UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: November 10, 1999
------------
(Date of earliest event reported)
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Exact Name of IRS
Commission Registrant as Employer Registrants'
File Specified in its State of Identification Telephone
Number Charter Incorporation Number Number
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0-29812 Berkshire Energy Massachusetts 04-3408946 413-442-1511
Resources
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115 Cheshire Road, Pittsfield, MA 01201
(Address of principal executive offices)
ITEM 5. OTHER EVENTS
On November 9, 1999, Berkshire Energy Resources ("BER") signed a
definitive merger agreement with Energy East Corporation ("Energy East")
under which BER will become a wholly-owned subsidiary of Energy East Energy
East will acquire all of the common shares of BER for $38.00 per share in
cash The transaction has an equity market value of approximately $96
million, based on approximately 2,513,905 million BER common shares
outstanding Energy East will also assume approximately $40,000,000 of
preferred stock and long-term debt.
The merger is subject to, among other things, the approvals of BER's
shareholders and the Securities and Exchange Commission. BER expects
the transaction to close by the end of the second quarter of 2000 A copy of
the merger agreement has been filed herewith as Exhibit 2.1 and is
incorporated herein by reference.
On November 10, 1999, BER and Energy East issued a press release
relating to the merger agreement and the related transactions The press
release has been filed herewith as Exhibit 99.1 and is incorporated herein
by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(c) Exhibits - See Index to Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
BERKSHIRE ENERGY RESOURCES
By: /s/ Michael J. Marrone
----------------------------------
Michael J. Marrone
Vice President, Treasurer and
Chief Financial Officer
Date: November 10, 1999
INDEX TO EXHIBITS
Sequential
Exhibits* Description of Exhibit Page Number
- ---------- ---------------------- -----------
2.1 Agreement and Plan of Merger, dated as of
November 9, 1999, by and among Berkshire
Energy Resources, Energy East Corporation
and Mountain Merger LLC
99.1 Press Release
* Exhibit numbers designated in Regulation S-K
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and among
BERKSHIRE ENERGY RESOURCES,
ENERGY EAST CORPORATION
AND
MOUNTAIN MERGER LLC
November 9, 1999
Table of Contents
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Page
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ARTICLE I-THE MERGER
Section 1.1 The Merger 1
Section 1.2 Effects of the Merger 1
Section 1.3 Effective Time of the Merger 1
Section 1.4 Trustees 2
Section 1.5 Officers 2
ARTICLE II-TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Shares and Membership Interests 2
Section 2.2 Exchange of Certificates 3
ARTICLE III-THE CLOSING
Section 3.1 Closing 4
ARTICLE IV-REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization and Qualification 4
Section 4.2 Subsidiaries 5
Section 4.3 Capitalization 5
Section 4.4 Authority; Non-contravention; Statutory Approvals; Compliance 6
Section 4.5 Reports and Financial Statements 8
Section 4.6 Absence of Certain Changes or Events 8
Section 4.7 Litigation 8
Section 4.8 Proxy Statement 9
Section 4.9 Tax Matters 9
Section 4.10 Employee Matters; ERISA 11
Section 4.11 Environmental Protection 14
Section 4.12 Regulation as a Utility 16
Section 4.13 Vote Required 17
Section 4.14 Opinion of Financial Advisor 17
Section 4.15 Ownership of Parent Common Stock 17
Section 4.16 Takeover Laws 17
ARTICLE V-REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.1 Organization and Qualification 17
Section 5.2 Subsidiaries 18
Section 5.3 Capitalization 18
Section 5.4 Authority; Non-contravention; Statutory Approvals 18
Section 5.5 Proxy Statement 19
Section 5.6 Availability of Funds 19
ARTICLE VI-CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of the Parties 19
Section 6.2 Covenant of the Company; Alternative Proposals 23
Section 6.3 Employment Agreements 24
Section 6.4 Additional Statutory Approvals 24
ARTICLE VII-ADDITIONAL AGREEMENTS
Section 7.1 Access to Information 25
Section 7.2 Proxy Statement 25
Section 7.3 Regulatory Matters 25
Section 7.4 Company Shareholders' Approval 26
Section 7.5 Indemnification 26
Section 7.6 Disclosure Schedules 27
Section 7.7 Public Announcements 28
Section 7.8 Certain Employee Agreements 28
Section 7.9 Employee Benefit Plans 28
Section 7.10 Expenses 30
Section 7.11 Further Assurances 30
Section 7.12 Corporate Offices 30
Section 7.13 Community Involvement 30
Section 7.14 Advisory Board 30
ARTICLE VIII-CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger 30
Section 8.2 Conditions to Obligation of Parent to Effect the Merger 31
Section 8.3 Conditions to Obligation of the Company to Effect the Merger 32
ARTICLE IX-TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination 33
Section 9.2 Effect of Termination 34
Section 9.3 Termination Fee; Expenses 35
Section 9.4 Amendment 36
Section 9.5 Waiver 36
ARTICLE X-GENERAL PROVISIONS
Section 10.1 Non-survival; Effect of Representations and Warranties 36
Section 10.2 Brokers 36
Section 10.3 Notices 36
Section 10.4 Miscellaneous 37
Section 10.5 Interpretation 38
Section 10.6 Counterparts; Effect 38
Section 10.7 Parties in Interest 38
Section 10.8 Waiver of Jury Trial and Certain Damages 38
Section 10.9 Enforcement 38
Section 10.10 Disclaimer of Liability 39
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List of Defined Terms
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Term Page
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1935 Act 5
Advisory Board 30
Agreement 1
Alternative Proposal 24
Certificate 2
Certificate of Merger 1
Closing 4
Closing Agreement 10
Closing Date 4
Code 4
Company 1
Company Common Shares 2
Company Disclosure Schedule 27
Company Financial Statements 8
Company Material Adverse Effect 5
Company Preferred Shares 6
Company Required Consents 6
Company Required Statutory Approvals 7
Company SEC Reports 8
Company Shareholders' Approval 17
Company Special Meeting 26
Confidentiality Agreement 25
Controlled Group Liability 11
Covered Company Employee 29
Disclosure Schedules 27
Effective Time 2
Employee Benefit Plan 11
Employment Agreements 24
Environmental Permits 15
Environmental Claim 15
ERISA 11
ERISA Affiliate 11
Exchange Act 8
Exchange Fund 3
Expenses 35
FERC 8
Final Order 31
GAAP 8
Indemnified Liabilities 26
Indemnified Parties 26
Indemnified Party 26
Initial Termination Date 33
IRS 12
joint venture 5
Liens 6
Merger 1
Merger Consideration 2
Merger Sub 1
Merger Sub Membership Interests 2
MGL 1
MLLCA 1
Multiemployer Plan 11
Multiple Employer Plan 13
Parent 1
Parent Disclosure Schedule 27
Parent Material Adverse Effect 17
Parent Preferred Stock 18
Parent Required Consents 18
Parent Required Statutory Approvals 18
Paying Agent 3
PBGC 13
Plan 11
Proxy Statement 9
Qualified Plans 12
Release 16
Representatives 25
Retiree Plan 29
Robinson Employment Agreement 24
SEC 8
Securities Act 8
SERP 29
subsidiary 5
Surviving Company 1
Takeover Laws 17
Tax Return 9
Tax Ruling 10
Taxes 9
Termination Fee 35
VEBA 12
Violation 6
Withdrawal Liability 12
</TABLE>
AGREEMENT AND PLAN OF MERGER, dated as of November 9, 1999 (this
"Agreement"), by and among Berkshire Energy Resources, a Massachusetts
business trust (the "Company"), Energy East Corporation, a New York
corporation ("Parent"), and Mountain Merger LLC, a Massachusetts limited
liability company and a subsidiary of Parent ("Merger Sub").
WHEREAS, the Company and Parent have determined to engage in a
business combination transaction on the terms stated herein;
WHEREAS, the Board of Directors of Parent, the Board of Trustees of
the Company and the Managers of Merger Sub have each approved and deemed
it advisable and in the best interests of their respective shareholders and
members to consummate the transactions contemplated herein under which the
businesses of the Company and Parent would be combined by means of the
merger of Merger Sub with and into the Company; and
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions of this Agreement:
At the Effective Time (as defined in Section 1.3), Merger Sub shall
be merged with and into the Company (the "Merger") in accordance with the
declaration of trust of the Company and the laws of the Commonwealth of
Massachusetts. The Company shall be the surviving entity in the Merger and
shall continue its existence under the laws of the Commonwealth of
Massachusetts. The effects and the consequences of the Merger shall be as
set forth in Section 1.2. Throughout this Agreement, the term "the Company"
shall refer to the Company prior to the Merger and the term "Surviving
Company" shall refer to the Company in its capacity as the surviving entity
in the Merger.
Section 1.2 Effects of the Merger. At the Effective Time, (i) the
declaration of trust of the Company, as in effect immediately prior to the
Effective Time, shall be the declaration of trust of the Surviving Company
until thereafter amended as provided by law and such declaration of trust
and (ii) the by-laws of the Company, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Company until
thereafter amended as provided by law, the declaration of trust of the
Surviving Company and such by-laws. Subject to the foregoing, the
additional effects of the Merger shall be as provided in Section 2 of
Chapter 182 of the Massachusetts General Laws ("MGL") and Section 62 of the
Massachusetts Limited Liability Company Act (the "MLLCA").
Section 1.3 Effective Time of the Merger. On the Closing Date (as
defined in Section 3.1), with respect to the Merger, a certificate of
merger complying with Article 56 of the Company's declaration of trust and
Section 61 of the MLLCA (the "Certificate of Merger") shall be delivered to
the Secretary of the Commonwealth of Massachusetts, and to such other
offices as may be required by law, for filing. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary
of the Commonwealth of Massachusetts, or at such later date and time as may
be set forth in the Certificate of Merger (the "Effective Time").
Section 1.4 Trustees. The Managers of Merger Sub immediately
prior to the Effective Time shall be the trustees of the Surviving Company
and shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualified in the manner
provided in the declaration of trust and by-laws of the Surviving Company.
Section 1.5 Officers. Except for the Vice President of the
Company, who shall become the President and Chief Executive Officer of the
Surviving Company, the officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Company and
shall hold office from the Effective Time until their respective successors
are duly elected or appointed and qualified in the manner provided in the
declaration of trust and by-laws of the Surviving Company.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Shares and Membership
Interests. At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any share of the Company or membership
interest of Merger Sub:
(a) Membership Interests of Merger Sub. All of the membership
interests of Merger Sub (the "Merger Sub Membership Interests") that are
issued and outstanding immediately prior to the Effective Time shall be
converted into an aggregate of one thousand (1,000) fully paid and
nonassessable common shares, without par value, of the Surviving Company.
(b) Cancellation of Certain Company Common Shares. Each
common share, without par value, of the Company (the "Company Common
Shares"), that is owned by the Company as treasury shares and all Company
Common Shares that are owned by Parent shall be canceled and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Shares. Subject to the
provisions of this Section 2.1, each Company Common Share, other than
shares canceled pursuant to Section 2.1(b), issued and outstanding
immediately prior to the Effective Time shall by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive $38.00 in cash (the "Merger Consideration"). At the
Effective Time, all such Company Common Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate ("Certificate") representing any
such Company Common Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration.
Section 2.2 Exchange of Certificates.
(a) Deposit With Paying Agent. As soon as practicable after
the Effective Time, Parent shall deposit or cause to be deposited with a
bank or trust company mutually agreeable to Parent and the Company (the
"Paying Agent"), pursuant to an agreement in form and substance reasonably
acceptable to Parent and the Company, cash representing the aggregate
Merger Consideration to which Company shareholders who have properly
completed, signed and submitted letters of transmittal shall be entitled
pursuant to Section 2.1(c); and from time to time cash representing the
aggregate Merger Consideration to which Company shareholders who later
submit letters of transmittal shall be entitled pursuant to Section 2.1(c)
(such amounts being hereinafter referred to as the "Exchange Fund"). The
Paying Agent shall invest the Exchange Fund as Parent directs. Any net
profit resulting from, or interest or income produced by, such investments
shall be payable to Parent. The Exchange Fund shall not be used for any
other purpose except as provided in this Agreement.
(b) Exchange And Payment Procedures. As soon as practicable
after the Effective Time, Parent shall cause the Paying Agent to mail to
each holder of record as of the Effective Time of a Certificate or
Certificates that have been converted pursuant to Section 2.1: (i) a letter
of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon actual
delivery of the Certificates to the Paying Agent) and (ii) instructions for
effecting the surrender of the Certificates and receiving the Merger
Consideration to which such holder shall be entitled therefor pursuant to
Section 2.1. Upon surrender of a Certificate to the Paying Agent for
cancellation, together with a duly executed letter of transmittal and such
other documents as the Paying Agent may require, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration. In the event the Merger Consideration is to be delivered to
any person who is not the person in whose name the Certificate surrendered
in exchange therefor is registered in the transfer records of the Company,
the Merger Consideration may be delivered to a transferee if the
Certificate is presented to the Paying Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence satisfactory
to the Paying Agent that any applicable transfer taxes have been paid.
