company and you will no longer have any interest in PNMR, including its future earnings. Following the merger, PNMR common stock will be delisted from the NYSE and deregistered under the Exchange Act.
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Q17:
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Did the PNMR board adopt the merger agreement?
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A17:
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Yes. At a meeting on October 20, 2020, the PNMR board unanimously adopted the merger agreement and approved and determined that it is in the best interests of PNMR and its shareholders for PNMR to execute and deliver the merger agreement and consummate the merger and the other transactions contemplated by the merger agreement.
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Q18:
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What will I receive if the merger is completed?
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A18:
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If the merger is completed, each share of PNMR common stock issued and outstanding immediately prior to the completion of the merger (other than (i) shares of PNMR common stock owned by Avangrid, PNMR, merger sub or any other direct or indirect wholly-owned subsidiary of Avangrid or PNMR and (ii) shares held by shareholders who have not voted in favor of the Merger and who are entitled to and have properly demanded dissenter’s rights under New Mexico law) will be converted into the right to receive $50.30 in cash, without interest and less any applicable withholding taxes, or the merger consideration.
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Q19:
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How does the merger consideration compare to the market price per share of PNMR common stock prior to the announcement of the merger?
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A19:
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The merger consideration represented a premium to PNMR’s recent and historic share trading price (a 10.0% premium to the October 20, 2020 closing share price of PNMR common stock and approximately a 19.3% premium to the 30-day volume weighted average price of PNMR’s common stock as of October 20, 2020).
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Q20:
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What will holders under PNMR’s stock-based plans receive in the merger?
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A20:
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At the effective time of the merger, each outstanding award of PNMR restricted stock rights granted to a member of the PNMR board under the PNMR Stock Plan or otherwise (other than any restricted stock rights granted to a member of the PNMR board with respect to which such board member has made a deferral election under the restricted stock rights program in which the such board member participates) will be converted into a right to receive an amount of cash per share equal to the merger consideration. At the effective time of the merger, all other outstanding PNMR restricted stock rights (other than any restricted stock rights granted to a member of the PNMR board) will be converted into an equivalent award of cash-settled restricted stock rights relating to Avangrid common stock on the same terms and conditions as were applicable to the corresponding PNMR restricted stock rights, including any applicable vesting acceleration provisions and payment timing provisions, except as
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Q21:
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Why am I being asked to consider and vote on the proposal to approve, by non-binding, advisory vote, certain existing compensation arrangements for named executive officers of PNMR in connection with the merger?
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A21:
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Under SEC rules, we are required to seek a non-binding, advisory vote with respect to the compensation that may be paid or become payable to our named executive officers that is based on, or otherwise relates to, the merger.
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Q22:
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What will happen if PNMR shareholders do not approve this merger-related executive compensation?
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A22:
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PNMR shareholder approval of the compensation that may be paid or become payable to PNMR’s named executive officers that is based on, or otherwise relates to, the merger is not a condition to completion of the merger. The vote is an advisory vote and will not be binding on PNMR or Avangrid in the merger. If the merger is completed, the merger-related compensation may be paid to PNMR’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if PNMR shareholders do not approve, by non-binding, advisory vote, the merger-related executive compensation.
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Q23:
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Do any of PNMR’s directors or executive officers have interests in the merger that differ from or are in addition to my interests as a shareholder of PNMR common stock?
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A23:
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In considering the recommendation of the PNMR board with respect to the proposal to approve the merger agreement and the other matters described in this proxy statement, you should be aware that certain directors and executive officers of PNMR may have interests in the merger that are different
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Q24:
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When do you expect the merger to be completed?
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A24:
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Subject to the satisfaction or waiver of the closing conditions described under the section entitled “The Merger Agreement—Conditions That Must Be Satisfied or Waived for the Merger to Occur” beginning on page 98 of this proxy statement, including the approval of the merger agreement by PNMR shareholders at the special meeting and certain regulatory approvals, the merger will close as soon as reasonably practicable. PNMR and Avangrid expect that the merger will close in the fourth quarter of 2021. However, it is possible that factors outside the control of both companies could result in the merger being completed at a different time or not at all.
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Q25:
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What are the material United States federal income tax consequences of the merger to PNMR shareholders?
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A25:
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The exchange of shares of PNMR common stock for cash pursuant to the merger will be a taxable transaction to U.S. holders (as defined in the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement) for U.S. federal income tax purposes. In general, a U.S. holder whose shares of PNMR common stock are converted into the right to receive cash in the merger will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received with respect to such shares of PNMR common stock and such U.S. holder’s adjusted tax basis in such shares. Backup withholding may also apply to the cash payments made pursuant to the merger unless the U.S. holder or other payee provides a valid taxpayer identification number and complies with certain certification procedures (generally, by providing a properly completed and executed IRS Form W-9) or otherwise establishes an exemption from backup withholding. Payments made to a non-U.S. holder (as defined in the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement) with respect to shares of PNMR common stock exchanged for cash pursuant to the merger generally will not be subject U.S. federal income tax, subject to certain exceptions (as discussed in the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement). A non-U.S. holder may, however, be subject to backup withholding with respect to the cash payments made pursuant to the merger, unless the non-U.S. holder certifies on an appropriate IRS Form W-8 that such non-U.S. holder is not a United States person or otherwise establishes an exemption from backup withholding. You should read the section entitled “Material United States Federal Income Tax Consequences” beginning on page 72 of this proxy statement for a more detailed discussion of the U.S. federal income tax consequences of the merger. You should also consult your tax advisor with respect to the specific tax consequences to you in connection with the merger in light of your own particular circumstances, including U.S. federal estate, gift and other non-income tax consequences, and tax consequences under state, local or non-U.S. tax laws or any applicable income tax treaties.
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Q26:
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How will I receive the merger consideration to which I am entitled?
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A26:
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After receiving the proper documentation from you, following the completion of the merger, the exchange agent will forward to you the cash to which you are entitled. If you own PNMR common stock in book-entry form or through a bank, broker, bank or other nominee, you will not need to obtain share certificates to submit for exchange to the exchange agent. However, you or your bank, broker or other nominee will need to follow the instructions provided by the exchange agent in order to properly surrender your PNMR common stock. More information on the documentation you are required to deliver to the exchange agent may be found in the section entitled “The Merger Agreement—Surrender of PNMR Shares” beginning on page 78 of this proxy statement.
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Q27:
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What happens if I sell my shares of PNMR common stock before the special meeting?
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A27:
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The record date is earlier than both the date of the special meeting and the completion of the merger. If
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Q28:
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What happens if I sell or otherwise transfer my shares of PNMR common stock after the special meeting but before the completion of the merger?
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A28:
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If you sell or otherwise transfer your shares after the special meeting but before the completion of the merger, you will have transferred the right to receive the merger consideration to the person to whom you transfer your shares. In order to receive the merger consideration upon completion of the merger, you must hold your shares at the effective time of the merger.
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Q29:
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Should I send in my share certificate(s) now?
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A29:
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No, please do NOT return your share certificate(s) with your proxy. If the merger agreement is approved by PNMR shareholders and the merger is completed, and you hold physical share certificate(s), you will be sent a letter of transmittal as promptly as reasonably practicable after the completion of the merger describing how you may exchange your shares of PNMR common stock for the merger consideration. If your shares of PNMR common stock are held in “street name” through a bank, broker or other nominee, you will receive instructions from your bank, broker or other nominee as to how to effect the surrender of your “street name” shares of PNMR common stock in exchange for the merger consideration.
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Q30:
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Am I entitled to exercise dissenter’s rights instead of receiving the merger consideration for my shares of PNMR common stock?
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A30:
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Yes, PNMR shareholders of record have the right under New Mexico law to demand appraisal of their shares of PNMR common stock in connection with the merger and to receive, in lieu of the merger consideration, payment in cash for the fair value of their shares of PNMR common stock. Any PNMR shareholder electing to exercise dissenters’ rights must not have voted his, her or its shares of PNMR common stock “FOR” the proposal to approve the merger agreement and must specifically comply with the applicable provisions of the NMBCA in order to perfect the rights of dissent and appraisal. See the section entitled, “The Merger —Dissenter’s Rights” beginning at page 62 of this proxy statement.
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Q31:
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What are the conditions to completion of the merger?
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A31:
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In addition to the approval of the merger agreement by PNMR shareholders as described above, completion of the merger is subject to the satisfaction of a number of other conditions, including the absence of any material adverse effect on PNMR, the receipt of required regulatory approvals and entry into agreements regarding the Four Corners divesture (as described in the merger agreement), as well as holders of no more than 15% of the outstanding shares of PNMR common stock validly exercising their dissenters’ rights. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see the section entitled “The Merger Agreement—Conditions That Must Be Satisfied or Waived for the Merger to Occur” beginning on page 98 of this proxy statement.
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Q32:
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What happens if the merger is not completed?
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A32:
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If the merger agreement is not approved by PNMR shareholders or if the merger is not completed for any other reason, PNMR shareholders will not receive any consideration for their shares of PNMR common stock. Instead, PNMR will remain an independent public company, PNMR common stock will continue to be listed and traded on the NYSE and registered under the Exchange Act and PNMR will continue to file periodic reports with the SEC. Under certain circumstances, PNMR may be required to pay Avangrid a termination fee of $130 million and Avangrid may be required to pay PNMR a termination fee of $184 million and the parties may be required to reimburse each party’s expenses in connection with the merger up to $10 million, with any reimbursement of expenses being credited
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Q33:
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Who will solicit and pay the cost of soliciting proxies?
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A33:
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The enclosed proxy is being solicited on behalf of the PNMR board. This solicitation is being made by mail, but also may be made by telephone or via the Internet. We have hired Georgeson to assist in the solicitation for an estimated fee of $25,000 plus any out-of-pocket expenses. We will pay all costs related to solicitation. Broadridge is tabulating the vote and providing the hosting services for the special meeting in a virtual format.
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Q34:
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Is this proxy statement the only way that proxies are being solicited?
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A34:
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No. As stated above, we have retained Georgeson to aid in the solicitation of proxies. In addition to mailing these proxy materials, certain directors, officers, or employees of PNMR may solicit proxies by telephone, facsimile, e-mail, or personal contact. They will not be specifically compensated for doing so.
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Q35:
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Will shareholders be given the opportunity to ask questions at the special meeting?
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A35:
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Yes. The Chairman will answer questions asked by shareholders during a designated portion of the special meeting. You will be provided an opportunity to ask questions of the Chairman by following the instructions available on the meeting website during the special meeting. Shareholders must direct questions and comments to the Chairman and limit their remarks to matters that relate directly to the business of the special meeting. For other rules of conduct, please refer to materials that will be provided to you during the special meeting.
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Q36:
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What if during the check-in time or during the special meeting I have technical difficulties or trouble accessing the virtual meeting website?
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A36:
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If we experience technical difficulties during the virtual special meeting (e.g., a temporary or prolonged power outage), we will determine whether the virtual special meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the virtual special meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged). In any such situation, we will promptly notify shareholders of the decision via www.virtualshareholdermeeting.com/PNM2021.
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Q37:
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Where can I find the voting results of the special meeting?
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A37:
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Preliminary voting results will be announced at the special meeting. The final voting results will be tallied by the inspectors of election and published in our Current Report on Form 8-K filed with the SEC within four business days after the date of the special meeting. Such results will also be published on our website at www.pnmresources.com.
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Q38:
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Who can help answer any other questions I have?
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A38:
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If you have additional questions about the merger, need assistance in submitting your proxy or voting your shares of PNMR common stock, or need additional copies of this proxy statement or the enclosed proxy card, please contact Georgeson, our proxy solicitor, by calling toll-free at 877-507-1756.
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the expected timing and likelihood of completion of the pending merger, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the pending merger that could reduce anticipated benefits or cause the parties to abandon the transaction,
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the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement,
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the possibility that PNMR’s shareholders may not approve the merger agreement,
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the risk that the parties may not be able to satisfy the conditions to the proposed merger in a timely manner or at all,
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risks related to disruption of management time from ongoing business operations due to the proposed merger,
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the outcome of any legal proceedings related to the merger,
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the failure by Avangrid to obtain the necessary financing set forth in commitment letters received in connection with the merger,
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the risk that any announcements relating to the proposed merger could have adverse effects on the market price of our common stock, and
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the risk that the proposed transaction and its announcement could have an adverse effect on our ability to retain and hire key personnel and maintain relationships with our customers and suppliers, and on our operating results and businesses generally.
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By Internet: Access www.proxyvote.com and follow the instructions. (You will need the control number on your proxy card or voting instruction form to vote your shares.) Shareholders voting through the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies that must be paid by the shareholder.
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By Telephone: For automated telephone voting, call 1-800-690-6903 (toll free) from any touch-tone telephone and follow the instructions. (You will need the control number on your proxy card or voting instruction form to vote your shares.)
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By Mail: Simply return your executed proxy card in the enclosed postage-paid envelope.
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1290 Avenue of the Americas, 9th Floor
New York, NY 10104
Shareholders, Banks and Brokers
Call Toll Free: 877-507-1756
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Patricia K. Collawn—Chairman, President and Chief Executive Officer;
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Charles N. Eldred—Executive Vice President, Corporate Development and Finance (served as Chief Financial Officer through January 21, 2020);
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Joseph D. Tarry—Senior Vice President and Chief Financial Officer;
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Patrick V. Apodaca—Senior Vice President, General Counsel and Secretary;
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Ronald N. Darnell—Senior Vice President, Public Policy; and
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Chris M. Olson,—Senior Vice President, Utility Operations.
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The merger consideration represented a premium to PNMR’s recent and historic share trading price (a 10.0% premium to the October 20, 2020 closing share price of PNMR common stock and approximately a 19.3% premium to the 30-day volume weighted average price of PNMR’s common stock as of October 20, 2020).
