Tab 1
AGREEMENT AND PLAN OF MERGER
dated as of February 1, 1999
by and among
NEW ENGLAND ELECTRIC SYSTEM,
RESEARCH DRIVE LLC
and
EASTERN UTILITIES ASSOCIATES
TABLE OF CONTENTS
Page
No.
ARTICLE I
THE MERGER......................................................... 1
1.01 The Merger......................................................... 1
1.02 Effective Time..................................................... 1
1.03 Effects of the Merger.............................................. 2
ARTICLE II
CONVERSION OF SHARES............................................... 2
2.01 Conversion of Capital Stock........................................ 2
2.02 Surrender of Shares................................................ 3
2.03 Withholding Rights................................................. 4
ARTICLE III
THE CLOSING........................................................ 4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EUA.............................. 5
4.01 Organization and Qualification..................................... 5
4.02 Capital Stock...................................................... 6
4.03 Authority.......................................................... 7
4.04 Non-Contravention; Approvals and Consents.......................... 7
4.05 SEC Reports, Financial Statements and Utility Reports.............. 8
4.06 Absence of Certain Changes or Events............................... 9
4.07 Legal Proceedings.................................................. 9
4.08 Information Supplied............................................... 9
4.09 Compliance......................................................... 10
4.10 Taxes.............................................................. 10
4.11 Employee Benefit Plans; ERISA...................................... 12
4.12 Labor Matters...................................................... 14
4.13 Environmental Matters.............................................. 15
4.14 Regulation as a Utility............................................ 17
4.15 Insurance.......................................................... 17
4.16 Nuclear Facilities................................................. 18
4.17 Vote Required...................................................... 18
4.18 Opinion of Financial Advisor....................................... 18
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Page
No.
4.19 Ownership of ▇▇▇▇ Common Shares.................................... 18
4.20 State Anti-Takeover Statutes....................................... 18
4.21 Year 2000.......................................................... 19
4.22 EUA Associates..................................................... 19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇............................. 19
5.01 Organization and Qualification..................................... 19
5.02 Authority.......................................................... 20
5.03 Capital Stock...................................................... 20
5.04 Non-Contravention; Approvals and Consents.......................... 20
5.05 Information Supplied............................................... 21
5.06 Compliance......................................................... 21
5.07 Financing.......................................................... 22
5.08 No Vote Required................................................... 22
5.09 Ownership of EUA Shares............................................ 22
5.10 Merger with The National Grid Group plc............................ 22
ARTICLE VI
COVENANTS................................................ 22
6.01 Covenants of EUA................................................... 22
6.02 Covenants of ▇▇▇▇.................................................. 28
6.03 Additional Covenants by ▇▇▇▇ and EUA............................... 29
ARTICLE VII
ADDITIONAL AGREEMENTS.................................... 30
7.01 Access to Information.............................................. 30
7.02 Proxy Statement.................................................... 31
7.03 Approval of Shareholders........................................... 31
7.04 Regulatory and Other Approvals..................................... 31
7.05 Employee Benefit Plans............................................. 32
7.06 Labor Agreements and Workforce Matters............................. 34
7.07 Post Merger Operations............................................. 34
7.08 No Solicitations................................................... 35
7.09 Directors' and Officers' Indemnification and Insurance............. 36
7.10 Expenses........................................................... 37
7.11 Brokers or Finders................................................. 37
7.12 Anti-Takeover Statutes............................................. 38
7.13 Public Announcements............................................... 38
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Page
No.
7.14 Restructuring of the Merger........................................ 38
ARTICLE VIII
CONDITIONS......................................................... 39
8.01 Conditions to Each Party's Obligation to Effect the Merger......... 39
8.02 Conditions to Obligation of ▇▇▇▇ and LLC to Effect the Merger...... 39
8.03 Conditions to Obligation of EUA to Effect the Merger............... 40
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER.................................. 41
9.01 Termination........................................................ 41
9.02 Effect of Termination.............................................. 43
9.03 Termination Fees................................................... 43
9.04 Amendment.......................................................... 44
9.05 Waiver............................................................. 44
ARTICLE X
GENERAL PROVISIONS................................................. 44
10.01 Non-Survival of Representations, Warranties, Covenants and
Agreements......................................................... 44
10.02 Notices............................................................ 44
10.03 Entire Agreement; Incorporation of Exhibits........................ 46
10.04 No Third Party Beneficiary......................................... 46
10.05 No Assignment; Binding Effect...................................... 46
10.06 Headings........................................................... 47
10.07 Invalid Provisions................................................. 47
10.08 Governing Law...................................................... 47
10.09 Enforcement of Agreement........................................... 47
10.10 Certain Definitions................................................ 47
10.11 Counterparts....................................................... 48
10.12 WAIVER OF JURY TRIAL............................................... 48
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:
"1935 Act" -- Section 4.05(b)
"Adjustment Date" -- Section 2.01(c)
"Affected Employees" -- Section 7.05(a)
"affiliate" -- Section 10.11(a)
"Agreement" -- Preamble
"Alternative Proposal" -- Section 7.08
"beneficially" -- Section 10.10(b)
"business day" -- Section 10.10(c)
"Canceled Shares" -- Section 2.02(b)
"Certificates" -- Section 2.02(b)
"Closing" -- Article III
"Closing Agreement" -- Section 4.10(j)
"Closing Date" -- Article III
"Code" -- Section 2.03
"Confidentiality Agreement" -- Section 7.01
"Constituent Entities" -- Section 1.01
"Contracts" -- Section 4.04(a)
"control," "controlling,"
"controlled by" and
"under common control with" -- Section 10.10(a)
"DOE" -- Section 4.05(b)
"Effective Time" -- Section 1.02
"Environmental Claim" -- Section 4.13(f)(i)
"Environmental Laws" -- Section 4.13(f)(ii)
"Environmental Permits" -- Section 4.13(b)
"ERISA" -- Section 4.11(a)
"ERISA Affiliate" -- Section 4.11(c)
"EUA" -- Preamble
"EUA Associates" -- Section 4.01(b)
"EUA Employee Agreements" -- Section 7.05(d)(ii)
"EUA Executives" -- Section 7.05(d)(ii)
"EUA Shares" -- Preamble
"EUA Disclosure Letter" -- Section 4.01(a)
"EUA Employee Benefit Plans" -- Section 4.11(a)
"EUA Financial Statements" -- Section 4.05(a)
"EUA Nuclear Facilities" -- Section 4.16
"EUA Material Adverse Effect" -- Section 4.01(a)
"EUA Required Consents" -- Section 4.04(a)
"EUA Required Statutory Approvals" -- Section 4.04(b)
"EUA SEC Reports" -- Section 4.05(a)
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"EUA Shareholders' Approval" -- Section 7.03
"EUA Shareholders' Meeting" -- Section 7.03
"EUA Significant Subsidiary" -- Section 7.08
"EUA Shares" -- Preamble
"EUA Trust Agreement" -- Section 1.03
"EUA Voting Debt -- Section 4.02(d)
"Evaluation Material" -- Section 7.01(a)
"Exchange Act" -- Section 4.05(a)
"Exchange Fund" -- Section 2.02(a)
"Extended Termination Date" -- Section 9.01(b)
"FCC" -- Section 4.05(b)
"FERC" -- Section 4.05(b)
"Final Order" -- Section 8.01(d)
"Governmental Authority" -- Section 4.04(a)
"Hazardous Materials" -- Section 4.13(f)(iii)
"HSR Act" -- Section 7.04(a)
"Indemnified Liabilities" -- Section 7.09(a)
"Indemnified Party" -- Section 7.09(a)
"Indemnified Parties" -- Section 7.09(a)
"Information Systems" -- Section 4.21
"Initial Termination Date" -- Section 9.01(b)
"IRS" -- Section 4.10(m)
"knowledge" -- Section 10.11(d)
"laws" -- Section 4.04(a)
"Lien" -- Section 4.02(b)
"LLC" -- Preamble
"Massachusetts Secretary" -- Section 1.02
"Merger" -- Preamble
"Merger Consideration" -- Section 2.01(b)(ii)
"MGL" -- Section 1.01
"National Grid Group" -- Section 5.10
"National Grid Merger Agreement" -- Section 5.10
"▇▇▇▇" -- Preamble
"▇▇▇▇ Disclosure Letter" -- Section 5.03
"▇▇▇▇ Material Adverse Effect" -- Section 5.01
"▇▇▇▇-EUA Regulatory Approvals" -- Section 7.04(b)
"▇▇▇▇-EUA Regulatory Proceedings" -- Section 7.04(c)
"▇▇▇▇ Required Consents" -- Section 5.04(a)
"▇▇▇▇ Required Statutory Approvals" -- Section 5.04(b)
"▇▇▇▇-NGG Regulatory Approvals" -- Section 7.04(c)
"▇▇▇▇-NGG Regulatory Proceedings" -- Section 7.04(c)
"▇▇▇▇-NGG Required Statutory Approvals"-- Section 7.04
"▇▇▇▇-NGG Transactions" -- Section 7.04
"▇▇▇▇ Shares" -- Section 5.03
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"▇▇▇▇ Trust Agreement" -- Section 5.01
"NGG Circular" -- Section 7.02
"NRC" -- Section 4.05(b)
"Options" -- Section 4.02(a)
"orders" -- Section 4.04(a)
"Out-of-Pocket Expenses" -- Section 9.03(a)
"Paying Agent" -- Section 2.02(a)
"PBGC" -- Section 4.11(g)
"person" -- Section 10.11(e)
"Per Share Amount" -- Section 2.01(b)(ii)
"Post Closing Plans" -- Section 7.05(b)
"Proxy Statement" -- Section 4.08(a)
"Release" -- Section 4.13(f)(iv)
"Representatives" -- Section 10.11(f)
"SEC" -- Section 4.05(a)
"Securities Act" -- Section 4.05(a)
"Subsidiary" -- Section 10.11(g)
"Surviving Entity" -- Section 1.01
"Tax Ruling" -- Section 4.10(j)
"Taxes" -- Section 4.10
"Tax Return" -- Section 4.10
"US GAAP" -- Section 4.05(a)
"Yankee Companies" -- Section 4.16
"Y2K Consultant" -- Section 6.01(o)
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This AGREEMENT AND PLAN OF MERGER, dated as of February 1, 1999 (this
"Agreement"), is made and entered into by and among NEW ENGLAND ELECTRIC SYSTEM,
a Massachusetts business trust ("▇▇▇▇"), RESEARCH DRIVE LLC ("LLC"), a
Massachusetts limited liability company which is directly and indirectly wholly
owned by ▇▇▇▇, and EASTERN UTILITIES ASSOCIATES, a Massachusetts business trust
("EUA").
WHEREAS, the Board of Directors of ▇▇▇▇, the Board of Trustees of EUA
and the members of LLC have each determined that it is advisable and in the best
interests of their respective shareholders and members to consummate, and have
approved, the business combination transaction provided for herein in which LLC
would merge with and into EUA, with EUA being the surviving entity (the
"Merger"), pursuant to the terms and conditions of this Agreement, as a result
of which ▇▇▇▇ will own, directly or indirectly, all of the issued and
outstanding common shares of EUA (the "EUA Shares");
WHEREAS, ▇▇▇▇, LLC and EUA desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 1.02), LLC shall be
merged with and into EUA in accordance with Section 2 of Chapter 182 and Section
59 of Chapter 156C of the Massachusetts General Laws ("MGL"). At the Effective
Time, the separate existence of LLC shall cease and EUA shall continue as the
surviving entity in the Merger. EUA, after the Effective Time, is sometimes
referred to herein as the "Surviving Entity" and EUA and LLC are sometimes
referred to herein as the "Constituent Entities". The effect and consequences of
the Merger shall be as set forth in Article II.
1.02 Effective Time. Subject to the provisions of this Agreement, on
the Closing Date (as defined in Article III), a certificate of merger shall be
executed and filed by EUA and LLC with the Secretary of the Commonwealth of
Massachusetts (the "Massachusetts Secretary"). The Merger shall become effective
at the time of the filing of the certificate of merger relating to the Merger
with the Massachusetts Secretary, or at such later time as is specified in the
certificate of merger (such date and time being referred to herein as the
"Effective Time").
1.03 Effects of the Merger. At the Effective Time, the Agreement and
Declaration of Trust of EUA (the "EUA Trust Agreement") as in effect immediately
prior to the Effective Time shall be the agreement and declaration of trust of
the Surviving Entity, until thereafter amended as provided by law and such
agreement and declaration of trust. Subject to the foregoing, the additional
effects of the Merger shall be as provided in the applicable provisions of
Section 2 of Chapter 182 of the MGL and Section 62 of the Limited Liability
Company Act of Massachusetts.
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(a) Membership Interests of LLC. Each one percent of the issued
and outstanding membership interests in LLC shall be converted into one
transferable certificate of participation or share of the Surviving Entity.
(b) Conversion of EUA Shares.
(i) Cancellation of Treasury Shares and Shares Owned by
▇▇▇▇ and Subsidiaries. All EUA Shares that are owned by EUA as treasury shares
and any EUA Shares owned by ▇▇▇▇ or any other wholly owned Subsidiary (as
defined in Section 10.11) of ▇▇▇▇ shall be canceled and retired and shall cease
to exist and no cash or other consideration shall be delivered in exchange
therefor.
(ii) Conversion of EUA Shares. Each EUA Share issued and
outstanding immediately prior to the Effective Time (other than shares to be
canceled in accordance with Section 2.01(b)(i)) shall be canceled and converted
in accordance with the provisions of this Section 2.01 into the right to receive
cash in the amount (the "Per Share Amount") of $31.00 as such amount may
hereafter be adjusted in accordance with Section 2.01(c) hereof (the "Merger
Consideration"), payable, without interest, to the holder of such EUA Share,
upon surrender, in the manner provided in Section 2.02 hereof, of the
certificate formerly evidencing such share.
(c) Adjustment in Amount of Merger Consideration. In the event
that the Closing Date shall not have occurred on or prior to the date that is
the six (6) month anniversary of the date on which EUA Shareholders' Approval is
obtained (the "Adjustment Date"), the Per Share Amount shall be increased, for
each day after the Adjustment Date up to and including the day which is one day
prior to the earlier of the Closing Date and the Extended Termination Date, by
an amount equal to $0.003.
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2.02 Surrender of Shares. (a) Deposit with Paying Agent. Prior to the
Effective Time, ▇▇▇▇ shall designate a bank or trust company reasonably
acceptable to EUA to act as agent (the "Paying Agent") for the benefit of the
holders of EUA Shares in connection with the Merger to receive the funds to
which holders of EUA Shares shall become entitled pursuant to Section
2.01(b)(ii) (the "Exchange Fund"). From time to time at, immediately prior to or
after the Effective Time, ▇▇▇▇ or LLC shall make or cause to be made available
to the Paying Agent immediately available funds in amounts and at the times
necessary for the payment of the Merger Consideration upon surrender of
Certificates (as defined in Section 2.02(b)) in accordance with Section 2.02(b),
it being understood that any and all interest or other income earned on funds
made available to the Paying Agent pursuant to this Section 2.02(a) shall belong
to and shall be paid (at the time provided for in Section 2.02(e)) as directed
by ▇▇▇▇ or LLC. Any such funds deposited with the Paying Agent by ▇▇▇▇ shall be
invested by the Paying Agent as directed by ▇▇▇▇ or LLC.