Until surrendered as contemplated by this Section 2.2, each Certificate
(other than a certificate representing Company Common Shares to be canceled
in accordance with Section 2.1(b)) shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
the Merger Consideration contemplated by this Section 2.2. No interest will
be paid or will accrue on any cash payable to holders of Certificates
pursuant to the provisions of this Article II.
(c) Closing of Transfer Books. From and after the Effective
Time, the share transfer books of the Company shall be closed and no
registration of any transfer of any shares of the Company shall thereafter
be made in the records of the Company. If, after the Effective Time,
Certificates are presented to the Surviving Company, they shall be canceled
and exchanged for the Merger Consideration.
(d) Termination of Exchange Fund. All funds held by the
Paying Agent for payment to the holders of unsurrendered Certificates and
unclaimed at the end of one year from the Effective Time shall be returned
to Parent, after which time any holder of unsurrendered Certificates shall
look as a general creditor only to the Surviving Company for payment of
such funds to which such holder may be due, subject to applicable law.
(e) Escheat. The Company shall not be liable to any person
for such funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) Withholding Rights. Each of the Surviving Company, the
Company and Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Shares such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code
of 1986 as amended (the "Code") and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign Tax law. To the
extent that amounts are so withheld by the Surviving Company, the Company
or Parent, as the case may be, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of Company
Common Shares in respect of which such deduction and withholding was made
by the Surviving Company, the Company or Parent, as the case may be.
Without limitation of the foregoing, unless an exemption applies, the
Paying Agent will be required to withhold and remit to the IRS 31% of any
cash payments to which a holder of Company Common Shares or other payee is
entitled pursuant to the Merger, unless (i) the shareholder or other payee
provides his or her U.S. Federal taxpayer identification number (social
security number or employer identification number) and certifies that such
number is correct by completing and signing the IRS Form W-9 that will be
included as part of the transmittal letter sent to shareholders by the
Paying Agent or (ii) another applicable exemption exists and is proved in a
manner satisfactory to the Paying Agent.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing")
shall take place at the offices of Huber Lawrence & Abell, at 10:00 a.m.,
Eastern time, on the second business day immediately following the date on
which the last of the conditions set forth in Article VIII hereof is
fulfilled or waived (other than conditions that by their nature are
required to be performed on the Closing Date, but subject to satisfaction
of such conditions), or at such other time and date and place as the
Company and Parent shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
Section 4.1 Organization and Qualification. Except as set forth
in Section 4.1 of the Company Disclosure Schedule (as defined in Section
7.6), the Company and each of its subsidiaries (as defined below) is a
business trust or corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization, has all requisite trust or corporate power and authority, and
has been duly authorized by all necessary approvals and orders, to own,
lease and operate its assets and properties to the extent owned, leased and
operated and to carry on its business as it is now being conducted and is
duly qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its assets
and properties makes such qualification necessary, other than in such
jurisdictions where the failure to be so qualified and in good standing
will not, when taken together with all other such failures, have a material
adverse effect on the business, properties, financial condition or results
of operations of the Company and its subsidiaries taken as a whole or on
the consummation of this Agreement (any such material adverse effect being
hereafter referred to as a "Company Material Adverse Effect"). As used in
this Agreement, the term "subsidiary" of a person shall mean any
corporation or other entity (including business trusts, partnerships and
other business associations) of which a majority of the outstanding capital
stock or other voting securities having voting power under ordinary
circumstances to elect directors or similar members of the governing body
of such corporation or entity shall at the time be held, directly or
indirectly, by such person.
Section 4.2 Subsidiaries. Section 4.2 of the Company Disclosure
Schedule sets forth a description as of the date hereof, of all material
and certain other subsidiaries and joint ventures of the Company, including
the name of each such entity, the state or jurisdiction of its
incorporation or organization, the Company's interest therein and a brief
description of the principal line or lines of business conducted by each
such entity. Except as set forth in Section 4.2 of the Company Disclosure
Schedule, none of the Company's subsidiaries is a "public utility company,"
a "holding company," a "subsidiary company" or an "affiliate" of any public
utility company within the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8) or
2(a)(11) of the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"). Except as set forth in Section 4.2 of the Company Disclosure
Schedule, all of the issued and outstanding shares of capital stock owned
by the Company of each Company subsidiary are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned, directly or
indirectly, by the Company free and clear of any liens, claims,
encumbrances, security interests, equities, charges and options of any
nature whatsoever, and there are no outstanding subscriptions, options,
calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating it to grant, extend or enter into
any such agreement or commitment, except for any of the foregoing that
could not reasonably be expected to have a Company Material Adverse Effect.
As used in this Agreement, the term "joint venture" of a person shall mean
any corporation or other entity (including business trusts, partnerships
and other business associations) that is not a subsidiary of such person,
in which such person or one or more of its subsidiaries owns an equity
interest, other than equity interests held for passive investment purposes
which are less than 10% of any class of the outstanding voting securities
or equity of any such entity.
Section 4.3 Capitalization. The authorized capital of the Company
consists of 10,000,000 Company Common Shares and 1,000,000 preferred
shares, par value $100.00, of the Company ("Company Preferred Shares"). As
of the close of business on November 8, 1999, there were issued and
outstanding 2,523,479 Company Common Shares and no Company Preferred
Shares. All of the issued and outstanding shares of the Company are validly
issued, fully paid, nonassessable and free of preemptive rights. Except as
set forth in Section 4.3 of the Company Disclosure Schedule, as of the date
hereof, there are no outstanding subscriptions, options, stock appreciation
rights, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating the Company or any of the
subsidiaries of the Company to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of the Company, or obligating
the Company to grant, extend or enter into any such agreement or
commitment.
Section 4.4 Authority; Non-contravention; Statutory Approvals;
Compliance.
(a) Authority. The Company has all requisite trust power and
authority to enter into this Agreement and, subject to obtaining the
Company Shareholders' Approval (as defined in Section 4.13) and the Company
Required Statutory Approvals (as defined in Section 4.4(c)), to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary trust action
on the part of the Company subject to obtaining the applicable Company
Shareholders' Approval. This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution
and delivery by the other signatories hereto, constitutes the valid and
binding obligation of the Company enforceable against it in accordance with
its terms.
(b) Non-contravention. Except as set forth in Section 4.4(b)
of the Company Disclosure Schedule, the execution and delivery of this
Agreement by the Company do not, and the consummation of the transactions
contemplated hereby will not, violate, conflict with, or result in a breach
of any provision of, or constitute a default (with or without notice or
lapse of time or both) under, or result in the termination or modification
of, or accelerate the performance required by, or result in a right of
termination, cancellation, or acceleration of any obligation or the loss of
a benefit under, or result in the creation of any lien, security interest,
charge or encumbrance ("Liens") upon any of the properties or assets of the
Company or any of its subsidiaries or any of its joint ventures (any such
violation, conflict, breach, default, right of termination, modification,
cancellation or acceleration, loss or creation, a "Violation" with respect
to the Company (such term when used in Article V having a correlative
meaning with respect to Parent)) pursuant to any provisions of (i) the
articles of organization, by-laws or similar governing documents of the
Company, any of its subsidiaries or any of its joint ventures, (ii) subject
to obtaining the Company Required Statutory Approvals and the receipt of
the Company Shareholders' Approval, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of
any Governmental Authority (as defined in Section 4.4(c)) applicable to the
Company, any of its subsidiaries or any of its joint ventures, or any of
their respective properties or assets or (iii) subject to obtaining the
third-party consents or other approvals set forth in Section 4.4(b) of the
Company Disclosure Schedule (the "Company Required Consents") any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of
any kind to which the Company, any of its subsidiaries or any of its joint
ventures is a party or by which it or any of its properties or assets may
be bound or affected, excluding from the foregoing clauses (i), (ii) and
(iii) such Violations as would not have, in the aggregate, a Company
Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section
4.4(c) of the Company Disclosure Schedule, no declaration, filing or
registration with, or notice to or authorization, consent or approval of,
any court, federal, state, local or foreign governmental or regulatory body
(including a stock exchange or other self-regulatory body) or authority
(each, a "Governmental Authority") is necessary for the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, the failure to obtain,
make or give which would have, in the aggregate, a Company Material Adverse
Effect (the "Company Required Statutory Approvals"), it being understood
that references in this Agreement to "obtaining" such Company Required
Statutory Approvals shall mean making such declarations, filings or
registrations, giving such notices, obtaining such authorizations, consents
or approvals and having such waiting periods expire as are necessary to
avoid a violation of law.
(d) Compliance. Except as set forth in Section 4.4(d) or
Section 4.11 of the Company Disclosure Schedule, or as disclosed in the
Company SEC Reports (as defined in Section 4.5) filed prior to the date
hereof, neither the Company, nor any of its subsidiaries nor any of its
joint ventures is in violation of, is under investigation with respect to
any violation of, or has been given notice or been charged with any
violation of, any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any applicable Environmental Law,
as defined in Section 4.11(f)(ii)) of any Governmental Authority except for
violations that, in the aggregate, do not have and are not reasonably
likely to have a Company Material Adverse Effect. Except as set forth in
Section 4.4(d) of the Company Disclosure Schedule or in Section 4.11 of the
Company Disclosure Schedule, the Company and its subsidiaries and joint
ventures have all permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct their
respective businesses as currently conducted in all respects, except those
which the failure to obtain would, in the aggregate, not have a Company
Material Adverse Effect. Except as set forth in Section 4.4(d) of the
Company Disclosure Schedule, the Company and each of its subsidiaries are
not in breach or violation of or in default in the performance or
observance of any term or provision of, and no event has occurred which,
with lapse of time or action by a third party, could result in a default
under, (i) its declaration of trust, articles of organization or by-laws or
(ii) any material contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which it is a party or by which it is bound or to which any of its property
is subject, except for breaches, violations or defaults that, in the
aggregate, do not have and are not reasonably likely to have, a Company
Material Adverse Effect.
(e) Except as set forth in Section 4.4(e) of the Company
Disclosure Schedule, there is no "non-competition" or other similar
contract, commitment, agreement or understanding that restricts the ability
of the Company or any of its affiliates to conduct business in any
geographic area or that would reasonably be likely to restrict the
Surviving Company or any of its affiliates to conduct business in any
geographic area.
Section 4.5 Reports and Financial Statements. The filings
required to be made by the Company and its subsidiaries since January 1,
1996 under the Securities Act of 1933, as amended (the "Securities Act"),
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
1935 Act and applicable state public utility laws and regulations have been
filed with the Securities and Exchange Commission (the "SEC"), the Federal
Energy Regulatory Commission (the "FERC") or the appropriate state public
utilities commission, as the case may be, including all forms, statements,
reports, agreements (oral or written) and all documents, exhibits,
amendments and supplements appertaining thereto, and complied, as of their
respective dates, in all material respects with all applicable requirements
of the appropriate statute and the rules and regulations thereunder. The
Company has made available to Parent a true and complete copy of each
report, schedule, registration statement and definitive proxy statement
filed by the Company or its predecessor with the SEC since January 1, 1996
(as such documents have since the time of their filing been amended, the
"Company SEC Reports"). As of their respective dates, the Company SEC
Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of the Company included in the
Company SEC Reports (collectively, the "Company Financial Statements") have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis ("GAAP") (except as may be indicated therein
or in the notes thereto and except with respect to unaudited statements as
permitted by Form 10-Q of the SEC) and fairly present the consolidated
financial position of the Company as of the dates thereof and the
consolidated results of operations and cash flows for the periods then
ended. True, accurate and complete copies of the declaration of trust and
by-laws of the Company, as in effect on the date hereof, have been made
available to Parent.
Section 4.6 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports filed prior to the date hereof or as
set forth in Section 4.6 of the Company Disclosure Schedule, from December
31, 1998 the Company and each of its subsidiaries have conducted their
business only in the ordinary course of business consistent with past
practice, and there has not been, and no fact or condition exists which
would have or, insofar as reasonably can be foreseen, could have, a Company
Material Adverse Effect.
Section 4.7 Litigation. Except as disclosed in the Company SEC
Reports filed prior to the date hereof or as set forth in Section 4.7,
Section 4.9 or Section 4.11 of the Company Disclosure Schedule, (a) there
are no claims, suits, actions or proceedings, pending or threatened, nor
are there any investigations or reviews pending or threatened against,
relating to or affecting the Company or any of its subsidiaries, and (b)
there are no judgments, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or authority
or any arbitrator applicable to the Company or any of its subsidiaries,
except for any of the foregoing under clauses (a) and (b) that individually
or in the aggregate would not reasonably be expected to have a Company
Material Adverse Effect.
Section 4.8 Proxy Statement. The proxy statement, in definitive
form (the "Proxy Statement"), relating to the Company Special Meeting (as
defined below) shall not, at the date mailed to shareholders and at the
time of the Company Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy
Statement, insofar as it relates to the Company or any of its subsidiaries,
shall comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act and the rules and
regulations thereunder.
