<PAGE>
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
EASTERN ENTERPRISES
----------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-1270730
- -------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 Riverside Road, Weston, Massachusetts 02493
----------------------------------------------
(Address of Principal Offices with) ( zip code)
ESSEX GAS COMPANY 1994 STOCK OPTION PLAN
----------------------------------------
(Full title of the Plan)
L. William Law, Jr.
Eastern Enterprises
9 Riverside Road
Weston, Massachusetts 02493
-------------------------------------
(Name and address of agent for service)
(781) 647-2300
----------------------------------------------------------
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
To Be To Be Price Per Offering Registration
Registered Registered Share (1) Price (1) Fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 28,415 $42.4375 $ 1,205,861.56 $335.23
$1.00 par value, with
related common stock
purchase rights
- -------------------------
</TABLE>
(1) Pursuant to Rules 457(f)(1) and 457(c) under the Securities Act of 1933, as
amended (the"Securities Act") and estimated solely for the purpose of
calculating the registration fee on the basis of the Eastern Common Stock to be
received as established by of the average high and low prices of the Common
Stock as reported by the New York Stock Exchange on December 17, 1998.
<PAGE>
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
-----------------------------------------------
This registration statement incorporates by reference the documents set
forth below that were previously filed with the Securities and Exchange
Commission by Eastern Enterprises (the "Company") (File No. 1-2297) and are made
a part of this registration statement.
o Eastern's Annual Report on Form 10-K for the fiscal year ended December 31,
1997.
o Eastern's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
o Eastern's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
o Eastern's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998.
o Eastern's Current Reports on Form 8-K filed June 29, 1998, July 28, 1998,
October 14, 1998, October 26, 1998 and December 7, 1998.
o Eastern's Current Report on Form 8-K filed November 23, 1998,
containing Eastern's restated financial statements and schedule as
of December 31, 1997 and 1996 and for each of the three years in the
period ended December 31, 1997. To the extent applicable, the
information contained in this report will supersede information
contained in Eastern's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997.
o The description of Eastern Common Stock contained in its Form 8,
filed on May 23, 1991, amending its Registration Statement on Form
8-A dated November 6, 1950.
o The description of the Eastern common stock purchase rights
contained in Eastern's Registration Statement on Form 8-A filed on
March 1, 1990, as amended.
o The description of the Eastern 1998 common stock purchase rights
contained in Eastern's Registration Statement on Form 8-A filed on
July 29, 1998.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended ( the "Exchange Act"), prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents.
Item 4. Description of Securities
-------------------------
Not Required.
2
<PAGE>
Item 5. Interests of Named Experts and Counsel
--------------------------------------
Not Applicable.
Item 6. Indemnification of Trustees and Officers
----------------------------------------
The Declaration of Trust of the Company (the "Company's Charter")
provides that the trustees, officers and agents of the Company generally shall
not be liable except for acts or failures to act which at the time would impose
liability on such party if the Company were a Massachusetts business corporation
and such person was a director, officer or agent thereof. The Company's Charter
provides that it shall indemnify each of its trustees and officers against all
liabilities and expenses, including amounts paid in satisfaction of judgments,
in compromise or as fines and penalties, and counsel fees, reasonably incurred
by such person in connection with the defense or disposition of any action,
suits or other proceeding, whether civil or criminal, including but not limited
to derivative suits (to the extent permitted by law), in which such person may
be involved or with which such person may be threatened, while in office or
thereafter, except with respect to any matters as to which such person shall
have been adjudicated to have acted in bad faith or not to have acted in good
faith in the reasonable belief that such person's action was in the best
interests of the Company or, to the extent that such matter relates to service
with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such plan. The Company's Charter provides,
however, that as to any matter disposed of by a compromise payment by such
trustee or officer pursuant to a consent decree or otherwise, no indemnification
either for said payment or for any other expenses shall be provided unless such
compromise shall be approved as in the best interests of the Company, after
notice that it involves such indemnification: (a) if no change of control has
occurred, (i) by a disinterested majority of the trustees then in office or (ii)
by a majority of the disinterested trustees then in office or by the
shareholders of the Company, provided that the Company shall have received a
written opinion of independent legal counsel to the effect that such trustee or
officer appears to have acted in good faith in the reasonable belief that such
person's action was in the best interests of the Company; or (b) if a change of
control shall have occurred, by an opinion in writing of independent legal
counsel to the effect that such trustee or officer appears to have acted in good
faith in the reasonable belief that such person's action was in the best
interests of the Company. The rights accruing to any trustee or officer under
the foregoing provisions do not exclude any other right to which such trustee or
officer may be lawfully entitled; provided, however, that no trustee or officer
may satisfy any rights of indemnity or reimbursement granted pursuant to the
Company's Charter or to which he may be otherwise entitled except out of the
trust estate of the Company.