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The belief of the PNMR board, after a thorough review of our business, market trends, operations, competitive landscape, execution risks and financial condition, and discussions with our management and advisors, that the value offered to shareholders pursuant to the merger is more favorable to our shareholders than the potential long-term and sustainable value that might have resulted from remaining an independent public company, considering:
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the outlook of our industry and markets, including consolidation in the utility industry and the regulatory risks;
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the execution and other risks and uncertainties relating to future execution of our strategic plan;
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costs and risks of other strategic alternatives;
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the challenging regulatory environment in the utility industry, including in New Mexico;
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credit ratings pressure; and
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trading and liquidity challenges for small and mid-cap utilities.
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The fact that the merger consideration of $50.30 will be paid in all cash, and provides liquidity, certainty of value, eliminates shareholder risk inherent in our business plan and removes potential future dilution from required equity issuance by PNMR, and also provides for an ability for PNMR to increase dividends prior to the closing.
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The other alternatives evaluated and considered by the PNMR board, in consultation with its advisors, including (i) continuing to run the company in the ordinary course and (ii) selling certain businesses or subsidiaries of PNMR.
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The responses from other possible strategic merger partners as discussed above under “—Background of the Merger”.
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The course of negotiations between PNMR and Iberdrola/Avangrid, in which PNMR was advised by independent legal and financial advisors.
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The belief of the PNMR board based upon arm’s-length negotiations with Iberdrola/Avangrid that the price to be paid by Avangrid was the highest price per share that Avangrid was willing to pay for PNMR and the fact that all other possible strategic merger partners that were contacted declined to make an offer to merge with or acquire PNMR.
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The oral opinion of Evercore, subsequently confirmed in Evercore’s written opinion dated as of October 20, 2020, that as of October 20, 2020 and based upon and subject to the assumptions, limitations, qualifications and conditions described in Evercore’s written opinion, the merger consideration was fair, from a financial point of view, to the holders of PNMR common stock entitled to receive such merger consideration, as more fully described below in the section entitled “—Opinion of PNMR’s Financial Advisor” beginning on page 53.
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The likelihood that the merger will be consummated, based on, among other things, the likelihood of receiving the PNMR shareholder approval necessary to complete the merger in a timely manner, the limited number of conditions to the merger, the fact that Avangrid has received a financing commitment letter that will be sufficient for Avangrid to fund payment of the merger consideration, and the relative likelihood of obtaining required regulatory approvals.
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The fact that Iberdrola and Avangrid have experience in and a successful history of consummating electric utility transactions in the U.S.
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•
|
The terms and conditions of the merger agreement that permit PNMR, prior to the time that PNMR shareholders approve the merger agreement and the transactions contemplated thereby, under certain circumstances, to discuss and negotiate an acquisition proposal should one be made and, if the PNMR board determines in good faith, after consultation with its legal and financial advisors, that the unsolicited acquisition proposal constitutes a superior proposal within the meaning of the merger agreement, the PNMR board is permitted, after giving Avangrid an opportunity to match that proposal, to terminate the merger agreement in order to enter into a definitive agreement for such superior proposal, subject to payment of a termination fee of $130 million.
|
•
|
The other terms and conditions of the merger agreement, including, among other things, the representations, warranties, covenants and agreements of the parties, and the conditions to completion of the merger, including the absence of a financing condition.
|
•
|
The benefits to customers and local communities that can be provided by a larger company, with a focus on creating jobs in New Mexico, sustainability and reliable and efficient services.
|
•
|
The protections provided for PNMR employees in the merger agreement and growth opportunities for employees at a larger company.
|
•
|
The risk that the merger will be delayed or will not be completed, including the risk that required regulatory approvals may not be obtained, as well as the potential loss of value to PNMR shareholders and the potential negative impact on the financial position, operations and prospects of PNMR if the merger is delayed or is not completed for any reason.
|
•
|
That PNMR will be required to bear the costs associated with negotiating the merger agreement and attempting to close the merger even if the merger is not ultimately completed, as well as in connection with potential litigation that may arise in relation to the merger agreement.
|
•
|
That the ability of the PNMR board to withdraw or change its recommendation in favor of the merger in connection with a superior proposal or certain material changes related to PNMR is subject to payment of a termination fee of $130 million in the event Avangrid terminates the merger agreement following such withdrawal or recommendation change.
|
•
|
That substantial management time and effort will be required to effectuate the merger and the related disruption to PNMR’s day-to-day operations during the pendency of the merger.
|
•
|
The risk, if the merger is not completed, that the pendency of the merger could adversely affect the relationship of PNMR and its subsidiaries with their respective regulators, customers, employees, suppliers, agents and others with whom they have business dealings.
|
•
|
That the terms of the merger agreement place restrictions on the conduct of PNMR’s business prior to completion of the merger, which may prevent PNMR from undertaking business opportunities that may arise prior to completion of the merger, and the resultant risk if the merger is not completed.
|
•
|
The fact that PNMR shareholders will not participate in any potential future earnings or growth of PNMR and will not benefit from any potential appreciation in the value of PNMR as a subsidiary of Avangrid.
|
•
|
The fact that the gain recognized by PNMR shareholders as a result of the merger generally will be taxable to the shareholders for U.S. income tax purposes.
|
•
|
That PNMR’s executive officers and directors may have interests in the merger that are different from, or in addition to, the interests of PNMR shareholders.
|
|
| |
2020E
|
| |
2021E
|
| |
2022E
|
| |
2023E
|
| |
2024E
|
|
| |
(in millions except per share data)
|
||||||||||||
Operating Income Excluding Regulatory Disallowances(1)
|
| |
$286
|
| |
$298
|
| |
$346
|
| |
$384
|
| |
$408
|
Depreciation and Amortization
|
| |
$276
|
| |
$298
|
| |
$324
|
| |
$354
|
| |
$380
|
Ongoing Net Income
|
| |
$177
|
| |
$198
|
| |
$220
|
| |
$240
|
| |
$251
|
Ongoing EPS
|
| |
$2.21(2)
|
| |
$2.30
|
| |
$2.56
|
| |
$2.79
|
| |
$2.90
|
If Converted Ongoing EPS(3)
|
| |
$2.22
|
| |
$2.30
|
| |
$2.49
|
| |
$2.71
|
| |
$2.82
|
Capital Expenditures
|
| |
$806
|
| |
$976
|
| |
$760
|
| |
$753
|
| |
$649
|
(1)
|
Regulatory disallowances of $83 million and $2 million in 2021 and 2022, respectively, are excluded.
|
(2)
|
On October 1, 2020, PNMR raised 2020 ongoing earnings guidance for Non-GAAP EPS from the range of $2.16-$2.26 with a midpoint of $2.21 (reflected above) to a range of $2.23-$2.31 with a midpoint of $2.27. As disclosed, this increase reflected higher residential loads resulting from COVID-19-related usage and warmer temperatures, along with interest savings from the refinancing of debt. Given that the COVID-19-related usage and warmer temperatures cannot be assumed to continue in the future, management determined that the forecasts above should be based on the prior Non-GAAP EPS guidance of $2.21.
|
(3)
|
If Converted Ongoing EPS was calculated by Evercore based on information provided by PNMR management and approved for Evercore’s use by PNMR. If Converted Ongoing EPS uses diluted shares reflecting the settlement of forward equity shares, retirement of eligible restricted stock dilutive shares and the issuance and conversion of mandatory convertible securities expected to be issued in December 2021 and converted in December 2024. Diluted shares for 2020E does not include any early settlement of the forward equity shares. If Converted Ongoing EPS calculation reflects an adjustment of $6 million in 2022E, 2023E and 2024E for convertible debt interest savings expected following issuance of mandatory convertible securities in December 2021.
|
•
|
normal weather consistent with historical usage and other assumptions affecting customer demand,
|
•
|
no significant changes in regulatory framework, including assumptions relating to rate cases in Texas and New Mexico,
|
•
|
decoupling revenues are in place,
|
•
|
each of PNM and TNMP earn a certain targeted return on equity,
|
•
|
the PNM securitization is implemented in 2022,
|
•
|
planned capital expenditures and their net customer impacts,
|
•
|
retirement of San Juan Generating Station as previously disclosed,
|
•
|
divestment of Four Corners as previously disclosed,
|
•
|
return of Palo Verde leases unit 1 in 2023 and unit 2 in 2024 as previously disclosed,
|
•
|
annual FERC transmission rate increases at PNM, and
|
•
|
issuance and conversion of mandatory convertible securities to be issued in December 2021 and converted in December 2024.
|
•
|
reviewed certain publicly available business and financial information relating to PNMR that Evercore deemed to be relevant, including publicly available research analysts’ estimates;
|
•
|
reviewed the Forecasts, which are summarized in the section entitled “—Certain Unaudited Financial Forecasts Prepared by the Management of PNMR” of this proxy statement;
|
•
|
discussed with management of PNMR their assessment of the past and current operations of PNMR, the current financial condition and prospects of PNMR, and the Forecasts;
|
•
|
reviewed the reported prices and the historical trading activity of PNMR common stock;
|
•
|
compared the financial performance of PNMR and its stock market trading multiples with those of certain other publicly traded companies that Evercore deemed relevant;
|
•
|
compared the financial performance of PNMR and the valuation multiples relating to the merger with the financial terms, to the extent publicly available, of certain other transactions that Evercore deemed relevant;
|
•
|
reviewed the financial terms and conditions of the merger agreement; and
|
•
|
performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate.
|
(i)
|
a perpetuity growth method -- under which Evercore calculated a range of terminal values for PNMR by applying perpetuity growth rates ranging from 1.50% to 2.00% to the estimate of terminal year unlevered free cash flow reflected in the Forecasts,
|
(ii)
|
a terminal multiple method (P/E Multiple) -- under which Evercore calculated a range of terminal values for PNMR by applying price to earnings-per-share (“P/E”) multiples ranging from 18.00x to 21.00x to the estimate of 2024 recurring net income reflected in the Forecasts, and
|
(iii)
|
a terminal multiple method (EV/EBITDA Multiple) -- under which Evercore calculated a range of terminal values for PNMR by applying enterprise value (“EV”) to earnings before interest, tax, depreciation and amortization (taking into account regulatory disallowances and gas pension costs) (“EBITDA”) multiples ranging from 11.00x to 13.00x to the estimate of 2024 EBITDA reflected in the Forecasts.
|
Method
|
| |
Implied Per Share Equity
Value Reference Ranges
|
Perpetuity Growth Rate Method
|
| |
$30.44 - $40.77
|
Terminal Multiple Method (P/E Multiple)
|
| |
$39.85 - $50.26
|
Terminal Multiple Method (EV/EBITDA Multiple)
|
| |
$36.38 - $54.53
|
•
|
Alliant Energy Corporation
|
•
|
Pinnacle West Capital Corporation
|
•
|
IDACORP, Inc.
|
•
|
NorthWestern Corporation
|
•
|
ALLETE, Inc.
|
•
|
Avista Corporation
|
|
| |
P/E
|
| |
EV / EBITDA
|
||||||
PNMR Selected Companies
|
| |
2021E
|
| |
2022E
|
| |
2021E
|
| |
2022E
|
Alliant Energy Corporation
|
| |
21.2x
|
| |
20.1x
|
| |
13.0x
|
| |
12.7x
|
Pinnacle West Capital Corporation
|
| |
16.2x
|
| |
15.4x
|
| |
10.0x
|
| |
9.2x
|
IDACORP, Inc.
|
| |
18.4x
|
| |
17.2x
|
| |
12.8x
|
| |
12.4x
|
NorthWestern Corporation
|
| |
14.4x
|
| |
13.6x
|
| |
10.1x
|
| |
9.6x
|
ALLETE, Inc.
|
| |
15.0x
|
| |
13.6x
|
| |
10.1x
|
| |
9.4x
|
Avista Corporation
|
| |
16.3x
|
| |
15.2x
|
| |
8.9x
|
| |
8.6x
|
Mean
|
| |
16.9x
|
| |
15.9x
|
| |
10.8x
|
| |
10.3x
|
Median
|
| |
16.2x
|
| |
15.3x
|
| |
10.1x
|
| |
9.5x
|
Metric
|
| |
Implied Equity Value
Range Per Share
|
2021 P/E
|
| |
$36.20 - $43.10
|
2022 P/E
|
| |
$36.72 - $44.19
|
2021 EV/EBITDA
|
| |
$29.86 - $43.80
|
2022 EV/EBITDA
|
| |
$34.09 - $49.74
|
|
| |
|
| |
|
| |
EV / EBITDA
|
| |
P/E
|
||||||
Date
Announced
|
| |
Acquirer
|
| |
Target
|
| |
FY1
|
| |
FY2
|
| |
FY1
|
| |
FY2
|
Integrated Utilities
|
| |
|
| |
|
| |
|
| |
|
| |
|
|||
06-03-19
|
| |
Infrastructure Investments Fund (IIF)
|
| |
El Paso Electric Company
|
| |
14.3x
|
| |
13.1x
|
| |
27.9x
|
| |
25.1x
|
04-23-18
|
| |
CenterPoint Energy, Inc.
|
| |
Vectren Corporation
|
| |
12.0x
|
| |
11.6x
|
| |
25.2x
|
| |
23.5x
|
07-09-17
|
| |
Hydro One Limited
|
| |
Avista Corporation (not closed)
|
| |
12.0x
|
| |
11.2x
|
| |
27.3x
|
| |
25.8x
|
05-31-16
|
| |
Great Plains Energy Incorporated
|
| |
Westar Energy, Inc. (not closed)
|
| |
11.5x
|
| |
10.9x
|
| |
24.7x
|
| |
23.7x
|
02-09-16
|
| |
Algonquin Power & Utilities Corp.
|
| |
The Empire District Electric Company
|
| |
10.0x
|
| |
9.6x
|
| |
22.8x
|
| |
21.5x
|
09-04-15
|
| |
Emera Incorporated
|
| |
TECO Energy, Inc.
|
| |
11.2x
|
| |
10.7x
|
| |
25.0x
|
| |
23.4x
|
10-20-14
|
| |
Macquarie Group Ltd.
|
| |
Cleco Corporation
|
| |
10.6x
|
| |
10.4x
|
| |
20.4x
|
| |
20.2x
|
12-11-13
|
| |
Fortis Inc.