Section 4.9 Tax Matters. "Taxes," as used in this Agreement,
means any federal, state, county, local or foreign taxes, charges, fees,
levies or other assessments, including, without limitation, all net income,
gross income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipts, capital stock,
production, business and occupation, disability, employment, payroll,
license, estimated, stamp, custom duties, severance or withholding taxes or
charges imposed by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any such taxes. "Tax
Return," as used in this Agreement, means a report, return or other written
information required to be supplied to a governmental entity with respect
to Taxes.
Except as disclosed in Section 4.9 of the Company Disclosure
Schedule:
(a) Filing of Timely Tax Returns. The Company and each of
its subsidiaries have duly filed (or there has been filed on its behalf)
within the time prescribed by law all material Tax Returns (including
withholding Tax Returns) required to be filed by each of them under
applicable law. All such Tax Returns were and are in all material respects
true, complete and correct.
(b) Payment of Taxes. The Company and each of its
subsidiaries have, within the time and in the manner prescribed by law,
paid all material Taxes (including withholding Taxes) that are currently
due and payable except for those contested in good faith and for which
adequate reserves have been taken.
(c) Tax Reserves. All material Taxes payable by the Company
and its subsidiaries for all taxable periods and portions thereof through
the date of the most recent financial statements contained in the Company
Financial Statements filed prior to the date of this Agreement are properly
reflected in such financial statements in accordance with GAAP, and the
unpaid Taxes of the Company and its subsidiaries do not exceed the amount
shown therefor on such financial statements adjusted for the passage of
time through the Effective Time in accordance with past custom and practice
of the Company and its subsidiaries in filing their Tax Returns.
(d) Extensions of Time for Filing Tax Returns. Neither the
Company nor any of its subsidiaries have requested any extension of time
within which to file any material Tax Return, which Tax Return has not
since been filed.
(e) Waivers of Statute of Limitations. Neither the Company
nor any of its subsidiaries has executed any outstanding waivers or
comparable consents regarding the application of the statute of limitations
with respect to any material Taxes or material Tax Returns.
(f) Expiration of Statute of Limitations. The statute of
limitations for the assessment of all material Taxes has expired for all
applicable material Tax Returns of the Company and each of its
subsidiaries, or those material Tax Returns have been examined by the
appropriate taxing authorities for all periods through the date hereof, and
no deficiency for any material Taxes has been proposed, asserted or
assessed against the Company or any of its subsidiaries that has not been
resolved and paid in full.
(g) Audit, Administrative and Court Proceedings. No material
claims, audits, disputes, controversies, examinations, investigations or
other proceedings are presently pending with regard to any Taxes or Tax
Returns of the Company or any of its subsidiaries.
(h) Tax Rulings. Neither the Company nor any of its
subsidiaries has received a Tax Ruling (as defined below) or entered into a
Closing Agreement (as defined below) with any taxing authority that would
have a continuing adverse effect after the Closing Date. "Tax Ruling," as
used in this Agreement, shall mean a written ruling of a taxing authority
relating to Taxes. "Closing Agreement," as used in this Agreement, shall
mean a written and legally binding agreement with a taxing authority
relating to Taxes.
(i) Availability of Tax Returns. The Company has provided or
made available to Parent complete and accurate copies of (i) all Tax
Returns, and any amendments thereto, filed by the Company or any of its
subsidiaries since 1994, (ii) all audit reports received from any taxing
authority relating to any Tax Return filed by the Company or any of its
subsidiaries and (iii) any Closing Agreements entered into by the Company
or any of its subsidiaries with any taxing authority.
(j) Tax Sharing Agreements. Neither the Company nor any of
its subsidiaries is a party to any agreement, understanding or arrangement
relating to allocating or sharing of Taxes.
(k) Liability for Others. Neither the Company nor any of its
subsidiaries has any liability for any material Taxes of any person other
than the Company and its subsidiaries (i) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), (ii) as
a transferee or successor, (iii) by contract or (iv) otherwise.
(l) Code Section 897. To the best knowledge of the Company
after due inquiry, no foreign person owns or has owned beneficially more
than five percent of the total fair market value of the Company Common
Shares during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
(m) Code Section 355(e). Neither the Company nor any of its
subsidiaries has constituted a "distributing corporation" or a "controlled
corporation" in a distribution of shares qualifying for tax-free treatment
under Section 355 of the Code (i) in the past 24 month period or (ii) in a
distribution which could otherwise constitute part of a "plan" or "series
of related transactions" (within the meaning of Section 355(e) of the Code)
in conjunction with the Merger.
Section 4.10 Employee Matters; ERISA. Except as set forth in the
appropriate subsection of Section 4.10 of the Company Disclosure Schedule:
(a) For purposes of this Section 4.10, the following terms
have the definitions set forth below:
(i) "Controlled Group Liability" means any and all
liabilities (a) under Title IV of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), (b) as a result of a
failure to comply with the minimum funding requirements of Section
302 of ERISA or Section 412 of the Code, (c) under Section 4971 of
the Code, and (d) as a result of a failure to comply with the
continuation coverage requirements of Section 601 et seq. of ERISA
and Section 4980B of the Code, other than such liabilities that arise
solely out of, or relate solely to, the Employee Benefit Plans.
(ii) "ERISA Affiliate" means, with respect to any
entity, trade or business, any other entity, trade or business that
is a member of a group described in Section 414(b), (c), (m) or (o)
of the Code or Section 4001(b)(1) of ERISA that includes the first
entity, trade or business, or that is a member of the same
"controlled group" as the first entity, trade or business pursuant to
Section 4001(a)(14) of ERISA.
(iii) An "Employee Benefit Plan" means any material
employee benefit plan, program, policy, practice, or other
arrangement providing benefits to any current or former employee,
officer, trustee or director of the Company or any of its
subsidiaries or any beneficiary or dependent thereof that is
sponsored or maintained by the Company or any of its subsidiaries or
to which the Company or any of its subsidiaries contributes or is
obligated to contribute, whether or not written, including without
limitation any employee welfare benefit plan within the meaning of
Section 3(1) of ERISA, any employee pension benefit plan within the
meaning of Section 3(2) of ERISA (whether or not such plan is subject
to ERISA) and any material bonus, incentive, deferred compensation,
vacation, stock purchase, stock option, severance, employment, change
of control or fringe benefit plan, program or agreement.
(iv) A "Plan" means any Employee Benefit Plan other than
a Multiemployer Plan.
(v) A "Multiemployer Plan" means any "multiemployer
plan" within the meaning of Section 4001(a)(3) of ERISA.
(vi) "Withdrawal Liability" means liability to a
Multiemployer Plan as a result of a complete or partial withdrawal
from such Multiemployer Plan, as those terms are defined in Part I of
Subtitle E of Title IV of ERISA.
(b) Section 4.10(b) of the Company Disclosure Schedule
includes a complete list of all material Employee Benefit Plans and, with
respect to executive welfare benefit plans and nonqualified pension,
savings and deferred compensation plans, states the number of employees
participating in or covered by such plans.
(c) With respect to each Plan, the Company has delivered to
Parent a true, correct and complete copy of: (i) each writing constituting
a part of such Plan, including without limitation all material plan
documents, trust agreements, and insurance contracts and other funding
vehicles; (ii) the most recent Annual Report (Form 5500 Series) and
accompanying schedules, if any; (iii) the current summary plan description
and any material modifications thereto, if required to be furnished under
ERISA; (iv) the most recent annual financial report, if any; (v) the most
recent actuarial report, if any; and (vi) the most recent determination
letter from the Internal Revenue Service (the "IRS"), if any. Except as
specifically provided in the foregoing documents delivered to Parent, there
are no amendments to any Plan that have been adopted or approved nor has
the Company or any of its subsidiaries undertaken to make any such
amendments or to adopt or approve any new Plan.
(d) Section 4.10(b) of the Company Disclosure Schedule
identifies each Plan that is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code ("Qualified Plans"). The IRS has
issued a favorable determination letter with respect to each Qualified Plan
and the related trust that has not been revoked, and except as would not
have a Company Material Adverse Effect, there are no existing circumstances
nor any events that have occurred that could adversely affect the qualified
status of any Qualified Plan or the related trust. Section 4.10(b) of the
Company Disclosure Schedule identifies each Plan or related trust which is
intended to meet the requirements of Code Section 501(c)(9) (a "VEBA"), and
except as would not have a Company Material Adverse Effect, each such VEBA
meets such requirements and provides no disqualified benefits (as such term
is defined in Code Section 4976(b)).
(e) All material contributions required to be made to any
Plan by applicable law or regulation or by any Plan document or other
contractual undertaking, and all material premiums due or payable with
respect to insurance policies funding any Plan, for any period through the
date hereof have been timely made or paid in full or, to the extent not
required to be made or paid on or before the date hereof, have been fully
reflected on the Company Financial Statements. Each Plan that is an
employee welfare benefit plan under Section 3(1) of ERISA (i) is funded
through an insurance company contract or a contract with a health
maintenance organization, (ii) is, or is funded through, a VEBA identified
as such in Section 4.10(b) of the Company Disclosure Schedule, or (iii) is
unfunded.
(f) Except as would not have a Company Material Adverse
Effect, with respect to each Employee Benefit Plan, the Company and its
subsidiaries have complied, and are now in compliance, with all provisions
of ERISA, the Code and all laws and regulations applicable to such Employee
Benefit Plans and each Plan has been administered in all material respects
in accordance with its terms. There is not now, nor do any circumstances
exist that could reasonably be expected to give rise to, any requirement
for the posting of security with respect to a Plan or the imposition of any
lien on the assets of the Company or any of its subsidiaries under ERISA or
the Code.
(g) With respect to each Plan that is subject to Title IV of
ERISA, the minimum funding requirements of Section 302 of ERISA or Section
412 of the Code, or Section 4971 of the Code: (i) there does not exist any
accumulated funding deficiency within the meaning of Section 412 of the
Code or Section 302 of ERISA, whether or not waived, in respect of any plan
year ended prior to the date hereof and for which the time for making
contributions in order to avoid incurring an accumulated funding deficiency
for such year has expired; (ii) the fair market value of the assets of each
such Plan that is a defined benefit plan equals or exceeds the actuarial
present value of the accumulated benefit obligation (as of the date of the
most recent actuarial report prepared for such Plan) under such Plan
(whether or not vested), based upon the actuarial assumptions set forth in
the most recent actuarial report for such Plan; (iii) no reportable event
within the meaning of Section 4043(c) of ERISA for which the 30-day notice
requirement has not been waived has occurred since December 31, 1993 in
respect of any such Plan which is a defined benefit Plan; (iv) all material
premiums to the Pension Benefit Guaranty Corporation ("PBGC") have been
timely paid in full; (v) no material liability (other than for premiums to
the PBGC and for the payment of benefits and contributions in the ordinary
course) under Title IV of ERISA has been or could reasonably be expected to
be incurred by the Company or any of its subsidiaries; and (vi) to the
knowledge of the Company, the PBGC has not instituted proceedings to
terminate any such Plan and no condition exists that presents a material
risk that such proceedings will be instituted or which would constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any such Plan.
(h) No Employee Benefit Plan is a Multiemployer Plan or a
plan that has two or more contributing sponsors at least two of which are
not under common control, within the meaning of Section 4063 of ERISA (a
"Multiple Employer Plan"). None of the Company and its subsidiaries nor any
of their respective ERISA Affiliates has, at any time during the last six
years, contributed to or been obligated to contribute to any Multiemployer
Plan or Multiple Employer Plan. None of the Company and its subsidiaries
nor any ERISA Affiliates has incurred any Withdrawal Liability that has not
been satisfied in full.
(i) There does not now exist, nor do any circumstances exist
that could reasonably be expected to result in, any Controlled Group
Liability that would have a Company Material Adverse Effect following the
Closing. Without limiting the generality of the foregoing, neither the
Company nor any of its subsidiaries, nor any of their respective ERISA
Affiliates, has engaged in any transaction described in Section 4069 or
Section 4204 or 4212 of ERISA since December 31, 1993.
(j) Except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA or applicable state
law, the Company and its subsidiaries have no material liability for life,
health, medical or other welfare benefits to former employees or
beneficiaries or dependents of former employees.
(k) Neither the execution and delivery of this Agreement nor
the consummation of any of the transactions contemplated hereby will
(either alone or in conjunction with any other event) result in, cause the
accelerated funding, vesting or delivery of, or increase the amount or
value of, any material payment or benefit to any employee, officer, trustee
or director of the Company or any of its subsidiaries. Section 4.10(k) of
the Company Disclosure Schedule sets forth the estimated amount that will
be required to be contributed to each trust listed thereon as a result of
the consummation of the transactions contemplated hereby.