The Company's Charter further provides that notwithstanding any
provision of law or any other provision of the Company's Charter, a trustee
shall not be liable to the Company or any shareholder of the Company for
monetary damages for breach of such trustee's fiduciary duties as a trustee,
except with respect to any matter as to which such liability is imposed by
applicable law and such trustee shall have been adjudicated (a) to have breached
such trustee's duty of loyalty to the Company or its shareholders, (b) to have
acted (or omitted to act) not in good faith, (c) to have knowingly violated the
law, (d) to have intentionally engaged in misconduct, or (e) to have derived any
improper personal benefit from a transaction. Trustees, officers and agents of
the Company will also not be held liable for any act or failure to act in good
faith, that is required, authorized or approved by an order issued pursuant to
the Public Utility Holding Company Act of 1935 or any other federal or state
statute regulating the Company or any of its subsidiaries by reason of its being
3
<PAGE>
a public utility holding company or their being public utilities. In the event
that the foregoing provisions of the preceding sentence are found by a court not
to constitute a valid defense on the grounds of not being applicable to the
particular class of plaintiffs, each such trustee, officer and agent (and his or
her legal representatives) shall be reimbursed for, or indemnified against, all
expenses and liabilities incurred by him or her or imposed on him or her in
connection with any such action, suit or proceeding; provided, however, that as
to any matter disposed of by a compromise payment by such trustee or officer,
pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless such compromise shall
be approved as in the best interest of the Company as provided in the Company's
Charter. Such expenses and liabilities shall include, but shall not be limited
to, judgments, court costs, and attorneys' fees.
The Company's Charter provides that in discharging his or her duties,
when acting in good faith, any trustee or officer shall be fully entitled to
rely upon information, opinion, reports or records, including financial
statements, books of account and other financial records, in each case presented
or prepared by, or under the supervision of, (a) one or more officers or
employees of the Company (or of another organization in which such party serves
as contemplated by Article 19 of the Company's Charter, including all directors,
officers and trustees of wholly-owned subsidiaries of the Company) whom the
trustee or officer reasonably believes to be reliable and competent in the
matters presented, (b) counsel, public accountants or other persons as to
matters which the trustee or officer reasonably believes to be within such
person's professional or expert competence, or (c) in the case of a trustee, a
duly constituted committee of trustees (or similar governing body of such other
organization) upon which such trustee does not serve, as to matters within its
delegated authority, which committee the trustee reasonably believes to merit
confidence, but such trustee shall not be considered to be acting in good faith
if such trustee has knowledge concerning the matter in question that would cause
such reliance to be unwarranted. The fact that a trustee or officer so relied
shall be a complete defense to any claim asserted against such party, except as
expressly provided by statute, by reason of such party being or having been a
trustee or officer of the Company (or such other organization).
The Company maintains an insurance policy that insures its trustees and
officers against certain liabilities.
Item 7. Exemption from Registration Claimed
-----------------------------------
Not Applicable.
Item 8. Exhibits.
--------
Exhibit 4(a). Essex Gas Company 1994 Stock Option Plan.
Exhibit 4(b). Declaration of Trust of Eastern
Enterprises, as amended (filed as Exhibit
3.1 to Eastern Enterprises Quarterly Report
on Form 10-Q for the quarter ended June 30,
1989, Commission File No.
1-2297, incorporated by reference herein).
Exhibit 4(c). By-laws of Eastern Enterprises, as
amended (filed as Exhibit 3.1 to the Eastern
Enterprises Quarterly Report on Form 10-Q
4
<PAGE>
for the quarter ended June 30, 1992,
Commission File No. 1-2297, incorporated by
reference herein).
Exhibit 4(d). Specimen copy of common stock
certificate for Eastern Enterprises (filed
as Exhibit A-1 to the Eastern Enterprises
Form U-1 dated March 31, 1998, Commission
File No. 070-09195, incorporated by
reference herein).
Exhibit 4(e). Common Stock Rights Agreement between
Eastern Enterprises and the Bank of New York
dated as of February 22, 1990 (filed as
Exhibit 1 to the Eastern Enterprises Current
Report on Form 8-K dated March 1, 1990,
Commission File No. 1-2297, incorporated by
reference herein).
Exhibit 4(f). Agreement between Eastern and the
First National Bank of Boston dated January
30, 1995 ( filed as Exhibit 4.1.1. to the
Eastern Enterprises Annual Report on Form
10-K for the year ended December 31, 1994,
Commission File No. 1-2297, incorporated by
reference herein).