(b) Exchange Procedure. As soon as practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding EUA Shares (the "Canceled Shares") that
were canceled and became instead the right to receive the Merger Consideration
pursuant to Section 2.01(b)(ii): (i) a letter of transmittal in such form as
▇▇▇▇ and EUA may reasonably agree (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 in exchange for the Merger
Consideration. Upon surrender of a Certificate or Certificates to the Paying
Agent for cancellation (or to such other agent or agents as may be appointed by
▇▇▇▇ and are reasonably acceptable to EUA), together with a duly executed letter
of transmittal and such other documents as the Paying Agent shall require, the
holder of such Certificate shall be entitled to receive the Merger Consideration
in exchange for each EUA Share formerly evidenced by such Certificate which such
holder has the right to receive pursuant to Section 2.01(b)(ii). In the event of
a transfer of ownership of Canceled Shares which is not registered in the
transfer records of EUA, the Merger Consideration in respect of such Canceled
Shares may be given to the transferee thereof if the Certificate or Certificates
representing such Canceled Shares 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 stock transfer taxes have
been paid. At any time after the Effective Time, each Certificate shall be
deemed to represent only the right to receive the Merger Consideration subject
to and upon the surrender of such Certificate as contemplated by this Section
2.02. No interest shall be paid or will accrue on the Merger Consideration
payable to holders of Certificates pursuant to Section 2.01(b)(ii).
(c) No Further Ownership Rights in EUA Shares. The Merger
Consideration paid upon the surrender of Certificates in accordance with the
terms of Section 2.01(b)(ii) shall be deemed to have been paid at the Effective
Time in full satisfaction of all rights pertaining to EUA Shares represented
thereby. From and after the Effective Time, the share transfer books of EUA
shall be closed and there shall be no further registration of transfers thereon
of EUA Shares which were outstanding immediately prior to the Effective Time.
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If, after the Effective Time, Certificates are presented to ▇▇▇▇ for any reason,
they shall be canceled and exchanged as provided in this Section 2.02.
(d) Lost, Stolen or Destroyed Certificates. In the event any
owner of any Certificate shall claim that such Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the owner
of such Certificate and delivery of that affidavit to the Paying Agent and, if
required by ▇▇▇▇ or LLC, the posting by such person of a bond in customary
amount as indemnity against any claim that may be made against ▇▇▇▇, EUA or the
Surviving Entity with respect to such Certificate, the Paying Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration payable upon due surrender of, and deliverable pursuant to this
Section 2.02 in respect of, EUA Shares to which such Certificate relates.
(e) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the shareholders of EUA for one (1) year
after the Effective Time shall be delivered to the Surviving Entity, upon
demand, and any Shareholders of EUA who have not theretofore complied with this
Article II shall thereafter look only to the Surviving Entity (subject to
abandoned property, escheat and other similar laws) as general creditors for
payment of their claim for the Merger Consideration payable upon due surrender
of the Certificates held by them. None of ▇▇▇▇, LLC or the Surviving Entity
shall be liable to any former holder of EUA Shares for the Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
2.03 Withholding Rights. Each of the Surviving Entity and ▇▇▇▇ shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of EUA 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"), or any other
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by the Surviving Entity or ▇▇▇▇, 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 EUA Shares in respect of which such deduction and withholding
was made by the Surviving Entity or ▇▇▇▇, as the case may be.
ARTICLE III
THE CLOSING
The closing of the Merger and other transactions contemplated hereby
(the "Closing") will take place at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇
& ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., local
time, on the second business day following satisfaction or waiver (where
applicable) of the conditions set forth in Article VIII (other than those
conditions that by their nature are to be fulfilled at the Closing, but subject
to the fulfillment or waiver of such conditions), unless another date, time or
place is agreed to in writing by the parties hereto (the "Closing Date").
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EUA
EUA represents and warrants to ▇▇▇▇ and LLC as follows:
4.01 Organization and Qualification. (a) EUA is a voluntary
association duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts and has full power, authority and legal
right to own its property and assets and to transact the business in which it is
engaged. Each of EUA's Subsidiaries is a corporation duly organized or
incorporated, validly existing and in good standing under the laws of its
jurisdiction of organization or incorporation and has full corporate power and
authority to conduct its business as and to the extent now conducted and to own,
use and lease its assets and properties, except where failure to be so organized
or incorporated, existing and in good standing or to have such power and
authority, individually or in the aggregate, could not reasonably be expected to
have an EUA Material Adverse Effect. As used in this Agreement, the term "EUA
Material Adverse Effect" means a material adverse effect on the business,
assets, results of operations, condition (financial or otherwise) or prospects
of EUA and its Subsidiaries taken as a whole. Each of EUA and its Subsidiaries
is duly qualified, licensed or admitted to do business and is in good standing
in each jurisdiction in which the ownership, use or leasing of its assets and
properties, or the conduct or nature of its business, makes such qualification,
licensing or admission necessary, except where failure to be so qualified,
licensed or admitted and in good standing, individually or in the aggregate,
could not reasonably be expected to have an EUA Material Adverse Effect. Section
4.01 of the letter dated the date hereof and delivered to ▇▇▇▇ and LLC by EUA
concurrently with the execution and delivery of this Agreement (the "EUA
Disclosure Letter") sets forth (i) the name and jurisdiction of incorporation or
organization of each Subsidiary of EUA, (ii) such Subsidiary's authorized
capital stock, (iii) the number of issued and outstanding shares of capital
stock of such Subsidiary and (iv) the number of shares of such Subsidiary held
of record by EUA. EUA has previously delivered to ▇▇▇▇ correct and complete
copies of the EUA Trust Agreement and the certificate or articles of
organization or incorporation and bylaws (or other comparable charter documents)
of its Subsidiaries.
(b) Section 4.01 of the EUA Disclosure Letter sets forth a
description as of the date hereof, of all EUA Associates, including (i) the name
of each such entity and EUA's interest therein and (ii) a brief description of
the principal line or lines of business conducted by each such entity. For
purposes of this Agreement "EUA Associates" shall mean any corporation or other
entity (including partnerships and other business associations) that is not a
Subsidiary of EUA in which EUA and/or one or more of its Subsidiaries, directly
or indirectly, owns an equity interest (other than short-term investments in the
ordinary course of business) if such corporation or other entity (including
partnerships and other business associations) contributes five percent or more
of EUA's consolidated revenues, assets, income or costs.
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4.02 Capital Stock. (a) The authorized equity securities of EUA
consists of 36,000,000 EUA Shares, of which 20,435,997 shares were issued and
outstanding as of the close of business on January 29, 1999. As of the close of
business on January 29, 1999, no EUA Shares were held in the treasury of EUA.
Since such date there has been no change in the sum of the issued and
outstanding EUA Shares. All of the issued and outstanding EUA Shares are duly
authorized, validly issued, fully paid and nonassessable. Except pursuant to
this Agreement and except as described in Section 4.02 of the EUA Disclosure
Letter, on the date hereof there are no outstanding subscriptions, options,
warrants, rights (including share appreciation rights), preemptive rights or
other contracts, commitments, understandings or arrangements, including any
right of conversion or exchange under any outstanding security, instrument or
agreement (together, "Options"), obligating EUA or any of its Subsidiaries to
issue or sell any shares of equity securities of EUA or to grant, extend or
enter into any Option with respect thereto. The EUA Disclosure Letter sets forth
all capital stock authorized, issued and outstanding at subsidiary levels as of
the close of business on January 29, 1999.
(b) Except as disclosed in EUA SEC Reports filed prior to the
date of this Agreement or Section 4.02 of the EUA Disclosure Letter, all of the
outstanding shares of capital stock of each Subsidiary of EUA are duly
authorized, validly issued, fully paid and nonassessable and are owned,
beneficially and of record, by EUA or a Subsidiary, which is wholly owned,
directly or indirectly, by EUA, free and clear of any liens, claims, mortgages,
encumbrances, pledges, security interests, equities and charges of any kind
(each a "Lien"). Except as disclosed in EUA SEC Reports filed prior to the date
of this Agreement or Section 4.02 of the EUA Disclosure Letter, there are no (i)
outstanding Options obligating EUA or any of its Subsidiaries to issue or sell
any shares of capital stock of any Subsidiary of EUA or to grant, extend or
enter into any such Option or (ii) voting trusts, proxies or other commitments,
understandings, restrictions or arrangements in favor of any person other than
EUA or a Subsidiary which is wholly owned, directly or indirectly, by EUA with
respect to the voting of, or the right to participate in, dividends or other
earnings on any capital stock of any Subsidiary of EUA.
(c) Except as disclosed in EUA SEC Reports filed prior to the
date of this Agreement or Section 4.02 of the EUA Disclosure Letter, there are
no outstanding contractual obligations of EUA or any Subsidiary of EUA to
repurchase, redeem or otherwise acquire any EUA Shares or any capital stock of
any Subsidiary of EUA or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Subsidiary of EUA or
any other person.
(d) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of EUA or any Subsidiary of EUA having the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) (together "EUA Voting Debt") on any matters on which Shareholders
may vote are issued or outstanding nor are there any outstanding Options
obligating EUA or any of its Subsidiaries to issue or sell any EUA Voting Debt
or to grant, extend or enter into any Option with respect thereto.
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4.03 Authority. EUA has full power and authority to enter into this
Agreement, to perform its obligations hereunder and, subject to obtaining EUA
Shareholders' Approval (as defined in Section 7.03(b)) and EUA Required
Statutory Approvals (as defined in Section 4.04(b)), to consummate the Merger
and other transactions contemplated hereby. The execution, delivery and
performance of this Agreement by EUA and the consummation by EUA of the Merger
and other transactions contemplated hereby have been duly authorized by all
necessary action on the part of EUA, subject to obtaining EUA Shareholders'
Approval with respect to the consummation of the Merger and the other
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by EUA and constitutes a legal, valid and binding
obligation of EUA enforceable against EUA in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.04 Non-Contravention; Approvals and Consents. (a) The execution and
delivery of this Agreement by EUA do not, and the performance by EUA of its
obligations hereunder and the consummation of the Merger and other transactions
contemplated hereby will not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in or give to any person any right of payment or reimbursement,
termination, cancellation, modification or acceleration of, or result in the
creation or imposition of any Lien upon any of the assets or properties of EUA
or any of its Subsidiaries or any of the terms, conditions or provisions of (i)
the EUA Trust Agreement or the certificates or articles of incorporation or
organization or bylaws (or other comparable charter documents) of EUA's
Subsidiaries, or (ii) subject to the obtaining of EUA Shareholders' Approval,
EUA Required Consents, EUA Required Statutory Approvals and the taking of any
other actions described in this Section 4.04, (x) any statute, law, rule,
regulation or ordinance (together, "laws"), or any judgment, decree, order,
writ, permit or license (together, "orders"), of any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision (a "Governmental Authority") applicable to
EUA or any of its Subsidiaries or any of their respective assets or properties,
or (y) subject to obtaining the third-party consents set forth in Section 4.04
of the EUA Disclosure Letter (the "EUA Required Consents"), any note, bond,
mortgage, security agreement, indenture, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind
(together, "Contracts") to which EUA or any of its Subsidiaries is a party or by
which EUA or any of its Subsidiaries or any of their respective assets or
properties is bound, excluding from the foregoing clauses (x) and (y) such
conflicts, violations, breaches, defaults, payments or reimbursements,
terminations, cancellations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate, could not
reasonably be expected to have an EUA Material Adverse Effect.
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(b) 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 EUA or the consummation by
EUA of the Merger and other transactions contemplated hereby except as described
in Section 4.04 of the EUA Disclosure Letter or the failure of which to obtain
could not reasonably be expected to result in an EUA Material Adverse Effect
(the "EUA Required Statutory Approvals," it being understood that references in
this Agreement to "obtaining" such EUA 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).
4.05 SEC Reports, Financial Statements and Utility Reports. (a) EUA
delivered to ▇▇▇▇ prior to the execution of this Agreement a true and complete
copy of each form, report, schedule, registration statement, registration
exemption, if applicable, definitive proxy statement and other document
(together with all amendments thereof and supplements thereto) filed by EUA or
any of its Subsidiaries with the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act") and the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Exchange Act") since
December 31, 1995 (as such documents have since the time of their filing been
amended or supplemented, the "EUA SEC Reports"), which are all the documents
(other than preliminary materials) that EUA and its Subsidiaries were required
to file with the SEC under the Securities Act and the Exchange Act since such
date. As of their respective dates, EUA SEC Reports (i) complied as to form in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the audited
consolidated financial statements and unaudited interim consolidated financial
statements (including, in each case, the notes, if any, thereto) included in EUA
SEC Reports (the "EUA Financial Statements") complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with U.S. generally accepted accounting
principles ("US GAAP") applied on a consistent basis during the periods involved
(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 (subject, in the case of the unaudited interim financial statements, to
normal, recurring year-end audit adjustments (which are not expected to be,
individually or in the aggregate, materially adverse to EUA and its Subsidiaries
taken as a whole)) the consolidated financial position of EUA and its
consolidated subsidiaries as at the respective dates thereof and the
consolidated results of their operations and cash flows for the respective
periods then ended. Except as set forth in Section 4.05 of the EUA Disclosure
Letter, each Subsidiary of EUA is treated as a consolidated subsidiary of EUA in
EUA Financial Statements for all periods covered thereby.
(b) All filings (other than immaterial filings) required to be
made by EUA or any of its Subsidiaries since December 31, 1995, under the Public
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Utility Holding Company Act of 1935 (the "1935 Act"), the Federal Power Act, the
Atomic Energy Act of 1954, the Communications Act of 1934, and applicable state
laws and regulations, have been filed with the SEC, the Federal Energy
Regulatory Commission (the "FERC"), the Department of Energy (the "DOE"), the
Nuclear Regulatory Commission (the "NRC"), the Federal Communications Commission
(the "FCC") or any appropriate state public utility commissions (including,
without limitation, to the extent required, the state public utility regulatory
agencies of Massachusetts, Rhode Island, New Hampshire, Maine, Vermont and
Connecticut as the case may be, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits, amendments and
supplements appertaining thereto, including but not limited to all rates,
tariffs, franchises, service agreements and related documents and all such
filings complied, as of their respective dates, in all material respects with
all applicable requirements of the appropriate statutes and the rules and
regulations thereunder.
4.06 Absence of Certain Changes or Events. Except as set forth in
Section 4.06 of the EUA Disclosure Letter or as disclosed in EUA SEC Reports
filed prior to the date of this Agreement since December 31, 1997, EUA and each
of EUA's Subsidiaries have conducted its business only in the ordinary course of
business consistent with past practice and there has not been, and no fact or
condition exists which, individually or in the aggregate, has or could
reasonably be expected to have an EUA Material Adverse Effect.
4.07 Legal Proceedings. Except as disclosed in EUA SEC Reports filed
prior to the date of this Agreement or in Section 4.07 of the EUA Disclosure
Letter and except for environmental matters which are governed by Section 4.13,
(i) there are no actions, claims, hearings, suits, arbitrations or proceedings
pending or, to the knowledge of EUA or any of its Subsidiaries, threatened
against, specifically relating to or affecting, and, to the knowledge of EUA or
any of its Subsidiaries, there are no Governmental Authority investigations or
audits pending or threatened against, specifically relating to or affecting, EUA
or any of its Subsidiaries or any of their respective assets and properties
which, individually or in the aggregate, could reasonably be expected to have an
EUA Material Adverse Effect and (ii) neither EUA nor any of its Subsidiaries is
subject to any order of any Governmental Authority which, individually or in the
aggregate, could reasonably be expected to have an EUA Material Adverse Effect.
