SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
February 1, 1999
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Date of Report (Date of Earliest Event Reported)
New England Electric System
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(Exact Name of Registrant as Specified in Charter)
Massachusetts 1-3446 04-1663060
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
25 Research Drive
Westborough, Massachusetts 01582
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(Address of Principal Executive Offices and Zip Code)
(508) 389-2000
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On February 1, 1999, New England Electric System, a Massachusetts
business trust ("NEES"), Research Drive LLC, a Massachusetts limited
liability company which is directly and indirectly wholly owned by NEES
("LLC") and Eastern Utilities Associates, a Massachusetts business trust
("EUA"), entered into an Agreement and Plan of Merger, dated as of February
1, 1999 (the "Merger Agreement"), providing for a merger transaction among
NEES, LLC and EUA. The Merger Agreement and the press release issued in
connection therewith are filed herewith as Exhibits 99(a) and 99(b),
respectively, and are incorporated herein by reference. The description of
the Merger Agreement set forth herein does not purport to be complete and
is qualified in its entirety by the provisions of the Merger Agreement.
Pursuant to the Merger Agreement, LLC will merge with and into EUA
(the "Merger"), with EUA being the surviving entity and becoming a wholly
owned subsidiary of NEES (the "Surviving Entity"). The Merger, which was
unanimously approved by the NEES Board of Directors, the EUA Board of
Trustees and the Members of LLC, is expected to occur shortly after all of
the conditions to the consummation of the Merger, including the receipt of
certain regulatory approvals, are met or waived. NEES expects that the
Merger will be completed in early 2000.
Under the terms of the Merger Agreement, each outstanding share of
EUA's common stock (the "EUA Common Stock"), other than shares, if any,
owned by EUA as treasury shares, NEES, LLC or any other wholly owned
subsidiary of NEES, will be converted into the right to receive $31.00 in
cash, as may be adjusted (the "Merger Consideration"). Such adjustment
will occur as follows: if the Closing Date does not occur on or prior to
the date that is the six month anniversary of the date on which EUA
shareholders approve the Merger (the "Adjustment Date"), then the per share
amount shall be increased for each day after the Adjustment Date up to and
including the day which is one day prior to the earlier of the Closing Date
and May 1, 2000 by an amount equal to $.003.
The Board of Directors of NEES has received an opinion from its
investment banker, Merrill Lynch, Pierce, Fenner & Smith Incorporated, to
the effect that, as of January 30, 1999, the Merger Consideration to be
paid by NEES pursuant to the Merger is fair from a financial point of view
to NEES.
The Merger is subject to certain customary closing conditions,
including, without limitation, the receipt of the required approval of
EUA's shareholders by an affirmative vote of two-thirds of the outstanding
EUA shares and the receipt of all necessary governmental approvals and the
making of all necessary governmental filings, including the consent or
approval of certain state utility regulators, the approval of the Federal
Energy Regulatory Commission, the approval of the Securities and Exchange
Commission under the Public Utility Holding Company Act of 1935, as
amended, the approval of the Nuclear Regulatory Commission and the filing
of the requisite notification with the Federal Trade Commission and the
Department of Justice under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended. A meeting of the EUA's shareholders to vote upon
the Merger will be convened as soon as practicable.
The Merger Agreement contains certain covenants of the parties pending
the consummation of the Merger. Generally, EUA must carry on its business
in the ordinary course consistent with past practice, comply with all laws
and preserve intact its goodwill. The Merger Agreement contains certain
restrictions on EUA including limitations on, or procedures for: payment
of dividends on EUA common shares and preferred shares of certain EUA
subsidiaries, issuance of securities, amendment of the EUA's Declaration of
Trust, or similar governing documents of EUA's subsidiaries, acquisitions,
dispositions, incurrence of indebtedness, capital expenditures,
modification of employee compensation and benefits, changes in accounting
policies, amendment, termination or failure to renew material contracts,
discharge of liabilities, rate matters, equity investments, loans to
affiliates or other persons, and assessing the adequacy of EUA's Year 2000
Program. (See Article VI of the Merger Agreement.)
Pursuant to the Merger Agreement EUA agrees that neither it nor any of
its subsidiaries shall knowingly initiate, solicit or encourage, directly
or indirectly, any inquiry or proposal or offer relating to a business
combination proposal or similar transaction including EUA or any of its
significant subsidiaries other than EUA Cogenex Corporation, or engage in
negotiations with, or provide confidential information to any third party,
and requires EUA to terminate immediately any existing discussions or
negotiations and notify NEES of any such inquiries relating to a business
combination proposal, unless prior to EUA shareholder approval: (i) EUA's
Board determines, in good faith based upon the advice of its outside legal
counsel with respect to the Board's fiduciary duties, that taking such
action is necessary for the Board to act in a manner consistent with its
fiduciary duties under applicable law; (ii) EUA's Board reasonably
concludes, in good faith after consultation with its financial advisors,
that (A) the party making such proposal has adequate financing sources and
(B) such proposal is likely to be more favorable to shareholders of EUA
than the Merger (a "Superior Proposal"); (iii) prior to furnishing
nonpublic information or entering into negotiations, EUA notifies NEES in
writing of such furnishing of information or negotiations (identifying the
party making the proposal and the material terms of such proposal) and
enters into a confidentiality agreement in customary form with such third
party; and (iv) EUA keeps NEES promptly informed of the status and all
material information with respect to such discussions or negotiations. EUA
may terminate the Merger Agreement to accept a Superior Proposal (in which
case, the termination fee provision described below would be applicable).
However, before so terminating, EUA must negotiate with NEES to adjust the
Merger Agreement so as to enable the parties to proceed with the adjusted
Merger Agreement, and EUA's Board must determine that, based on advice of
counsel with respect to the Board's fiduciary duties and notwithstanding a
binding commitment to consummate the Merger Agreement and notwithstanding
all concessions that may be offered by NEES in further negotiations with
EUA, the Superior Proposal is more favorable to EUA's shareholders than the
Merger. (See Section 7.08 and Article IX of the Merger Agreement.)
If the Merger is consummated, then promptly following the merger
contemplated by the merger agreement between NEES, National Grid Group plc
and NGG Holdings LLC (formerly known as Iosta LLC) dated as of December 11,
1998 (the "National Grid Merger Agreement"), NEES shall take the necessary
action to cause all of the members of the Board of Trustees of EUA to be
appointed to serve on the advisory board to be formed pursuant to the
National Grid Merger Agreement. (See Section 7.07 of the Merger
Agreement.)
The Merger Agreement may be terminated under certain circumstances,
including: (i) by mutual written agreement of the Board of Directors of
NEES and the Board of Trustees of EUA, (ii) by either party if the Merger
has not been effected by December 31, 1999 (the "Initial Termination
Date"), provided, that if the parties are otherwise ready to close, but
certain statutory approvals are not yet obtained, the Initial Termination
Date will be extended for four months (the "Extended Termination Date") and
(iii) by either party if any law, rule or regulation is adopted which makes
the Merger illegal or any final order or injunction permanently prohibits
the Merger. NEES may terminate the Merger Agreement: (i) if EUA
shareholder approval has not been obtained at a duly held meeting of such
shareholders, including any adjournments thereof, (ii) if there has been a
material breach of EUA's representations and warranties or a failure to
perform and comply with its covenants under the Agreement and such breach
or failure has not been cured, (iii) if EUA's Board withdraws or modifies
its approval of the merger or its recommendation to its shareholders or
resolves to take such action or (iv) if EUA's Board approves, recommends or
takes no position with respect to an alternative proposal or resolves to
take such action. In addition, EUA may terminate the Merger Agreement:
(i) in order to accept a Superior Proposal if EUA's Board determines that
such termination is necessary to act in a manner consistent with its
fiduciary duties after following the applicable procedures, as described
above, provided, that EUA's ability to terminate in accordance with this
provision of the Agreement is conditioned upon concurrent payment by EUA to
NEES of any applicable termination fees under the Agreement, (ii) if there
has been a material breach of NEES's representations and warranties or a
failure to perform and comply with its covenants under the Agreement and
such breach or failure has not been cured or (iii) if NEES fails to deliver
the Merger Consideration at a time when all conditions to NEES's obligation
to close have been satisfied or waived. (See Articles VIII and IX of the
Merger Agreement.)
EUA will pay NEES a termination fee of $20 million plus up to $5
million for documented out-of-pocket expenses: (i) if EUA terminates the
Merger Agreement because EUA became the target of a third party alternative
proposal, and EUA's Board determined in good faith based upon the advice of
outside counsel with respect to the Board's fiduciary duties, that
termination was necessary for the Board to act consistently with its
fiduciary duties under applicable law or (ii) if, at a time when an
alternative business proposal is pending, EUA terminates the Merger
Agreement because: (A) EUA shareholder approval was not obtained, (B) EUA
has materially breached its representations and warranties or has failed to
materially perform and comply with its covenants under the Merger
Agreement, or (C) the Closing has not occurred by the termination date,
provided, that in the case of (A), (B) or (C), EUA enters into a merger or
acquisition agreement with the party offering such alternative proposal
within two years of such termination. (See Article IX of the Merger
Agreement.)
NEES will pay EUA a termination fee of $10 million plus up to $5
million for documented out-of-pocket expenses if either NEES or EUA
terminates because the Closing Date has not occurred on or before the
Initial Termination Date, or if the Initial Termination Date is extended,
the Extended Termination Date, and on the date of such termination: (i) all
conditions to closing other than the condition requiring that certain
statutory consents and approvals be obtained has not been fulfilled,
provided, that such Closing Date has not failed to occur due to a failure
on the part of the terminating party to fulfill any obligation under the
Merger Agreement, (ii) if the date of termination is any date other than
the Extended Termination Date or a date thereafter, all conditions of each
party other than the conditions concerning (A) statutory consents and
approvals and (B) the certification of performance of obligations on the
part of NEES and LLC have been fulfilled or are capable of being fulfilled
and (iii) the merger contemplated by the National Grid Merger Agreement has
not been consummated. (See Articles VIII and IX of the Merger Agreement.)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits.
99(a) Agreement and Plan of Merger, dated as of February 1, 1999, by
and among , New England Electric System, Research Drive LLC
and Eastern Utilities Associates.
99(b) Press Release of New England Electric System issued February
1, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: February 2, 1999
NEW ENGLAND ELECTRIC SYSTEM
By: /s/ Michael E. Jesanis
---------------------------------
Michael E. Jesanis
Senior Vice President and
Chief Financial Officer
The name "New England Electric System" means the trustee or trustees for
the time being (as trustee or trustees but not personally) under an
Agreement and Declaration of Trust dated January 2, 1926, as amended, which
is hereby referred to, and a copy of which, as amended, has been filed with
the Secretary of the Commonwealth of Massachusetts. Any agreement,
obligation, or liability made, entered into, or incurred by or on behalf of
New England Electric System binds only its trust estate, and no
shareholder, director, trustee, officer, or agent thereof assumes or shall
be held to any liability therefor.
Exhibit Index
Exhibit Description
------- -----------
99(a) Agreement and Plan of Merger, dated as of February 1, 1999,
by and among , New England Electric System, Research Drive
LLC and Eastern Utilities Associates.
99(b) Press Release of New England Electric System issued February
1, 1999.
EXHIBIT 99(a)
[Execution Counterpart]
AGREEMENT AND PLAN OF MERGER
dated as of February 1, 1999
by and among
NEW ENGLAND ELECTRIC SYSTEM,
RESEARCH DRIVE LLC
and
EASTERN UTILITIES ASSOCIATES
TABLE OF CONTENTS
Page
No.
ARTICLE I
THE MERGER.................................1
1.01 The Merger.....................................................1
1.02 Effective Time.................................................1
1.03 Effects of the Merger..........................................2
ARTICLE II
CONVERSION OF SHARES............................2
2.01 Conversion of Capital Stock....................................2
2.02 Surrender of Shares............................................3
2.03 Withholding Rights.............................................4
ARTICLE III
THE CLOSING................................4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EUA...................5
4.01 Organization and Qualification.................................5
4.02 Capital Stock..................................................6
4.03 Authority......................................................7
4.04 Non-Contravention; Approvals and Consents......................7
4.05 SEC Reports, Financial Statements and Utility Reports..........8
4.06 Absence of Certain Changes or Events...........................9
4.07 Legal Proceedings..............................................9
4.08 Information Supplied...........................................9
4.09 Compliance....................................................10
4.10 Taxes.........................................................10
4.11 Employee Benefit Plans; ERISA.................................12
4.12 Labor Matters.................................................14
4.13 Environmental Matters.........................................15
4.14 Regulation as a Utility.......................................17
4.15 Insurance.....................................................17
4.16 Nuclear Facilities............................................18
4.17 Vote Required.................................................18
4.18 Opinion of Financial Advisor..................................18
4.19 Ownership of NEES Common Shares...............................18
4.20 State Anti-Takeover Statutes..................................18
4.21 Year 2000.....................................................19
4.22 EUA Associates................................................19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NEES..................19
5.01 Organization and Qualification................................19
5.02 Authority.....................................................20
5.03 Capital Stock.................................................20
5.04 Non-Contravention; Approvals and Consents.....................20
5.05 Information Supplied..........................................21
5.06 Compliance....................................................21
5.07 Financing.....................................................22
5.08 No Vote Required..............................................22
5.09 Ownership of EUA Shares.......................................22
5.10 Merger with The National Grid Group plc.......................22
ARTICLE VI
COVENANTS................................22
6.01 Covenants of EUA..............................................22
6.02 Covenants of NEES.............................................28
6.03 Additional Covenants by NEES and EUA..........................29
ARTICLE VII
ADDITIONAL AGREEMENTS..........................30
7.01 Access to Information.........................................30
7.02 Proxy Statement...............................................31
7.03 Approval of Shareholders......................................31
7.04 Regulatory and Other Approvals................................31
7.05 Employee Benefit Plans........................................32
7.06 Labor Agreements and Workforce Matters........................34
7.07 Post Merger Operations........................................34
7.08 No Solicitations..............................................35
7.09 Directors' and Officers' Indemnification and Insurance........36
7.10 Expenses......................................................37
7.11 Brokers or Finders............................................37
7.12 Anti-Takeover Statutes........................................38
7.13 Public Announcements..........................................38
7.14 Restructuring of the Merger...................................38
ARTICLE VIII
CONDITIONS................................39
8.01 Conditions to Each Party's Obligation to Effect the Merger....39
8.02 Conditions to Obligation of NEES and LLC to Effect the Merger.39
8.03 Conditions to Obligation of EUA to Effect the Merger..........40
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER....................41
9.01 Termination...................................................41
9.02 Effect of Termination.........................................43
9.03 Termination Fees..............................................43
9.04 Amendment.....................................................44
9.05 Waiver........................................................44
ARTICLE X
GENERAL PROVISIONS............................44
10.01 Non-Survival of Representations, Warranties,
Covenants and Agreements....................................44
10.02 Notices.......................................................44
10.03 Entire Agreement; Incorporation of Exhibits...................46
10.04 No Third Party Beneficiary....................................46
10.05 No Assignment; Binding Effect.................................46
10.06 Headings......................................................47
10.07 Invalid Provisions............................................47
10.08 Governing Law.................................................47
10.09 Enforcement of Agreement......................................47
10.10 Certain Definitions...........................................47
10.11 Counterparts..................................................48
10.12 WAIVER OF JURY TRIAL..........................................48
GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the
meanings ascribed to them in the corresponding Sections of this Agreement
listed below:
"1935 Act" -- Section 4.05(b)
"Adjustment Date" -- Section 2.01(c)
"Affected Employees" -- Section 7.05(a)
"affiliate" -- Section 10.11(a)
"Agreement" -- Preamble
"Alternative Proposal" -- Section 7.08
"beneficially" -- Section 10.10(b)
"business day" -- Section 10.10(c)
"Canceled Shares" -- Section 2.02(b)
"Certificates" -- Section 2.02(b)
"Closing" -- Article III
"Closing Agreement" -- Section 4.10(j)
"Closing Date" -- Article III
"Code" -- Section 2.03
"Confidentiality Agreement" -- Section 7.01
"Constituent Entities" -- Section 1.01
"Contracts" -- Section 4.04(a)
"control," "controlling,"
"controlled by" and "under
common control with" -- Section 10.10(a)
"DOE" -- Section 4.05(b)
"Effective Time" -- Section 1.02
"Environmental Claim" -- Section 4.13(f)(i)
"Environmental Laws" -- Section 4.13(f)(ii)
"Environmental Permits" -- Section 4.13(b)
"ERISA" -- Section 4.11(a)
"ERISA Affiliate" -- Section 4.11(c)
"EUA" -- Preamble
"EUA Associates" -- Section 4.01(b)
"EUA Employee Agreements" -- Section 7.05(d)(ii)
"EUA Executives" -- Section 7.05(d)(ii)
"EUA Shares" -- Preamble
"EUA Disclosure Letter" -- Section 4.01(a)
"EUA Employee Benefit Plans" -- Section 4.11(a)
"EUA Financial Statements" -- Section 4.05(a)
"EUA Nuclear Facilities" -- Section 4.16
"EUA Material Adverse Effect" -- Section 4.01(a)
"EUA Required Consents" -- Section 4.04(a)
"EUA Required Statutory Approvals" -- Section 4.04(b)
"EUA SEC Reports" -- Section 4.05(a)
"EUA Shareholders' Approval" -- Section 7.03
"EUA Shareholders' Meeting" -- Section 7.03
"EUA Significant Subsidiary" -- Section 7.08
"EUA Shares" -- Preamble
"EUA Trust Agreement" -- Section 1.03
"EUA Voting Debt -- Section 4.02(d)
"Evaluation Material" -- Section 7.01(a)
"Exchange Act" -- Section 4.05(a)
"Exchange Fund" -- Section 2.02(a)
"Extended Termination Date" -- Section 9.01(b)
"FCC" -- Section 4.05(b)
"FERC" -- Section 4.05(b)
"Final Order" -- Section 8.01(d)
"Governmental Authority" -- Section 4.04(a)
"Hazardous Materials" -- Section 4.13(f)(iii)
"HSR Act" -- Section 7.04(a)
"Indemnified Liabilities" -- Section 7.09(a)
"Indemnified Party" -- Section 7.09(a)
"Indemnified Parties" -- Section 7.09(a)
"Information Systems" -- Section 4.21
"Initial Termination Date" -- Section 9.01(b)
"IRS" -- Section 4.10(m)
"knowledge" -- Section 10.11(d)
"laws" -- Section 4.04(a)
"Lien" -- Section 4.02(b)
"LLC" -- Preamble
"Massachusetts Secretary" -- Section 1.02
"Merger" -- Preamble
"Merger Consideration" -- Section 2.01(b)(ii)
"MGL" -- Section 1.01
"National Grid Group" -- Section 5.10
"National Grid Merger Agreement" -- Section 5.10
"NEES" -- Preamble
"NEES Disclosure Letter" -- Section 5.03
"NEES Material Adverse Effect" -- Section 5.01
"NEES-EUA Regulatory Approvals" -- Section 7.04(b)
"NEES-EUA Regulatory Proceedings" -- Section 7.04(c)
"NEES Required Consents" -- Section 5.04(a)
"NEES Required Statutory Approvals" -- Section 5.04(b)
"NEES-NGG Regulatory Approvals" -- Section 7.04(c)
"NEES-NGG Regulatory Proceedings" -- Section 7.04(c)
"NEES-NGG Required Statutory
Approvals" -- Section 7.04
"NEES-NGG Transactions" -- Section 7.04
"NEES Shares" -- Section 5.03
"NEES Trust Agreement" -- Section 5.01
"NGG Circular" -- Section 7.02
"NRC" -- Section 4.05(b)
"Options" -- Section 4.02(a)
"orders" -- Section 4.04(a)
"Out-of-Pocket Expenses" -- Section 9.03(a)
"Paying Agent" -- Section 2.02(a)
"PBGC" -- Section 4.11(g)
"person" -- Section 10.11(e)
"Per Share Amount" -- Section 2.01(b)(ii)
"Post Closing Plans" -- Section 7.05(b)
"Proxy Statement" -- Section 4.08(a)
"Release" -- Section 4.13(f)(iv)
"Representatives" -- Section 10.11(f)
"SEC" -- Section 4.05(a)
"Securities Act" -- Section 4.05(a)
"Subsidiary" -- Section 10.11(g)
"Surviving Entity" -- Section 1.01
"Tax Ruling" -- Section 4.10(j)
"Taxes" -- Section 4.10
"Tax Return" -- Section 4.10
"US GAAP" -- Section 4.05(a)
"Yankee Companies" -- Section 4.16
"Y2K Consultant" -- Section 6.01(o)
This AGREEMENT AND PLAN OF MERGER, dated as of February 1, 1999
(this "Agreement"), is made and entered into by and among NEW ENGLAND
ELECTRIC SYSTEM, a Massachusetts business trust ("NEES"), RESEARCH DRIVE
LLC ("LLC"), a Massachusetts limited liability company which is directly
and indirectly wholly owned by NEES, and EASTERN UTILITIES ASSOCIATES, a
Massachusetts business trust ("EUA").