(l) No labor organization or group of employees of the
Company or any of its subsidiaries has made a pending demand for
recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or, to the knowledge of the Company, threatened to be
brought or filed, with the National Labor Relations Board or any other
labor relations tribunal or authority. There are no organizing activities,
strikes, work stoppages, slowdowns, lockouts, material arbitrations or
material grievances, or other material labor disputes pending or, to the
knowledge of the Company, threatened against or involving the Company or
any of its subsidiaries. Each of the Company and its subsidiaries is in
compliance in all material respects with all applicable laws and collective
bargaining agreements respecting employment and employment practices, terms
and conditions of employment, wages and hours and occupational safety and
health.
(m) There are no pending or, to the knowledge of the Company,
threatened claims (other than claims for benefits in the ordinary course),
lawsuits or arbitrations which have been asserted or instituted, and there
is no set of circumstances which may reasonably give rise to a claim or
lawsuit, against the Plans, any fiduciaries thereof with respect to their
duties to the Plans or the assets of any of the trusts under any of the
Plans which could reasonably be expected to result in a Company Material
Adverse Effect.
(n) The Company, its subsidiaries and each member of their
respective business enterprise has complied with the Worker Adjustment and
Retraining Notification Act.
(o) None of the Company and its subsidiaries nor any other
person, including any fiduciary, has engaged in any "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of
ERISA), which could subject any of the Employee Benefit Plans or their
related trusts, the Company, any of its subsidiaries or any person that the
Company or any of its subsidiaries has an obligation to indemnify, to any
tax or penalty imposed under Section 4975 of the Code or Section 502 of
ERISA.
Section 4.11 Environmental Protection. Except as set forth in
Section 4.11 of the Company Disclosure Schedule or in the Company SEC
Reports filed prior to the date hereof:
(a) Compliance. Except where the failure to be in such
compliance would not in the aggregate have a Company Material Adverse
Effect, (i) the Company and each of its subsidiaries are in compliance with
all applicable Environmental Laws (as defined in Section 4.11(f)(ii)) and
(ii) neither the Company nor any of its subsidiaries has received any
communication from any Governmental Authority or any written communication
from any other person that alleges that the Company or any of its
subsidiaries is not in compliance with applicable Environmental Laws.
(b) Environmental Permits. The Company and each of its
subsidiaries has obtained or has applied for all environmental, health and
safety permits and governmental authorizations (collectively, the
"Environmental Permits") necessary for the construction of its facilities
or the conduct of its operations, and all such Environmental Permits are in
good standing or, where applicable, a renewal application has been timely
filed and is pending agency approval, and the Company and its subsidiaries
are in compliance with all terms and conditions of the Environmental
Permits, and the Company reasonably believes that any transfer, renewal or
reapplication for any Environmental Permit required as a result of the
Merger can be accomplished in the ordinary course of business, except where
the failure to obtain or to be in such compliance would not, in the
aggregate, have a Company Material Adverse Effect.
(c) Environmental Claims. There are no Environmental Claims
(as defined in Section 4.11(f)(i)) pending (i) against the Company or any
of its subsidiaries or joint ventures, or (ii) against any real or personal
property or operations that the Company or any of its subsidiaries owns,
leases or manages, in whole or in part that, if adversely determined, would
have, in the aggregate, a Company Material Adverse Effect.
(d) Releases. Except for Releases of Hazardous Materials the
liability for which would not have, in the aggregate, a Company Material
Adverse Effect, there have been no Releases (as defined in Section
4.11(f)(iv)) of any Hazardous Material (as defined in Section 4.11(f)(iii))
that would be reasonably likely to (i) form the basis of any Environmental
Claim against the Company or any of its subsidiaries, or (ii) to the
knowledge of the Company, cause, damage or diminution of value to any of
the operations or real properties owned, leased or managed, in whole or in
part, by Company or any of its subsidiaries.
(e) Predecessors. The Company has no knowledge of any
Environmental Claim pending or threatened, or of any Release of Hazardous
Materials that would be reasonably likely to form the basis of any
Environmental Claim, in each case against any person or entity (including,
without limitation, any predecessor of the Company or any of its
subsidiaries) whose liability the Company or any of its subsidiaries has or
may have retained or assumed either contractually or by operation of law or
against any real or personal property which the Company or any of its
subsidiaries formerly owned, leased or managed, in whole or in part, except
for Releases of Hazardous Materials the liability for which would not have,
in the aggregate, a Company Material Adverse Effect.
(f) As used in this Agreement:
(i) "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, liens, investigations,
proceedings or notices of noncompliance or violation by any person or
entity (including any Governmental Authority) alleging potential
liability (including, without limitation, potential responsibility
for or liability for enforcement costs, investigatory costs, cleanup
costs, governmental response costs, removal costs, remedial costs,
natural-resources damages, property damages, personal injuries, fines
or penalties) arising out of, based on or resulting from (A) the
presence, or Release or threatened Release into the environment, of
any Hazardous Materials at any location, whether or not owned,
operated, leased or managed by the Company, Parent or any of their
respective subsidiaries or joint ventures; or (B) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law; or (C) any and all claims by any third party
seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence or
Release of any Hazardous Materials.
(ii) "Environmental Laws" means all federal, state,
local laws, rules, ordinances and regulations relating to pollution,
the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or protection
of human health as it relates to the environment including, without
limitation, laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that
is or could become friable, urea formaldehyde foam insulation, coal
tar residue, and transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls ("PCBs") in
regulated concentrations; and (B) any chemicals, materials or
substances which are now defined as or included in the definition of
"hazardous substances", "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "hazardous constituents" or words of
similar import, under any Environmental Law; and (C) any other
chemical, material, substance or waste, exposure to which is now
prohibited, limited or regulated under any Environmental Law in a
jurisdiction in which the Parent, the Company or any of their
subsidiaries or joint ventures operates or has stored, treated or
disposed of Hazardous Materials.
(iv) "Release" means any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the atmosphere, soil, surface water, groundwater or
property.
Section 4.12 Regulation as a Utility. Except as set forth in
Section 4.12 of the Company Disclosure Schedule, neither the Company nor
any "associate company," "subsidiary company" or "affiliate" (as such terms
are defined in the 1935 Act) of the Company is subject to regulation as (a)
a "holding company," a "public-utility company," a "subsidiary company" or
an "affiliate" of a "holding company," within the meaning of Sections
2(a)(7), 2(a)(5), 2(a)(8) and 2(a)(11), respectively, of the 1935 Act, (b)
a "public utility" under the Federal Power Act, (c) a "natural-gas company"
under the Natural Gas Act or (d) a public utility or public service company
(or similar designation) by any state in the United States other than
Massachusetts or by any foreign country.
Section 4.13 Vote Required. The approval of the Merger by two-
thirds of the votes entitled to be cast by all holders of issued and
outstanding Company Common Shares (the "Company Shareholders' Approval") is
the only vote of the holders of any class or series of the shares of the
Company or any of its subsidiaries required to approve this Agreement, the
Merger and the other transactions contemplated hereby.
Section 4.14 Opinion of Financial Advisor. The Company has
received the opinion of Tucker Anthony Cleary Gull to the effect that, as
of November 9, 1999, the Merger Consideration is fair from a financial
point of view to the holders of Company Common Shares.
Section 4.15 Ownership of Parent Common Stock. Except as set forth
in Section 4.15 of the Company Disclosure Schedule, the Company does not
"beneficially own" (as such term is defined for purposes of Section 13(d)
of the Exchange Act) any shares of Parent Common Stock.
Section 4.16 Takeover Laws. The Company has taken all action
required to be taken by it in order to exempt this Agreement and the
transactions contemplated hereby from, and this Agreement and the
transactions contemplated hereby are exempt from, the requirements of any
"moratorium," "control share," "fair price" or other anti-takeover laws and
regulations (collectively, "Takeover Laws") of the Commonwealth of
Massachusetts, including Chapters 110C, 110D and 110F of the Massachusetts
General Laws.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.1 Organization and Qualification. Except as set forth in
Section 5.1 of the Parent Disclosure Schedule (as defined in Section 7.6),
Parent and each of its subsidiaries is a corporation or other entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite corporate
power and authority, and has been duly authorized by all necessary
approvals and orders, to own, lease and operate its assets and properties
to the extent owned, leased and operated and to carry on its business as it
is now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its assets and properties makes such qualification
necessary, other than in such jurisdictions where the failure to be so
qualified and in good standing will not, when taken together with all other
such failures, have a material adverse effect on the business, properties,
financial condition or results of operations of Parent and its subsidiaries
taken as a whole or on the consummation of this Agreement (any such
material adverse effect being hereafter referred to as a "Parent Material
Adverse Effect").
Section 5.2 Subsidiaries. Except as set forth in Section 5.2 of
the Parent Disclosure Schedule, Parent is an exempt holding company under
the 1935 Act and none of the subsidiaries of Parent is a "public utility
company" within the meaning of Section 2(a)(5) of the 1935 Act.
Section 5.3 Capitalization. The authorized capital stock of
Parent consists of 300,000,000 shares of Parent Common Stock and 10,000,000
shares of preferred stock, par value $.01 per share, of Parent ("Parent
Preferred Stock"). As of the close of business on November 8, 1999, there
were issued and outstanding 112,042,928 shares of Parent Common Stock and
no shares of Parent Preferred Stock.
Section 5.4 Authority; Non-contravention; Statutory Approvals.
(a) Authority. Parent has all requisite corporate power and
authority to enter into this Agreement and, subject to the applicable
Parent Required Statutory Approvals (as defined in Section 5.4(c)), to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement, and the consummation by Parent of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Parent. This Agreement has been duly and validly
executed and delivered by Parent and, assuming the due authorization,
execution and delivery by the other signatories hereto, constitutes a valid
and binding obligation of Parent enforceable against it in accordance with
its terms.
(b) Non-contravention. Except as set forth in Section 5.4(b)
of the Parent Disclosure Schedule, the execution and delivery of this
Agreement by Parent do not, and the consummation of the transactions
contemplated hereby will not, result in a Violation pursuant to any
provisions of (i) the articles of incorporation, by-laws or similar
governing documents of Parent or any of its subsidiaries or any of its
joint ventures, (ii) subject to obtaining the Parent Required Statutory
Approvals (as defined in Section 5.4(c)) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of
any Governmental Authority applicable to Parent or any of its subsidiaries
or any of its joint ventures or any of their respective properties or
assets or (iii) subject to obtaining the third-party consents or other
approvals set forth in Section 5.4(b) of the Parent Disclosure Schedule
(the "Parent Required Consents"), any note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Parent or any of
its subsidiaries or any of its joint ventures is a party or by which it or
any of its properties or assets may be bound or affected, excluding from
the foregoing clauses (i), (ii) and (iii) such Violations as would not
have, in the aggregate, a Parent Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section
5.4(c) of the Parent Disclosure Schedule, no declaration, filing or
registration with, or notice to or authorization, consent or approval of,
any Governmental Authority is necessary for the execution and delivery of
this Agreement by Parent or the consummation by Parent of the transactions
contemplated hereby, the failure to obtain, make or give which would have,
in the aggregate, a Parent Material Adverse Effect (the "Parent Required
Statutory Approvals"), it being understood that references in this
Agreement to "obtaining" such Parent Required Statutory Approvals shall
mean making such declarations, filings or registrations; giving such
notices; obtaining such authorizations, consents or approvals; and having
such waiting periods expire as are necessary to avoid a violation of law.
Section 5.5 Proxy Statement. None of the information supplied or
to be supplied by or on behalf of Parent for inclusion or incorporation by
reference in the Proxy Statement will, at the date the Proxy Statement is
mailed to the Company shareholders and at the time of the Company Special
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading.
Section 5.6 Availability of Funds. Parent has sufficient funds
available to it or has received binding written commitments subject only to
customary terms and conditions from third parties to enable Parent timely
to perform all of its obligations under this Agreement.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of the Parties. After the date hereof and
prior to the Effective Time or earlier termination of this Agreement,
Parent and the Company each agree as follows, each as to itself and to each
of its subsidiaries, except as expressly contemplated or permitted in this
Agreement, or to the extent the other parties hereto shall otherwise
consent in writing:
(a) Ordinary Course of Business. The Company shall, and
shall cause its subsidiaries to, carry on their respective businesses in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted and use all commercially reasonable efforts to (i)
preserve intact their present business organizations and goodwill, preserve
the goodwill and relationships with customers, suppliers and others having
business dealings with them, (ii) subject to prudent management of
workforce needs and ongoing programs currently in force, keep available the
services of their present officers and employees as a group, and
(iii) maintain and keep material properties and assets in as good repair
and condition as at present, subject to ordinary wear and tear, and
maintain supplies and inventories in quantities consistent with past
practice.