Exhibit 4(g) Amendment No. 2 to Common Stock Rights
Agreement, between Eastern Enterprises and
BankBoston, N.A., dated July 22, 1998 (filed
as Exhibit 99.1 to the Eastern Enterprises
Current Report on Form 8-K, filed July
29,1998, Commission File No. 1-2297,
incorporated herein by reference).
Exhibit 4(h) Rights Agreement between Eastern
Enterprises and BankBoston, N.A., dated as
of July 22, 1998 (filed as Exhibit 99.2 to
the Eastern Enterprises Current Report on
Form 8-K, filed July 29,1998, Commission
File No. 1-2297, incorporated herein by
reference).
Exhibit 5. Opinion of L. William Law, Jr., General
Counsel of Eastern Enterprises.
Exhibit 23(a). Consent of L. William Law, Jr., General
Counsel of Eastern Enterprises (contained
in Exhibit 5).
Exhibit 23(b). Consent of Arthur Andersen LLP.
Exhibit 24. Power of Attorney (included as part of the
signature pages to this Registration
Statement).
Item 9. Undertakings.
------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
5
<PAGE>
(i) To include any prospectus required by Section 10(a)
(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) will not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of any
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Weston, Commonwealth of Massachusetts, on this 22nd
day of December, 1998.
EASTERN ENTERPRISES
By: /s/ Walter J. Flaherty
----------------------
Name: Walter J. Flaherty
Title: Senior Vice President and
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Walter J. Flaherty and L. William Law, Jr. and
each of them, with full power to act without the other, his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
revocation, for him or her and in his or her name, place and stead, in any and
all capacities to execute any and all amendments to this registration statement,
including post-effective amendments and supplements to this registration
statement, or any registration statement under Rule 462(b), and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or any substitutes may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Name Title Date
/s/ J. Atwood Ives Chairman of the Board, December 22, 1998
- -------------------
J. Atwood Ives Chief Executive Officer and Trustee
(principal executive officer)
/s/ Fred C. Raskin President and Chief Operating December 22, 1998
- -------------------
Fred C. Raskin Officer
/s/ Walter J. Flaherty Senior Vice President December 22, 1998
- -----------------------
Walter J. Flaherty and Chief Financial Officer
(principal financial officer)
/s/ James J. Harper Vice President and Controller December 22, 1998
- --------------------
James J. Harper (principal accounting officer)
7
<PAGE>
/s/ James R. Barker Trustee December 22, 1998
- --------------------
James R. Barker
/s/ Richard R. Clayton Trustee December 22, 1998
- -----------------------
Richard R. Clayton
/s/ John D. Curtin, Jr. Trustee December 22, 1998
- ------------------------
John D. Curtin, Jr.
/s/ Samuel Frankenheim Trustee December 22, 1998
- -----------------------
Samuel Frankenheim
/s/ Leonard R. Jaskol Trustee December 22, 1998
- ----------------------
Leonard R. Jaskol
/s/ Wendell J. Knox Trustee December 22, 1998
- --------------------
Wendell J. Knox
/s/ Rina K. Spence Trustee December 22, 1998
- -------------------
Rina K. Spence
/s/ David B. Stone Trustee December 22, 1998
- -------------------
David B. Stone
8
<PAGE>
EXHIBIT INDEX
Number Title of Exhibits
Exhibit 4(a). Essex Gas Company's 1994 Stock Option Plan.
Exhibit 4(b). Declaration of Trust of Eastern Enterprises, as amended
(incorporated by reference).
Exhibit 4(c). By-laws of Eastern Enterprises, as amended ( incorporated
by reference).
Exhibit 4(d). Specimen copy of common stock certificate for Eastern
Enterprises (incorporated by reference).
Exhibit 4(e). Common Stock Rights Agreement between Eastern Enterprises
and the Bank of New York dated as of February 22, 1990
(incorporated by reference).
Exhibit 4(f). Agreement between Eastern and the First National Bank of
Boston dated January 30, 1995 (incorporated by reference).
Exhibit 4(g) Amendment No. 2 to Common Stock Rights Agreement, between
Eastern Enterprises and BankBoston, N.A., dated July
22, 1998 (incorporated by reference).
Exhibit 4(h) Rights Agreement between Eastern Enterprises and
BankBoston, N.A., dated as of July 22, 1998 (incorporated
by reference).
Exhibit 5. Opinion of L. William Law, Jr., General Counsel of Eastern
Enterprises.
Exhibit 23(a). Consent of L. William Law, Jr., General Counsel of Eastern
Enterprises (contained in Exhibit 5).
Exhibit 23(b). Consent of Arthur Andersen LLP.
Exhibit 24. Power of Attorney (included as part of the signature
pages to this Registration Statement).
