Exhibit 2
AGREEMENT AND PLAN OF MERGER
by and among
BERKSHIRE ENERGY RESOURCES,
ENERGY EAST CORPORATION
AND
MOUNTAIN MERGER LLC
dated as of November 9, 1999
Table of Contents
Page
ARTICLE I
THE MERGER
Section 1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2 Effects of the Merger . . . . . . . . . . . . . . . . . . .1
Section 1.3 Effective Time of the Merger. . . . . . . . . . . . . . . .1
Section 1.4 Trustees. . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.5 Officers. . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Shares and Membership
Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 2.2 Exchange of Certificates. . . . . . . . . . . . . . . . . .3
ARTICLE III
THE CLOSING
Section 3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization and Qualification. . . . . . . . . . . . . . .4
Section 4.2 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . .5
Section 4.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . .5
Section 4.4 Authority; Non-contravention; Statutory Approvals;
Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 4.5 Reports and Financial Statements. . . . . . . . . . . . . .8
Section 4.6 Absence of Certain Changes or Events. . . . . . . . . . . .8
Section 4.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . .8
Section 4.8 Proxy Statement . . . . . . . . . . . . . . . . . . . . . .9
Section 4.9 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . .9
Section 4.10 Employee Matters; ERISA . . . . . . . . . . . . . . . . . 11
Section 4.11 Environmental Protection. . . . . . . . . . . . . . . . . 14
Section 4.12 Regulation as a Utility . . . . . . . . . . . . . . . . . 16
Section 4.13 Vote Required . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.14 Opinion of Financial Advisor. . . . . . . . . . . . . . . 17
Section 4.15 Ownership of Parent Common Stock. . . . . . . . . . . . . 17
Section 4.16 Takeover Laws . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.1 Organization and Qualification. . . . . . . . . . . . . . 17
Section 5.2 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . 18
Section 5.4 Authority; Non-contravention; Statutory Approvals . . . . 18
Section 5.5 Proxy Statement . . . . . . . . . . . . . . . . . . . . . 19
Section 5.6 Availability of Funds . . . . . . . . . . . . . . . . . . 19
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of the Parties. . . . . . . . . . . . . . . . . 19
Section 6.2 Covenant of the Company; Alternative Proposals. . . . . . 23
Section 6.3 Employment Agreements . . . . . . . . . . . . . . . . . . 24
Section 6.4 Additional Statutory Approvals. . . . . . . . . . . . . . 24
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information . . . . . . . . . . . . . . . . . . 25
Section 7.2 Proxy Statement . . . . . . . . . . . . . . . . . . . . . 25
Section 7.3 Regulatory Matters. . . . . . . . . . . . . . . . . . . . 25
Section 7.4 Company Shareholders' Approval. . . . . . . . . . . . . . 26
Section 7.5 Indemnification . . . . . . . . . . . . . . . . . . . . . 26
Section 7.6 Disclosure Schedules. . . . . . . . . . . . . . . . . . . 27
Section 7.7 Public Announcements. . . . . . . . . . . . . . . . . . . 28
Section 7.8 Certain Employee Agreements . . . . . . . . . . . . . . . 28
Section 7.9 Employee Benefit Plans. . . . . . . . . . . . . . . . . . 28
Section 7.10 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.11 Further Assurances. . . . . . . . . . . . . . . . . . . . 30
Section 7.12 Corporate Offices . . . . . . . . . . . . . . . . . . . . 30
Section 7.13 Community Involvement . . . . . . . . . . . . . . . . . . 30
Section 7.14 Advisory Board. . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.2 Conditions to Obligation of Parent to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.3 Conditions to Obligation of the Company to Effect
the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.2 Effect of Termination . . . . . . . . . . . . . . . . . . 34
Section 9.3 Termination Fee; Expenses . . . . . . . . . . . . . . . . 35
Section 9.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.5 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-survival; Effect of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.2 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.4 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.5 Interpretation. . . . . . . . . . . . . . . . . . . . . . 38
Section 10.6 Counterparts; Effect. . . . . . . . . . . . . . . . . . . 38
Section 10.7 Parties in Interest . . . . . . . . . . . . . . . . . . . 38
Section 10.8 Waiver of Jury Trial and Certain Damages. . . . . . . . . 38
Section 10.9 Enforcement . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.10. Disclaimer of Liability . . . . . . . . . . . . . . . . . 39
List of Defined Terms
Term Page
1935 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Advisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Alternative Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Certificate of Merger. . . . . . . . . . . . . . . . . . . . . . . . . . .1
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Closing Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Company Common Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .2
Company Disclosure Schedule. . . . . . . . . . . . . . . . . . . . . . . 27
Company Financial Statements . . . . . . . . . . . . . . . . . . . . . . .8
Company Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . .5
Company Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . .6
Company Required Consents. . . . . . . . . . . . . . . . . . . . . . . . .6
Company Required Statutory Approvals . . . . . . . . . . . . . . . . . . .7
Company SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Company Shareholders' Approval . . . . . . . . . . . . . . . . . . . . . 17
Company Special Meeting. . . . . . . . . . . . . . . . . . . . . . . . . 26
Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . . . . 25
Controlled Group Liability . . . . . . . . . . . . . . . . . . . . . . . 11
Covered Company Employee . . . . . . . . . . . . . . . . . . . . . . . . 29
Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Employee Benefit Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Environmental Permits. . . . . . . . . . . . . . . . . . . . . . . . . . 15
Environmental Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ERISA Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Exchange Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
FERC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Final Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Indemnified Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 26
Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Indemnified Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Initial Termination Date . . . . . . . . . . . . . . . . . . . . . . . . 33
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
joint venture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Merger Sub Membership Interests. . . . . . . . . . . . . . . . . . . . . .2
MGL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
MLLCA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Multiple Employer Plan . . . . . . . . . . . . . . . . . . . . . . . . . 13
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Parent Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . 27
Parent Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . 17
Parent Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . 18
Parent Required Consents . . . . . . . . . . . . . . . . . . . . . . . . 18
Parent Required Statutory Approvals. . . . . . . . . . . . . . . . . . . 18
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Qualified Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Representatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Retiree Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
▇▇▇▇▇▇▇▇ Employment Agreement. . . . . . . . . . . . . . . . . . . . . . 24
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
SERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Surviving Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Takeover Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Tax Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Termination Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
VEBA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Withdrawal Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 12
AGREEMENT AND PLAN OF MERGER, dated as of November 9, 1999
(this "Agreement"), by and among Berkshire Energy Resources, a
Massachusetts business trust (the "Company"), Energy East
Corporation, a New York corporation ("Parent"), and Mountain
Merger LLC, a Massachusetts limited liability company and a
subsidiary of Parent ("Merger Sub").
WHEREAS, the Company and Parent have determined to engage in
a business combination transaction on the terms stated herein;
WHEREAS, the Board of Directors of Parent, the Board of
Trustees of the Company and the Managers of Merger Sub have each
approved and deemed it advisable and in the best interests of
their respective shareholders and members to consummate the
transactions contemplated herein under which the businesses of
the Company and Parent would be combined by means of the merger
of Merger Sub with and into the Company; and
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to
the conditions of this Agreement:
At the Effective Time (as defined in Section 1.3), Merger
Sub shall be merged with and into the Company (the "Merger") in
accordance with the declaration of trust of the Company and the
laws of the Commonwealth of Massachusetts. The Company shall be
the surviving entity in the Merger and shall continue its
existence under the laws of the Commonwealth of Massachusetts.
The effects and the consequences of the Merger shall be as set
forth in Section 1.2. Throughout this Agreement, the term "the
Company" shall refer to the Company prior to the Merger and the
term "Surviving Company" shall refer to the Company in its
capacity as the surviving entity in the Merger.
Section 1.2 Effects of the Merger. At the Effective
Time, (i) the declaration of trust of the Company, as in effect
immediately prior to the Effective Time, shall be the declaration
of trust of the Surviving Company until thereafter amended as
provided by law and such declaration of trust and (ii) the
by-laws of the Company, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Company
until thereafter amended as provided by law, the declaration of
trust of the Surviving Company and such by-laws. Subject to the
foregoing, the additional effects of the Merger shall be as
provided in Section 2 of Chapter 182 of the Massachusetts General
Laws ("MGL") and Section 62 of the Massachusetts Limited
Liability Company Act (the "MLLCA").
Section 1.3 Effective Time of the Merger. On the Closing
Date (as defined in Section 3.1), with respect to the Merger, a
certificate of merger complying with Article 56 of the Company's
declaration of trust and Section 61 of the MLLCA (the
"Certificate of Merger") shall be delivered to the Secretary of
the Commonwealth of Massachusetts, and to such other offices as
may be required by law, for filing. The Merger shall become
effective upon the filing of the Certificate of Merger with the
Secretary of the Commonwealth of Massachusetts, or at such later
date and time as may be set forth in the Certificate of Merger
(the "Effective Time").
Section 1.4 Trustees. The Managers of Merger Sub
immediately prior to the Effective Time shall be the trustees of
the Surviving Company and shall hold office from the Effective
Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the declaration
of trust and by-laws of the Surviving Company.
Section 1.5 Officers. Except for the Vice President of
the Company, who shall become the President and Chief Executive
Officer of the Surviving Company, the officers of Merger Sub
immediately prior to the Effective Time shall be the initial
officers of the Surviving Company and shall hold office from the
Effective Time until their respective successors are duly elected
or appointed and qualified in the manner provided in the
declaration of trust and by-laws of the Surviving Company.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Shares and Membership
Interests. At the Effective Time, by virtue of the Merger and
without any action on the part of any holder of any share of the
Company or membership interest of Merger Sub:
(a) Membership Interests of Merger Sub. All of
the membership interests of Merger Sub (the "Merger Sub
Membership Interests") that are issued and outstanding
immediately prior to the Effective Time shall be converted into
an aggregate of one thousand (1,000) fully paid and nonassessable
common shares, without par value, of the Surviving Company.
(b) Cancellation of Certain Company Common
Shares. Each common share, without par value, of the Company
(the "Company Common Shares"), that is owned by the Company as
treasury shares and all Company Common Shares that are owned by
Parent shall be canceled and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Shares. Subject
to the provisions of this Section 2.1, each Company Common Share,
other than shares canceled pursuant to Section 2.1(b), issued and
outstanding immediately prior to the Effective Time shall by
virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive $38.00 in
cash (the "Merger Consideration"). At the Effective Time, all
such Company Common Shares shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate ("Certificate")
representing any such Company Common Shares shall cease to have
any rights with respect thereto, except the right to receive the
Merger Consideration.
Section 2.2 Exchange of Certificates.
(a) Deposit With Paying Agent. As soon as practicable
after the Effective Time, Parent shall deposit or cause to be
deposited with a bank or trust company mutually agreeable to
Parent and the Company (the "Paying Agent"), pursuant to an
agreement in form and substance reasonably acceptable to Parent
and the Company, cash representing the aggregate Merger
Consideration to which Company shareholders who have properly
completed, signed and submitted letters of transmittal shall be
entitled pursuant to Section 2.1(c); and from time to time cash
representing the aggregate Merger Consideration to which Company
shareholders who later submit letters of transmittal shall be
entitled pursuant to Section 2.1(c) (such amounts being
hereinafter referred to as the "Exchange Fund"). The Paying
Agent shall invest the Exchange Fund as Parent directs. Any net
profit resulting from, or interest or income produced by, such
investments shall be payable to Parent. The Exchange Fund shall
not be used for any other purpose except as provided in this
Agreement.
(b) Exchange And Payment Procedures. As soon as
practicable after the Effective Time, Parent shall cause the
Paying Agent to mail to each holder of record as of the Effective
Time of a Certificate or Certificates that have been converted
pursuant to Section 2.1: (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon actual delivery
of the Certificates to the Paying Agent) and (ii) instructions
for effecting the surrender of the Certificates and receiving the
Merger Consideration to which such holder shall be entitled
therefor pursuant to Section 2.1. Upon surrender of a Certificate
to the Paying Agent for cancellation, together with a duly
executed letter of transmittal and such other documents as the
Paying Agent may require, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger
Consideration. In the event the Merger Consideration is to be
delivered to any person who is not the person in whose name the
Certificate surrendered in exchange therefor is registered in the
transfer records of the Company, the Merger Consideration may be
delivered to a transferee if the Certificate is presented to the
Paying Agent, accompanied by all documents required to evidence
and effect such transfer and by evidence satisfactory to the
Paying Agent that any applicable transfer taxes have been paid.