(b) Dividends. The Company shall not, nor shall it permit
any of its subsidiaries to: (i) declare or pay any dividends on or make
other distributions in respect of any shares other than (A) dividends by a
wholly owned subsidiary to the Company or another wholly owned subsidiary,
(B) dividends by a less than wholly owned subsidiary consistent with past
practice or (C) regular dividends on Company Common Shares with usual
record and payment dates that do not exceed the current regular dividends
on Company Common Shares, except for periodic increases made in the
ordinary course of business consistent with the Company's recent policy of
annual dividend increases as set forth in Schedule 6.1(b) of the Company
Disclosure Schedule; (ii) split, combine or reclassify any shares or the
capital stock of any subsidiary or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of, or in
substitution for, shares of the Company or the capital stock of any
subsidiary; or (iii) redeem, repurchase or otherwise acquire any shares or
the capital stock of any subsidiary other than (A) redemptions, repurchases
and other acquisitions of shares in connection with the administration of
employee benefit and dividend reinvestment plans as in effect on the date
hereof in the ordinary course of the operation of such plans consistent
with past practice, or (B) intercompany acquisitions of shares or capital
stock.
(c) Issuance of Securities. Except as set forth in Section
6.1(c) of the Company Disclosure Schedule, the Company shall not, nor shall
it permit any of its subsidiaries to, issue, agree to issue, deliver, sell,
award, pledge, dispose of or otherwise encumber or authorize or propose the
issuance, delivery, sale, award, pledge, disposal or other encumbrance of,
any of their shares or capital stock of any class or any securities
convertible into or exchangeable for, or any rights, warrants or options to
acquire, any such shares or convertible or exchangeable securities.
(d) Charter Documents; Other Actions. Neither party shall,
nor shall any party permit any of its subsidiaries to, amend or propose to
amend its respective declaration of trust, articles of organization, by-
laws or regulations, or similar organic documents or to take or fail to
take any other action, which in any such case would reasonably be expected
to prevent or materially impede or interfere with the Merger.
(e) Acquisitions. Except as disclosed in Section 6.1(e) of
the Company Disclosure Schedule, the Company shall not, nor shall it permit
any of its subsidiaries to, acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or business organization or
division thereof, or otherwise acquire or agree to acquire any material
amount of assets other than in the ordinary course of business.
(f) Capital Expenditures. Except as set forth in Section
6.1(f) of the Company Disclosure Schedule, the Company shall not, nor shall
it permit any of its subsidiaries to, make capital expenditures in an
aggregate amount in excess of 110% of the amount budgeted by the Company or
its subsidiaries for capital expenditures as set forth in Section 6.1(f) of
the Company Disclosure Schedule.
(g) No Dispositions. Except as set forth in Section 6.1(g)
of the Company Disclosure Schedule, the Company shall not, nor shall it
permit any of its subsidiaries to, sell, lease, license, encumber or
otherwise dispose of, any of its respective assets, other than encumbrances
or dispositions in the ordinary course of business consistent with past
practice.
(h) Indebtedness. Except as set forth in Section 6.1(h) of
the Company Disclosure Schedule, the Company shall not, nor shall it permit
any of its subsidiaries to, incur or guarantee any indebtedness (including
any debt borrowed or guaranteed or otherwise assumed including, without
limitation, the issuance of debt securities or warrants or rights to
acquire debt) or enter into any "keep well" or other agreement to maintain
any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing other than
(i) short-term indebtedness in the ordinary course of business consistent
with past practice; (ii) arrangements between the Company and its
subsidiaries or among its subsidiaries; or (iii) in connection with the
refunding of existing indebtedness at a lower cost of funds.
(i) Compensation, Benefits. Except as set forth in Section
6.1(i) of the Company Disclosure Schedule, as may be required by applicable
law or under existing Employee Benefit Plans or collective bargaining
agreements, as may be required to facilitate or obtain a determination
letter from the IRS that a plan is a Qualified Plan, or as expressly
contemplated by this Agreement, the Company shall not, nor shall it permit
any of its subsidiaries to, (i) enter into, adopt or amend or increase the
amount or accelerate the payment or vesting of any benefit or amount
payable under any Employee Benefit Plan, or otherwise increase the
compensation or benefits of any trustee, director, officer or other
employee of such party or any of its subsidiaries, except for normal
increases in compensation and benefits, or grants of new incentive
compensation awards, or actions in the ordinary course of business, that
are consistent with the Company's past practice of adjusting compensation
and benefits to reflect the average compensation and benefits as determined
by general industry or market surveys; provided that prior to implementing
any such increases on the basis of such surveys the Company shall advise
Parent of its intention so to increase compensation or benefits and of the
basis therefor and shall otherwise consult with Parent concerning such
proposed increases, or (ii) enter into or amend any employment, severance
or special pay arrangement with respect to the termination of employment or
other similar contract, agreement or arrangement with any trustee, director
or officer or other employee other than with respect to employees who are
not officers of the Company in the ordinary course of business consistent
with current industry practice. This subsection (i) is not intended to
(A) restrict the Company or its subsidiaries from granting promotions to
officers or employees based upon job performance or workplace requirements
in the ordinary course of business consistent with past practice, (B)
restrict the Company's ability to make available to employees the plans,
benefits and arrangements that have customarily and consistent with past
practices been available to officers and employees in the context of such
merit-based promotion or (C) restrict the Company from dealing with matters
of employee retention in specific areas of expertise through the use of
specialized employment and benefit plans designed for that specific
purpose; provided, however, that the result of the use of such specialized
employment or benefit plans shall not, in the aggregate, result in payments
in excess of $130,000.
(j) 1935 Act. Except as set forth in Section 6.1(j) of the
Company Disclosure Schedule, and except as required or contemplated by this
Agreement, the Company shall not, nor shall it permit any of its
subsidiaries to, engage in any activities which would cause a change in its
status, or that of its subsidiaries, under the 1935 Act.
(k) Accounting. Except as set forth in Section 6.1(k) of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any
of its subsidiaries to, make any changes in their accounting methods,
except as required by law, rule, regulation or GAAP.
(l) Cooperation, Notification. Each party shall, and shall
cause its subsidiaries to, (i) confer on a regular and frequent basis with
one or more representatives of the other party to discuss, subject to
applicable law, material operational matters and the general status of its
ongoing operations; (ii) promptly notify the other party of any significant
changes in its business, properties, assets, condition (financial or
other), results of operations or prospects; (iii) advise the other party of
any change or event which has had or, insofar as reasonably can be
foreseen, is reasonably likely to result in, in the case of the Company, a
Company Material Adverse Effect or, in the case of Parent, a Parent
Material Adverse Effect; and (iv) promptly provide the other party with
copies of all filings made by such party or any of its subsidiaries with
any state or federal court, administrative agency, commission or other
Governmental Authority in connection with this Agreement and the
transactions contemplated hereby.
(m) Third-party Consents. The Company shall, and shall cause
its subsidiaries to, use all commercially reasonable efforts to obtain all
the Company Required Consents. The Company shall promptly notify Parent of
any failure or prospective failure to obtain any such consents and, if
requested by Parent shall provide copies of all the Company Required
Consents obtained by the Company to Parent. Parent shall, and shall cause
its subsidiaries to, use all commercially reasonable efforts to obtain all
Parent Required Consents. Parent shall promptly notify the Company of any
failure or prospective failure to obtain any such consents and, if
requested by the Company, shall provide copies of all Parent Required
Consents obtained by Parent to the Company.
(n) No Breach, Etc. No party shall, nor shall any party
permit any of its subsidiaries to, willfully take any action that would or
is reasonably likely to result in a material breach of any provision of
this Agreement or in any of its representations and warranties set forth in
this Agreement being untrue on and as of the Closing Date.
(o) Discharge of Liabilities. The Company shall not pay,
discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice (which includes the payment of final
and unappealable judgments) or in accordance with their terms, of
liabilities reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes thereto) of the
Company included in the Company's reports filed with the SEC, or incurred
in the ordinary course of business consistent with past practice.
(p) Contracts. Except as set forth in Section 6.1(p) of the
Company Disclosure Schedule, the Company shall not, except in the ordinary
course of business consistent with past practice, modify, amend, terminate,
renew or fail to use reasonable business efforts to renew any material
contract or agreement to which the Company or any of its subsidiaries is a
party or waive, release or assign any material rights or claims.
(q) Insurance. The Company shall, and shall cause its
subsidiaries to, maintain with financially responsible insurance companies
insurance in such amounts and against such risks and losses as are
customary for companies engaged in the gas utility industry.
(r) Permits. The Company shall, and shall cause its
subsidiaries to, use reasonable efforts to maintain in effect all existing
governmental permits pursuant to which the Company or any of its
subsidiaries operate.
(s) Takeover Laws. Neither party shall take any action that
would cause the transactions contemplated by this Agreement to be subject
to requirements imposed by any Takeover Law, and each of them shall take
all necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable
Takeover Law, as now or hereafter in effect, including Chapters 110C, 110D
and 110F of the Massachusetts General Laws.
(t) No Rights Triggered. The Company shall ensure that the
entering into of this Agreement and the consummation of the transactions
contemplated hereby and any other action or combination of actions, or any
other transactions contemplated hereby, do not and will not result,
directly or indirectly, in the grant of any rights to any person under any
material agreement (other than the employment agreements disclosed in
Section 6.1(t) of the Company Disclosure Schedule) to which it or any of
its subsidiaries is a party.
(u) Taxes. Except as disclosed on Section 6.1(u) of the
Company Disclosure Schedule, the Company shall not, and shall cause its
subsidiaries not to, (A) make or rescind any express or deemed material
election relating to Taxes, (B) settle or compromise any material claim,
audit, dispute, controversy, examination, investigation or other proceeding
relating to Taxes, (C) materially change any of its methods of reporting
income or deductions for federal income Tax purposes, except as may be
required by applicable law, or (D) file any material Tax Return other than
in a manner consistent with past custom and practice.
Section 6.2 Covenant of the Company; Alternative Proposals. From
and after the date hereof, the Company agrees (a) that it will not, its
subsidiaries will not, and it will not authorize or permit any of its or
its subsidiaries' officers, trustees, directors, employees, agents and
representatives (including, without limitation, any investment banker,
attorney or accountant retained by it or any of its subsidiaries or any of
the foregoing) to, directly or indirectly, encourage, initiate or solicit
(including by way of furnishing information) or take any other action to
facilitate knowingly any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to its shareholders)
which constitutes or may reasonably be expected to lead to an Alternative
Proposal (as defined below) from any person or engage in any discussion or
negotiations concerning, or provide any non-public information or data to
make or implement, an Alternative Proposal; (b) that it will immediately
cease and cause to be terminated any existing solicitation, initiation,
encouragement, activity, discussions or negotiations with any parties
conducted heretofore with a view of formulating an Alternative Proposal;
and (c) that it will notify Parent orally and in writing of any such
inquiry, offer or proposals (including, without limitation, the terms and
conditions of any such proposal and the identity of the person making it),
within one business day of the receipt thereof, and that it shall keep
Parent informed of the status and details of any such inquiry, offer or
proposal and shall give Parent 48 hours' prior notice of any agreement to
be entered into or of the fact that it proposes to commence providing
information to any person making such inquiry, offer or proposal; provided
however, that notwithstanding any other provision hereof, the Company may
(i) at any time prior to the time at which the Company Shareholders'
Approval shall have been obtained engage in discussions or negotiations
with a third party who (without any solicitation, initiation,
encouragement, discussion or negotiation, directly or indirectly, by or
with Company or its representatives after the date hereof) seeks to
initiate such discussions or negotiations and may furnish such third party
information concerning the Company and its business, properties and assets
if, and only to the extent that, (A) (x) the third party has first made an
Alternative Proposal that is financially superior to the Merger and has
demonstrated that any necessary financing has been obtained, or in the
reasonable judgment of the Company's financial advisor is obtainable, and
(y) the Board of Trustees of the Company shall conclude in good faith,
after consultation with its financial advisor and based upon the advice of
outside counsel and such other matters as the Board of Trustees of the
Company deems relevant, that failure to do so would likely result in a
breach of its fiduciary duties under applicable law, and (B) prior to
furnishing such information to, or entering into discussions or
negotiations with, such person or entity, the Company (x) provides prompt
written notice to Parent to the effect that it intends to furnish
information to, or intends to enter into discussions or negotiations with,
such person or entity, (y) provides the Parent a reasonable opportunity to
respond to the Alternative Proposal and (z) receives from such person an
executed confidentiality agreement in reasonably customary form except that
such confidentiality agreement shall not prohibit such person from making
an unsolicited Alternative Proposal, and (ii) comply with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange
offer and/or (iii) accept an Alternative Proposal from a third party,
provided the Company terminates this Agreement pursuant to Section 9.1(e).
"Alternative Proposal" shall mean any merger, acquisition, consolidation,
reorganization, share exchange, tender offer, exchange offer or similar
transaction involving the Company or any of the Company's subsidiaries, or
any proposal or offer to acquire in any manner, directly or indirectly, a
substantial equity interest in or a substantial portion of the assets of
the Company or any of the Company's subsidiaries. Nothing herein shall
prohibit a disposition permitted by Section 6.1(g) hereof.