WHEREAS, the Board of Directors of NEES, the Board of Trustees
of EUA and the members of LLC have each determined that it is advisable and
in the best interests of their respective shareholders and members to
consummate, and have approved, the business combination transaction
provided for herein in which LLC would merge with and into EUA, with EUA
being the surviving entity (the "Merger"), pursuant to the terms and
conditions of this Agreement, as a result of which NEES will own, directly
or indirectly, all of the issued and outstanding common shares of EUA (the
"EUA Shares");
WHEREAS, NEES, LLC and EUA desire to make certain
representations, warranties and agreements in connection with the Merger
and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined in Section 1.02), LLC
shall be merged with and into EUA in accordance with Section 2 of Chapter
182 and Section 59 of Chapter 156C of the Massachusetts General Laws
("MGL"). At the Effective Time, the separate existence of LLC shall cease
and EUA shall continue as the surviving entity in the Merger. EUA, after
the Effective Time, is sometimes referred to herein as the "Surviving
Entity" and EUA and LLC are sometimes referred to herein as the
"Constituent Entities". The effect and consequences of the Merger shall be
as set forth in Article II.
1.02 Effective Time. Subject to the provisions of this
Agreement, on the Closing Date (as defined in Article III), a certificate
of merger shall be executed and filed by EUA and LLC with the Secretary of
the Commonwealth of Massachusetts (the "Massachusetts Secretary"). The
Merger shall become effective at the time of the filing of the certificate
of merger relating to the Merger with the Massachusetts Secretary, or at
such later time as is specified in the certificate of merger (such date and
time being referred to herein as the "Effective Time").
1.03 Effects of the Merger. At the Effective Time, the
Agreement and Declaration of Trust of EUA (the "EUA Trust Agreement") as in
effect immediately prior to the Effective Time shall be the agreement and
declaration of trust of the Surviving Entity, until thereafter amended as
provided by law and such agreement and declaration of trust. Subject to the
foregoing, the additional effects of the Merger shall be as provided in the
applicable provisions of Section 2 of Chapter 182 of the MGL and Section 62
of the Limited Liability Company Act of Massachusetts.
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder
thereof:
(a) Membership Interests of LLC. Each one percent of the
issued and outstanding membership interests in LLC shall be converted into
one transferable certificate of participation or share of the Surviving
Entity.
(b) Conversion of EUA Shares.
(i) Cancellation of Treasury Shares and Shares
Owned by NEES and Subsidiaries. All EUA Shares that are owned by EUA as
treasury shares and any EUA Shares owned by NEES or any other wholly owned
Subsidiary (as defined in Section 10.11) of NEES shall be canceled and
retired and shall cease to exist and no cash or other consideration shall
be delivered in exchange therefor.
(ii) Conversion of EUA Shares. Each EUA Share
issued and outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 2.01(b)(i)) shall be
canceled and converted in accordance with the provisions of this Section
2.01 into the right to receive cash in the amount (the "Per Share Amount")
of $31.00 as such amount may hereafter be adjusted in accordance with
Section 2.01(c) hereof (the "Merger Consideration"), payable, without
interest, to the holder of such EUA Share, upon surrender, in the manner
provided in Section 2.02 hereof, of the certificate formerly evidencing
such share.
(c) Adjustment in Amount of Merger Consideration. In the
event that the Closing Date shall not have occurred on or prior to the date
that is the six (6) month anniversary of the date on which EUA
Shareholders' Approval is obtained (the "Adjustment Date"), the Per Share
Amount shall be increased, for each day after the Adjustment Date up to and
including the day which is one day prior to the earlier of the Closing Date
and the Extended Termination Date, by an amount equal to $0.003.
2.02 Surrender of Shares. (a) Deposit with Paying Agent. Prior
to the Effective Time, NEES shall designate a bank or trust company
reasonably acceptable to EUA to act as agent (the "Paying Agent") for the
benefit of the holders of EUA Shares in connection with the Merger to
receive the funds to which holders of EUA Shares shall become entitled
pursuant to Section 2.01(b)(ii) (the "Exchange Fund"). From time to time
at, immediately prior to or after the Effective Time, NEES or LLC shall
make or cause to be made available to the Paying Agent immediately
available funds in amounts and at the times necessary for the payment of
the Merger Consideration upon surrender of Certificates (as defined in
Section 2.02(b)) in accordance with Section 2.02(b), it being understood
that any and all interest or other income earned on funds made available to
the Paying Agent pursuant to this Section 2.02(a) shall belong to and shall
be paid (at the time provided for in Section 2.02(e)) as directed by NEES
or LLC. Any such funds deposited with the Paying Agent by NEES shall be
invested by the Paying Agent as directed by NEES or LLC.
(b) Exchange Procedure. As soon as practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to
the Effective Time represented outstanding EUA Shares (the "Canceled
Shares") that were canceled and became instead the right to receive the
Merger Consideration pursuant to Section 2.01(b)(ii): (i) a letter of
transmittal in such form as NEES and EUA may reasonably agree (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the Certificates to
the Paying Agent) and (ii) instructions for effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate or Certificates to the Paying Agent for cancellation (or to
such other agent or agents as may be appointed by NEES and are reasonably
acceptable to EUA), together with a duly executed letter of transmittal and
such other documents as the Paying Agent shall require, the holder of such
Certificate shall be entitled to receive the Merger Consideration in
exchange for each EUA Share formerly evidenced by such Certificate which
such holder has the right to receive pursuant to Section 2.01(b)(ii). In
the event of a transfer of ownership of Canceled Shares which is not
registered in the transfer records of EUA, the Merger Consideration in
respect of such Canceled Shares may be given to the transferee thereof if
the Certificate or Certificates representing such Canceled Shares is
presented to the Paying Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence satisfactory to the
Paying Agent that any applicable stock transfer taxes have been paid. At
any time after the Effective Time, each Certificate shall be deemed to
represent only the right to receive the Merger Consideration subject to and
upon the surrender of such Certificate as contemplated by this Section
2.02. No interest shall be paid or will accrue on the Merger Consideration
payable to holders of Certificates pursuant to Section 2.01(b)(ii).
(c) No Further Ownership Rights in EUA Shares. The Merger
Consideration paid upon the surrender of Certificates in accordance with
the terms of Section 2.01(b)(ii) shall be deemed to have been paid at the
Effective Time in full satisfaction of all rights pertaining to EUA Shares
represented thereby. From and after the Effective Time, the share transfer
books of EUA shall be closed and there shall be no further registration of
transfers thereon of EUA Shares which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are
presented to NEES for any reason, they shall be canceled and exchanged as
provided in this Section 2.02.
(d) Lost, Stolen or Destroyed Certificates. In the event any
owner of any Certificate shall claim that such Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the owner of such Certificate and delivery of that affidavit to the Paying
Agent and, if required by NEES or LLC, the posting by such person of a bond
in customary amount as indemnity against any claim that may be made against
NEES, EUA or the Surviving Entity with respect to such Certificate, the
Paying Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration payable upon due surrender of, and
deliverable pursuant to this Section 2.02 in respect of, EUA Shares to
which such Certificate relates.
(e) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the shareholders of EUA for one (1)
year after the Effective Time shall be delivered to the Surviving Entity,
upon demand, and any Shareholders of EUA who have not theretofore complied
with this Article II shall thereafter look only to the Surviving Entity
(subject to abandoned property, escheat and other similar laws) as general
creditors for payment of their claim for the Merger Consideration payable
upon due surrender of the Certificates held by them. None of NEES, LLC or
the Surviving Entity shall be liable to any former holder of EUA Shares for
the Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
2.03 Withholding Rights. Each of the Surviving Entity and NEES
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of EUA Shares such amounts
as it is required to deduct and withhold with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the "Code"),
or any other provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Entity or NEES, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of EUA Shares in respect of
which such deduction and withholding was made by the Surviving Entity or
NEES, as the case may be.
ARTICLE III
THE CLOSING
The closing of the Merger and other transactions contemplated
hereby (the "Closing") will take place at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022, at
10:00 a.m., local time, on the second business day following satisfaction
or waiver (where applicable) of the conditions set forth in Article VIII
(other than those conditions that by their nature are to be fulfilled at
the Closing, but subject to the fulfillment or waiver of such conditions),
unless another date, time or place is agreed to in writing by the parties
hereto (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EUA
EUA represents and warrants to NEES and LLC as follows:
4.01 Organization and Qualification. (a) EUA is a voluntary
association duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and has full power, authority and
legal right to own its property and assets and to transact the business in
which it is engaged. Each of EUA's Subsidiaries is a corporation duly
organized or incorporated, validly existing and in good standing under the
laws of its jurisdiction of organization or incorporation and has full
corporate power and authority to conduct its business as and to the extent
now conducted and to own, use and lease its assets and properties, except
where failure to be so organized or incorporated, existing and in good
standing or to have such power and authority, individually or in the
aggregate, could not reasonably be expected to have an EUA Material Adverse
Effect. As used in this Agreement, the term "EUA Material Adverse Effect"
means a material adverse effect on the business, assets, results of
operations, condition (financial or otherwise) or prospects of EUA and its
Subsidiaries taken as a whole. Each of EUA and its Subsidiaries is duly
qualified, licensed or admitted to do business and is in good standing in
each jurisdiction in which the ownership, use or leasing of its assets and
properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except where failure to be
so qualified, licensed or admitted and in good standing, individually or in
the aggregate, could not reasonably be expected to have an EUA Material
Adverse Effect. Section 4.01 of the letter dated the date hereof and
delivered to NEES and LLC by EUA concurrently with the execution and
delivery of this Agreement (the "EUA Disclosure Letter") sets forth (i) the
name and jurisdiction of incorporation or organization of each Subsidiary
of EUA, (ii) such Subsidiary's authorized capital stock, (iii) the number
of issued and outstanding shares of capital stock of such Subsidiary and
(iv) the number of shares of such Subsidiary held of record by EUA. EUA has
previously delivered to NEES correct and complete copies of the EUA Trust
Agreement and the certificate or articles of organization or incorporation
and bylaws (or other comparable charter documents) of its Subsidiaries.
(b) Section 4.01 of the EUA Disclosure Letter sets forth a
description as of the date hereof, of all EUA Associates, including (i) the
name of each such entity and EUA's interest therein and (ii) a brief
description of the principal line or lines of business conducted by each
such entity. For purposes of this Agreement "EUA Associates" shall mean any
corporation or other entity (including partnerships and other business
associations) that is not a Subsidiary of EUA in which EUA and/or one or
more of its Subsidiaries, directly or indirectly, owns an equity interest
(other than short-term investments in the ordinary course of business) if
such corporation or other entity (including partnerships and other business
associations) contributes five percent or more of EUA's consolidated
revenues, assets, income or costs.
4.02 Capital Stock. (a) The authorized equity securities of EUA
consists of 36,000,000 EUA Shares, of which 20,435,997 shares were issued
and outstanding as of the close of business on January 29, 1999. As of the
close of business on January 29, 1999, no EUA Shares were held in the
treasury of EUA. Since such date there has been no change in the sum of the
issued and outstanding EUA Shares. All of the issued and outstanding EUA
Shares are duly authorized, validly issued, fully paid and nonassessable.
Except pursuant to this Agreement and except as described in Section 4.02
of the EUA Disclosure Letter, on the date hereof there are no outstanding
subscriptions, options, warrants, rights (including share appreciation
rights), preemptive rights or other contracts, commitments, understandings
or arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement (together, "Options"),
obligating EUA or any of its Subsidiaries to issue or sell any shares of
equity securities of EUA or to grant, extend or enter into any Option with
respect thereto. The EUA Disclosure Letter sets forth all capital stock
authorized, issued and outstanding at subsidiary levels as of the close of
business on January 29, 1999.
(b) Except as disclosed in EUA SEC Reports filed prior to the
date of this Agreement or Section 4.02 of the EUA Disclosure Letter, all of
the outstanding shares of capital stock of each Subsidiary of EUA are duly
authorized, validly issued, fully paid and nonassessable and are owned,
beneficially and of record, by EUA or a Subsidiary, which is wholly owned,
directly or indirectly, by EUA, free and clear of any liens, claims,
mortgages, encumbrances, pledges, security interests, equities and charges
of any kind (each a "Lien"). Except as disclosed in EUA SEC Reports filed
prior to the date of this Agreement or Section 4.02 of the EUA Disclosure
Letter, there are no (i) outstanding Options obligating EUA or any of its
Subsidiaries to issue or sell any shares of capital stock of any Subsidiary
of EUA or to grant, extend or enter into any such Option or (ii) voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements in favor of any person other than EUA or a Subsidiary which is
wholly owned, directly or indirectly, by EUA with respect to the voting of,
or the right to participate in, dividends or other earnings on any capital
stock of any Subsidiary of EUA.
(c) Except as disclosed in EUA SEC Reports filed prior to the
date of this Agreement or Section 4.02 of the EUA Disclosure Letter, there
are no outstanding contractual obligations of EUA or any Subsidiary of EUA
to repurchase, redeem or otherwise acquire any EUA Shares or any capital
stock of any Subsidiary of EUA or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in,
any Subsidiary of EUA or any other person.
(d) As of the date of this Agreement, no bonds, debentures,
notes or other indebtedness of EUA or any Subsidiary of EUA having the
right to vote (or which are convertible into or exercisable for securities
having the right to vote) (together "EUA Voting Debt") on any matters on
which Shareholders may vote are issued or outstanding nor are there any
outstanding Options obligating EUA or any of its Subsidiaries to issue or
sell any EUA Voting Debt or to grant, extend or enter into any Option with
respect thereto.