Until surrendered as contemplated by this Section 2.2, each
Certificate (other than a certificate representing Company Common
Shares to be canceled in accordance with Section 2.1(b)) shall be
deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the Merger Consideration
contemplated by this Section 2.2. No interest will be paid or
will accrue on any cash payable to holders of Certificates
pursuant to the provisions of this Article II.
(c) Closing of Transfer Books. From and after
the Effective Time, the share transfer books of the Company shall
be closed and no registration of any transfer of any shares of
the Company shall thereafter be made in the records of the
Company. If, after the Effective Time, Certificates are
presented to the Surviving Company, they shall be canceled and
exchanged for the Merger Consideration.
(d) Termination of Exchange Fund. All funds held
by the Paying Agent for payment to the holders of unsurrendered
Certificates and unclaimed at the end of one year from the
Effective Time shall be returned to Parent, after which time any
holder of unsurrendered Certificates shall look as a general
creditor only to the Surviving Company for payment of such funds
to which such holder may be due, subject to applicable law.
(e) Escheat. The Company shall not be liable to
any person for such funds delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(f) Withholding Rights. Each of the Surviving
Company, the Company and Parent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to
this Agreement to any holder of Company Common Shares such
amounts as it is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of
1986 as amended (the "Code") and the rules and regulations
promulgated thereunder, or any provision of state, local or
foreign Tax law. To the extent that amounts are so withheld by
the Surviving Company, the Company or Parent, as the case may be,
such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of Company Common
Shares in respect of which such deduction and withholding was
made by the Surviving Company, the Company or Parent, as the case
may be. Without limitation of the foregoing, unless an exemption
applies, the Paying Agent will be required to withhold and remit
to the IRS 31% of any cash payments to which a holder of Company
Common Shares or other payee is entitled pursuant to the Merger,
unless (i) the shareholder or other payee provides his or her
U.S. Federal taxpayer identification number (social security
number or employer identification number) and certifies that such
number is correct by completing and signing the IRS Form W-9 that
will be included as part of the transmittal letter sent to
shareholders by the Paying Agent or (ii) another applicable
exemption exists and is proved in a manner satisfactory to the
Paying Agent.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the
"Closing") shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, at 10:00 a.m., Eastern time, on the second business day
immediately following the date on which the last of the
conditions set forth in Article VIII hereof is fulfilled or
waived (other than conditions that by their nature are required
to be performed on the Closing Date, but subject to satisfaction
of such conditions), or at such other time and date and place as
the Company and Parent shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
Section 4.1 Organization and Qualification. Except as set
forth in Section 4.1 of the Company Disclosure Schedule (as
defined in Section 7.6), the Company and each of its subsidiaries
(as defined below) is a business trust or corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has all
requisite trust or corporate power and authority, and has been
duly authorized by all necessary approvals and orders, to own,
lease and operate its assets and properties to the extent owned,
leased and operated and to carry on its business as it is now
being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business
or the ownership or leasing of its assets and properties makes
such qualification necessary, other than in such jurisdictions
where the failure to be so qualified and in good standing will
not, when taken together with all other such failures, have a
material adverse effect on the business, properties, financial
condition or results of operations of the Company and its
subsidiaries taken as a whole or on the consummation of this
Agreement (any such material adverse effect being hereafter
referred to as a "Company Material Adverse Effect"). As used in
this Agreement, the term "subsidiary" of a person shall mean any
corporation or other entity (including business trusts,
partnerships and other business associations) of which a majority
of the outstanding capital stock or other voting securities
having voting power under ordinary circumstances to elect
directors or similar members of the governing body of such
corporation or entity shall at the time be held, directly or
indirectly, by such person.
Section 4.2 Subsidiaries. Section 4.2 of the Company
Disclosure Schedule sets forth a description as of the date
hereof, of all material and certain other subsidiaries and joint
ventures of the Company, including the name of each such entity,
the state or jurisdiction of its incorporation or organization,
the Company's interest therein and a brief description of the
principal line or lines of business conducted by each such
entity. Except as set forth in Section 4.2 of the Company
Disclosure Schedule, none of the Company's subsidiaries is a
"public utility company," a "holding company," a "subsidiary
company" or an "affiliate" of any public utility company within
the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(11) of
the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"). Except as set forth in Section 4.2 of the Company
Disclosure Schedule, all of the issued and outstanding shares of
capital stock owned by the Company of each Company subsidiary are
validly issued, fully paid, nonassessable and free of preemptive
rights, and are owned, directly or indirectly, by the Company
free and clear of any liens, claims, encumbrances, security
interests, equities, charges and options of any nature
whatsoever, and there are no outstanding subscriptions, options,
calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating
any such subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of its capital stock
or obligating it to grant, extend or enter into any such
agreement or commitment, except for any of the foregoing that
could not reasonably be expected to have a Company Material
Adverse Effect. As used in this Agreement, the term "joint
venture" of a person shall mean any corporation or other entity
(including business trusts, partnerships and other business
associations) that is not a subsidiary of such person, in which
such person or one or more of its subsidiaries owns an equity
interest, other than equity interests held for passive investment
purposes which are less than 10% of any class of the outstanding
voting securities or equity of any such entity.
Section 4.3 Capitalization. The authorized capital of the
Company consists of 10,000,000 Company Common Shares and
1,000,000 preferred shares, par value $100.00, of the Company
("Company Preferred Shares"). As of the close of business on
November 8, 1999, there were issued and outstanding 2,523,479
Company Common Shares and no Company Preferred Shares. All of the
issued and outstanding shares of the Company are validly issued,
fully paid, nonassessable and free of preemptive rights. Except
as set forth in Section 4.3 of the Company Disclosure Schedule,
as of the date hereof, there are no outstanding subscriptions,
options, stock appreciation rights, calls, contracts, voting
trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating the Company or any of
the subsidiaries of the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the
Company, or obligating the Company to grant, extend or enter into
any such agreement or commitment.
Section 4.4 Authority; Non-contravention; Statutory
Approvals; Compliance.
(a) Authority. The Company has all requisite trust
power and authority to enter into this Agreement and, subject to
obtaining the Company Shareholders' Approval (as defined in
Section 4.13) and the Company Required Statutory Approvals (as
defined in Section 4.4(c)), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement
and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary
trust action on the part of the Company subject to obtaining the
applicable Company Shareholders' Approval. This Agreement has
been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by the
other signatories hereto, constitutes the valid and binding
obligation of the Company enforceable against it in accordance
with its terms.
(b) Non-contravention. Except as set forth in Section
4.4(b) of the Company Disclosure Schedule, the execution and
delivery of this Agreement by the Company do not, and the
consummation of the transactions contemplated hereby will not,
violate, conflict with, or result in a breach of any provision
of, or constitute a default (with or without notice or lapse of
time or both) under, or result in the termination or modification
of, or accelerate the performance required by, or result in a
right of termination, cancellation, or acceleration of any
obligation or the loss of a benefit under, or result in the
creation of any lien, security interest, charge or encumbrance
("Liens") upon any of the properties or assets of the Company or
any of its subsidiaries or any of its joint ventures (any such
violation, conflict, breach, default, right of termination,
modification, cancellation or acceleration, loss or creation, a
"Violation" with respect to the Company (such term when used in
Article V having a correlative meaning with respect to Parent))
pursuant to any provisions of (i) the articles of organization,
by-laws or similar governing documents of the Company, any of its
subsidiaries or any of its joint ventures, (ii) subject to
obtaining the Company Required Statutory Approvals and the
receipt of the Company Shareholders' Approval, any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any Governmental Authority (as defined
in Section 4.4(c)) applicable to the Company, any of its
subsidiaries or any of its joint ventures, or any of their
respective properties or assets or (iii) subject to obtaining the
third-party consents or other approvals set forth in Section
4.4(b) of the Company Disclosure Schedule (the "Company Required
Consents") any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the
Company, any of its subsidiaries or any of its joint ventures is
a party or by which it or any of its properties or assets may be
bound or affected, excluding from the foregoing clauses (i), (ii)
and (iii) such Violations as would not have, in the aggregate, a
Company Material Adverse Effect.
(c) Statutory Approvals. Except as described in
Section 4.4(c) of the Company Disclosure Schedule, no
declaration, filing or registration with, or notice to or
authorization, consent or approval of, any court, federal, state,
local or foreign governmental or regulatory body (including a
stock exchange or other self-regulatory body) or authority (each,
a "Governmental Authority") is necessary for the execution and
delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, the failure
to obtain, make or give which would have, in the aggregate, a
Company Material Adverse Effect (the "Company Required Statutory
Approvals"), it being understood that references in this
Agreement to "obtaining" such Company Required Statutory
Approvals shall mean making such declarations, filings or
registrations, giving such notices, obtaining such
authorizations, consents or approvals and having such waiting
periods expire as are necessary to avoid a violation of law.
(d) Compliance. Except as set forth in Section 4.4(d)
or Section 4.11 of the Company Disclosure Schedule, or as
disclosed in the Company SEC Reports (as defined in Section 4.5)
filed prior to the date hereof, neither the Company, nor any of
its subsidiaries nor any of its joint ventures is in violation
of, is under investigation with respect to any violation of, or
has been given notice or been charged with any violation of, any
law, statute, order, rule, regulation, ordinance or judgment
(including, without limitation, any applicable Environmental Law,
as defined in Section 4.11(f)(ii)) of any Governmental Authority
except for violations that, in the aggregate, do not have and are
not reasonably likely to have a Company Material Adverse Effect.
Except as set forth in Section 4.4(d) of the Company Disclosure
Schedule or in Section 4.11 of the Company Disclosure Schedule,
the Company and its subsidiaries and joint ventures have all
permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct their
respective businesses as currently conducted in all respects,
except those which the failure to obtain would, in the aggregate,
not have a Company Material Adverse Effect. Except as set forth
in Section 4.4(d) of the Company Disclosure Schedule, the Company
and each of its subsidiaries are not in breach or violation of or
in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time
or action by a third party, could result in a default under, (i)
its declaration of trust, articles of organization or by-laws or
(ii) any material contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which it is a party or by which it is bound
or to which any of its property is subject, except for breaches,
violations or defaults that, in the aggregate, do not have and
are not reasonably likely to have, a Company Material Adverse
Effect.
(e) Except as set forth in Section 4.4(e) of the
Company Disclosure Schedule, there is no "non-competition" or
other similar contract, commitment, agreement or understanding
that restricts the ability of the Company or any of its
affiliates to conduct business in any geographic area or that
would reasonably be likely to restrict the Surviving Company or
any of its affiliates to conduct business in any geographic area.
Section 4.5 Reports and Financial Statements. The filings
required to be made by the Company and its subsidiaries since
January 1, 1996 under the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the 1935 Act and applicable state
public utility laws and regulations have been filed with the
Securities and Exchange Commission (the "SEC"), the Federal
Energy Regulatory Commission (the "FERC") or the appropriate
state public utilities commission, as the case may be, including
all forms, statements, reports, agreements (oral or written) and
all documents, exhibits, amendments and supplements appertaining
thereto, and complied, as of their respective dates, in all
material respects with all applicable requirements of the
appropriate statute and the rules and regulations thereunder. The
Company has made available to Parent a true and complete copy of
each report, schedule, registration statement and definitive
proxy statement filed by the Company or its predecessor with the
SEC since January 1, 1996 (as such documents have since the time
of their filing been amended, the "Company SEC Reports"). As of
their respective dates, the Company SEC Reports did not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading. The audited consolidated
financial statements and unaudited interim financial statements
of the Company included in the Company SEC Reports (collectively,
the "Company Financial Statements") have been prepared in
accordance with generally accepted accounting principles applied
on a consistent basis ("GAAP") (except as may be indicated
therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q of the SEC) and
fairly present the consolidated financial position of the Company
as of the dates thereof and the consolidated results of
operations and cash flows for the periods then ended. True,
accurate and complete copies of the declaration of trust and
by-laws of the Company, as in effect on the date hereof, have
been made available to Parent.
Section 4.6 Absence of Certain Changes or Events. Except
as disclosed in the Company SEC Reports filed prior to the date
hereof or as set forth in Section 4.6 of the Company Disclosure
Schedule, from December 31, 1998 the Company and each of its
subsidiaries have conducted their business only in the ordinary
course of business consistent with past practice, and there has
not been, and no fact or condition exists which would have or,
insofar as reasonably can be foreseen, could have, a Company
Material Adverse Effect.
