File No. 70-8255
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 3
TO
FORM U-1
APPLICATION-DECLARATION WITH RESPECT TO
THE ISSUANCE OF COMMON SHARES IN CONNECTION WITH
THE ACQUISITION OF TWO ENERGY SERVICES BUSINESSES
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
EASTERN UTILITIES ASSOCIATES
P.O. Box 2333, Boston, Massachusetts 02107
EUA COGENEX CORPORATION
P.O. Box 2333, BOSTON, MASSACHUSETTS 02107
(Name of companies filing this statement
and address of principal executive office)
EASTERN UTILITIES ASSOCIATES
(Name of top registered holding company parent of
applicant or declarant)
CLIFFORD J. HEBERT, JR., TREASURER
EASTERN UTILITIES ASSOCIATES
P.O. Box 2333, BOSTON, MASSACHUSETTS 02107
(Name and address of agent for service)
The Commission is requested to mail signed copies
of all orders, notices and communications to:
ARTHUR I. ANDERSON, ESQ.
McDermott, Will & Emery
75 State Street
Boston, MA 02109
ITEM 1. DESCRIPTION OF THE PROPOSED TRANSACTIONS.
EUA and Cogenex propose to amend and restate the information in
Sections IV, V and VI of Item 1 of this Application-Declaration on
Form U-1 relating to the proposed acquisition of Northeast Energy
Management, Inc., a Maine corporation (NEMI), as follows:
IV. The NEMI Acquisition Plan. The NEMI acquisition will be
structured as a taxable statutory merger of NEMI into NEWCO with NEWCO
as the surviving corporation. The merger will be structured to
satisfy the requirements for pooling accounting treatment of the
acquisition. Exhibit J filed herewith explains the requirements for
using the pooling method of accounting and how the NEMI acquisition
meets those requirements.
In connection with the merger, EUA will issue to the sole
stockholder of NEMI an amount of EUA common shares which equals an
aggregate consideration for NEMI of $19,800,000.00, plus an amount
equal to the accounts receivable of NEMI due under an agreement with
Central Maine filed herewith as Exhibit K to be received by NEWCO
which relate to the period prior to the Closing, less the liabilities
of NEMI assumed by operation of law in connection with the merger of
NEMI into NEWCO (the "Purchase Price"). The accounts receivable of
NEMI at the Closing are estimated to be $416,093 through January 30,
1994, and the assumed liabilities as of the Closing Date are estimated
to be approximately $8,500,000. A dividend in an amount equal to
NEMI's retained earnings through the Closing Date will be declared and
paid by NEMI prior to the Closing. If NEMI borrows funds for the
purpose of paying the dividend, such amounts shall be included in the
NEMI liabilities assumed by NEWCO. The Purchase Price, estimated to
be approximately $11,800,000 as calculated on Exhibit L hereto and
more fully described on Exhibit I-1 hereto, shall be paid at Closing
which is anticipated to occur during the time in which EUA's common
shares are trading ex-dividend. Assuming an EUA common share price of
$28.00 per share, approximately 425,000 common shares of EUA would be
issued in the acquisition. The actual number of EUA Shares to be
delivered at Closing shall be determined by dividing the Purchase
Price, calculated as described above, by the arithmetic average of (x)
the average of the high and low selling price of EUA common shares on
the first day prior to the Closing Date that such shares are trading
ex-dividend and (y) the average of the high and low selling price of
EUA common shares on the second day prior to the Closing Date that
such shares are trading ex-dividend. Each high and low selling price
shall be as reported in The Wall Street Journal. The common shares of
EUA will be registered under the '33 Act and applicable Blue Sky laws
for resale by the NEMI stockholder.
Cogenex, NEMI and the NEMI stockholder have executed a letter
agreement (Exhibit B-2) as amended by further letter agreements
(Exhibits B-2.1 and B-2.2), the terms of which will be more fully set
forth in a definitive agreement of merger which is filed as Exhibit B-
4 to the Application-Declaration. The obligations of EUA and Cogenex
to effect the acquisition through NEWCO will be subject to various
Closing conditions including the approval of the Commission under the
Act and the delivery of a five year non-competition agreement by the
NEMI stockholder in consideration of the payment of $500,000 by NEWCO.
The $500,000 non-competition payment is a negotiated amount based on
NEWCO's perceived value of ensuring that the NEMI stockholder, Angus
S. King, Jr., does not take advantage of his well established
relationships with NEMI's customers for a period of five years after
Closing. Mr. King has over twenty years experience in Maine's
business and political circles, including hosting a public television
program, which gives him strong name and face recognition in Maine
that NEWCO would have to compete against but for the non-competition
agreement.
V. Request for Authorization to Form and to Finance a New
Subsidiary. Cogenex seeks Commission approval to incorporate NEWCO, a
Massachusetts business corporation. The initial authorized
capitalization of NEWCO shall be 200,000 shares of Common Stock, $.01
par value per share, of which 10,000 shares will be issued to Cogenex
for $100.00. Cogenex also requests Commission approval for the period
ending December 31, 1995 to make investments in NEWCO in amounts equal
to the liabilities of NEMI to be discharged in connection with the
Closing, estimated to be approximately $8,500,000 plus an additional
$1,000,000 for working capital purposes and for payment of the
consideration due under the non-competition agreement. NEWCO
anticipates needing working capital to pursue new projects with NEMI's
existing customers and, in the unlikely event that some current NEMI
customers are lost, to pursue new projects with other CMP customers.
Such investments in NEWCO by Cogenex may take the form of any
combination of capital contributions by Cogenex and short-term loans
by Cogenex which will be effected upon the same terms as Cogenex
borrows funds under the EUA System credit lines. The effective cost
of borrowings under such lines, commitment fees and/or compensatory
balance requirements will be set forth on Exhibit H to this
Application-Declaration. If it becomes necessary to obtain more
favorable terms with respect to certain obligations of NEWCO,
including the obligation to provide Central Maine a letter of credit
in connection with the Central Maine agreement, Cogenex hereby
proposes and requests authorization to guaranty obligations of NEWCO
in an aggregate amount not to exceed $500,000. No person or entity
other than Cogenex will own stock in NEWCO. References to Cogenex
herein shall mean Cogenex or NEWCO, where the context so allows,
subject to Commission approval of the incorporation of NEWCO and
Cogenex's decision to incorporate and use such subsidiary. Forms of
Articles of Organization and By-Laws of NEWCO are filed with this
application (Exhibits A-2 and A-3 respectively).
VI. Request For Authority For Financing The NEMI Acquisition By The
Applicants. EUA has filed a registration statement on Form S-4 under
the '33 Act (File No. 33-50099) with respect to the issuance and sale
of one million five hundred thousand (1,500,000) of its common shares.
The maximum number of shares issued by EUA in connection with the
acquisition of NEMI will be based upon the various factors described
above and will be less than the number of shares registered pursuant
to the S-4. The additional shares being registered were for use in
connection with the Day Co. acquisition and for possible use in
connection with future Cogenex acquisitions. At such time as EUA and
Cogenex wish to effect further acquisitions, whether in consideration
for the issuance of common shares of EUA or otherwise, they will seek
further Commission approval for such acquisitions. If EUA shares are
to be issued, EUA will file with the Commission on Form U-1 for
authorization to issue said shares.
NEWCO does not now, and will not in the future, without prior
Commission approval, own or operate or be an equity participant in any
exempt wholesale generator or foreign utility company, as such terms
are defined in the Energy Policy Act of 1992.
Cogenex is currently restricted to earning less than 50% of its
revenues from outside New England and New York (the "50%
Restriction"). The revenues from NEWCO, on a consolidated basis with
the revenues of Cogenex, will be subject to the 50% Restriction just
like any aspect of Cogenex's business other than QF projects, the
revenues from which are not included in the calculation for the 50%
Restriction.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
The estimated fees, commissions and expenses to be paid or
incurred directly or indirectly in connection with the NEMI
acquisition are as follows:
Securities and Exchange Commission Fee $ 2,000*
EUA Service Corporation Expenses 58,000
EUA Cogenex Corporation Expenses 60,000
Fees and Expenses of Company Counsel 200,000
Miscellaneous 2,000
TOTAL $ 322,000
=======
(*actual)
ITEM 5. PROCEDURE.
Item 5 is hereby amended by adding the following:
(c) Because NEWCO will be a subsidiary of Cogenex, Cogenex
proposes to file reports with the Commission, pursuant to Rule 24 on a
quarterly basis, 45 days after the end of each calendar quarter,
beginning the first calendar quarter after this application-
declaration is granted and permitted to become effective. Such
reports will consist of NEWCO's balance sheets, statements of income
and statements of cash flows. In addition, Cogenex's U-13-60 annual
report shall include the revenues of NEWCO in Cogenex's calculation to
the 50% Restriction.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS (* Filed herewith) (**
Confidential treatment requested).
Section (a) of Item 6 is amended and restated in its entirety as
follows:
(a) Exhibits.
Exhibit A-1 Declaration of Trust of EUA, dated
April 2, 1928, as amended (Exhibit A-3,
File No. 70-3188; Exhibit 1 to EUA's 8-K
reports for April in each of the years
1957, 1962, 1966, 1968, 1972, and 1973,
File No. 1-5366; Exhibit A-1(a),
Amendment No. 2 to Form U-1, File No.
70-5997, Exhibit 4-3, Registration No. 2-
72589; Exhibit 1 to Certificate of
Notification, File No. 70-6713;
Exhibit 1 to Certificate of Notification,
File No. 70-7084; Exhibit 3-2, Form 10-K
of EUA for 1987, File No. 1-5366).
*Exhibit A-2 Form of Articles of Organization of
NEWCO.
*Exhibit A-3 Form of By-Laws of NEWCO.
Exhibit B-1 Letter Agreement: James L. Day Co.,
Inc.
Exhibit B-2 Letter Agreement: Northeast Energy
Management, Inc.