4.03 Authority. EUA has full power and authority to enter into
this Agreement, to perform its obligations hereunder and, subject to
obtaining EUA Shareholders' Approval (as defined in Section 7.03(b)) and
EUA Required Statutory Approvals (as defined in Section 4.04(b)), to
consummate the Merger and other transactions contemplated hereby. The
execution, delivery and performance of this Agreement by EUA and the
consummation by EUA of the Merger and other transactions contemplated
hereby have been duly authorized by all necessary action on the part of
EUA, subject to obtaining EUA Shareholders' Approval with respect to the
consummation of the Merger and the other transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by EUA and
constitutes a legal, valid and binding obligation of EUA enforceable
against EUA in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
4.04 Non-Contravention; Approvals and Consents. (a) The
execution and delivery of this Agreement by EUA do not, and the performance
by EUA of its obligations hereunder and the consummation of the Merger and
other transactions contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of time
or both) a default under, result in or give to any person any right of
payment or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any Lien upon
any of the assets or properties of EUA or any of its Subsidiaries or any of
the terms, conditions or provisions of (i) the EUA Trust Agreement or the
certificates or articles of incorporation or organization or bylaws (or
other comparable charter documents) of EUA's Subsidiaries, or (ii) subject
to the obtaining of EUA Shareholders' Approval, EUA Required Consents, EUA
Required Statutory Approvals and the taking of any other actions described
in this Section 4.04, (x) any statute, law, rule, regulation or ordinance
(together, "laws"), or any judgment, decree, order, writ, permit or license
(together, "orders"), of any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States,
any foreign country or any domestic or foreign state, county, city or other
political subdivision (a "Governmental Authority") applicable to EUA or any
of its Subsidiaries or any of their respective assets or properties, or (y)
subject to obtaining the third-party consents set forth in Section 4.04 of
the EUA Disclosure Letter (the "EUA Required Consents"), any note, bond,
mortgage, security agreement, indenture, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of
any kind (together, "Contracts") to which EUA or any of its Subsidiaries is
a party or by which EUA or any of its Subsidiaries or any of their
respective assets or properties is bound, excluding from the foregoing
clauses (x) and (y) such conflicts, violations, breaches, defaults,
payments or reimbursements, terminations, cancellations, modifications,
accelerations and creations and impositions of Liens which, individually or
in the aggregate, could not reasonably be expected to have an EUA Material
Adverse Effect.
(b) No declaration, filing or registration with, or notice to
or authorization, consent or approval of, any Governmental Authority is
necessary for the execution and delivery of this Agreement by EUA or the
consummation by EUA of the Merger and other transactions contemplated
hereby except as described in Section 4.04 of the EUA Disclosure Letter or
the failure of which to obtain could not reasonably be expected to result
in an EUA Material Adverse Effect (the "EUA Required Statutory Approvals,"
it being understood that references in this Agreement to "obtaining" such
EUA Required Statutory Approvals shall mean making such declarations,
filings or registrations; giving such notices; obtaining such
authorizations, consents or approvals; and having such waiting periods
expire as are necessary to avoid a violation of law).
4.05 SEC Reports, Financial Statements and Utility Reports. (a)
EUA delivered to NEES prior to the execution of this Agreement a true and
complete copy of each form, report, schedule, registration statement,
registration exemption, if applicable, definitive proxy statement and other
document (together with all amendments thereof and supplements thereto)
filed by EUA or any of its Subsidiaries with the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended, and
the rules and regulations thereunder (the "Securities Act") and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act") since December 31, 1995 (as such documents
have since the time of their filing been amended or supplemented, the "EUA
SEC Reports"), which are all the documents (other than preliminary
materials) that EUA and its Subsidiaries were required to file with the SEC
under the Securities Act and the Exchange Act since such date. As of their
respective dates, EUA SEC Reports (i) complied as to form in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the case may be, and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if
any, thereto) included in EUA SEC Reports (the "EUA Financial Statements")
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance
with U.S. generally accepted accounting principles ("US GAAP") applied on a
consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited interim financial statements, to
normal, recurring year-end audit adjustments (which are not expected to be,
individually or in the aggregate, materially adverse to EUA and its
Subsidiaries taken as a whole)) the consolidated financial position of EUA
and its consolidated subsidiaries as at the respective dates thereof and
the consolidated results of their operations and cash flows for the
respective periods then ended. Except as set forth in Section 4.05 of the
EUA Disclosure Letter, each Subsidiary of EUA is treated as a consolidated
subsidiary of EUA in EUA Financial Statements for all periods covered
thereby.
(b) All filings (other than immaterial filings) required to be
made by EUA or any of its Subsidiaries since December 31, 1995, under the
Public Utility Holding Company Act of 1935 (the "1935 Act"), the Federal
Power Act, the Atomic Energy Act of 1954, the Communications Act of 1934,
and applicable state laws and regulations, have been filed with the SEC,
the Federal Energy Regulatory Commission (the "FERC"), the Department of
Energy (the "DOE"), the Nuclear Regulatory Commission (the "NRC"), the
Federal Communications Commission (the "FCC") or any appropriate state
public utility commissions (including, without limitation, to the extent
required, the state public utility regulatory agencies of Massachusetts,
Rhode Island, New Hampshire, Maine, Vermont and Connecticut as the case may
be, including all forms, statements, reports, agreements (oral or written)
and all documents, exhibits, amendments and supplements appertaining
thereto, including but not limited to all rates, tariffs, franchises,
service agreements and related documents and all such filings complied, as
of their respective dates, in all material respects with all applicable
requirements of the appropriate statutes and the rules and regulations
thereunder.
4.06 Absence of Certain Changes or Events. Except as set forth
in Section 4.06 of the EUA Disclosure Letter or as disclosed in EUA SEC
Reports filed prior to the date of this Agreement since December 31, 1997,
EUA and each of EUA's Subsidiaries have conducted its business only in the
ordinary course of business consistent with past practice and there has not
been, and no fact or condition exists which, individually or in the
aggregate, has or could reasonably be expected to have an EUA Material
Adverse Effect.
4.07 Legal Proceedings. Except as disclosed in EUA SEC Reports
filed prior to the date of this Agreement or in Section 4.07 of the EUA
Disclosure Letter and except for environmental matters which are governed
by Section 4.13, (i) there are no actions, claims, hearings, suits,
arbitrations or proceedings pending or, to the knowledge of EUA or any of
its Subsidiaries, threatened against, specifically relating to or
affecting, and, to the knowledge of EUA or any of its Subsidiaries, there
are no Governmental Authority investigations or audits pending or
threatened against, specifically relating to or affecting, EUA or any of
its Subsidiaries or any of their respective assets and properties which,
individually or in the aggregate, could reasonably be expected to have an
EUA Material Adverse Effect and (ii) neither EUA nor any of its
Subsidiaries is subject to any order of any Governmental Authority which,
individually or in the aggregate, could reasonably be expected to have an
EUA Material Adverse Effect.
4.08 Information Supplied. (a) The proxy statement relating to
EUA Shareholders' Meeting, as amended or supplemented from time to time (as
so amended and supplemented, the "Proxy Statement"), and any other
documents to be filed by EUA with the SEC (including, without limitation,
under the 1935 Act) or any other Governmental Authority in connection with
the Merger and other transactions contemplated hereby will comply as to
form in all material respects with the requirements of the Exchange Act,
the Securities Act and the 1935 Act, as applicable, and will not, on the
date of their respective filings or, in the case of the Proxy Statement, at
the date it is mailed to Shareholders of EUA and at the time of EUA
Shareholders' Meeting (as defined in Section 7.03), contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section
4.08, no representation or warranty is made by EUA with respect to
statements made or incorporated by reference in the Proxy Statement based
on information supplied by NEES or LLC for inclusion or incorporation by
reference therein.
4.09 Compliance. Except as set forth in Section 4.09 of the EUA
Disclosure Letter, or as disclosed in EUA SEC Reports filed prior to the
date hereof, neither EUA nor any of EUA's Subsidiaries is in violation of,
is, to the knowledge of EUA, under investigation with respect to any
violation of, or has been given notice or been charged with any violation
of, any law, statute, order, rule, regulation, ordinance or judgment
(including, without limitation, any applicable environmental law, ordinance
or regulation) of any Governmental Authority, except for possible
violations which, individually or in the aggregate, could not reasonably be
expected to have an EUA Material Adverse Effect. Except as set forth in
Section 4.09 of the EUA Disclosure Letter or as disclosed in EUA SEC
Reports filed prior to the date hereof, EUA and EUA's Subsidiaries have all
permits, licenses, franchises and other governmental authorizations,
consents and approvals necessary to conduct their businesses as presently
conducted except for such failures which could not reasonably be expected
to have an EUA Material Adverse Effect. Neither EUA nor any of EUA's
Subsidiaries is in breach or violation of, or in default in the performance
or observance of any term or provision of, (i) the EUA Trust Agreement, in
the case of EUA, or articles of incorporation or organization or by-laws,
in the case of EUA's Subsidiaries, or (ii) any contract, commitment,
agreement, indenture, mortgage, loan agreement, note, lease, bond, license,
approval or other instrument to which it is a party or by which EUA or any
Subsidiary of EUA is bound or to which any of their respective property is
subject, except for possible violations, breaches or defaults which,
individually or in the aggregate, could not reasonably be expected to have
an EUA Material Adverse Effect.
4.10 Taxes. Except as disclosed in Section 4.10 of the EUA
Disclosure Letter:
(a) Filing of Timely Tax Returns. EUA and each of its
Subsidiaries have timely filed all Tax Returns required to be filed by each
of them under applicable law. All Tax Returns were (and, as to Tax Returns
not filed as of the date hereof, will be) true, complete and correct;
(b) Payment of Taxes. EUA and each of its Subsidiaries
have, within the time and in the manner prescribed by law, paid (and until
the Closing Date will pay within the time and in the manner prescribed by
law) all Taxes that are currently due and payable except for those
contested in good faith and for which adequate reserves have been taken;
(c) Tax Reserves. EUA and its Subsidiaries have
established (and until the Closing Date will maintain) on their books and
records adequate reserves for all Taxes and for any liability for deferred
income taxes in accordance with GAAP;
(d) Extensions of Time for Filing Tax Returns. Neither
EUA nor any of its Subsidiaries has requested any extension of time within
which to file any Tax Return, which Tax Return has not since been filed;
(e) Waivers of Statute of Limitations. Neither EUA nor
any of its Subsidiaries has in effect any extension, outstanding waivers or
comparable consents regarding the application of the statute of limitations
with respect to any Taxes or Tax Returns;
(f) Expiration of Statute of Limitations. The Tax Returns
of EUA, each of its Subsidiaries and any affiliated, consolidated, combined
or unitary group that includes EUA or any of its Subsidiaries either have
been examined and settled with the appropriate Tax authority or closed by
virtue of the expiration of the applicable statute of limitations for all
years through and including 1993;
(g) Audit, Administrative and Court Proceedings. No
audits or other administrative proceedings or court proceedings are
presently pending or threatened with regard to any Taxes or Tax Returns of
EUA or any of its Subsidiaries (other than those being contested in good
faith and for which adequate reserves have been established) and no issues
have been raised in writing by any Tax authority in connection with any Tax
or Tax Return;
(h) Tax Liens. There are no Tax liens upon any asset of
EUA or any of its Subsidiaries except liens for Taxes not yet due.
(i) Powers of Attorney. No power of attorney currently in
force has been granted by EUA or any of its Subsidiaries concerning any Tax
matter;
(j) Tax Rulings. Neither EUA nor any of its Subsidiaries
has, during the five year period prior to the date of this Agreement,
received a Tax Ruling (as defined below) or entered into a Closing
Agreement (as defined below) with any taxing authority. "Tax Ruling", as
used in this Agreement, shall mean a written ruling of a taxing authority
relating to Taxes. "Closing Agreement", as used in this Agreement, shall
mean a written and legally binding agreement with a taxing authority
relating to Taxes;
(k) Availability of Tax Returns. EUA and its Subsidiaries
have made available to NEES complete and accurate copies, covering all
years ending on or after December 31, 1993, of (i) all Tax Returns, and any
amendments thereto, filed by EUA or any of its Subsidiaries, (ii) all audit
reports received from any taxing authority relating to any Tax Return filed
by EUA or any of its Subsidiaries and (iii) any Closing Agreements entered
into by EUA or any of its Subsidiaries with any taxing authority.
(l) Tax Sharing Agreements. No agreements relating to the
allocation or sharing of Taxes exist between or among EUA and any of its
Subsidiaries and neither EUA nor any of its Subsidiaries (i) has been a
member of an affiliated group filing a consolidated federal income tax
return (other than a group the common parent of which was EUA) or (ii) has
any liability for Taxes of any Person (other than EUA or its Subsidiaries)
under United States Treasury Regulation Section 1.1502-6 (or any provision
of state, local), or foreign law, as a transferee or successor, by contract
or otherwise;
(m) Code Section 481 Adjustments. Neither EUA nor any of
its Subsidiaries is required to include in income any adjustment pursuant
to Code Section 481(a) by reason of a voluntary change in accounting method
initiated by EUA or any of its Subsidiaries, and, the Internal Revenue
Service ("IRS") has not proposed any such adjustment or change in
accounting method;
(n) Code Sections 6661 and 6662. All transactions that
could give rise to an understatement of federal income tax, and within the
meaning of Code Section 6662 have been adequately disclosed (or, with
respect to Tax Returns filed following the Closing, will be adequately
disclosed) on the Tax Returns of EUA and its Subsidiaries in accordance
with Code Section 6662(d)(2)(B);
(o) Intercompany Transactions. Neither EUA nor any of its
Subsidiaries has engaged in any intercompany transactions within the
meaning of Treasury Regulations ss. 1.1502-13 for which any income or gain
will remain unrecognized as of the close of the last taxable year prior to
the Closing Date; and
(p) Foreign Tax Returns. Neither EUA nor any of its
Subsidiaries is required to file a foreign tax return.
"Taxes" as used in this Agreement, shall mean any federal,
state, county, local or foreign taxes, charges, fees, levies, or other
assessments, including all net income, gross income, premiums, sales and
use, ad valorem, transfer, gains, profits, windfall profits, excise,
franchise, real and personal property, gross receipts, capital stock,
production, business and occupation, employment, disability, payroll,
license, estimated, stamp, custom duties, severance or withholding taxes,
other taxes or similar charges of any kind whatsoever imposed by any
governmental entity, whether imposed directly on a Person or resulting
under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign law), as a transferee or successor, by contract or
otherwise and includes any interest and penalties on or additions to any
such taxes or in respect of a failure to comply with any requirement
relating to any Tax Return. "Tax Return" as used in this Agreement, shall
mean a report, return or other information required to be supplied to a
governmental entity with respect to Taxes including, where permitted or
required, combined, unitary or consolidated returns for any group of
entities.
4.11 Employee Benefit Plans; ERISA. (a) Each "employee benefit
plan" (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), bonus, deferred compensation,
share option or other written agreement relating to employment or fringe
benefits for employees, former employees, officers, trustees or directors
of EUA or any of its Subsidiaries effective as of the date hereof or
providing benefits as of the date hereof to current employees, former
employees, officers, trustees or directors of EUA or pursuant to which EUA
or any of its subsidiaries has or could reasonably be expected to have any
liability (collectively, the "EUA Employee Benefit Plans") is listed in
Section 4.11(a) of the EUA Disclosure Letter, is in material compliance
with applicable law, and has been administered and operated in all material
respects in accordance with its terms. Each EUA Employee Benefit Plan which
is intended to be qualified within the meaning of Section 401(a) of the
Code has received a favorable determination letter from the IRS as to such
qualification and, to the knowledge of EUA, no event has occurred and no
condition exists which could reasonably be expected to result in the
revocation of, or have any adverse effect on, any such determination.
(b) Complete and correct copies of the following documents have
been made available to NEES as of the date of this Agreement: (i) all EUA
Employee Benefit Plans and any related trust agreements or insurance
contracts, (ii) the most current summary descriptions of each EUA Employee
Benefit Plan subject to ERISA, (iii) the three most recent Form 5500s and
Schedules thereto for each EUA Employee Benefit Plan subject to such
reporting, (iv) the most recent determination of the IRS with respect to
the qualified status of each EUA Employee Benefit Plan that is intended to
qualify under Section 401(a) of the Code, (v) the most recent accountings
with respect to each EUA Employee Benefit Plan funded through a trust and
(vi) the most recent actuarial report of the qualified actuary of each EUA
Employee Benefit Plan with respect to which actuarial valuations are
conducted.
(c) Except as set forth in Section 4.11(c) of the EUA
Disclosure Letter, neither EUA nor any Subsidiary maintains or is obligated
to provide benefits under any EUA Employee Benefit Plan (other than as an
incidental benefit under a Plan qualified under Section 401(a) of the Code)
which provides health or welfare benefits to retirees or other terminated
employees other than benefit continuations as required pursuant to Section
601 of ERISA. Each EUA Employee Benefit Plan subject to the requirements of
Section 601 of ERISA has been operated in material compliance therewith.
EUA has not contributed to a nonconforming group health plan (as defined in
Code Section 5000(c)) and no person under common control with EUA within
the meaning of Section 414 of the Code ("ERISA Affiliate") has incurred a
tax liability under Code Section 5000(a) that is or could reasonably be
expected to be a liability of EUA's.
(d) Except as set forth in Section 4.11(d) of the EUA
Disclosure Letter, each EUA Employee Benefit Plan covers only employees who
are employed by EUA or a Subsidiary (or former employees or beneficiaries
with respect to service with EUA or a Subsidiary).
(e) Except as set forth in Section 4.11(e) of the EUA
Disclosure Letter, neither EUA, any Subsidiary, any ERISA Affiliate nor any
other corporation or organization controlled by or under common control
with any of the foregoing within the meaning of Section 4001 of ERISA has,
within the five-year period preceding the date of this Agreement, at any
time contributed to any "multiemployer plan," as that term is defined in
Section 4001 of ERISA.
(f) No event has occurred, and there exists no condition or set
of circumstances in connection with any EUA Employee Benefit Plan, under
which EUA or any Subsidiary, directly or indirectly (through any
indemnification agreement or otherwise), could be subject to any liability
under Section 409 of ERISA, Section 502(i) of ERISA, Title IV of ERISA or
Section 4975 of the Code except for instances of non-compliance which,
individually or in the aggregate, could not reasonably be expected to have
an EUA Material Adverse Effect.
(g) Neither EUA nor any ERISA Affiliate has incurred any
liability to the Pension Benefit Guaranty Corporation (the "PBGC") under
Section 302(c)(ii), 4062, 4063, 4064 or 4069 of ERISA, or otherwise that
has not been satisfied in full and no event or condition exists or has
existed which could reasonably be expected to result in any such material
liability. As of the date of this Agreement, no "reportable event" within
the meaning of Section 4043 of ERISA has occurred with respect to any EUA
Employee Benefit Plan that is a defined benefit plan under Section 3(35) of
ERISA.