Section 4.7 Litigation. Except as disclosed in the
Company SEC Reports filed prior to the date hereof or as set
forth in Section 4.7, Section 4.9 or Section 4.11 of the Company
Disclosure Schedule, (a) there are no claims, suits, actions or
proceedings, pending or threatened, nor are there any
investigations or reviews pending or threatened against, relating
to or affecting the Company or any of its subsidiaries, and (b)
there are no judgments, decrees, injunctions, rules or orders of
any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator applicable to the
Company or any of its subsidiaries, except for any of the
foregoing under clauses (a) and (b) that individually or in the
aggregate would not reasonably be expected to have a Company
Material Adverse Effect.
Section 4.8 Proxy Statement. The proxy statement, in
definitive form (the "Proxy Statement"), relating to the Company
Special Meeting (as defined below) shall not, at the date mailed
to shareholders and at the time of the Company Special Meeting,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The
Proxy Statement, insofar as it relates to the Company or any of
its subsidiaries, shall comply as to form in all material
respects with the applicable provisions of the Securities Act and
the Exchange Act and the rules and regulations thereunder.
Section 4.9 Tax Matters. "Taxes," as used in this
Agreement, means any federal, state, county, local or foreign
taxes, charges, fees, levies or other assessments, including,
without limitation, all net income, gross income, sales and use,
ad valorem, transfer, gains, profits, excise, franchise, real and
personal property, gross receipts, capital stock, production,
business and occupation, disability, employment, payroll,
license, estimated, stamp, custom duties, severance or
withholding taxes or charges imposed by any governmental entity,
and includes any interest and penalties (civil or criminal) on or
additions to any such taxes. "Tax Return," as used in this
Agreement, means a report, return or other written information
required to be supplied to a governmental entity with respect to
Taxes.
Except as disclosed in Section 4.9 of the Company Disclosure
Schedule:
(a) Filing of Timely Tax Returns. The Company and each
of its subsidiaries have duly filed (or there has been filed on
its behalf) within the time prescribed by law all material Tax
Returns (including withholding Tax Returns) required to be filed
by each of them under applicable law. All such Tax Returns were
and are in all material respects true, complete and correct.
(b) Payment of Taxes. The Company and each of its
subsidiaries have, within the time and in the manner prescribed
by law, paid all material Taxes (including withholding Taxes)
that are currently due and payable except for those contested in
good faith and for which adequate reserves have been taken.
(c) Tax Reserves. All material Taxes payable by the
Company and its subsidiaries for all taxable periods and portions
thereof through the date of the most recent financial statements
contained in the Company Financial Statements filed prior to the
date of this Agreement are properly reflected in such financial
statements in accordance with GAAP, and the unpaid Taxes of the
Company and its subsidiaries do not exceed the amount shown
therefor on such financial statements adjusted for the passage of
time through the Effective Time in accordance with past custom
and practice of the Company and its subsidiaries in filing their
Tax Returns.
(d) Extensions of Time for Filing Tax Returns. Neither
the Company nor any of its subsidiaries have requested any
extension of time within which to file any material Tax Return,
which Tax Return has not since been filed.
(e) Waivers of Statute of Limitations. Neither the
Company nor any of its subsidiaries has executed any outstanding
waivers or comparable consents regarding the application of the
statute of limitations with respect to any material Taxes or
material Tax Returns.
(f) Expiration of Statute of Limitations. The statute
of limitations for the assessment of all material Taxes has
expired for all applicable material Tax Returns of the Company
and each of its subsidiaries, or those material Tax Returns have
been examined by the appropriate taxing authorities for all
periods through the date hereof, and no deficiency for any
material Taxes has been proposed, asserted or assessed against
the Company or any of its subsidiaries that has not been resolved
and paid in full.
(g) Audit, Administrative and Court Proceedings. No
material claims, audits, disputes, controversies, examinations,
investigations or other proceedings are presently pending with
regard to any Taxes or Tax Returns of the Company or any of its
subsidiaries.
(h) Tax Rulings. Neither the Company nor any of its
subsidiaries has received a Tax Ruling (as defined below) or
entered into a Closing Agreement (as defined below) with any
taxing authority that would have a continuing adverse effect
after the Closing Date. "Tax Ruling," as used in this Agreement,
shall mean a written ruling of a taxing authority relating to
Taxes. "Closing Agreement," as used in this Agreement, shall mean
a written and legally binding agreement with a taxing authority
relating to Taxes.
(i) Availability of Tax Returns. The Company has
provided or made available to Parent complete and accurate copies
of (i) all Tax Returns, and any amendments thereto, filed by the
Company or any of its subsidiaries since 1994, (ii) all audit
reports received from any taxing authority relating to any Tax
Return filed by the Company or any of its subsidiaries and (iii)
any Closing Agreements entered into by the Company or any of its
subsidiaries with any taxing authority.
(j) Tax Sharing Agreements. Neither the Company nor
any of its subsidiaries is a party to any agreement,
understanding or arrangement relating to allocating or sharing of
Taxes.
(k) Liability for Others. Neither the Company nor any
of its subsidiaries has any liability for any material Taxes of
any person other than the Company and its subsidiaries (i) under
Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign law), (ii) as a transferee or successor,
(iii) by contract or (iv) otherwise.
(l) Code Section 897. To the best knowledge of the
Company after due inquiry, no foreign person owns or has owned
beneficially more than five percent of the total fair market
value of the Company Common Shares during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
(m) Code Section 355(e). Neither the Company nor any
of its subsidiaries has constituted a "distributing corporation"
or a "controlled corporation" in a distribution of shares
qualifying for tax-free treatment under Section 355 of the Code
(i) in the past 24 month period or (ii) in a distribution which
could otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code)
in conjunction with the Merger.
Section 4.10 Employee Matters; ERISA. Except as set forth
in the appropriate subsection of Section 4.10 of the Company
Disclosure Schedule:
(a) For purposes of this Section 4.10, the following
terms have the definitions set forth below:
(i) "Controlled Group Liability" means any and all
liabilities (a) under Title IV of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (b) as a
result of a failure to comply with the minimum funding
requirements of Section 302 of ERISA or Section 412 of the
Code, (c) under Section 4971 of the Code, and (d) as a
result of a failure to comply with the continuation coverage
requirements of Section 601 et seq. of ERISA and Section
4980B of the Code, other than such liabilities that arise
solely out of, or relate solely to, the Employee Benefit
Plans.
(ii) "ERISA Affiliate" means, with respect to any
entity, trade or business, any other entity, trade or
business that is a member of a group described in Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of
ERISA that includes the first entity, trade or business, or
that is a member of the same "controlled group" as the first
entity, trade or business pursuant to Section 4001(a)(14) of
ERISA.
(iii) An "Employee Benefit Plan" means any material
employee benefit plan, program, policy, practice, or other
arrangement providing benefits to any current or former
employee, officer, trustee or director of the Company or any
of its subsidiaries or any beneficiary or dependent thereof
that is sponsored or maintained by the Company or any of its
subsidiaries or to which the Company or any of its
subsidiaries contributes or is obligated to contribute,
whether or not written, including without limitation any
employee welfare benefit plan within the meaning of Section
3(1) of ERISA, any employee pension benefit plan within the
meaning of Section 3(2) of ERISA (whether or not such plan
is subject to ERISA) and any material bonus, incentive,
deferred compensation, vacation, stock purchase, stock
option, severance, employment, change of control or fringe
benefit plan, program or agreement.
(iv) A "Plan" means any Employee Benefit Plan other
than a Multiemployer Plan.
(v) A "Multiemployer Plan" means any "multiemployer
plan" within the meaning of Section 4001(a)(3) of ERISA.
(vi) "Withdrawal Liability" means liability to a
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as those terms are
defined in Part I of Subtitle E of Title IV of ERISA.
(b) Section 4.10(b) of the Company Disclosure Schedule
includes a complete list of all material Employee Benefit Plans
and, with respect to executive welfare benefit plans and
nonqualified pension, savings and deferred compensation plans,
states the number of employees participating in or covered by
such plans.
(c) With respect to each Plan, the Company has delivered
to Parent a true, correct and complete copy of: (i) each writing
constituting a part of such Plan, including without limitation
all material plan documents, trust agreements, and insurance
contracts and other funding vehicles; (ii) the most recent Annual
Report (Form 5500 Series) and accompanying schedules, if any;
(iii) the current summary plan description and any material
modifications thereto, if required to be furnished under ERISA;
(iv) the most recent annual financial report, if any; (v) the
most recent actuarial report, if any; and (vi) the most recent
determination letter from the Internal Revenue Service (the
"IRS"), if any. Except as specifically provided in the foregoing
documents delivered to Parent, there are no amendments to any
Plan that have been adopted or approved nor has the Company or
any of its subsidiaries undertaken to make any such amendments or
to adopt or approve any new Plan.
(d) Section 4.10(b) of the Company Disclosure Schedule
identifies each Plan that is intended to be a "qualified plan"
within the meaning of Section 401(a) of the Code ("Qualified
Plans"). The IRS has issued a favorable determination letter with
respect to each Qualified Plan and the related trust that has not
been revoked, and except as would not have a Company Material
Adverse Effect, there are no existing circumstances nor any
events that have occurred that could adversely affect the
qualified status of any Qualified Plan or the related trust.
Section 4.10(b) of the Company Disclosure Schedule identifies
each Plan or related trust which is intended to meet the
requirements of Code Section 501(c)(9) (a "VEBA"), and except as
would not have a Company Material Adverse Effect, each such VEBA
meets such requirements and provides no disqualified benefits (as
such term is defined in Code Section 4976(b)).
(e) All material contributions required to be made to any
Plan by applicable law or regulation or by any Plan document or
other contractual undertaking, and all material premiums due or
payable with respect to insurance policies funding any Plan, for
any period through the date hereof have been timely made or paid
in full or, to the extent not required to be made or paid on or
before the date hereof, have been fully reflected on the Company
Financial Statements. Each Plan that is an employee welfare
benefit plan under Section 3(1) of ERISA (i) is funded through an
insurance company contract or a contract with a health
maintenance organization, (ii) is, or is funded through, a VEBA
identified as such in Section 4.10(b) of the Company Disclosure
Schedule, or (iii) is unfunded.
(f) Except as would not have a Company Material Adverse
Effect, with respect to each Employee Benefit Plan, the Company
and its subsidiaries have complied, and are now in compliance,
with all provisions of ERISA, the Code and all laws and
regulations applicable to such Employee Benefit Plans and each
Plan has been administered in all material respects in accordance
with its terms. There is not now, nor do any circumstances exist
that could reasonably be expected to give rise to, any
requirement for the posting of security with respect to a Plan or
the imposition of any lien on the assets of the Company or any of
its subsidiaries under ERISA or the Code.
(g) With respect to each Plan that is subject to Title IV
of ERISA, the minimum funding requirements of Section 302 of
ERISA or Section 412 of the Code, or Section 4971 of the Code:
(i) there does not exist any accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of
ERISA, whether or not waived, in respect of any plan year ended
prior to the date hereof and for which the time for making
contributions in order to avoid incurring an accumulated funding
deficiency for such year has expired; (ii) the fair market value
of the assets of each such Plan that is a defined benefit plan
equals or exceeds the actuarial present value of the accumulated
benefit obligation (as of the date of the most recent actuarial
report prepared for such Plan) under such Plan (whether or not
vested), based upon the actuarial assumptions set forth in the
most recent actuarial report for such Plan; (iii) no reportable
event within the meaning of Section 4043(c) of ERISA for which
the 30-day notice requirement has not been waived has occurred
since December 31, 1993 in respect of any such Plan which is a
defined benefit Plan; (iv) all material premiums to the Pension
Benefit Guaranty Corporation ("PBGC") have been timely paid in
full; (v) no material liability (other than for premiums to the
PBGC and for the payment of benefits and contributions in the
ordinary course) under Title IV of ERISA has been or could
reasonably be expected to be incurred by the Company or any of
its subsidiaries; and (vi) to the knowledge of the Company, the
PBGC has not instituted proceedings to terminate any such Plan
and no condition exists that presents a material risk that such
proceedings will be instituted or which would constitute grounds
under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any such Plan.
(h) No Employee Benefit Plan is a Multiemployer Plan or a
plan that has two or more contributing sponsors at least two of
which are not under common control, within the meaning of Section
4063 of ERISA (a "Multiple Employer Plan"). None of the Company
and its subsidiaries nor any of their respective ERISA Affiliates
has, at any time during the last six years, contributed to or
been obligated to contribute to any Multiemployer Plan or
Multiple Employer Plan. None of the Company and its subsidiaries
nor any ERISA Affiliates has incurred any Withdrawal Liability
that has not been satisfied in full.