Exhibit B-2.1 Amendment to Letter Agreement:
Northeast Energy Management, Inc.
Exhibit B-3 Agreement and Plan of Merger: James L.
Day Co. (filed pursuant to confidential
treatment request).
**Exhibit B-4 Agreement of Merger: Northeast
Energy Management, Inc. (filed pursuant
to confidential treatment request).
Exhibit C Registration Statement on Form S-4 of
EUA, as amended (File No. 33-50099).
Exhibit F Opinion of counsel as to James L. Day
Co., Inc. transaction.
*Exhibit F-1 Opinion of counsel as to Northeast
Energy Management, Inc. transaction.
Exhibit G Proposed Form of Notice.
*Exhibit H Bank Lines of Credit.
Exhibit I Pricing Assumptions for James L. Day
Co., Inc. merger into EUA Cogenex
Corporation (filed pursuant to
confidential treatment request).
**Exhibit I-1 Pricing Assumptions for Northeast Energy
Management., Inc. merger into EUA
Acquisition Corp. (filed pursuant to
confidential treatment request).
*Exhibit J Pooling Accounting Requirements.
*Exhibit K Energy Management Agreement between
Northeast Energy Management, Inc. and
Central Maine Power Company, as amended
(filed under Form SE).
*Exhibit L Purchase Price Calculation
Section (b) of Item 6 is amended as follows:
(b) Financial Statements.
*b-7 Financial Statements of Northeast Energy
Management, Inc. for the period ended
December 31, 1993.
*b-8 Financial Statements and Notes of
Northeast Energy Management, Inc. for the
period ended June 30, 1993.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned Applicants have duly caused this
statement to be signed on their behalf by the undersigned duly
authorized individuals.
EASTERN UTILITIES ASSOCIATES
By: Clifford J. Hebert, Jr.
Treasurer
EUA COGENEX CORPORATION
By: Basil G. Pallone
Vice President
Dated: January 20, 1994
Exhibit A-2
The Commonwealth of Massachusetts
Office of the Secretary of State
Michael J. Connolly, Secretary
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF ORGANIZATION
(Under G.L. Ch. 156B)
ARTICLE I
The name of the corporation is:
EUA ACQUISITION CORP.
ARTICLE II
The purpose of the corporation is to engage in the following
activities:
To engage in the business of energy conservation programs
including but not limited to the creation of alternative energy
sources.
To contract, enter joint ventures, partnerships or other
associations or affiliations with public or private utility companies
and other private companies for the purpose of the sale or
distribution of energy.
To provide conservation services to utility companies and their
customers including residential, commercial, industrial, governmental
and other users, and to engage in activities reasonably ancillary
thereto.
To engage in and carry on any other business or activity which
may lawfully be engaged in or carried on by a corporation which is
organized under the Business Corporation Law of The Commonwealth of
Massachusetts, as presently in effect or as amended from time to time.
ARTICLE III
The type and classes of stock and the total number of shares and par
value, if any, of each type and class of stock which the corporation
is authorized to issue is as follows:
WITHOUT PAR VALUE STOCKS
TYPE NUMBER OF SHARES
COMMON N/A
PREFERRED N/A
WITH PAR VALUE STOCKS
TYPE NUMBER OF SHARES PAR VALUE
COMMON 200,000 $.01
PREFERRED N/A
ARTICLE IV
If more than one class of stock is authorized, state a distinguishing
designation for each class. Prior to the issuance of any shares of a
class, if shares of another class are outstanding, the corporation
must provide a description of the preferences, voting powers,
qualifications, and special or relative rights or privileges of that
class and of each other class of which shares are outstanding and of
each series then established within any class.
N/A
ARTICLE V
The restrictions, if any, imposed by the Articles of Organization upon
the transfer of shares of stock of any class are:
N/A
ARTICLE VI
Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary
dissolution, or for limiting, defining, or regulating the powers of
the corporation, or of its directors or stockholders, or of any class
of stockholders:
ONE: Meetings of the stockholders may be held anywhere in the
United States.
TWO: The corporation may be a partner, either general or limited,
in any business enterprise it would have the power to
conduct by itself.
THREE: Except as specifically authorized by statute, no stockholder
shall have any right to examine any property or any books,
accounts or other writings of the corporation if there is
reasonable ground for belief that such examination will for
any reason be adverse to the interests of the corporation,
and a vote of the directors refusing permission to make such
examination and setting forth that in the opinion of the
directors such examination would be adverse to the interests
of the corporation shall be prima facie evidence that such
examination would be adverse to the interests of the
corporation. Every such examination shall be subject to
such reasonable regulations as the directors may establish
in regard thereto.
FOUR: The Board of Directors may specify the manner in which the
accounts of the corporation shall be kept and may determine
what constitutes net earnings, profits and surplus, what
amounts, if any, shall be reserved for any corporate
purpose, and what amounts, if any, shall be declared as
dividends. Unless the Board of Directors otherwise
specifies, the excess of the consideration for any share of
its capital stock with par value issued by it over such par
value shall be surplus. The Board of Directors may allocate
to capital stock less than all of the consideration for any
share of its capital stock without par value issued by it,
in which case the balance of such consideration shall be
surplus. All surplus shall be available for any corporate
purpose, including the payment of dividends.
FIVE: The purchase or other acquisition or retention by the
corporation of shares of its own capital stock shall not be
deemed a reduction of its capital stock. Upon any reduction
of capital or capital stock, no stockholder shall have any
right to demand any distribution from the corporation,
except as and to the extent that the stockholders shall have
provided at the time of authorizing such reduction.
SIX: In the absence of fraud, no contract or transaction between
the corporation and one or more of its directors or
officers, or between the corporation and any other
organization of which one or more of its directors or
officers are directors, trustees or officers, or in which
any of them has any financial or other interest, shall be
void or voidable, or in any way affected, solely for this
reason, or solely because the director or officer is present
at or participates in the meeting of the board of directors
or committee thereof which authorizes, approves or ratifies
the contract or transaction, or solely because his/her or
their votes are counted for such purposes, if:
(i) The material facts as to his/her relationship or
interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the
committee which authorizes, approves or ratifies the
contract or transaction, and the board or committee in
good faith authorizes, approves or ratifies the
contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though
the disinterested directors be less than a quorum; or
(ii) The material facts as to his/her relationship or
interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to
vote thereon, and the contract or transaction is
specifically authorized, approved or ratified in good
faith by vote of the stockholders; or
(iii) The contract or transaction is fair as to the
corporation as of the time it is authorized, approved
or ratified by the Board of Directors, a committee
thereof, or the stockholders.
Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the board of
directors or of a committee thereof which authorizes,
approves or ratifies the contract or transaction. No
director or officer of the corporation shall be liable or
accountable to the corporation or to any of its stockholders
or creditors or to any other person, either for any loss to
the corporation or to any other person or for any gains or
profits realized by such director or officer, by reason of
any contract or transaction as to which clauses (i), (ii) or
(iii) above are applicable.
SEVEN: No current or former director of the corporation shall be
personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director
notwithstanding any provision of law imposing such
liability; provided, however, that this provision shall not
eliminate liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 61 or 62 or successor
provisions of the Massachusetts Business Corporation Law or
(iv) for any transaction from which the director derived an
improper personal benefit. If the Massachusetts Business
Corporation Law is hereafter amended to authorize corporate
action further than the liability of the directors, then the
liability of the director of the corporation shall be
eliminated or limited to the fullest extent permitted by the
Massachusetts Business Corporation Law, as so amended from
time to time. No amendment or repeal of this paragraph
shall adversely affect any of the rights or protection
afforded to a director of the corporation for or with
respect to any acts or omissions of such director occurring
prior to such amendment or repeal.
ARTICLE VII
The effective date of organization of the corporation shall be the
date approved and filed by the Secretary of the Commonwealth.
ARTICLE VIII
a. The street address of the corporation IN MASSACHUSETTS is: (post
office boxes are not acceptable)
Boot Mills South
100 Foot of John Street
Lowell, MA 01852
b. The name, residence and post office address (if different) of the
directors and officers of the corporation are:
NAME RESIDENCE POST
OFFICE
ADDRESS
President: Joseph S. Fitzpatrick 112 Clark Road Same
Lowell, MA 01852
Treasurer: Joseph S. Fitzpatrick 112 Clark Road Same
Lowell, MA 01852
Clerk: William F. O'Connor 48 Granite Street Same
Medfield, MA 02052
Directors: Joseph S. Fitzpatrick 112 Clark Road Same
Lowell, MA 01852
c. The fiscal year (i.e., tax year) of the corporation shall end on
the last day of the month of:
DECEMBER
d. The name and BUSINESS address of the RESIDENT AGENT of the
corporation, if any, is:
N/A
ARTICLE IX
By-laws of the corporation have been duly adopted and the president,
treasurer, clerk and directors whose names are set forth above, have
been duly elected.
IN WITNESS WHEREOF and under the pains and penalties of perjury, I,
whose signature appears below as incorporator and whose name and
business address ARE CLEARLY TYPED OR PRINTED beneath my signature do
hereby associate with the intention of forming this corporation under
the provisions of General Laws Chapter 156B and do hereby sign these
Articles of Organization as incorporator(s) this ___ day of January,
1994.
/s/ Alicia M.V. Wyman
Alicia M.V. Wyman, Esq.
c/o McDermott, Will & Emery
75 State Street
Boston, MA 02109
Exhibit A-3
BY-LAWS
OF
EUA ACQUISITION CORP.
ARTICLE I
OFFICES
Section 1.1. Principal Office. The initial principal office of
the Corporation shall be as indicated in the Articles of Organization of
the Corporation. The Corporation may have such other offices, either
within or without the Commonwealth of Massachusetts, as it may require
from time to time.