Section 6.3 Employment Agreements. Parent and the Company have
entered into employment agreements with Mr. Robert M. Allessio, Mr.
Michael J. Marrone and Ms. Cheryl M. Clark (the "Employment Agreements"),
which will become effective upon consummation of the Merger. The Berkshire
Gas Company, a subsidiary of the Company, has entered into an amendment of
its employment agreement with Mr. Scott S. Robinson (the "Robinson
Employment Agreement")
Section 6.4 Additional Statutory Approvals. Parent agrees not to,
and it will not permit any subsidiary to, and will use reasonable best
efforts to cause any prospective subsidiary not to, be a party to any
transaction that would make it necessary for Parent or the Company to make
any declaration, filing or registration with, or notice to or
authorization, consent or approval of, any Governmental Authority in
connection with the consummation by Parent, Merger Sub or the Company of
the transactions contemplated by this Agreement, other than those set forth
in Section 5.4(c) of the Parent Disclosure Schedule or Section 4.4(c) of
the Company Disclosure Schedule, in either case, that would reasonably be
expected to prevent or materially impede, interfere with, or delay
consummation of the Merger or the transactions contemplated by this
Agreement beyond the 18-month anniversary of the date hereof.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. Upon reasonable notice and
during normal business hours, each party shall, and shall cause its
subsidiaries to, afford to the officers, directors, trustees, employees,
accountants, counsel, investment bankers, financial advisors and other
representatives of the other (collectively, "Representatives") reasonable
access, throughout the period prior to the Effective Time, to all of its
properties, books, contracts, commitments and records (including, but not
limited to, Tax Returns) and, during such period, each party shall, and
shall cause its subsidiaries to, furnish promptly to the other (a) access
to each report, schedule and other document filed or received by it or any
of its subsidiaries pursuant to the requirements of federal or state
securities laws or filed with or sent to the SEC, the FERC, the Department
of Justice, the Federal Trade Commission or any other federal or state
regulatory agency or commission, and (b) access to all information
concerning themselves, their subsidiaries, directors, trustees, officers
and shareholders and such other matters as may be reasonably requested by
the other party in connection with any filings, applications or approvals
required or contemplated by this Agreement. Each party shall, and shall
cause its subsidiaries and Representatives to, hold in strict confidence
all Evaluation Material (as defined in the Confidentiality Agreement)
concerning the other parties furnished to it in connection with the
transactions contemplated by this Agreement in accordance with the
Confidentiality Agreement, dated as of September 23, 1999, between the
Company and Parent, as it may be amended from time to time (the
"Confidentiality Agreement").
Section 7.2 Proxy Statement. As soon as reasonably practicable
after the date hereof, the Company shall prepare the Proxy Statement, file
it with the SEC under the Exchange Act and use all reasonable efforts to
have the Proxy Statement cleared by the SEC. Each of the parties hereto
shall furnish all information concerning itself which is required or
customary for inclusion in the Proxy Statement. No representation,
covenant or agreement is made by or on behalf of any party hereto with
respect to information supplied by any other party for inclusion in the
Proxy Statement.
Section 7.3 Regulatory Matters. Each party hereto shall cooperate
and use its best efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions,
filings and other documents, and to use all commercially reasonable efforts
to obtain no later than the Initial Termination Date, as such date may be
extended pursuant to Section 9.1(b), all necessary permits, consents,
approvals and authorizations of all Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement,
including, without limitation, the Company Required Statutory Approvals and
the Parent Required Statutory Approvals.
Section 7.4 Company Shareholders' Approval.
(a) Company Special Meeting. Subject to the provisions of
Section 7.4(b), the Company shall, as soon as reasonably practicable after
the date hereof (i) take all steps necessary to duly call, give notice of,
convene and hold a meeting of its shareholders (the "Company Special
Meeting") for the purpose of securing the Company Shareholders' Approval,
(ii) distribute to its shareholders the Proxy Statement in accordance with
applicable federal and state law and with its declaration of trust and by-
laws, (iii) subject to the fiduciary duties of its Board of Trustees,
recommend to its shareholders the approval of this Agreement and the
transactions contemplated hereby and (iv) cooperate and consult with Parent
with respect to each of the foregoing matters.
(b) Meeting Date. The Company Special Meeting for the
purpose of securing the Company Shareholders' Approval shall be held on
such date as the Company and Parent shall mutually determine.
Section 7.5 Indemnification.
(a) Indemnification. To the extent, if any, not provided by
an existing right of indemnification or other agreement or policy, from and
after the Effective Time, Parent and the Surviving Company shall, to the
fullest extent permitted by applicable law, indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time, an officer, director,
trustee or employee of the Company or any of its subsidiaries (each an
"Indemnified Party" and collectively, the "Indemnified Parties") against
(i) all losses, expenses (including reasonable attorney's fees and
expenses), claims, damages or liabilities or, subject to the proviso of the
next succeeding sentence, amounts paid in settlement, arising out of
actions or omissions occurring at or prior to the Effective Time (and
whether asserted or claimed prior to, at or after the Effective Time) that
are, in whole or in part, based on or arising out of the fact that such
person is or was a director, trustee, officer or employee of the Company or
a subsidiary of the Company (the "Indemnified Liabilities"), and (ii) all
Indemnified Liabilities to the extent they are based on or arise out of or
pertain to the transactions contemplated by this Agreement. In the event of
any such loss, expense, claim, damage or liability (whether or not arising
before the Effective Time), (i) Parent shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel
shall be reasonably satisfactory to Parent, promptly after statements
therefor are received and otherwise advance to such Indemnified Party upon
request reimbursement of documented expenses reasonably incurred, (ii) any
determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth in Section 8 of the
MLLCA or the declaration of trust or certificate of incorporation or by-
laws shall be made by independent counsel mutually acceptable to Parent and
the Indemnified Party; provided, however, that Parent shall not be liable
for any settlement effected without its written consent (which consent
shall not be unreasonably withheld). The Indemnified Parties as a group may
retain only one law firm with respect to each related matter except to the
extent there is, in the opinion of counsel to an Indemnified Party, under
applicable standards of professional conduct, a conflict on any significant
issue between positions of such Indemnified Party and any other Indemnified
Party or Indemnified Parties.
(b) Insurance. For a period of six years after the Effective
Time, Parent shall (i) cause to be maintained in effect policies of
directors' and officers' liability insurance for the benefit of those
persons who are currently covered by such policies of the Company on terms
no less favorable than the terms of such current insurance coverage or (ii)
provide tail coverage for such persons which provides coverage for a period
of six years for acts prior to the Effective Time on terms no less
favorable than the terms of such current insurance coverage; provided,
however, that Parent shall not be required to expend in any year an amount
in excess of 200% of the annual aggregate premiums currently paid by the
Company, for such insurance; and provided, further, that if the annual
premiums of such insurance coverage exceed such amount, Parent shall be
obligated to obtain a policy with the best coverage available, in the
reasonable judgment of the Board of Directors of Parent, for a cost not
exceeding such amount.
(c) Successors. In the event Parent or any of its successors
or assigns (i) consolidates with or merges into any other person and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in either such case, proper
provisions shall be made so that the successors and assigns of Parent shall
assume the obligations set forth in this Section 7.5.
(d) Survival of Indemnification. To the fullest extent
permitted by law, from and after the Effective Time, all rights to
indemnification as of the date hereof in favor of the employees, agents,
directors, trustees and officers of the Company, and its subsidiaries with
respect to their activities as such prior to the Effective Time, as
provided in their respective declaration of trust or articles of
organization and by-laws in effect on the date hereof, or otherwise in
effect on the date hereof, shall survive the Merger and shall continue in
full force and effect for a period of not less than six years from the
Effective Time.
(e) Benefit. The provisions of this Section 7.5 are intended
to be for the benefit of, and shall be enforceable by, each Indemnified
Party, his or her heirs and his or her representatives.
Section 7.6 Disclosure Schedules. On the date hereof, (a) Parent
has delivered to the Company a schedule (the "Parent Disclosure Schedule"),
accompanied by a certificate signed by the Executive Vice President and
General Counsel of Parent stating the Parent Disclosure Schedule is being
delivered pursuant to this Section 7.6(a), and (b) the Company has
delivered to Parent a schedule (the "Company Disclosure Schedule"),
accompanied by a certificate signed by the President and Chief Executive
Officer of the Company stating the Company Disclosure Schedule is being
delivered pursuant to this Section 7.6(b). The Company Disclosure Schedule
and the Parent Disclosure Schedule are collectively referred to herein as
the "Disclosure Schedules." The Disclosure Schedules constitute an integral
part of this Agreement and modify the respective representations,
warranties, covenants or agreements of the parties hereto contained herein
to the extent that such representations, warranties, covenants or
agreements expressly refer to the Disclosure Schedules. Anything to the
contrary contained herein or in the Disclosure Schedules notwithstanding,
any and all statements, representations, warranties or disclosures set
forth in the Disclosure Schedules shall be deemed to have been made on and
as of the date hereof.
Section 7.7 Public Announcements. Subject to each party's
disclosure obligations imposed by law, the Company and Parent will
cooperate with each other in the development and distribution of all news
releases and other public information disclosures with respect to this
Agreement or any of the transactions contemplated hereby and shall not
issue any public announcement or statement with respect hereto without the
consent of the other party (which consent shall not be unreasonably
withheld).
Section 7.8 Certain Employee Agreements. Subject to Section 7.9,
Parent and the Surviving Company and its subsidiaries shall honor, without
modification, all contracts, agreements, collective bargaining agreements
and commitments of the parties which apply to any current or former
employee or current or former director or trustee of the parties hereto;
provided, however, that the foregoing shall not prevent Parent or the
Surviving Company from enforcing such contracts, agreements, collective
bargaining agreements and commitments in accordance with their terms,
including, without limitation, any reserved right to amend, modify,
suspend, revoke or terminate any such contract, agreement, collective
bargaining agreement or commitment. It is the present intention of Parent
and the Company that following the Effective Time, there will be no
involuntary reductions in force at the Surviving Company or its
subsidiaries, but that Parent, the Surviving Company and their respective
subsidiaries will continue Parent's and the Company's present strategy of
achieving workforce reductions through attrition; however, if any
reductions in workforce in respect of employees of Parent and its
subsidiaries, including the Surviving Company and its subsidiaries, become
necessary, they shall be made on a fair and equitable basis, in light of
the circumstances and the objectives to be achieved, giving consideration
to previous work history, job experience, qualifications, and business
needs without regard to whether employment prior to the Effective Time was
with the Company or its subsidiaries or Parent or its subsidiaries, and any
employees whose employment is terminated or jobs are eliminated by Parent,
the Surviving Company or any of their respective subsidiaries shall be
entitled to participate on a fair and equitable basis in the job
opportunity and employment placement programs offered by Parent, the
Surviving Company or any of their respective subsidiaries. Any workforce
reductions carried out following the Effective Time by Parent or the
Surviving Company and their respective subsidiaries shall be done in
accordance with all applicable collective bargaining agreements, and all
laws and regulations governing the employment relationship and termination
thereof including, without limitation, the Worker Adjustment and Retraining
Notification Act and regulations promulgated thereunder, and any comparable
state or local law.
Section 7.9 Employee Benefit Plans.
(a) Except as may be required by applicable law, each Plan in
effect on the date hereof (or as amended or established in accordance with
or as permitted by this Agreement) shall be maintained in effect with
respect to the employees, former employees, trustees, former trustees,
directors or former directors of the Company and any of its subsidiaries
who are covered by such plans, programs, agreements or arrangements
immediately prior to the Effective Time until Parent determines otherwise
on or after the Effective Time, and Parent shall assume or cause the
Surviving Company to assume as of the Effective Time each Plan maintained
by the Company immediately prior to the Effective Time and perform such
plan, program, agreement or arrangement in the same manner and to the same
extent that the Company would be required to perform thereunder; provided,
however, that nothing herein contained shall limit any reserved right
contained in any such Plan to amend, modify, suspend, revoke or terminate
any such plan, program, agreement or arrangement; provided, further, that
Parent or its subsidiaries shall provide to each employee of the Company
and any of its subsidiaries who was covered by Plans immediately prior to
the Effective Time and who is not covered by a collective bargaining
agreement (a "Covered Company Employee"), for a period of no less than 18
months following the Effective Time, employer-provided benefits under
Qualified Plans, supplemental retirement benefit and deferred compensation
plans which are not Qualified Plans and welfare plans that are no less
favorable in the aggregate than those provided to the employee immediately
prior to the Effective Time. Without limiting the foregoing, each Covered
Company Employee who is a participant in any Plan shall receive credit for
purposes of eligibility to participate, vesting and eligibility to receive
benefits (but specifically excluding for benefit accrual purposes) under
any replacement benefit plan of Parent or any of its subsidiaries or
affiliates in which such employee becomes a participant for service
credited for the corresponding purpose under any such Plan; provided,
however, that such crediting of service shall not operate to cause any such
plan or agreement to fail to comply with the applicable provisions of the
Code and ERISA. No provision contained in this Section 7.9 shall be deemed
to constitute an employment contract between Parent or any of its
subsidiaries and any individual, or a waiver of Parent's or any of its
subsidiaries' right to discharge any employee at any time, with or without
cause.