(h) Except as set forth in Section 4.11(h) of the EUA
Disclosure Letter, no employer securities, employer real property or other
employer property is included in the assets of any EUA Employee Benefit Plan.
(i) Full payment has been made of all material amounts which
EUA or any affiliate thereof was required under the terms of EUA Employee
Benefit Plans to have paid as contributions to such plans on or prior to
the Effective Time (excluding any amounts not yet due) and no EUA Employee
Benefit Plan which is subject to Part III of Subtitle B of Title I of ERISA
has incurred any "accumulated funding deficiency" within the meaning of
Section 302 of ERISA or Section 412 of the Code, whether or not waived.
(j) Except as set forth in Section 4.11(j) of the EUA
Disclosure Letter, no amounts payable under any EUA Employee Benefit Plan
or other agreement, contract, or arrangement will fail to be deductible for
federal income tax purposes by virtue of Section 280G or Section 162(m) of
the Code.
4.12 Labor Matters. As of the date hereof, except as set forth
in Section 4.12 of the EUA Disclosure Letter, neither EUA nor any of its
Subsidiaries is a party to any material collective bargaining agreement or
other labor agreement with any union or labor organization. To the
knowledge of EUA, as of the date hereof, there is no current union
representation question involving employees of EUA or any of its
Subsidiaries, nor does EUA know of any activity or proceeding of any labor
organization (or representative thereof) or employee group to organize any
such employees. Except as set forth in Section 4.12 of the EUA Disclosure
Letter, (i) there is no unfair labor practice, employment discrimination or
other employment-related complaint or proceeding against EUA or any of its
Subsidiaries pending or, to the knowledge of EUA, threatened, which has or
could reasonably be expected to have an EUA Material Adverse Effect, (ii)
there is no strike, dispute, slowdown, work stoppage or lockout pending,
or, to the knowledge of EUA, threatened, against or involving EUA or any of
its Subsidiaries which has or could reasonably be expected to have, an EUA
Material Adverse Effect and (iii) there is no proceeding, claim, suit, or
action pending or, to the knowledge of EUA or any of its Subsidiaries,
threatened, nor, to the knowledge of EUA or any of its Subsidiaries is
there any Governmental Authority investigation pending or threatened, in
respect of which any trustee, director, officer, employee or agent of EUA
or any of its Subsidiaries is or may be entitled to claim indemnification
from EUA or any of its Subsidiaries pursuant to the EUA Trust Agreement, in
the case of EUA, and their respective articles of incorporation and
by-laws, in the case of EUA's Subsidiaries, or as provided in the
indemnification agreements listed in Section 4.12 of the EUA Disclosure
Letter. Except as set forth in Section 4.12 of the EUA Disclosure Letter,
EUA and its Subsidiaries are in compliance with all federal, state and
local laws with respect to employment practices and labor relations,
including, without limitation, any provisions relating to affirmative
action, employment discrimination, wages, hours, collective bargaining, and
the payment of social security and similar taxes, safety and health
regulations and mass layoffs and plant closings except for such instances
of noncompliance which, individually or in the aggregate, could not
reasonably be expected to have an EUA Material Adverse Effect.
4.13 Environmental Matters. Except as disclosed in EUA SEC
Reports filed prior to the date of this Agreement or in Section 4.13 of the
EUA Disclosure Letter:
(a) (i) Each of EUA and its Subsidiaries is in compliance with
all applicable Environmental Laws (as hereinafter defined), except where
the failure to be in compliance, in the aggregate could not reasonably be
expected to result in an EUA Material Adverse Effect; and
(ii) Neither EUA nor any of its Subsidiaries has received
any written communication from any person or Governmental Authority that
alleges that EUA or any of its Subsidiaries is not in such compliance
(including the materiality qualifier set forth in clause (i) above) with
applicable Environmental Laws.
(b) Each of EUA and its Subsidiaries has obtained all
environmental, health and safety permits and governmental authorizations
(collectively, the "Environmental Permits") necessary for the construction
of their facilities and the conduct of their operations, as applicable, and
all such Environmental Permits are in good standing or, where applicable, a
renewal application has been timely filed and agency approval is expected
in the ordinary course of business, and EUA and its Subsidiaries are in
compliance with all terms and conditions of the Environmental Permits,
except where the failure have such Environmental Permits, file a renewal
application for such Environmental Permits, or to be in compliance with
such Environmental Permits, in the aggregate could not reasonably be
expected to result in an EUA Material Adverse Effect.
(c) There is no Environmental Claim (as hereinafter defined)
that could, individually or in the aggregate, reasonably be expected to
have an EUA Material Adverse Effect pending (i) against EUA or any of its
Subsidiaries; (ii) against any person or entity whose liability for any
Environmental Claim EUA or any of its Subsidiaries has or may have retained
or assumed either contractually or by operation of law; or (iii) against
any real or personal property or operations which EUA or any of its
Subsidiaries owns, leases or manages, in whole or in part.
(d) To the knowledge of EUA there have not been any material
Releases (as hereinafter defined) of any Hazardous Material (as hereinafter
defined) that would be reasonably likely to form the basis of any material
Environmental Claim against EUA or any of its Subsidiaries, or against any
person or entity whose liability for any material Environmental Claim EUA
or any of its Subsidiaries has or may have retained or assumed either
contractually or by operation of law, except for any Environmental Claim
that, individually or in the aggregate, could not reasonably be expected to
have an EUA Material Adverse Effect.
(e) To the knowledge of EUA with respect to any predecessor of
EUA or any of its Subsidiaries, there is no material Environmental Claim
pending or threatened, and there has been no Release of Hazardous Materials
that could reasonably be expected to form the basis of any material
Environmental Claim except for any Environmental Claim that, individually
or in the aggregate, could not be reasonably be expected to have an EUA
Material Adverse Effect.
(f) As used in this Section 4.13:
(i) "Environmental Claim" means any and all written
administrative, regulatory or judicial actions, suits, demands, demand
letters, directives, claims, liens, investigations, proceedings or notices
or noncompliance, liability or violation by any person or entity (including
any Governmental Authority) alleging potential liability (including,
without limitation, potential responsibility or liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, removal
costs, remedial costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on or resulting from
(A) the presence, or Release or threatened Release into
the environment, of any Hazardous Materials at any
location, whether or not owned, operated, leased or
managed by EUA or any of its Subsidiaries; or
(B) circumstances forming the basis of any violation,
or alleged violation, of any Environmental Law; or
(C) any and all claims by any third party seeking
damages, contribution, indemnification, cost
recovery, compensation or injunctive relief
resulting from the presence or Release of any
Hazardous Materials;
(ii) "Environmental Laws" means all federal, state and
local laws, rules and regulations and binding interpretation thereof,
relating to pollution, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata)
or protection of human health as it relates to the environment including,
without limitation, laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the manufacture,
generation, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials;
(iii) "Hazardous Materials" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation, and transformers
or other equipment that contain dielectric fluid containing polychlorinated
biphenyls; and (B) any chemicals, materials or substances which are now
defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic pollutants", or
words of similar import, under any Environmental Law; and (c) any other
chemical, material, substance or waste, exposure to which is now
prohibited, limited or regulated under any Environmental Law in a
jurisdiction in which EUA or any of its Subsidiaries (x) operates or (y)
stores, treats or disposes of Hazardous Materials; and
(iv) "Release" means any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water, groundwater or
property.
4.14 Regulation as a Utility. (a) EUA is a public utility
holding company registered under Section 5, and subject to the provisions,
of the 1935 Act. Section 4.14 of the EUA Disclosure Letter lists the
subsidiaries of EUA that are "public utility companies" within the meaning
of Section 2(a)(5) of the 1935 Act and lists the jurisdictions where each
such Subsidiary is subject to regulation as a public utility company or
public service company. Except as set forth above and as set forth in
Section 4.14 of the EUA Disclosure Letter, neither EUA nor any "subsidiary
company" or "affiliate" of EUA is subject to regulation as a public utility
or public service company (or similar designation) by the federal
government of the United States, any state in the United States or any
political subdivision thereof, or any foreign country.
(b) As used in this Section 4.14, the terms "subsidiary
company" and "affiliate" shall have the respective meanings ascribed to
them in Section 2(a)(8) and Section 2(a)(11), respectively, of the 1935
Act.
4.15 Insurance. Except as set forth in Section 4.15 of the EUA
Disclosure Letter, each of EUA and its Subsidiaries is, and has been
continuously since January 1, 1994, insured with financially responsible
insurers in such amounts and against such risks and losses as are customary
in all material respects for companies in the United States conducting the
business conducted by EUA and its Subsidiaries during such time period.
Except as set forth in Section 4.15 of the EUA Disclosure Letter, neither
EUA nor any of its Subsidiaries has received any notice of cancellation or
termination with respect to any material insurance policy of EUA or any of
its Subsidiaries. The insurance policies of EUA and each of its
Subsidiaries are valid and enforceable policies.
4.16 Nuclear Facilities. Montaup Electric Company, a Subsidiary
of EUA, is a minority common stockholder of each of Connecticut Yankee
Atomic Power Company, Maine Yankee Atomic Power Company, Vermont Yankee
Nuclear Power Corporation and Yankee Atomic Electric Company (the "Yankee
Companies") and a minority joint owner in Millstone 3 and Seabrook 1
(collectively, as described in Section 4.16 of the EUA Disclosure Letter,
the "EUA Nuclear Facilities"). With respect to its ownership of Millstone 3
and Seabrook 1, Montaup Electric Company holds the required operating
licenses from the NRC. With respect to the Yankee Companies, each Yankee
Company holds its own operating license from the NRC. Because it is a
minority stockholder or a minority joint owner, Montaup Electric Company
does not have responsibility for the operation of EUA Nuclear Facilities.
Except as set forth in Section 4.16 of the EUA Disclosure Letter or as
disclosed in EUA SEC Reports filed prior to the date hereof, to the
knowledge of EUA, neither EUA nor any of its Subsidiaries is in violation
of any applicable health, safety, regulatory and other legal requirement,
including NRC laws and regulations and Environmental Laws, applicable to
EUA Nuclear Facilities except for such failure to comply as could not
reasonably be expected to have a material adverse effect with respect to
EUA Nuclear Facilities and the ownership interest of EUA therein. To the
knowledge of EUA, each of EUA Nuclear Facilities maintains emergency plans
designed to respond to an unplanned release therefrom of radioactive
materials into the environment and insurance coverages consistent with
industry practice. EUA has funded, or has caused the funding of, its
portion of the decommissioning cost of each of the EUA Nuclear Facilities
and the storage of spent nuclear fuel consistent with the most recently
approved plan for each of the EUA Nuclear Facilities and FERC authorized
rates. Except as set forth in Section 4.16 of the EUA Disclosure Letter, to
the knowledge of EUA, no EUA Nuclear Facility is as of the date of this
Agreement on the List of Nuclear Power Plants Warranting Increased
Regulatory Attention maintained by the NRC.
4.17 Vote Required. The affirmative vote of two-thirds of the
outstanding EUA Shares voting as a single class (with each EUA Share having
one vote per share) with respect to the approval of the Merger and other
transactions contemplated hereby is the only vote of the holders of any
class or series of equity securities of EUA or its Subsidiaries required to
approve this Agreement and approve the Merger and other transactions
contemplated hereby.
4.18 Opinion of Financial Advisor. EUA has received the opinion
of Salomon Smith Barney Inc., dated the date of this Agreement, to the
effect that, as of such date, the Merger Consideration is fair from a
financial point of view to the holders of EUA Shares. A true and complete
copy of the written opinion will be delivered to NEES promptly after
receipt thereof by EUA.
4.19 Ownership of NEES Common Shares. Neither EUA nor any of
its Subsidiaries or other affiliates beneficially owns any NEES Common
Shares.
4.20 State Anti-Takeover Statutes. EUA has taken all necessary
actions so that the provisions of Chapters 110C, 110D or 110F of the MGL
will not apply to this Agreement, the Merger or other transactions
contemplated hereby or thereby.
4.21 Year 2000. The Information Systems operated by EUA and its
Subsidiaries which is used in the conduct of their business is capable of
providing or being adapted to provide uninterrupted millennium
functionality to record, store, process and present calendar dates falling
on or after January 1, 2000 in substantially the same manner and with the
same functionality as such Information Systems record, store, process and
present such calendar dates falling on or before December 31, 1999 other
than such interruptions in millennium functionality that could not,
individually or in the aggregate, reasonably be expected to result in a EUA
Material Adverse Effect. EUA reasonably believes as of the date hereof that
the remaining cost of adaptations referred to in the foregoing sentence
will not exceed the amounts reflected in the Form 10-Q filed by EUA for the
quarter ended September 30, 1998 (excluding the fees and costs of any Y2K
Consultant retained pursuant to Section 6.01(o) hereof and of the
implementation of any recommendations by such Y2K Consultant actually made
by EUA that are not already part of EUA's compliance plan as of the date
hereof). "Information Systems" means mainframe and midrange hardware,
operating system software and applications programs; network and desktop
(PC) hardware, operating system software and applications programs; EDI
(Electronic Date Interchange) and FTP (File Transfer Protocol) software;
and embedded systems hardware and applications software.
4.22 EUA Associates. The representations and warranties set
forth in Sections 4.04(a), 4.06, 4.07, 4.09, 4.12 and 4.13 are true and
correct in all material respects with regard to EUA Associates.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NEES
NEES represents and warrants to EUA as follows:
5.01 Organization and Qualification. NEES is a voluntary
association duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and has full power, authority and
legal right to own its property and assets and to transact the business in
which it is engaged. Each of the NEES Subsidiaries is a corporation duly
organized or incorporated, validly existing and in good standing under the
laws of its jurisdiction of organization or incorporation and has full
corporate power and authority to conduct its business as and to the extent
now conducted and to own, use and lease its assets and properties, except
where failure to be so organized or incorporated, existing and in good
standing or to have such power and authority, individually or in the
aggregate, could not reasonably be expected to have a NEES Material Adverse
Effect. As used in this Agreement, the term "NEES Material Adverse Effect"
means a material adverse effect on the business, assets, results of
operations, condition (financial or otherwise) or prospects of NEES and its
Subsidiaries taken as a whole. LLC is a limited liability company validly
existing under the laws of the Commonwealth of Massachusetts. LLC was
formed solely for the purpose of engaging in the Merger and other
transactions contemplated hereby, has engaged in no other business
activities (other than in connection with the formation and capitalization
of LLC pursuant to or in accordance with the LLC Agreement (as defined
below)) and has conducted its operations only as contemplated hereby and by
the LLC Agreement. Each of NEES and its Subsidiaries is duly qualified,
licensed or admitted to do business and is in good standing in each
jurisdiction in which the ownership, use or leasing of its assets and
properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except where failure to be
so qualified, licensed or admitted and in good standing, individually or in
the aggregate, could not reasonably be expected to have a NEES Material
Adverse Effect. NEES has previously delivered to EUA correct and complete
copies of its Agreement and Declaration of Trust (the "NEES Trust
Agreement") and the articles of association of LLC.
5.02 Authority. Each of NEES and LLC has full power and
authority to enter into this Agreement, and to perform its obligations
hereunder, and to consummate the Merger and other transactions contemplated
hereby. The execution, delivery and performance of this Agreement by each
of NEES and LLC and the consummation by each of NEES and LLC of the Merger
and other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of NEES and all necessary action on
the part of LLC. This Agreement has been duly and validly executed and
delivered by each of NEES and LLC and constitutes a legal, valid and
binding obligation of each of NEES and LLC enforceable against each of NEES
and LLC in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
5.03 Capital Stock. The authorized equity securities of NEES
consists of 150,000,000 common shares of NEES (the "NEES Shares"), of which
59,170,986 shares were issued and outstanding as of the close of business
on January 29, 1999. As of the close of business on January 29, 1999,
5,798,666 NEES Shares were held in the treasury of NEES. All of the issued
and outstanding NEES Shares are duly authorized, validly issued, fully paid
and nonassessable. Except as may be provided by the New England Electric
System Companies' Incentive Share Plan, the New England Electric System
Companies Incentive Thrift Plan I, the New England Electric System
Companies Incentive Thrift Plan II, the New England Electric Companies
Long-Term Performance Share Award Plan, and the New England Electric System
Directors' annual retainer shares, and except as set forth in Section 5.03
of the letter dated the date hereof and delivered to EUA by NEES and LLC
concurrently with the execution and delivery of this Agreement (the "NEES
Disclosure Letter"), on the date hereof there are no outstanding Options
obligating NEES or any of its Subsidiaries to issue or sell any shares of
equity securities of NEES or to grant, extend or enter into any Option with
respect thereto.
5.04 Non-Contravention; Approvals and Consents. (a) The
execution and delivery of this Agreement by each of NEES and LLC do not,
and the performance by each of NEES and LLC of its obligations hereunder
and the consummation of the Merger and other transactions contemplated
hereby will not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default
under, result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of,
or result in the creation or imposition of any Lien upon any of the assets
or properties of NEES, or LLC under, any of the terms, conditions or
provisions of (i) the NEES Agreement and Declaration of Trust or the
articles of organization of LLC, (ii) subject to the actions described in
paragraph (b) of this Section, (x) any laws or orders of any Governmental
Authority applicable to NEES or LLC or any of their respective assets or
properties, or (y) subject to obtaining the third-party consents (the "NEES
Required Consents") set forth in Section 5.04 of the NEES Disclosure Letter
any Contracts to which NEES is a party or by which NEES or any of its
Subsidiaries or any of their respective assets or properties is bound,
excluding from the foregoing clauses (x) and (y) conflicts, violations,
breaches, defaults, terminations, modifications, accelerations and
creations and impositions of Liens which, individually or in the aggregate,
could not reasonably be expected to have a NEES Material Adverse Effect.