Section l.2. Change in Principal Office. The Board of Directors
of the Corporation may at any time and from time to time, change the
principal office of the Corporation in the Commonwealth, provided that
no such change shall be effective until a certificate of such change,
specifying the post-office address of its new principal office in the
Commonwealth, signed under the penalties of perjury by the clerk or an
assistant clerk of the Corporation, has been filed with the state
secretary.
ARTICLE II
STOCKHOLDERS
Section 2.1. Place of Meetings. All meetings of the stockholders
for the election of directors shall be held at the offices of the
Corporation or elsewhere in the United States as the Board of Directors
may designate.
Section 2.2. Annual Meetings. An annual meeting of the
stockholders, commencing with the year 1994 shall be held on the second
Tuesday in April in each year, but if a legal holiday, then on the next
business day following, at 10:00 o'clock A.M., at which the stockholders
shall elect a Board of Directors and transact such other business as may
properly be brought before such meeting.
Section 2.3. Special Meetings. Special meetings of the
stockholders may be called by the President or by the directors, and
shall be called by the Clerk, or in case of the death, absence,
incapacity or refusal of the Clerk, by any other officer, upon written
application of one or more stockholders who hold at least one-tenth part
in interest of the capital stock entitled to vote thereat. In case none
of the officers is able and willing to call a special meeting, the
Supreme Judicial or Superior Court, upon application of one or more
stockholders who hold at least one-tenth part in interest of the capital
stock entitled to vote thereat, shall have jurisdiction in equity to
authorize one or more of such stockholders to call a meeting by giving
such notice as is required by law.
Section 2.4. Notice of Meetings. A written notice of the place,
date and hour of all meetings of stockholders stating the purposes of
the meeting shall be given by the Clerk or an assistant Clerk (or other
person authorized by the By-Laws or empowered pursuant to Section 2.3)
at least seven days before the meeting to each stockholder entitled to
vote thereat and to each stockholder who, under the Articles of
Organization or under the By-Laws, is entitled to such notice, by
leaving such notice with him or at his residence or usual place of
business, or by mailing it, postage prepaid, and addressed to such
stockholder at his address as it appears in the records of the
Corporation.
Section 2.5. Waiver of Notice. Whenever notice of a meeting is
required to be given a stockholder under any provision of the law or of
the Articles of Organization or these By-Laws, a written waiver thereof,
executed before or after the meeting by such stockholder or his attorney
thereunto authorized and filed with the records of meeting, shall be
deemed equivalent to such notice.
Section 2.6. Closing of Transfer Books and Fixing of Record Date.
The directors may fix in advance a time, which, unless a shorter period
is provided in the Articles of Organization, shall be not more than
sixty days before the date of any meeting of stockholders or the date
for the payment of any dividend or the making of any distribution to
stockholders or the last day on which the consent or dissent of
stockholders may be effectively expressed for any purpose, as the record
date for determining the stockholders having the right to notice of and
to vote at such meeting and any adjournment thereof or the right to
receive such dividend or distribution or the right to give such consent
or dissent, and in such case only stockholders of record on such record
date shall have such right, notwithstanding any transfer of stock on the
books of the Corporation after the record date; or without fixing such
record date the directors may for any of such purposes close the
transfer books for all or any part of such period.
If no record date is fixed and the transfer books are not closed:
(a) The record date for determining stockholders having the right
to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is
given.
(b) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board
of Directors acts with respect thereto.
Section 2.7. Quorum. A majority of the shares of the Corporation
issued, outstanding and entitled to vote at a meeting represented in
person or by proxy shall constitute a quorum at any meeting of
stockholders.
Section 2.8. Manner of Acting. If a quorum is present, the
affirmative vote of the majority of the shares represented at the
meeting shall be the act of the stockholders, unless the vote of a
greater number or voting by classes is required by the Business
Corporation Law of the Commonwealth of Massachusetts or the Articles of
Organization or these By-Laws.
Section 2.9. Proxies. Stockholders may vote in person or by
proxy. No proxy dated more than six months before the meeting named
therein shall be valid and no proxy shall be valid after the final
adjournment of such meeting. Notwithstanding the provisions of the
foregoing sentence, a proxy coupled with an interest sufficient in law
to support an irrevocable power, including, without limitation, an
interest in shares or in the corporation generally, may be made
irrevocable if it so provides, need not specify the meeting to which it
relates, and shall be valid and enforceable until the interest
terminates, or for such shorter period as may be specified in the proxy.
Any proxy shall be filed with the Clerk of the Corporation before or at
the time of the meeting. A proxy with respect to stock held in the name
of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Corporation receives a
specific written notice to the contrary from any one of them. A proxy
purporting to be executed by or on behalf of a stockholder shall be
deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger.
Section 2.10. Voting of Shares. Stockholders entitled to vote
shall have one vote for each share of stock owned by them and a
proportionate vote for a fractional share, unless otherwise provided by
the Articles of Organization.
Section 2.11. Informal Action by Stockholders. Any action
required or permitted to be taken at any meeting of the stockholders may
be taken without a meeting if all stockholders entitled to vote on the
matter consent to the action in writing and the written consents are
filed with the records of the meetings of stockholders. Such consent
shall be treated for all purposes as a vote at a meeting.
Section 2.12. Voting Agreements. An agreement between two or more
stockholders or between one or more stockholders and one or more other
persons, if in writing and signed by the parties thereto, may provide
that the shares held by such stockholders shall be voted under
procedures set forth in said agreement.
ARTICLE III
DIRECTORS
Section 3.1. General Powers. The business and affairs of the
Corporation shall be managed by a Board of Directors.
Section 3.2. Number, Election and Term of Office. The Board of
Directors shall consist of not less than three directors, except that
whenever there shall be only two stockholders the number of directors
shall be not less than two, and whenever there shall be only one
stockholder the number of directors shall be not less than one. The
number of the directors shall be as determined from time to time by the
stockholders and may be enlarged between meetings of the stockholders by
the vote of a majority of the directors then in office. The directors
shall be chosen at the annual meeting of the stockholders by such
stockholders as have the right to vote thereon, and each shall hold
office until the next annual election of directors and until his
successor is chosen and qualified or until he sooner dies, resigns, is
removed or becomes disqualified. No director need be a stockholder.
Any election of directors by stockholders shall be by ballot if so
requested by any stockholder entitled to vote thereon.
Section 3.3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this By-Law,
immediately after, and at the same place as, the annual meeting of
stockholders. The Board of Directors may provide, by resolution, the
time and place, either within or without the Commonwealth of
Massachusetts, for the holding of additional regular meetings in which
case no other notice need be given.
Section 3.4. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the President or any two
(2) directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or
without the Commonwealth of Massachusetts, as the place for holding any
special meeting of the Board of Directors.
Section 3.5. Notice. Written notice of any special meeting of
directors shall be given as follows:
By mail to each director at his business address at least
three days prior to the meeting; or
By personal delivery or telegram to each director at his
business address at least 24 hours prior to the meeting, or in the event
such notice is given on a Saturday, Sunday or holiday, to each director
at his residence address at least 24 hours prior to the meeting. If
mailed, such notice shall be deemed to be delivered when deposited in
the United States mail so addressed, with postage thereon prepaid. If
notice is given by telegram, such notice shall be deemed to be delivered
when the telegram is delivered to the telegraph company.
Notice of a meeting need not be given to any director, if a
written waiver of notice, executed by him before or after the meeting,
is filed with the records of the meeting, or to any director who attends
the meeting without protesting prior thereto or at its commencement the
lack of notice to him. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the Board of Directors
need be specified in the notice or waiver of notice of such meeting.
Section 3.6. Quorum. The number of directors required to
constitute a quorum shall be a majority of the directors then in office.
If a quorum is present, a majority of the directors present may take any
action on behalf of the board except to the extent that a larger number
is required by law or the Articles of Organization or these By-Laws.
Section 3.7. Meetings by Telecommunications. Unless the Articles
of Organization otherwise provide, members of the Board of Directors or
any committee designated thereby may participate in a meeting of such
board or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in
the meeting can hear each other at the same time and participation by
such means shall constitute presence in person at a meeting.
Section 3.8. Vacancies. Any vacancy occurring in the Board of
Directors and any directorship to be filled by reason of an increase in
the number of directors may be filled by election at a meeting of the
stockholders or of the Board of Directors. A director elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in
office.
Section 3.9. Compensation. By resolution of the Board of
Directors, irrespective of any personal interest of any of the members,
the directors may be paid their expenses, if any, of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for
attendance at meetings or a stated salary as directors. These payments
shall not preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 3.10. Presumption of Assent. A director of the
Corporation who is present at a meeting of the Board of Directors at
which action on any corporate matter is taken shall be conclusively
presumed to have assented to the action taken unless his dissent is
entered in the minutes of the meeting or unless he files his written
dissent to such action with the person acting as the secretary of the
meeting before the adjournment of the meeting or forwards such dissent
by registered mail to the Clerk of the Corporation immediately after the
adjournment of the meeting. Such right to dissent does not apply to a
director who voted in favor of such action.
Section 3.11. Committees of Directors. The Corporation may
provide for an executive committee or other committees to be elected
from and by the Board of Directors, and the directors may delegate to
any such committee or committees some or all of their powers, except,
however, the power
(a) to change the principal office of the Corporation;
(b) to amend By-Laws;
(c) to elect officers and to fill vacancies in any such
offices;
(d) to change the number of the Board of Directors and to
fill vacancies in the Board of Directors;
(e) to remove officers or directors from office;
(f) to authorize the payment of any dividend or distribution
to shareholders;
(g) to authorize the reacquisition for value of stock of the
Corporation; or
(h) to authorize a merger.
Except as otherwise provided in the Articles of Organization,
the directors may determine the manner of conducting committee business,
whether at a meeting or otherwise, and the number of members required to
take specified types of action. The designation of any such committee
and the delegation of any authority thereto shall not operate to relieve
the directors from any responsibility imposed upon them by law.