4.08 Information Supplied. (a) The proxy statement relating to EUA
Shareholders' Meeting, as amended or supplemented from time to time (as so
amended and supplemented, the "Proxy Statement"), and any other documents to be
filed by EUA with the SEC (including, without limitation, under the ▇▇▇▇ ▇▇▇) or
any other Governmental Authority in connection with the Merger and other
transactions contemplated hereby will comply as to form in all material respects
with the requirements of the Exchange Act, the Securities Act and the 1935 Act,
as applicable, and will not, on the date of their respective filings or, in the
case of the Proxy Statement, at the date it is mailed to Shareholders of EUA and
at the time of EUA Shareholders' Meeting (as defined in Section 7.03), contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
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(b) Notwithstanding the foregoing provisions of this Section
4.08, no representation or warranty is made by EUA with respect to statements
made or incorporated by reference in the Proxy Statement based on information
supplied by ▇▇▇▇ or LLC for inclusion or incorporation by reference therein.
4.09 Compliance. Except as set forth in Section 4.09 of the EUA
Disclosure Letter, or as disclosed in EUA SEC Reports filed prior to the date
hereof, neither EUA nor any of EUA's Subsidiaries is in violation of, is, to the
knowledge of EUA, 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, ordinance or regulation) of any Governmental
Authority, except for possible violations which, individually or in the
aggregate, could not reasonably be expected to have an EUA Material Adverse
Effect. Except as set forth in Section 4.09 of the EUA Disclosure Letter or as
disclosed in EUA SEC Reports filed prior to the date hereof, EUA and EUA's
Subsidiaries have all permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct their businesses as
presently conducted except for such failures which could not reasonably be
expected to have an EUA Material Adverse Effect. Neither EUA nor any of EUA's
Subsidiaries is in breach or violation of, or in default in the performance or
observance of any term or provision of, (i) the EUA Trust Agreement, in the case
of EUA, or articles of incorporation or organization or by-laws, in the case of
EUA's Subsidiaries, or (ii) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or other
instrument to which it is a party or by which EUA or any Subsidiary of EUA is
bound or to which any of their respective property is subject, except for
possible violations, breaches or defaults which, individually or in the
aggregate, could not reasonably be expected to have an EUA Material Adverse
Effect.
4.10 Taxes. Except as disclosed in Section 4.10 of the EUA Disclosure
Letter:
(a) Filing of Timely Tax Returns. EUA and each of its
Subsidiaries have timely filed all Tax Returns required to be filed by each of
them under applicable law. All Tax Returns were (and, as to Tax Returns not
filed as of the date hereof, will be) true, complete and correct;
(b) Payment of Taxes. EUA and each of its Subsidiaries have,
within the time and in the manner prescribed by law, paid (and until the Closing
Date will pay within the time and in the manner prescribed by law) all 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. EUA and its Subsidiaries have established (and
until the Closing Date will maintain) on their books and records adequate
reserves for all Taxes and for any liability for deferred income taxes in
accordance with GAAP;
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(d) Extensions of Time for Filing Tax Returns. Neither EUA nor
any of its Subsidiaries has requested any extension of time within which to file
any Tax Return, which Tax Return has not since been filed;
(e) Waivers of Statute of Limitations. Neither EUA nor any of
its Subsidiaries has in effect any extension, outstanding waivers or comparable
consents regarding the application of the statute of limitations with respect to
any Taxes or Tax Returns;
(f) Expiration of Statute of Limitations. The Tax Returns of
EUA, each of its Subsidiaries and any affiliated, consolidated, combined or
unitary group that includes EUA or any of its Subsidiaries either have been
examined and settled with the appropriate Tax authority or closed by virtue of
the expiration of the applicable statute of limitations for all years through
and including 1993;
(g) Audit, Administrative and Court Proceedings. No audits or
other administrative proceedings or court proceedings are presently pending or
threatened with regard to any Taxes or Tax Returns of EUA or any of its
Subsidiaries (other than those being contested in good faith and for which
adequate reserves have been established) and no issues have been raised in
writing by any Tax authority in connection with any Tax or Tax Return;
(h) Tax Liens. There are no Tax liens upon any asset of EUA or
any of its Subsidiaries except liens for Taxes not yet due.
(i) Powers of Attorney. No power of attorney currently in force
has been granted by EUA or any of its Subsidiaries concerning any Tax matter;
(j) Tax Rulings. Neither EUA nor any of its Subsidiaries has,
during the five year period prior to the date of this Agreement, received a Tax
Ruling (as defined below) or entered into a Closing Agreement (as defined below)
with any taxing authority. "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;
(k) Availability of Tax Returns. EUA and its Subsidiaries have
made available to ▇▇▇▇ complete and accurate copies, covering all years ending
on or after December 31, 1993, of (i) all Tax Returns, and any amendments
thereto, filed by EUA or any of its Subsidiaries, (ii) all audit reports
received from any taxing authority relating to any Tax Return filed by EUA or
any of its Subsidiaries and (iii) any Closing Agreements entered into by EUA or
any of its Subsidiaries with any taxing authority.
(l) Tax Sharing Agreements. No agreements relating to the
allocation or sharing of Taxes exist between or among EUA and any of its
Subsidiaries and neither EUA nor any of its Subsidiaries (i) has been a member
of an affiliated group filing a consolidated federal income tax return (other
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than a group the common parent of which was EUA) or (ii) has any liability for
Taxes of any Person (other than EUA or its Subsidiaries) under United States
Treasury Regulation Section 1.1502-6 (or any provision of state, local), or
foreign law, as a transferee or successor, by contract or otherwise;
(m) Code Section 481 Adjustments. Neither EUA nor any of its
Subsidiaries is required to include in income any adjustment pursuant to Code
Section 481(a) by reason of a voluntary change in accounting method initiated by
EUA or any of its Subsidiaries, and, the Internal Revenue Service ("IRS") has
not proposed any such adjustment or change in accounting method;
(n) Code Sections 6661 and 6662. All transactions that could
give rise to an understatement of federal income tax, and within the meaning of
Code Section 6662 have been adequately disclosed (or, with respect to Tax
Returns filed following the Closing, will be adequately disclosed) on the Tax
Returns of EUA and its Subsidiaries in accordance with Code Section
6662(d)(2)(B);
(o) Intercompany Transactions. Neither EUA nor any of its
Subsidiaries has engaged in any intercompany transactions within the meaning of
Treasury Regulations ss. 1.1502-13 for which any income or gain will remain
unrecognized as of the close of the last taxable year prior to the Closing Date;
and
(p) Foreign Tax Returns. Neither EUA nor any of its Subsidiaries
is required to file a foreign tax return.
"Taxes" as used in this Agreement, shall mean any federal, state,
county, local or foreign taxes, charges, fees, levies, or other assessments,
including all net income, gross income, premiums, sales and use, ad valorem,
transfer, gains, profits, windfall profits, excise, franchise, real and personal
property, gross receipts, capital stock, production, business and occupation,
employment, disability, payroll, license, estimated, stamp, custom duties,
severance or withholding taxes, other taxes or similar charges of any kind
whatsoever imposed by any governmental entity, whether imposed directly on a
Person or resulting under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise and includes any interest and penalties on or additions to
any such taxes or in respect of a failure to comply with any requirement
relating to any Tax Return. "Tax Return" as used in this Agreement, shall mean a
report, return or other information required to be supplied to a governmental
entity with respect to Taxes including, where permitted or required, combined,
unitary or consolidated returns for any group of entities.
4.11 Employee Benefit Plans; ERISA. (a) Each "employee benefit plan"
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), bonus, deferred compensation, share option or other
written agreement relating to employment or fringe benefits for employees,
former employees, officers, trustees or directors of EUA or any of its
Subsidiaries effective as of the date hereof or providing benefits as of the
date hereof to current employees, former employees, officers, trustees or
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directors of EUA or pursuant to which EUA or any of its subsidiaries has or
could reasonably be expected to have any liability (collectively, the "EUA
Employee Benefit Plans") is listed in Section 4.11(a) of the EUA Disclosure
Letter, is in material compliance with applicable law, and has been administered
and operated in all material respects in accordance with its terms. Each EUA
Employee Benefit Plan which is intended to be qualified within the meaning of
Section 401(a) of the Code has received a favorable determination letter from
the IRS as to such qualification and, to the knowledge of EUA, no event has
occurred and no condition exists which could reasonably be expected to result in
the revocation of, or have any adverse effect on, any such determination.
(b) Complete and correct copies of the following documents have
been made available to ▇▇▇▇ as of the date of this Agreement: (i) all EUA
Employee Benefit Plans and any related trust agreements or insurance contracts,
(ii) the most current summary descriptions of each EUA Employee Benefit Plan
subject to ERISA, (iii) the three most recent Form 5500s and Schedules thereto
for each EUA Employee Benefit Plan subject to such reporting, (iv) the most
recent determination of the IRS with respect to the qualified status of each EUA
Employee Benefit Plan that is intended to qualify under Section 401(a) of the
Code, (v) the most recent accountings with respect to each EUA Employee Benefit
Plan funded through a trust and (vi) the most recent actuarial report of the
qualified actuary of each EUA Employee Benefit Plan with respect to which
actuarial valuations are conducted.
(c) Except as set forth in Section 4.11(c) of the EUA Disclosure
Letter, neither EUA nor any Subsidiary maintains or is obligated to provide
benefits under any EUA Employee Benefit Plan (other than as an incidental
benefit under a Plan qualified under Section 401(a) of the Code) which provides
health or welfare benefits to retirees or other terminated employees other than
benefit continuations as required pursuant to Section 601 of ERISA. Each EUA
Employee Benefit Plan subject to the requirements of Section 601 of ERISA has
been operated in material compliance therewith. EUA has not contributed to a
nonconforming group health plan (as defined in Code Section 5000(c)) and no
person under common control with EUA within the meaning of Section 414 of the
Code ("ERISA Affiliate") has incurred a tax liability under Code Section 5000(a)
that is or could reasonably be expected to be a liability of EUA's.
(d) Except as set forth in Section 4.11(d) of the EUA Disclosure
Letter, each EUA Employee Benefit Plan covers only employees who are employed by
EUA or a Subsidiary (or former employees or beneficiaries with respect to
service with EUA or a Subsidiary).
(e) Except as set forth in Section 4.11(e) of the EUA Disclosure
Letter, neither EUA, any Subsidiary, any ERISA Affiliate nor any other
corporation or organization controlled by or under common control with any of
the foregoing within the meaning of Section 4001 of ERISA has, within the
five-year period preceding the date of this Agreement, at any time contributed
to any "multiemployer plan," as that term is defined in Section 4001 of ERISA.
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(f) No event has occurred, and there exists no condition or set
of circumstances in connection with any EUA Employee Benefit Plan, under which
EUA or any Subsidiary, directly or indirectly (through any indemnification
agreement or otherwise), could be subject to any liability under Section 409 of
ERISA, Section 502(i) of ERISA, Title IV of ERISA or Section 4975 of the Code
except for instances of non-compliance which, individually or in the aggregate,
could not reasonably be expected to have an EUA Material Adverse Effect.
(g) Neither EUA nor any ERISA Affiliate has incurred any
liability to the Pension Benefit Guaranty Corporation (the "PBGC") under Section
302(c)(ii), 4062, 4063, 4064 or 4069 of ERISA, or otherwise that has not been
satisfied in full and no event or condition exists or has existed which could
reasonably be expected to result in any such material liability. As of the date
of this Agreement, no "reportable event" within the meaning of Section 4043 of
ERISA has occurred with respect to any EUA Employee Benefit Plan that is a
defined benefit plan under Section 3(35) of ERISA.
(h) Except as set forth in Section 4.11(h) of the EUA Disclosure
Letter, no employer securities, employer real property or other employer
property is included in the assets of any EUA Employee Benefit Plan.
(i) Full payment has been made of all material amounts which EUA
or any affiliate thereof was required under the terms of EUA Employee Benefit
Plans to have paid as contributions to such plans on or prior to the Effective
Time (excluding any amounts not yet due) and no EUA Employee Benefit Plan which
is subject to Part III of Subtitle B of Title I of ERISA has incurred any
"accumulated funding deficiency" within the meaning of Section 302 of ERISA or
Section 412 of the Code, whether or not waived.
(j) Except as set forth in Section 4.11(j) of the EUA Disclosure
Letter, no amounts payable under any EUA Employee Benefit Plan or other
agreement, contract, or arrangement will fail to be deductible for federal
income tax purposes by virtue of Section 280G or Section 162(m) of the Code.
4.12 Labor Matters. As of the date hereof, except as set forth in
Section 4.12 of the EUA Disclosure Letter, neither EUA nor any of its
Subsidiaries is a party to any material collective bargaining agreement or other
labor agreement with any union or labor organization. To the knowledge of EUA,
as of the date hereof, there is no current union representation question
involving employees of EUA or any of its Subsidiaries, nor does EUA know of any
activity or proceeding of any labor organization (or representative thereof) or
employee group to organize any such employees. Except as set forth in Section
4.12 of the EUA Disclosure Letter, (i) there is no unfair labor practice,
employment discrimination or other employment-related complaint or proceeding
against EUA or any of its Subsidiaries pending or, to the knowledge of EUA,
threatened, which has or could reasonably be expected to have an EUA Material
Adverse Effect, (ii) there is no strike, dispute, slowdown, work stoppage or
lockout pending, or, to the knowledge of EUA, threatened, against or involving
EUA or any of its Subsidiaries which has or could reasonably be expected to
have, an EUA Material Adverse Effect and (iii) there is no proceeding, claim,
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suit, or action pending or, to the knowledge of EUA or any of its Subsidiaries,
threatened, nor, to the knowledge of EUA or any of its Subsidiaries is there any
Governmental Authority investigation pending or threatened, in respect of which
any trustee, director, officer, employee or agent of EUA or any of its
Subsidiaries is or may be entitled to claim indemnification from EUA or any of
its Subsidiaries pursuant to the EUA Trust Agreement, in the case of EUA, and
their respective articles of incorporation and by-laws, in the case of EUA's
Subsidiaries, or as provided in the indemnification agreements listed in Section
4.12 of the EUA Disclosure Letter. Except as set forth in Section 4.12 of the
EUA Disclosure Letter, EUA and its Subsidiaries are in compliance with all
federal, state and local laws with respect to employment practices and labor
relations, including, without limitation, any provisions relating to affirmative
action, employment discrimination, wages, hours, collective bargaining, and the
payment of social security and similar taxes, safety and health regulations and
mass layoffs and plant closings except for such instances of noncompliance
which, individually or in the aggregate, could not reasonably be expected to
have an EUA Material Adverse Effect.
4.13 Environmental Matters. Except as disclosed in EUA SEC Reports
filed prior to the date of this Agreement or in Section 4.13 of the EUA
Disclosure Letter:
(a) (i) Each of EUA and its Subsidiaries is in compliance with
all applicable Environmental Laws (as hereinafter defined), except where the
failure to be in compliance, in the aggregate could not reasonably be expected
to result in an EUA Material Adverse Effect; and
(ii) Neither EUA nor any of its Subsidiaries has received
any written communication from any person or Governmental Authority that alleges
that EUA or any of its Subsidiaries is not in such compliance (including the
materiality qualifier set forth in clause (i) above) with applicable
Environmental Laws.
(b) Each of EUA and its Subsidiaries has obtained all
environmental, health and safety permits and governmental authorizations
(collectively, the "Environmental Permits") necessary for the construction of
their facilities and the conduct of their operations, as applicable, and all
such Environmental Permits are in good standing or, where applicable, a renewal
application has been timely filed and agency approval is expected in the
ordinary course of business, and EUA and its Subsidiaries are in compliance with
all terms and conditions of the Environmental Permits, except where the failure
have such Environmental Permits, file a renewal application for such
Environmental Permits, or to be in compliance with such Environmental Permits,
in the aggregate could not reasonably be expected to result in an EUA Material
Adverse Effect.