(i) There does not now exist, nor do any circumstances
exist that could reasonably be expected to result in, any
Controlled Group Liability that would have a Company Material
Adverse Effect following the Closing. Without limiting the
generality of the foregoing, neither the Company nor any of its
subsidiaries, nor any of their respective ERISA Affiliates, has
engaged in any transaction described in Section 4069 or Section
4204 or 4212 of ERISA since December 31, 1993.
(j) Except for health continuation coverage as required
by Section 4980B of the Code or Part 6 of Title I of ERISA or
applicable state law, the Company and its subsidiaries have no
material liability for life, health, medical or other welfare
benefits to former employees or beneficiaries or dependents of
former employees.
(k) Neither the execution and delivery of this Agreement
nor the consummation of any of the transactions contemplated
hereby will (either alone or in conjunction with any other event)
result in, cause the accelerated funding, vesting or delivery of,
or increase the amount or value of, any material payment or
benefit to any employee, officer, trustee or director of the
Company or any of its subsidiaries. Section 4.10(k) of the
Company Disclosure Schedule sets forth the estimated amount that
will be required to be contributed to each trust listed thereon
as a result of the consummation of the transactions contemplated
hereby.
(l) No labor organization or group of employees of the
Company or any of its subsidiaries has made a pending demand for
recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation
proceeding presently pending or, to the knowledge of the Company,
threatened to be brought or filed, with the National Labor
Relations Board or any other labor relations tribunal or
authority. There are no organizing activities, strikes, work
stoppages, slowdowns, lockouts, material arbitrations or material
grievances, or other material labor disputes pending or, to the
knowledge of the Company, threatened against or involving the
Company or any of its subsidiaries. Each of the Company and its
subsidiaries is in compliance in all material respects with all
applicable laws and collective bargaining agreements respecting
employment and employment practices, terms and conditions of
employment, wages and hours and occupational safety and health.
(m) There are no pending or, to the knowledge of the
Company, threatened claims (other than claims for benefits in the
ordinary course), lawsuits or arbitrations which have been
asserted or instituted, and there is no set of circumstances
which may reasonably give rise to a claim or lawsuit, against the
Plans, any fiduciaries thereof with respect to their duties to
the Plans or the assets of any of the trusts under any of the
Plans which could reasonably be expected to result in a Company
Material Adverse Effect.
(n) The Company, its subsidiaries and each member of
their respective business enterprise has complied with the Worker
Adjustment and Retraining Notification Act.
(o) None of the Company and its subsidiaries nor any
other person, including any fiduciary, has engaged in any
"prohibited transaction" (as defined in Section 4975 of the Code
or Section 406 of ERISA), which could subject any of the Employee
Benefit Plans or their related trusts, the Company, any of its
subsidiaries or any person that the Company or any of its
subsidiaries has an obligation to indemnify, to any tax or
penalty imposed under Section 4975 of the Code or Section 502 of
ERISA.
Section 4.11 Environmental Protection. Except as set forth
in Section 4.11 of the Company Disclosure Schedule or in the
Company SEC Reports filed prior to the date hereof:
(a) Compliance. Except where the failure to be in such
compliance would not in the aggregate have a Company Material
Adverse Effect, (i) the Company and each of its subsidiaries are
in compliance with all applicable Environmental Laws (as defined
in Section 4.11(f)(ii)) and (ii) neither the Company nor any of
its subsidiaries has received any communication from any
Governmental Authority or any written communication from any
other person that alleges that the Company or any of its
subsidiaries is not in compliance with applicable Environmental
Laws.
(b) Environmental Permits. The Company and each of its
subsidiaries has obtained or has applied for all environmental,
health and safety permits and governmental authorizations
(collectively, the "Environmental Permits") necessary for the
construction of its facilities or the conduct of its operations,
and all such Environmental Permits are in good standing or, where
applicable, a renewal application has been timely filed and is
pending agency approval, and the Company and its subsidiaries are
in compliance with all terms and conditions of the Environmental
Permits, and the Company reasonably believes that any transfer,
renewal or reapplication for any Environmental Permit required as
a result of the Merger can be accomplished in the ordinary course
of business, except where the failure to obtain or to be in such
compliance would not, in the aggregate, have a Company Material
Adverse Effect.
(c) Environmental Claims. There are no Environmental
Claims (as defined in Section 4.11(f)(i)) pending (i) against the
Company or any of its subsidiaries or joint ventures, or (ii)
against any real or personal property or operations that the
Company or any of its subsidiaries owns, leases or manages, in
whole or in part that, if adversely determined, would have, in
the aggregate, a Company Material Adverse Effect.
(d) Releases. Except for Releases of Hazardous Materials
the liability for which would not have, in the aggregate, a
Company Material Adverse Effect, there have been no Releases (as
defined in Section 4.11(f)(iv)) of any Hazardous Material (as
defined in Section 4.11(f)(iii)) that would be reasonably likely
to (i) form the basis of any Environmental Claim against the
Company or any of its subsidiaries, or (ii) to the knowledge of
the Company, cause, damage or diminution of value to any of the
operations or real properties owned, leased or managed, in whole
or in part, by Company or any of its subsidiaries.
(e) Predecessors. The Company has no knowledge of any
Environmental Claim pending or threatened, or of any Release of
Hazardous Materials that would be reasonably likely to form the
basis of any Environmental Claim, in each case against any person
or entity (including, without limitation, any predecessor of the
Company or any of its subsidiaries) whose liability the Company
or any of its subsidiaries has or may have retained or assumed
either contractually or by operation of law or against any real
or personal property which the Company or any of its subsidiaries
formerly owned, leased or managed, in whole or in part, except
for Releases of Hazardous Materials the liability for which would
not have, in the aggregate, a Company Material Adverse Effect.
(f) As used in this Agreement:
(i) "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits,
demands, demand letters, directives, claims, liens,
investigations, proceedings or notices of noncompliance or
violation by any person or entity (including any
Governmental Authority) alleging potential liability
(including, without limitation, potential responsibility for
or liability for enforcement costs, investigatory costs,
cleanup costs, governmental response costs, removal costs,
remedial costs, natural-resources damages, property damages,
personal injuries, fines or penalties) arising out of, based
on or resulting from (A) the presence, or Release or
threatened Release into the environment, of any Hazardous
Materials at any location, whether or not owned, operated,
leased or managed by the Company, Parent or any of their
respective subsidiaries or joint ventures; or (B)
circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law; or (C) any and all
claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive
relief resulting from the presence or Release of any
Hazardous Materials.
(ii) "Environmental Laws" means all federal, state,
local laws, rules, ordinances and regulations relating to
pollution, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or
subsurface strata) or protection of human health as it
relates to the environment including, without limitation,
laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to
the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous
Materials.
(iii) "Hazardous Materials" means (A) any petroleum
or petroleum products, radioactive materials, asbestos in
any form that is or could become friable, urea formaldehyde
foam insulation, coal tar residue, and transformers or other
equipment that contain dielectric fluid containing
polychlorinated biphenyls ("PCBs") in regulated
concentrations; and (B) any chemicals, materials or
substances which are now defined as or included in the
definition of "hazardous substances", "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic
pollutants," "hazardous constituents" or words of similar
import, under any Environmental Law; and (C) any other
chemical, material, substance or waste, exposure to which is
now prohibited, limited or regulated under any Environmental
Law in a jurisdiction in which the Parent, the Company or
any of their subsidiaries or joint ventures operates or has
stored, treated or disposed of Hazardous Materials.
(iv) "Release" means any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the atmosphere, soil, surface
water, groundwater or property.
Section 4.12 Regulation as a Utility. Except as set forth
in Section 4.12 of the Company Disclosure Schedule, neither the
Company nor any "associate company," "subsidiary company" or
"affiliate" (as such terms are defined in the ▇▇▇▇ ▇▇▇) of the
Company is subject to regulation as (a) a "holding company," a
"public-utility company," a "subsidiary company" or an
"affiliate" of a "holding company," within the meaning of
Sections 2(a)(7), 2(a)(5), 2(a)(8) and 2(a)(11), respectively, of
the 1935 Act, (b) a "public utility" under the Federal Power Act,
(c) a "natural-gas company" under the Natural Gas Act or (d) a
public utility or public service company (or similar designation)
by any state in the United States other than Massachusetts or by
any foreign country.
Section 4.13 Vote Required. The approval of the Merger by
two-thirds of the votes entitled to be cast by all holders of
issued and outstanding Company Common Shares (the "Company
Shareholders' Approval") is the only vote of the holders of any
class or series of the shares of the Company or any of its
subsidiaries required to approve this Agreement, the Merger and
the other transactions contemplated hereby.
Section 4.14 Opinion of Financial Advisor. The Company has
received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Gull to the effect
that, as of November 9, 1999, the Merger Consideration is fair
from a financial point of view to the holders of Company Common
Shares.
Section 4.15 Ownership of Parent Common Stock. Except as
set forth in Section 4.15 of the Company Disclosure Schedule, the
Company does not "beneficially own" (as such term is defined for
purposes of Section 13(d) of the Exchange Act) any shares of
Parent Common Stock.
Section 4.16 Takeover Laws. The Company has taken all
action required to be taken by it in order to exempt this
Agreement and the transactions contemplated hereby from, and this
Agreement and the transactions contemplated hereby are exempt
from, the requirements of any "moratorium," "control share,"
"fair price" or other anti-takeover laws and regulations
(collectively, "Takeover Laws") of the Commonwealth of
Massachusetts, including Chapters 110C, 110D and 110F of the
Massachusetts General Laws.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.1 Organization and Qualification. Except as set
forth in Section 5.1 of the Parent Disclosure Schedule (as
defined in Section 7.6), Parent and each of its subsidiaries is a
corporation or other entity duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite corporate power
and authority, and has been duly authorized by all necessary
approvals and orders, to own, lease and operate its assets and
properties to the extent owned, leased and operated and to carry
on its business as it is now being conducted and is duly
qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership
or leasing of its assets and properties makes such qualification
necessary, other than in such jurisdictions where the failure to
be so qualified and in good standing will not, when taken
together with all other such failures, have a material adverse
effect on the business, properties, financial condition or
results of operations of Parent and its subsidiaries taken as a
whole or on the consummation of this Agreement (any such material
adverse effect being hereafter referred to as a "Parent Material
Adverse Effect").
Section 5.2 Subsidiaries. Except as set forth in Section
5.2 of the Parent Disclosure Schedule, Parent is an exempt
holding company under the 1935 Act and none of the subsidiaries
of Parent is a "public utility company" within the meaning of
Section 2(a)(5) of the 1935 Act.
Section 5.3 Capitalization. The authorized capital stock
of Parent consists of 300,000,000 shares of Parent Common Stock
and 10,000,000 shares of preferred stock, par value $.01 per
share, of Parent ("Parent Preferred Stock"). As of the close of
business on November 8, 1999, there were issued and outstanding
112,042,928 shares of Parent Common Stock and no shares of Parent
Preferred Stock.
Section 5.4 Authority; Non-contravention; Statutory
Approvals.
(a) Authority. Parent has all requisite corporate power
and authority to enter into this Agreement and, subject to the
applicable Parent Required Statutory Approvals (as defined in
Section 5.4(c)), to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement, and the
consummation by Parent of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on
the part of Parent. This Agreement has been duly and validly
executed and delivered by Parent and, assuming the due
authorization, execution and delivery by the other signatories
hereto, constitutes a valid and binding obligation of Parent
enforceable against it in accordance with its terms.
(b) Non-contravention. Except as set forth in Section
5.4(b) of the Parent Disclosure Schedule, the execution and
delivery of this Agreement by Parent do not, and the consummation
of the transactions contemplated hereby will not, result in a
Violation pursuant to any provisions of (i) the articles of
incorporation, by-laws or similar governing documents of Parent
or any of its subsidiaries or any of its joint ventures, (ii)
subject to obtaining the Parent Required Statutory Approvals (as
defined in Section 5.4(c)) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or
license of any Governmental Authority applicable to Parent or any
of its subsidiaries or any of its joint ventures or any of their
respective properties or assets or (iii) subject to obtaining the
third-party consents or other approvals set forth in Section
5.4(b) of the Parent Disclosure Schedule (the "Parent Required
Consents"), any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Parent
or any of its subsidiaries or any of its joint ventures is a
party or by which it or any of its properties or assets may be
bound or affected, excluding from the foregoing clauses (i), (ii)
and (iii) such Violations as would not have, in the aggregate, a
Parent Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section
5.4(c) of the Parent Disclosure Schedule, no declaration, filing
or registration with, or notice to or authorization, consent or
approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by Parent or the
consummation by Parent of the transactions contemplated hereby,
the failure to obtain, make or give which would have, in the
aggregate, a Parent Material Adverse Effect (the "Parent Required
Statutory Approvals"), it being understood that references in
this Agreement to "obtaining" such Parent Required Statutory
Approvals shall mean making such declarations, filings or
registrations; giving such notices; obtaining such
authorizations, consents or approvals; and having such waiting
periods expire as are necessary to avoid a violation of law.