Section 3.12. Informal Action by Directors. Any action required
or permitted to be taken at any meeting of the Board of Directors or the
Executive Committee, if any, may be taken without a meeting, if all the
directors entitled to vote consent to the action in writing and the
written consents are filed with the records of the meetings. Such
consents shall be treated for all purposes as a vote at a meeting.
Section 3.13. Removal of Directors. Any director may be removed
from his office with or without cause by vote of the holders of a
majority of the shares entitled to vote in the election of directors,
provided that the directors of a class elected by a particular class of
stockholders may be removed only by the vote of the holders of a
majority of the shares of the particular class of stockholders entitled
to vote for the election of such directors. Any director may be removed
from his office for cause by vote of a majority of the directors then in
office. A director may be removed for cause only after a reasonable
notice and opportunity to be heard before the body proposing to remove
him.
ARTICLE IV
OFFICERS
Section 4.1. Number. The officers of the Corporation shall be a
President, a Treasurer and a Clerk, each of whom shall be elected by the
Board of Directors. The Board of Directors may appoint such other
officers as they deem necessary who shall have such authority and shall
perform such duties as from time to time may be prescribed by the Board
of Directors. Any person may simultaneously hold more than one office
of the Corporation.
Section 4.2. Election and Term of Office. The officers of the
Corporation shall be elected annually by the Board of Directors at the
first meeting of the Board of Directors held after each annual meeting
of stockholders. If the election of officers is not held at that
meeting, the election shall be held as soon thereafter as practicable.
Each officer shall hold office until his successor shall have been duly
elected and shall have qualified or until his death or until he shall
resign or shall have been removed in the manner hereinafter provided.
Section 4.3. Removal. Any officer or agent of the Corporation may
be removed with or without cause by the Board of Directors whenever in
its judgment the best interests of the Corporation would be served
thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
Section 4.4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by
the Board of Directors for the unexpired portion of the term. Vacancies
may be filled or new offices filled at any meeting of the Board of
Directors.
Section 4.5. Bonds. If the Board of Directors by resolution shall
so require, any officer or agent of the Corporation shall give bond to
the Corporation in such amount and with such surety as the Board of
Directors may deem sufficient, conditioned upon the faithful performance
of their respective duties and offices.
Section 4.6. President. The President shall be the chief
executive officer of the Corporation and shall in general supervise and
control all of the business and affairs of the Corporation. He shall
preside at all meetings of the stockholders and of the Board of
Directors. He may sign, with the Clerk or any other proper officer of
the Corporation thereunto authorized by the Board of Directors,
certificates for shares of the Corporation, any deeds, mortgages, bonds,
contracts or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors
or by these By-Laws to some other officer or agent of the Corporation or
shall be required by law to be otherwise signed or executed; and in
general shall perform all duties incident to the office of President and
such other duties as may be prescribed by the Board of Directors from
time to time. The President need not be a director.
Section 4.7. Vice Presidents. In the absence of the President or
in the event of his inability or refusal to act, the Vice President (or,
in the event there is more than one Vice President, Vice Presidents in
the order designated, or in the absence of any designation, then in the
order of their election) shall perform the duties of the President. Any
Vice President may sign, with the Treasurer or an Assistant Treasurer,
certificates for shares of the Corporation, and shall perform those
other duties which from time to time may be assigned to him by the Board
of Directors or by the chief executive officer.
Section 4.8. Treasurer. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the
Corporation; receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever and deposit all such moneys in
the name of the Corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the provisions of
Article V of these By-Laws; (b) sign with the President or Vice
President certificates for shares of the Corporation's stock; and (c) in
general, perform all duties incident to the office of Treasurer and all
other duties as from time to time may be assigned to him by the Board of
Directors or the chief executive officer. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of
his duties in the sum and with a surety or sureties as the Board of
Directors shall determine.
Section 4.9. Clerk. The Clerk shall: (a) keep the minutes of the
stockholders' and of the Board of Directors' meetings in one or more
books provided for that purpose; (b) see that all notices are duly given
in accordance with the provisions of these By-Laws or as required by
law; (c) be custodian of the corporate records and, if the Corporation
has a corporate seal, of the seal of the Corporation and see that the
seal of the Corporation is affixed to all certificates for shares prior
to the issue thereof and to all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized in
accordance with the provisions of these By-Laws; (d) keep a register of
the post office address of each stockholder which shall be furnished to
the Clerk by such stockholder; (e) have general charge of the share
transfer books of the Corporation; and (f) in general, perform all
duties incident to the office of Clerk and all other duties as from time
to time may be assigned to him by the Board of Directors or the chief
executive officer.
Section 4.10. Assistant Treasurers and Assistant Clerks. The
Assistant Treasurer as thereunto authorized by the Board of Directors
may sign with the President or a Vice President certificates for shares
of the Corporation's stock, the issue of which shall have been
authorized by a resolution of the Board of Directors. The Assistant
Treasurers and Assistant Clerks, in general, shall perform such duties
as shall be assigned to them by the Treasurer or the Clerk,
respectively, or by the Board of Directors or the chief executive
officer. The Assistant Treasurers shall, if required by the Board of
Directors, give bonds for the faithful discharge of their duties in sums
and with sureties as the Board of Directors shall determine.
Section 4.11. Salaries. The salaries of the officers shall be
fixed from time to time by the Board of Directors, and no officer shall
be prevented from receiving such salary by reason of the fact that he is
also a director of the Corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 5.1. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents to enter into any contract or
execute and deliver any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.
Section 5.2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such
authority may be general or confined to specific instances. No loans
shall be made by the Corporation secured by its shares.
Section 5.3. Checks, Drafts, Etc. All checks, drafts or other
order for the payment of money, notes or other evidences of indebtedness
issued in the name of the Corporation shall be signed by such officer or
officers, agent or agents of the Corporation and in the manner which
shall from time to time be determined by resolution of the Board of
Directors.
Section 5.4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the
Corporation in banks, trust companies or other depositories which the
Board of Directors may select.
ARTICLE VI
SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF SHARES
Section 6.1. Regulation. The Board of Directors may make such
rules and regulations as it may deem expedient concerning the issuance,
transfer and registration of certificates for shares of the Corporation,
including the appointment of transfer agents and registrars. Any
unissued capital stock from time to time authorized under the Articles
of Organization may be issued by vote of the stockholders or by vote of
the directors. No stock shall be issued unless the cash, so far as due,
or the property, services or expenses for which it was authorized to be
issued, has been actually received or incurred by, or conveyed or
rendered to, the Corporation, or is in its possession as surplus.
Section 6.2. Certificates for Shares. Each stockholder shall be
entitled to a certificate stating the number and the class and the
designation of the series, if any, of the shares held by him. Such
certificate shall be signed by the President or a Vice President and by
the Treasurer or an Assistant Treasurer. Such signatures may be
facsimiles if the certificate is signed by a transfer agent, or by a
registrar, other than a director, officer or employee of the
Corporation. In case any officer who has signed or whose facsimile
signature has been placed on such certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the time
of its issue. Every certificate issued for shares of stock at a time
when such shares are subject to any restriction on transfer pursuant to
the Articles of Organization, these By-Laws or any agreement to which
the Corporation is a party shall have the restriction noted
conspicuously on the certificate and shall also set forth on the face or
back of the certificate either the full text of the restriction, or a
statement of the existence of such restriction and a statement that the
Corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge. Every stock
certificate issued at a time when the Corporation is authorized to issue
more than one class or series of stock shall set forth upon the face or
back of the certificate either the full text of the preferences, voting
powers, qualifications and special and relative rights of the shares of
each class and series, if any, authorized to be issued, as set forth in
the Articles of Organization, or a statement of the existence of such
preferences, powers, qualifications and rights, and a statement that the
Corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge.
Each certificate representing shares shall also state the name
of the Corporation, the date of issue, that the Corporation is organized
under the laws of the Commonwealth of Massachusetts, the name of the
person to whom it is issued, and the par value of each share represented
by the certificate or a statement that the shares are without par value.
Each certificate shall be otherwise in such form as may be prescribed by
the Board of Directors and as shall conform to the rules of any Stock
Exchange on which the shares may be listed.
Section 6.3. Cancellation of Certificates. All certificates
surrendered to the Corporation for transfer shall be canceled and no new
certificates shall be issued in lieu thereof until the former
certificate for a like number of shares shall have been surrendered and
canceled, except as herein provided with respect to lost, stolen or
destroyed certificates.
Section 6.4. Lost, Stolen or Destroyed Certificates. Subject to
Section 8-405 of the Massachusetts Uniform Commercial Code, as amended
from time to time, the Board of Directors shall determine the conditions
upon which a new certificate of stock may be issued in place of any
certificate alleged to have been lost, mutilated or destroyed. They
may, in their discretion, require the owner of a lost, mutilated or
destroyed certificate, or his legal representative, to give a bond,
sufficient in their opinion, with or without surety, to indemnify the
Corporation against any loss or claim which may arise by reason of the
issue of a certificate in place of such lost, mutilated or destroyed
stock certificate.
Section 6.5. Transfer of Shares. The Corporation may from time to
time enter into an agreement or agreements with one or more of its
stockholders restricting the transferability of its shares in accordance
with the general corporate purpose to have its shares owned by persons
actively engaged in the corporate business. Subject to the terms of any
such agreement, shares of the Corporation shall be transferable on the
books of the Corporation by the holder thereof, in person or by his duly
authorized attorney, upon the surrender and cancellation of a
certificate or certificates for a like number of shares. Upon
presentation and surrender of a certificate for shares properly endorsed
and payment of all required taxes, if any, the transferee shall be
entitled to a new certificate or certificates in lieu thereof. As
against the Corporation, a transfer of shares can be made only on the
books of the Corporation and in the manner hereinabove provided, and the
Corporation shall be entitled to treat the holder of record of any share
as the owner thereof and shall not be bound to recognize any equitable
or other claim to or interest in such share on the part of any other
person, whether or not it shall have express or other notice thereof,
except as expressly provided by the statutes of the Commonwealth of
Massachusetts.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall end on the 31st day
of December in each calendar year.
ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares in the manner
and upon the terms and conditions provided by law and its Articles of
Organization.
ARTICLE IX
SEAL
The Board of Directors may provide a corporate seal which
shall be in the form of a circle and shall have inscribed thereon the
name of the Corporation and the words "Corporate Seal, Massachusetts,"
or shall be in such other form as the Board of Directors may from time
to time determine.
ARTICLE X
INDEMNIFICATION
The Corporation shall, to the maximum extent legally
permissible, indemnify all directors, officers, employees and other
agents of the Corporation, and persons who serve at its request as
directors, officers, employees or other agents of another organization,
or who serve at its request in any capacity with respect to any employee
benefit plan, against all liability and expenses, including counsel
fees, reasonably incurred by or imposed upon such person in connection
with any proceeding in which he may become involved by reason of his
serving or having served in such capacity (other than a proceeding
voluntarily initiated by such person unless he is successful on the
merits, the proceeding was authorized by a majority of the Board of
Directors or the proceeding seeks a declaratory judgment regarding his
own conduct). Such indemnification shall include payment by the
Corporation of expenses incurred in defending a civil or criminal action
or proceeding in advance of the final disposition of such action or
proceeding, upon receipt of an undertaking by the person indemnified to
repay such payment if he shall be adjudicated to be not entitled to
indemnification under this Article which undertaking may be accepted
without reference to the financial ability of such person to make
repayment. Any such indemnification shall be provided although the
person to be indemnified is no longer an officer, director, employee or
agent of the Corporation or of such other organization or no longer
serves with respect to any such employee benefit plan.
No indemnification shall be provided for any person with
respect to any matter as to which he shall have been adjudicated in any
proceeding not to have acted in good faith in the reasonable belief that
his action was in the best interests of the Corporation 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
employee benefit plan. The Board of Directors shall have power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or other agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
employee or other agent of another organization or with respect to any
employee benefit plan, against any liability incurred by him in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such
liability.
ARTICLE XI
CONFLICT OF INTEREST
No contract or transaction between the corporation and one or more
of its directors or officers, or between the corporation and any other
organization of which one or more of its directors or officers are
directors, trustees or officers, or in which any of them has any
financial or other interest, shall be void or voidable, or in any way
affected, solely for this reason, or solely because the director or
officer is present at or participates in the meeting of the board of
directors or committee thereof which authorizes, approves or ratifies
the contract or transaction, or solely because his or their votes are
counted for such purposes, if:
(i) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to
the Board of Directors or the committee which authorizes,
approves or ratifies the contract or transaction, and the
board or committee in good faith authorizes, approves or
ratifies the contract or transaction by the affirmative vote
of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or
(ii) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to
the stockholders entitled to vote thereon, and the contract or
transaction is specifically authorized, approved or ratified
in good faith by vote of the stockholders; or
(iii) The contract or transaction is fair as to the corporation as
of the time it is authorized, approved or ratified by the
Board of Directors, a committee thereof, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a
committee thereof which authorizes, approves or ratifies the contract or
transaction. No director or officer of the corporation shall be liable
or accountable to the corporation or to any of its stockholders or
creditors or to any other person, either for any loss to the corporation
or to any other person or for any gains or profits realized by such
director or officer, by reason of any contract or transaction as to
which clauses (i), (ii) or (iii) above are applicable.
ARTICLE XII
CORPORATE RECORDS
The original, or attested copies, of the Articles of
Organization, By-Laws, and records of all meetings of the incorporators
and stockholders, and the stock and transfer records, which shall
contain the names of all stockholders and the record address and the
amount of stock held by each, shall be kept in the Commonwealth for
inspection by the stockholders at the Corporation's principal office or
an office of the Clerk, or of the transfer agent or the Resident Agent,
if any. Said copies and records need not all be kept in the same
office.
ARTICLE XIII
AMENDMENTS
These By-Laws may be altered, amended or repealed and new
By-Laws may be adopted by a majority of the stockholders present at any
meeting of the stockholders of the Corporation at which a quorum is
present. These By-Laws may also be altered, amended or repealed and new
By-Laws may be adopted by a majority of the directors present at any
meeting of the Board of Directors of the Corporation at which a quorum
is present, except with respect to any provision thereof which by law,
the Articles of Organization or these By-Laws requires action by the
stockholders. Not later than the time of giving notice of the meeting
of stockholders next following the making, amending or repealing by the
directors of any by-law, notice thereof stating the substance of such
changes shall be given to all stockholders entitled to vote on amending
the by-laws. Any by-law adopted by the directors may be amended or
repealed by the stockholders.
January 20, 1994
Securities and Exchange Commission
Washington, D.C. 20549
Re: File No. 70-8255: Eastern Utilities Associates
and EUA Cogenex Corporation--Acquisition of
Northeast Energy Management, Inc.
Ladies and Gentlemen:
As counsel for Eastern Utilities Associates ("EUA") and its
wholly-owned subsidiary, EUA Cogenex Corporation ("Cogenex"), we are
furnishing this opinion to be used in connection with the application-
declaration on Form U-1 (the "Application-Declaration") dated August
19, 1993 under the Public Utility Holding Company Act of 1935 filed on
behalf of EUA and Cogenex with the Securities and Exchange Commission
(the "Commission"), File No. 70-8255, as amended, concerning the
issuance by EUA of up to 1,500,000 of its common shares to fund
certain acquisitions by Cogenex, including the acquisition of
Northeast Energy Management, Inc. ("NEMI") by EUA Acquisition Corp., a
wholly-owned subsidiary of Cogenex ("EUA Acquisition"), (the "Proposed
NEMI Transaction"), all as more fully described in the Application-
Declaration. A Registration Statement on Form S-4 relating to EUA's
common shares was filed with the Commission under the Securities Act
of 1933 and such Registration Statement became effective on February
22, 1993. The Commission issued an order on December 8, 1993
authorizing the acquisition of James L. Day Co. and reserved
jurisdiction at that time over the Proposed NEMI Transaction.
It is our opinion, subject to the additional assumptions,
exceptions and qualifications hereinafter stated, that in the event
that the Proposed NEMI Transaction is consummated in accordance with
the Application-Declaration:
(a) all State laws applicable to the Proposed NEMI Transaction
will have been complied with by EUA, Cogenex and EUA Acquisition;
(b) EUA, the issuer of the common shares, is a validly organized
and duly existing voluntary association under the laws of The
Commonwealth of Massachusetts and the common shares in connection with
the Proposed NEMI Transaction will be validly issued, fully paid and
non-assessable, and the holders thereof will be entitled to the rights
and privileges appertaining thereto set forth in the Declaration of
Trust of EUA, as amended, which is the document defining such rights
and privileges;
(c) EUA Acquisition will legally acquire the assets of NEMI
through a statutory merger; and
(d) the consummation of the Proposed NEMI Transaction will not
violate the legal rights of the holders of any of the securities
issued by EUA, Cogenex or EUA Acquisition or by Eastern Edison Company
("Eastern Edison"), Montaup Electric Company ("Montaup"), EUA Service
Corporation ("EUA Service"), EUA Energy Investment Corporation ("EUA
Energy"), and OSP Finance Company ("OSP") all associate companies of
EUA, Cogenex and EUA Acquisition.
This opinion in addition to being subject to the consummation of
the Proposed NEMI Transaction in accordance with the Application-
Declaration is also subject to the following additional assumptions,
exceptions and qualifications:
(1) compliance with such order or orders as the Commission may
issue from time to time upon the Application-Declaration and the
continued effectiveness of the Registration Statement on Form S-4
relating to the EUA common shares;
(2) the accuracy of information furnished to us (a) as to the
outstanding securities of EUA, Cogenex, EUA Acquisition, Eastern
Edison, Montaup, EUA Service, EUA Energy, and OSP and (b) that there
is no provision or condition in any note or other document in
connection with outstanding short-term borrowings of any of those
companies limiting the transaction which is the subject of the
Application-Declaration;
(3) that requirements of applicable state securities or "blue
sky" laws will have been complied with;
(4) that the common shares are properly listed on the New York
Stock Exchange and the Pacific Stock Exchange;
(5) that the enforceability of the Proposed NEMI Transaction may
be subject to and affected by applicable bankruptcy, receivership,
insolvency, reorganization, moratorium, fraudulent conveyance or other
laws affecting the enforcement of the rights and remedies of creditors
generally (including, without limitation, such as may deny giving
effect to waivers of rights to debtors or guarantors); and such duties
and standards as are or may be imposed on creditors, including,
without limitation, good faith, reasonableness and fair dealing under
any applicable statute, rule, regulation or judicial decision; and
(6) that the enforceability of the Proposed NEMI Transaction may
be subject to and affected by general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law) and the exercise of equitable powers by a court of
competent jurisdiction (and no opinion is given herein as to specific
performance or as to the availability of other equitable remedies or
equitable relief of any kind).
This opinion relates only to federal law and the laws of The
Commonwealth of Massachusetts and we express no opinion with respect
to any other jurisdiction. To the extent that certain matters
addressed may involve the laws of other states, we have assumed that
such laws are not materially different from the laws of The
Commonwealth of Massachusetts.
We consent to the use of this opinion in connection with the
Application-Declaration filed with the Commission.