|
| |
UNS Energy Corporation
|
| |
9.0x
|
| |
8.2x
|
| |
20.3x
|
| |
18.1x
|
05-29-13
|
| |
MidAmerican Energy Holdings Company
|
| |
NV Energy, Inc.
|
| |
8.9x
|
| |
8.8x
|
| |
18.3x
|
| |
17.5x
|
|
| |
|
| |
75th Percentile
|
| |
12.0x
|
| |
11.2x
|
| |
25.2x
|
| |
23.7x
|
|
| |
|
| |
Mean
|
| |
11.1x
|
| |
10.5x
|
| |
23.5x
|
| |
22.1x
|
|
| |
|
| |
Median
|
| |
11.2x
|
| |
10.7x
|
| |
24.7x
|
| |
23.4x
|
|
| |
|
| |
25th Percentile
|
| |
10.0x
|
| |
9.6x
|
| |
20.4x
|
| |
20.2x
|
T&D Utilities
|
| |
|
| |
|
| |
|
| |
|
| |
|
|||
02-09-16
|
| |
Fortis Inc.
|
| |
ITC Holdings Corp.
|
| |
12.8x
|
| |
11.7x
|
| |
21.4x
|
| |
20.0x
|
04-30-14
|
| |
Exelon Corporation
|
| |
Pepco Holdings Inc.
|
| |
9.9x
|
| |
8.8x
|
| |
22.3x
|
| |
20.7x
|
|
| |
|
| |
75th Percentile
|
| |
12.0x
|
| |
11.0x
|
| |
22.1x
|
| |
20.5x
|
|
| |
|
| |
Mean
|
| |
11.3x
|
| |
10.3x
|
| |
21.9x
|
| |
20.3x
|
|
| |
|
| |
Median
|
| |
11.3x
|
| |
10.3x
|
| |
21.9x
|
| |
20.3x
|
|
| |
|
| |
25th Percentile
|
| |
10.6x
|
| |
9.6x
|
| |
21.6x
|
| |
20.2x
|
All Utilities
|
| |
|
| |
|
| |
|
| |
|
| |
|
|||
|
| |
|
| |
75th Percentile
|
| |
12.0x
|
| |
11.4x
|
| |
25.1x
|
| |
23.6x
|
|
| |
|
| |
Mean
|
| |
11.1x
|
| |
10.5x
|
| |
23.2x
|
| |
21.8x
|
|
| |
|
| |
Median
|
| |
11.2x
|
| |
10.7x
|
| |
22.8x
|
| |
21.5x
|
|
| |
|
| |
25th Percentile
|
| |
9.9x
|
| |
9.2x
|
| |
20.9x
|
| |
20.1x
|
Metric
|
| |
Implied Equity Value
Range Per Share
|
FY1 Price / Earnings
|
| |
$46.52 - $55.39
|
FY2 Price / Earnings
|
| |
$45.97 - $54.02
|
FY1 Enterprise Value / EBITDA
|
| |
$29.30 - $42.44
|
FY2 Enterprise Value / EBITDA
|
| |
$26.37 - $43.80
|
•
|
the expiration of the waiting period under the HSR Act and the rules and regulations thereunder;
|
•
|
notices to and filings under, and compliance with all requirements of CFIUS;
|
•
|
approval by NMPRC, pursuant to the New Mexico Public Utility Act and NMPRC Rule 450;
|
•
|
approval by PUCT, pursuant to the Public Utility Regulatory Act;
|
•
|
approval from FERC, pursuant to Section 203 of the Federal Power Act;
|
•
|
approval from the FCC under the Communications Act of 1934 for the transfer of control over wireless and microwave licenses held by certain PNMR subsidiaries; and
|
•
|
approval from the NRC.
|
•
|
you must file with PNMR, prior to or at the special meeting, a written objection to the merger;
|
•
|
you must not vote in favor of the merger;
|
•
|
you must, within ten days after the date of the special meeting, make a written demand on PNMR (as the surviving company of the merger) for payment of the fair value of your shares of PNMR common stock; and
|
•
|
if your shares of PNMR common stock are represented by a certificate, you must, within 20 days after you make your demand for payment to PNMR as described above, submit your certificate formerly representing your shares of PNMR common stock to PNMR for notation that such demand has been made.
|
Name
|
| |
Restricted
Stock Rights
(not deferred)
(#)
|
| |
Restricted
Stock Rights
(deferred)
(#)
|
| |
Total Value of
Restricted
Stock Rights(1)
($)
|
Vicky A. Bailey
|
| |
3,124
|
| |
—
|
| |
157,137.20
|
Norman P. Becker
|
| |
—
|
| |
7,686
|
| |
386,605.80
|
Renae E. Conley
|
| |
—
|
| |
3,124
|
| |
157,137.20
|
Alan J. Fohrer
|
| |
—
|
| |
7,686
|
| |
386,605.80
|
Sidney M. Gutierrez
|
| |
3,124
|
| |
—
|
| |
157,137.20
|
James A. Hughes
|
| |
—
|
| |
5,342
|
| |
268,702.60
|
Maureen T. Mullarkey
|
| |
—
|
| |
7,686
|
| |
386,605.80
|
Donald K. Schwantz
|
| |
3,124
|
| |
—
|
| |
157,137.20
|
Bruce W. Wilkinson
|
| |
3,124
|
| |
—
|
| |
157,137.20
|
(1)
|
Calculated by multiplying the $50.30 merger consideration by the number of shares.
|
Name
|
| |
Restricted
Stock Rights
(#)
|
Patricia K. Collawn
|
| |
26,521
|
Charles N. Eldred
|
| |
7,321
|
Joseph D. Tarry
|
| |
2,175
|
Patrick V. Apodaca
|
| |
4,030
|
Chis M. Olson
|
| |
3,107
|
Ronald N. Darnell
|
| |
3,052
|
Executive Officer
|
| |
Target
Performance
Shares (#)
|
| |
Maximum
Performance
Shares (#)
|
Patricia K. Collawn
|
| |
114,656
|
| |
229,314
|
Charles N. Eldred
|
| |
34,094
|
| |
68,190
|
Joseph D. Tarry
|
| |
11,161
|
| |
22,326
|
Patrick V. Apodaca
|
| |
14,797
|
| |
29,594
|
Chis M. Olson
|
| |
12,101
|
| |
24,206
|
Ronald N. Darnell
|
| |
11,891
|
| |
23,785
|
•
|
Patricia K. Collawn—Chairman, President and Chief Executive Officer;
|
•
|
Charles N. Eldred—Executive Vice President, Corporate Development and Finance (served as Chief Financial Officer through January 21, 2020);
|
•
|
Joseph D. Tarry—Senior Vice President and Chief Financial Officer
|
•
|
Patrick V. Apodaca—Senior Vice President, General Counsel and Secretary;
|
•
|
Ronald N. Darnell—Senior Vice President, Public Policy; and
|
•
|
Chris M. Olson—Senior Vice President, Utility Operations.
|
•
|
the closing date of the merger is December 15, 2020, which is the estimated date of the completion of the merger solely for purposes of this golden parachute compensation disclosure; and
|
•
|
the named executive officers of PNMR are terminated without “cause” immediately following the assumed closing date of the merger on December 15, 2020.
|
Name
|
| |
Cash(1)
($)
|
| |
Equity(2)
($)
|
| |
Perquisites/
Benefits(3)
($)
|
| |
Other(4)
($)
|
| |
Total($)
|
Patricia K. Collawn
|
| |
9,918,213
|
| |
9,904,875
|
| |
49,377
|
| |
20,000
|
| |
19,892,465
|
Charles N. Eldred
|
| |
4,395,484
|
| |
2,906,938
|
| |
31,757
|
| |
20,000
|
| |
7,354,179
|
Joseph D. Tarry
|
| |
2,166,068
|
| |
944,030
|
| |
39,421
|
| |
20,000
|
| |
3,169,519
|
Patrick V. Apodaca
|
| |
2,481,921
|
| |
1,310,214
|
| |
39,578
|
| |
20,000
|
| |
3,851,713
|
Ronald N. Darnell
|
| |
1,871,375
|
| |
1,043,272
|
| |
52,201
|
| |
20,000
|
| |
2,986,848
|
Chris M. Olson
|
| |
2,023,751
|
| |
1,059,620
|
| |
38,868
|
| |
20,000
|
| |
3,142,239
|
(1)
|
The amounts reflect estimated payments of the lump-sum cash severance that would be provided to the named executive officer under the terms of the Officer Retention Plan if the named executive officer were to experience a covered termination for the purposes of the Officer Retention Plan on the closing date of the merger, calculated as a lump sum severance payment equal to two times current eligible compensation for the CEO, EVP and SVPs of $4,708,932 to Ms. Collawn, $2,089,637 to Mr. Eldred, $1,216,130 to Mr. Tarry, $1,292,323 to Mr. Apodaca, $1,060,112 to Mr. Darnell and $1,144,091 to Mr. Olson, inclusive of payments under the acceleration of the 2020 annual incentive plan. Receipt of the double-trigger payments is conditioned upon the named executive officer’s execution of a customary release agreement and a restrictive covenant agreement not to compete. The amounts also include estimated payments conditioned on compliance with a covenant not to compete if the named executive officer experiences a covered termination following a change in control and is equal to the named executive officer’s eligible compensation paid over a 12-month period of $2,354,466 to Ms. Collawn, $1,044,818 to Mr. Eldred, $608,065 to Mr. Tarry, $646,161 to Mr. Apodaca, $530,056 to Mr. Darnell and $572,046 to
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(2)
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The amounts reflect the aggregate payment that each named executive officer would receive with respect to PNMR equity awards subject to accelerated vesting in connection with the merger, as described above in “Interests of PNMR’s Executive Officers and Directors in the Merger – Payments Upon Termination Upon or Following the Closing of the Merger” above. The amounts reflect acceleration of performance-based shares based on management projections of actual performance to date. As described above, the time-vested restricted stock rights will fully vest upon termination upon a change in control. Because the named executive officers are retirement eligible, the time-vested restricted stock rights will also fully vest upon a voluntary termination.
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(3)
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Includes medical, dental, vision, life and accidental death and dismemberment insurance benefits that are substantially similar to those received by the named executive officer immediately prior to termination of employment for a period of two years. Receipt of these benefits is conditioned upon the named executive officer experiencing a covered termination following the closing date of the merger, and his or her execution of a customary release agreement.
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(4)
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Includes reimbursement of reasonable legal expenses upon termination for a change in control under the Officer Retention Plan. The amount shown in the table is a reasonable estimate of the amount that may be reimbursable.
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a bank, insurance company, or other financial institution;
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a tax-exempt organization;
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a retirement plan or other tax-deferred account;
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an S corporation, a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes (or an investor in a partnership or S corporation);
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a real estate investment trust or regulated investment company;
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a dealer or broker in stocks and securities, or currencies;
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a trader in securities that elects mark-to-market treatment;
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a holder of shares of PNMR common stock subject to the alternative minimum tax provisions of the Code;
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a holder of shares of PNMR common stock that received the shares of PNMR common stock through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation;
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a U.S. holder (as defined below) that has a functional currency other than the United States dollar;
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“controlled foreign corporations,” “passive foreign investment companies” or corporations that accumulate earnings to avoid U.S. federal income tax;
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a person that holds the shares of PNMR common stock as part of a hedge, straddle, constructive sale, conversion or other risk reduction strategy or integrated transaction; or
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a U.S. expatriate or a former citizen or long-term resident of the United States.
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an individual citizen or resident of the United States;
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a corporation (or any other entity or arrangement treated as a corporation for United States federal income tax purposes) organized in or under the laws of the United States or any state thereof or the District of Columbia;
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an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
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a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more “United States” persons (within the meaning of Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust or (b) the trust has validly elected to be treated as a United States person for U.S. federal income tax purposes.
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the non-U.S. holder is an individual who was present in the United States for 183 days or more during the taxable year of the exchange and certain other conditions are met; or
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the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States, and, if required by an applicable income tax treaty, attributable to a permanent establishment maintained by the non-U.S. holder in the United States.
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cooperation between Avangrid and PNMR in the preparation and filing of this proxy statement;
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notification to the other party upon the occurrence of certain events;
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Avangrid’s access to PNMR’s information and Avangrid’s agreement to keep information exchanged confidential;
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cooperation with Avangrid and the use of commercially reasonable efforts by PNMR to delist shares of PNMR common stock from the NYSE and deregister such shares as promptly as practical after the effective time of the merger;
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cooperation between Avangrid and PNMR in connection with public announcements;
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indemnification of directors and officers of PNMR and its subsidiaries for certain matters occurring at or prior to the merger;
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notification and cooperation between PNMR and Avangrid with respect to any litigation related to the merger agreement, the merger or the other transactions contemplated by the merger agreement;
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the performance by merger sub of its obligations under the merger agreement;
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the PNMR board and the Avangrid board of directors, prior to the effective time of the merger, taking reasonable steps, consistent with the interpretive guidelines of the SEC, to cause the transactions contemplated by the merger agreement to be exempt under Rule 16b-3 promulgated under the Exchange Act;
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the agreement of the parties that if the effective time of the merger occurs after the record date for a regular quarterly cash dividend payable to holders of shares of PNMR common stock and prior to the payment date of such dividend, then the surviving corporation will cause to be paid, out of the exchange fund, such dividend following the effective time of the merger on the scheduled payment date for such dividend;
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the use by each of Avangrid and PNMR of commercially reasonable efforts to do all things necessary, proper or advisable under applicable law to carry out the intent and purposes of the merger agreement, to fulfill and satisfy each condition within the control of such party and to consummate and make effective the transactions contemplated by the merger agreement, including the merger;
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the establishment by Avangrid and PNMR of a transition committee, consisting of two representatives of each party, to develop regulatory plans and proposals, facilitate the transfer of information between the parties and other matters as such committee deems appropriate, subject to applicable law;
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the taking by each of Avangrid and PNMR of all action within its power to ensure that no state anti-takeover statute or similar statute or regulation is or becomes applicable to the merger agreement, the merger or any of the other transactions contemplated by the merger agreement, and if any such statute or regulation becomes applicable to the merger agreement, the merger or any of the other transactions contemplated by the merger agreement, the taking by each of Avangrid and PNMR of all action within its power to ensure that the merger and the other transactions contemplated by the merger agreement may be consummated as promptly as reasonably practicable on the terms contemplated by the merger agreement and otherwise to minimize the effect of such statute or regulation on the merger and the other transactions contemplated by the merger agreement; and
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the agreement by PNMR that, as soon as reasonably practicable following the date of the merger agreement, PNMR will (a) enter into definitive agreements providing for exit from all ownership
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due organization, valid existence, good standing, organizational documents and, in the case of PNMR, ownership of subsidiaries;
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corporate power and authority to enter into the merger agreement and to complete the transactions contemplated by the merger agreement, and the enforceability of the merger agreement;
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absence of conflicts with or breaches of its and, in the case of PNMR, its subsidiaries’, (i) governing documents, licenses, and, in the case of PNMR, certain contracts, and (ii) applicable laws as a result of entering into the merger agreement and the consummation of the merger and the other transactions contemplated by the merger agreement;
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consents and approvals required in connection with the execution and delivery of the merger agreement or the completion of the merger and the other transactions contemplated by the merger agreement, including required filings with, and the consents and approvals of, governmental entities or third parties in connection with the transactions contemplated by the merger agreement;
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compliance with laws and licenses;
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absence of any material adverse effect;
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absence of certain litigation, orders and injunctions; and
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brokers’ fees in connection with the transactions contemplated by the merger agreement.