(b) No declaration, filing or registration with, or notice to
or authorization, consent or approval of, any Governmental Authority is
necessary for the execution and delivery of this Agreement by NEES or LLC
or the consummation by NEES or LLC of the Merger and other transactions
contemplated hereby except as described in Section 5.04 of the NEES
Disclosure Letter or the failure of which to obtain could not reasonably be
expected to result in a NEES Material Adverse Effect (the "NEES Required
Statutory Approvals," it being understood that references in this Agreement
to "obtaining" such NEES Required Statutory Approvals shall mean making
such declarations, filings or registrations; giving such notices; obtaining
such authorizations, consents or approvals; and having such waiting periods
expire as are necessary to avoid a violation of law).
5.05 Information Supplied. (a) The information supplied by NEES
or LLC and included in the Proxy Statement with the written consent of NEES
or LLC, as the case may be, will not, at the date mailed to EUA's
Shareholders or at the time of EUA Shareholder's Meeting, contain any
untrue statements of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) Notwithstanding the foregoing provisions of this Section
5.05, no representation or warranty is made by NEES with respect to
statements made or incorporated by reference in the Proxy Statement based
on information supplied by EUA for inclusion or incorporation by reference
therein or based on information which is not made in or incorporated by
reference in such documents but which should have been disclosed pursuant
to this Section 5.05.
5.06 Compliance. Except as set forth in Section 5.06 of the
NEES Disclosure Letter, or as disclosed in the NEES Reports filed prior to
the date hereof, NEES is not in violation of, is, to the knowledge of NEES,
under investigation with respect to any violation of, or has been given
notice or been charged with any violation of, any law, statute, order,
rule, regulation, ordinance or judgment (including, without limitation, any
applicable environmental law, ordinance or regulation) of any Governmental
Authority, except for possible violations which, individually or in the
aggregate, could not reasonably be expected to have a NEES Material Adverse
Effect. Except as set forth in Section 5.06 of the NEES Disclosure Letter
or as disclosed in the NEES Reports filed prior to the date hereof, NEES
and its Subsidiaries have all material permits, licenses and other
governmental authorizations, consents and approvals necessary to conduct
their businesses as presently conducted which are material to the operation
of the businesses of NEES. NEES is not in breach or violation of, or in
default in the performance or observance of, any term or provision of, and
no event has occurred which, with lapse of time or action by a third party,
could result in a default by NEES under (i) the NEES Agreement and
Declaration of Trust or by-laws or (ii) any contract, commitment,
agreement, indenture, mortgage, loan agreement, note, lease, bond, license,
approval or other instrument to which it is a party or by which NEES is
bound or to which any of their respective property is subject, except for
possible violations, breaches or defaults which, individually or in the
aggregate, could not reasonably be expected to have a NEES Material Adverse
Effect.
5.07 Financing. NEES has or will have available, prior to the
Effective Time, sufficient cash in immediately available funds to pay or to
cause LLC to pay the Merger Consideration pursuant to Article II hereof and
to consummate the Merger and other transactions contemplated hereby.
5.08 No Vote Required. No vote of the NEES Shares or of any
class or series of equity securities of NEES or its Subsidiaries is
necessary for the approval of the Merger and other transactions
contemplated hereby.
5.09 Ownership of EUA Shares. Neither NEES nor any of its
Subsidiaries or other affiliates beneficially owns any EUA Shares.
5.10 Merger with The National Grid Group plc. NEES has entered
into an Agreement and Plan of Merger dated as of December 11, 1998 by and
among The National Grid Group plc ("National Grid Group"), NGG Holdings LLC
(formerly known as Iosta LLC) and NEES (the "National Grid Merger
Agreement"). Pursuant to Section 6.01 of the National Grid Merger
Agreement, NEES has provided a copy of this Agreement to National Grid
Group, and National Grid Group has given NEES its written consent to enter
into this Agreement and consummate the Merger on the terms set forth in
this Agreement. Prior to the execution of this Agreement, NEES has provided
EUA with a copy of such written consent.
ARTICLE VI
COVENANTS
6.01 Covenants of EUA. At all times from and after the date
hereof until the Effective Time, EUA covenants and agrees as to itself and
its Subsidiaries that (except as expressly contemplated or permitted by
this Agreement or as set forth in Section 6.01 of the EUA Disclosure
Letter, or to the extent that NEES shall otherwise previously consent in
writing):
(a) Ordinary Course. EUA and each of its Subsidiaries shall
conduct their businesses only in, and EUA and each of its Subsidiaries
shall not take any action except in, the ordinary course consistent with
good utility practice. Without limiting the generality of the foregoing,
EUA and its Subsidiaries shall use all commercially reasonable efforts to
preserve intact in all material respects their present business
organizations and reputation, to maintain in effect all existing permits,
to keep available the services of their key officers and employees, to
maintain their assets and properties in good working order and condition,
ordinary wear and tear excepted, to maintain insurance on their tangible
assets and businesses in such amounts and against such risks and losses as
are currently in effect, to preserve their relationships with customers and
suppliers and others having significant business dealings with them and to
comply in all material respects with all laws and orders of all
Governmental Authorities applicable to them.
(b) Charter Documents. EUA shall not, nor shall it permit any
of its Subsidiaries to, amend or propose to amend the EUA Trust Agreement,
in the case of EUA, and its certificate or articles of incorporation or
organization or bylaws (or other comparable charter documents), in the case
of EUA's Subsidiaries.
(c) Dividends. EUA shall not, nor shall it permit any of its
Subsidiaries to, (i) declare, set aside or pay any dividends on, or make
other distributions in respect of, any of its capital stock or share
capital, except:
(A) that EUA may continue the declaration and payment
of regular quarterly dividends on EUA Shares with
usual record and payment dates not, in any fiscal
year, in excess of the dividend for the comparable
period in the prior fiscal year;
(B) that the Subsidiaries of EUA set forth in Section
6.01(c) of the EUA Disclosure Letter may continue
the declaration and payment of dividends on
preferred stock in accordance with the terms of
such stock, with the record and payment dates and
in the amounts set forth in Section 6.01(c) of the
EUA Disclosure Letter;
(C) if the Effective Time does not occur between a
record date and payment date of a regular quarterly
dividend, for a special dividend on EUA Shares with
respect to the quarter in which the Effective Time
occurs with a record date on or prior to the date
on which the Effective Time occurs, which does not
exceed an amount equal to the product of (x) the
number of days between the last payment date of a
regular quarterly dividend and the record date of
such special dividend, multiplied by (y) $.0045;
and
(D) for dividends and distributions (including
liquidating distributions) by a direct or indirect
Subsidiary of EUA to its parent.
(ii) split, combine, subdivide, reclassify or take similar action with
respect to any of its capital stock or share capital or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock or comprised in its
share capital, (iii) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization or (iv) directly or indirectly redeem, repurchase or
otherwise acquire any shares of its capital stock or any Option with
respect thereto except:
(A) in connection with intercompany purchases of
capital stock or share capital,
(B) for the purpose of funding EUA's dividend
reinvestment and share purchase plan in accordance
with past practice, or
(C) subject to EUA's obligations under the Securities
Act and the Exchange Act, pursuant to EUA's
previously announced share repurchase program
provided that the number of EUA Shares repurchased
does not exceed 3,000,000 and the price paid per
share does not exceed 95% of the Per Share Amount.
(d) Share Issuances. EUA shall not, nor shall it permit any of
its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
Option with respect thereto (other than the issuance by a wholly owned
Subsidiary of its capital stock to its direct or indirect parent
corporation, or modify or amend any right of any holder of outstanding
shares of capital stock or Options with respect thereto).
(e) Acquisitions. EUA shall not, nor shall it permit any of its
Subsidiaries to acquire or agree to acquire (by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial
portion of the assets of, or by any other manner) any business or any
corporation, partnership, association or other business organization or
division thereof.
(f) Dispositions. EUA shall not, nor shall it permit any of its
Subsidiaries to sell, lease, securitize, grant any security interest in or
otherwise dispose of or encumber any of its assets or properties, other
than dispositions in the ordinary course of its business consistent with
past practice and having an aggregate value of less than $1,000,000 for
each disposition and $5,000,000 in the aggregate.
(g) Indebtedness. EUA shall not, nor shall it permit any of its
Subsidiaries to incur or guarantee any indebtedness (including any debt
borrowed or guaranteed or otherwise assumed, including, without limitation,
the issuance of debt securities or warrants or rights to acquire debt) or
enter into any "keep well" or other agreement to maintain any financial
condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing other than (i) short-term
indebtedness in the ordinary course of business consistent with past
practice (such as the issuance of commercial paper or the use of existing
credit facilities) in amounts not exceeding the amounts set forth in
Section 6.01(g) of the EUA Disclosure Letter, (ii) long-term indebtedness
in connection with the refinancing of existing indebtedness either at its
stated maturity or at a lower cost of funds (calculating such cost on an
aggregate after-tax basis) or (iii) guarantees or "keep well" agreements in
favor of wholly owned Subsidiaries of EUA in connection with the conduct of
the business of such wholly owned Subsidiaries of EUA not aggregating more
than $1,000,000.
(h) Capital Expenditures. Except (i) as required by law or (ii)
as reasonably deemed necessary by EUA after consulting with NEES following
a catastrophic event, such as a major storm, EUA shall not, nor shall it
permit any of its Subsidiaries to make any capital expenditures or
commitments during any fiscal year that is in excess of 110% of (i) the
aggregate amount set forth in Section 6.01(h) of the EUA Disclosure Letter
with respect to EUA and its Subsidiaries that are public utility companies
within the meaning of Section 2(a)(5) of the 1935 Act or (ii) the amount
set forth in Section 6.01(h) of the EUA Disclosure Letter with respect to
each of EUA's other Subsidiaries.
(i) Employee Benefits. EUA shall not, nor shall it permit any
of its Subsidiaries to enter into, adopt, amend (except as may be required
by applicable law) or terminate any EUA Employee Benefit Plan, or other
agreement, arrangement, plan or policy between EUA or one of its
Subsidiaries and one or more of its trustees, directors, officers,
employees or former employees, or, except for normal increases in the
ordinary course of business, (a) increase in any manner the compensation or
fringe benefits of any trustee, director or executive officer, (b) increase
in any manner the compensation or fringe benefits of any employee, (c) pay
any benefit not required by any plan or arrangement in effect as of the
date hereof or, (d) cause any trustee, director, officer, employee or
former employee of EUA to accrue or receive additional benefits, accelerate
vesting or accelerate the payment of any benefits under any EUA Employee
Benefit Plan, or other agreement, arrangement, plan or policy. EUA, prior
to the Closing Date, shall take all necessary action and make all necessary
amendments to its stock-based plans so that all such plans will be in a
form that allows the plans to function after the Effective Time and after
any merger of EUA and its Subsidiaries into NEES or its Subsidiaries. EUA,
prior to the Closing Date, shall take all necessary actions, in a manner
satisfactory to NEES, so that on or after the Closing Date, neither EUA,
the Surviving Entity nor their affiliates' stock or securities will be
required to be held in, or distributed pursuant to, any EUA Employee
Benefit Plan.
(j) Labor Matters. Notwithstanding any other provision of this
Agreement to the contrary, EUA or its Subsidiaries may negotiate successor
collective bargaining agreements to those referenced in Section 4.12
hereof, and may negotiate other collective bargaining agreements or
arrangements as required by law or for the purpose of implementing the
agreements referenced in Section 4.12 hereof. EUA will keep NEES informed
as to the status of, and will consult with NEES as to the strategy for, all
negotiations with collective bargaining representatives. EUA and its
Subsidiaries shall act prudently and reasonably and consistent with their
obligation under applicable law in such negotiations.
(k) Discharge of Liabilities. EUA shall not, nor shall it
permit its Subsidiaries to, pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice (which includes the payment of final and unappealable judgments)
or in accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of such party included in EUA SEC
Reports, or incurred in the ordinary course of business consistent with
past practice.
(l) Contracts. EUA shall not, nor shall it permit its
Subsidiaries, except in the ordinary course of business consistent with
past practice or as set forth in Section 6.01(l) of the EUA Disclosure
Letter, (i) to modify, amend, terminate or fail to use commercially
reasonable efforts to renew any material Contract to which EUA or any of
its Subsidiaries is a party or waive, release or assign any material rights
or claims or (ii) to enter into any new material Contracts except as
expressly permitted by Sections 6.01 (f), (g) or (i) and 7.06 hereof.
(m) Equity Investments. EUA shall not, nor shall it permit its
Subsidiaries or affiliates to, make equity contributions to non-affiliates
or to its non-utility Subsidiaries.
(n) Loans. EUA shall not, nor shall it permit its Subsidiaries
or affiliates to, loan money to non-affiliates or to its non-utility
Subsidiaries.
(o) Year 2000. EUA, within 15 days of the date of this
Agreement, shall engage a qualified third party ("Y2K Consultant") to
conduct a detailed assessment of the adequacy and state of completion of
its Year 2000 Program, including but not limited to assessment and testing
of its customer, accounting, and operational systems. The Y2K Consultant
and scope of work of the Y2K Consultant shall be acceptable to NEES. Such
assessment and testing shall be completed as soon thereafter as
practicable. EUA shall have such assessment updated by the Y2K Consultant
at the end of each fiscal quarter of 1999. EUA shall allow designated NEES
personnel and representatives access to the Y2K Consultant's personnel,
reports and recommendations and access to EUA's personnel, documents, and
information related to the Y2K issue. EUA and the third party shall meet
with such designated NEES personnel and representatives on a periodic basis
(but not less frequently than monthly) to update NEES on EUA's Year 2000
Program. If this Agreement is terminated pursuant to Section 9.01 hereof,
NEES shall reimburse EUA for the costs and expenses of the Y2K Consultant.
(p) Insurance. EUA shall, and shall cause its Subsidiaries to,
maintain with financially responsible insurance companies (or through
self-insurance, consistent with past practice) insurance in such amounts
and against such risks and losses as are customary for companies engaged in
their respective businesses.
(q) 1935 Act. EUA shall not, nor shall it permit any of its
Subsidiaries to, engage in any activities which would cause a change in its
status, or that of its Subsidiaries, under the 1935 Act.
(r) Regulatory Matters. Subject to applicable law and except
for non-material filings in the ordinary course of business consistent with
past practice, EUA shall consult with NEES prior to implementing any
changes in its or any of its Subsidiaries' rates or charges, standards of
service or accounting or executing any agreement with respect thereto that
is otherwise permitted under this Agreement and shall, and shall cause its
Subsidiaries to, deliver to NEES a copy of each such filing or agreement at
least four (4) business days prior to the filing or execution thereof so
that NEES may comment thereon. EUA shall, and shall cause its Subsidiaries
to, make all such filings (i) only in the ordinary course of business
consistent with past practice or (ii) as required by a Governmental
Authority or regulatory agency with appropriate jurisdiction.
(s) Accounting. EUA shall not, nor shall it permit any of its
Subsidiaries to make any changes in their accounting methods, policies or
procedures, except as required by law, rule, regulation or applicable
generally accepted accounting principles;
(t) Tax Status. Neither EUA nor any of its Subsidiaries shall
(i) make or rescind any material express or deemed election relating to
Taxes, (ii) make a request for a Tax Ruling or enter into a Closing
Agreement, (iii) settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit, or controversy
relating to Taxes or (iv) change in any material respect any of its methods
of reporting income, deductions or accounting for federal income tax
purposes from those employed in the preparation of its federal income Tax
Return for the taxable year ending December 31, 1997, except as may be
required by applicable law.
(u) No Breach. EUA shall not, nor shall it permit any of its
Subsidiaries to willfully take or fail to take any action that would or is
reasonably likely to result in (i) a material breach of any provision of
this Agreement or (ii) its representations and warranties set forth in this
Agreement being untrue in any material respect on and as of the Closing
Date.
(v) Advice of Changes. EUA shall confer with NEES on a regular
and frequent basis with respect to EUA's business and operations and other
matters relevant to the Merger to the extent permitted by law, and shall
promptly advise NEES, orally and in writing, of any material change or
event, including, without limitation, any complaint, investigation or
hearing by any Governmental Authority (or communication indicating the same
may be contemplated) or the institution or threat of material litigation;
provided that EUA shall not be required to make any disclosure to the
extent such disclosure would constitute a violation of any applicable law
or regulation.
(w) Notice and Cure. EUA will notify NEES in writing of, and
will use all commercially reasonable efforts to cure before the Closing,
any event, transaction or circumstance, as soon as practical after it
becomes known to EUA, that causes or will or may be likely to cause any
covenant or agreement of EUA under this Agreement to be breached or that
renders or will render untrue in any material respect any representation or
warranty of EUA contained in this Agreement. EUA also will notify NEES in
writing of, and will use all commercially reasonable efforts to cure,
before the Closing, any material violation or breach, as soon as practical
after it becomes known to EUA, of any representation, warranty, covenant or
agreement made by EUA. No notice given pursuant to this paragraph shall
have any effect on the representations, warranties, covenants or agreements
contained in this Agreement for purposes of determining satisfaction of any
condition contained herein.
(x) Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, EUA will take or cause to be taken all
commercially reasonable steps necessary or desirable and proceed diligently
and in good faith to satisfy each condition to the other's obligations
contained in this Agreement and to consummate and make effective the Merger
and other transactions contemplated by this Agreement, and EUA will not,
nor will it permit any of its Subsidiaries to, take or fail to take any
action that could be reasonably expected to result in the nonfulfillment of
any such condition.
(y) Third Party Standstill Agreements. Except as provided in
Section 7.08 hereto, during the period from the date of this Agreement
through the Effective Time, neither EUA nor any of its Subsidiaries shall
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it is a party. During such period, EUA shall
take all steps necessary to enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreement.
6.02 Covenants of NEES. At all times from and after the date hereof
until the Effective Time, NEES covenants and agrees that (except as
expressly contemplated or permitted by this Agreement or to the extent that
EUA shall otherwise previously consent in writing):
(a) No Breach. NEES shall not, nor shall it permit any of its
Subsidiaries to, except as otherwise expressly provided for in this
Agreement, willfully take or fail to take any action that would or is
reasonably likely to result in (i) a material breach of any of its
covenants or agreements contained in this Agreement or (ii) any of its
representations and warranties set forth in Sections 5.01, 5.02, 5.03,
5.04, 5.05, 5.06, 5.07, 5.08 and 5.09 of this Agreement being untrue in any
material respect on and as of the Closing Date.