(b) The Company shall take all necessary actions so that,
effective no later than immediately before the Effective Time, (i) each of
the Corporate Incentive Compensation Plan, The Berkshire Gas Company
Supplemental Executive Retirement Plan (the "SERP"), the Trust under the
SERP, The Berkshire Gas Company Executive Retiree Health Plan (the "Retiree
Plan") and all other executive benefit plans and programs of the Company
and its subsidiaries shall be amended to the extent necessary so that any
provisions therein that prohibit or limit the amendment or termination
thereof following a change of control do not apply to individuals who are
not participants therein as of the date of this Agreement and (ii) subject
to applicable law and the provisions of any applicable collective
bargaining agreement, each Qualified Plan shall be amended to the extent
necessary so that any provisions therein that call for the waiver or
elimination of vesting requirements upon or following a change in control
shall apply only to individuals who are participants therein immediately
before the Effective Time. Notwithstanding anything to the contrary
herein, the Company shall take all necessary action so that, at the
Effective Time, the Retiree Plan shall be amended to the extent necessary
so that Messrs. Allessio and Marrone shall not participate in the Retiree
Plan.
Section 7.10 Expenses. Subject to Section 9.3, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses,
except that those expenses incurred in connection with printing the Proxy
Statement, as well as the filing fee relating thereto, shall be shared
equally by the Company and Parent.
Section 7.11 Further Assurances. Each party will, and will cause
its subsidiaries to, execute such further documents and instruments and
take such further actions as may reasonably be requested by any other party
in order to consummate the Merger in accordance with the terms hereof.
Section 7.12 Corporate Offices. At and subsequent to the Effective
Time, the headquarters of the Surviving Company shall be located in
Pittsfield, Massachusetts.
Section 7.13 Community Involvement. After the Effective Time,
Parent will, or will cause the Surviving Company to make an aggregate of
$200,000 per year in charitable contributions to the communities served by
the Surviving Company and otherwise maintain a substantial level of
involvement in community activities in the Commonwealth of Massachusetts
(as well as the States of Vermont and New York) that is similar to, or
greater than, the level of community development and related activities
carried on by the Company.
Section 7.14 Advisory Board. At the Effective Time, there shall be
established an advisory board to the Surviving Company ("Advisory Board"),
which shall be comprised of the persons who were trustees of the Company
immediately prior to the Effective Time. The Advisory Board shall meet no
less frequently than quarterly and shall provide advice to the Board of
Trustees of the Surviving Company with respect to such issues as the Board
of Trustees of the Surviving Company may from time to time request,
including but not limited to community relations, customer service,
economic development, employee development and relations and such other
matters of community interest as may be appropriate. The members of the
Advisory Board, who shall serve at the discretion of the Surviving Company,
shall receive remuneration for their services equivalent to the
remuneration currently provided to non-employee trustees of the Company.
Parent acknowledges that, pursuant to the Retirement Plan for Directors of
The Berkshire Gas Company dated September 1, 1993, as amended, each trustee
of the Company shall be credited with a minimum of 10 years of service
under Section 4 of said Retirement Plan and shall be deemed fully vested
pursuant to Section 4 of said Retirement Plan as of the Effective Time.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of the
following conditions, except, to the extent permitted by applicable law,
that such conditions may be waived in writing pursuant to Section 9.5 by
the joint action of the parties hereto:
(a) Shareholder Approval. The Company Shareholders' Approval
shall have been obtained.
(b) No Injunction. No temporary restraining order or
preliminary or permanent injunction or other order by any federal or state
court preventing consummation of the Merger shall have been issued and be
continuing in effect, and the Merger and the other transactions
contemplated hereby shall not have been prohibited under any applicable
federal or state law or regulation.
(c) Statutory Approvals. The Company Required Statutory
Approvals and the Parent Required Statutory Approvals shall have been
obtained at or prior to the Effective Time, such approvals shall have
become Final Orders (as defined below) and such Final Orders shall not
impose terms or conditions which, in the aggregate, would have, or insofar
as reasonably can be foreseen, could have, a Company Material Adverse
Effect or a Parent Material Adverse Effect; provided, however, that a
requirement that Parent become a registered holding company pursuant to
Section 5 of the 1935 Act as a result of the Merger shall not constitute a
term or condition which could have a "material adverse effect" within the
meaning of this Section 8.1(c). In addition, the inclusion of a condition
or requirement of the SEC's approval of the Merger under the 1935 Act that
Parent divest its ownership of, or not consummate the acquisition of, any
of the entities listed on Section 8.1(c) of the Parent Disclosure Schedule,
shall constitute a term or condition which could have a "material adverse
effect" within the meaning of this Section 8.1(c). A "Final Order" means
action by the relevant regulatory authority which has not been reversed,
stayed, enjoined, set aside, annulled or suspended, with respect to which
any waiting period prescribed by law before the transactions contemplated
hereby may be consummated has expired, and as to which all conditions to
the consummation of such transactions prescribed by law, regulation or
order have been satisfied.
Section 8.2 Conditions to Obligation of Parent to Effect the
Merger. The obligation of Parent to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the
following conditions, except as may be waived by Parent in writing pursuant
to Section 9.5:
(a) Performance of Obligations of the Company. The Company
(and its appropriate subsidiaries) shall have performed in all material
respects its agreements and covenants contained in Sections 6.1 and 6.2 and
shall have performed in all material respects its other agreements and
covenants contained in or contemplated by this Agreement to be performed by
it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct (i) on and as of the date hereof and (ii) on and as of the Closing
Date with the same effect as though such representations and warranties had
been made on and as of the Closing Date (except for representations and
warranties that expressly speak only as of a specific date or time other
than the date hereof or the Closing Date, which need only be true and
correct as of such date or time) except in each of cases (i) and (ii) for
such failures of representations or warranties to be true and correct
(without regard to any materiality qualifications contained therein) which,
individually and in the aggregate, would not be reasonably likely to result
in a Company Material Adverse Effect.
(c) Closing Certificates. Parent shall have received a
certificate signed by the chief financial officer of the Company, dated the
Closing Date, to the effect that, to the best of such officer's knowledge,
the conditions set forth in Section 8.2(a) and Section 8.2(b) have been
satisfied.
(d) No Company Material Adverse Effect. No Company Material
Adverse Effect shall have occurred, and there shall exist no fact or
circumstance (other than facts and circumstances described in Section
8.2(d) of the Company Disclosure Schedule or the Company SEC Reports filed
prior to the date hereof) which is reasonably likely to have a Company
Material Adverse Effect.
(e) Company Required Consents. The Company Required Consents
the failure of which to obtain would have a Company Material Adverse Effect
shall have been obtained.
Section 8.3 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be
further subject to the satisfaction, on or prior to the Closing Date, of
the following conditions, except as may be waived by the Company in writing
pursuant to Section 9.5.
(a) Performance of Obligations of Parent. Parent (and its
appropriate subsidiaries) shall have performed in all material respects its
agreements and covenants contained in Section 6.1 and shall have performed
in all material respects its other agreements and covenants contained in or
contemplated by this Agreement to be performed by it at or prior to the
Effective Time.
(b) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement shall be true and correct
(i) on and as of the date hereof and (ii) on and as of the Closing Date
with the same effect as though such representations and warranties had been
made on and as of the Closing Date (except for representations and
warranties that expressly speak only as of a specific date or time other
than the date hereof or the Closing Date, which need only be true and
correct as of such date or time) except in each of cases (i) and (ii) for
such failures of representations or warranties to be true and correct
(without regard to any materiality qualifications contained therein) which,
individually and in the aggregate, would not be reasonably likely to result
in a Parent Material Adverse Effect.
(c) Closing Certificates. The Company shall have received a
certificate signed by the Executive Vice President and General Counsel of
Parent, dated the Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Section 8.3(a) and Section
8.3(b) have been satisfied.
(d) Parent Required Consents. The Parent Required Consents
the failure of which to obtain would have a Parent Material Adverse Effect
shall have been obtained.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after approval by the
shareholders of the respective parties hereto contemplated by this
Agreement:
(a) by mutual written consent of the Board of Directors of
Parent and the Board of Trustees of the Company;
(b) by any party hereto, by written notice to the other
parties, if the Effective Time shall not have occurred on or before the
date that is 12 months from the date hereof (the "Initial Termination
Date"); provided, however, that if on the Initial Termination Date the
conditions to the Closing set forth in Section 8.1(c) shall not have been
fulfilled but all other conditions to the Closing shall be fulfilled or
shall be capable of being fulfilled, then the Initial Termination Date
shall be extended to the 18-month anniversary of the date hereof; and
provided, further, that the right to terminate this Agreement under this
Section 9.1(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement or whose breach of any agreement or
covenant has been the cause of, or resulted directly or indirectly in, the
failure of the Effective Time to occur on or before the Initial Termination
Date or as it may be so extended.
(c) by any party hereto, by written notice to the other
parties, if the Company Shareholders' Approval shall not have been obtained
at a duly held Company Special Meeting, including any adjournments thereof
by the Initial Termination Date;
(d) by any party hereto, if any state or federal law, order,
rule or regulation is adopted or issued, which has the effect, as supported
by the written opinion of outside counsel for such party, of prohibiting
the Merger, or by any party hereto if any court of competent jurisdiction
in the United States or any State shall have issued an order, judgment or
decree permanently restraining, enjoining or otherwise prohibiting the
Merger, and such order, judgment or decree shall have become final and
nonappealable;
(e) by the Company prior to the time at which the Company
Shareholders' Approval shall have been obtained, upon five days' prior
notice to Parent, if the Company is not in breach of this Agreement and, as
a result of an Alternative Proposal, the Board of Trustees of the Company
determines in good faith, that (i) the Alternative Proposal is financially
superior to the Merger and the third party making the Alternative Proposal
has demonstrated that any necessary financing has been obtained, or in the
reasonable judgment of the Company's financial advisor such financing is
obtainable, and (ii) after consultation with its financial advisor and
based upon the advice of outside counsel and such other matters as the
Board of Trustees of the Company deems relevant, after considering
applicable provisions of state law and after giving effect to all
concessions which may be offered by the other party pursuant to the proviso
below, that failure to do so would likely result in a breach of its
fiduciary duties under applicable law; provided, however, that prior to any
such termination, the Company shall, and shall cause its respective
financial and legal advisors to, negotiate with Parent to make such
adjustments in the terms and conditions of this Agreement as would enable
the Company to proceed with the transactions contemplated herein;
(f) by the Company, by written notice to Parent, if (i) there
exist breaches of the representations and warranties of Parent made herein
as of the date hereof which breaches, individually or in the aggregate,
would or would be reasonably likely to result in a Parent Material Adverse
Effect, and such breaches shall not have been remedied within 20 days after
receipt by Parent of notice in writing from the Company, specifying the
nature of such breaches and requesting that they be remedied, or (ii)
Parent (or its appropriate subsidiaries) shall have failed to perform and
comply with, in all material respects, its agreements and covenants
hereunder, and such failure to perform or comply shall not have been
remedied within 20 days after receipt by Parent of notice in writing from
the Company, specifying the nature of such failure and requesting that it
be remedied;
(g) by Parent, by written notice to the Company, if (i) there
exist material breaches of the representations and warranties of the
Company made herein as of the date hereof which breaches, individually or
in the aggregate, would or would be reasonably likely to result in a
Company Material Adverse Effect, and such breaches shall not have been
remedied within 20 days after receipt by the Company of notice in writing
from Parent, specifying the nature of such breaches and requesting that
they be remedied, (ii) the Company (or its appropriate subsidiaries) shall
not have performed and complied with its agreements and covenants contained
in Sections 6.1(b) and 6.1(c) or shall have failed to perform and comply
with, in all material respects, its other agreements and covenants
hereunder, and such failure to perform or comply shall not have been
remedied within 20 days after receipt by the Company of notice in writing
from Parent, specifying the nature of such failure and requesting that it
be remedied; or (iii) the Board of Trustees of the Company or any committee
thereof (A) shall withdraw or modify in any manner adverse to Parent its
approval or recommendation of this Agreement or the transactions
contemplated herein, (B) shall fail to reaffirm such approval or
recommendation upon Parent's request within two days of such request, (C)
shall approve or recommend any acquisition of the Company or a material
portion of its assets or any tender offer for the shares of the Company, in
each case by a party other than Parent or any of its affiliates or (D)
shall resolve to take any of the actions specified in clause (A), (B) or
(C); or
(h) by Parent, by written notice to the Company, if Parent
reasonably believes that (i) the transactions contemplated by this
Agreement will delay the grant of any regulatory approval of any of the
transactions listed in Section 9.1(h) of the Parent Disclosure Schedule or
(ii) any such regulatory approval, if granted, will be unduly burdensome to
Parent.