Very truly yours,
McDERMOTT, WILL & EMERY
<TABLE>
Exhibit H
<CAPTION>
EUA SYSTEM
CREDIT LINES
<S> <C> <C> <C> <C>
EFFECTIVE
TOTAL EXPIRATION BORROWING
BANKS * CREDIT LINE ARRANGEMENTS DATE COST **
BANK OF NEW YORK $40,000,000 FEE - 1/4% x LINE 06-30-94 6.2500%
CITIBANK, N.A. $15,000,000 FEE - 1/4% x LINE 06-30-94 6.2500%
STATE STREET BANK $15,000,000 FEE - 1/4% x LINE 06-30-94 6.2500%
BANK OF BOSTON $10,000,000 FEE - 1/4% x LINE 06-30-94 6.2500%
$10,000,000 FEE - NONE 06-30-94 6.0000%
SHAWMUT, N.A. $20,000,000 FEE - 1/4% x LINE 06-30-94 6.2500%
$10,000,000 FEE - NONE 06-30-94 6.0000%
CANADIAN IMPERIAL $10,000,000 FEE - 1/4% x LINE 06-30-94 6.2500%
CREDIT LYONNAIS $10,000,000 FEE - 1/4% x LINE 08-15-94 6.2500%
$140,000,000
</TABLE>
[FN]
(*) THE CREDIT LINES, BORROWINGS AND ARRANGEMENTS FOR ANY BANK LISTED ABOVE,
AND IN THE AGGREGATE, MAY INCREASE, DECREASE OR CHANGE.
THE AVAILABILIITY OF CERTAIN LINES ARE CURRENTLY BEING REVIEWED AND
ADDITIONAL BANKS MAY BE ADDED TO THE ABOVE LIST.
(**) ASSUMES BORROWING AND PRIME RATE OF 6.00%.
<TABLE>
<CAPTION>
EXHIBIT J
EASTERN UTILITIES ASSOCIATES
EUA COGENEX CORPORATION FILE NO. 70-8255
CRITERIA FOR A POOLING OF INTERESTS - APB 16
<S> <C>
CRITERIA
PER APB 16 AND SEC STAFF INTERPRETATIONS PER MERGER AGREEMENT
1 A CORPORATION OFFERS AND ISSUES ONLY COMMON ARTICLE III, PARAGRAPH 3.1
STOCK WITH RIGHTS IDENTICAL TO THOSE OF ITS EUA SHALL ISSUE SHARES OF VALIDLY ISSUED,
OUTSTANDING VOTING COMMON STOCK IN EXCHANGE FULLY PAID, AND NON-ASSESABLE COMMON SHARES,
FOR SUBSTANTIALLY ALL (AT LEAST 90% OF THE $5 PAR VALUE FOR ALL OF THE ASSETS AND
OUTSTANDING VOTING COMMON STOCK) OF THE ASSUMED LIABILITIES OF NORTHEAST ENERGY
VOTING COMMON STOCK OF ANOTHER COMPANY AT MANAGEMENT, INC. (NEMI)
THE DATE THE COMBINATION IS CONSUMMATED.
PARAGRAPH 47b, .106(b)
2 EACH OF THE COMBINING COMPANIES IS EUA ACQUISITION CORPORATION (NEWCO) WILL BE A
AUTONOMOUS AND HAS NOT BEEN A SUBSIDIARY OR WHOLLY OWNED SUBSIDIARY OF EUA COGENEX. EUA
DIVISION OF ANOTHER CORPORATION WITHIN TWO COGENEX IS A WHOLLY OWNED SUBSIDIARY OF
YEARS BEFORE THE PLAN OF COMBINATION IS EASTERN UTILITIES ASSOCIATES. UNDER ARTICLE
INITIATED. PARAGRAPH 46a, .105(a) III, PARAGRAPH 3.1 IN CONSIDERATION OF
NEWCO'S RECEIPT OF ALL OF THE ASSETS OF
PARAGRAPH 46, .105(a)2 ALLOWS FOR A WHOLLY NEMI AND THE ASSUMED LIABILITIES, EUA WILL
OWNED SUBSIDIARY THAT DISTRIBUTES VOTING ISSUE AN AGREEDED UPON NUMBER OF EUA COMMON
STOCK OF ITS PARENT TO EFFECT THE SHARES TO THE STOCKHOLDER.
COMBINATION IS CONSIDERED AUTONOMOUS
PROVIDED THAT THE PARENT MEETS ALL 12 ARTICLE IV, PARAGRAPH 4.2(f) REPRESENTATIONS
CRITERIA. AND WARRANTIES BY THE COMPANY AND THE SHAREHOLDER. PARENTS
AND SUBSIDIARIES. COMPANY (NEMI) HAS NO OWNERSHIP OR CONTROL
RELATIONSHIP WITH ANY ENTITY.
NEMI OR NEMI'S SOLE SHAREHOLDER DO NOT OWN 10% OR MORE OF
EUA.
3 EACH OF THE COMBINING COMPANIES IS ARTICLE IV, PARAGRAPH 4.2(b)
INDEPENDENT OF THE OTHER COMBINING COMPANIES. NEMI HAS 100,000 SHARES OF COMMON STOCK
PARAGRAPH 46b, .105(b) AUTHORIZED AND 100 SHARES ISSUED, ALL OF
WHICH THE SOLE SHAREHOLDER OF NEMI HAS TITLE TO. THEREFORE
EUA OWNS NO STOCK OF NEMI.
IN ADDITION, NEMI OWNS NO STOCK OF EUA.
4 THE COMBINATION IS EFFECTED IN A SINGLE AMENDMENT NO. 3 OF THE FORM U-1/A, FILE NO.
TRANSACTION OR IS COMPLETED IN ACCORDANCE 70-8255 DATED NOVEMBER 29, 1993 IS THE
WITH A SPECIFIC PLAN WITHIN ONE YEAR AFTER INITIATION DATE FOR POOLING PURPOSES.
THE PLAN IS INITIATED. PARAGRAPH 47a, .106(a) CLOSING OF THE TRANSACTIONS IN THE AGREEMENT IS ANTICIPATED
TO BE ON JANUARY 31, 1994
ACCORDING TO PARAGRAPH 46, .105(a)(1) THE (PER ARTICLE III, PARAGRAPH 3.4) AT WHICH
PLAN IS INITIATED ON THE DATE THE MAJOR TIME THE EUA COMMON SHARES WILL BE EXCHANGED
TERMS OF A PLAN, INCLUDING THE RATIO OF FOR ALL THE ASSETS AND ASSUMED LIABILITIES
EXCHANGE OF STOCK, ARE ANNOUNCED OR FORMALLY OF NEMI. THEREFORE THE COMBINATION WILL BE
MADE KNOWN TO STOCKHOLDERS OF ANY ONE OF THE EFFECTED WITHIN ONE YEAR OF INITIATION. COMBINING
ENTERPRISES.
5 NONE OF THE COMBINING COMPANIES CHANGES THE THERE HAVE BEEN NO CHANGES IN THE EQUITY
EQUITY INTEREST OF THE VOTING COMMON STOCK INTEREST OF THE VOTING COMMON STOCK OF
IN CONTEMPLATION OF EFFECTING THE EITHER COMPANY IN CONTEMPLATION OF EFFECTING
COMBINATION EITHER WITHIN TWO YEARS BEFORE THE MERGER. A COPY OF THE 12/31/93 AUDITED
THE PLAN OF COMBINATION IS INITIATED OR FINANCIAL STATEMENTS OF NEMI WILL BE
BETWEEN THE DATES THE COMBINATION IS PROVIDED TO CONFIRM THIS STATEMENT.
INITIATED AND CONSUMMATED.
PARAGRAPH 47c, .106(c)
6 TREASURY STOCK ACQUIRED WITHIN A TWO-YEAR ARTICLE IV, PARAGRAPH 4.1(d)
PERIOD GENERALLY CANNOT BE USED IN A POOLING THE COMMON SHARES TO BE DELIVERED TO
OF INTERESTS. PARAGRAPH 47d, 106(d) SHAREHOLDER WILL BE DULY AUTHORIZED, VALIDLY ISSUED, FULLY
PAID AND NON-ASSESSABLE.
PER THE 1992 ANNUAL REPORT OF EUA AND THE 9/30/93 EUA 10Q
THERE HAS BEEN NO TREASURY STOCK ACTIVITY OF EUA COMMON
SHARES. THESE REPORTS HAVE BEEN DELIVERED TO THE
SHAREHOLDER PER ARTICLE IV, PARAGRAPH 4.1(f).
7 THE RATIO OF THE INTEREST OF AN INDIVIDUAL ARTICLE IV, PARAGRAPH 4.2(b), STATES THAT
COMMON SHAREHOLDER TO THOSE OF OTHER COMMON "THE SHAREHOLDER" HAS GOOD AND MARKETABLE
SHAREHOLDERS IN A COMBINING COMPANY REMAINS TITLE TO ALL OF THE ISSUED AND OUTSTANDING
THE SAME AS A RESULT OF THE EXCHANGE OF NEMI COMMON STOCK. BECAUSE THERE IS ONLY
STOCK. PARAGRAPH 47e, .106(e) ONE SHAREHOLDER THIS CRITERIA IS SATISFIED.
8 THE VOTING RIGHTS TO WHICH THE COMMON STOCK ARTICLE III, PARAGRAPH 3.2
OWNERSHIP INTERESTS IN THE RESULTING AT THE CLOSING, THE SHAREHOLDER WILL BE
CORPORATION ARE ENTITLED ARE EXERCISABLE ENTITLED TO RECEIVE FROM EUA CERTIFICATES
ONLY BY THE SHAREHOLDERS. REPRESENTING THE NUMBER OF EUA COMMON SHARES
PARAGRAPH 47f, .106(f) AGREED TO IN PARAGRAPH 3.1. BECAUSE THESE SHARES ARE
TRANSFERRED DIRECTLY TO THE SHAREHOLDER (NOT INTO A VOTING
TRUST)
AND ARE NOT SUBJECT TO ANY RESTRICTIONS
THIS CRITERIA IS SATISFIED.