(c) There is no Environmental Claim (as hereinafter defined)
that could, individually or in the aggregate, reasonably be expected to have an
EUA Material Adverse Effect pending (i) against EUA or any of its Subsidiaries;
(ii) against any person or entity whose liability for any Environmental Claim
EUA or any of its Subsidiaries has or may have retained or assumed either
contractually or by operation of law; or (iii) against any real or personal
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property or operations which EUA or any of its Subsidiaries owns, leases or
manages, in whole or in part.
(d) To the knowledge of EUA there have not been any material
Releases (as hereinafter defined) of any Hazardous Material (as hereinafter
defined) that would be reasonably likely to form the basis of any material
Environmental Claim against EUA or any of its Subsidiaries, or against any
person or entity whose liability for any material Environmental Claim EUA or any
of its Subsidiaries has or may have retained or assumed either contractually or
by operation of law, except for any Environmental Claim that, individually or in
the aggregate, could not reasonably be expected to have an EUA Material Adverse
Effect.
(e) To the knowledge of EUA with respect to any predecessor of
EUA or any of its Subsidiaries, there is no material Environmental Claim pending
or threatened, and there has been no Release of Hazardous Materials that could
reasonably be expected to form the basis of any material Environmental Claim
except for any Environmental Claim that, individually or in the aggregate, could
not be reasonably be expected to have an EUA Material Adverse Effect.
(f) As used in this Section 4.13:
(i) "Environmental Claim" means any and all written
administrative, regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices or
noncompliance, liability or violation by any person or entity (including any
Governmental Authority) alleging potential liability (including, without
limitation, potential responsibility or liability for enforcement, investigatory
costs, cleanup costs, governmental response costs, removal costs, remedial
costs, natural resources damages, property damages, personal injuries 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 EUA or any of its Subsidiaries; 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 and local
laws, rules and regulations and binding interpretation thereof, 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
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regulations relating to Releases or threatened Releases of Hazardous
Materials, or otherwise relating to the manufacture, generation, 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, and transformers or other
equipment that contain dielectric fluid containing polychlorinated biphenyls;
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", 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 EUA or any of its Subsidiaries (x)
operates or (y) stores, treats or disposes of Hazardous Materials; and
(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.
4.14 Regulation as a Utility. (a) EUA is a public utility holding
company registered under Section 5, and subject to the provisions, of the 1935
Act. Section 4.14 of the EUA Disclosure Letter lists the subsidiaries of EUA
that are "public utility companies" within the meaning of Section 2(a)(5) of the
1935 Act and lists the jurisdictions where each such Subsidiary is subject to
regulation as a public utility company or public service company. Except as set
forth above and as set forth in Section 4.14 of the EUA Disclosure Letter,
neither EUA nor any "subsidiary company" or "affiliate" of EUA is subject to
regulation as a public utility or public service company (or similar
designation) by the federal government of the United States, any state in the
United States or any political subdivision thereof, or any foreign country.
(b) As used in this Section 4.14, the terms "subsidiary company"
and "affiliate" shall have the respective meanings ascribed to them in Section
2(a)(8) and Section 2(a)(11), respectively, of the ▇▇▇▇ ▇▇▇.
4.15 Insurance. Except as set forth in Section 4.15 of the EUA
Disclosure Letter, each of EUA and its Subsidiaries is, and has been
continuously since January 1, 1994, insured with financially responsible
insurers in such amounts and against such risks and losses as are customary in
all material respects for companies in the United States conducting the business
conducted by EUA and its Subsidiaries during such time period. Except as set
forth in Section 4.15 of the EUA Disclosure Letter, neither EUA nor any of its
Subsidiaries has received any notice of cancellation or termination with respect
to any material insurance policy of EUA or any of its Subsidiaries. The
insurance policies of EUA and each of its Subsidiaries are valid and enforceable
policies.
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4.16 Nuclear Facilities. Montaup Electric Company, a Subsidiary of
EUA, is a minority common stockholder of each of Connecticut Yankee Atomic Power
Company, Maine Yankee Atomic Power Company, Vermont Yankee Nuclear Power
Corporation and Yankee Atomic Electric Company (the "Yankee Companies") and a
minority joint owner in Millstone 3 and Seabrook 1 (collectively, as described
in Section 4.16 of the EUA Disclosure Letter, the "EUA Nuclear Facilities").
With respect to its ownership of Millstone 3 and Seabrook 1, Montaup Electric
Company holds the required operating licenses from the NRC. With respect to the
Yankee Companies, each Yankee Company holds its own operating license from the
NRC. Because it is a minority stockholder or a minority joint owner, Montaup
Electric Company does not have responsibility for the operation of EUA Nuclear
Facilities. Except as set forth in Section 4.16 of the EUA Disclosure Letter or
as disclosed in EUA SEC Reports filed prior to the date hereof, to the knowledge
of EUA, neither EUA nor any of its Subsidiaries is in violation of any
applicable health, safety, regulatory and other legal requirement, including NRC
laws and regulations and Environmental Laws, applicable to EUA Nuclear
Facilities except for such failure to comply as could not reasonably be expected
to have a material adverse effect with respect to EUA Nuclear Facilities and the
ownership interest of EUA therein. To the knowledge of EUA, each of EUA Nuclear
Facilities maintains emergency plans designed to respond to an unplanned release
therefrom of radioactive materials into the environment and insurance coverages
consistent with industry practice. EUA has funded, or has caused the funding of,
its portion of the decommissioning cost of each of the EUA Nuclear Facilities
and the storage of spent nuclear fuel consistent with the most recently approved
plan for each of the EUA Nuclear Facilities and FERC authorized rates. Except as
set forth in Section 4.16 of the EUA Disclosure Letter, to the knowledge of EUA,
no EUA Nuclear Facility is as of the date of this Agreement on the List of
Nuclear Power Plants Warranting Increased Regulatory Attention maintained by the
NRC.
4.17 Vote Required. The affirmative vote of two-thirds of the
outstanding EUA Shares voting as a single class (with each EUA Share having one
vote per share) with respect to the approval of the Merger and other
transactions contemplated hereby is the only vote of the holders of any class or
series of equity securities of EUA or its Subsidiaries required to approve this
Agreement and approve the Merger and other transactions contemplated hereby.
4.18 Opinion of Financial Advisor. EUA has received the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., dated the date of this Agreement, to the effect that,
as of such date, the Merger Consideration is fair from a financial point of view
to the holders of EUA Shares. A true and complete copy of the written opinion
will be delivered to ▇▇▇▇ promptly after receipt thereof by EUA.
4.19 Ownership of ▇▇▇▇ Common Shares. Neither EUA nor any of its
Subsidiaries or other affiliates beneficially owns any ▇▇▇▇ Common Shares.
4.20 State Anti-Takeover Statutes. EUA has taken all necessary actions
so that the provisions of Chapters 110C, 110D or 110F of the MGL will not apply
to this Agreement, the Merger or other transactions contemplated hereby or
thereby.
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4.21 Year 2000. The Information Systems operated by EUA and its
Subsidiaries which is used in the conduct of their business is capable of
providing or being adapted to provide uninterrupted millennium functionality to
record, store, process and present calendar dates falling on or after January 1,
2000 in substantially the same manner and with the same functionality as such
Information Systems record, store, process and present such calendar dates
falling on or before December 31, 1999 other than such interruptions in
millennium functionality that could not, individually or in the aggregate,
reasonably be expected to result in a EUA Material Adverse Effect. EUA
reasonably believes as of the date hereof that the remaining cost of adaptations
referred to in the foregoing sentence will not exceed the amounts reflected in
the Form 10-Q filed by EUA for the quarter ended September 30, 1998 (excluding
the fees and costs of any Y2K Consultant retained pursuant to Section 6.01(o)
hereof and of the implementation of any recommendations by such Y2K Consultant
actually made by EUA that are not already part of EUA's compliance plan as of
the date hereof). "Information Systems" means mainframe and midrange hardware,
operating system software and applications programs; network and desktop (PC)
hardware, operating system software and applications programs; EDI (Electronic
Date Interchange) and FTP (File Transfer Protocol) software; and embedded
systems hardware and applications software.
4.22 EUA Associates. The representations and warranties set forth in
Sections 4.04(a), 4.06, 4.07, 4.09, 4.12 and 4.13 are true and correct in all
material respects with regard to EUA Associates.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇
▇▇▇▇ represents and warrants to EUA as follows:
5.01 Organization and Qualification. ▇▇▇▇ is a voluntary association
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has full power, authority and legal right to
own its property and assets and to transact the business in which it is engaged.
Each of the ▇▇▇▇ Subsidiaries is a corporation duly organized or incorporated,
validly existing and in good standing under the laws of its jurisdiction of
organization or incorporation and has full corporate power and authority to
conduct its business as and to the extent now conducted and to own, use and
lease its assets and properties, except where failure to be so organized or
incorporated, existing and in good standing or to have such power and authority,
individually or in the aggregate, could not reasonably be expected to have a
▇▇▇▇ Material Adverse Effect. As used in this Agreement, the term "▇▇▇▇ Material
Adverse Effect" means a material adverse effect on the business, assets, results
of operations, condition (financial or otherwise) or prospects of ▇▇▇▇ and its
Subsidiaries taken as a whole. LLC is a limited liability company validly
existing under the laws of the Commonwealth of Massachusetts. LLC was formed
solely for the purpose of engaging in the Merger and other transactions
contemplated hereby, has engaged in no other business activities (other than in
connection with the formation and capitalization of LLC pursuant to or in
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accordance with the LLC Agreement (as defined below)) and has conducted its
operations only as contemplated hereby and by the LLC Agreement. Each of ▇▇▇▇
and its Subsidiaries is duly qualified, licensed or admitted to do business and
is in good standing in each jurisdiction in which the ownership, use or leasing
of its assets and properties, or the conduct or nature of its business, makes
such qualification, licensing or admission necessary, except where failure to be
so qualified, licensed or admitted and in good standing, individually or in the
aggregate, could not reasonably be expected to have a ▇▇▇▇ Material Adverse
Effect. ▇▇▇▇ has previously delivered to EUA correct and complete copies of its
Agreement and Declaration of Trust (the "▇▇▇▇ Trust Agreement") and the articles
of association of LLC.
5.02 Authority. Each of ▇▇▇▇ and LLC has full power and authority to
enter into this Agreement, and to perform its obligations hereunder, and to
consummate the Merger and other transactions contemplated hereby. The execution,
delivery and performance of this Agreement by each of ▇▇▇▇ and LLC and the
consummation by each of ▇▇▇▇ and LLC of the Merger and other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of ▇▇▇▇ and all necessary action on the part of LLC. This Agreement
has been duly and validly executed and delivered by each of ▇▇▇▇ and LLC and
constitutes a legal, valid and binding obligation of each of ▇▇▇▇ and LLC
enforceable against each of ▇▇▇▇ and LLC in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.03 Capital Stock. The authorized equity securities of ▇▇▇▇ consists
of 150,000,000 common shares of ▇▇▇▇ (the "▇▇▇▇ Shares"), of which 59,170,986
shares were issued and outstanding as of the close of business on January 29,
1999. As of the close of business on January 29, 1999, 5,798,666 ▇▇▇▇ Shares
were held in the treasury of ▇▇▇▇. All of the issued and outstanding ▇▇▇▇ Shares
are duly authorized, validly issued, fully paid and nonassessable. Except as may
be provided by the New England Electric System Companies' Incentive Share Plan,
the New England Electric System Companies Incentive Thrift Plan I, the New
England Electric System Companies Incentive Thrift Plan II, the New England
Electric Companies Long-Term Performance Share Award Plan, and the New England
Electric System Directors' annual retainer shares, and except as set forth in
Section 5.03 of the letter dated the date hereof and delivered to EUA by ▇▇▇▇
and LLC concurrently with the execution and delivery of this Agreement (the
"▇▇▇▇ Disclosure Letter"), on the date hereof there are no outstanding Options
obligating ▇▇▇▇ or any of its Subsidiaries to issue or sell any shares of equity
securities of ▇▇▇▇ or to grant, extend or enter into any Option with respect
thereto.
5.04 Non-Contravention; Approvals and Consents. (a) The execution and
delivery of this Agreement by each of ▇▇▇▇ and LLC do not, and the performance
by each of ▇▇▇▇ and LLC of its obligations hereunder and the consummation of the
Merger and other transactions contemplated hereby will not, conflict with,
result in a violation or breach of, constitute (with or without notice or lapse
of time or both) a default under, result in or give to any person any right of
payment or reimbursement, termination, cancellation, modification or
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acceleration of, or result in the creation or imposition of any Lien upon any of
the assets or properties of ▇▇▇▇, or LLC under, any of the terms, conditions or
provisions of (i) the ▇▇▇▇ Agreement and Declaration of Trust or the articles of
organization of LLC, (ii) subject to the actions described in paragraph (b) of
this Section, (x) any laws or orders of any Governmental Authority applicable to
▇▇▇▇ or LLC or any of their respective assets or properties, or (y) subject to
obtaining the third-party consents (the "▇▇▇▇ Required Consents") set forth in
Section 5.04 of the ▇▇▇▇ Disclosure Letter any Contracts to which ▇▇▇▇ is a
party or by which ▇▇▇▇ or any of its Subsidiaries or any of their respective
assets or properties is bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, terminations, modifications,
accelerations and creations and impositions of Liens which, individually or in
the aggregate, could not reasonably be expected to have a ▇▇▇▇ Material Adverse
Effect.
(b) 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 ▇▇▇▇ or LLC or the
consummation by ▇▇▇▇ or LLC of the Merger and other transactions contemplated
hereby except as described in Section 5.04 of the ▇▇▇▇ Disclosure Letter or the
failure of which to obtain could not reasonably be expected to result in a ▇▇▇▇
Material Adverse Effect (the "▇▇▇▇ Required Statutory Approvals," it being
understood that references in this Agreement to "obtaining" such ▇▇▇▇ 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).
5.05 Information Supplied. (a) The information supplied by ▇▇▇▇ or LLC
and included in the Proxy Statement with the written consent of ▇▇▇▇ or LLC, as
the case may be, will not, at the date mailed to EUA's Shareholders or at the
time of EUA Shareholder's Meeting, contain any untrue statements of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section
5.05, no representation or warranty is made by ▇▇▇▇ with respect to statements
made or incorporated by reference in the Proxy Statement based on information
supplied by EUA for inclusion or incorporation by reference therein or based on
information which is not made in or incorporated by reference in such documents
but which should have been disclosed pursuant to this Section 5.05.
5.06 Compliance. Except as set forth in Section 5.06 of the ▇▇▇▇
Disclosure Letter, or as disclosed in the ▇▇▇▇ Reports filed prior to the date
hereof, ▇▇▇▇ is not in violation of, is, to the knowledge of ▇▇▇▇, 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, ordinance or regulation) of any Governmental Authority,
except for possible violations which, individually or in the aggregate, could
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not reasonably be expected to have a ▇▇▇▇ Material Adverse Effect. Except as set
forth in Section 5.06 of the ▇▇▇▇ Disclosure Letter or as disclosed in the ▇▇▇▇
Reports filed prior to the date hereof, ▇▇▇▇ and its Subsidiaries have all
material permits, licenses and other governmental authorizations, consents and
approvals necessary to conduct their businesses as presently conducted which are
material to the operation of the businesses of ▇▇▇▇. ▇▇▇▇ is 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 by ▇▇▇▇ under (i) the ▇▇▇▇ Agreement and
Declaration of Trust or by-laws or (ii) any contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which it is a party or by which ▇▇▇▇ is bound or to which
any of their respective property is subject, except for possible violations,
breaches or defaults which, individually or in the aggregate, could not
reasonably be expected to have a ▇▇▇▇ Material Adverse Effect.
5.07 Financing. ▇▇▇▇ has or will have available, prior to the
Effective Time, sufficient cash in immediately available funds to pay or to
cause LLC to pay the Merger Consideration pursuant to Article II hereof and to
consummate the Merger and other transactions contemplated hereby.