9
<PAGE>
Exhibit 4(a)
ESSEX GAS COMPANY
1994 STOCK OPTION PLAN
<PAGE>
ESSEX GAS COMPANY
1994 STOCK OPTION PLAN
1. PURPOSE
This 1994 Stock Option Plan (the "Plan") is intended as an incentive to, and to
encourage stock ownership by, key personnel of Essex Gas Company (the
"Corporation") and any subsidiary corporations (the "Subsidiaries") as that term
is defined in Section 424 of the Internal Revenue Code of 1986, as amended (the
"Code"), so that they may acquire or increase their proprietary interest in the
success of the Corporation and its Subsidiaries, and to encourage them to remain
in the employ of the Corporation or of the Subsidiaries.
2. ADMINISTRATION
The plan shall be administered by the Board of Directors of the Corporation or
any committee appointed by such Board (such body administering the plan shall be
known as the "Committee").
Subject to the express provisions of the Plan, the Committee shall have complete
authority to:
(a) interpret the Plan;
(b) prescribe, amend and rescind rules and regulations relating
to the Plan;
(c) determine the individuals to whom, and the time or times at
which, options shall be granted;
(d) determine the number of shares to be subject to each option
and the terms and provisions of each option Agreement;
(e) subject to the limitations set forth in Sections 5(g), 5(h) and
5(i), waive or modify at any time, either before or after an
option is granted, any condition or restriction with respect to
the exercise of the option imposed by Sections 5 or 6 in such
circumstances as the Committee in its sole discretion deems
appropriate; and
(f) make all determinations not specifically set forth in (a)
through (e) above which it considers necessary or desirable for
the administration of the Plan.
3. ELIGIBILITY
The persons who shall be eligible to receive options shall be key exempt
employees of the Corporation, or its Subsidiaries, including employees who may
2
<PAGE>
also be officers or directors. Persons who hold options (the "Optionees") may
hold more than one option, but only on the terms and subject to the restrictions
hereinafter set forth. Employees owning more than 10% of the total voting power
of the Corporation shall be eligible to receive options subject to the special
restrictions detailed in Section 5(i).
4. SHARES SUBJECT TO THE PLAN
The aggregate number of shares of the Corporation's common stock, with $2.50 par
value ("'Common Stock") which may be issued or sold pursuant to the exercise of
options granted under the Plan shall not exceed 100,000 subject to adjustment as
provided in Section 5(j). The shares issued upon exercise of options under the
Plan may be authorized and unissued shares or shares held by the Corporation in
its treasury. In the event that any outstanding option under the Plan for any
reason expires or is terminated, the shares of Common Stock allocable to the
unexercised portion of such option may again be made subject to an option under
the Plan. The aggregate number of shares of Common Stock as to which options may
be granted during any one calendar year to any one individual shall not exceed
25,000. As a result of the acquisition of the Corporation by Eastern Enterprises
("Eastern") on September 30, 1998, all issued and outstanding options issued
under this Plan as of such date will be exercisable only for shares of common
stock, $1.00 par value per share, of Eastern ("Eastern Common Stock") in
accordance with Section 7.12 of the Agreement and Plan of Merger, dated as of
December 19, 1997, by and between Eastern and the Corporation. No additional
options shall be granted under this Plan after September 30, 1998. All
references to Common Stock shall mean Eastern Common Stock after September 30,
1998. All references to the Corporation shall be interpreted by the Committee to
mean Eastern as the Committee shall, in its sole discretion, deem necessary to
the administration of the Plan after September 30, 1998.
5. TERMS AND CONDITIONS OF OPTIONS
Stock options granted pursuant to the Plan shall be evidenced by agreements (the
"Agreements") between the Corporation and each Optionee in such form as the
Committee shall from time to time approve, which Agreements shall comply with,
and be subject to, the following terms and conditions:
(a) Optionee's Agreement
--------------------
This Plan shall not impose upon the Corporation or any of the
Subsidiaries any obligation to retain the Optionee in the
employ of such entities for any period.
(b) Grants
------
Each option shall be designated as an incentive stock option
within the meaning of Section 422 of the Code or as a
nonqualified stock option (i.e. a stock option which is not an
incentive stock option). The number of shares of Common Stock
that shall be available for incentive stock options granted
under the plan is 100,000, subject to adjustment as provided
in Section 5(j).
3
<PAGE>
(c) Number of Shares
----------------
Each option shall state the number of shares of Common Stock
to which it pertains.
(d) Option Price
------------
Each option shall state the option price, which shall be not
less than 100% of the Fair Market Value of a share of the
Corporation's Common Stock on the date the option is granted.
For purposes of the Plan, "Fair Market Value" as of a given
date means the mean between the bid and the asked price for
the Common Stock at the close of trading for such given date
or if no sale is reported for such date, on the next preceding
date for which a sale is reported.