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capital structure, including in particular the number of shares of common stock, preferred stock and equity-based awards issued and outstanding;
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securities filings since January 1, 2018, including financial statements contained therein;
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internal controls and absence of undisclosed liabilities;
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the vote required by the PNMR shareholders to approve the merger agreement and the transactions contemplated thereby, including the merger;
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matters with respect to certain contracts;
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conduct of business in the ordinary course since December 31, 2018;
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matters related to employee benefit plans;
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tax matters;
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environmental matters;
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receipt of opinions of financial advisors;
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regulatory matters;
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labor and employment matters;
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insurance matters;
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real property matters;
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intellectual property matters;
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the inapplicability of certain state and federal antitakeover statutes;
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matters related to energy price risk management; and
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compliance with anti-corruption and anti-money laundering laws.
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ownership and operations of merger sub;
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absence of ownership of PNMR common stock or certain securities, contract rights or derivative positions by Avangrid and any of its subsidiaries;
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sufficiency of funds necessary to consummate the merger and the other transactions contemplated by the merger agreement, including the payment of the merger consideration;
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the receipt and enforceability of the commitment letter delivered by Iberdrola, S.A.; and
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absence of any requirement that the holders of any capital stock of Avangrid or any of its affiliates vote or consent to approve the merger agreement or the transactions contemplated thereby, including the merger.
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(i)
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general changes or developments in the legislative or political condition, or in the economy or the financial, debt, capital, credit, commodities or securities markets, in each such case, in the United States or elsewhere in the world, including as a result of changes in geopolitical conditions;
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(ii)
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any change affecting any industry in which PNMR or its subsidiaries operate, including electric generating, transmission or distribution industries (including, in each case, any changes in operations thereof) or any change affecting retail markets for electric power, capacity or fuel or related products;
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(iii)
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any changes in the national, regional, state, provincial or local electric generation, transmission or distribution systems or increases or decreases in planned spending with respect thereto;
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(iv)
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the entry into the merger agreement or the public announcement of the merger or other transactions contemplated by the merger agreement, including any impact thereof on relationships, contractual or otherwise, with customers, suppliers, regulators, lenders, partners or employees of PNMR and its subsidiaries;
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(v)
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any action taken or omitted to be taken by PNMR at the express written request of or with the express written consent of Avangrid or merger sub;
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(vi)
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any actions required to be undertaken by PNMR in accordance with the provisions of the merger agreement related to obtaining any consent or making any filing required for the consummation of the merger and the other transactions contemplated by the merger agreement or, in connection therewith, any written proposal or commitment made by Avangrid or PNMR or their respective affiliates to any governmental entity in accordance with the merger agreement or imposed by any governmental entity, in each case, in order to obtain the approvals from the NMPRC, the PUCT and CFIUS;
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(vii)
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changes after the date of execution of the merger agreement in any applicable laws or applicable binding accounting regulations or principles or interpretation or enforcement thereof by any governmental entity;
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(viii)
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any hurricane, tornado, earthquake, flood, tsunami, natural disaster, act of God, pandemic or epidemic, including COVID-19 and the taking of any COVID Action. A “COVID Action” is any commercially reasonable action taken by a party or its subsidiaries (after determination by the party or its applicable
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(ix)
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any outbreak or escalation of hostilities or war (whether or not declared), military actions or any act of sabotage, terrorism, or national or international political or social conditions;
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(x)
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any change in the market price or trading volume of the shares of PNMR or the credit rating of PNMR or any of its subsidiaries;
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(xi)
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any failure by PNMR to meet any published analyst estimates or expectations of PNMR’s revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure by PNMR to meet its internal or published projections, budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself; or
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(xii)
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any litigation or claim threatened or initiated by shareholders, ratepayers, customers or suppliers of PNMR (each in their capacity as such) against PNMR, any of its subsidiaries or any of their respective officers or directors (in each case, in their capacity as such), in each case, arising out of the execution of the merger agreement or the transactions contemplated thereby.
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PNMR has agreed to, cause each of its subsidiaries to, and exercise any available rights to cause its joint ventures to:
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conduct its business in the ordinary course of business consistent with past practice and in substantially the same manner as previously conducted;
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use its commercially reasonable efforts to maintain its relationships with governmental entities, customers, suppliers, contractors, distributors, creditors, lessors and other third parties that have material business dealings with PNMR or such subsidiary and keep available the services of its officers and key employees and consultants, in each case, as is reasonably necessary to preserve substantially intact its business organization; and
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PNMR has agreed not to, and cause each of its affiliates not to, directly or indirectly, take any action (including any action with respect to a third-party) that would, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the consummation of the merger or the other transactions contemplated by the merger agreement or their respective ability to satisfy their obligations hereunder.
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amend or otherwise change its articles of incorporation or bylaws or the equivalent organizational documents;
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make any acquisition of, or make any investment in any interest in, any business or assets except for (i) purchases of equipment, inventory and other assets or pursuant to construction, operation and/or maintenance contracts, in each case in the ordinary course of business or pursuant to contracts existing on the date of the merger agreement or entered into thereafter consistent with the terms of the merger agreement or (ii) acquisitions or investments that do not exceed $20 million individually or $60 million in the aggregate;
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issue or authorize the issuance, pledge, transfer, encumber, sell, or dispose of (or commit to any of the foregoing) (in each case, whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any equity securities (except for the issuance of shares of PNMR common stock pursuant to the exercise or settlement of PNMR restricted stock rights, performance shares and other stock rights granted under the PNMR Stock Plan outstanding as of October 19, 2020, and for the grant of new awards under the PNMR Stock Plan in the ordinary course of business consistent with past practice and specified in the disclosure schedule to the merger agreement (provided that such new awards will not vest, accelerate or become exercisable solely as a result of the merger or the other transactions contemplated by the merger agreement, although the acceleration of any vesting of any PNMR restricted stock rights, performance shares and other stock rights granted under the PNMR Stock Plan is permitted on a “double trigger” basis in accordance with the terms of the PNMR Stock Plan));
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reclassify, combine, split, subdivide or amend the terms of, or redeem, purchase or otherwise acquire, directly or indirectly, any of its equity securities;
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other than certain permitted liens or liens relating to indebtedness otherwise permitted to be incurred pending the merger, create or incur any lien on any material assets of PNMR or its subsidiaries (other than subsidiaries acquired following the date of the merger agreement);
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make any loans or advances to any person (other than PNMR or any of its wholly-owned subsidiaries) other than in the ordinary course of business or not in excess of $10 million in the aggregate;
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sell or otherwise dispose of any business organization or division thereof or otherwise sell, assign, exclusively license, allow to expire, or dispose of any assets, rights or properties which are material to PNMR, its subsidiaries and joint ventures, taken as a whole (other than sales, dispositions or licensing of equipment or inventory and other assets in the ordinary course of business consistent with past practice or pursuant to contracts existing on the date of the merger agreement or entered into thereafter consistent with the terms of the merger agreement);
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declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its equity securities, or make any other actual, constructive or deemed distribution in respect of any equity securities (except (i) PNMR may continue the declaration and payment of planned regular quarterly cash dividends on PNMR common stock for each quarterly
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other than in the ordinary course of business, as required by law or any governmental entity or to implement the outcome of any regulatory proceeding, enter into, terminate, modify or amend in any material respect certain material contracts;
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except as expressly provided in merger agreement, for borrowings in the ordinary course of business under PNMR’s and its subsidiaries’ credit facilities, and for intercompany loans between PNMR and any of its wholly-owned subsidiaries or between any wholly-owned subsidiaries of PNMR:
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incur, assume or repay indebtedness for borrowed money or issue any debt securities in excess of $50 million, provided that that any such debt must be voluntarily prepayable without material premium, penalties or other material costs, and provided further that these restrictions on debt will not apply to (1) debt incurred in the ordinary course of business not to exceed $10 million in the aggregate, (2) debt pursuant to letters of credit in the ordinary course of business, or (3) any refinancing of long-term or short-term debt of PNMR or any of its subsidiaries existing as of the date of the merger agreement, provided that if such refinancing is completed prior to maturity, it will be (x) on substantially similar terms or terms that are more favorable to PNMR or such subsidiaries in the aggregate, (y) for the same or lesser principal amount and (z) voluntarily prepayable by PNMR or such subsidiaries without a premium or penalty amount greater than the premium or penalty associated with the debt that is being refinanced,
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modify in any material respect in a manner adverse to PNMR or Avangrid the terms of any such indebtedness for borrowed money,
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assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) the obligations of any person (other than a wholly-owned subsidiary of PNMR),
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make any loans, advances or capital contributions to or investments in any other person (other than PNMR or any of its subsidiaries), except for business expense advancements in the ordinary course of business consistent with past practice to employees of PNMR or its subsidiaries,
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mortgage or pledge any of its or its subsidiaries’ assets (tangible or intangible), or
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any commodity, currency, sale or other hedging agreements other than such hedging agreements entered into in the ordinary course of business consistent with past practice, which can be terminated on 90 days or less notice.
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increase the salary, wages, bonus or fringe benefits of any director, officer or employee of PNMR or any of its subsidiaries, other than:
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as required by any agreement existing on the date of the merger agreement, any collective bargaining agreement or any employee plan, agreement or arrangement, in each case, made available to Avangrid or as contemplated under the merger agreement,
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increases in salaries, wages, bonuses and fringe benefits of any employee of PNMR or any of its subsidiaries made in the ordinary course of business consistent with past practice, including, merit increases or increases in response to competing offers or to market conditions, or in connection with any extension or renewal of any collective bargaining agreement made in the ordinary course of business,
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renewals and changes made in the ordinary course of business consistent with past practice to employee benefit plans which renewals and changes do not discriminate in favor of executive level employees,
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with respect to new hires and promotions in the ordinary course, or
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restructuring or reassignment of officers and executive-level employees provided the total number of officers and executive-level employees does not increase as a result of the restructuring or reassignment from the number of officers and executive-level employees as of the date of the merger agreement;
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except as required by applicable law or the terms of any agreement (including any benefit plan or collective bargaining agreement made available to Avangrid) existing on the date of the merger agreement or as contemplated under the merger agreement (i) make any increase in, or accelerate the vesting of, the compensation or benefits payable or to become payable, or grant any retention, severance or termination pay (or rights thereto) to, any current, former or retired employee or director or other individual consultant/service provider of PNMR or any of its subsidiaries, which we collectively refer to as “PNMR Employees,” or enter into or amend any employee plan, agreement or arrangement or make any loans to any PNMR Employees (other than reasonable and normal advances to PNMR Employees for bona fide expenses that are incurred in the ordinary course of business), or (ii) enter into, adopt or amend any collective bargaining agreements, in each case in a manner inconsistent with past practice, provided that the foregoing does not prevent PNMR or any subsidiary of PNMR from:
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entering into at-will offer letters with new or newly-promoted non-executive level employees (or employment arrangements with new executive level employees to replace existing executive-level PNMR Employees or as the result of promotion of non-executive level employees), in each and every case, in the ordinary course of business consistent with past practice,
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promoting non-executive level employees in the ordinary course of business consistent with past practice (including promoting non-executive level employees into executive level positions made in the ordinary course),
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changing the compensation or benefits to PNMR Employees in the ordinary course of business consistent with past practice,
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paying retention, severance, termination pay or other benefits to PNMR Employees under any benefit plan, agreement or arrangement as in effect on the date of the merger agreement or as otherwise expressly contemplated by the merger agreement,
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renewals and changes made in the ordinary course of business consistent with past practice to any benefit plan, agreement or arrangement which renewals and changes do not discriminate in favor of executive level employees,
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extensions or renewals made in the ordinary course of business to any collective bargaining agreements, or
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restructuring or reassignment of officers and executive-level employees provided the total number of officers and executive-level employees does not increase as a result of the restructuring or reassignment from the number of officers and executive-level employees as of the date of the merger agreement;
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except as may be required as a result of a change in applicable law or in GAAP, make any material change in any of the accounting principles, policies, procedures or practices used by it or change any annual tax accounting period;
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other than as and to the extent required by applicable law or GAAP, (i) make, revoke, rescind or change any material tax election, (ii) adopt or change an annual tax accounting period, (iii) adopt or change a material tax accounting method, (iv) surrender any material claim for a refund of taxes, (v) settle or compromise any material liability or refund for taxes or any tax audit, claim or other proceeding relating to a material amount of taxes or otherwise enter into any closing agreement affecting any material tax liability or refund, or (vi) amend, in a material respect, any material tax return;
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other than in the ordinary course of business or as required by applicable law, enter into any collective bargaining agreement with any labor organization representing any PNMR Employees or extend or amend in any material respect any existing collective bargaining agreement;
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waive, release, discharge, settle, satisfy or compromise any legal proceeding, other than the waiver, release, assignment, discharge, settlement, satisfaction or compromises of litigation where the amount paid does not exceed $5 million individually or $15 million in the aggregate, except that (i) PNMR will continue to have the ability to enter into settlements or compromises in the ordinary course of business consistent with past practice or in respect of any regulatory proceedings (including appeals) that would not reasonably be expected to have a material adverse effect on PNMR and (ii) any amount that is reflected or reserved against in PNMR’s audited consolidated financial statements included in certain reports filed by PNMR with the SEC in respect of such legal proceeding, or that is offset by insurance proceeds received in respect of such legal proceeding, will in each case not be counted towards the $5 million or $15 million limitations;
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merge or consolidate with any person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restricting, recapitalization or other reorganization;
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authorize or make any capital expenditures that are, in the aggregate, greater than 125% of the aggregate amount of capital expenditures scheduled to be made in PNMR’s capital expenditure budget as set forth in PNMR’s disclosure schedule for the relevant periods indicated therein, provided that notwithstanding the foregoing, PNMR and its subsidiaries will be permitted to make emergency capital expenditures, after first using commercially reasonable efforts to consult with Avangrid, in any amount (i) as required by a governmental entity or (ii) that PNMR determines is incurred in connection with the repair or replacement of facilities or equipment destroyed or damaged due to casualty or accident or natural disaster or other force majeure event necessary or advisable to maintain or restore safe, adequate and reliable electric transmission service or to prevent any threat to health and safety of individuals;
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enter into any agreement with respect to the voting of its capital stock;
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other than in the ordinary course of business consistent with past practice, enter into any contract for the lease or purchase of material real property or modify the material terms of any material real property lease to which it is a party;
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fail to use its commercially reasonable efforts to maintain, in full force without interruption, its present insurance policies or comparable insurance coverage; or
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agree, authorize or commit to do any of the actions described in the bullets above.