5.08 No Vote Required. No vote of the ▇▇▇▇ Shares or of any class or
series of equity securities of ▇▇▇▇ or its Subsidiaries is necessary for the
approval of the Merger and other transactions contemplated hereby.
5.09 Ownership of EUA Shares. Neither ▇▇▇▇ nor any of its Subsidiaries
or other affiliates beneficially owns any EUA Shares.
5.10 Merger with The National Grid Group plc. ▇▇▇▇ has entered into an
Agreement and Plan of Merger dated as of December 11, 1998 by and among The
National Grid Group plc ("National Grid Group"), NGG Holdings LLC (formerly
known as Iosta LLC) and ▇▇▇▇ (the "National Grid Merger Agreement"). Pursuant to
Section 6.01 of the National Grid Merger Agreement, ▇▇▇▇ has provided a copy of
this Agreement to National Grid Group, and National Grid Group has given ▇▇▇▇
its written consent to enter into this Agreement and consummate the Merger on
the terms set forth in this Agreement. Prior to the execution of this Agreement,
▇▇▇▇ has provided EUA with a copy of such written consent.
ARTICLE VI
COVENANTS
6.01 Covenants of EUA. At all times from and after the date hereof
until the Effective Time, EUA covenants and agrees as to itself and its
Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or as set forth in Section 6.01 of the EUA Disclosure Letter, or to
the extent that ▇▇▇▇ shall otherwise previously consent in writing):
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(a) Ordinary Course. EUA and each of its Subsidiaries shall
conduct their businesses only in, and EUA and each of its Subsidiaries shall not
take any action except in, the ordinary course consistent with good utility
practice. Without limiting the generality of the foregoing, EUA and its
Subsidiaries shall use all commercially reasonable efforts to preserve intact in
all material respects their present business organizations and reputation, to
maintain in effect all existing permits, to keep available the services of their
key officers and employees, to maintain their assets and properties in good
working order and condition, ordinary wear and tear excepted, to maintain
insurance on their tangible assets and businesses in such amounts and against
such risks and losses as are currently in effect, to preserve their
relationships with customers and suppliers and others having significant
business dealings with them and to comply in all material respects with all laws
and orders of all Governmental Authorities applicable to them.
(b) Charter Documents. EUA shall not, nor shall it permit any of
its Subsidiaries to, amend or propose to amend the EUA Trust Agreement, in the
case of EUA, and its certificate or articles of incorporation or organization or
bylaws (or other comparable charter documents), in the case of EUA's
Subsidiaries.
(c) Dividends. EUA shall not, nor shall it permit any of its
Subsidiaries to, (i) declare, set aside or pay any dividends on, or make other
distributions in respect of, any of its capital stock or share capital, except:
(A) that EUA may continue the declaration and payment of
regular quarterly dividends on EUA Shares with usual
record and payment dates not, in any fiscal year, in
excess of the dividend for the comparable period in the
prior fiscal year;
(B) that the Subsidiaries of EUA set forth in Section
6.01(c) of the EUA Disclosure Letter may continue the
declaration and payment of dividends on preferred stock
in accordance with the terms of such stock, with the
record and payment dates and in the amounts set forth
in Section 6.01(c) of the EUA Disclosure Letter;
(C) if the Effective Time does not occur between a record
date and payment date of a regular quarterly dividend,
for a special dividend on EUA Shares with respect to
the quarter in which the Effective Time occurs with a
record date on or prior to the date on which the
Effective Time occurs, which does not exceed an amount
equal to the product of (x) the number of days between
the last payment date of a regular quarterly dividend
and the record date of such special dividend,
multiplied by (y) $.0045; and
(D) for dividends and distributions (including liquidating
distributions) by a direct or indirect Subsidiary of
EUA to its parent.
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(ii) split, combine, subdivide, reclassify or take similar action with respect
to any of its capital stock or share capital or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or comprised in its share capital,
(iii) adopt a plan of complete or partial liquidation or resolutions providing
for or authorizing such liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization or (iv) directly or
indirectly redeem, repurchase or otherwise acquire any shares of its capital
stock or any Option with respect thereto except:
(A) in connection with intercompany purchases of capital
stock or share capital,
(B) for the purpose of funding EUA's dividend reinvestment
and share purchase plan in accordance with past
practice, or
(C) subject to EUA's obligations under the Securities Act
and the Exchange Act, pursuant to EUA's previously
announced share repurchase program provided that the
number of EUA Shares repurchased does not exceed
3,000,000 and the price paid per share does not exceed
95% of the Per Share Amount.
(d) Share Issuances. EUA shall not, nor shall it permit any of
its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any Option
with respect thereto (other than the issuance by a wholly owned Subsidiary of
its capital stock to its direct or indirect parent corporation, or modify or
amend any right of any holder of outstanding shares of capital stock or Options
with respect thereto).
(e) Acquisitions. EUA 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 substantial portion of the
assets of, or by any other manner) any business or any corporation, partnership,
association or other business organization or division thereof.
(f) Dispositions. EUA shall not, nor shall it permit any of its
Subsidiaries to sell, lease, securitize, grant any security interest in or
otherwise dispose of or encumber any of its assets or properties, other than
dispositions in the ordinary course of its business consistent with past
practice and having an aggregate value of less than $1,000,000 for each
disposition and $5,000,000 in the aggregate.
(g) Indebtedness. EUA 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 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 (such as the issuance of commercial paper
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or the use of existing credit facilities) in amounts not exceeding the amounts
set forth in Section 6.01(g) of the EUA Disclosure Letter, (ii) long-term
indebtedness in connection with the refinancing of existing indebtedness either
at its stated maturity or at a lower cost of funds (calculating such cost on an
aggregate after-tax basis) or (iii) guarantees or "keep well" agreements in
favor of wholly owned Subsidiaries of EUA in connection with the conduct of the
business of such wholly owned Subsidiaries of EUA not aggregating more than
$1,000,000.
(h) Capital Expenditures. Except (i) as required by law or (ii)
as reasonably deemed necessary by EUA after consulting with ▇▇▇▇ following a
catastrophic event, such as a major storm, EUA shall not, nor shall it permit
any of its Subsidiaries to make any capital expenditures or commitments during
any fiscal year that is in excess of 110% of (i) the aggregate amount set forth
in Section 6.01(h) of the EUA Disclosure Letter with respect to EUA and its
Subsidiaries that are public utility companies within the meaning of Section
2(a)(5) of the 1935 Act or (ii) the amount set forth in Section 6.01(h) of the
EUA Disclosure Letter with respect to each of EUA's other Subsidiaries.
(i) Employee Benefits. EUA shall not, nor shall it permit any of
its Subsidiaries to enter into, adopt, amend (except as may be required by
applicable law) or terminate any EUA Employee Benefit Plan, or other agreement,
arrangement, plan or policy between EUA or one of its Subsidiaries and one or
more of its trustees, directors, officers, employees or former employees, or,
except for normal increases in the ordinary course of business, (a) increase in
any manner the compensation or fringe benefits of any trustee, director or
executive officer, (b) increase in any manner the compensation or fringe
benefits of any employee, (c) pay any benefit not required by any plan or
arrangement in effect as of the date hereof or, (d) cause any trustee, director,
officer, employee or former employee of EUA to accrue or receive additional
benefits, accelerate vesting or accelerate the payment of any benefits under any
EUA Employee Benefit Plan, or other agreement, arrangement, plan or policy. EUA,
prior to the Closing Date, shall take all necessary action and make all
necessary amendments to its stock-based plans so that all such plans will be in
a form that allows the plans to function after the Effective Time and after any
merger of EUA and its Subsidiaries into ▇▇▇▇ or its Subsidiaries. EUA, prior to
the Closing Date, shall take all necessary actions, in a manner satisfactory to
▇▇▇▇, so that on or after the Closing Date, neither EUA, the Surviving Entity
nor their affiliates' stock or securities will be required to be held in, or
distributed pursuant to, any EUA Employee Benefit Plan.
(j) Labor Matters. Notwithstanding any other provision of this
Agreement to the contrary, EUA or its Subsidiaries may negotiate successor
collective bargaining agreements to those referenced in Section 4.12 hereof, and
may negotiate other collective bargaining agreements or arrangements as required
by law or for the purpose of implementing the agreements referenced in Section
4.12 hereof. EUA will keep ▇▇▇▇ informed as to the status of, and will consult
with ▇▇▇▇ as to the strategy for, all negotiations with collective bargaining
representatives. EUA and its Subsidiaries shall act prudently and reasonably and
consistent with their obligation under applicable law in such negotiations.
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(k) Discharge of Liabilities. EUA shall not, nor shall it permit
its Subsidiaries to, 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 such party
included in EUA SEC Reports, or incurred in the ordinary course of business
consistent with past practice.
(l) Contracts. EUA shall not, nor shall it permit its
Subsidiaries, except in the ordinary course of business consistent with past
practice or as set forth in Section 6.01(l) of the EUA Disclosure Letter, (i) to
modify, amend, terminate or fail to use commercially reasonable efforts to renew
any material Contract to which EUA or any of its Subsidiaries is a party or
waive, release or assign any material rights or claims or (ii) to enter into any
new material Contracts except as expressly permitted by Sections 6.01 (f), (g)
or (i) and 7.06 hereof.
(m) Equity Investments. EUA shall not, nor shall it permit its
Subsidiaries or affiliates to, make equity contributions to non-affiliates or to
its non-utility Subsidiaries.
(n) Loans. EUA shall not, nor shall it permit its Subsidiaries
or affiliates to, loan money to non-affiliates or to its non-utility
Subsidiaries.
(o) Year 2000. EUA, within 15 days of the date of this
Agreement, shall engage a qualified third party ("Y2K Consultant") to conduct a
detailed assessment of the adequacy and state of completion of its Year 2000
Program, including but not limited to assessment and testing of its customer,
accounting, and operational systems. The Y2K Consultant and scope of work of the
Y2K Consultant shall be acceptable to ▇▇▇▇. Such assessment and testing shall be
completed as soon thereafter as practicable. EUA shall have such assessment
updated by the Y2K Consultant at the end of each fiscal quarter of 1999. EUA
shall allow designated ▇▇▇▇ personnel and representatives access to the Y2K
Consultant's personnel, reports and recommendations and access to EUA's
personnel, documents, and information related to the Y2K issue. EUA and the
third party shall meet with such designated ▇▇▇▇ personnel and representatives
on a periodic basis (but not less frequently than monthly) to update ▇▇▇▇ on
EUA's Year 2000 Program. If this Agreement is terminated pursuant to Section
9.01 hereof, ▇▇▇▇ shall reimburse EUA for the costs and expenses of the Y2K
Consultant.
(p) Insurance. EUA shall, and shall cause its Subsidiaries to,
maintain with financially responsible insurance companies (or through
self-insurance, consistent with past practice) insurance in such amounts and
against such risks and losses as are customary for companies engaged in their
respective businesses.
(q) 1935 Act. EUA 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.
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(r) Regulatory Matters. Subject to applicable law and except for
non-material filings in the ordinary course of business consistent with past
practice, EUA shall consult with ▇▇▇▇ prior to implementing any changes in its
or any of its Subsidiaries' rates or charges, standards of service or accounting
or executing any agreement with respect thereto that is otherwise permitted
under this Agreement and shall, and shall cause its Subsidiaries to, deliver to
▇▇▇▇ a copy of each such filing or agreement at least four (4) business days
prior to the filing or execution thereof so that ▇▇▇▇ may comment thereon. EUA
shall, and shall cause its Subsidiaries to, make all such filings (i) only in
the ordinary course of business consistent with past practice or (ii) as
required by a Governmental Authority or regulatory agency with appropriate
jurisdiction.
(s) Accounting. EUA shall not, nor shall it permit any of its
Subsidiaries to make any changes in their accounting methods, policies or
procedures, except as required by law, rule, regulation or applicable generally
accepted accounting principles;
(t) Tax Status. Neither EUA nor any of its Subsidiaries shall
(i) make or rescind any material express or deemed election relating to Taxes,
(ii) make a request for a Tax Ruling or enter into a Closing Agreement, (iii)
settle or compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit, or controversy relating to Taxes or (iv)
change in any material respect any of its methods of reporting income,
deductions or accounting for federal income tax purposes from those employed in
the preparation of its federal income Tax Return for the taxable year ending
December 31, 1997, except as may be required by applicable law.
(u) No Breach. EUA shall not, nor shall it permit any of its
Subsidiaries to willfully take or fail to take any action that would or is
reasonably likely to result in (i) a material breach of any provision of this
Agreement or (ii) its representations and warranties set forth in this Agreement
being untrue in any material respect on and as of the Closing Date.
(v) Advice of Changes. EUA shall confer with ▇▇▇▇ on a regular
and frequent basis with respect to EUA's business and operations and other
matters relevant to the Merger to the extent permitted by law, and shall
promptly advise ▇▇▇▇, orally and in writing, of any material change or event,
including, without limitation, any complaint, investigation or hearing by any
Governmental Authority (or communication indicating the same may be
contemplated) or the institution or threat of material litigation; provided that
EUA shall not be required to make any disclosure to the extent such disclosure
would constitute a violation of any applicable law or regulation.
(w) Notice and Cure. EUA will notify ▇▇▇▇ in writing of, and
will use all commercially reasonable efforts to cure before the Closing, any
event, transaction or circumstance, as soon as practical after it becomes known
to EUA, that causes or will or may be likely to cause any covenant or agreement
of EUA under this Agreement to be breached or that renders or will render untrue
in any material respect any representation or warranty of EUA contained in this
Agreement. EUA also will notify ▇▇▇▇ in writing of, and will use all
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commercially reasonable efforts to cure, before the Closing, any material
violation or breach, as soon as practical after it becomes known to EUA, of any
representation, warranty, covenant or agreement made by EUA. No notice given
pursuant to this paragraph shall have any effect on the representations,
warranties, covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein.
(x) Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, EUA will take or cause to be taken all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each condition to the other's obligations contained in
this Agreement and to consummate and make effective the Merger and other
transactions contemplated by this Agreement, and EUA will not, nor will it
permit any of its Subsidiaries to, take or fail to take any action that could be
reasonably expected to result in the nonfulfillment of any such condition.
(y) Third Party Standstill Agreements. Except as provided in
Section 7.08 hereto, during the period from the date of this Agreement through
the Effective Time, neither EUA nor any of its Subsidiaries shall terminate,
amend, modify or waive any provision of any confidentiality or standstill
agreement to which it is a party. During such period, EUA shall take all steps
necessary to enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreement.
6.02 Covenants of ▇▇▇▇. At all times from and after the date hereof
until the Effective Time, ▇▇▇▇ covenants and agrees that (except as expressly
contemplated or permitted by this Agreement or to the extent that EUA shall
otherwise previously consent in writing):
(a) No Breach. ▇▇▇▇ shall not, nor shall it permit any of its
Subsidiaries to, except as otherwise expressly provided for in this Agreement,
willfully take or fail to take any action that would or is reasonably likely to
result in (i) a material breach of any of its covenants or agreements contained
in this Agreement or (ii) any of its representations and warranties set forth in
Sections 5.01, 5.02, 5.03, 5.04, 5.05, 5.06, 5.07, 5.08 and 5.09 of this
Agreement being untrue in any material respect on and as of the Closing Date.
(b) Advice of Changes. ▇▇▇▇ shall confer with EUA on a regular
and frequent basis with respect to any matter having, or which, insofar as can
be reasonably foreseen, could reasonably be expected to have, a ▇▇▇▇ Material
Adverse Effect or materially impair the ability of ▇▇▇▇ to consummate the Merger
and other transactions contemplated hereby; provided that ▇▇▇▇ shall not be
required to make any disclosure to the extent such disclosure would constitute a
violation of any applicable law or regulation.