EXHIBIT J
9 THE COMBINATION MUST BE RESOLVED WHEN THE ARTICLE III, PARAGRAPH 3.2 - AT THE CLOSING
PLAN IS CONSUMMATED AND NO PROVISION OF THE THE SHAREHOLDER WILL BE ENTITLED TO RECEIVE
PLAN RELATING TO THE ISSUE OF SECURITIES MAY FROM EUA IMMEDIATELY UPON THE MERGER,
BE PENDING. PARAGRAPH 47g, .106(g) CERTIFICATES REPRESENTING THE NUMBER OF
SHARES SET FORTH IN SECTION 3.1 AND CASH IN LIEU OF ANY
FRACTIONAL EUA COMMON SHARES.
THERE ARE NO CONTINGENCIES REGARDING THE ISSUANCE OF
SECURITIES AFTER THE CLOSING
IN THE AGREEMENT.
10 THE COMBINED CORPORATION DOES NOT AGREE ARTICLE III, PARAGRAPH 3.5
DIRECTLY OR INDIRECTLY TO RETIRE OR SHAREHOLDER AGREES TO HOLD EUA SHARES ISSUED
REACQUIRE ALL OR PART OF THE COMMON STOCK TO HIM THROUGH THE EARLIER OF MARCH 31, 1994
ISSUED TO EFFECT THE COMBINATION. OR THE DATE FOLLOWING THE DATE UPON WHICH
PARAGRAPH 48a, .107(a) EUA PUBLISHES FINANCIAL RESULTS FOR THE
MONTH OF FEBRUARY, 1994 WHICH WILL BE FILED
ON FORM 8K. THE AGREEMENT DOES ALLOW FOR THE TRANSFER OF SOME
EUA SHARES, INCLUDING GIFTS AND SALE OF DIMINIMIS AMOUNT
WHICH AGGREGATE NO MORE THAN 1% OF COMMON SHARES HELD BY
HIM, TO THE EXTENT PERMITTED BY SEC RULES
AND INTERPRETATIONS.
ASR 135 AS INTERPRETED BY SAB NO. 65 STATES
NO AFFILIATE OF EITHER COMBINING COMPANY MAY REDUCE ITS
RELATIVE RISK 30 DAYS PRIOR TO CONSUMMATION AND ENDING WHEN
FINANCIAL
RESULTS COVERING AT LEAST 30 DAYS OF POST-MERGER ACTIVITY
HAVE BEEN PUBLISHED.
THE SEC STAFF INTERPRETATION OF SAB NO.76 PERMITS EACH
AFFILIATE TO SELL A DE MINIMIS NUMBER OF COMMON SHARES.
DEMINIMIS IS
DEFINED BY SEC AS NO MORE THAN 10% OF COMMON SHARES HELD BY
AFFILIATE, LIMITED TO NO MORE THAN 1 PERCENT OF TOTAL
OUTSTANDING SHARES
OF THE ISSUING COMPANY. ALSO PERMITS CHARITABLE
CONTRIBUTIONS OR BONA FIDE GIFTS
IF RECIPIENT ABIDES BY THE SAME RESTRICTIONS.
11 THE COMBINED CORPORATION DOES NOT ENTER INTO THE AGREEMENT DOES NOT PROVIDE FOR ANY
OTHER FINANCIAL ARRANGEMENTS FOR THE BENEFIT FINANCIAL ARRANGEMENTS FOR THE BENEFIT OF
OF THE FORMER STOCKHOLDERS OF THE ACQUIRED FORMER STOCKHOLDERS OF THE ACQUIRED COMPANY. COMPANY, i.e.,
GUARANTEE OF LOANS SECURED BY
THE STOCK ISSUED. PARAGRAPH 48b, .107(b)
12 THE COMBINED COMPANY DOES NOT INTEND OR PLAN EUA AND EUA COGENEX HAVE NO PLAN OR
TO DISPOSE OF A SIGNIFICANT PART OF THE INTENTIONS TO DISPOSE OF A SIGNIFICANT PART
ASSETS OF THE COMBINING COMPANIES WITHIN TWO OF THE ASSETS OF THE COMBINING COMPANIES
YEARS AFTER THE COMBINATION, OTHER THAN WITHIN TWO YEARS.
DISPOSALS IN THE ORDINARY COURSE OF BUSINESS
OF THE FORMERLY SEPERATE COMPANIES AND TO
ELIMINATE DUPLICATE FACILITIES OR EXCESS
CAPACITY. PARAGRAPH 48c, .107(c)
</TABLE>
DRAFT EXHIBIT L
EUA COGENEX CORPORATION
PURCHASE PRICE FOR NORTHEAST ENERGY MANAGEMENT
Purchase Price $19,800,000
+Accounts Receivable as of 12/31/93 186,801
+Accounts Receivable est. through 1/31/94 226,200
- -General Liabilities as of 12/31/93 6,520,502
- -Other Assumed Liabilities 1,487,460
- -Est. Fleet borrowing to pay NEMI dividend 450,000
-----------
Adjusted Purchase Price $11,755,039 (a)
Est. EUA Share Price $27.00
Approximate Number of EUA Common Shares 435,000
(a) Adjusted purchase price does not include the $500,000
cash payment to the NEMI shareholder, Angus S. King, Jr.
in consideration for a five year non-competition
agreement.
NORTHEAST ENERGY MANAGEMENT, INC.
-----------------
FINANCIAL STATEMENTS
for the year ended December 31, 1993
(Unaudited)
*new page*
NORTHEAST ENERGY MANAGEMENT, INC.
BALANCE SHEET
December 31, 1993
(Unaudited)
_______
ASSETS
Current assets:
Cash $ 206,593
Accounts receivable 186,801
Prepaid expenses 1,402
----------
Total current assets 394,796
Property and Equipment: ----------
Furniture and equipment 46,108
Less: accumulated depreciation (39,043)
----------
Net property and equipment 7,065
----------
Other assets:
Project costs 7,549,165
Deferred charges 176,053
Other 1,806
Less: accumulated amortization (1,228,861)
----------
Total other assets 6,498,163
----------
Total assets $ 6,900,024
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable 105,233
Accrued interest payable 6,172
Notes payable, current portion 999,996
----------
Total current liabilities 1,111,401
Notes payable, net of current portion 5,436,201
----------
Total liabilities 6,547,602
Stockholder's equity: ----------
Common stock - $.01 par value, 100,000 shares
authorized, issued and outstanding 1,000
Additional paid-in capital 48,883
Retained earnings 302,539
Total stockholder's equity ----------
352,422
-----------
Total liabilities and stockholder's equity $ 6,900,024
===========
The accompanying notes are an integral part of the financial statements
2
*new page*
NORTHEAST ENERGY MANAGEMENT, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
for the year ended December 31, 1993
(Unaudited)
-----------
Revenue:
Fees from Central Maine Power Co. $2,314,418
Operating expenses:
Depreciation and amortization 512,665
General and administrative expenses 621,239
----------
Total operating expenses 1,133,904
----------
Income from operations 1,180,514
----------
Other income (expense):
Investment income 5,391
Gain on sale of investment 1,496
Interest expense (484,042)
----------
Total other (expense) (477,155)
----------
Net income 703,359
Retained earnings, beginning of year 421,970
Less: distributions to stockholder (822,790)
----------
Retained earnings, end of year $ 302,359
==========
The accompanying notes are an integral part of the financial statements
3
*new page*
NORTHEAST ENERGY MANAGEMENT, INC.
STATEMENT OF CASH FLOWS
for the year ended December 31, 1993
(Unaudited)
_______
Cash flows from operating activities:
Net income $ 703,359
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 512,665
Gain on sale of investment (1,496)
Changes in operating assets and liabilities:
Accounts receivable 201,772
Accounts payable (243,265)
Accrued interest payable (4,828)
Other, net (473)
----------
Net cash provided by operating activities 1,167,736
Cash flows from investing activities: ----------
Project costs (480,648)
Purchase of property and equipment (1,298)
Net proceeds from sale of short-term investments 249,434
----------
Net cash (used) by investing activities (232,512)
----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 75,902
Distributions to stockholder (822,790)
----------
Net cash provided by financing activities (746,888)
----------
Net increase in cash 188,336
Cash, beginning of year 18,257
----------
Cash, end of year $ 206,593
==========
Cash paid during the year for:
Interest $ 488,870
Income taxes -
The accompanying notes are an integral part of the financial statements.
4
*NEW PAGE*
(b) Financial Statements
Exhibit b-8
Northeast Energy Management, Inc.
FINANCIAL STATEMENTS
June 30, 1993
CONTENTS
Accountants' compilation report
Balance sheet Exhibit A
Statement of income and retained earnings Exhibit B
Schedule of operating expenses Schedule B
Statement of cash flows Exhibit C
Notes to financial statements
EXHIBIT A
Northeast Energy Management, Inc.
BALANCE SHEET
June 30, 1993
ASSETS
CURRENT ASSETS
Cash (Exhibit C) $ 202,376
Accounts receivable 187,765
Investments (Note 8) 207,213
Prepaid expenses 1,869
TOTAL CURRENT ASSETS $ 599,223
PROPERTY AND EQUIPMENT (Note 1)
Furniture and equipment $ 45,634
Less: accumulated depreciation (36,403)
NET PROPERTY AND EQUIPMENT 9,231
OTHER ASSETS (Note 1)
Software $ 1,724
Deferred charges 176,053
Project costs 7,522,482
Less: accumulated amortization (990,320)
TOTAL OTHER ASSETS 6,709,939
TOTAL ASSETS $ 7,318,393
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 10,087
Accrued wages 6,179
Accrued interest payable 3,909
Notes payable, current
portion (Note 2) 857,268
TOTAL CURRENT LIABILITIES $ 877,443
LONG-TERM LIABILITIES
Notes payable, net of current
portion (Note 2) 5,936,200
TOTAL LIABILITIES $ 6,813,643
STOCKHOLDER'S EQUITY
Common stock - $.01 par
value, 100,000 shares
authorized, issued and
outstanding $ 1,000
Additional paid-in capital 48,883
Retained earnings (Exhibit B) 454,867
TOTAL STOCKHOLDER'S EQUITY 504,750
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 7,318,393
EXHIBIT B
Northeast Energy Management, Inc.