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initiate, solicit, knowingly encourage or knowingly facilitate any inquiries with respect to or that could reasonably be expected to lead to, or the making, submission or announcement of, any acquisition proposal;
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participate or engage in any negotiations or discussions concerning, or furnish or provide access to its properties, books and records or any confidential information or data to, any person relating to an acquisition proposal, or any inquiry or proposal that could reasonably be expected to lead to any acquisition proposal;
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approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any acquisition proposal; or
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execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement or other similar agreement for any acquisition proposal.
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such acquisition proposal or proposal that would reasonably be expected to lead to an acquisition proposal was not obtained or made as a result of a breach of the merger agreement,
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the PNMR board determines in good faith, after consultation with its financial advisors and outside legal counsel, that the failure to take such action could reasonably be expected to result in a possible superior proposal and a breach of its fiduciary duties under applicable law,
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so long as neither PNMR nor any of its subsidiaries nor any of their respective representatives has violated the merger agreement, and
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PNMR promptly notifies Avangrid (including the identity of such counterparty) after granting any such waiver, amendment or release and, if requested by Avangrid, grants Avangrid a waiver, amendment or release of any similar provision under its confidentiality agreement with PNMR.
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grant a waiver, amendment or release under any confidentiality or standstill agreement to the extent necessary to allow for a confidential acquisition proposal to be made to PNMR or the PNMR board or to allow for the engagement in discussions regarding an acquisition proposal or a proposal that would reasonably be expected to lead to an acquisition proposal so long as, in each case, such acquisition proposal or proposal that would reasonably be expected to lead to an acquisition proposal was not obtained or made as a result of a violation of the terms of the merger agreement, if the PNMR board determines in good faith, after consultation with its financial advisors and outside legal counsel, that the failure to take such action could reasonably be expected to result in (i) a possible superior proposal and (ii) a breach of its fiduciary duties under applicable law and so long as (x) neither PNMR nor any of its subsidiaries nor any of their respective representatives has violated the merger agreement, and (y) PNMR promptly notifies Avangrid thereof (including the identity of such counterparty) after granting any such waiver, amendment or release and, if requested by Avangrid, grants Avangrid a waiver, amendment or release of any similar provision under the confidentiality agreement between Avangrid and PNMR;
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provide access to PNMR’s properties, books and records and providing information or data in response to a request therefor by a person or group who has made a bona fide written acquisition proposal after the date of the merger agreement that, in each case, did not result from a breach of PNMR’s non-solicitation obligations under the merger agreement (so long as (a) PNMR has provided the required notice of the acquisition proposal to Avangrid and (b) such acquisition proposal was not initiated, solicited, obtained or encouraged in breach of PNMR’s non-solicitation obligations under the merger agreement) if the PNMR board (i) has determined in good faith, after consultation with its outside legal counsel and financial advisors, that such acquisition proposal could reasonably be expected to constitute, result in or lead to a superior proposal, (ii) after consultation with its outside legal counsel, has determined in good faith that failing to do so could be reasonably expected to result in a breach of its fiduciary duties under applicable law and (iii) has received from such person an executed confidentiality agreement on terms no less favorable in the aggregate to PNMR and no less restrictive in the aggregate to such person to those contained in the confidentiality agreement between PNMR and Avangrid (except for such changes specifically and expressly permitted pursuant to the merger agreement); and
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•
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participate and engage in any negotiations or discussions with any person or group and their respective representatives who has made a bona fide written acquisition proposal after the date of the merger agreement that, in each case, did not result from a breach of PNMR’s non-solicitation obligations under the merger agreement, if the PNMR board (i) has determined in good faith, after consultation with its outside legal counsel and financial advisors, that such acquisition proposal could reasonably be expected to constitute, result in or lead to a superior proposal and (ii) after consultation with its outside legal counsel, has determined in good faith that failing to do so could be reasonably expected to result in a breach of its fiduciary duties under applicable law.
|
•
|
solicit, initiate, knowingly facilitate or knowingly encourage any Avangrid business combination,
|
•
|
enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement, option agreement, joint venture agreement, partnership agreement or other similar agreement constituting or related to, or that is intended to effect, any Avangrid business combination or that would reasonably be expected to cause Avangrid to abandon, terminate or fail to consummate the merger or the other transactions contemplated by the merger agreement,
|
•
|
enter into, initiate, continue, engage in or otherwise participate in any way in any discussions or negotiations regarding any Avangrid business combination, or
|
•
|
agree or propose to do any of the foregoing.
|
•
|
that would prevent, materially delay or materially impair the consummation of the merger, or
|
•
|
in which the holders of shares of PNMR common stock would not be entitled to receive, in respect of each such share (other than (A) shares of PNMR common stock owned by Avangrid, PNMR, merger sub or any other direct or indirect wholly-owned subsidiary of Avangrid or PNMR and (B) dissenting shares) an amount in cash equal to the merger consideration (taking into account the amounts paid in respect thereof pursuant to the merger agreement).
|
•
|
withhold, withdraw, qualify or modify, or resolve to or propose to withhold, withdraw, qualify or modify, its recommendation that the PNMR shareholders vote in favor of approving the merger and the merger agreement in a manner adverse to Avangrid;
|
•
|
make any public statement inconsistent with such recommendation;
|
•
|
approve, adopt or recommend any acquisition proposal, or any inquiry or proposal that could reasonably be expected to lead to any acquisition proposal;
|
•
|
fail to reaffirm or re-publish such recommendation within ten business days of being requested by Avangrid to do so, provided that Avangrid will not be entitled to request such a reaffirmation or re-publishing more than one time with respect to any single acquisition proposal other than in connection with an amendment to any financial terms of such acquisition proposal or any other material amendment to such acquisition proposal;
|
•
|
fail to include such recommendation in this proxy statement;
|
•
|
fail to announce publicly, within five business days after a tender offer or exchange offer relating to any PNMR securities has been commenced that would constitute an acquisition proposal, that the PNMR board recommends rejection of such tender or exchange offer;
|
•
|
resolve, publicly propose or agree to do any of the foregoing;
|
•
|
authorize, cause or permit PNMR or any of its subsidiaries to enter into a merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar contract (other than an acceptable confidentiality agreement) or recommend any tender offer providing for, with respect to, or in connection with any acquisition proposal or requiring PNMR to abandon, terminate, delay or fail to consummate the merger or any other transaction contemplated by the merger agreement; or
|
•
|
take any action pursuant to which any person (other than Avangrid, merger sub or their respective affiliates) or acquisition proposal would become exempt from or not otherwise subject to any take-over statute or articles of incorporation provision relating to an acquisition proposal.
|
•
|
a salary or wage, that is no less favorable than the salary or wage that was provided to such continuing employee immediately prior to the effective time of the merger,
|
•
|
target annual cash bonus opportunity and long-term incentive opportunity (it being understood that long-term incentive opportunities provided by Avangrid to each continuing employee do not need to be provided in the form or equity or equity-based grants) that are no less favorable in the aggregate than the target annual cash bonus opportunity and long-term incentive opportunity provided to such continuing employee immediately prior to the effective time of the merger,
|
•
|
employee retirement benefits (including defined contribution retirement, pension and nonqualified deferred compensation) (including matching and other employer contributions), in each case, that is no less favorable in the aggregate than the employee retirement benefits (including defined contribution retirement, pension and nonqualified deferred compensation) (including matching and other employer contributions) that were provided to such continuing employee immediately prior to the effective time of the merger,
|
•
|
welfare and other benefits that are substantially comparable in the aggregate to the welfare and other benefits that were provided to such continuing employee immediately prior to the effective time of the merger, and
|
•
|
severance benefits that are no less favorable than those provided as of the effective time of the merger, subject to such severed employee’s execution and non-revocation of a standard release of claims and counting any service accrued after the effective time of the merger.
|
•
|
any pre-existing conditions or limitations and eligibility waiting periods under any group health plans of Avangrid or its affiliates to be waived with respect to continuing employees and their eligible dependents,
|
•
|
each continuing employee will receive credit for the plan year in which the continuing employee commences participation under any group health plans of Avangrid or its affiliates towards applicable deductibles and annual out-of-pocket limits for medical expenses incurred prior to such time in the applicable plan year for which payment has been made, and
|
•
|
to the extent that a continuing employee’s service was recognized under a similar PNMR benefit plan, subject to certain exceptions, such continuing employee will receive service credit for his or her employment with PNMR and its subsidiaries for purposes of eligibility to participate, vesting credit and benefits accruals (but excluding benefit accrual under any defined benefit pension plan or retiree health plan) under each applicable Avangrid benefit plan.
|
•
|
make and obtain the required consents and filings,
|
•
|
make all registrations and filings, and thereafter, make any other required registrations, filings or submissions, and pay any fees due in connection therewith, with any governmental entity necessary to consummate the transactions contemplated by the merger agreement,
|
•
|
take, or cause to be taken, all reasonable and appropriate action and do, or cause to be done, all reasonable things necessary, proper or advisable under applicable law or otherwise to satisfy the conditions to closing set forth in the merger agreement as promptly as practicable,
|
•
|
cooperate in good faith with the applicable governmental entities or other persons and provide promptly such other information and communications requested by such governmental entities or other persons, and
|
•
|
execute and deliver any additional agreements or instruments reasonably necessary to consummate the transactions contemplated by the merger agreement.
|
•
|
individually or in the aggregate, and taking into account any positive effects expected to be realized in the merger, could reasonably be expected to have a burdensome effect, which is defined as a material and adverse effect on the business, assets, liabilities, properties, condition (financial or otherwise) or results of operations of a hypothetical company that is 50% of the size of PNM and its subsidiaries, taken as a whole, as of the date of the merger agreement, provided that for the purposes of determining whether a burdensome effect exists (or could reasonably be expected to exist), in respect of a the approvals from the NMPRC and the PUCT, only those terms, conditions, liabilities, obligations, commitments, or undertakings related to or arising out of rate concessions (including rate reductions and rate credits) to customers required to obtain such approvals will be taken into account and considered in such determination; or
|
•
|
impose any independent or disinterested director obligations that would negatively impact or limit Avangrid’s control over PNMR or its subsidiaries in any material respect.
|
•
|
approval of the merger agreement by an affirmative vote of the holders of at least a majority of the outstanding shares of PNMR common stock entitled to vote at the special meeting;
|
•
|
absence of any law (whether temporary, preliminary or permanent) which prohibits, restrains or enjoins the consummation of the merger;
|
•
|
all required consents and filings by or with any governmental authorities have been obtained, made or given and are in full force and effect and are not subject to appeal, and all applicable waiting periods imposed by any government entity (including under the HSR Act) have terminated or expired; and
|
•
|
either (i) the parties have received written notice from CFIUS stating that: (A) CFIUS has concluded that the consummation of the merger and the other transactions contemplated by the merger agreement are not a “covered transaction” and not subject to review under the Defense Production Act; or (B) CFIUS has concluded a review or investigation of the notification voluntarily provided pursuant to the Defense Production Act with respect to the merger and the other transactions contemplated by the merger agreement and has concluded that there are no unresolved national security concerns, and has therefore terminated all action under the Defense Production Act; or (ii) if CFIUS has sent a report to the President of the United States requesting the President’s decision, then either (1) the President has announced a decision not to take any action to suspend or prohibit the merger or the other transactions contemplated by the merger agreement, or (2) having received a report from CFIUS requesting the President’s decision, the President has not taken any action to suspend or prohibit the merger or the other transactions contemplated by the merger agreement after 15 days from the date the President received such report from CFIUS.