(c) Notice and Cure. ▇▇▇▇ will notify EUA in writing of, and
will use all commercially reasonable efforts to cure before the Closing, any
event, transaction or circumstance, as soon as practical after it becomes known
to ▇▇▇▇, that causes or will or may be likely to cause any covenant or agreement
of ▇▇▇▇ under this Agreement to be breached or that renders or will render
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untrue in any material respect any representation or warranty of ▇▇▇▇ contained
in this Agreement. ▇▇▇▇ also will notify EUA in writing of, and will use all
commercially reasonable efforts to cure before the Closing, any material
violation or breach, as soon as practical after it becomes known to such party,
of any representation, warranty, covenant or agreement made by ▇▇▇▇. No notice
given pursuant to this paragraph shall have any effect on the representations,
warranties, covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein.
(d) Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, ▇▇▇▇ will take or cause to be taken all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each condition to its obligations contained in this
Agreement and to consummate and make effective the Merger and other transactions
contemplated by this Agreement, and ▇▇▇▇ will not, nor will it permit any of its
Subsidiaries to, take or fail to take any action that could be reasonably
expected to result in the nonfulfillment of any such condition.
(e) Conduct of Business of LLC. Prior to the Effective Time,
except as may be required by applicable law and subject to the other provisions
of this Agreement, ▇▇▇▇ shall cause LLC to (i) perform its obligations under
this Agreement in accordance with its terms, and (ii) not engage directly or
indirectly in any business or activities of any type or kind and not enter into
any agreements or arrangements with any person, or be subject to or bound by any
obligation or undertaking, which is inconsistent with this Agreement.
(f) Certain Mergers. ▇▇▇▇ shall not, and shall not permit any of
its Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or equity in, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets if the entering into of a definitive agreement
relating to or the consummation of such acquisition, merger or consolidation
could reasonably be expected to (i) impose any material delay in the obtaining
of, or significantly increase the risk of not obtaining, any authorizations,
consents, orders, declarations or approvals of any Governmental Authority
necessary to consummate the Merger or the expiration or termination of any
applicable waiting period, (ii) significantly increase the risk of any
Governmental Authority entering an order prohibiting the consummation of the
Merger, (iii) significantly increase the risk of not being able to remove any
such order on appeal or otherwise or (iv) materially delay the consummation of
the Merger.
6.03 Additional Covenants by ▇▇▇▇ and EUA.
(a) Control of Other Party's Business. Nothing contained in this
Agreement shall give ▇▇▇▇, directly or indirectly, the right to control or
direct EUA's operations prior to the Effective Time. Nothing contained in this
Agreement shall give EUA, directly or indirectly, the right to control or direct
▇▇▇▇' operations prior to the Effective Time. Prior to the Effective Time, each
of EUA and ▇▇▇▇ shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its respective operations.
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(b) Transition Steering Team. As soon as reasonably practicable
after the date hereof, ▇▇▇▇ and EUA shall create a special transition steering
team, with representation from EUA and ▇▇▇▇, that will develop recommendations
concerning the future structure and operations of EUA after the Effective Time,
subject to applicable law. The members of the transition steering team shall be
appointed by the Chief Executive Officers of ▇▇▇▇ and EUA. The functions of the
transition steering team shall include (i) to direct the exchange of information
and documents between the parties and their Subsidiaries as contemplated by
Section 7.01 and (ii) the development of regulatory plans and proposals,
corporate organizational and management plans, workforce combination proposals,
and such other matters as they deem appropriate.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 Access to Information. EUA shall, and shall cause each of its
Subsidiaries to, and shall use commercially reasonable efforts to cause EUA
Associates to, throughout the period from the date hereof to the Effective Time
to the extent permitted by law, (i) provide ▇▇▇▇ and its Representatives with
full access, upon reasonable prior notice and during normal business hours, to
all facilities, operations, officers (including EUA's environmental, health and
safety personnel), employees, agents and accountants of EUA and its Subsidiaries
and Associates and their respective assets, properties, books and records, to
the extent EUA or any Subsidiary of EUA or EUA Associate is not under a legal
obligation not to provide access or to the extent that such access would not
constitute a waiver of the attorney client privilege and does not unreasonably
interfere with the business and operations of EUA and its Subsidiaries and
Associates and (ii) furnish promptly to such persons (x) a copy of each report,
statement, schedule and other document filed or received by EUA or any of its
Subsidiaries pursuant to the requirements of federal or state securities laws
and each material report, statement, schedule and other document filed with any
other Governmental Authority, and (y) all other information and data (including,
without limitation, copies of Contracts, EUA Employee Benefit Plans, and other
books and records) concerning the business and operations of EUA and its
Subsidiaries as ▇▇▇▇ or any of its Representatives reasonably may request. No
review pursuant to this Section 7.01 or otherwise shall affect any
representation or warranty contained in this Agreement or any condition to the
obligations of the parties hereto. Any such information or material obtained
pursuant to this Section 7.01 that constitutes "Evaluation Material" (as such
term is defined in the letter agreement dated as of December 18, 1998 between
EUA and ▇▇▇▇ (the "Confidentiality Agreement")) shall be governed by the terms
of the Confidentiality Agreement. ▇▇▇▇ may provide information or materials that
it obtains relating to EUA or any EUA Subsidiary pursuant to this Section 7.01
to National Grid Group; the treatment by National Grid Group of such information
or material shall be governed by the terms of the letter agreement dated as of
December 21, 1998 between EUA and National Grid Group.
7.02 Proxy Statement. As soon as reasonably practicable after the
date of this Agreement, EUA shall prepare and file the Proxy Statement with the
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SEC. ▇▇▇▇ and EUA shall cooperate with each other in the preparation of the
Proxy Statement and any amendment or supplement thereto, and EUA shall promptly
notify ▇▇▇▇ of the receipt of any comments of the SEC with respect to the Proxy
Statement and of any requests by the SEC for any amendment or supplement thereto
or for additional information, and shall promptly provide to ▇▇▇▇ copies of all
correspondence between EUA or any of its Representatives and the SEC with
respect to the Proxy Statement (except reports from financial advisors other
than with the consent of such financial advisors). Each of the parties hereto
shall furnish all information concerning itself which is required or customary
for inclusion in the Proxy Statement. EUA shall consult with ▇▇▇▇ regarding the
Proxy Statement and have due regard to any comments ▇▇▇▇ may make in relation to
the Proxy Statement. EUA shall give ▇▇▇▇ and its counsel the opportunity to
review the Proxy Statement and all responses to requests for additional
information by and replies to comments of the SEC before their being filed with,
or sent to, the SEC. Each of EUA and ▇▇▇▇ agrees to use its reasonable best
efforts, after consultation with the other parties hereto, to respond promptly
to all such comments of and requests by the SEC. After obtaining the consent of
EUA, which consent shall not be unreasonably withheld, ▇▇▇▇ may provide
information supplied to ▇▇▇▇ by EUA to National Grid Group for inclusion of such
information in the Super Class 1 circular ("NGG Circular") to be issued to
shareholders of National Grid Group in connection with approval by such
shareholders of the National Grid Merger Agreement. ▇▇▇▇ shall use its best
efforts to provide EUA with a draft of any portion of the NGG Circular with
information relating to EUA prior to the issuance of the NGG Circular.
7.03 Approval of Shareholders. EUA shall, through its Board of
Trustees, duly call, give notice of, convene and hold a meeting of its
shareholders (the "EUA Shareholders' Meeting") for the purpose of voting on the
approval of the Merger and other transactions contemplated hereby (the "EUA
Shareholders' Approval") as soon as reasonably practicable after the date
hereof; provided, however, subject to the fiduciary duties of its Board of
Trustees and the requirements of applicable law, EUA shall include in the Proxy
Statement the recommendation of the Board of Trustees of EUA that the
Shareholders of EUA approve the Merger and the other transactions contemplated
hereby, and shall use its reasonable best efforts to obtain such approval.
7.04 Regulatory and Other Approvals. (a) HSR Filings. Each party
hereto shall file or cause to be filed with the Federal Trade Commission and the
Department of Justice any notifications required to be filed by its respective
"ultimate parent" company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), and the rules and regulations promulgated
thereunder with respect to the Merger and other transactions contemplated
hereby. Such parties will use all commercially reasonable efforts to make such
filings in a timely manner and to respond on a timely basis to any requests for
additional information made by either of such agencies.
(b) Other Regulatory Approvals. Each party shall cooperate and
use its best efforts to promptly prepare and file all necessary applications,
notices, petitions, filings and other documents with, and to use all
commercially reasonable efforts to obtain all necessary permits, consents,
approvals and authorizations of, all Governmental Authorities necessary or
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advisable to obtain the EUA Required Statutory Approvals, the ▇▇▇▇ Required
Statutory Approvals and the approvals of the state utility commissions referred
to in Section 8.01(d) (collectively, the "▇▇▇▇-EUA Regulatory Approvals"). The
parties agree that they will consult with each other with respect to obtaining
the ▇▇▇▇-EUA Regulatory Approvals; provided, however, that ▇▇▇▇ shall have
primary responsibility for the preparation and filing of any related
applications, filings or other material with the SEC, the FERC, the NRC and
state utility commissions. EUA shall have the right to review and approve in
advance drafts of and final applications, filings and other material (including
material with respect to proposed settlements) submitted to or filed with the
SEC, the FERC, the NRC and state utility commissions or parties to such
proceedings before such Governmental Authority, which approval shall not be
unreasonably withheld or delayed.
(c) ▇▇▇▇-NGG Regulatory Proceedings. EUA and ▇▇▇▇ acknowledge
that, at the same time EUA and ▇▇▇▇ will be seeking to obtain the ▇▇▇▇-EUA
Regulatory Approvals, National Grid Group and ▇▇▇▇ will be seeking to obtain the
regulatory approvals (the "▇▇▇▇-NGG Regulatory Approvals") required to
consummate the transactions contemplated by the National Grid Merger Agreement.
▇▇▇▇ and EUA agree to seek to prosecute the proceedings relating to the ▇▇▇▇-EUA
Regulatory Approvals (the "▇▇▇▇-EUA Regulatory Proceedings") separately from the
prosecution by National Grid Group and ▇▇▇▇ of the proceedings relating to the
▇▇▇▇-NGG Regulatory Approvals (the "▇▇▇▇-NGG Regulatory Proceedings"), but
recognize that one or more of the ▇▇▇▇-EUA Regulatory Proceedings may be
consolidated with one or more of the ▇▇▇▇-NGG Regulatory Proceedings by the
relevant Governmental Authority. Upon the request of EUA, ▇▇▇▇ will keep EUA
reasonably apprised of the status of the ▇▇▇▇-NGG Regulatory Proceedings.
7.05 Employee Benefit Plans.
(a) For a period of twelve (12) months immediately following the
Closing Date, the compensation, benefits and coverage provided to those
non-union individuals who continue to be employees of the Surviving Entity (the
"Affected Employees") pursuant to employee benefit plans or arrangements
maintained by ▇▇▇▇ or the Surviving Entity shall be, in the aggregate, not less
favorable (as determined by ▇▇▇▇ and the Surviving Entity using reasonable
assumptions and benefit valuation methods) than those provided, in the
aggregate, to such Affected Employees immediately prior to the Closing Date. In
addition to the foregoing, ▇▇▇▇ shall, or shall cause the Surviving Entity to,
pay any Affected Employee whose employment is terminated by ▇▇▇▇ or the
Surviving Entity within twelve (12) months of the Closing Date a severance
benefit package equivalent to the severance benefit package that would be
provided under the ▇▇▇▇ Standard Severance Plan as in effect on the date hereof.
(b) ▇▇▇▇ shall, or shall cause the Surviving Entity to, give the
Affected Employees full credit for purposes of eligibility, vesting, benefit
accrual (including, without limitation, benefit accrual under any defined
benefit pension plans) and determination of the level of benefits under any
employee benefit plans or arrangements maintained by ▇▇▇▇ or the Surviving
Entity in effect as of the Closing Date for such Affected Employees' service
with EUA or any Subsidiary of EUA (or any prior employer) to the same extent
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recognized by EUA or such Subsidiary immediately prior to the Closing Date. With
respect to any employee benefit plan or arrangement established by ▇▇▇▇, EUA or
the Surviving Entity after the Closing Date (the "Post Closing Plans"), service
shall be credited in accordance with the terms of such Post Closing Plans.
(c) ▇▇▇▇ shall, or shall cause the Surviving Entity to, (i)
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Affected Employees under any welfare benefit plan established to replace any
EUA welfare benefit plans in which such Affected Employees may be eligible to
participate after the Closing Date, other than limitations or waiting periods
that are already in effect with respect to such Affected Employees and that have
not been satisfied as of the Closing Date under any welfare plan maintained for
the Affected Employees immediately prior to the Closing Date, and (ii) provide
each Affected Employee with credit for any co-payments and deductibles paid
prior to the Closing Date in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such Affected Employees
are eligible to participate in after the Closing Date.
(d)(i) ▇▇▇▇ shall, or shall cause the Surviving Entity and its
Subsidiaries to, honor, and shall guarantee the obligations of the Surviving
Entity and its Subsidiaries under, all EUA Employee Benefit Plans as in effect
on the date hereof; provided, however, that this Section 7.05(d)(i) is not
intended to prevent ▇▇▇▇ or the Surviving Entity from exercising their rights
with respect to all EUA Employee Benefit Plans solely in accordance with their
terms, including but not limited to the right to alter, terminate or otherwise
amend such EUA Employee Benefit Plans.
(ii) ▇▇▇▇ shall, or shall cause the Surviving Entity and
its Subsidiaries to, honor, and shall guarantee the obligations of the Surviving
Entity and its Subsidiaries under, (A) all employment severance, consulting and
retention agreements or arrangements as in effect on the date hereof, as set
forth in Section 7.05(d)(ii) of the EUA Disclosure Letter, or as modified in
accordance with Section 6.01(i) of the EUA Disclosure Letter (such agreements or
arrangements, the "EUA Employee Agreements" and the individuals who are parties
to such EUA Employee Agreements, the "EUA Executives") and (B) all EUA Employee
Benefit Plans in which such EUA Executives participate; provided, however, that
this Section 7.05(d)(i) is not intended to prevent ▇▇▇▇ or the Surviving Entity
from exercising their rights with respect to the EUA Employee Agreements and the
EUA Employee Benefit Plans in which such EUA Executives participate, in each
case solely in accordance with their terms, including but not limited to the
right to alter, terminate or otherwise amend such EUA Employee Agreements and
EUA Employee Benefit Plans.
(e) Notwithstanding the foregoing, ▇▇▇▇ and the Surviving Entity
and its subsidiaries shall neither be required to or prevented from merging
EUA's benefit plans, agreements, or arrangements into ▇▇▇▇ or the Surviving
Entity and its subsidiaries benefit plans, agreements, or arrangements or from
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replacing EUA's benefit plans, agreements or arrangements with ▇▇▇▇ or the
Surviving Entity and its subsidiaries benefit plans, agreements or arrangements.
7.06 Labor Agreements and Workforce Matters.
(a) Labor Agreements. ▇▇▇▇ shall honor, or shall cause the
appropriate subsidiaries of the Surviving Entity to honor, all collective
bargaining agreements of EUA or its subsidiaries in effect as of the Effective
Time until their expiration; provided, however, that this undertaking is not
intended to prevent ▇▇▇▇ or the Surviving Entity and its subsidiaries from
exercising their rights with respect to such collective bargaining agreements
and in accordance with their terms, including any right to amend, modify,
suspend, revoke or terminate any such contract, agreement, collective bargaining
agreement or commitment or portion thereof.