(b) Advice of Changes. NEES shall confer with EUA on a regular
and frequent basis with respect to any matter having, or which, insofar as
can be reasonably foreseen, could reasonably be expected to have, a NEES
Material Adverse Effect or materially impair the ability of NEES to
consummate the Merger and other transactions contemplated hereby; provided
that NEES shall not be required to make any disclosure to the extent such
disclosure would constitute a violation of any applicable law or
regulation.
(c) Notice and Cure. NEES will notify EUA in writing of, and
will use all commercially reasonable efforts to cure before the Closing,
any event, transaction or circumstance, as soon as practical after it
becomes known to NEES, that causes or will or may be likely to cause any
covenant or agreement of NEES under this Agreement to be breached or that
renders or will render untrue in any material respect any representation or
warranty of NEES contained in this Agreement. NEES also will notify EUA in
writing of, and will use all commercially reasonable efforts to cure before
the Closing, any material violation or breach, as soon as practical after
it becomes known to such party, of any representation, warranty, covenant
or agreement made by NEES. No notice given pursuant to this paragraph shall
have any effect on the representations, warranties, covenants or agreements
contained in this Agreement for purposes of determining satisfaction of any
condition contained herein.
(d) Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, NEES will take or cause to be taken all
commercially reasonable steps necessary or desirable and proceed diligently
and in good faith to satisfy each condition to its obligations contained in
this Agreement and to consummate and make effective the Merger and other
transactions contemplated by this Agreement, and NEES will not, nor will it
permit any of its Subsidiaries to, take or fail to take any action that
could be reasonably expected to result in the nonfulfillment of any such
condition.
(e) Conduct of Business of LLC. Prior to the Effective Time,
except as may be required by applicable law and subject to the other
provisions of this Agreement, NEES shall cause LLC to (i) perform its
obligations under this Agreement in accordance with its terms, and (ii) not
engage directly or indirectly in any business or activities of any type or
kind and not enter into any agreements or arrangements with any person, or
be subject to or bound by any obligation or undertaking, which is
inconsistent with this Agreement.
(f) Certain Mergers. NEES shall not, and shall not permit any
of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of
or equity in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets if the
entering into of a definitive agreement relating to or the consummation of
such acquisition, merger or consolidation could reasonably be expected to
(i) impose any material delay in the obtaining of, or significantly
increase the risk of not obtaining, any authorizations, consents, orders,
declarations or approvals of any Governmental Authority necessary to
consummate the Merger or the expiration or termination of any applicable
waiting period, (ii) significantly increase the risk of any Governmental
Authority entering an order prohibiting the consummation of the Merger,
(iii) significantly increase the risk of not being able to remove any such
order on appeal or otherwise or (iv) materially delay the consummation of
the Merger.
6.03 Additional Covenants by NEES and EUA.
(a) Control of Other Party's Business. Nothing contained in
this Agreement shall give NEES, directly or indirectly, the right to
control or direct EUA's operations prior to the Effective Time. Nothing
contained in this Agreement shall give EUA, directly or indirectly, the
right to control or direct NEES' operations prior to the Effective Time.
Prior to the Effective Time, each of EUA and NEES shall exercise,
consistent with the terms and conditions of this Agreement, complete
control and supervision over its respective operations.
(b) Transition Steering Team. As soon as reasonably practicable
after the date hereof, NEES and EUA shall create a special transition
steering team, with representation from EUA and NEES, that will develop
recommendations concerning the future structure and operations of EUA after
the Effective Time, subject to applicable law. The members of the
transition steering team shall be appointed by the Chief Executive Officers
of NEES and EUA. The functions of the transition steering team shall
include (i) to direct the exchange of information and documents between the
parties and their Subsidiaries as contemplated by Section 7.01 and (ii) the
development of regulatory plans and proposals, corporate organizational and
management plans, workforce combination proposals, and such other matters
as they deem appropriate.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 Access to Information. EUA shall, and shall cause each of its
Subsidiaries to, and shall use commercially reasonable efforts to cause EUA
Associates to, throughout the period from the date hereof to the Effective
Time to the extent permitted by law, (i) provide NEES and its
Representatives with full access, upon reasonable prior notice and during
normal business hours, to all facilities, operations, officers (including
EUA's environmental, health and safety personnel), employees, agents and
accountants of EUA and its Subsidiaries and Associates and their respective
assets, properties, books and records, to the extent EUA or any Subsidiary
of EUA or EUA Associate is not under a legal obligation not to provide
access or to the extent that such access would not constitute a waiver of
the attorney client privilege and does not unreasonably interfere with the
business and operations of EUA and its Subsidiaries and Associates and (ii)
furnish promptly to such persons (x) a copy of each report, statement,
schedule and other document filed or received by EUA or any of its
Subsidiaries pursuant to the requirements of federal or state securities
laws and each material report, statement, schedule and other document filed
with any other Governmental Authority, and (y) all other information and
data (including, without limitation, copies of Contracts, EUA Employee
Benefit Plans, and other books and records) concerning the business and
operations of EUA and its Subsidiaries as NEES or any of its
Representatives reasonably may request. No review pursuant to this Section
7.01 or otherwise shall affect any representation or warranty contained in
this Agreement or any condition to the obligations of the parties hereto.
Any such information or material obtained pursuant to this Section 7.01
that constitutes "Evaluation Material" (as such term is defined in the
letter agreement dated as of December 18, 1998 between EUA and NEES (the
"Confidentiality Agreement")) shall be governed by the terms of the
Confidentiality Agreement. NEES may provide information or materials that
it obtains relating to EUA or any EUA Subsidiary pursuant to this Section
7.01 to National Grid Group; the treatment by National Grid Group of such
information or material shall be governed by the terms of the letter
agreement dated as of December 21, 1998 between EUA and National Grid
Group.
7.02 Proxy Statement. As soon as reasonably practicable after the
date of this Agreement, EUA shall prepare and file the Proxy Statement with
the SEC. NEES and EUA shall cooperate with each other in the preparation of
the Proxy Statement and any amendment or supplement thereto, and EUA shall
promptly notify NEES of the receipt of any comments of the SEC with respect
to the Proxy Statement and of any requests by the SEC for any amendment or
supplement thereto or for additional information, and shall promptly
provide to NEES copies of all correspondence between EUA or any of its
Representatives and the SEC with respect to the Proxy Statement (except
reports from financial advisors other than with the consent of such
financial advisors). Each of the parties hereto shall furnish all
information concerning itself which is required or customary for inclusion
in the Proxy Statement. EUA shall consult with NEES regarding the Proxy
Statement and have due regard to any comments NEES may make in relation to
the Proxy Statement. EUA shall give NEES and its counsel the opportunity to
review the Proxy Statement and all responses to requests for additional
information by and replies to comments of the SEC before their being filed
with, or sent to, the SEC. Each of EUA and NEES agrees to use its
reasonable best efforts, after consultation with the other parties hereto,
to respond promptly to all such comments of and requests by the SEC. After
obtaining the consent of EUA, which consent shall not be unreasonably
withheld, NEES may provide information supplied to NEES by EUA to National
Grid Group for inclusion of such information in the Super Class 1 circular
("NGG Circular") to be issued to shareholders of National Grid Group in
connection with approval by such shareholders of the National Grid Merger
Agreement. NEES shall use its best efforts to provide EUA with a draft of
any portion of the NGG Circular with information relating to EUA prior to
the issuance of the NGG Circular.
7.03 Approval of Shareholders. EUA shall, through its Board of
Trustees, duly call, give notice of, convene and hold a meeting of its
shareholders (the "EUA Shareholders' Meeting") for the purpose of voting on
the approval of the Merger and other transactions contemplated hereby (the
"EUA Shareholders' Approval") as soon as reasonably practicable after the
date hereof; provided, however, subject to the fiduciary duties of its
Board of Trustees and the requirements of applicable law, EUA shall include
in the Proxy Statement the recommendation of the Board of Trustees of EUA
that the Shareholders of EUA approve the Merger and the other transactions
contemplated hereby, and shall use its reasonable best efforts to obtain
such approval.
7.04 Regulatory and Other Approvals. (a) HSR Filings. Each party
hereto shall file or cause to be filed with the Federal Trade Commission
and the Department of Justice any notifications required to be filed by its
respective "ultimate parent" company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules and
regulations promulgated thereunder with respect to the Merger and other
transactions contemplated hereby. Such parties will use all commercially
reasonable efforts to make such filings in a timely manner and to respond
on a timely basis to any requests for additional information made by either
of such agencies.
(b) Other Regulatory Approvals. Each party shall cooperate and
use its best efforts to promptly prepare and file all necessary
applications, notices, petitions, filings and other documents with, and to
use all commercially reasonable efforts to obtain all necessary permits,
consents, approvals and authorizations of, all Governmental Authorities
necessary or advisable to obtain the EUA Required Statutory Approvals, the
NEES Required Statutory Approvals and the approvals of the state utility
commissions referred to in Section 8.01(d) (collectively, the "NEES-EUA
Regulatory Approvals"). The parties agree that they will consult with each
other with respect to obtaining the NEES-EUA Regulatory Approvals;
provided, however, that NEES shall have primary responsibility for the
preparation and filing of any related applications, filings or other
material with the SEC, the FERC, the NRC and state utility commissions. EUA
shall have the right to review and approve in advance drafts of and final
applications, filings and other material (including material with respect
to proposed settlements) submitted to or filed with the SEC, the FERC, the
NRC and state utility commissions or parties to such proceedings before
such Governmental Authority, which approval shall not be unreasonably
withheld or delayed.
(c) NEES-NGG Regulatory Proceedings. EUA and NEES acknowledge
that, at the same time EUA and NEES will be seeking to obtain the NEES-EUA
Regulatory Approvals, National Grid Group and NEES will be seeking to
obtain the regulatory approvals (the "NEES-NGG Regulatory Approvals")
required to consummate the transactions contemplated by the National Grid
Merger Agreement. NEES and EUA agree to seek to prosecute the proceedings
relating to the NEES-EUA Regulatory Approvals (the "NEES-EUA Regulatory
Proceedings") separately from the prosecution by National Grid Group and
NEES of the proceedings relating to the NEES-NGG Regulatory Approvals (the
"NEES-NGG Regulatory Proceedings"), but recognize that one or more of the
NEES-EUA Regulatory Proceedings may be consolidated with one or more of the
NEES-NGG Regulatory Proceedings by the relevant Governmental Authority.
Upon the request of EUA, NEES will keep EUA reasonably apprised of the
status of the NEES-NGG Regulatory Proceedings.
7.05 Employee Benefit Plans.
(a) For a period of twelve (12) months immediately following
the Closing Date, the compensation, benefits and coverage provided to those
non-union individuals who continue to be employees of the Surviving Entity
(the "Affected Employees") pursuant to employee benefit plans or
arrangements maintained by NEES or the Surviving Entity shall be, in the
aggregate, not less favorable (as determined by NEES and the Surviving
Entity using reasonable assumptions and benefit valuation methods) than
those provided, in the aggregate, to such Affected Employees immediately
prior to the Closing Date. In addition to the foregoing, NEES shall, or
shall cause the Surviving Entity to, pay any Affected Employee whose
employment is terminated by NEES or the Surviving Entity within twelve (12)
months of the Closing Date a severance benefit package equivalent to the
severance benefit package that would be provided under the NEES Standard
Severance Plan as in effect on the date hereof.
(b) NEES shall, or shall cause the Surviving Entity to, give
the Affected Employees full credit for purposes of eligibility, vesting,
benefit accrual (including, without limitation, benefit accrual under any
defined benefit pension plans) and determination of the level of benefits
under any employee benefit plans or arrangements maintained by NEES or the
Surviving Entity in effect as of the Closing Date for such Affected
Employees' service with EUA or any Subsidiary of EUA (or any prior
employer) to the same extent recognized by EUA or such Subsidiary
immediately prior to the Closing Date. With respect to any employee benefit
plan or arrangement established by NEES, EUA or the Surviving Entity after
the Closing Date (the "Post Closing Plans"), service shall be credited in
accordance with the terms of such Post Closing Plans.
(c) NEES shall, or shall cause the Surviving Entity to, (i)
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable
to the Affected Employees under any welfare benefit plan established to
replace any EUA welfare benefit plans in which such Affected Employees may
be eligible to participate after the Closing Date, other than limitations
or waiting periods that are already in effect with respect to such Affected
Employees and that have not been satisfied as of the Closing Date under any
welfare plan maintained for the Affected Employees immediately prior to the
Closing Date, and (ii) provide each Affected Employee with credit for any
co-payments and deductibles paid prior to the Closing Date in satisfying
any applicable deductible or out-of-pocket requirements under any welfare
plans that such Affected Employees are eligible to participate in after the
Closing Date.
(d)(i) NEES shall, or shall cause the Surviving Entity and its
Subsidiaries to, honor, and shall guarantee the obligations of the
Surviving Entity and its Subsidiaries under, all EUA Employee Benefit Plans
as in effect on the date hereof; provided, however, that this Section
7.05(d)(i) is not intended to prevent NEES or the Surviving Entity from
exercising their rights with respect to all EUA Employee Benefit Plans
solely in accordance with their terms, including but not limited to the
right to alter, terminate or otherwise amend such EUA Employee Benefit
Plans.
(ii) NEES shall, or shall cause the Surviving Entity and
its Subsidiaries to, honor, and shall guarantee the obligations of the
Surviving Entity and its Subsidiaries under, (A) all employment severance,
consulting and retention agreements or arrangements as in effect on the
date hereof, as set forth in Section 7.05(d)(ii) of the EUA Disclosure
Letter, or as modified in accordance with Section 6.01(i) of the EUA
Disclosure Letter (such agreements or arrangements, the "EUA Employee
Agreements" and the individuals who are parties to such EUA Employee
Agreements, the "EUA Executives") and (B) all EUA Employee Benefit Plans in
which such EUA Executives participate; provided, however, that this Section
7.05(d)(i) is not intended to prevent NEES or the Surviving Entity from
exercising their rights with respect to the EUA Employee Agreements and the
EUA Employee Benefit Plans in which such EUA Executives participate, in
each case solely in accordance with their terms, including but not limited
to the right to alter, terminate or otherwise amend such EUA Employee
Agreements and EUA Employee Benefit Plans.
(e) Notwithstanding the foregoing, NEES and the Surviving
Entity and its subsidiaries shall neither be required to or prevented from
merging EUA's benefit plans, agreements, or arrangements into NEES or the
Surviving Entity and its subsidiaries benefit plans, agreements, or
arrangements or from replacing EUA's benefit plans, agreements or
arrangements with NEES or the Surviving Entity and its subsidiaries benefit
plans, agreements or arrangements.
7.06 Labor Agreements and Workforce Matters.
(a) Labor Agreements. NEES shall honor, or shall cause the
appropriate subsidiaries of the Surviving Entity to honor, all collective
bargaining agreements of EUA or its subsidiaries in effect as of the
Effective Time until their expiration; provided, however, that this
undertaking is not intended to prevent NEES or the Surviving Entity and its
subsidiaries from exercising their rights with respect to such collective
bargaining agreements and in accordance with their terms, including any
right to amend, modify, suspend, revoke or terminate any such contract,
agreement, collective bargaining agreement or commitment or portion
thereof.
(b) Workforce Matters. Subject to applicable law and
obligations under applicable collective bargaining agreements, for a period
of 2 years following the Effective Time, any reductions in workforce in
respect of employees of the Surviving Entity and its Subsidiaries shall be
made on a fair and equitable basis as determined by the Surviving Entity,
with due consideration to prior experience and skills, and any employee
whose employment is terminated or job is eliminated during such period
shall be entitled to participate on a fair and equitable basis as
determined by NEES or the Surviving Entity in the job opportunity and
employment placement programs offered by NEES or the Surviving Entity or
any of their Subsidiaries for which they are eligible. Any workforce
reductions carried out following the Effective Time by the Surviving Entity
and its Subsidiaries shall be done in accordance with all applicable
collective bargaining agreements and all laws and regulations governing the
employment relationship and termination thereof including, without
limitation, the Worker Adjustment and Retraining Notification Act, and the
regulations promulgated thereunder, and any comparable state or local law.
7.07 Post Merger Operations.
(a) NEES Advisory Board. If the Merger is consummated, then,
promptly following the closing of the merger contemplated by the National
Grid Merger Agreement, NEES shall take such action as is necessary to cause
all of the members of the Board of Directors of EUA to be appointed to
serve on the advisory board to be formed pursuant to Section 7.07(e) of the
National Grid Merger Agreement.
(b) Charities. The parties agree that provision of charitable
contribution and community support within the New England region serves a
number of important goals. After the Effective Time, NEES intends to cause
the Surviving Entity to provide charitable contributions and community
support within the New England region at annual levels substantially
comparable to the annual level of charitable contributions and community
support provided, directly or indirectly, by EUA and its public utility
subsidiaries within the New England region during 1998.