If the Common Stock is listed on a national securities
exchange the "Fair Market Value" as of a given date means, the
closing price of the Common Stock on the Composite Tape for
such given date or if no sale is reported for such date, on
the next preceding date for which a sale is reported.
Notwithstanding any provision of the Plan to the contrary, no
determination made with respect to the Fair Market Value of
Common Stock subject to an Incentive Stock Option shall be
inconsistent with Section 422 of the Code or regulations
thereunder.
(e) Limitation on Exercise
----------------------
Unless the Agreement provides otherwise, an option shall be
exercisable in whole or in part. Stock options issued in the
form of incentive stock options shall comply with Section 422
of the Code. Accordingly, the aggregate Fair Market Value
(determined at the time the option was granted) of the Common
Stock with respect to which incentive stock options are
exercisable for the first time by an Optionee during any
calendar year (under this Plan or any other plan of the
Corporation or any of its Subsidiaries) shall not exceed
$100,000 (or such other limit as may be required by the Code).
(f) Medium and Time of Payment
--------------------------
Each option shall provide that the purchase price of the
shares as to which an option shall be exercised shall be paid
to Eastern at the time of exercise either in cash or in Common
Stock already owned by the Optionee having a total Fair Market
Value equal to the purchase price, or a combination of cash
and Common Stock having a total Fair Market Value equal to the
purchase price. The Committee shall establish appropriate
methods for accepting Common Stock and may impose such
conditions as it deems appropriate on the use of such Common
Stock to exercise a stock option.
4
<PAGE>
In the discretion of the Committee, payment for any shares
subject to an option may also be made by delivering a properly
executed exercise notice to the Corporation, together with a
copy of irrevocable instructions to a broker to deliver
promptly to the Corporation the amount of sale or loan
proceeds to pay the purchase price. To facilitate the
foregoing, the Corporation may enter into agreements for
coordinated procedures with one or more brokerage firms.
(g) Period of Option
----------------
Each option shall be exercisable during such period ending not
later than ten years from the date it is granted as the
Committee may determine.
(h) Time of Exercise
----------------
Each option shall become exercisable in such cumulative annual
installments as the Committee shall determine; commencing,
except as provided in Section 5(k), twelve months after the
date of grant and terminating at the end of the period
specified pursuant to Section 5(g).
(i) Restrictions for Certain Shareholders
-------------------------------------
Notwithstanding anything contained herein to the contrary, the
following restrictions shall be applied to incentive stock
options granted to employees who own more than 10% of the
total combined voting power of all classes of stock of the
Corporation or its parent or any Subsidiary at the time the
option is granted (a "10% Shareholder").
(1) The opinion price for each incentive stock option
granted to a 10% Shareholder shall not be less than
10% of the Fair Market Value of the Common Stock on
the date the option is granted.
(2)Each incentive stock option granted to a 10% Shareholder
shall be exercisable during such period ending not
later than five years from the date it is granted as
the Committee may determine.
(3) Each incentive stock option granted to a 10%
Shareholder shall become exercisable in such
cumulative annual installments as the Committee shall
determine; commencing, except as provided in Section
5(k), twelve months after the date of the grant and
terminating at the end of the period specified
pursuant to Section 5(i)(2).
5
<PAGE>
(j) Recapitalization
----------------
Notwithstanding any other provisions in the Plan, the
Committee shall adjust, or the Agreements entered into
hereunder may contain such provisions as the Committee shall
determine to be appropriate for the adjustment of, the number,
price and class of shares subject to each outstanding option,
in the event of changes in the outstanding Common Stock by
reason of stock dividends, recapitalization, mergers,
consolidations, split-ups, combinations or exchanges of shares
and the like.
In the event of a change in the Common Stock of the
Corporation as presently constituted which is limited to a
change of all of its authorized Common Stock into the same
number of shares without par value, the shares resulting from
any such change shall be deemed to be the Common Stock within
the meaning of the Plan.
Such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and
conclusive, provided that each incentive stock option granted
pursuant to this Plan shall not be adjusted in a manner that
causes the option to fail to continue to qualify as an
incentive stock option within the meaning of Section 422 of
the Code.
The grant of an option pursuant to the Plan shall not affect
in any way the right or power of the Corporation to make
adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or to
consolidate or to dissolve, liquidate or sell, or transfer all
or any part of its business or assets.
(k) Change of Control
-----------------
In order to maintain the Optionees' rights in the event of a
Change of Control of the Corporation, as hereinafter defined,
the commencement of any time periods relating to the exercise
of such options shall be accelerated to the date of Change of
Control.