Section 5.5 Proxy Statement. None of the information
supplied or to be supplied by or on behalf of Parent for
inclusion or incorporation by reference in the Proxy Statement
will, at the date the Proxy Statement is mailed to the Company
shareholders and at the time of the Company Special Meeting,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 5.6 Availability of Funds. Parent has sufficient
funds available to it or has received binding written commitments
subject only to customary terms and conditions from third parties
to enable Parent timely to perform all of its obligations under
this Agreement.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of the Parties. After the date hereof
and prior to the Effective Time or earlier termination of this
Agreement, Parent and the Company each agree as follows, each as
to itself and to each of its subsidiaries, except as expressly
contemplated or permitted in this Agreement, or to the extent the
other parties hereto shall otherwise consent in writing:
(a) Ordinary Course of Business. The Company shall, and
shall cause its subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and use all
commercially reasonable efforts to (i) preserve intact their
present business organizations and goodwill, preserve the
goodwill and relationships with customers, suppliers and others
having business dealings with them, (ii) subject to prudent
management of workforce needs and ongoing programs currently in
force, keep available the services of their present officers and
employees as a group, and (iii) maintain and keep material
properties and assets in as good repair and condition as at
present, subject to ordinary wear and tear, and maintain supplies
and inventories in quantities consistent with past practice.
(b) Dividends. The Company shall not, nor shall it
permit any of its subsidiaries to: (i) declare or pay any
dividends on or make other distributions in respect of any
shares other than (A) dividends by a wholly owned subsidiary to
the Company or another wholly owned subsidiary, (B) dividends by
a less than wholly owned subsidiary consistent with past practice
or (C) regular dividends on Company Common Shares with usual
record and payment dates that do not exceed the current regular
dividends on Company Common Shares, except for periodic increases
made in the ordinary course of business consistent with the
Company's recent policy of annual dividend increases as set forth
in Schedule 6.1(b) of the Company Disclosure Schedule; (ii)
split, combine or reclassify any shares or the capital stock of
any subsidiary or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of, or in
substitution for, shares of the Company or the capital stock of
any subsidiary; or (iii) redeem, repurchase or otherwise acquire
any shares or the capital stock of any subsidiary other than
(A) redemptions, repurchases and other acquisitions of shares in
connection with the administration of employee benefit and
dividend reinvestment plans as in effect on the date hereof in
the ordinary course of the operation of such plans consistent
with past practice, or (B) intercompany acquisitions of shares or
capital stock.
(c) Issuance of Securities. Except as set forth in
Section 6.1(c) of the Company Disclosure Schedule, the Company
shall not, nor shall it permit any of its subsidiaries to, issue,
agree to issue, deliver, sell, award, pledge, dispose of or
otherwise encumber or authorize or propose the issuance,
delivery, sale, award, pledge, disposal or other encumbrance of,
any of their shares or capital stock of any class or any
securities convertible into or exchangeable for, or any rights,
warrants or options to acquire, any such shares or convertible or
exchangeable securities.
(d) Charter Documents; Other Actions. Neither party
shall, nor shall any party permit any of its subsidiaries to,
amend or propose to amend its respective declaration of trust,
articles of organization, by-laws or regulations, or similar
organic documents or to take or fail to take any other action,
which in any such case would reasonably be expected to prevent or
materially impede or interfere with the Merger.
(e) Acquisitions. Except as disclosed in Section 6.1(e)
of the Company Disclosure Schedule, the Company shall not, nor
shall it permit any of its subsidiaries to, acquire or agree to
acquire, by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any
corporation, partnership, association or business organization or
division thereof, or otherwise acquire or agree to acquire any
material amount of assets other than in the ordinary course of
business.
(f) Capital Expenditures. Except as set forth in Section
6.1(f) of the Company Disclosure Schedule, the Company shall not,
nor shall it permit any of its subsidiaries to, make capital
expenditures in an aggregate amount in excess of 110% of the
amount budgeted by the Company or its subsidiaries for capital
expenditures as set forth in Section 6.1(f) of the Company
Disclosure Schedule.
(g) No Dispositions. Except as set forth in Section
6.1(g) of the Company Disclosure Schedule, the Company shall not,
nor shall it permit any of its subsidiaries to, sell, lease,
license, encumber or otherwise dispose of, any of its respective
assets, other than encumbrances or dispositions in the ordinary
course of business consistent with past practice.
(h) Indebtedness. Except as set forth in Section 6.1(h)
of the Company Disclosure Schedule, the Company shall not, nor
shall it permit any of its subsidiaries to, incur or guarantee
any indebtedness (including any debt borrowed or guaranteed or
otherwise assumed including, without limitation, the issuance of
debt securities or warrants or rights to acquire debt) or enter
into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing
other than (i) short-term indebtedness in the ordinary course of
business consistent with past practice; (ii) arrangements between
the Company and its subsidiaries or among its subsidiaries; or
(iii) in connection with the refunding of existing indebtedness
at a lower cost of funds.
(i) Compensation, Benefits. Except as set forth in
Section 6.1(i) of the Company Disclosure Schedule, as may be
required by applicable law or under existing Employee Benefit
Plans or collective bargaining agreements, as may be required to
facilitate or obtain a determination letter from the IRS that a
plan is a Qualified Plan, or as expressly contemplated by this
Agreement, the Company shall not, nor shall it permit any of its
subsidiaries to, (i) enter into, adopt or amend or increase the
amount or accelerate the payment or vesting of any benefit or
amount payable under any Employee Benefit Plan, or otherwise
increase the compensation or benefits of any trustee, director,
officer or other employee of such party or any of its
subsidiaries, except for normal increases in compensation and
benefits, or grants of new incentive compensation awards, or
actions in the ordinary course of business, that are consistent
with the Company's past practice of adjusting compensation and
benefits to reflect the average compensation and benefits as
determined by general industry or market surveys; provided that
prior to implementing any such increases on the basis of such
surveys the Company shall advise Parent of its intention so to
increase compensation or benefits and of the basis therefor and
shall otherwise consult with Parent concerning such proposed
increases, or (ii) enter into or amend any employment, severance
or special pay arrangement with respect to the termination of
employment or other similar contract, agreement or arrangement
with any trustee, director or officer or other employee other
than with respect to employees who are not officers of the
Company in the ordinary course of business consistent with
current industry practice. This subsection (i) is not intended to
(A) restrict the Company or its subsidiaries from granting
promotions to officers or employees based upon job performance or
workplace requirements in the ordinary course of business
consistent with past practice, (B) restrict the Company's ability
to make available to employees the plans, benefits and
arrangements that have customarily and consistent with past
practices been available to officers and employees in the context
of such merit-based promotion or (C) restrict the Company from
dealing with matters of employee retention in specific areas of
expertise through the use of specialized employment and benefit
plans designed for that specific purpose; provided, however, that
the result of the use of such specialized employment or benefit
plans shall not, in the aggregate, result in payments in excess
of $130,000.
(j) 1935 Act. Except as set forth in Section 6.1(j) of
the Company Disclosure Schedule, and except as required or
contemplated by this Agreement, the Company shall not, nor shall
it permit any of its subsidiaries to, engage in any activities
which would cause a change in its status, or that of its
subsidiaries, under the 1935 Act.
(k) Accounting. Except as set forth in Section 6.1(k) of
the Company Disclosure Schedule, the Company shall not, nor shall
it permit any of its subsidiaries to, make any changes in their
accounting methods, except as required by law, rule, regulation
or GAAP.
(l) Cooperation, Notification. Each party shall, and
shall cause its subsidiaries to, (i) confer on a regular and
frequent basis with one or more representatives of the other
party to discuss, subject to applicable law, material operational
matters and the general status of its ongoing operations; (ii)
promptly notify the other party of any significant changes in its
business, properties, assets, condition (financial or other),
results of operations or prospects; (iii) advise the other party
of any change or event which has had or, insofar as reasonably
can be foreseen, is reasonably likely to result in, in the case
of the Company, a Company Material Adverse Effect or, in the case
of Parent, a Parent Material Adverse Effect; and (iv) promptly
provide the other party with copies of all filings made by such
party or any of its subsidiaries with any state or federal court,
administrative agency, commission or other Governmental Authority
in connection with this Agreement and the transactions
contemplated hereby.
(m) Third-party Consents. The Company shall, and shall
cause its subsidiaries to, use all commercially reasonable
efforts to obtain all the Company Required Consents. The Company
shall promptly notify Parent of any failure or prospective
failure to obtain any such consents and, if requested by Parent
shall provide copies of all the Company Required Consents
obtained by the Company to Parent. Parent shall, and shall cause
its subsidiaries to, use all commercially reasonable efforts to
obtain all Parent Required Consents. Parent shall promptly notify
the Company of any failure or prospective failure to obtain any
such consents and, if requested by the Company, shall provide
copies of all Parent Required Consents obtained by Parent to the
Company.
(n) No Breach, Etc. No party shall, nor shall any party
permit any of its subsidiaries to, willfully take any action that
would or is reasonably likely to result in a material breach of
any provision of this Agreement or in any of its representations
and warranties set forth in this Agreement being untrue on and as
of the Closing Date.
(o) Discharge of Liabilities. The Company shall not pay,
discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with
past practice (which includes the payment of final and
unappealable judgments) or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by,
the most recent consolidated financial statements (or the notes
thereto) of the Company included in the Company's reports filed
with the SEC, or incurred in the ordinary course of business
consistent with past practice.
(p) Contracts. Except as set forth in Section 6.1(p) of
the Company Disclosure Schedule, the Company shall not, except in
the ordinary course of business consistent with past practice,
modify, amend, terminate, renew or fail to use reasonable
business efforts to renew any material contract or agreement to
which the Company or any of its subsidiaries is a party or waive,
release or assign any material rights or claims.
(q) Insurance. The Company shall, and shall cause its
subsidiaries to, maintain with financially responsible insurance
companies insurance in such amounts and against such risks and
losses as are customary for companies engaged in the gas utility
industry.
(r) Permits. The Company shall, and shall cause its
subsidiaries to, use reasonable efforts to maintain in effect all
existing governmental permits pursuant to which the Company or
any of its subsidiaries operate.
(s) Takeover Laws. Neither party shall take any action
that would cause the transactions contemplated by this Agreement
to be subject to requirements imposed by any Takeover Law, and
each of them shall take all necessary steps within its control to
exempt (or ensure the continued exemption of) the transactions
contemplated by this Agreement from, or if necessary challenge
the validity or applicability of, any applicable Takeover Law, as
now or hereafter in effect, including Chapters 110C, 110D and
110F of the Massachusetts General Laws.
(t) No Rights Triggered. The Company shall ensure that
the entering into of this Agreement and the consummation of the
transactions contemplated hereby and any other action or
combination of actions, or any other transactions contemplated
hereby, do not and will not result, directly or indirectly, in
the grant of any rights to any person under any material
agreement (other than the employment agreements disclosed in
Section 6.1(t) of the Company Disclosure Schedule) to which it or
any of its subsidiaries is a party.
(u) Taxes. Except as disclosed on Section 6.1(u) of the
Company Disclosure Schedule, the Company shall not, and shall
cause its subsidiaries not to, (A) make or rescind any express or
deemed material election relating to Taxes, (B) settle or
compromise any material claim, audit, dispute, controversy,
examination, investigation or other proceeding relating to Taxes,
(C) materially change any of its methods of reporting income or
deductions for federal income Tax purposes, except as may be
required by applicable law, or (D) file any material Tax Return
other than in a manner consistent with past custom and practice.
Section 6.2 Covenant of the Company; Alternative Proposals.