|
•
|
the representations and warranties of PNMR with respect to the organization and qualification of PNMR and with respect to the authority, absence of conflicts with organizational documents, and ownership of subsidiaries of PNMR and its subsidiaries being true and correct in all material respects as of the date of the merger agreement and as of the effective time of the merger (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case as of such earlier date);
|
•
|
the representations and warranties of PNMR with respect to PNMR and its subsidiaries related to capitalization being true and correct in all but de minimis respects as of the date of the merger agreement and as of the effective time of the merger (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case as of such earlier date);
|
•
|
the representation and warranty of PNMR with respect to the absence of any material adverse effect being true and correct in all respects as of the date of the merger agreement;
|
•
|
all other representations and warranties of PNMR being true and correct in all respects, without giving effect to materiality qualifiers, as of the effective time of the merger (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case such representation and warranty being true and correct as of such earlier date), except where the failures of any such representations and warranties to be so true and correct, in the aggregate, do not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on PNMR;
|
•
|
PNMR’s performance in all material respects of all obligations, and compliance in all material respects with all agreements and covenants, required to be performed or complied with by it under the merger agreement;
|
•
|
receipt by Avangrid of a certificate of an executive officer of PNMR certifying that the five preceding conditions have been satisfied;
|
•
|
there not having occurred since the date of the merger agreement any event, development, change, effect or occurrence that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on PNMR;
|
•
|
the absence of any final order of the NMPRC, the PUCT or CFIUS imposing terms or conditions that, individually or in the aggregate (when taken together with the other final orders of the NMPRC, the PUCT or CFIUS), could reasonably be expected to have a burdensome effect;
|
•
|
not more than 15% of the issued and outstanding shares of PNMR common stock as of immediately prior to the effective time of the merger will constitute dissenting shares; and
|
•
|
each of the definitive agreements related to the divestiture of Four Corners having been duly executed and delivered by each of the parties thereto and remaining in full force and effect as of the effective time of the merger, and PNM having made all applicable regulatory filings to obtain required approvals from applicable governmental entities, including for abandonment authority and securitization from the NMPRC.
|
•
|
the representations and warranties of Avangrid and merger sub being true and correct in all respects, without giving effect to materiality qualifiers, as of the effective time of the merger (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case such representation and warranty being true and correct as of such earlier date), except where the failures of any such representations and warranties to be so true and correct, in the aggregate, do not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Avangrid;
|
•
|
Avangrid’s and merger sub’s performance in all material respects of all obligations, and compliance in all material respects with all agreements and covenants, required to be performed or complied with by them under the merger agreement; and
|
•
|
receipt by PNMR of a certificate of an executive officer of Avangrid certifying that the preceding conditions have been satisfied.
|
•
|
by mutual written consent of Avangrid and PNMR;
|
•
|
by either Avangrid or PNMR:
|
○
|
by Avangrid or PNMR if any court of competent jurisdiction or other governmental entity has issued an order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the merger and such order, decree, ruling or other action is or has become final and nonappealable and the party seeking to terminate the merger agreement has complied with its obligations under the merger agreement related to obtaining or making the required consents and filings (provided a party cannot exercise this termination right if the order, decree or ruling issued, or other action taken, was primarily due to the material breach of the merger agreement by such party);
|
○
|
if the merger has not been completed on or before 5:00 p.m. New York City time on January 20, 2022 (which we refer to as the End date) and the failure of the effective time to occur on or before the End date was not primarily caused by the breach of the obligations under the merger agreement of the party seeking to terminate the merger agreement (the End date is subject to a three-month extension if the only closing conditions outstanding are the conditions relating to required regulatory approvals, including CFIUS); or
|
○
|
PNMR shareholder approval of the merger agreement is not obtained at the special meeting;
|
•
|
by PNMR:
|
○
|
if Avangrid or merger sub has breached or failed to perform its representations, warranties, covenants or agreements contained in the merger agreement, which breach or failure to perform (i) would cause certain of the conditions to PNMR’s obligation to consummate the merger to not be satisfied and (ii) cannot be cured by Avangrid or merger sub through the exercise of its reasonable best efforts or has not been cured by the earlier of 30 days after written notice thereof has been given by PNMR to Avangrid or three business days prior to the End date, but PNMR will not have such a termination right if it is then in breach of any of its representations, warranties, covenants or agreements in the merger agreement and such breach would result in a failure of certain of the conditions to Avangrid’s or merger sub’s obligation to consummate the merger to not be satisfied;
|
○
|
in order to enter into a definitive agreement with respect to a superior proposal, if such termination occurs before PNMR shareholders approve the merger agreement and so long as PNMR complies with its obligations with respect to a superior proposal, if prior to or concurrently with such termination, PNMR pays the PNMR termination fee to Avangrid (as described below); or
|
○
|
if (i) all conditions to the obligation of the parties to consummate the merger have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the effective time, each of which is capable of being satisfied at the effective time), (ii) PNMR has given written notice to Avangrid and merger sub that it is prepared, willing and able to consummate the merger and (iii) Avangrid and merger sub fail to consummate the transactions contemplated by the merger agreement on the date specified for such consummation in the merger agreement and fail to consummate such transactions by the close of business on the fifth business day following receipt of such notice from PNMR;
|
•
|
by Avangrid:
|
○
|
if PNMR has breached or failed to perform its representations, warranties, covenants or agreements contained in the merger agreement, which breach or failure to perform (i) would cause certain of the conditions to Avangrid’s and merger sub’s obligation to consummate the merger to not be satisfied, and (ii) cannot be cured by PNMR through the exercise of its reasonable best efforts or has not been cured by the earlier of 30 days after written notice thereof has been given by Avangrid to PNMR or three business days prior to the End date, but Avangrid will not have such a termination right if it or merger sub is then in breach of any of its representations, warranties, covenants or agreements in the merger agreement and such breach would result in a failure of certain of the conditions to PNMR’s obligation to consummate the merger to not be satisfied; or
|
○
|
if the PNMR board changes its recommendation to PNMR shareholders to approve the merger agreement.
|
•
|
the merger agreement is terminated by PNMR as permitted by the merger agreement in order to enter into a definitive agreement with respect to a superior proposal, if such termination occurs before PNMR shareholders approve the merger agreement;
|
•
|
the merger agreement is terminated by Avangrid because the PNMR board (i) changes its recommendation to the PNMR shareholders for approval of the merger agreement, (ii) withholds, withdraws, qualifies or modifies (or resolves to do so) such recommendation in a manner adverse to Avangrid, (iii) makes any public statement inconsistent with such recommendation, (iv) approves, adopts or recommends any acquisition proposal, or any inquiry or proposal that could reasonably be expected to lead to any acquisition proposal, (v) fails to reaffirm or re-publish such recommendation within ten business days of being requested by Avangrid to do so, (vi) fails to include such recommendation in this proxy statement, (vii) fails to announce publicly, within five business days after a tender offer or exchange offer relating to any securities of PNMR has been commenced that would constitute an acquisition proposal, that the PNMR board recommends rejection of such tender or exchange offer or (viii) resolves, publicly proposes or agrees to do any of the foregoing;
|
•
|
the merger agreement is terminated (i) by either Avangrid or PNMR (A) prior to the convening of the special meeting of the PNMR shareholders to approve the merger agreement and due to the occurrence of the End date where the primary cause of the failure of closing to occur on or before the End date was not the breach of the obligations under the merger agreement of the party seeking to terminate the merger agreement or (B) because of a failure to obtain PNMR shareholder approval of the merger agreement at the special meeting, or (ii) by Avangrid as a result of PNMR having breached its representations or warranties or failed to perform its covenants or agreements contained in the merger agreement, which breach or failure to perform (I) would cause the conditions to Avangrid’s and merger sub’s obligation to consummate the merger related to the accuracy of the Company’s representations and warranties and the performance of its covenants and agreements, in each case, as of the effective time, to not be satisfied, and (II) cannot be cured by PNMR through the exercise of its reasonable best efforts or has not been cured by the earlier of (x) 30 days after written notice thereof has been given by Avangrid to PNMR and (y) three business days prior to the End date, and in either such case of (x) and (y) above, only so long as PNMR continues to use its reasonable best efforts to cure such breach; provided that Avangrid shall not have the right to terminate the merger agreement under (ii) above if it
|
○
|
at any time after the date of the merger agreement and prior to such termination an acquisition proposal has been made to PNMR, or to the PNMR board or shareholders, or an acquisition proposal has otherwise become publicly known, and within 12 months after such termination, PNMR has entered into a definitive agreement with respect to an acquisition proposal or has consummated an acquisition proposal. In this case, “acquisition proposal” has the meaning set forth above in “—No Solicitation by PNMR,” except all references to “20% or more” therein will be deemed to be references to “more than 50%.”
|
•
|
the merger agreement is terminated by PNMR when (i) all conditions to the obligation of the parties to consummate the merger have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the effective time, each of which is capable of being satisfied at the effective time), (ii) PNMR has given written notice to Avangrid and merger sub that PNMR is prepared, willing and able to consummate the merger and (iii) Avangrid and merger sub fail to consummate the transactions contemplated by the merger agreement on the date specified for such consummation in the merger agreement and fail to consummate such transactions by the close of business on the fifth business day following receipt of such notice from PNMR;
|
•
|
(i) the merger agreement is terminated by (A) Avangrid or PNMR (x) because a court of competent jurisdiction or other governmental entity has issued an order, decree or ruling or taken any other final action, in each case, arising in connection with obtaining the required regulatory approvals, and which restrains, enjoins or otherwise prohibits the merger and such order, decree, ruling or other action is or has become final and nonappealable and the party seeking to terminate the merger agreement has complied with its obligations under the merger agreement related to obtaining or making the required consents and filings, and the order, decree or ruling issued, or other action taken, was not primarily due to the material breach of the merger agreement by such party, or (y) due to the occurrence of the End date where the primary cause of the failure of closing to occur on or before the End date was not the breach of the obligations under the merger agreement of the party seeking to terminate the merger; or (B) by PNMR due to Avangrid or merger sub breaching or failing to perform its covenants or agreements contained in the merger agreement with respect to obtaining or making required consents and filings, which breach or failure causes certain of the conditions to PNMR’s obligation to consummate the merger to not be satisfied, and which cannot be cured by Avangrid or merger sub through the exercise of its reasonable best efforts or has not been cured in accordance with the terms of the merger agreement; and, (ii) in each case above:
|
○
|
at the time of such termination, (i) any of the required regulatory approvals have not been obtained, made or given or applicable waiting periods imposed by any government entity have not terminated or expired or (ii) any law (whether temporary, preliminary or permanent) solely in connection with the required regulatory approvals is in effect which prohibits, restrains or enjoins the consummation of the merger;
|
○
|
Avangrid is in breach of its obligations under the merger agreement with respect to obtaining or making required consents or filings from or with any regulatory authorities, and PNMR has notified Avangrid promptly (and in any event no later than five business days) after becoming aware of any such breach;
|
○
|
each of the conditions to Avangrid’s and merger sub’s obligations (other than with respect to obtaining or making required consents or filings from or with any regulatory authorities) to consummate the merger have been and continue to be satisfied (other than those conditions that by their nature are to be satisfied at the closing of the merger, but which condition would be satisfied or would be capable of being satisfied if the closing of the merger were then to occur);
|
○
|
either (i) a required regulatory approval or the CFIUS approval (as defined in the merger agreement) has not been obtained or (ii) a final order granting the required regulatory approvals or the CFIUS approval imposes a burdensome effect; and
|
○
|
Avangrid’s breach of its covenants relating to obtaining the required regulatory approvals has materially contributed to the failure of to obtain such approvals.
|
Date
|
| |
Common Stock
Closing Price
|
October 20, 2020
|
| |
$45.74
|
December 15, 2020
|
| |
$49.15
|
|
Name and Address
|
| |
Voting Authority
|
| |
Dispositive Authority
|
| |||||||||||||||
|
Sole
|
| |
Shared
|
| |
None
|
| |
Sole
|
| |
Shared
|
| |
Total
Amount
|
| |
Percentage of
Class
|
| |||
|
BlackRock, Inc.(1)
55 East 52nd Street
New York, NY 10022
|
| |
9,513,953
|
| |
—
|
| |
—
|
| |
9,703,374
|
| |
—
|
| |
9,703,374
|
| |
11.30%
|
|
|
The Vanguard Group(2)
100 Vanguard Blvd.
Malvern, PA 192355
|
| |
97,686
|
| |
29,692
|
| |
—
|
| |
9,235,028
|
| |
96,338
|
| |
9,331,366
|
| |
10.87%
|
|
(1)
|
As reported on Schedule 13G/A filed February 4, 2020 with the SEC by BlackRock, Inc. as the parent holding company or control person of thirteen subsidiaries.
|
(2)
|
As reported on Schedule 13G/A filed February 12, 2020 with the SEC by The Vanguard Group.