A "Change of Control" shall mean:
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the "Exchange Act") (A "Person") of beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more
of the combined voting power of the then outstanding
voting securities of the Corporation entitled to
vote generally in the election of directors (the
"Outstanding Corporation Voting Securities");
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provided, however, that for purposes of this
subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition
directly from the Corporation, (ii) any acquisition
by the Corporation, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored
or maintained by the Corporation or any corporation
controlled by the Corporation or (iv) any
acquisition by any corporation pursuant to a
transaction that complies with clauses (i), (ii) and
(iii) of subsection (c) below; or
(b) individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the
Board; provided, however, that any individual
becoming a director subsequent to the date hereof
whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote
of at least a majority of the directors then
comprising the Incumbent Board shall be considered
as though such individual were a member of the
Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of
office occurs as a result of an actual or threatened
election contest with respect to the election or
removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) the consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Corporation
("Business Combination"); excluding, however, such a
Business Combination pursuant to which (i) all or
substantially all of the individuals and entities
who were the beneficial owners of the Outstanding
Corporation Voting Securities immediately prior to
such Business Combination beneficially own, directly
or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the
combined voting power of the then outstanding voting
securities entitled to vote generally in the
election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation that
as a result of such transaction owns the Corporation
or all or substantially all of the Corporation's
assets either directly or through one or more
subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such
Business Combination of the Outstanding Corporation
Voting Securities, (ii) no Person (excluding any
employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then
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outstanding share of common stock of the corporation
resulting from such Business Combination or the
combined voting power of the then outstanding voting
securities of such corporation except to the extent
that such ownership existed prior to the Business
Combination and (iii) at least a majority of the
members of the board of directors of the corporation
resulting from such Business Combination were members
of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(d) approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
(l) Change of Control Cash-Out
--------------------------
Notwithstanding any other provision of the Plan, during the
60-day period from and after a Change of Control (the
"Exercise Period"), unless the Committee shall determine
otherwise at the time of grant, an Optionee shall have the
right, whether or not the option is fully exercisable and in
lieu of the payment of the exercise price for the shares of
Common Stock being purchased under the option and by giving
notice to the Corporation, to elect (within the Exercise
Period) to surrender all or part of the option to the Company
and to receive cash, within 30 days of such notice, in an
amount equal to the amount by which the Change of Control
Price per share of Common Stock on the date of such election
shall exceed the exercise price per share of Stock under the
option (the "Spread") multiplied by the number of share of
Common Stock subject to the option as to which the right
granted under this Section 5(l) shall have been exercised;
provided, however, that if the Change of Control occurs within
six months of the date of grant of a particular option held by
an Optionee who is an officer or director of the Corporation
and is subject to Section 16(b) of the Exchange Act no such
election shall be made by such Optionee with respect to such
option prior to six months from the date of grant. However, if
the end of such 60-day period from and after a Change of
Control is within six months of the date of grant of an option
held by an Optionee who is an officer or director of the
Corporation and is subject to Section 16(b) of the Exchange
Act, such option shall be canceled in exchange for a cash
payment to the Optionee, effected on the day which is six
months and one day after the date of grant of such option,
equal to the Spread multiplied by the number of shares of
Stock granted under the option. Notwithstanding the foregoing,
if any right granted pursuant to this Section 5(l) would make
a Change of Control transaction ineligible for pooling of
interests accounting under APB No. 16 that but for this
Section 5(l) would otherwise be eligible for such accounting
treatment, the Committee shall have the ability to substitute
for the cash payable pursuant this Section 5(l) common stock
of the entity surviving the Change of Control with a Fair
Market Value equal to the cash that would otherwise be payable
hereunder.
"Change of Control Price" means the higher of (i) the highest
reported sale price of a share of Stock in any transaction
reported on the New York Stock Exchange Composite Tape or
other national securities exchange on which such share are
listed or on NASDAQ, as applicable, during the 60 day period
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prior to and including the date of a Change of Control and
(ii) if the Change in Control is the result of a tender or
exchange offer or a Business Combination, the highest price
per share of Stock paid in such tender or exchange offer or
Business Combination; provided, however, that (x) in the case
of an option which (A) is held by an Optionee who is an
officer or director of the Corporation and is subject to
Section 16(b) of the Exchange Act and (B) was granted within
240 days of the Change of Control, then the Change of Control
Price for such option shall be the Fair Market Value of the
Stock on the date such option is exercised or canceled and (y)
in the case of incentive stock options, the Change of Control
Price shall be in all cases the Fair Market Value of the
Common Stock on the date such incentive stock option is
exercised. To the extent that the consideration paid in any
such transaction described above consists all or in part of
securities or other non-cash consideration, the value of such
securities or other non-cash consideration shall be determined
in the sole discretion of the Board.