From and after the date hereof, the Company agrees (a) that it
will not, its subsidiaries will not, and it will not authorize or
permit any of its or its subsidiaries' officers, trustees,
directors, employees, agents and representatives (including,
without limitation, any investment banker, attorney or accountant
retained by it or any of its subsidiaries or any of the
foregoing) to, directly or indirectly, encourage, initiate or
solicit (including by way of furnishing information) or take any
other action to facilitate knowingly any inquiries or the making
of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) which constitutes or may
reasonably be expected to lead to an Alternative Proposal (as
defined below) from any person or engage in any discussion or
negotiations concerning, or provide any non-public information or
data to make or implement, an Alternative Proposal; (b) that it
will immediately cease and cause to be terminated any existing
solicitation, initiation, encouragement, activity, discussions or
negotiations with any parties conducted heretofore with a view of
formulating an Alternative Proposal; and (c) that it will notify
Parent orally and in writing of any such inquiry, offer or
proposals (including, without limitation, the terms and
conditions of any such proposal and the identity of the person
making it), within one business day of the receipt thereof, and
that it shall keep Parent informed of the status and details of
any such inquiry, offer or proposal and shall give Parent 48
hours' prior notice of any agreement to be entered into or of the
fact that it proposes to commence providing information to any
person making such inquiry, offer or proposal; provided however,
that notwithstanding any other provision hereof, the Company may
(i) at any time prior to the time at which the Company
Shareholders' Approval shall have been obtained engage in
discussions or negotiations with a third party who (without any
solicitation, initiation, encouragement, discussion or
negotiation, directly or indirectly, by or with Company or its
representatives after the date hereof) seeks to initiate such
discussions or negotiations and may furnish such third party
information concerning the Company and its business, properties
and assets if, and only to the extent that, (A) (x) the third
party has first made an Alternative Proposal that is financially
superior to the Merger and has demonstrated that any necessary
financing has been obtained, or in the reasonable judgment of the
Company's financial advisor is obtainable, and (y) the Board of
Trustees of the Company shall conclude in good faith, after
consultation with its financial advisor and based upon the advice
of outside counsel and such other matters as the Board of
Trustees of the Company deems relevant, that failure to do so
would likely result in a breach of its fiduciary duties under
applicable law, and (B) prior to furnishing such information to,
or entering into discussions or negotiations with, such person or
entity, the Company (x) provides prompt written notice to Parent
to the effect that it intends to furnish information to, or
intends to enter into discussions or negotiations with, such
person or entity, (y) provides the Parent a reasonable
opportunity to respond to the Alternative Proposal and (z)
receives from such person an executed confidentiality agreement
in reasonably customary form except that such confidentiality
agreement shall not prohibit such person from making an
unsolicited Alternative Proposal, and (ii) comply with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or
exchange offer and/or (iii) accept an Alternative Proposal from a
third party, provided the Company terminates this Agreement
pursuant to Section 9.1(e). "Alternative Proposal" shall mean any
merger, acquisition, consolidation, reorganization, share
exchange, tender offer, exchange offer or similar transaction
involving the Company or any of the Company's subsidiaries, or
any proposal or offer to acquire in any manner, directly or
indirectly, a substantial equity interest in or a substantial
portion of the assets of the Company or any of the Company's
subsidiaries. Nothing herein shall prohibit a disposition
permitted by Section 6.1(g) hereof.
Section 6.3 Employment Agreements. Parent and the Company
have entered into employment agreements with ▇▇. ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the
"Employment Agreements"), which will become effective upon
consummation of the Merger. The Berkshire Gas Company, a
subsidiary of the Company, has entered into an amendment of its
employment agreement with ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇▇
Employment Agreement")
Section 6.4 Additional Statutory Approvals. Parent agrees
not to, and it will not permit any subsidiary to, and will use
reasonable best efforts to cause any prospective subsidiary not
to, be a party to any transaction that would make it necessary
for Parent or the Company to make any declaration, filing or
registration with, or notice to or authorization, consent or
approval of, any Governmental Authority in connection with the
consummation by Parent, Merger Sub or the Company of the
transactions contemplated by this Agreement, other than those set
forth in Section 5.4(c) of the Parent Disclosure Schedule or
Section 4.4(c) of the Company Disclosure Schedule, in either
case, that would reasonably be expected to prevent or materially
impede, interfere with, or delay consummation of the Merger or
the transactions contemplated by this Agreement beyond the
18-month anniversary of the date hereof.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. Upon reasonable notice
and during normal business hours, each party shall, and shall
cause its subsidiaries to, afford to the officers, directors,
trustees, employees, accountants, counsel, investment bankers,
financial advisors and other representatives of the other
(collectively, "Representatives") reasonable access, throughout
the period prior to the Effective Time, to all of its properties,
books, contracts, commitments and records (including, but not
limited to, Tax Returns) and, during such period, each party
shall, and shall cause its subsidiaries to, furnish promptly to
the other (a) access to each report, schedule and other document
filed or received by it or any of its subsidiaries pursuant to
the requirements of federal or state securities laws or filed
with or sent to the SEC, the FERC, the Department of Justice, the
Federal Trade Commission or any other federal or state regulatory
agency or commission, and (b) access to all information
concerning themselves, their subsidiaries, directors, trustees,
officers and shareholders and such other matters as may be
reasonably requested by the other party in connection with any
filings, applications or approvals required or contemplated by
this Agreement. Each party shall, and shall cause its
subsidiaries and Representatives to, hold in strict confidence
all Evaluation Material (as defined in the Confidentiality
Agreement) concerning the other parties furnished to it in
connection with the transactions contemplated by this Agreement
in accordance with the Confidentiality Agreement, dated as of
September 23, 1999, between the Company and Parent, as it may be
amended from time to time (the "Confidentiality Agreement").
Section 7.2 Proxy Statement. As soon as reasonably
practicable after the date hereof, the Company shall prepare the
Proxy Statement, file it with the SEC under the Exchange Act and
use all reasonable efforts to have the Proxy Statement cleared by
the SEC. Each of the parties hereto shall furnish all
information concerning itself which is required or customary for
inclusion in the Proxy Statement. No representation, covenant or
agreement is made by or on behalf of any party hereto with
respect to information supplied by any other party for inclusion
in the Proxy Statement.
Section 7.3 Regulatory Matters. Each party hereto shall
cooperate and use its best efforts to promptly prepare and file
all necessary documentation, to effect all necessary
applications, notices, petitions, filings and other documents,
and to use all commercially reasonable efforts to obtain no later
than the Initial Termination Date, as such date may be extended
pursuant to Section 9.1(b), all necessary permits, consents,
approvals and authorizations of all Governmental Authorities
necessary or advisable to consummate the transactions
contemplated by this Agreement, including, without limitation,
the Company Required Statutory Approvals and the Parent Required
Statutory Approvals.
Section 7.4 Company Shareholders' Approval.
(a) Company Special Meeting. Subject to the provisions
of Section 7.4(b), the Company shall, as soon as reasonably
practicable after the date hereof (i) take all steps necessary to
duly call, give notice of, convene and hold a meeting of its
shareholders (the "Company Special Meeting") for the purpose of
securing the Company Shareholders' Approval, (ii) distribute to
its shareholders the Proxy Statement in accordance with
applicable federal and state law and with its declaration of
trust and by-laws, (iii) subject to the fiduciary duties of its
Board of Trustees, recommend to its shareholders the approval of
this Agreement and the transactions contemplated hereby and (iv)
cooperate and consult with Parent with respect to each of the
foregoing matters.
(b) Meeting Date. The Company Special Meeting for the
purpose of securing the Company Shareholders' Approval shall be
held on such date as the Company and Parent shall mutually
determine.
Section 7.5 Indemnification.
(a) Indemnification. To the extent, if any, not provided
by an existing right of indemnification or other agreement or
policy, from and after the Effective Time, Parent and the
Surviving Company shall, to the fullest extent permitted by
applicable law, indemnify, defend and hold harmless each person
who is now, or has been at any time prior to the date hereof, or
who becomes prior to the Effective Time, an officer, director,
trustee or employee of the Company or any of its subsidiaries
(each an "Indemnified Party" and collectively, the "Indemnified
Parties") against (i) all losses, expenses (including reasonable
attorney's fees and expenses), claims, damages or liabilities or,
subject to the proviso of the next succeeding sentence, amounts
paid in settlement, arising out of actions or omissions occurring
at or prior to the Effective Time (and whether asserted or
claimed prior to, at or after the Effective Time) that are, in
whole or in part, based on or arising out of the fact that such
person is or was a director, trustee, officer or employee of the
Company or a subsidiary of the Company (the "Indemnified
Liabilities"), and (ii) all Indemnified Liabilities to the extent
they are based on or arise out of or pertain to the transactions
contemplated by this Agreement. In the event of any such loss,
expense, claim, damage or liability (whether or not arising
before the Effective Time), (i) Parent shall pay the reasonable
fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to Parent,
promptly after statements therefor are received and otherwise
advance to such Indemnified Party upon request reimbursement of
documented expenses reasonably incurred, (ii) any determination
required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth in Section
8 of the MLLCA or the declaration of trust or certificate of
incorporation or by-laws shall be made by independent counsel
mutually acceptable to Parent and the Indemnified Party;
provided, however, that Parent shall not be liable for any
settlement effected without its written consent (which consent
shall not be unreasonably withheld). The Indemnified Parties as a
group may retain only one law firm with respect to each related
matter except to the extent there is, in the opinion of counsel
to an Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue between
positions of such Indemnified Party and any other Indemnified
Party or Indemnified Parties.
(b) Insurance. For a period of six years after the
Effective Time, Parent shall (i) cause to be maintained in effect
policies of directors' and officers' liability insurance for the
benefit of those persons who are currently covered by such
policies of the Company on terms no less favorable than the terms
of such current insurance coverage or (ii) provide tail coverage
for such persons which provides coverage for a period of six
years for acts prior to the Effective Time on terms no less
favorable than the terms of such current insurance coverage;
provided, however, that Parent shall not be required to expend in
any year an amount in excess of 200% of the annual aggregate
premiums currently paid by the Company, for such insurance; and
provided, further, that if the annual premiums of such insurance
coverage exceed such amount, Parent shall be obligated to obtain
a policy with the best coverage available, in the reasonable
judgment of the Board of Directors of Parent, for a cost not
exceeding such amount.
(c) Successors. In the event Parent or any of its
successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets
to any person, then, and in either such case, proper provisions
shall be made so that the successors and assigns of Parent shall
assume the obligations set forth in this Section 7.5.
(d) Survival of Indemnification. To the fullest extent
permitted by law, from and after the Effective Time, all rights
to indemnification as of the date hereof in favor of the
employees, agents, directors, trustees and officers of the
Company, and its subsidiaries with respect to their activities as
such prior to the Effective Time, as provided in their respective
declaration of trust or articles of organization and by-laws in
effect on the date hereof, or otherwise in effect on the date
hereof, shall survive the Merger and shall continue in full force
and effect for a period of not less than six years from the
Effective Time.
(e) Benefit. The provisions of this Section 7.5 are
intended to be for the benefit of, and shall be enforceable by,
each Indemnified Party, his or her heirs and his or her
representatives.
Section 7.6 Disclosure Schedules. On the date hereof, (a)
Parent has delivered to the Company a schedule (the "Parent
Disclosure Schedule"), accompanied by a certificate signed by the
Executive Vice President and General Counsel of Parent stating
the Parent Disclosure Schedule is being delivered pursuant to
this Section 7.6(a), and (b) the Company has delivered to Parent
a schedule (the "Company Disclosure Schedule"), accompanied by a
certificate signed by the President and Chief Executive Officer
of the Company stating the Company Disclosure Schedule is being
delivered pursuant to this Section 7.6(b). The Company Disclosure
Schedule and the Parent Disclosure Schedule are collectively
referred to herein as the "Disclosure Schedules." The Disclosure
Schedules constitute an integral part of this Agreement and
modify the respective representations, warranties, covenants or
agreements of the parties hereto contained herein to the extent
that such representations, warranties, covenants or agreements
expressly refer to the Disclosure Schedules. Anything to the
contrary contained herein or in the Disclosure Schedules
notwithstanding, any and all statements, representations,
warranties or disclosures set forth in the Disclosure Schedules
shall be deemed to have been made on and as of the date hereof.
Section 7.7 Public Announcements. Subject to each party's
disclosure obligations imposed by law, the Company and Parent
will cooperate with each other in the development and
distribution of all news releases and other public information
disclosures with respect to this Agreement or any of the
transactions contemplated hereby and shall not issue any public
announcement or statement with respect hereto without the consent
of the other party (which consent shall not be unreasonably
withheld).