7.08 No Solicitations. Prior to the Effective Time, EUA agrees: (a)
that neither it nor any of its Subsidiaries shall, and it shall use its
best efforts to cause its Representatives (as defined in Section 10.10) not
to, knowingly initiate, solicit or encourage, directly or indirectly, any
inquiries or any proposal or offer (including, without limitation, any
proposal or offer to its Shareholders) with respect to a merger,
consolidation or other business combination including EUA or any of its
significant Subsidiaries (as defined in Rule 1-02(W) of Regulation S-X
promulgated under the Exchange Act) other than EUA Cogenex Corporation (an
"EUA Significant Subsidiary"), or any acquisition or similar transaction
(including, without limitation, a tender or exchange offer) involving the
purchase of (i) all or any significant portion of the assets of EUA and its
Subsidiaries taken as a whole, (ii) ten percent or more of the outstanding
EUA Shares or (iii) 50% or more of the outstanding shares of the capital
stock of any EUA Significant Subsidiary (any such proposal or offer being
hereinafter referred to as an "Alternative Proposal"), or engage in any
negotiations concerning, or provide any confidential information or data
to, or have any other discussions with, any person or group relating to an
Alternative Proposal, or otherwise knowingly facilitate any effort or
attempt to make or implement an Alternative Proposal other than from NEES
and its affiliates; (b) that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties with respect to any Alternative Proposal; and (c) that it will
notify NEES immediately if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with,
it or any of such persons; provided, however, that, prior to receipt of the
EUA Shareholders' Approval, nothing contained in this Section 7.08 shall
prohibit the Board of Trustees of EUA from (i) furnishing information to
(but only pursuant to a confidentiality agreement in customary form and
having terms and conditions no less favorable to EUA than the
Confidentiality Agreement (as defined in Section 7.01)) or entering into
discussions or negotiations with any person or group that makes an
unsolicited Alternative Proposal, if, and only to the extent that, (A) the
Board of Trustees of EUA, based upon advice of outside counsel with respect
to fiduciary duties, determines in good faith that such action is necessary
for the Board of Trustees to act in a manner consistent with its fiduciary
duties to Shareholders under applicable law, (B) the Board of Trustees of
EUA has reasonably concluded in good faith (after consultation with its
financial advisors) that the person or group making such Alternative
Proposal will have adequate sources of financing to consummate such
Alternative Proposal and that such Alternative Proposal is likely to be
more favorable to EUA's shareholders than the Merger, (C) prior to
furnishing such information to, or entering into discussions or
negotiations with, such person or group, EUA provides written notice to
NEES to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person or group, which notice shall
identify such person or group and the material terms of the Alternative
Proposal in reasonable detail, and (D) EUA keeps NEES promptly informed of
the status and all material information with respect to any such
discussions or negotiations; and (ii) to the extent required, complying
with Rule 14e-2 promulgated under the Exchange Act with regard to an
Alternative Proposal. Nothing in this Section 7.08 shall (x) permit EUA to
terminate this Agreement (except as specifically provided in Article IX),
(y) permit EUA to enter into any agreement with respect to an Alternative
Proposal for so long as this Agreement remains in effect (it being agreed
that for so long as this Agreement remains in effect, EUA shall not enter
into any agreement with any person or group that provides for, or in
any way knowingly facilitates, an Alternative Proposal (other than a
confidentiality agreement under the circumstances described above)), or (z)
affect any other obligation of EUA under this Agreement.
7.09 Directors' and Officers' Indemnification and Insurance.
(a) Indemnification. To the extent, if any, not provided by an
existing right of indemnification or other agreement or policy, from and
after the Effective Time, NEES shall, or shall cause the Surviving Entity
to, to the fullest extent permitted by applicable law, indemnify, defend
and hold harmless each person who is now, or has been at any time prior to
the date hereof, or who becomes prior to the Effective Time, (x) an
officer, trustee or director or (y) an employee covered as of the date
hereof (to the extent of the coverage extended as of the date hereof) of
EUA or any Subsidiary of EUA (each an "Indemnified Party," and
collectively, the "Indemnified Parties") against (i) all losses, expenses
(including reasonable attorney's fees and expenses), claims, damages or
liabilities or, subject to the first proviso of the next succeeding
sentence, amounts paid in settlement, arising out of actions or omissions
occurring at or prior to the Effective Time (and whether asserted or
claimed prior to, at or after the Effective Time) that are, in whole or in
part, based on or arising out of the fact that such person is or was a
director, trustee, officer or employee of EUA or any Subsidiary of EUA (the
"Indemnified Liabilities"), and (ii) all Indemnified Liabilities to the
extent they are based on or arise out of or pertain to the transactions
contemplated by this Agreement, in each case, to the extent permitted by
the EUA Trust Agreement or the indemnification agreements set forth in
Section 7.09 of the EUA Disclosure Letter. In the event of any such loss,
expense, claim, damage or liability (whether or not arising before the
Effective Time), (i) NEES shall, or shall cause the Surviving Entity to,
pay the reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to NEES or the
Surviving Entity, as appropriate, promptly after statements therefor are
received and otherwise advance to such Indemnified Party upon request,
reimbursement of documented expenses reasonably incurred, in either case to
the extent not prohibited by the EUA Trust Agreement or the indemnification
agreements set forth in Section 7.09 of the EUA Disclosure Letter upon
receipt of an undertaking by or on behalf of such director, trustee or
officer to repay such amounts as and to the extent required by the EUA
Trust Agreement or the indemnification agreements set forth in Section 7.09
of the EUA Disclosure Letter, (ii) the Surviving Entity shall cooperate in
the defense of any such matter and (iii) any determination required to be
made with respect to whether an Indemnified Party's conduct complies with
the standards set forth under the EUA Trust Agreement or the
indemnification agreements set forth in Section 7.09 of the EUA Disclosure
Letter and the certificate of incorporation or by-laws or similar governing
documents of the Surviving Entity shall be made by independent counsel
mutually acceptable to the Surviving Entity and the Indemnified Party;
provided, however, that the Surviving Entity shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld) and provided further that no indemnification shall
be made if such indemnification is prohibited by the EUA Trust Agreement or
the indemnification agreements set forth in Section 7.09 of the EUA
Disclosure Letter.
(b) Insurance. For a period of six years after the Effective
Time, NEES and the Surviving Entity at NEES's election, (i) shall cause to
be maintained in effect an extended reporting period for current policies
of directors' and officers' liability insurance for the benefit of such
persons who are currently covered by such policies of EUA on terms no less
favorable than the terms of such current insurance coverage or (ii) shall
provide tail coverage for such persons which provides such persons with
coverage for a period of six years for acts prior to the Effective Time on
terms no less favorable than the terms of such current insurance coverage.
(c) Successors. In the event the Surviving Entity or any of its
successors or assigns (i) consolidates with or merges into any other person
or entity and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person or entity,
then and in either such case, proper provisions shall be made so that the
successors and assigns of the Surviving Entity, as applicable, shall assume
the obligations set forth in this Section 7.09.
(d) Survival of Indemnification. To the fullest extent
permitted by law, from and after the Effective Time, all rights to
indemnification as of the date hereof in favor of the employees, agents,
directors, trustees and officers of EUA and EUA's Subsidiaries with respect
to their activities as such prior to the Effective Time, as provided in the
EUA Trust Agreement or the respective certificates of incorporation and
by-laws or similar governing documents in effect on the date hereof, or
otherwise in effect on the date hereof, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years
from the Effective Time.
(e) Benefit. The provisions of this Section 7.09 are intended
to be for the benefit of, and shall be enforceable by, each Indemnified
Party, his or her heirs and his or her representatives.
(f) Amendment of the EUA Trust Agreement. NEES shall not, and
shall ensure that the Surviving Entity shall not, amend the EUA Trust
Agreement to in any way limit the indemnification provided to the
Indemnified Parties under this Section 7.09.
7.10 Expenses. Except as set forth in Section 9.03, whether or not
the Merger is consummated, all costs and expenses incurred in connection
with the Merger and other transactions contemplated hereby shall be paid by
the party incurring such cost or expense, except that the filing fees in
connection with the filings required under the HSR Act and the 1935 Act
shall be paid by NEES.
7.11 Brokers or Finders. EUA represents, as to itself and its
affiliates, that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any broker's, finder's or
investment banker's fee or any other commission or similar fee in
connection with the Merger and other transactions contemplated by this
Agreement except Salomon Smith Barney Inc., whose fees and expenses will be
paid by EUA in accordance with EUA's agreement with such firm, and EUA
shall indemnify and hold NEES harmless from and against any and all claims,
liabilities or obligations with respect to any other such fee or commission
or expenses related thereto asserted by any person on the basis of any act
or statement alleged to have been made by EUA or its affiliates.
7.12 Anti-Takeover Statutes. If any "fair price", "moratorium",
"business combination", "control share acquisition" or other form of
anti-takeover statute or regulation shall become applicable to the Merger
or other transactions contemplated hereby, EUA and the members of the Board
of Trustees of EUA shall grant such approvals and take such actions
consistent with their fiduciary duties and in accordance with applicable
law as are reasonably necessary so that the Merger and other transactions
contemplated hereby may be consummated as promptly as practicable on the
terms contemplated hereby and otherwise act to eliminate or minimize the
effects of such statute or regulation on the Merger and other transactions
contemplated hereby.
7.13 Public Announcements. Except as otherwise required by law or the
rules of any applicable securities exchange or national market system or
any other Regulatory Authority, so long as this Agreement is in effect,
NEES and EUA will not, and will not permit any of their respective
Subsidiaries or Representatives to, issue or cause the publication of any
press release or make any other public announcement with respect to the
Merger and other transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be unreasonably
withheld. NEES and EUA will cooperate with each other in the development
and distribution of all press releases and other public announcements with
respect to the Merger and other transactions contemplated hereby, and will
furnish the other with drafts of any such releases and announcements as far
in advance as practicable.
7.14 Restructuring of the Merger. It may be preferable to effectuate
a business combination between NEES and EUA by means of an alternative
structure to the Merger. Accordingly, if, prior to satisfaction of the
conditions contained in Article VIII hereto, NEES proposes the adoption of
an alternative structure that otherwise substantially preserves for NEES
and EUA the economic benefits of the Merger and will not materially delay
the consummation thereof, then the parties shall use their respective best
efforts to effect a business combination among themselves by means of a
mutually agreed upon structure other than the Merger that so preserves such
benefits; provided, however, that prior to closing any such restructured
transaction, all material third party and Governmental Authority
declarations, filings, registrations, notices, authorizations, consents or
approvals necessary for the effectuation of such alternative business
combination shall have been obtained and all other conditions to the
parties' obligations to consummate the Merger and other transactions
contemplated hereby, as applied to such alternative business combination,
shall have been satisfied or waived.
ARTICLE VIII
CONDITIONS
8.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger and other
transactions contemplated hereby is subject to the satisfaction or waiver,
at or prior to the Closing, of each of the following conditions:
(a) Shareholder Approval. EUA Shareholders' Approval shall
have been obtained.
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under HSR shall have expired
or been terminated.
(c) Injunctions or Restraints. No court of competent
jurisdiction or other competent Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any law or order (whether
temporary, preliminary or permanent) which is then in effect and has the
effect of making illegal or otherwise restricting, preventing or
prohibiting consummation of the Merger or other transactions contemplated
hereby.
(d) Governmental and Regulatory and Other Consents and
Approvals. The NEES Required Statutory Approvals and EUA Required Statutory
Approvals shall have been obtained prior to the Effective Time, and shall
have become Final Orders (as hereinafter defined). The Final Orders shall
not, individually or in the aggregate, impose terms and conditions that (i)
could reasonably be expected to have an EUA Material Adverse Effect; (ii)
could reasonably be expected to have a NEES Material Adverse Effect; or
(iii) materially impair the ability of the parties to complete the Merger.
The parties shall have received Final Orders from the Massachusetts
Department of Telecommunications and Energy and the Rhode Island Public
Utilities Commission pertaining to the recovery of costs (including,
without limitation, transaction premium and integration costs) associated
with the Merger that are materially consistent with existing policy and
previous orders of such agencies. "Final Order" for all purposes of this
Agreement means action by the relevant regulatory authority which has not
been reversed, stayed, enjoined, set aside, annulled or suspended with
respect to which any waiting period prescribed by law before the Merger and
other transactions contemplated hereby may be consummated has expired, and
as to which all conditions to be satisfied before the consummation of such
transactions prescribed by law, regulation or order have been satisfied.
8.02 Conditions to Obligation of NEES and LLC to Effect the Merger.
The obligation of NEES and LLC to effect the Merger and other transactions
contemplated hereby is further subject to the satisfaction or waiver at or
prior to the Closing, of each of the following additional conditions (all
or any of which may be waived in whole or in part by NEES and LLC in the
sole discretion):
(a) Representations and Warranties. The representations and
warranties made by EUA in this Agreement, in each case made as if none of
such representations or warranties contained any qualification or
limitation as to "materiality" or "EUA Material Adverse Effect", shall be
true and correct as so made as of the Closing Date as though so made on and
as of the Closing Date, except to the extent expressly given as of a
specified date, except where the failure of such representations and
warranties to be true and correct as so made does not have and could not
reasonably be expected to have, individually or in the aggregate, an EUA
Material Adverse Effect, and EUA shall have delivered to NEES a
certificate, dated the Closing Date and executed in the name and on behalf
of EUA by its Chairman of the Board, President or any Executive or Senior
Vice President, to such effect.
(b) Performance of Obligations. EUA shall have performed and
complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with
by EUA at or prior to the Closing, and EUA shall have delivered to NEES a
certificate, dated the Closing Date and executed in the name and on behalf
of EUA by its Chairman of the Board, President or any Executive or Senior
Vice President, to such effect.
(c) Material Adverse Effect. No EUA Material Adverse Effect
shall have occurred and there shall exist no facts or circumstances which
in the aggregate could reasonably be expected to have an EUA Material
Adverse Effect.
(d) EUA Required Consents. All EUA Required Consents shall have
been obtained by EUA, except where the failure to receive such EUA Required
Consents could not reasonably be expected to (i) have an EUA Material
Adverse Effect, or (ii) delay or prevent the consummation of the Merger and
other transactions contemplated hereby.
8.03 Conditions to Obligation of EUA to Effect the Merger. The
obligation of EUA to effect the Merger and other transactions contemplated
hereby is further subject to the satisfaction or waiver, at or prior to the
Closing, of each of the following additional conditions (all or any of
which may be waived in whole or in part by EUA in its sole discretion):
(a) Representations and Warranties. The representations and
warranties made by NEES and LLC in Sections 5.01, 5.02, 5.03, 5.04, 5.05,
5.07, 5.08 and 5.09 of this Agreement, in each case made as if none of such
representations or warranties contained any qualification or limitation as
to "materiality" or "NEES Material Adverse Effect," shall be true and
correct as so made as of the Closing Date, except to the extent expressly
given as of a specified date and except where the failure of such
representations and warranties to be so true and correct as so made does
not have and could not reasonably be expected to have, individually or in
the aggregate, a NEES Material Adverse Effect or a material adverse effect
on LLC, and NEES and LLC shall each have delivered to EUA a certificate,
dated the Closing Date and executed in the name and on behalf of NEES by
any director of NEES and in the name and on behalf of LLC by a member of
its management committee its Chairman of the Board, President or any
Executive or Senior Vice President to such effect.
(b) NEES Required Consents. All NEES Required Consents shall
have been obtained by NEES, except where the failure to receive such NEES
Required Consents could not reasonably be expected to (i) have a NEES
Material Adverse Effect or (ii) delay or prevent the consummation of the
Merger and other transactions contemplated hereby.
(c) Performance of Obligations. NEES and LLC shall have
performed and complied with, in all material respects, each agreement,
covenant and obligation required by this Agreement to be so performed or
complied with by NEES or LLC at or prior to the Closing, and NEES and LLC
shall each have delivered to EUA a certificate, dated the Closing Date and
executed in the name and on behalf of NEES by its Chairman of the Board,
President or any Executive or Senior Vice President, or on behalf of LLC by
a member of its management committee to such effect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.01 Termination. This Agreement may be terminated, and the Merger
and other transactions contemplated hereby may be abandoned, at any time
prior to the Effective Time, whether prior to or after EUA Shareholders'
Approval (except as otherwise provided in Section 9.01(c) below):
(a) By mutual written agreement of the Board of Directors of
NEES and Board of Trustees of EUA, respectively;
(b) By EUA or NEES, by written notice to the other, if the
Closing Date shall not have occurred on or before December 31, 1999 (the
"Initial Termination Date"); provided, however, that the right to terminate
the Agreement under this Section 9.01(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on
or before such date; and provided, further, that if on the Initial
Termination Date the conditions to the Closing set forth in Section 8.01(d)
shall not have been fulfilled but all other conditions to the Closing shall
be fulfilled or shall be capable of being fulfilled, then the Initial
Termination Date shall be extended for four (4) months beyond the Initial
Termination Date (the "Extended Termination Date");
(c) By NEES, by written notice to EUA, if EUA Shareholders'
Approval shall not have been obtained at a duly held meeting of such
Shareholders, including any adjournments thereof;
(d) By EUA or NEES, if any applicable state or federal law or
applicable law of a foreign jurisdiction or any order, rule or regulation
is adopted or issued that has the effect, as supported by the written
opinion of outside counsel for such party, of prohibiting the Merger or
other transactions contemplated hereby, or if any court of competent
jurisdiction or any Governmental Authority shall have issued a
nonappealable final order, judgment or ruling or taken any other action
having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger or other transactions contemplated hereby (provided
that the right to terminate this Agreement under this Section 9.01(d) shall
not be available to any party that has not defended such lawsuit or other
legal proceeding (including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Authority
vacated or reversed)).