|
|
Name
|
| |
Amount and Nature of Shares Beneficially Owned(a)
|
| ||||||||||||
|
Shares Held
|
| |
Right to Acquire
within 60 Days(b)
|
| |
Total Shares
Beneficially Owned
|
| |
Percent of Shares
Beneficially Owned
|
| |
Deferred RSAs(c)
|
| |||
|
Non-Employee Directors:
|
| |||||||||||||||
|
Vicky A. Bailey
|
| |
2,218
|
| |
3,124
|
| |
5,342
|
| |
*
|
| |
—
|
|
|
Norman P. Becker
|
| |
8,541
|
| |
—
|
| |
8,541
|
| |
*
|
| |
7,686
|
|
|
E. Renae Conley
|
| |
19,972
|
| |
—
|
| |
19,972
|
| |
*
|
| |
3,124
|
|
|
Alan J. Fohrer
|
| |
18,838
|
| |
—
|
| |
18,838
|
| |
*
|
| |
7,686
|
|
|
Sidney M. Gutierrez
|
| |
12,136
|
| |
3,124
|
| |
15,260
|
| |
*
|
| |
—
|
|
|
James A. Hughes
|
| |
—
|
| |
—
|
| |
—
|
| |
*
|
| |
5,342
|
|
|
Maureen T. Mullarkey
|
| |
9,926
|
| |
—
|
| |
9,926
|
| |
*
|
| |
7,686
|
|
|
Donald K. Schwanz
|
| |
38,368
|
| |
3,124
|
| |
41,492
|
| |
*
|
| |
—
|
|
|
Bruce W. Wilkinson
|
| |
48,955
|
| |
3,124
|
| |
52,079
|
| |
*
|
| |
—
|
|
|
NEOs:
|
| |||||||||||||||
|
Patricia K. Collawn
|
| |
558,518
|
| |
109,113
|
| |
667,631
|
| |
*
|
| |
—
|
|
|
Charles N. Eldred
|
| |
114,717
|
| |
14,834
|
| |
129,551
|
| |
*
|
| |
—
|
|
|
Joseph T. Tarry
|
| |
13,852
|
| |
2,175
|
| |
16,027
|
| |
*
|
| |
—
|
|
|
Patrick V. Apodaca
|
| |
71,662
|
| |
4,030
|
| |
75,692
|
| |
*
|
| |
—
|
|
|
Ronald N. Darnell
|
| |
28,425
|
| |
3,052
|
| |
31,477
|
| |
*
|
| |
—
|
|
|
Chris M. Olson
|
| |
12,831
|
| |
3,107
|
| |
15,938
|
| |
*
|
| |
—
|
|
|
Directors and Executive Officers as a Group (15 persons)
|
| |
958,959
|
| |
148,807
|
| |
1,107,766
|
| |
1.29%
|
| |
31,524
|
|
*
|
Less than 1% of PNMR outstanding shares of common stock.
|
(a)
|
Unless otherwise noted, each person has sole investment and voting power over the reported shares (or shares such powers with his or her spouse).
|
(b)
|
Beneficial ownership also includes the following shares directors and executive officers have a right to acquire through (1) potential accelerated vesting (upon disability) under the PNMR Stock Plan of non-employee director restricted stock awards that the director has elected not to defer receipt to a later date, (2) potential accelerated vesting (upon retirement or disability) under the PNMR Stock Plan of officer restricted stock awards, and (3) the number of shares that executive officers have a right to acquire through the Executive Savings Plan II upon the participant’s termination of employment. As of November 30, 2020, the number of shares reported in this column include the following Executive Savings Plan II share rights held by PNMR’s named executive officers: P. K. Collawn – 82,592 and C. N. Eldred – 7,513.
|
(c)
|
The amounts shown are restricted stock rights that directors have elected to defer receipt of. The information in this column is not required by SEC rules because the effect of the deferral election is that the director does not have the right to acquire any underlying shares within 60 days of December 15, 2020. PNMR has provided this information to provide a more complete picture of the financial stake that its directors have in PNMR.
|
•
|
Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (filed with the SEC on March 3, 2020);
|
•
|
Quarterly Reports on Form 10-Q for the quarter ended March 31, 2020 (filed with the SEC on May 1, 2020), for the quarter ended June 30, 2020 (filed with the SEC on July 31, 2020) and for the quarter ended September 30, 2020 (filed with the SEC on October 30, 2020);
|
•
|
Current Reports on Form 8-K (excluding any information and exhibits furnished under either Item 2.02 or Item 7.01 thereof) filed with the SEC on January 10, 2020, January 22, 2020, January 30, 2020, February 26, 2020, March 30, 2020, April 15, 2020, April 17, 2020, April 24, 2020, May 14, 2020, June 11, 2020, July 15, 2020, October 21, 2020, October 28, 2020, November 2, 2020, November 2, 2020, November 25, 2020, December 4, 2020 and December 16, 2020; and
|
•
|
Definitive Proxy Statement on Schedule 14A filed on March 31, 2020, to the extent incorporated by reference in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
|
Avangrid
|
| |
Avangrid, Inc., a New York Corporation
|
Broadridge
|
| |
Broadridge Investor Communication Solutions, Inc.
|
CFIUS
|
| |
Committee on Foreign Investment in the United States
|
DOJ
|
| |
Department of Justice
|
EBITDA
|
| |
Earnings before interest, taxes, depreciation and amortization
|
ESG
|
| |
Environmental, Social and Governance
|
Exchange Act
|
| |
The Securities Exchange Act of 1934, as amended
|
FCC
|
| |
Federal Communications Commission
|
FERC
|
| |
Federal Energy Regulatory Commission
|
FPA
|
| |
Federal Power Act
|
FTC
|
| |
Federal Trade Commission
|
GAAP
|
| |
Generally Accepted Accounting Principles
|
Georgeson
|
| |
Georgeson, Inc.
|
HSR
|
| |
Hart-Scott-Rodino Antitrust Improvements Act of 1976
|
IRS
|
| |
Internal Revenue Service
|
KPMG LLP
|
| |
KPMG LLP
|
NYSE
|
| |
New York Stock Exchange
|
NMBCA
|
| |
New Mexico Business Corporation Act
|
NMPRC
|
| |
New Mexico Public Regulation Commission
|
PNM
|
| |
Public Service Company of New Mexico, a New Mexico corporation
|
PNMR
|
| |
PNM Resources, Inc., a New Mexico Corporation
|
PUCT
|
| |
Public Utility Commission of Texas
|
PUHCA 2005
|
| |
Public Utility Holding Company Act of 2005
|
SEC
|
| |
United States Securities and Exchange Commission
|
TNMP
|
| |
Texas-New Mexico Power Company, a Texas corporation
|
USRPHC
|
| |
United States real property holding corporation
|
|
| |
|
| |
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| | | | |||
| | | | |||
| | | |
Acceptable Confidentiality Agreement
|
| |
Section 9.5(a)
|
Acquisition Proposal
|
| |
Section 6.1(f)(i)
|
Affiliate
|
| |
Section 9.5(b)
|
Agreement
|
| |
Preamble
|
Anti-Corruption Law
|
| |
Section 9.5(c)
|
Antitrust Authorities
|
| |
Section 6.5(c)(i)
|
Applicable Date
|
| |
Section 3.6
|
Articles of Merger
|
| |
Section 1.4
|
Average Parent Stock Price
|
| |
Section 9.5(d)
|
Bankruptcy and Equity Exception
|
| |
Section 3.4(a)
|
Book-Entry Share
|
| |
Section 2.1(a)
|
Burdensome Effect
|
| |
Section 6.5(d)
|
Business Day
|
| |
Section 9.5(e)
|
Cancelled Shares
|
| |
Section 2.1(a)
|
Certificate
|
| |
Section 2.1(a)
|
CFIUS
|
| |
Section 9.5(f)
|
CFIUS Approval
|
| |
Section 7.1(d)
|
Charter Documents
|
| |
Section 9.5(g)
|
Closing
|
| |
Section 1.3
|
Closing Date
|
| |
Section 1.3
|
Code
|
| |
Recitals
|
Company
|
| |
Preamble
|
Company Articles of Incorporation
|
| |
Section 3.2
|
Company Board of Directors
|
| |
Recitals
|
Company Bylaws
|
| |
Section 3.2
|
Company Capitalization Date
|
| |
Section 3.3(a)
|
Company Change of Recommendation
|
| |
Section 6.1(c)
|
Company Collective Bargaining Agreement
|
| |
Section 9.5(h)
|
Company Common Stock
|
| |
Section 3.3
|
Company Contacts
|
| |
Section 6.16(b)
|
Company Cure Period
|
| |
Section 8.1(e)(i)
|
Company Disclosure Schedule
|
| |
Article III
|
Company Employees
|
| |
Section 3.11(a)
|
Company Financial Advisor
|
| |
Section 3.18
|
Company Material Contract
|
| |
Section 3.8(a)(viii)
|
Company Material Easement Real Property
|
| |
Section 3.14(a)
|
Company Material Leased Real Property
|
| |
Section 3.14(a)
|
Company Material Owned Real Property
|
| |
Section 3.14(a)
|
Company Material Real Property
|
| |
Section 3.14(a)
|
Company Notice
|
| |
Section 6.1(d)
|
Company Parties
|
| |
Section 9.5(i)
|
Company Plan
|
| |
Section 3.11(a)
|
Company Preferred Stock
|
| |
Section 3.3
|
Company Recommendation
|
| |
Section 3.4(b)
|
Company Regulatory Approvals
|
| |
Section 7.1(c)
|
Company Requisite Vote
|
| |
Section 3.4(a)
|
Company Restricted Stock Rights
|
| |
Section 2.2(a)
|
Company Risk Management Guidelines
|
| |
Section 3.22(a)
|
Company SEC Reports
|
| |
Section 3.7(a)
|
Company Securities
|
| |
Section 3.3(b)
|
Company Share
|
| |
Section 2.1(a)
|
Company Shareholders Meeting
|
| |
Section 6.4
|
Company Stock Awards
|
| |
Section 2.2(b)
|
Company Stock Plan
|
| |
Section 3.3(a)(iii)
|
Company Termination Fee
|
| |
Section 8.2(b)(i)
|
Confidentiality Agreement
|
| |
Section 6.7(b)
|
Consent
|
| |
Section 3.5(b)
|
Continuing Employee
|
| |
Section 6.10(a)
|
Contract
|
| |
Section 9.5(j)
|
Control
|
| |
Section 9.5(k)
|
Controlled Group Liability
|
| |
Section 3.11(d)
|
COVID Actions
|
| |
Section 9.5(l)
|
COVID Company Exception
|
| |
Section 5.1
|
COVID Parent Exception
|
| |
Section 5.2
|
Credit Facilities
|
| |
Section 9.5(m)
|
Derivative Product
|
| |
Section 9.5(n)
|
Direct Plan
|
| |
Section 2.2(c)
|
Directors Deferred Plan
|
| |
Section 2.2(d)
|
Dissenting Shares
|
| |
Section 2.3
|
DPA
|
| |
Section 6.5(c)(ii)
|
D&O Insurance
|
| |
Section 6.11(d)
|
Earned Performance Shares
|
| |
Section 2.2(b)
|
Easement
|
| |
Section 3.14(c)
|
Effective Time
|
| |
Section 1.4
|
End Date
|
| |
Section 8.1(c)
|
Environmental Law
|
| |
Section 3.17(f)
|
Equity Conversion Factor
|
| |
Section 9.5(o)
|
Equity Securities
|
| |
Section 9.5(p)
|
ERISA
|
| |
Section 3.11(a)
|
ERISA Affiliate
|
| |
Section 9.5(q)
|
Exchange Act
|
| |
Section 9.5(r)
|
Exchange Agent
|
| |
Section 2.4(a)
|
Exchange Fund
|
| |
Section 2.4(a)
|
Existing Lenders
|
| |
Section 6.18
|
Existing Loan Consent
|
| |
Section 6.18
|
Existing Loan Notice
|
| |
Section 6.18
|
Expenses
|
| |
Section 8.3
|
FERC
|
| |
Section 9.5(s)
|
Filing
|
| |
Section 3.5(b)
|
Final Exercise Date
|
| |
Section 2.2(c)
|
Final Order
|
| |
Section 9.5(t)
|
Final Quarterly Dividend
|
| |
Section 6.15
|
Four Corners Divestiture Agreements
|
| |
Section 6.19
|
FPA
|
| |
Section 9.5(u)
|
GAAP
|
| |
Section 9.5(v)
|
Government Official
|
| |
Section 9.5(w)
|
Governmental Entity
|
| |
Section 9.5(x)
|
Hazardous Substance
|
| |
Section 3.17(f)
|
HSR Act
|
| |
Section 9.5(y)
|
Indemnified Party
|
| |
Section 6.11(a)
|
Intellectual Property
|
| |
Section 9.5(z)
|
Interim Period
|
| |
Section 9.5(aa)
|
Intervening Event
|
| |
Section 9.5(bb)
|
Iridium
|
| |
Recitals
|
IRS
|
| |
Section 3.11(b)
|
Joint Venture
|
| |
Section 9.5(cc)
|
knowledge
|
| |
Section 9.5(dd)
|
Law
|
| |
Section 9.5(ee)
|
Liability
|
| |
Section 9.5(ff)
|
Legal Restraint
|
| |
Section 7.1(b)
|
Licenses
|
| |
Section 3.6
|
Liens
|
| |
Section 3.14(a)
|
Material Adverse Effect
|
| |
Section 9.5(gg)
|
Merger
|
| |
Recitals
|
Merger Sub
|
| |
Preamble
|
Merger Sub Common Stock
|
| |
Section 2.1(c)
|
New Mexico Secretary of State
|
| |
Section 1.4
|
NMBCA
|
| |
Section 9.5(ii)
|
NMPRC
|
| |
Section 6.7(a)
|
Notice Period
|
| |
Section 6.1(d)
|
NYSE
|
| |
Section 9.5(kk)
|
Parent
|
| |
Preamble
|
Parent Board of Directors
|
| |
Recitals
|
Parent Business Combination
|
| |
Section 6.2
|
Parent Contacts
|
| |
Section 6.16(b)
|
Parent Cure Period
|
| |
Section 8.1(d)(i)
|
Parent Disclosure Schedule
|
| |
Article IV
|
Parent Parties
|
| |
Section 9.5(mm)
|
Parent Regulatory Approvals
|
| |
Section 7.1(c)
|
Parent Regulatory Covenant Breach
|
| |
Section 8.2(c)
|
Parent Restricted Stock Rights
|
| |
Section 2.2(a)
|
Parent Termination Fee
|
| |
Section 9.5(nn)
|
Parties
|
| |
Preamble
|
Party
|
| |
Preamble
|
Per Share Merger Consideration
|
| |
Section 2.1(a)
|
Performance Shares
|
| |
Section 2.2(b)
|
Permitted Liens
|
| |
Section 3.14(a)
|
Person
|
| |
Section 9.5(oo)
|
Personal Information
|
| |
Section 9.5(pp)
|
PNM
|
| |
Section 3.7(a)
|
President
|
| |
Section 7.1(d)
|
Privacy Rules and Policies
|
| |
Section 9.5(rr)
|
Proceeding
|
| |
Section 6.11(a)
|
Proxy Statement
|
| |
Section 6.3(b)
|
PUCT
|
| |
Section 6.7(a)
|
PUHCA
|
| |
Section 9.5(qq)
|
Regulatory Condition
|
| |
Section 9.5(ss)
|
Regulated Operating Subsidiaries
|
| |
Section 3.19(a)
|
Representatives
|
| |
Section 6.1(a)
|
Required Regulatory Approvals
|
| |
Section 7.1(c)
|
Restricted Stock Cash Payouts
|
| |
Section 2.2(a)
|
Retention Program
|
| |
Section 6.10(e)
|
Sarbanes Oxley Act
|
| |
Section 3.7(a)
|
Satisfaction Notice
|
| |
Section 8.1(d)(iii)
|
SEC
|
| |
Section 3.7(a)
|
Section 53-15-4
|
| |
Section 2.3
|
Securities Act
|
| |
Section 3.7(a)
|
Series A Preferred Stock
|
| |
Section 3.3
|
Significant Subsidiary
|
| |
Section 9.5(tt)
|
subsidiary
|
| |
Section 9.5(vv)
|
Superior Proposal
|
| |
Section 6.1(f)(ii)
|
Surviving Corporation
|
| |
Section 1.2
|
Surviving Corporation Bylaws
|
| |
Section 1.5(c)
|
Surviving Corporation Charter
|
| |
Section 1.5(b)
|
Tax Return
|
| |
Section 9.5(ww)
|
Taxes
|
| |
Section 9.5(xx)
|
Taxing Authority
|
| |
Section 9.5(yy)
|
TNMP
|
| |
Section 3.7(a)
|
Trademark
|
| |
Section 9.5(zz)
|
Transaction Litigation
|
| |
Section 6.12
|
Transition Committee
|
| |
Section 6.16(b)
|
Treasury Regulations
|
| |
Section 9.5(aaa)
|
Unsatisfied Conditions
|
| |
Section 8.2(c)
|
WARN Act
|
| |
Section 6.10(f)
|
Willful Breach
|
| |
Section 9.5(bbb)
|
|
| |
(a)
|
| |
if to Parent or Merger Sub:
|
|
| |
|
| |
|
|
| |
|
| |
Avangrid, Inc.