Section 7.8 Certain Employee Agreements. Subject to Section
7.9, Parent and the Surviving Company and its subsidiaries shall
honor, without modification, all contracts, agreements,
collective bargaining agreements and commitments of the parties
which apply to any current or former employee or current or
former director or trustee of the parties hereto; provided,
however, that the foregoing shall not prevent Parent or the
Surviving Company from enforcing such contracts, agreements,
collective bargaining agreements and commitments in accordance
with their terms, including, without limitation, any reserved
right to amend, modify, suspend, revoke or terminate any such
contract, agreement, collective bargaining agreement or
commitment. It is the present intention of Parent and the Company
that following the Effective Time, there will be no involuntary
reductions in force at the Surviving Company or its subsidiaries,
but that Parent, the Surviving Company and their respective
subsidiaries will continue Parent's and the Company's present
strategy of achieving workforce reductions through attrition;
however, if any reductions in workforce in respect of employees
of Parent and its subsidiaries, including the Surviving Company
and its subsidiaries, become necessary, they shall be made on a
fair and equitable basis, in light of the circumstances and the
objectives to be achieved, giving consideration to previous work
history, job experience, qualifications, and business needs
without regard to whether employment prior to the Effective Time
was with the Company or its subsidiaries or Parent or its
subsidiaries, and any employees whose employment is terminated or
jobs are eliminated by Parent, the Surviving Company or any of
their respective subsidiaries shall be entitled to participate on
a fair and equitable basis in the job opportunity and employment
placement programs offered by Parent, the Surviving Company or
any of their respective subsidiaries. Any workforce reductions
carried out following the Effective Time by Parent or the
Surviving Company and their respective subsidiaries shall be done
in accordance with all applicable collective bargaining
agreements, and all laws and regulations governing the employment
relationship and termination thereof including, without
limitation, the Worker Adjustment and Retraining Notification Act
and regulations promulgated thereunder, and any comparable state
or local law.
Section 7.9 Employee Benefit Plans.
(a) Except as may be required by applicable law, each Plan
in effect on the
date hereof (or as amended or established in accordance with or
as permitted by this Agreement) shall be maintained in effect
with respect to the employees, former employees, trustees, former
trustees, directors or former directors of the Company and any of
its subsidiaries who are covered by such plans, programs,
agreements or arrangements immediately prior to the Effective
Time until Parent determines otherwise on or after the Effective
Time, and Parent shall assume or cause the Surviving Company to
assume as of the Effective Time each Plan maintained by the
Company immediately prior to the Effective Time and perform such
plan, program, agreement or arrangement in the same manner and to
the same extent that the Company would be required to perform
thereunder; provided, however, that nothing herein contained
shall limit any reserved right contained in any such Plan to
amend, modify, suspend, revoke or terminate any such plan,
program, agreement or arrangement; provided, further, that Parent
or its subsidiaries shall provide to each employee of the Company
and any of its subsidiaries who was covered by Plans immediately
prior to the Effective Time and who is not covered by a
collective bargaining agreement (a "Covered Company Employee"),
for a period of no less than 18 months following the Effective
Time, employer-provided benefits under Qualified Plans,
supplemental retirement benefit and deferred compensation plans
which are not Qualified Plans and welfare plans that are no less
favorable in the aggregate than those provided to the employee
immediately prior to the Effective Time. Without limiting the
foregoing, each Covered Company Employee who is a participant in
any Plan shall receive credit for purposes of eligibility to
participate, vesting and eligibility to receive benefits (but
specifically excluding for benefit accrual purposes) under any
replacement benefit plan of Parent or any of its subsidiaries or
affiliates in which such employee becomes a participant for
service credited for the corresponding purpose under any such
Plan; provided, however, that such crediting of service shall not
operate to cause any such plan or agreement to fail to comply
with the applicable provisions of the Code and ERISA. No
provision contained in this Section 7.9 shall be deemed to
constitute an employment contract between Parent or any of its
subsidiaries and any individual, or a waiver of Parent's or any
of its subsidiaries' right to discharge any employee at any time,
with or without cause.
(b) The Company shall take all necessary actions so that,
effective no later than immediately before the Effective Time,
(i) each of the Corporate Incentive Compensation Plan, The
Berkshire Gas Company Supplemental Executive Retirement Plan (the
"SERP"), the Trust under the SERP, The Berkshire Gas Company
Executive Retiree Health Plan (the "Retiree Plan") and all other
executive benefit plans and programs of the Company and its
subsidiaries shall be amended to the extent necessary so that any
provisions therein that prohibit or limit the amendment or
termination thereof following a change of control do not apply to
individuals who are not participants therein as of the date of
this Agreement and (ii) subject to applicable law and the
provisions of any applicable collective bargaining agreement,
each Qualified Plan shall be amended to the extent necessary so
that any provisions therein that call for the waiver or
elimination of vesting requirements upon or following a change in
control shall apply only to individuals who are participants
therein immediately before the Effective Time. Notwithstanding
anything to the contrary herein, the Company shall take all
necessary action so that, at the Effective Time, the Retiree Plan
shall be amended to the extent necessary so that Messrs. ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ shall not participate in the Retiree Plan.
Section 7.10 Expenses. Subject to Section 9.3, all costs
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such expenses, except that those expenses incurred in
connection with printing the Proxy Statement, as well as the
filing fee relating thereto, shall be shared equally by the
Company and Parent.
Section 7.11 Further Assurances. Each party will, and will
cause its subsidiaries to, execute such further documents and
instruments and take such further actions as may reasonably be
requested by any other party in order to consummate the Merger in
accordance with the terms hereof.
Section 7.12 Corporate Offices. At and subsequent to the
Effective Time, the headquarters of the Surviving Company shall
be located in Pittsfield, Massachusetts.
Section 7.13 Community Involvement. After the Effective
Time, Parent will, or will cause the Surviving Company to make an
aggregate of $200,000 per year in charitable contributions to
the communities served by the Surviving Company and otherwise
maintain a substantial level of involvement in community
activities in the Commonwealth of Massachusetts (as well as the
States of Vermont and New York) that is similar to, or greater
than, the level of community development and related activities
carried on by the Company.
Section 7.14 Advisory Board. At the Effective Time, there
shall be established an advisory board to the Surviving Company
("Advisory Board"), which shall be comprised of the persons who
were trustees of the Company immediately prior to the Effective
Time. The Advisory Board shall meet no less frequently than
quarterly and shall provide advice to the Board of Trustees of
the Surviving Company with respect to such issues as the Board of
Trustees of the Surviving Company may from time to time request,
including but not limited to community relations, customer
service, economic development, employee development and relations
and such other matters of community interest as may be
appropriate. The members of the Advisory Board, who shall serve
at the discretion of the Surviving Company, shall receive
remuneration for their services equivalent to the remuneration
currently provided to non-employee trustees of the Company.
Parent acknowledges that, pursuant to the Retirement Plan for
Directors of The Berkshire Gas Company dated September 1, 1993,
as amended, each trustee of the Company shall be credited with a
minimum of 10 years of service under Section 4 of said Retirement
Plan and shall be deemed fully vested pursuant to Section 4 of
said Retirement Plan as of the Effective Time.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect
the Merger shall be subject to the satisfaction on or prior to
the Closing Date of the following conditions, except, to the
extent permitted by applicable law, that such conditions may be
waived in writing pursuant to Section 9.5 by the joint action of
the parties hereto:
(a) Shareholder Approval. The Company Shareholders'
Approval shall have been obtained.
(b) No Injunction. No temporary restraining order or
preliminary or permanent injunction or other order by any federal
or state court preventing consummation of the Merger shall have
been issued and be continuing in effect, and the Merger and the
other transactions contemplated hereby shall not have been
prohibited under any applicable federal or state law or
regulation.
(c) Statutory Approvals. The Company Required Statutory
Approvals and the Parent Required Statutory Approvals shall have
been obtained at or prior to the Effective Time, such approvals
shall have become Final Orders (as defined below) and such Final
Orders shall not impose terms or conditions which, in the
aggregate, would have, or insofar as reasonably can be foreseen,
could have, a Company Material Adverse Effect or a Parent
Material Adverse Effect; provided, however, that a requirement
that Parent become a registered holding company pursuant to
Section 5 of the 1935 Act as a result of the Merger shall not
constitute a term or condition which could have a "material
adverse effect" within the meaning of this Section 8.1(c). In
addition, the inclusion of a condition or requirement of the
SEC's approval of the Merger under the 1935 Act that Parent
divest its ownership of, or not consummate the acquisition of,
any of the entities listed on Section 8.1(c) of the Parent
Disclosure Schedule, shall constitute a term or condition which
could have a "material adverse effect" within the meaning of this
Section 8.1(c). A "Final Order" means action by the relevant
regulatory authority which has not been reversed, stayed,
enjoined, set aside, annulled or suspended, with respect to which
any waiting period prescribed by law before the transactions
contemplated hereby may be consummated has expired, and as to
which all conditions to the consummation of such transactions
prescribed by law, regulation or order have been satisfied.
Section 8.2 Conditions to Obligation of Parent to Effect the
Merger. The obligation of Parent to effect the Merger shall be
further subject to the satisfaction, on or prior to the Closing
Date, of the following conditions, except as may be waived by
Parent in writing pursuant to Section 9.5:
(a) Performance of Obligations of the Company. The
Company (and its appropriate subsidiaries) shall have performed
in all material respects its agreements and covenants contained
in Sections 6.1 and 6.2 and shall have performed in all material
respects its other agreements and covenants contained in or
contemplated by this Agreement to be performed by it at or prior
to the Effective Time.
(b) Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement shall
be true and correct (i) on and as of the date hereof and (ii) on
and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the
Closing Date (except for representations and warranties that
expressly speak only as of a specific date or time other than the
date hereof or the Closing Date, which need only be true and
correct as of such date or time) except in each of cases (i) and
(ii) for such failures of representations or warranties to be
true and correct (without regard to any materiality
qualifications contained therein) which, individually and in the
aggregate, would not be reasonably likely to result in a Company
Material Adverse Effect.
(c) Closing Certificates. Parent shall have received a
certificate signed by the chief financial officer of the Company,
dated the Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Section 8.2(a)
and Section 8.2(b) have been satisfied.
(d) No Company Material Adverse Effect. No Company
Material Adverse Effect shall have occurred, and there shall
exist no fact or circumstance (other than facts and circumstances
described in Section 8.2(d) of the Company Disclosure Schedule or
the Company SEC Reports filed prior to the date hereof) which is
reasonably likely to have a Company Material Adverse Effect.
(e) Company Required Consents. The Company Required
Consents the failure of which to obtain would have a Company
Material Adverse Effect shall have been obtained.
Section 8.3 Conditions to Obligation of the Company to
Effect the Merger. The obligation of the Company to effect the
Merger shall be further subject to the satisfaction, on or prior
to the Closing Date, of the following conditions, except as may
be waived by the Company in writing pursuant to Section 9.5.
(a) Performance of Obligations of Parent. Parent (and
its appropriate subsidiaries) shall have performed in all
material respects its agreements and covenants contained in
Section 6.1 and shall have performed in all material respects its
other agreements and covenants contained in or contemplated by
this Agreement to be performed by it at or prior to the Effective
Time.
(b) Representations and Warranties. The representations
and warranties of Parent set forth in this Agreement shall be
true and correct (i) on and as of the date hereof and (ii) on and
as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the
Closing Date (except for representations and warranties that
expressly speak only as of a specific date or time other than the
date hereof or the Closing Date, which need only be true and
correct as of such date or time) except in each of cases (i) and
(ii) for such failures of representations or warranties to be
true and correct (without regard to any materiality
qualifications contained therein) which, individually and in the
aggregate, would not be reasonably likely to result in a Parent
Material Adverse Effect.
(c) Closing Certificates. The Company shall have
received a certificate signed by the Executive Vice President and
General Counsel of Parent, dated the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set
forth in Section 8.3(a) and Section 8.3(b) have been satisfied.
(d) Parent Required Consents. The Parent Required
Consents the failure of which to obtain would have a Parent
Material Adverse Effect shall have been obtained.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated
at any time prior to the Closing Date, whether before or after
approval by the shareholders of the respective parties hereto
contemplated by this Agreement:
(a) by mutual written consent of the Board of Directors
of Parent and the Board of Trustees of the Company;
(b) by any party hereto, by written notice to the other
parties, if the Effective Time shall not have occurred on or
before the date that is 12 months from the date hereof (the
"Initial Termination Date"); provided, however, that if on the
Initial Termination Date the conditions to the Closing set forth
in Section 8.1(c) shall not have been fulfilled but all other
conditions to the Closing shall be fulfilled or shall be capable
of being fulfilled, then the Initial Termination Date shall be
extended to the 18-month anniversary of the date hereof; and
provided, further, that the right to terminate this Agreement
under this Section 9.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement or
whose breach of any agreement or covenant has been the cause of,
or resulted directly or indirectly in, the failure of the
Effective Time to occur on or before the Initial Termination Date
or as it may be so extended.