Section 9.2 Effect of Termination. Subject to Section 10.1(b), in
the event of termination of this Agreement by either the Company or Parent
pursuant to Section 9.1, there shall be no liability on the part of either
the Company or Parent or their respective officers, directors or trustees
hereunder, except that Section 7.10, Section 9.3, the agreement contained
in the last sentence of Section 7.1, Section 10.8 and Section 10.9 shall
survive the termination.
Section 9.3 Termination Fee; Expenses.
(a) Termination Fee upon Breach or Withdrawal of Approval.
If this Agreement is terminated at such time that this Agreement is
terminable pursuant to one (but not both) of (x) Section 9.1(f)(i) or (ii)
or (y) Section 9.1(g)(i) or (ii), then: the breaching party shall promptly
(but not later than five business days after receipt of notice from the
non-breaching party) pay to the non-breaching party in cash an amount equal
to all documented out-of-pocket expenses and fees incurred by the non-
breaching party (including, without limitation, fees and expenses payable
to all legal, accounting, financial, public relations and other
professional advisors arising out of, in connection with or related to the
Merger or the transactions contemplated by this Agreement) not in excess of
$2 million ("Expenses"); provided, however, that, if this Agreement is
terminated by a party as a result of a willful breach by the other party,
the non-breaching party may pursue any remedies available to it at law or
in equity and shall, in addition to its out-of-pocket expenses (which shall
be paid as specified above and shall not be limited to $2 million), be
entitled to retain such additional amounts as such non-breaching party may
be entitled to receive at law or in equity.
(b) If this Agreement is terminated by Parent pursuant to
Section 9.1(h), then Parent shall promptly (but not later than five
business days after receipt of notice from the Company) pay to the Company
in cash an amount equal to $4 million.
(c) The Company shall pay Parent a fee of $4 million
("Termination Fee") plus Expenses, upon the termination of this Agreement
by Parent or the Company pursuant to Section 9.1(c) or the Company pursuant
to Section 9.1(e) or by Parent pursuant to Section 9.1(g)(iii); provided,
however, that in the event of termination under either Section 9.1(c) or
Section 9.1(g)(iii), no payment of the Termination Fee or Expenses shall be
required unless and until within two years of such termination the Company
enters into a definitive agreement to consummate or consummates an
Alternative Proposal, and, in the case of a termination pursuant to Section
9.1(c), there shall have been made and not withdrawn at the time of the
Company Special Meeting an Alternative Proposal and, in the case of a
termination pursuant to Section 9.1(g)(iii), there shall have been made and
not withdrawn at the time of such termination an Alternative Proposal.
(d) Liquidated Damages; Prompt Payment. The parties agree
that the agreements contained in this Section 9.3 are an integral part of
the transactions contemplated by the Agreement and constitute liquidated
damages and not a penalty. If one party fails to pay promptly to the other
any fee or expenses due hereunder, the defaulting party shall pay the costs
and expenses (including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee at
the publicly announced prime rate of Chase Manhattan Bank, N.A., from the
date such fee was required to be paid.
Section 9.4 Amendment. This Agreement may be amended by the
Boards of Directors or Trustees or Managers as the case may be, of the
parties hereto, at any time before or after approval hereof by the
shareholders of the Company and prior to the Effective Time, but after such
approvals, no such amendment shall (a) alter or change the amount or kind
of shares, rights or any of the proceedings of the treatment of shares
under Article II, or (b) alter or change any of the terms and conditions of
this Agreement if any of the alterations or changes, alone or in the
aggregate, would materially adversely affect the rights of holders of
Company shares, except for alterations or changes that could otherwise be
adopted by the Board of Trustees of the Company, without the further
approval of such shareholders. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
Section 9.5 Waiver. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions contained herein, to the extent permitted by
applicable law. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-survival; Effect of Representations and
Warranties. (a) All representations, warranties and agreements in this
Agreement shall not survive the Merger, except as otherwise provided in
this Agreement and except for the agreements contained in this Section
10.1, in Articles I and II and in Sections 7.5, 10.7, 10.8, 10.9 and 10.10.
(b) No party may assert a claim for breach of any
representation or warranty contained in this Agreement (whether by direct
claim or counterclaim) except in connection with the cancellation of this
Agreement pursuant to Section 9.1(f)(i) or Section 9.1(g)(i) (or pursuant
to any other subsection of Section 9.1, if the terminating party would have
been entitled to terminate this Agreement pursuant to Section 9.1(f)(i) or
Section 9.1(g)(i)).
Section 10.2 Brokers. The Company represents and warrants that,
except for Tucker Anthony Cleary Gull, whose fees have been disclosed to
Parent prior to the date hereof, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
Parent represents and warrants that, except for Chase Securities, Inc.,
whose fees have been disclosed to the Company prior to the date hereof, no
broker, finder or investment banker is entitled to any brokerage, finder's
or other fee or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent.
Section 10.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if (a) delivered
personally, (b) sent by reputable overnight courier service, (c) telecopied
(which is confirmed) or (d) five days after being mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
(i) If to the Company, to:
Berkshire Energy Resources
115 Cheshire Road
Pittsfield, Massachusetts 01201
Attention: Scott S. Robinson
President and Chief Executive Officer
Telephone: (413) 442-1511
Telecopy: (413) 443-0546
with a copy to:
Rich, May, Bilodeau & Flaherty, P.C.
176 Federal Street
Boston, Massachusetts 02110
Attention: Joseph F. Sullivan, Esq.
Telephone: (617) 482-1360
Telecopy: (617) 556-3889
(ii) If to Parent or Merger Sub, to:
Energy East Corporation
One Canterbury Green
P.O. Box 1196
Stamford, Connecticut 06901
Attention: Mr. Kenneth M. Jasinski
Executive Vice President and General Counsel
Telephone: (203) 325-0690
Telecopy: (203) 325-1901
with a copy to:
Huber Lawrence & Abell
605 Third Avenue
New York, New York 10158
Attention: Leonard Blum, Esq.
Telephone: (212) 682-6200
Telecopy: (212) 661-5759
Section 10.4 Miscellaneous. This Agreement (including the
documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to
the subject matter hereof other than the Employment Agreements, the
Robinson Employment Agreement and the Confidentiality Agreement; (b) shall
not be assigned other than by operation of law without the prior written
consent of the other parties hereto; and (c) shall be governed by and
construed in accordance with the laws of the State of New York applicable
to contracts executed in and to be fully performed in such State, without
giving effect to its conflicts of law, rules or principles and except to
the extent the provisions of this Agreement (including the documents or
instruments referred to herein) are expressly governed by or derive their
authority from the MLLCA or the MGL.
Section 10.5 Interpretation. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement, respectively, unless otherwise indicated. The
table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 10.6 Counterparts; Effect. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
Section 10.7 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and their
respective successors and permitted assigns, and, except for rights of
Indemnified Parties as set forth in Section 7.5, nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights
or remedies of any nature whatsoever under or by reason of this Agreement.
Section 10.8 Waiver of Jury Trial and Certain Damages. Each party
to this Agreement waives, to the fullest extent permitted by applicable
law, (a) any right it may have to a trial by jury in respect of any action,
suit or proceeding arising out of this Agreement and (b) without limiting
the effect of Section 9.3, any right it may have, other than in the case of
a willful breach, to receive damages from any other party based on any
theory of liability for any special, indirect, consequential (including
lost profits) or punitive damages.
Section 10.9 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of New
York or in New York state court, this being in addition to any other remedy
to which they are entitled at law or in equity. In addition, each of the
parties hereto (a) consents to submit itself to the personal jurisdiction
of any federal court located in the State of New York or any New York state
court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a federal or state court sitting in the
State of New York.
Section 10.10. Disclaimer of Liability. As provided by Article 3 of
the Company's declaration of trust, no trustee of the Company shall be held
to any liability whatever for the payment of any sum of money, or for
damage or otherwise under this Agreement, and this Agreement shall not be
enforceable against the trustees, shareholders (other than Parent),
officers, agents or other representatives of the Company or any of them in
their, his or her individual capacities or capacity. This Agreement shall
be enforceable only against the Company, Merger Sub and Parent. Every
person, firm, association, trust and corporation shall look only to the
trust estate of the Company for the payment or satisfaction of any
liability or damages of the Company arising out of or in connection with
this Agreement.
IN WITNESS WHEREOF, the Company, Parent and Merger Sub have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
BERKSHIRE ENERGY RESOURCES
By: /s/ Scott S. Robinson
-------------------------
Name: Scott S. Robinson
Title: President and Chief
Executive Officer
ENERGY EAST CORPORATION
By: /s/ Kenneth M. Jasinski
-------------------------
Name: Kenneth M. Jasinski
Title: Executive Vice President and
General Counsel
MOUNTAIN MERGER LLC
By: /s/Kenneth M. Jasinski
-------------------------
Name: Kenneth M. Jasinski
Title: Secretary, Treasurer and
Vice President
Berkshire Energy Resources
NASDAQ: BERK
FOR IMMEDIATE RELEASE
ENERGY EAST AND BERKSHIRE ENERGY RESOURCES AGREE TO COMBINE
IN $96 MILLION TRANSACTION
ALBANY, NY, AND PITTSFIELD, MA (November 10, 1999) - The boards of directors
of Energy East Corporation [NYSE: NEG] and Berkshire Energy Resources [NASD:
BERK] today announced that the companies have signed a definitive agreement
under which Energy East will acquire all of the common shares of Berkshire
for $38.00 per share in cash. The transaction has an equity market value of
approximately $96 million based upon the approximately 2.5 million Berkshire
common shares currently outstanding. Energy East will also assume
approximately $40 million of Berkshire preferred stock and long-term debt.
The acquisition will be accounted for as a purchase, and Energy East intends
to finance it with debt and cash.
Upon completion, Berkshire will become a wholly-owned subsidiary of
Energy East. Berkshire's principal subsidiaries, Berkshire Gas Company,
Berkshire Propane, Inc. and Berkshire Service Solutions serve approximately
40,000 customers, including 6,000 propane customers, in western
Massachusetts, southern Vermont and eastern New York. Berkshire will
maintain its Pittsfield, Massachusetts headquarters.
Wes von Schack, chairman, president and chief executive officer of
Energy East said, "Berkshire Resources makes good strategic sense. It
complements our growth strategies, particularly in Vermont and New
Hampshire, and its propane business provides an opportunity for further
expansion. Also, Berkshire's proximity to NYSEG in eastern Upstate New York
and CTG Resources, Inc. [NYSE: CTG] in northern Connecticut makes it a good
geographical fit."
Scott Robinson, president and chief executive officer of Berkshire
said, "We are pleased to announce this strategic combination with Energy
East. Not only does it provide excellent value to our shareholders, but it
also brings to Massachusetts a company with a demonstrated commitment to
outstanding customer service, competition and economic development. This
combination will be a real benefit to our customers, our employees and the
communities that we serve."
The transaction is conditioned, among other things, upon the approvals
of Berkshire shareholders and the Securities and Exchange Commission (SEC).
The companies anticipate that necessary approvals can be obtained within a
year. No layoffs are anticipated as a result of this combination. The
companies will seek to minimize workforce effects of the merger, primarily
through attrition. The union contract will be honored.
Chase Securities, Inc. acted as financial advisor to Energy East and
Tucker Anthony Cleary Gull acted as financial advisor to Berkshire. Huber
Lawrence & Abell acted as legal counsel to Energy East and Rich, May,
Bilodeau & Flaherty, P.C. acted as legal counsel to Berkshire.
Berkshire Energy Resources is a holding company whose subsidiaries
include The Berkshire Gas Company, Berkshire Propane, Inc., and Berkshire
Service Solutions, Inc.
A natural gas utility serving western Massachusetts, Berkshire Gas
serves 34,000 natural gas customers. The Company has been meeting the energy
needs of customers in western Massachusetts for more than 145 years.
Berkshire Propane provides retail propane service across a 5,000-
square-mile territory in western Massachusetts, southern Vermont and eastern
New York. Berkshire Propane was first established in 1955.
Berkshire Service Solutions is engaged in the commodity sale of energy
to commercial and industrial customers and provides on premise HVAC and
plumbing services in commercial, industrial and residential markets.
Energy East Corporation [NYSE: NEG] is a super-regional energy
services and delivery company in the Northeast. Energy East is a leader in
promoting competition and is committed to profitably growing its energy
infrastructure. Upon completion of this acquisition and its mergers with
Connecticut Energy Corporation [NYSE: CNE], CMP Group [NYSE: CTP] and CTG
Resources - and including its current energy delivery subsidiary, NYSEG -
Energy East will serve more than 1.3 million electricity customers and
nearly 600,000 natural gas customers in New York and New England.
# # #
Contacts for Energy East: Contacts for Berkshire Energy Resources:
Media: Dan Farley Media: Chris Farrell
(518) 434-3014 (413) 445-0312
Investors: Thorn Dickinson Investors: Mike Marrone
(607) 347-2561 (413) 445-0259