STATEMENT OF INCOME AND RETAINED EARNINGS
For the six months ended June 30, 1993
Amount Percent
REVENUE (Note 3)
Fees from Central Maine Power Co. $ 1,127,820 100.0
OPERATING EXPENSES (Schedule B) 470,217 41.7
INCOME FROM OPERATIONS $ 657,603 58.3
OTHER INCOME (EXPENSE)
Investment income (Note 8) $ 2,727 .2
Interest income 1,088 .2
Gain on sale of investment (Note 8) 1,496 .1
Interest (expense) (245,381) (21.8)
TOTAL OTHER INCOME (EXPENSE) $ (240,070) (21.3)
NET INCOME $ 417,533 37.0
RETAINED EARNINGS, beginning of period 421,970
DISTRIBUTIONS (384,636)
RETAINED EARNINGS, end of period $ 454,867
SCHEDULE B
Northeast Energy Management, Inc.
SCHEDULE OF OPERATING EXPENSES
For the six months ended June 30, 1993
Amount Percent
Amortization (Note 1) $ 274,152 24.3
Wages and salaries 112,520 10.0
Employee benefits (Note 7) 13,616 1.2
Engineering royalty fees (Note 6) 13,733 1.2
Payroll taxes 9,767 1.0
Depreciation (Note 1) 2,321 .2
Monitoring costs 5,114 .5
Telephone and utilities 4,947 .4
Legal and accounting 9,006 .8
Rent (Note 4) 4,740 .4
Travel and entertainment 1,386 .1
Insurance 4,455 .4
Postage and supplies 2,108 .2
Repairs and maintenance 240 .0
Miscellaneous 324 .0
Contributions 4,125 .4
Licenses and fees 624 .0
Payroll service fees 345 .0
Projected reimbursements (Note 9) 3,592 .3
Engineering expense 3,102 .3
TOTAL OPERATING EXPENSES $ 470,217 41.7
EXHIBIT C
Northeast Energy Management, Inc.
STATEMENT OF CASH FLOWS
For the six months ended June 30, 1993
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from Central
Maine Power Co. $1,328,628
Gain on sale of investment 1,496
Interest and dividends received 3,815
Cash (paid) for wages and other
operating expenses (526,195)
Interest (paid) (252,472)
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 555,272
CASH FLOWS FROM INVESTING ACTIVITIES
Project (costs) $ (458,954)
(Purchase) of property and equipment (1,461)
Proceeds from sale of short-term
investments and marketable securities 114,000
(Purchase) of short-term investments and
marketable securities (73,275)
(Distributions) to stockholder (384,636)
NET CASH (USED) BY INVESTING
ACTIVITIES (804,326)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of
long-term debt $ 775,900
Principal (payments) on long-term debt (342,727)
NET CASH PROVIDED BY
FINANCING ACTIVITIES 433,173
NET INCREASE IN CASH $ 184,119
CASH, beginning of period 18,257
CASH, end of period $ 202,376
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
NET INCOME $ 417,533
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Depreciation $ 2,321
Amortization 274,152
Decrease in accounts receivable 200,808
(Increase) in prepaid expenses (143)
(Decrease) in accounts payable (338,411)
(Decrease) in payroll taxes payable (76)
(Decrease) in accrued interest payable (912)
TOTAL ADJUSTMENTS 137,739
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 555,272
Northeast Energy Management, Inc.
NOTES TO FINANCIAL STATEMENTS
June 30, 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Northeast Energy Management, Inc. was established in January 1989, to
develop, under contract with Central Maine Power Co., 9.5 million
megawatts of electrical conservation capacity. Under the original
contract, Northeast Energy Management, Inc. will be paid by Central
Maine Power Co. for the electrical savings from its conservation
projects over a fifteen year period. Under an amendment to the contract
signed September 11, 1991, Northeast Energy Management, Inc. was given
authority by Central Maine Power Co. to develop an additional 1.3
megawatts of electrical conservation capacity. This additional capacity
is to be paid for in an agreed-upon lump sum amount per kwh of annual
savings at the conclusion of construction of each of the additional
projects. These projects are referred to as Stage VI projects. The
following is a summary of Northeast Energy Management, Inc.'s
significant accounting policies:
PROPERTY AND EQUIPMENT - Property and equipment are carried at cost.
Depreciation of property and equipment is provided using accelerated
methods. The range of estimated useful lives are as follows:
Years
Furniture and equipment 5 - 7
SOFTWARE - Software is carried at cost and amortized over five years
using the straight-line method.
DEFERRED CHARGES - Fees paid for obtaining a loan are capitalized and
amortized over the life of the loan. Deferred charges were $176,053 and
accumulated expense at June 30, 1993 was $14,671.
PROJECT COSTS AND AMORTIZATION - Project costs are accumulated for each
active project and are amortized using the straight-line method over
fifteen years. Project costs include expenses relating to the project,
net of institutional reimbursements, engineering costs identified for a
particular project and a pro-rated share of the Company's operating
expenses. As projects are discontinued, the unamortized portion of the
related project is included in the amortization expense in the
discontinuing year. For 1993, $4,989 previously capitalized costs were
included in amortization expense.
INCOME TAXES - The Company has elected to be treated as an S Corporation
under IRC Section 1362(a). Under this election, the Company's net
income or loss is reportable by the stockholder. Consequently, there is
no provision for corporate income taxes.
NOTE 2 - NOTES PAYABLE
The Company has a note with Fleet bank which bears interest at a
variable rate, currently 7%.
Monthly principal payments of $59,545 plus interest through December,
1993, $83,333 plus interest through December 1994, $104,167 plus
interest through December, 1995, $141,667 plus interest through December
1996, $125,000 plus interest through December 1997, $83,199 plus
interest through December 1998 with the balance due in full December
1998. Secured by income, assets, and personally guaranteed by the
Company's stockholder. The total indebtedness of the note is
$7,713,338, the amount available for draw down is $919,870.
Maturities of notes payable in the five subsequent years from June 30,
1993 are as follows:
June 30, 1994 $ 857,268
June 30, 1995 1,125,000
June 30, 1996 1,475,004
June 30, 1997 1,600,002
June 30, 1998 1,249,194
Thereafter 487,000
$ 6,793,468
NOTE 3 - REVENUE
Project fee revenue represents fees earned from customer projects
undertaken. All other contracts contain no provision for fee income and
amounts received from customers are fully applied as reduction of hard
project costs.
Under the contract discussed in Note 1, fees from Central Maine Power
Co. are to be earned over a fifteen year period. Initial Central Maine
Power Co. revenue was received in 1991 and will increase as projects
become completed.
NOTE 4 - RENT
The Company rents space under an operating lease which requires monthly
lease payments of $790 through May 31, 1994. At the end of two years,
the lease may be renewed for an additional year. Rent expense was
$4,740 in 1993.
NOTE 5 - LETTER OF CREDIT
Under the requirements of its Central Maine Power Co. contract, the
Company has delivered a letter of credit to Central Maine Power Co. for
indemnification against unpaid project costs.
As of June 30, 1993, the Company was contingently liable to Fleet Bank
under this outstanding letter of credit in the amount of $180,000 due to
expire on December 31, 1993.
NOTE 6 - ENGINEERING ROYALTY FEES
The Company entered into an agreement on November 29, 1989 for
professional consulting services aiding in marketing, conducting
engineering analysis design, construction, management and measuring the
energy savings of various projects. For payments of these services,
Northeast Energy Management, Inc. has agreed to pay a royalty. The
royalty is 2.5% of the gross payments received by the Company from
Central Maine Power Co. for each project less actual total construction
costs of the project. This royalty fee is in effect for seven years.
Upon each succeeding year, the royalty rate is 3.5% of the gross
receipts from Central Maine Power Co. for each project without set off
or deduction.
NOTE 7 - EMPLOYEE BENEFITS
The Company pays 13% of gross wages to a simplified employee pension
plan. All employees who meet certain age, income, and service
requirements are eligible. Pension expense was $0 for the six months
ended June 30, 1993.
NOTE 8 - INVESTMENTS
Investments consist of mutual funds consisting of municipal bonds and
equity growth stocks. The investment account is carried at the lower of
aggregate cost or market value. The investments are all considered
short-term.
Gain or loss is determined by valuing securities at cost. Realized gain
on sale of investments for 1993 was $1,496.
Total market value at 6/30/93 $ 212,645
Total cost at 6/30/93 207,213
Unrealized gain $ 5,432
In August, 1993, the Company transferred the entire investment account
balance to the sole stockholder. The estimated market value of the fund
is not estimated to be materially different from that of June 30, 1993.
NOTE 9 - PROJECT REIMBURSEMENTS
The Company has an agreement with each project to review the project's
actual cost savings. In the event the actual savings exceeds the
projected, the Company shall pay to the project an amount based on per
kilowatt hour saved. During 1993, $3,592 has been paid under this
agreement.
NOTE 10 - SUBSEQUENT EVENTS
The Company has a letter of understanding that Eastern Utilities
Associates (EUA) Congenex Corporation, a Massachusetts business and
subsidiary of EUA, wants to acquire the existing business of Northeast
Energy Management, Inc. The sale would include all of the Company's
utility demand side management contracts which are primarily with
Central Maine Power Company (CMP). These contracts were written for
CMP's Power Partner's Program for commercial/industrial energy efficient
projects.
Between June 30, 1993 and September 7, 1993, the Company distributed
cash, in excess of amounts disclosed in Note 8, totaling $57,919 to the
sole stockholder.
NOTE 11 - UNINSURED CASH
At June 30, 1993, the carrying amount of the Company's deposits
(checking and savings) was $202,376 and the related bank balance was
$202,526. Of the bank balance, $100,000 was covered by federal
depository insurance, and $102,526 was uninsured.