(c) by any party hereto, by written notice to the other
parties, if the Company Shareholders' Approval shall not have
been obtained at a duly held Company Special Meeting, including
any adjournments thereof by the Initial Termination Date;
(d) by any party hereto, if any state or federal law,
order, rule or regulation is adopted or issued, which has the
effect, as supported by the written opinion of outside counsel
for such party, of prohibiting the Merger, or by any party hereto
if any court of competent jurisdiction in the United States or
any State shall have issued an order, judgment or decree
permanently restraining, enjoining or otherwise prohibiting the
Merger, and such order, judgment or decree shall have become
final and nonappealable;
(e) by the Company prior to the time at which the Company
Shareholders' Approval shall have been obtained, upon five days'
prior notice to Parent, if the Company is not in breach of this
Agreement and, as a result of an Alternative Proposal, the Board
of Trustees of the Company determines in good faith, that (i) the
Alternative Proposal is financially superior to the Merger and
the third party making the Alternative Proposal has demonstrated
that any necessary financing has been obtained, or in the
reasonable judgment of the Company's financial advisor such
financing is obtainable, and (ii) after consultation with its
financial advisor and based upon the advice of outside counsel
and such other matters as the Board of Trustees of the Company
deems relevant, after considering applicable provisions of state
law and after giving effect to all concessions which may be
offered by the other party pursuant to the proviso below, that
failure to do so would likely result in a breach of its fiduciary
duties under applicable law; provided, however, that prior to any
such termination, the Company shall, and shall cause its
respective financial and legal advisors to, negotiate with Parent
to make such adjustments in the terms and conditions of this
Agreement as would enable the Company to proceed with the
transactions contemplated herein;
(f) by the Company, by written notice to Parent, if (i)
there exist breaches of the representations and warranties of
Parent made herein as of the date hereof which breaches,
individually or in the aggregate, would or would be reasonably
likely to result in a Parent Material Adverse Effect, and such
breaches shall not have been remedied within 20 days after
receipt by Parent of notice in writing from the Company,
specifying the nature of such breaches and requesting that they
be remedied, or (ii) Parent (or its appropriate subsidiaries)
shall have failed to perform and comply with, in all material
respects, its agreements and covenants hereunder, and such
failure to perform or comply shall not have been remedied within
20 days after receipt by Parent of notice in writing from the
Company, specifying the nature of such failure and requesting
that it be remedied;
(g) by Parent, by written notice to the Company, if (i)
there exist material breaches of the representations and
warranties of the Company made herein as of the date hereof which
breaches, individually or in the aggregate, would or would be
reasonably likely to result in a Company Material Adverse Effect,
and such breaches shall not have been remedied within 20 days
after receipt by the Company of notice in writing from Parent,
specifying the nature of such breaches and requesting that they
be remedied, (ii) the Company (or its appropriate subsidiaries)
shall not have performed and complied with its agreements and
covenants contained in Sections 6.1(b) and 6.1(c) or shall have
failed to perform and comply with, in all material respects, its
other agreements and covenants hereunder, and such failure to
perform or comply shall not have been remedied within 20 days
after receipt by the Company of notice in writing from Parent,
specifying the nature of such failure and requesting that it be
remedied; or (iii) the Board of Trustees of the Company or any
committee thereof (A) shall withdraw or modify in any manner
adverse to Parent its approval or recommendation of this
Agreement or the transactions contemplated herein, (B) shall fail
to reaffirm such approval or recommendation upon Parent's request
within two days of such request, (C) shall approve or recommend
any acquisition of the Company or a material portion of its
assets or any tender offer for the shares of the Company, in each
case by a party other than Parent or any of its affiliates or (D)
shall resolve to take any of the actions specified in clause (A),
(B) or (C); or
(h) by Parent, by written notice to the Company, if
Parent reasonably believes that (i) the transactions contemplated
by this Agreement will delay the grant of any regulatory approval
of any of the transactions listed in Section 9.1(h) of the Parent
Disclosure Schedule or (ii) any such regulatory approval, if
granted, will be unduly burdensome to Parent.
Section 9.2 Effect of Termination. Subject to Section
10.1(b), in the event of termination of this Agreement by either
the Company or Parent pursuant to Section 9.1, there shall be no
liability on the part of either the Company or Parent or their
respective officers, directors or trustees hereunder, except
that Section 7.10, Section 9.3, the agreement contained in the
last sentence of Section 7.1, Section 10.8 and Section 10.9 shall
survive the termination.
Section 9.3 Termination Fee; Expenses.
(a) Termination Fee upon Breach or Withdrawal of
Approval. If this Agreement is terminated at such time that this
Agreement is terminable pursuant to one (but not both) of (x)
Section 9.1(f)(i) or (ii) or (y) Section 9.1(g)(i) or (ii), then:
the breaching party shall promptly (but not later than five
business days after receipt of notice from the non-breaching
party) pay to the non-breaching party in cash an amount equal to
all documented out-of-pocket expenses and fees incurred by the
non-breaching party (including, without limitation, fees and
expenses payable to all legal, accounting, financial, public
relations and other professional advisors arising out of, in
connection with or related to the Merger or the transactions
contemplated by this Agreement) not in excess of $2 million
("Expenses"); provided, however, that, if this Agreement is
terminated by a party as a result of a willful breach by the
other party, the non-breaching party may pursue any remedies
available to it at law or in equity and shall, in addition to its
out-of-pocket expenses (which shall be paid as specified above
and shall not be limited to $2 million), be entitled to retain
such additional amounts as such non-breaching party may be
entitled to receive at law or in equity.
(b) If this Agreement is terminated by Parent pursuant to
Section 9.1(h),
then Parent shall promptly (but not later than five business days
after receipt of notice from the Company) pay to the Company in
cash an amount equal to $4 million.
(c) The Company shall pay Parent a fee of $4 million
("Termination Fee") plus Expenses, upon the termination of this
Agreement by Parent or the Company pursuant to Section 9.1(c) or
the Company pursuant to Section 9.1(e) or by Parent pursuant to
Section 9.1(g)(iii); provided, however, that in the event of
termination under either Section 9.1(c) or Section 9.1(g)(iii),
no payment of the Termination Fee or Expenses shall be required
unless and until within two years of such termination the Company
enters into a definitive agreement to consummate or consummates
an Alternative Proposal, and, in the case of a termination
pursuant to Section 9.1(c), there shall have been made and not
withdrawn at the time of the Company Special Meeting an
Alternative Proposal and, in the case of a termination pursuant
to Section 9.1(g)(iii), there shall have been made and not
withdrawn at the time of such termination an Alternative
Proposal.
(d) Liquidated Damages; Prompt Payment. The parties
agree that the agreements contained in this Section 9.3 are an
integral part of the transactions contemplated by the Agreement
and constitute liquidated damages and not a penalty. If one party
fails to pay promptly to the other any fee or expenses due
hereunder, the defaulting party shall pay the costs and expenses
(including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal
action, taken to collect payment, together with interest on the
amount of any unpaid fee at the publicly announced prime rate of
Chase Manhattan Bank, N.A., from the date such fee was required
to be paid.
Section 9.4 Amendment. This Agreement may be amended by the
Boards of Directors or Trustees or Managers as the case may be,
of the parties hereto, at any time before or after approval
hereof by the shareholders of the Company and prior to the
Effective Time, but after such approvals, no such amendment shall
(a) alter or change the amount or kind of shares, rights or any
of the proceedings of the treatment of shares under Article II,
or (b) alter or change any of the terms and conditions of this
Agreement if any of the alterations or changes, alone or in the
aggregate, would materially adversely affect the rights of
holders of Company shares, except for alterations or changes that
could otherwise be adopted by the Board of Trustees of the
Company, without the further approval of such shareholders. This
Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 9.5 Waiver. At any time prior to the Effective
Time, the parties hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein, to the extent
permitted by applicable law. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid if set
forth in an instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-survival; Effect of Representations and
Warranties. (a) All representations, warranties and agreements
in this Agreement shall not survive the Merger, except as
otherwise provided in this Agreement and except for the
agreements contained in this Section 10.1, in Articles I and II
and in Sections 7.5, 10.7, 10.8, 10.9 and 10.10.
(b) No party may assert a claim for breach of any
representation or warranty contained in this Agreement (whether
by direct claim or counterclaim) except in connection with the
cancellation of this Agreement pursuant to Section 9.1(f)(i) or
Section 9.1(g)(i) (or pursuant to any other subsection of Section
9.1, if the terminating party would have been entitled to
terminate this Agreement pursuant to Section 9.1(f)(i) or Section
9.1(g)(i)).
Section 10.2 Brokers. The Company represents and warrants
that, except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Gull, whose fees have been
disclosed to Parent prior to the date hereof, no broker, finder
or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. Parent
represents and warrants that, except for Chase Securities, Inc.,
whose fees have been disclosed to the Company prior to the date
hereof, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with
the Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent.
Section 10.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if (a)
delivered personally, (b) sent by reputable overnight courier
service, (c) telecopied (which is confirmed) or (d) five days
after being mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like
notice):
(i) If to the Company, to:
Berkshire Energy Resources
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Rich, May, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Parent or Merger Sub, to:
Energy East Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President and General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.4 Miscellaneous. This Agreement (including the
documents and instruments referred to herein) (a) constitutes the
entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof other than the
Employment Agreements, the ▇▇▇▇▇▇▇▇ Employment Agreement and the
Confidentiality Agreement; (b) shall not be assigned other than
by operation of law without the prior written consent of the
other parties hereto; and (c) shall be governed by and construed
in accordance with the laws of the State of New York applicable
to contracts executed in and to be fully performed in such State,
without giving effect to its conflicts of law, rules or
principles and except to the extent the provisions of this
Agreement (including the documents or instruments referred to
herein) are expressly governed by or derive their authority from
the MLLCA or the MGL.
Section 10.5 Interpretation. When a reference is made in
this Agreement to Sections or Exhibits, such reference shall be
to a Section or Exhibit of this Agreement, respectively, unless
otherwise indicated. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation."
Section 10.6 Counterparts; Effect. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one
and the same agreement.
Section 10.7 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto
and their respective successors and permitted assigns, and,
except for rights of Indemnified Parties as set forth in Section
7.5, nothing in this Agreement, express or implied, is intended
to confer upon any other person any rights or remedies of any
nature whatsoever under or by reason of this Agreement.
Section 10.8 Waiver of Jury Trial and Certain Damages. Each
party to this Agreement waives, to the fullest extent permitted
by applicable law, (a) any right it may have to a trial by jury
in respect of any action, suit or proceeding arising out of this
Agreement and (b) without limiting the effect of Section 9.3, any
right it may have, other than in the case of a willful breach, to
receive damages from any other party based on any theory of
liability for any special, indirect, consequential (including
lost profits) or punitive damages.
Section 10.9 Enforcement. The parties agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State
of New York or in New York state court, this being in addition to
any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court located
in the State of New York or any New York state court in the event
any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny such personal jurisdiction by motion or
other request for leave from any such court and (c) agrees that
it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court
other than a federal or state court sitting in the State of New
York.
Section 10.10. Disclaimer of Liability. As provided by
Article 3 of the Company's declaration of trust, no trustee of
the Company shall be held to any liability whatever for the
payment of any sum of money, or for damage or otherwise under
this Agreement, and this Agreement shall not be enforceable
against the trustees, shareholders (other than Parent), officers,
agents or other representatives of the Company or any of them in
their, his or her individual capacities or capacity. This
Agreement shall be enforceable only against the Company, Merger
Sub and Parent. Every person, firm, association, trust and
corporation shall look only to the trust estate of the Company
for the payment or satisfaction of any liability or damages of
the Company arising out of or in connection with this Agreement.
IN WITNESS WHEREOF, the Company, Parent and Merger Sub have
caused this Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written above.
BERKSHIRE ENERGY RESOURCES
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
ENERGY EAST CORPORATION
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
General Counsel
MOUNTAIN MERGER LLC
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Secretary, Treasurer and Vice President