|
|
| |
|
| |
180 Marsh Hill Road
|
|
| |
|
| |
Orange, Connecticut 06477
|
|
| |
|
| |
Attention: R. Scott Mahoney, SVP - General Counsel & Corporate Secretary
|
|
| |
|
| |
E-Mail: Scott.Mahoney@avangrid.com
|
|
| |
|
| |
|
|
| |
|
| |
with an additional copy (which shall not constitute notice) to:
|
|
| |
|
| |
|
|
| |
|
| |
Latham & Watkins LLP
|
|
| |
|
| |
885 Third Avenue
|
|
| |
|
| |
New York, New York 10022-4834
|
|
| |
|
| |
Attention: David Kurzweil
|
|
| |
|
| |
E-Mail: david.kurzweil@lw.com
|
|
| |
|
| |
|
|
| |
(b)
|
| |
if to the Company:
|
|
| |
|
| |
|
|
| |
|
| |
PNM Resources, Inc.
|
|
| |
|
| |
414 Silver Ave. SW
|
|
| |
|
| |
Albuquerque, New Mexico 87102-3289
|
|
| |
|
| |
Attention: Patrick V. Apodaca
|
|
| |
|
| |
E-Mail: patrick.apodaca@pnmresources.com
|
|
| |
|
| |
|
|
| |
|
| |
with an additional copy (which shall not constitute notice) to:
|
|
| |
|
| |
|
|
| |
|
| |
Troutman Pepper Hamilton Sanders LLP
|
|
| |
|
| |
1001 Haxall Point
|
|
| |
|
| |
Richmond, Virginia 23219
|
|
| |
|
| |
Attention: R. Mason Bayler, Jr.
|
|
| |
|
| |
E-Mail: mason.bayler@troutman.com
|
|
| |
COMPANY:
|
|||
|
| |
|
| |
|
|
| |
PNM RESOURCES, INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Patricia K. Collawn
|
|
| |
|
| |
Patricia K. Collawn
|
|
| |
|
| |
Chairman, President and Chief Executive Officer
|
|
| |
|
| |
|
|
| |
PARENT:
|
|||
|
| |
|
| |
|
|
| |
AVANGRID, INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Dennis V. Arriola
|
|
| |
|
| |
Name: Dennis V. Arriola
|
|
| |
|
| |
Title: Chief Executive Officer
|
|
| |
|
| |
|
|
| |
MERGER SUB:
|
|||
|
| |
|
| |
|
|
| |
NM GREEN HOLDINGS, INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Dennis V. Arriola
|
|
| |
|
| |
Name: Dennis V. Arriola
|
|
| |
|
| |
Title: President and Treasurer
|
(i)
|
reviewed certain publicly available business and financial information relating to the Company that we deemed to be relevant, including publicly available research analysts’ estimates;
|
(ii)
|
reviewed certain internal projected financial data relating to the Company prepared and furnished to us by management of the Company, as approved for our use by the Company (the “Forecasts”);
|
(iii)
|
discussed with management of the Company their assessment of the past and current operations of the Company, the current financial condition and prospects of the Company, and the Forecasts;
|
(iv)
|
reviewed the reported prices and the historical trading activity of the Company Common Stock;
|
(v)
|
compared the financial performance of the Company and its stock market trading multiples with those of certain other publicly traded companies that we deemed relevant;
|
(vi)
|
compared the financial performance of the Company and the valuation multiples relating to the Merger with the financial terms, to the extent publicly available, of certain other transactions that we deemed relevant;
|
(vii)
|
reviewed the financial terms and conditions of the Merger Agreement; and
|
(viii)
|
performed such other analyses and examinations and considered such other factors that we deemed appropriate.
|
|
| |
Very truly yours,
|
|||
|
| |
EVERCORE GROUP L.L.C.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Sesh Raghavan
|
|
| |
|
| |
Sesh Raghavan, Managing Director
|
A.
|
Any shareholder of a corporation may dissent from, and obtain payment for the shareholder’s shares in the event of, any of the following corporate actions:
|
(1)
|
any plan of merger or consolidation to which the corporation is a party, except as provided in Subsection C of this section;
|
(2)
|
any sale or exchange of all or substantially all of the property and assets of the corporation not made in the usual and regular course of its business, including a sale in dissolution, but not including a sale pursuant to an order of a court having jurisdiction in the premises or a sale for cash on terms requiring that all or substantially all of the net proceeds of sale be distributed to the shareholders in accordance with their respective interests within one year after the date of sale;
|
(3)
|
any plan of exchange to which the corporation is a party as the corporation the shares of which are to be acquired;
|
(4)
|
any amendment of the articles of incorporation which materially and adversely affects the rights appurtenant to the shares of the dissenting shareholder in that it:
|
(a)
|
alters or abolishes a preferential right of such shares;
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(b)
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creates, alters or abolishes a right in respect of the redemption of such shares, including a provision respecting a sinking fund for the redemption or repurchase of such shares;
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(c)
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alters or abolishes an existing preemptive right of the holder of such shares to acquire shares or other securities; or
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(d)
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excludes or limits the right of the holder of such shares to vote on any matter, or to cumulate his votes, except as such right may be limited by dilution through the issuance of shares or other securities with similar voting rights; or
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(5)
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any other corporate action taken pursuant to a shareholder vote with respect to which the articles of incorporation, the bylaws or a resolution of the board of directors directs that dissenting shareholders shall have a right to obtain payment for their shares.
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B.
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(1) A record holder of shares may assert dissenters’ rights as to less than all of the shares registered in his name only if the holder dissents with respect to all the shares beneficially owned by any one person and discloses the name and address of the person or persons on whose behalf the holder dissents. In that event, his rights shall be determined as if the shares as to which he has dissented and his other shares were registered in the names of different shareholders.
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C.
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The right to obtain payment under this section shall not apply to the shareholders of the surviving corporation in a merger if a vote of the shareholders of such corporation is not necessary to authorize such merger.
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D.
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A shareholder of a corporation who has a right under this section to obtain payment for his shares shall have no right at law or in equity to attack the validity of the corporate action that gives rise to his right to obtain payment, nor to have the action set aside or rescinded, except when the corporate action is unlawful or fraudulent with regard to the complaining shareholder or to the corporation.
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A.
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Any shareholder electing to exercise his right of dissent shall file with the corporation, prior to or at the meeting of shareholders at which the proposed corporate action is submitted to a vote, a written objection to the proposed corporate action. If the proposed corporate action is approved by the required vote and the shareholder has not voted in favor thereof, the shareholder may, within ten days after the date on which the vote was taken or if a corporation is to be merged without a vote of its shareholders into another corporation any of its shareholders may, within twenty-five days after the plan of the merger has been mailed to the shareholders, make written demand on the corporation, or, in the case of a merger or consolidation, on the surviving or new corporation, domestic or foreign, for payment of the fair value of the shareholder’s shares, and, if the proposed corporate action is effected, the corporation shall pay to the shareholder, upon the determination of the fair value, by agreement or judgment as provided herein, and, in the case of shares represented by certificates, the surrender of such certificates the fair value thereof as of the day prior to the date on which the vote was taken approving the proposed corporate action, excluding any appreciation or depreciation in anticipation of the corporate action. Any shareholder failing to make demand within the prescribed ten-day or twenty-five-day period shall be bound by the terms of the proposed corporate action. Any shareholder making such demand shall thereafter be entitled only to payment as in this section provided and shall not be entitled to vote or to exercise any other rights of a shareholder.
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B.
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No such demand may be withdrawn unless the corporation consents thereto. If, however, the demand is withdrawn upon consent, or if the proposed corporate action is abandoned or rescinded or the shareholders revoke the authority to effect the action, or if, in the case of a merger, on the date of the filing of the articles of merger the surviving corporation is the owner of all the outstanding shares of the other corporation, domestic and foreign, that are parties to the merger, or if no demand or petition for the determination of fair value by a court has been made or filed within the time provided in this section, or if a court of competent jurisdiction determines that the shareholder is not entitled to the relief provided by this section, then the right of the shareholder to be paid the fair value of his shares ceases and his status as a shareholder shall be restored, without prejudice, to any corporate proceedings which may have been taken during the interim.
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C.
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Within ten days after such corporate action is effected, the corporation, or, in the case of a merger or consolidation, the surviving or new corporation, domestic or foreign, shall give written notice thereof to each dissenting shareholder who has made demand as provided in this section and shall make a written offer to each such shareholder to pay for such shares at a specified price deemed by the corporation to be the fair value thereof. The notice and offer shall be accompanied by a balance sheet of the corporation, the shares of which the dissenting shareholder holds, as of the latest available date and not more than twelve months prior to the making of the offer, and a profit and loss statement of the corporation for the twelve-months’ period ended on the date of the balance sheet.
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D.
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If within thirty days after the date on which the corporate action was effected the fair value of the shares is agreed upon between any dissenting shareholder and the corporation, payment therefor shall be made within ninety days after the date on which the corporate action was effected, and, in the case of shares represented by certificates, upon surrender of the certificates. Upon payment of the agreed value, the dissenting shareholder shall cease to have any interest in the shares.
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E.
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If, within the period of thirty days, a dissenting shareholder and the corporation do not so agree, then the corporation, within thirty days after receipt of written demand from any dissenting shareholder, given within sixty days after the date on which corporate action was effected, shall, or at its election at any time within the period of sixty days may, file a petition in any court of competent jurisdiction in the county in this state where the registered office of the corporation is located praying that the fair value of the shares be found and determined. If, in the case of a merger or consolidation, the surviving or new corporation is a foreign corporation without a registered office in this state, the petition shall be filed in the county where the registered office of the domestic corporation was last located. If the corporation fails to institute the proceeding as provided in this section, any dissenting shareholder may do so in the name of the corporation. All dissenting shareholders, wherever residing, shall be made parties to the proceeding as an action against their shares quasi in rem. A copy of the petition shall be served on each dissenting shareholder who is a resident of this state and shall be served by registered
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F.
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The judgment shall include an allowance for interest at such rate as the court may find to be fair and equitable, in all the circumstances, from the date on which the vote was taken on the proposed corporate action to the date of payment.
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G.
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The costs and expenses of any such proceeding shall be determined by the court and shall be assessed against the corporation, but all or any part of the costs and expenses may be apportioned and assessed as the court deems equitable against any or all of the dissenting shareholders who are parties to the proceeding to whom the corporation made an offer to pay for the shares if the court finds that the action of the shareholders in failing to accept the offer was arbitrary or vexatious or not in good faith. Such expenses include reasonable compensation for and reasonable expenses of the appraisers, but exclude the fees and expenses of counsel for and experts employed by any party; but if the fair value of the shares as determined materially exceeds the amount which the corporation offered to pay therefor, or if no offer was made, the court in its discretion may award to any shareholder who is a party to the proceeding such sum as the court determines to be reasonable compensation to any expert employed by the shareholder in the proceeding, together with reasonable fees of legal counsel.
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H.
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Upon receiving a demand for payment from any dissenting shareholder, the corporation shall make an appropriate notation thereof in its shareholder records. Within twenty days after demanding payment for his shares, each holder of shares represented by certificates demanding payment shall submit the certificates to the corporation for notation thereon that such demand has been made. His failure to do so shall, at the option of the corporation, terminate his rights under this section unless a court of competent jurisdiction, for good and sufficient cause shown, otherwise directs. If uncertificated shares for which payment has been demanded or shares represented by a certificate on which notation has been so made are transferred, any new certificate issued therefor shall bear similar notation, together with the name of the original dissenting holder of the shares, and a transferee of the shares acquires by such transfer no rights in the corporation other than those which the original dissenting shareholder had after making demand for payment of the fair value thereof.
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I.
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Shares acquired by a corporation pursuant to payment of the agreed value therefor or to payment of the judgment entered therefor, as in this section provided, may be held and disposed of by the corporation as in the case of other treasury shares, except that, in the case of a merger or consolidation, they may be held and disposed of as the plan of merger or consolidation may otherwise provide.
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