(m) Rights as a Stockholder
-----------------------
An Optionee shall have no rights as a stockholder with respect
to any shares covered by his option until the date of issuance
of a stock certificate to him for such shares. No adjustment
shall be made for dividends (ordinary or extraordinary whether
in cash, securities or other property) or distributions or
other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in this
Section 5.
(n) Other Provisions
----------------
The option Agreements authorized under the Plan shall contain
such other provisions, including, without limitation,
restrictions upon the exercise of the option, as the Committee
shall deem advisable. Any such option Agreement in respect of
incentive stock options shall contain such limitations and
restrictions upon the exercise of the option as shall be
necessary in order that such option will be an "Incentive
Stock Option" as defined in Section 422 of the Code or to
conform to any change in the law.
6. TERMINATION OF EMPLOYMENT
(a) Notice of Termination
---------------------
Except as provided in Sections 6(b) and 6(c) below, upon
notice of termination of an Optionee's employment with the
Corporation or a Subsidiary, whether given by the Optionee to
the Corporation or Subsidiary, or by the Corporation or
Subsidiary to the Optionee, the Optionee may exercise all
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<PAGE>
exercisable options held by such Optionee on the date of
termination, at any time, or from time to time, prior to the
earlier of the expiration date of the option or 3 months from
the date of the Optionee's termination.
Notwithstanding the foregoing, options that are exercisable
immediately following a Change of Control shall remain
exercisable following a termination of the Optionee's
employment until the earlier of the expiration date of the
option or seven months from the date of such termination.
(b) Death
-----
When an Optionee's employment with the Corporation or a
Subsidiary terminates by reason of death, or in the event of
the death of the Optionee within three months after
termination of employment with the Corporation or Subsidiary,
the Optionee's personal representatives, heirs or legatees, as
the case may be, shall be entitled to exercise all remaining
unexpired options (without regard to the twelve month and
cumulative installment limitations set forth in Sections 5(h)
and 5(i)(3) above) held by the Optionee on the date of death,
at any time, or from time to time, prior to the earlier of the
expiration date of the option or two years from the date of
the Optionee's death.
(c) Disability
----------
If an Optionee's employment with the Corporation or a
Subsidiary shall terminate because of permanent disability as
defined in Code Section 22(e)(3), the Optionee may exercise
all exercisable options held by such Optionee on the date of
termination, at any time, or from time to time, prior to the
earlier of the expiration date of the option or one year from
the date of the Optionee's termination.
(d) Leave of Absence
----------------
A leave of absence authorized by the Corporation shall not be
deemed a termination of employment to the extent permitted
under applicable Internal Revenue Code provisions or
regulations adopted pursuant thereto; however, no options may
be exercised by an Optionee during such leave of absence
before the occurrence of a Change of Control.
7. NON-ASSIGNABILITY
Options granted under the Plan are not transferable otherwise than by will or
the laws of descent and distribution and during the Optionee's lifetime are
exercisable only by him.
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8. GENERAL RESTRICTION
(a) Securities Laws and Regulations
-------------------------------
No option granted hereunder shall be exercisable unless and
until such time as the Common Stock to which it relates is
exempt, is the subject matter of an exempt transaction, or is
registered or otherwise duly qualified for sale under all
applicable federal and state securities laws and regulations.
(b) Taxes
-----
It shall be a condition to performance of the Corporation's
obligation to issue or transfer shares upon exercise of
options that the Optionee pay, or make provision satisfactory
to the Corporation for payment of, any taxes (other than stock
issue or transfer taxes) which the Corporation is obligated to
collect with respect to the issue or transfer of such shares
upon such exercise.
If an Optionee disposes of shares acquired pursuant to the
exercise of an incentive stock option in a disqualifying
disposition within the time periods identified in Section
422(a)(1) of the Code, such Optionee is required to notify the
Corporation of such disposition, provide information as to the
date of disposition, sale price, quantity disposed of and any
other information about such disposition which the Corporation
may reasonably request, and pay to the Corporation an amount
sufficient to satisfy all federal, state and/or local
withholding tax requirements due as a result of such
disposition. In accordance with any applicable administrative
guidelines it establishes, the Committee may allow an Optionee
to pay the amount of taxes required to bewithheld with respect
to such disposition by withholding from amounts payable to the
Optionee under the Plan or from other compensation payable to
the Optionee, or by permitting the Optionee to deliver to the
Corporation, shares of Common Stock having a Fair Market Value
equal to the amount of such required withholding taxes.
9. TERM OF PLAN
Options may be granted pursuant to the Plan from time to time within a period of
ten years from the date the Plan is adopted, or the date the Plan is approved by
the shareholders of the Corporation, whichever is earlier.