(b) Workforce Matters. Subject to applicable law and obligations
under applicable collective bargaining agreements, for a period of 2 years
following the Effective Time, any reductions in workforce in respect of
employees of the Surviving Entity and its Subsidiaries shall be made on a fair
and equitable basis as determined by the Surviving Entity, with due
consideration to prior experience and skills, and any employee whose employment
is terminated or job is eliminated during such period shall be entitled to
participate on a fair and equitable basis as determined by ▇▇▇▇ or the Surviving
Entity in the job opportunity and employment placement programs offered by ▇▇▇▇
or the Surviving Entity or any of their Subsidiaries for which they are
eligible. Any workforce reductions carried out following the Effective Time by
the Surviving Entity and its 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 the
regulations promulgated thereunder, and any comparable state or local law.
7.07 Post Merger Operations.
(a) ▇▇▇▇ Advisory Board. If the Merger is consummated, then,
promptly following the closing of the merger contemplated by the National Grid
Merger Agreement, ▇▇▇▇ shall take such action as is necessary to cause all of
the members of the Board of Directors of EUA to be appointed to serve on the
advisory board to be formed pursuant to Section 7.07(e) of the National Grid
Merger Agreement.
(b) Charities. The parties agree that provision of charitable
contribution and community support within the New England region serves a number
of important goals. After the Effective Time, ▇▇▇▇ intends to cause the
Surviving Entity to provide charitable contributions and community support
within the New England region at annual levels substantially comparable to the
annual level of charitable contributions and community support provided,
directly or indirectly, by EUA and its public utility subsidiaries within the
New England region during 1998.
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7.08 No Solicitations. Prior to the Effective Time, EUA agrees: (a)
that neither it nor any of its Subsidiaries shall, and it shall use its best
efforts to cause its Representatives (as defined in Section 10.10) not to,
knowingly initiate, solicit or encourage, directly or indirectly, any inquiries
or any proposal or offer (including, without limitation, any proposal or offer
to its Shareholders) with respect to a merger, consolidation or other business
combination including EUA or any of its significant Subsidiaries (as defined in
Rule 1-02(W) of Regulation S-X promulgated under the Exchange Act) other than
EUA Cogenex Corporation (an "EUA Significant Subsidiary"), or any acquisition or
similar transaction (including, without limitation, a tender or exchange offer)
involving the purchase of (i) all or any significant portion of the assets of
EUA and its Subsidiaries taken as a whole, (ii) ten percent or more of the
outstanding EUA Shares or (iii) 50% or more of the outstanding shares of the
capital stock of any EUA Significant Subsidiary (any such proposal or offer
being hereinafter referred to as an "Alternative Proposal"), or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any other discussions with, any person or group relating to an Alternative
Proposal, or otherwise knowingly facilitate any effort or attempt to make or
implement an Alternative Proposal other than from ▇▇▇▇ and its affiliates; (b)
that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties with respect to any
Alternative Proposal; and (c) that it will notify ▇▇▇▇ immediately if any such
inquiries, proposals or offers are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, it or any of such persons; provided, however, that,
prior to receipt of the EUA Shareholders' Approval, nothing contained in this
Section 7.08 shall prohibit the Board of Trustees of EUA from (i) furnishing
information to (but only pursuant to a confidentiality agreement in customary
form and having terms and conditions no less favorable to EUA than the
Confidentiality Agreement (as defined in Section 7.01)) or entering into
discussions or negotiations with any person or group that makes an unsolicited
Alternative Proposal, if, and only to the extent that, (A) the Board of Trustees
of EUA, based upon advice of outside counsel with respect to fiduciary duties,
determines in good faith that such action is necessary for the Board of Trustees
to act in a manner consistent with its fiduciary duties to Shareholders under
applicable law, (B) the Board of Trustees of EUA has reasonably concluded in
good faith (after consultation with its financial advisors) that the person or
group making such Alternative Proposal will have adequate sources of financing
to consummate such Alternative Proposal and that such Alternative Proposal is
likely to be more favorable to EUA's shareholders than the Merger, (C) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or group, EUA provides written notice to ▇▇▇▇ to the effect
that it is furnishing information to, or entering into discussions or
negotiations with, such person or group, which notice shall identify such person
or group and the material terms of the Alternative Proposal in reasonable
detail, and (D) EUA keeps ▇▇▇▇ promptly informed of the status and all material
information with respect to any such discussions or negotiations; and (ii) to
the extent required, complying with Rule 14e-2 promulgated under the Exchange
Act with regard to an Alternative Proposal. Nothing in this Section 7.08 shall
(x) permit EUA to terminate this Agreement (except as specifically provided in
Article IX), (y) permit EUA to enter into any agreement with respect to an
Alternative Proposal for so long as this Agreement remains in effect (it being
agreed that for so long as this Agreement remains in effect, EUA shall not enter
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into any agreement with any person or group that provides for, or in any way
knowingly facilitates, an Alternative Proposal (other than a confidentiality
agreement under the circumstances described above)), or (z) affect any other
obligation of EUA under this Agreement.
7.09 Directors' and Officers' Indemnification and Insurance.
(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, ▇▇▇▇ shall, or shall cause the Surviving Entity to, 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, (x) an officer, trustee or director or (y)
an employee covered as of the date hereof (to the extent of the coverage
extended as of the date hereof) of EUA or any Subsidiary of EUA (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 first 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 EUA or any Subsidiary of EUA (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 each case, to the extent permitted by the EUA Trust Agreement or
the indemnification agreements set forth in Section 7.09 of the EUA Disclosure
Letter. In the event of any such loss, expense, claim, damage or liability
(whether or not arising before the Effective Time), (i) ▇▇▇▇ shall, or shall
cause the Surviving Entity to, pay the reasonable fees and expenses of counsel
selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to ▇▇▇▇ or the Surviving Entity, as appropriate, promptly after
statements therefor are received and otherwise advance to such Indemnified Party
upon request, reimbursement of documented expenses reasonably incurred, in
either case to the extent not prohibited by the EUA Trust Agreement or the
indemnification agreements set forth in Section 7.09 of the EUA Disclosure
Letter upon receipt of an undertaking by or on behalf of such director, trustee
or officer to repay such amounts as and to the extent required by the EUA Trust
Agreement or the indemnification agreements set forth in Section 7.09 of the EUA
Disclosure Letter, (ii) the Surviving Entity shall cooperate in the defense of
any such matter and (iii) any determination required to be made with respect to
whether an Indemnified Party's conduct complies with the standards set forth
under the EUA Trust Agreement or the indemnification agreements set forth in
Section 7.09 of the EUA Disclosure Letter and the certificate of incorporation
or by-laws or similar governing documents of the Surviving Entity shall be made
by independent counsel mutually acceptable to the Surviving Entity and the
Indemnified Party; provided, however, that the Surviving Entity shall not be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld) and provided further that no indemnification
shall be made if such indemnification is prohibited by the EUA Trust Agreement
or the indemnification agreements set forth in Section 7.09 of the EUA
Disclosure Letter.
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(b) Insurance. For a period of six years after the Effective
Time, ▇▇▇▇ and the Surviving Entity at ▇▇▇▇'▇ election, (i) shall cause to be
maintained in effect an extended reporting period for current policies of
directors' and officers' liability insurance for the benefit of such persons who
are currently covered by such policies of EUA on terms no less favorable than
the terms of such current insurance coverage or (ii) shall provide tail coverage
for such persons which provides such persons with 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.
(c) Successors. In the event the Surviving Entity or any of its
successors or assigns (i) consolidates with or merges into any other person or
entity 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 or entity, then and in either such case,
proper provisions shall be made so that the successors and assigns of the
Surviving Entity, as applicable, shall assume the obligations set forth in this
Section 7.09.
(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 EUA and EUA's Subsidiaries with respect to their activities as such
prior to the Effective Time, as provided in the EUA Trust Agreement or the
respective certificates of incorporation and by-laws or similar governing
documents 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 7.09 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.
(f) Amendment of the EUA Trust Agreement. ▇▇▇▇ shall not, and
shall ensure that the Surviving Entity shall not, amend the EUA Trust Agreement
to in any way limit the indemnification provided to the Indemnified Parties
under this Section 7.09.
7.10 Expenses. Except as set forth in Section 9.03, whether or not
the Merger is consummated, all costs and expenses incurred in connection with
the Merger and other transactions contemplated hereby shall be paid by the party
incurring such cost or expense, except that the filing fees in connection with
the filings required under the HSR Act and the 1935 Act shall be paid by ▇▇▇▇.
7.11 Brokers or Finders. EUA represents, as to itself and its
affiliates, that no agent, broker, investment banker, financial advisor or other
firm or person is or will be entitled to any broker's, finder's or investment
banker's fee or any other commission or similar fee in connection with the
Merger and other transactions contemplated by this Agreement except ▇▇▇▇▇▇▇
▇▇▇▇▇ Barney Inc., whose fees and expenses will be paid by EUA in accordance
with EUA's agreement with such firm, and EUA shall indemnify and hold ▇▇▇▇
harmless from and against any and all claims, liabilities or obligations with
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respect to any other such fee or commission or expenses related thereto asserted
by any person on the basis of any act or statement alleged to have been made by
EUA or its affiliates.
7.12 Anti-Takeover Statutes. If any "fair price", "moratorium",
"business combination", "control share acquisition" or other form of
anti-takeover statute or regulation shall become applicable to the Merger or
other transactions contemplated hereby, EUA and the members of the Board of
Trustees of EUA shall grant such approvals and take such actions consistent with
their fiduciary duties and in accordance with applicable law as are reasonably
necessary so that the Merger and other transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or regulation
on the Merger and other transactions contemplated hereby.
7.13 Public Announcements. Except as otherwise required by law or the
rules of any applicable securities exchange or national market system or any
other Regulatory Authority, so long as this Agreement is in effect, ▇▇▇▇ and EUA
will not, and will not permit any of their respective Subsidiaries or
Representatives to, issue or cause the publication of any press release or make
any other public announcement with respect to the Merger and other transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld. ▇▇▇▇ and EUA will cooperate with
each other in the development and distribution of all press releases and other
public announcements with respect to the Merger and other transactions
contemplated hereby, and will furnish the other with drafts of any such releases
and announcements as far in advance as practicable.
7.14 Restructuring of the Merger. It may be preferable to effectuate
a business combination between ▇▇▇▇ and EUA by means of an alternative structure
to the Merger. Accordingly, if, prior to satisfaction of the conditions
contained in Article VIII hereto, ▇▇▇▇ proposes the adoption of an alternative
structure that otherwise substantially preserves for ▇▇▇▇ and EUA the economic
benefits of the Merger and will not materially delay the consummation thereof,
then the parties shall use their respective best efforts to effect a business
combination among themselves by means of a mutually agreed upon structure other
than the Merger that so preserves such benefits; provided, however, that prior
to closing any such restructured transaction, all material third party and
Governmental Authority declarations, filings, registrations, notices,
authorizations, consents or approvals necessary for the effectuation of such
alternative business combination shall have been obtained and all other
conditions to the parties' obligations to consummate the Merger and other
transactions contemplated hereby, as applied to such alternative business
combination, shall have been satisfied or waived.
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ARTICLE VIII
CONDITIONS
8.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger and other transactions
contemplated hereby is subject to the satisfaction or waiver, at or prior to the
Closing, of each of the following conditions:
(a) Shareholder Approval. EUA Shareholders' Approval shall have
been obtained.
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under HSR shall have expired or
been terminated.
(c) Injunctions or Restraints. No court of competent
jurisdiction or other competent Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any law or order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
illegal or otherwise restricting, preventing or prohibiting consummation of the
Merger or other transactions contemplated hereby.
(d) Governmental and Regulatory and Other Consents and
Approvals. The ▇▇▇▇ Required Statutory Approvals and EUA Required Statutory
Approvals shall have been obtained prior to the Effective Time, and shall have
become Final Orders (as hereinafter defined). The Final Orders shall not,
individually or in the aggregate, impose terms and conditions that (i) could
reasonably be expected to have an EUA Material Adverse Effect; (ii) could
reasonably be expected to have a ▇▇▇▇ Material Adverse Effect; or (iii)
materially impair the ability of the parties to complete the Merger. The parties
shall have received Final Orders from the Massachusetts Department of
Telecommunications and Energy and the Rhode Island Public Utilities Commission
pertaining to the recovery of costs (including, without limitation, transaction
premium and integration costs) associated with the Merger that are materially
consistent with existing policy and previous orders of such agencies. "Final
Order" for all purposes of this Agreement 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 Merger and other transactions contemplated hereby may be consummated
has expired, and as to which all conditions to be satisfied before the
consummation of such transactions prescribed by law, regulation or order have
been satisfied.
8.02 Conditions to Obligation of ▇▇▇▇ and LLC to Effect the Merger.
The obligation of ▇▇▇▇ and LLC to effect the Merger and other transactions
contemplated hereby is further subject to the satisfaction or waiver at or prior
to the Closing, of each of the following additional conditions (all or any of
which may be waived in whole or in part by ▇▇▇▇ and LLC in the sole discretion):
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(a) Representations and Warranties. The representations and
warranties made by EUA in this Agreement, in each case made as if none of such
representations or warranties contained any qualification or limitation as to
"materiality" or "EUA Material Adverse Effect", shall be true and correct as so
made as of the Closing Date as though so made on and as of the Closing Date,
except to the extent expressly given as of a specified date, except where the
failure of such representations and warranties to be true and correct as so made
does not have and could not reasonably be expected to have, individually or in
the aggregate, an EUA Material Adverse Effect, and EUA shall have delivered to
▇▇▇▇ a certificate, dated the Closing Date and executed in the name and on
behalf of EUA by its Chairman of the Board, President or any Executive or Senior
Vice President, to such effect.
(b) Performance of Obligations. EUA shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by EUA at or
prior to the Closing, and EUA shall have delivered to ▇▇▇▇ a certificate, dated
the Closing Date and executed in the name and on behalf of EUA by its Chairman
of the Board, President or any Executive or Senior Vice President, to such
effect.
(c) Material Adverse Effect. No EUA Material Adverse Effect
shall have occurred and there shall exist no facts or circumstances which in the
aggregate could reasonably be expected to have an EUA Material Adverse Effect.
(d) EUA Required Consents. All EUA Required Consents shall have
been obtained by EUA, except where the failure to receive such EUA Required
Consents could not reasonably be expected to (i) have an EUA Material Adverse
Effect, or (ii) delay or prevent the consummation of the Merger and other
transactions contemplated hereby.
8.03 Conditions to Obligation of EUA to Effect the Merger. The
obligation of EUA to effect the Merger and other transactions contemplated
hereby is further subject to the satisfaction or waiver, at or prior to the
Closing, of each of the following additional conditions (all or any of which may
be waived in whole or in part by EUA in its sole discretion):
(a) Representations and Warranties. The representations and
warranties made by ▇▇▇▇ and LLC in Sections 5.01, 5.02, 5.03, 5.04, 5.05, 5.07,
5.08 and 5.09 of this Agreement, in each case made as if none of such
representations or warranties contained any qualification or limitation as to
"materiality" or "▇▇▇▇ Material Adverse Effect," shall be true and correct as so
made as of the Closing Date, except to the extent expressly given as of a
specified date and except where the failure of such representations and
warranties to be so true and correct as so made does not have and could not
reasonably be expected to have, individually or in the aggregate, a ▇▇▇▇
Material Adverse Effect or a material adverse effect on LLC, and ▇▇▇▇ and LLC
shall each have delivered to EUA a certificate, dated the Closing Date and
executed in the name and on behalf of ▇▇▇▇ by any director of ▇▇▇▇ and in the
name and on behalf of LLC by a member of its management committee its Chairman
of the Board, President or any Executive or Senior Vice President to such
effect.