10. AMENDMENTS OF THE PLAN
The Board may amend, alter or discontinue the Plan, but no amendment, alteration
or discontinuation shall be made which would impair the rights of any Optionee
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<PAGE>
under any outstanding option Agreement, without his consent, or which, without
the approval of the shareholders, would:
(a) Except as is provided in Section 5(j) of the Plan, increase
the maximum number of shares of Common Stock reserved for the
purposes of the Plan or reduce the minimum option price to
less than 100% of the Fair Market Value of the Common Stock on
the date the option is granted;
(b) Change the class of employees eligible to receive options
under the Plan;
(c) Extend the duration of the Plan; or
(d) Extend the period during which options may be exercised under the
Plan.
11. APPROVAL OF SHAREHOLDERS AND DIRECTORS
The Plan shall not take effect until approved by the affirmative vote of a
majority of the shares represented at the meeting of Shareholders held to
consider such action. Such approval must occur within the period beginning
twelve months before and ending twelve months after the date the Plan is adopted
by the Board of Directors.
The Plan was adopted by the Board of Directors of the Corporation on June 7,
1994 and will be submitted to the shareholders of the Corporation on January
17,1995.
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Exhibit 5
December 22, 1998
Eastern Enterprises
9 Riverside Road
Weston, MA 02493
You have asked for my opinion concerning the legality of 28,415 shares of Common
Stock, with a par value of $1.00 per share (the "Shares"), of Eastern
Enterprises (the "Association") issuable upon the exercise of options granted
under the Essex Gas Company 1994 Stock Option Plan (the "Plan") and 28,415
common stock purchase rights (the "Rights") attached to the Shares pursuant to
the provisions of a Common Stock Rights Agreement between the Association and
BankBoston, N.A., dated as of February 22, 1990, as amended (the "Rights
Agreement").
As Senior Vice President, General Counsel and Secretary of the Association, I
have acted as counsel for the Association in connection with the preparation of
the Registration Statement on Form S-8 (the "Registration Statement") with
respect to the Plan, which is being filed with the Securities and Exchange
Commission under the Securities Act of 1933 contemporaneously herewith, and I
have examined:
(a) the Declaration of Trust of the Association dated July 18, 1929, as
amended;
(b) the By-laws of the Association as from time to time in effect;
(c) a copy of the Registration Statement;
(d) the minutes of meetings to date of the shareholders and
Board of Trustees of the Association and the shareholders
and Board of Directors of Essex Gas Company;
<PAGE>
Eastern Enterprises
December 22, 1998
Page 2
(e) the Rights Agreement; and
(f) such other documents and records as I deem necessary for purposes of this
opinion.
I have assumed that the Shares proposed to be issued upon the exercise of
options under the Plan will be issued only upon payment therefor as provided in
the Plan and that the price for such shares will be not less than $1.00 per
share. I have also assumed that the issuance of any Shares pursuant to the Plan
will not result in the issuance by the Association of more than its authorized
shares of the Association's common stock. In addition, I have assumed that the
Rights will be issued in accordance with the provisions of the Rights Agreement.
Based upon the foregoing, I am of the opinion that:
1. The Association is duly organized and existing as an unincorporated
voluntary association in conformity with the laws of The Commonwealth of
Massachusetts.
2. The Shares, when issued and paid for as provided in the Plan, will be
validly issued and will be fully paid and nonassessable except as set forth
below in this opinion.
3. The Rights, when issued in accordance with the Rights Agreement, will be
validly issued and will constitute binding obligations of the Association.
The Association is a voluntary association of the type commonly known as a
"Massachusetts business trust." Pursuant to certain decisions of the Supreme
Judicial Court of Massachusetts, shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. Even if the Association were held to be a partnership, however, the
possibility of its shareholders incurring financial loss appears remote because
(a) the Association's Declaration of Trust contains an express disclaimer of
shareholder liability for the obligations of the Association and requires that
such notice be given in each agreement, obligation or instrument entered into or
executed by the
<PAGE>
Eastern Enterprises
December 22, 1998
Page 3
Association, (b) management of the Association has advised that the Association
is adequately insured against tort liability, (c) most of the Association's
operations are conducted by incorporated subsidiaries and (d) the Association's
Declaration of Trust provides for indemnification out of the trust property for
any shareholder held personally liable for the obligations of the Association.I
understand that this opinion is to be used in connection with the Registration
Statement. I consent to the filing of this opinion with and as a part of the
Registration Statement and to use of my name therein.
Very truly yours,
/s/ L. William Law, Jr.
L. William Law, Jr.
EXHIBIT 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our reports dated October 1, 1998
(except with respect to the matter discussed in Note 3 to the financial
statements, as to which the date is October 17, 1998) included in Eastern
Enterprises' Current Report on Form 8-K dated November 23, 1998, and to all
references to our Firm included in this Registration Statement.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Boston, Massachusetts
December 21, 1998