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(b) ▇▇▇▇ Required Consents. All ▇▇▇▇ Required Consents shall
have been obtained by ▇▇▇▇, except where the failure to receive such ▇▇▇▇
Required Consents could not reasonably be expected to (i) have a ▇▇▇▇ Material
Adverse Effect or (ii) delay or prevent the consummation of the Merger and other
transactions contemplated hereby.
(c) Performance of Obligations. ▇▇▇▇ and LLC shall have
performed and complied with, in all material respects, each agreement, covenant
and obligation required by this Agreement to be so performed or complied with by
▇▇▇▇ or LLC at or prior to the Closing, and ▇▇▇▇ and LLC shall each have
delivered to EUA a certificate, dated the Closing Date and executed in the name
and on behalf of ▇▇▇▇ by its Chairman of the Board, President or any Executive
or Senior Vice President, or on behalf of LLC by a member of its management
committee to such effect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.01 Termination. This Agreement may be terminated, and the Merger
and other transactions contemplated hereby may be abandoned, at any time prior
to the Effective Time, whether prior to or after EUA Shareholders' Approval
(except as otherwise provided in Section 9.01(c) below):
(a) By mutual written agreement of the Board of Directors of
▇▇▇▇ and Board of Trustees of EUA, respectively;
(b) By EUA or ▇▇▇▇, by written notice to the other, if the
Closing Date shall not have occurred on or before December 31, 1999 (the
"Initial Termination Date"); provided, however, that the right to terminate the
Agreement under this Section 9.01(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such date;
and provided, further, that if on the Initial Termination Date the conditions to
the Closing set forth in Section 8.01(d) 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 for four (4)
months beyond the Initial Termination Date (the "Extended Termination Date");
(c) By ▇▇▇▇, by written notice to EUA, if EUA Shareholders'
Approval shall not have been obtained at a duly held meeting of such
Shareholders, including any adjournments thereof;
(d) By EUA or ▇▇▇▇, if any applicable state or federal law or
applicable law of a foreign jurisdiction or any order, rule or regulation is
adopted or issued that has the effect, as supported by the written opinion of
outside counsel for such party, of prohibiting the Merger or other transactions
contemplated hereby, or if any court of competent jurisdiction or any
Governmental Authority shall have issued a nonappealable final order, judgment
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or ruling or taken any other action having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger or other transactions
contemplated hereby (provided that the right to terminate this Agreement under
this Section 9.01(d) shall not be available to any party that has not defended
such lawsuit or other legal proceeding (including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Authority
vacated or reversed)).
(e) By EUA upon ten (10) days' prior notice to ▇▇▇▇ if the Board
of Trustees of EUA determines in good faith, that termination of this Agreement
is necessary for the Board of Trustees of EUA to act in a manner consistent with
its fiduciary duties to Shareholders under applicable law by reason of an
unsolicited Alternative Proposal meeting the requirements of clauses (A) and (B)
of Section 7.08 having been made; provided that
(A) The Board of Trustees of EUA shall determine based
on advice of outside counsel with respect to the Board of
Trustees' fiduciary duties that notwithstanding a binding
commitment to consummate an agreement of the nature of this
Agreement entered into in the proper exercise of its applicable
fiduciary duties, and notwithstanding all concessions which may
be offered by ▇▇▇▇ in negotiation entered into pursuant to clause
(B) below, it is necessary pursuant to such fiduciary duties that
the trustees reconsider such commitment as a result of such
Alternative Proposal, and
(B) prior to any such termination, EUA shall, and
shall cause its respective financial and legal advisors to,
negotiate with ▇▇▇▇ to make such adjustments in the terms and
conditions of this Agreement as would enable EUA to proceed with
the Merger or other transactions contemplated hereby on such
adjusted terms;
and provided further that EUA's ability to terminate this Agreement pursuant to
this Section 9.01(e) is conditioned upon the concurrent payment by EUA to ▇▇▇▇
of any amounts owed by it pursuant to Section 9.03(a);
(f) By EUA, by written notice to ▇▇▇▇, if (i) there shall have
been any material breach of any representation or warranty, or any material
breach of any covenant or agreement, of ▇▇▇▇ hereunder (other than a breach
described in clause (ii)), and such breach shall not have been remedied within
twenty (20) days after receipt by ▇▇▇▇ of notice in writing from EUA, specifying
the nature of such breach and requesting that it be remedied; or (ii) ▇▇▇▇ shall
fail to deliver or cause to be delivered the amount of cash to the Paying Agent
required pursuant to Section 2.02(a) at a time when all conditions to ▇▇▇▇'▇
obligation to close have been satisfied or otherwise waived in writing by ▇▇▇▇.
(g) By ▇▇▇▇, by written notice to EUA, if (i) there shall have
been any material breach of any representation or warranty, or any material
breach of any covenant or agreement, of EUA hereunder, and such breach shall not
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have been remedied within twenty (20) days after receipt by EUA of notice in
writing from ▇▇▇▇, specifying the nature of such breach and requesting that it
be remedied; or (ii) the Board of Trustees of EUA (A) shall withdraw or modify
in any manner adverse to ▇▇▇▇ its approval of the Merger and other transactions
contemplated hereby or its recommendation to its shareholders regarding the
approval of this Agreement, the Merger and other transactions contemplated
hereby, (B) shall approve or recommend or take no position with respect to an
Alternative Proposal or (C) shall resolve to take any of the actions specified
in clause (A) or (B).
9.02 Effect of Termination. If this Agreement is validly terminated
by either EUA or ▇▇▇▇ pursuant to Section 9.01, this Agreement shall forthwith
become null and void and there shall be no liability or obligation on the part
of either EUA or ▇▇▇▇ (or any of their respective Representatives or
affiliates), except that the provisions of this Section 9.02, Sections 7.10,
7.11 and 7.13, Section 9.03 and Sections 10.09 and 10.10 shall continue to apply
following any such termination.
9.03 Termination Fees. (a) In the event that (i) this Agreement is
terminated by EUA pursuant to Section 9.01(e) or (ii) any person or group shall
have made an Alternative Proposal that has not been withdrawn and this Agreement
is terminated by (A) ▇▇▇▇ pursuant to Section 9.01(c) or Section 9.01(g) or (B)
by EUA pursuant to Section 9.01(b) and, in the case of this clause (ii) only, a
definitive agreement with respect to such Alternative Proposal is executed
within two years after such termination, then EUA shall pay to ▇▇▇▇, by wire
transfer of same day funds, either on the date contemplated in Section 9.01(e)
if applicable, or otherwise, within five (5) business days after such
termination, a termination fee of $20 million, plus an amount equal to all
documented out-of-pocket expenses and fees incurred by ▇▇▇▇ arising out of, or
in connection with or related to, the Merger and other transactions contemplated
hereby, not in excess of $5 million in the aggregate.
(b) In the event that this Agreement is terminated by either
▇▇▇▇ or EUA pursuant to Section 9.01(b) and at the time of such termination (i)
the conditions to the Closing set forth in Section 8.01(d) shall not have been
fulfilled, (ii) if the date of termination is any date other than a date which
is on or after the Extended Termination Date, all conditions contained in
Article VIII other than Sections 8.01(d) or 8.03(c) shall have been fulfilled or
are capable of being fulfilled as of such date, and (iii) the merger
contemplated by the National Grid Merger Agreement has not yet been consummated,
then ▇▇▇▇ shall pay to EUA, by wire transfer of same day funds, within five (5)
business days after such termination, a termination fee of $10 million, plus an
amount equal to all documented out-of-pocket expenses and fees incurred by EUA
arising out of, or in connection with or related to, the Merger and other
transactions contemplated hereby, not in excess of $5 million in the aggregate.
(c) Nature of Fees. The parties agree that the agreements
contained in this Section 9.03 are an integral part of the Merger and the other
transactions contemplated hereby and constitute liquidated damages and not a
penalty. The parties further agree that if any party is or becomes obligated to
pay a termination fee pursuant to Sections 9.03(a) or (b), the right to receive
such termination fee shall be the sole remedy of the other party with respect to
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the facts and circumstances giving rise to such payment obligation. If this
Agreement is terminated by a party as a result of a willful breach of a
representation, warranty, covenant or agreement by the other party, including a
termination pursuant to Section 9.01(f)(ii), the non-breaching party may pursue
any remedies available to it at law or in equity and shall be entitled to
recover any additional amounts thereunder. Notwithstanding anything to the
contrary contained in this Section 9.03, if one party fails to promptly pay to
the other any fee or expense due under this Section 9.03, in addition to any
amounts paid or payable pursuant to such Section, 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 Citibank, N.A. from the date such fee was
required to be paid.
9.04 Amendment. This Agreement may be amended, supplemented or
modified by action taken by or on behalf of the Board of Directors of ▇▇▇▇ or
the Board of Trustees of EUA at any time prior to the Effective Time, whether
prior to or after EUA Shareholders' Approval shall have been obtained, but after
such adoption and approval only to the extent permitted by applicable law. No
such amendment, supplement or modification shall be effective unless set forth
in a written instrument duly executed and delivered by or on behalf of each
party hereto.
9.05 Waiver. At any time prior to the Effective Time, ▇▇▇▇ or EUA, by
action taken by or on behalf of its Board of Directors or Board of Trustees,
respectively, may to the extent permitted by applicable law (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties of the
other parties hereto contained herein or in any document delivered pursuant
hereto or (iii) waive compliance with any of the covenants, agreements or
conditions of the other parties hereto contained herein. No such extension or
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party extending the time of performance or waiving any
such inaccuracy or non-compliance. No waiver by any party of any term or
condition of this Agreement, in any one or more instances, shall be deemed to be
or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion.
ARTICLE X
GENERAL PROVISIONS
10.01 Non-Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall not survive the Merger but shall terminate at the Effective Time, except
for the agreements contained in Article I and Article II, in Sections 7.05,
7.06, 7.08, 7.09 and 7.10, this Article X which shall survive the Effective
Time.
10.02 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
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delivered personally or by facsimile transmission or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses or
facsimile numbers:
If to ▇▇▇▇ or LLC, to:
New England Electric System
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to EUA, to:
Eastern Utilities Associates
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be deemed given
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upon delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section, be deemed given when sent, provided that the
facsimile is promptly confirmed by telephone confirmation thereof, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given one business day after delivery (in each case
regardless of whether such notice, request or other communication is received by
any other person to whom a copy of such notice, request or other communication
is to be delivered pursuant to this Section). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other
parties hereto.
10.03 Entire Agreement; Incorporation of Exhibits. (a) This Agreement
supersedes all prior discussions and agreements, both written and oral, among
the parties hereto with respect to the subject matter hereof, other than the
Confidentiality Agreement, which shall survive the execution and delivery of
this Agreement in accordance with its terms, and contains, together with the
Confidentiality Agreement, the sole and entire agreement among the parties
hereto with respect to the subject matter hereof.
(b) The EUA Disclosure Letter, the ▇▇▇▇ Disclosure Letter and
any Exhibit attached to this Agreement and referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
10.04 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and except as provided in Article II
and Sections 7.04, 7.05(d)(ii) and 7.09 (which is intended to be for the benefit
of the persons entitled to therein, and may be enforced by any of such persons),
it is not the intention of the parties to confer third-party beneficiary rights
upon any other person.
10.05 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned, in whole or in part, by
operation of law or otherwise, by any party hereto without the prior written
consent of the other parties hereto and any attempt to do so will be void,
except that LLC may assign any or all of its rights, interests and obligations
hereunder to another direct or indirect wholly owned Subsidiary of ▇▇▇▇,
provided that any such Subsidiary agrees in writing to be bound by all of the
terms, conditions and provisions contained herein and provided further that such
assignment (i) does not require a greater vote for EUA's Shareholder Approval,
(ii) does not require a subsequent vote following EUA's Shareholders Meeting, or
(iii) is not reasonably likely to materially delay or prevent EUA, LLC and ▇▇▇▇,
as appropriate, from obtaining EUA Required Statutory Approvals, EUA Required
Consents, EUA Shareholders' Approval, the ▇▇▇▇ Required Shareholders' Approvals,
or the ▇▇▇▇ Required Consents. Subject to the preceding sentence, this Agreement
is binding upon, inures to the benefit of and is enforceable by the parties
hereto and their respective successors and assigns.
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10.06 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define, modify or limit
the provisions hereof.
10.07 Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law or
order, and if the rights or obligations of any party hereto under this Agreement
will not be materially and adversely affected thereby, (i) such provision will
be fully severable, (ii) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, and (iii) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.
10.08 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
10.09 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specified terms or was
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 hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
10.10 Certain Definitions. As used in this Agreement:
(a) except as provided in Section 4.14, the term "affiliate," as
applied to any person, shall mean any other person directly or indirectly
controlling, controlled by, or under common control with, that person; for
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common control with"), as
applied to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
person, whether through the ownership of voting securities, by contract or
otherwise;
(b) a person will be deemed to "beneficially" own securities if
such person would be the beneficial owner of such securities under Rule 13d-3
under the Exchange Act, including securities which such person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time);
(c) the term "business day" means a day other than Saturday,
Sunday or any day on which banks located in the Massachusetts are authorized or
obligated to close;
(d) the term "knowledge" or any similar formulation of
"knowledge" shall mean, with respect to any party hereto, the actual knowledge
after due inquiry of the executive officers of ▇▇▇▇ and its Subsidiaries or EUA
and its Subsidiaries, respectively, set forth in Section 10.11(d) of the ▇▇▇▇
Disclosure Letter or Section 10.11(d) of the EUA Disclosure Letter; provided
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that as used in Section 4.13 the term "knowledge" shall also include the
knowledge of the environmental, health and safety personnel of EUA;
(e) the term "person" shall include individuals, corporations,
partnerships, trusts, limited liability companies, other entities and groups
(which term shall include a "group" as such term is defined in Section 13(d)(3)
of the Exchange Act);
(f) the "Representatives" of any entity shall have the same
meaning as set forth in the Confidentiality Agreement;
(g) the term "Subsidiary" means any corporation or other entity,
whether incorporated or unincorporated, in which such party directly or
indirectly owns at least a majority of the voting power represented by the
outstanding capital stock or other voting securities or interests having voting
power under ordinary circumstances to elect a majority of the directors or
similar members of the governing body, or otherwise to direct the management and
policies, or such corporation or entity.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument and will become effective
when one or more counterparts have been signed by each party and delivered to
the other parties.
10.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its officer thereunto duly authorized as of the date first above
written.
NEW ENGLAND ELECTRIC SYSTEM
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
The name "New England Electric System" means the trustee or trustees for the
time being (as trustee or trustees but not personally) under an Agreement and
Declaration of Trust dated January 2, 1926, as amended, which is hereby referred
to, and a copy of which, as amended, has been filed with the Secretary of the
Commonwealth of Massachusetts. Any agreement, obligation, or liability made,
entered into, or incurred by or on behalf of New England Electric System binds
only its trust estate, and no shareholder, director, trustee, officer, or agent
thereof assumes or shall be held to any liability therefor.
EASTERN UTILITIES ASSOCIATES
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
The name "Eastern Utilities Associates" is the designation of the Trustees of
EUA for the time being in their collective capacity but not personally, under a
Declaration of Trust dated April 2, 1928, as amended, a copy of which amended
Declaration of Trust has been filed in the office of the Secretary of The
Commonwealth of Massachusetts and elsewhere as required by law; and all persons
dealing with EUA must look solely to the trust property for the enforcement of
any claim against EUA, as neither the Trustees nor the officers or shareholders
of EUA assume any personal liability for obligations entered into on behalf of
EUA.
RESEARCH DRIVE LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Manager
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