(e) By EUA upon ten (10) days' prior notice to NEES if the
Board of Trustees of EUA determines in good faith, that termination of this
Agreement is necessary for the Board of Trustees of EUA to act in a manner
consistent with its fiduciary duties to Shareholders under applicable law
by reason of an unsolicited Alternative Proposal meeting the requirements
of clauses (A) and (B) of Section 7.08 having been made; provided that
(A) The Board of Trustees of EUA shall determine
based on advice of outside counsel with respect to the Board of
Trustees' fiduciary duties that notwithstanding a binding
commitment to consummate an agreement of the nature of this
Agreement entered into in the proper exercise of its applicable
fiduciary duties, and notwithstanding all concessions which may
be offered by NEES in negotiation entered into pursuant to
clause (B) below, it is necessary pursuant to such fiduciary
duties that the trustees reconsider such commitment as a result
of such Alternative Proposal, and
(B) prior to any such termination, EUA shall, and
shall cause its respective financial and legal advisors to,
negotiate with NEES to make such adjustments in the terms and
conditions of this Agreement as would enable EUA to proceed
with the Merger or other transactions contemplated hereby on
such adjusted terms;
and provided further that EUA's ability to terminate this Agreement
pursuant to this Section 9.01(e) is conditioned upon the concurrent payment
by EUA to NEES of any amounts owed by it pursuant to Section 9.03(a);
(f) By EUA, by written notice to NEES, if (i) there shall have
been any material breach of any representation or warranty, or any material
breach of any covenant or agreement, of NEES hereunder (other than a breach
described in clause (ii)), and such breach shall not have been remedied
within twenty (20) days after receipt by NEES of notice in writing from
EUA, specifying the nature of such breach and requesting that it be
remedied; or (ii) NEES shall fail to deliver or cause to be delivered the
amount of cash to the Paying Agent required pursuant to Section 2.02(a) at
a time when all conditions to NEES's obligation to close have been
satisfied or otherwise waived in writing by NEES.
(g) By NEES, by written notice to EUA, if (i) there shall have
been any material breach of any representation or warranty, or any material
breach of any covenant or agreement, of EUA hereunder, and such breach
shall not have been remedied within twenty (20) days after receipt by EUA
of notice in writing from NEES, specifying the nature of such breach and
requesting that it be remedied; or (ii) the Board of Trustees of EUA (A)
shall withdraw or modify in any manner adverse to NEES its approval of the
Merger and other transactions contemplated hereby or its recommendation to
its shareholders regarding the approval of this Agreement, the Merger and
other transactions contemplated hereby, (B) shall approve or recommend or
take no position with respect to an Alternative Proposal or (C) shall
resolve to take any of the actions specified in clause (A) or (B).
9.02 Effect of Termination. If this Agreement is validly terminated
by either EUA or NEES pursuant to Section 9.01, this Agreement shall
forthwith become null and void and there shall be no liability or
obligation on the part of either EUA or NEES (or any of their respective
Representatives or affiliates), except that the provisions of this Section
9.02, Sections 7.10, 7.11 and 7.13, Section 9.03 and Sections 10.09 and
10.10 shall continue to apply following any such termination.
9.03 Termination Fees. (a) In the event that (i) this Agreement is
terminated by EUA pursuant to Section 9.01(e) or (ii) any person or group
shall have made an Alternative Proposal that has not been withdrawn and
this Agreement is terminated by (A) NEES pursuant to Section 9.01(c) or
Section 9.01(g) or (B) by EUA pursuant to Section 9.01(b) and, in the case
of this clause (ii) only, a definitive agreement with respect to such
Alternative Proposal is executed within two years after such termination,
then EUA shall pay to NEES, by wire transfer of same day funds, either on
the date contemplated in Section 9.01(e) if applicable, or otherwise,
within five (5) business days after such termination, a termination fee of
$20 million, plus an amount equal to all documented out-of-pocket expenses
and fees incurred by NEES arising out of, or in connection with or related
to, the Merger and other transactions contemplated hereby, not in excess of
$5 million in the aggregate.
(b) In the event that this Agreement is terminated by either
NEES or EUA pursuant to Section 9.01(b) and at the time of such termination
(i) the conditions to the Closing set forth in Section 8.01(d) shall not
have been fulfilled, (ii) if the date of termination is any date other than
a date which is on or after the Extended Termination Date, all conditions
contained in Article VIII other than Sections 8.01(d) or 8.03(c) shall have
been fulfilled or are capable of being fulfilled as of such date, and (iii)
the merger contemplated by the National Grid Merger Agreement has not yet
been consummated, then NEES shall pay to EUA, by wire transfer of same day
funds, within five (5) business days after such termination, a termination
fee of $10 million, plus an amount equal to all documented out-of-pocket
expenses and fees incurred by EUA arising out of, or in connection with or
related to, the Merger and other transactions contemplated hereby, not in
excess of $5 million in the aggregate.
(c) Nature of Fees. The parties agree that the agreements
contained in this Section 9.03 are an integral part of the Merger and the
other transactions contemplated hereby and constitute liquidated damages
and not a penalty. The parties further agree that if any party is or
becomes obligated to pay a termination fee pursuant to Sections 9.03(a) or
(b), the right to receive such termination fee shall be the sole remedy of
the other party with respect to the facts and circumstances giving rise to
such payment obligation. If this Agreement is terminated by a party as a
result of a willful breach of a representation, warranty, covenant or
agreement by the other party, including a termination pursuant to Section
9.01(f)(ii), the non-breaching party may pursue any remedies available to
it at law or in equity and shall be entitled to recover any additional
amounts thereunder. Notwithstanding anything to the contrary contained in
this Section 9.03, if one party fails to promptly pay to the other any fee
or expense due under this Section 9.03, in addition to any amounts paid or
payable pursuant to such Section, the defaulting party shall pay the costs
and expenses (including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee at
the publicly announced prime rate of Citibank, N.A. from the date such fee
was required to be paid.
9.04 Amendment. This Agreement may be amended, supplemented or
modified by action taken by or on behalf of the Board of Directors of NEES
or the Board of Trustees of EUA at any time prior to the Effective Time,
whether prior to or after EUA Shareholders' Approval shall have been
obtained, but after such adoption and approval only to the extent permitted
by applicable law. No such amendment, supplement or modification shall be
effective unless set forth in a written instrument duly executed and
delivered by or on behalf of each party hereto.
9.05 Waiver. At any time prior to the Effective Time, NEES or EUA, by
action taken by or on behalf of its Board of Directors or Board of
Trustees, respectively, may to the extent permitted by applicable law (i)
extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other parties hereto contained herein
or in any document delivered pursuant hereto or (iii) waive compliance with
any of the covenants, agreements or conditions of the other parties hereto
contained herein. No such extension or waiver shall be effective unless set
forth in a written instrument duly executed by or on behalf of the party
extending the time of performance or waiving any such inaccuracy or
non-compliance. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed
as a waiver of the same or any other term or condition of this Agreement on
any future occasion.
ARTICLE X
GENERAL PROVISIONS
10.01 Non-Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall not survive the Merger but shall terminate at the Effective
Time, except for the agreements contained in Article I and Article II, in
Sections 7.05, 7.06, 7.08, 7.09 and 7.10, this Article X which shall
survive the Effective Time.
10.02 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given
only if delivered personally or by facsimile transmission or sent by
overnight courier (providing proof of delivery) to the parties at the
following addresses or facsimile numbers:
If to NEES or LLC, to:
New England Electric System
25 Research Drive
Westborough, MA 01582
Attn: Richard P. Sergel
President and Chief Executive Officer
Telephone: (508) 389-2764
Facsimile: (508) 366-5498
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attn: Sheldon S. Adler, Esq.
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
If to EUA, to:
Eastern Utilities Associates
One Liberty Square
Boston, MA 02109
Attn: Donald G. Pardus
Chairman and Chief Executive Officer
Telephone: (617) 357-9590
Facsimile: (617) 357-7320
with a copy to:
Winthrop, Stimson, Putnam & Roberts
1 Battery Park Plaza
New York, NY 10004
Attn: David P. Falck
Telephone: (212) 858-1000
Facsimile: (212) 858-1500
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be deemed
given upon delivery, (ii) if delivered by facsimile transmission to the
facsimile number as provided in this Section, be deemed given when sent,
provided that the facsimile is promptly confirmed by telephone confirmation
thereof, and (iii) if delivered by mail in the manner described above to
the address as provided in this Section, be deemed given one business day
after delivery (in each case regardless of whether such notice, request or
other communication is received by any other person to whom a copy of such
notice, request or other communication is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by
giving notice specifying such change to the other parties hereto.
10.03 Entire Agreement; Incorporation of Exhibits. (a) This Agreement
supersedes all prior discussions and agreements, both written and oral,
among the parties hereto with respect to the subject matter hereof, other
than the Confidentiality Agreement, which shall survive the execution and
delivery of this Agreement in accordance with its terms, and contains,
together with the Confidentiality Agreement, the sole and entire agreement
among the parties hereto with respect to the subject matter hereof.
(b) The EUA Disclosure Letter, the NEES Disclosure Letter and
any Exhibit attached to this Agreement and referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
10.04 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and except as provided in
Article II and Sections 7.04, 7.05(d)(ii) and 7.09 (which is intended to be
for the benefit of the persons entitled to therein, and may be enforced by
any of such persons), it is not the intention of the parties to confer
third-party beneficiary rights upon any other person.
10.05 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned, in whole or in
part, by operation of law or otherwise, by any party hereto without the
prior written consent of the other parties hereto and any attempt to do so
will be void, except that LLC may assign any or all of its rights,
interests and obligations hereunder to another direct or indirect wholly
owned Subsidiary of NEES, provided that any such Subsidiary agrees in
writing to be bound by all of the terms, conditions and provisions
contained herein and provided further that such assignment (i) does not
require a greater vote for EUA's Shareholder Approval, (ii) does not
require a subsequent vote following EUA's Shareholders Meeting, or (iii) is
not reasonably likely to materially delay or prevent EUA, LLC and NEES, as
appropriate, from obtaining EUA Required Statutory Approvals, EUA Required
Consents, EUA Shareholders' Approval, the NEES Required Shareholders'
Approvals, or the NEES Required Consents. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and
assigns.
10.06 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define, modify or
limit the provisions hereof.
10.07 Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law or
order, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (i) such
provision will be fully severable, (ii) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had
never comprised a part hereof, and (iii) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by
the illegal, invalid or unenforceable provision or by its severance
herefrom.
10.08 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
10.09 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement was not performed in accordance with its specified terms or
was otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of competent jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
10.10 Certain Definitions. As used in this Agreement:
(a) except as provided in Section 4.14, the term "affiliate,"
as applied to any person, shall mean any other person directly or
indirectly controlling, controlled by, or under common control with, that
person; for purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as applied to any person, means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of that person, whether through the ownership
of voting securities, by contract or otherwise;
(b) a person will be deemed to "beneficially" own securities if
such person would be the beneficial owner of such securities under Rule
13d-3 under the Exchange Act, including securities which such person has
the right to acquire (whether such right is exercisable immediately or only
after the passage of time);
(c) the term "business day" means a day other than Saturday,
Sunday or any day on which banks located in the Massachusetts are
authorized or obligated to close;
(d) the term "knowledge" or any similar formulation of
"knowledge" shall mean, with respect to any party hereto, the actual
knowledge after due inquiry of the executive officers of NEES and its
Subsidiaries or EUA and its Subsidiaries, respectively, set forth in
Section 10.11(d) of the NEES Disclosure Letter or Section 10.11(d) of the
EUA Disclosure Letter; provided that as used in Section 4.13 the term
"knowledge" shall also include the knowledge of the environmental, health
and safety personnel of EUA;
(e) the term "person" shall include individuals, corporations,
partnerships, trusts, limited liability companies, other entities and
groups (which term shall include a "group" as such term is defined in
Section 13(d)(3) of the Exchange Act);
(f) the "Representatives" of any entity shall have the same
meaning as set forth in the Confidentiality Agreement;
(g) the term "Subsidiary" means any corporation or other
entity, whether incorporated or unincorporated, in which such party
directly or indirectly owns at least a majority of the voting power
represented by the outstanding capital stock or other voting securities or
interests having voting power under ordinary circumstances to elect a
majority of the directors or similar members of the governing body, or
otherwise to direct the management and policies, or such corporation or
entity.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument and will become
effective when one or more counterparts have been signed by each party and
delivered to the other parties.
10.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
IN WITNESS WHEREOF, each party hereto has caused this Agreement
to be signed by its officer thereunto duly authorized as of the date first
above written.
NEW ENGLAND ELECTRIC SYSTEM
By: /s/ Richard P. Sergel
--------------------------
Name: Richard P. Sergel
Title: President and CEO
The name "New England Electric System" means the trustee or trustees for
the time being (as trustee or trustees but not personally) under an
Agreement and Declaration of Trust dated January 2, 1926, as amended, which
is hereby referred to, and a copy of which, as amended, has been filed with
the Secretary of the Commonwealth of Massachusetts. Any agreement,
obligation, or liability made, entered into, or incurred by or on behalf of
New England Electric System binds only its trust estate, and no
shareholder, director, trustee, officer, or agent thereof assumes or shall
be held to any liability therefor.
EASTERN UTILITIES ASSOCIATES
By: /s/ Donald G. Pardus
------------------------
Name: Donald G. Pardus
Title: Chairman
The name "Eastern Utilities Associates" is the designation of the Trustees
of EUA for the time being in their collective capacity but not personally,
under a Declaration of Trust dated April 2, 1928, as amended, a copy of
which amended Declaration of Trust has been filed in the office of the
Secretary of The Commonwealth of Massachusetts and elsewhere as required by
law; and all persons dealing with EUA must look solely to the trust
property for the enforcement of any claim against EUA, as neither the
Trustees nor the officers or shareholders of EUA assume any personal
liability for obligations entered into on behalf of EUA.
RESEARCH DRIVE LLC
By: /s/ John G. Cochrane
--------------------------
Name: John G. Cochrane
Title: Manager
EXHIBIT 99(b)
FOR RELEASE: Feb. 1, 1999, 6:00 am
CONTACTS:
NEES EUA
Investors: Investors:
Bob Seega, 508-389-2178 Clifford J. Hebert, 617-357-9590
Media: Media:
Cathy Fair, 508-389-3102 Fred Mason, 508-559-2000 x3662
NEES AND EUA TO MERGE IN $634-MILLION TRANSACTION
Industry Restructuring-Driven Consolidation Continues
WESTBOROUGH, Mass., Feb. 1, 1999 In the latest consolidation driven
by the restructuring of the region's electricity industry, New England
Electric System (NYSE:NES) and Eastern Utilities Associates (NYSE:EUA)
announced today that they have signed a merger agreement under which NEES
will acquire all outstanding shares of EUA for $31 per share in cash,
subject to upward adjustment, as described later.
The merger agreement values the equity of EUA at approximately $634
million and represents a 23% premium above the price of EUA shares on Dec.
4, 1998 (the last trading day before other regional merger announcements
affected EUA's share price), and a 5% premium above the closing price on
Jan. 29, 1999.
NEES is New England's second largest electric utility, serving 1.3
million customers through its regulated electric companies in
Massachusetts, Rhode Island and New Hampshire. The company announced on
Dec. 14, 1998, that it will merge with National Grid Group plc, the world's
largest independent transmission company, which is based in Coventry,
England. Upon completion of that merger, NEES will become a wholly owned
subsidiary of National Grid.
The NEES/EUA merger is not contingent upon the NEES/National Grid
merger closing, but has the full support of National Grid, according to
Rick Sergel, president and chief executive officer of NEES.
EUA is a Boston-based public utility holding company whose
subsidiaries include electric transmission and distribution utilities in
southeastern Massachusetts and northern and south coastal Rhode Island.
These utilities provide electric service to approximately 300,000
customers.
Upon completion of the merger, EUA's operations will be merged into
NEES's. The combined company will serve 1.6 million electricity customers
in 228 New England communities. The new company will serve more
electricity customers in both Massachusetts and Rhode Island than any other
company.
NEES and EUA consistently have been the two lowest-cost, major
electric companies in the region. It is expected that the geographical fit
of the two companies will result in even greater efficiencies. The
companies expect to file a rate plan with state regulators in the near
future, which will maintain NEES's low rates, and bring EUA's rates to NEES
levels in the future.
"This merger of New England's two most cost-conscious electric
companies is a natural fit in philosophy, geography and corporate
structure," Sergel said. "Furthermore, it is the first step in fulfilling
the promise of the NEES/National Grid merger."
"EUA and NEES share a long history of providing customers with high-
quality service at low rates. The synergies between the two companies will
create an even stronger company for our customers," EUA Chairman and Chief
Executive Officer Donald G. Pardus said. "Equally important, NEES and EUA
customers will continue to receive the same great service from the same
people."
Sergel will be president and chief executive officer of the combined
company upon completion of the merger. Both Pardus and EUA President and
Chief Operating Officer John R. Stevens have opted to retire upon the
merger's completion. EUA board members will be offered positions on the
NEES Advisory Board, and Pardus and Sergel will appoint a transition team
representing both companies. EUA Executive Vice President Robert G.
Powderly will become president of New England Power Service Company, NEES's
subsidiary that provides administrative and support services to the other
subsidiaries.
"These are the logical steps to take to ensure a smooth transition as
EUA and NEES mesh into a larger, even more efficient, finely tuned
operation," Pardus said.
The combined company will have approximately 250 fewer positions.
"Our goal is to attain this through voluntary early retirement and
attrition," Sergel said. NEES will honor EUA's labor contracts.
The merger is subject to regulatory approvals by the Securities and
Exchange Commission, Federal Energy Regulatory Commission, Nuclear
Regulatory Commission, and the state utility commissions in Massachusetts
and Rhode Island. NEES expects to submit all principal regulatory filings,
related both to EUA and National Grid, this month. The merger also
requires approval by EUA shareholders. The merger is expected to be
completed by early 2000.
EUA shareholders will receive a cash payment of $31 for each share
held when the merger is completed. The cash payment will be subject to an
increase of $0.003 per share per day if the merger is not completed on or
before the date following six months after approval of the merger by EUA
shareholders.
NEES will finance the acquisition in part with cash received from the
sale of its generating business in September 1998.
EUA shareholders will continue to receive dividends at the current
level as declared by the EUA Board of Trustees, until closing of the
merger.
Merrill Lynch & Co., Inc. served as financial advisor and delivered a
fairness opinion to NEES, as did Salomon Smith Barney Inc. for EUA.
NEES is a public utility holding company headquartered in Westborough,
Mass. Massachusetts Electric Company serves 970,000 customers in 146
communities, and Nantucket Electric Company serves 10,000 customers on the
island of Nantucket. Narragansett Electric Company serves 330,000
customers in 27 Rhode Island communities, and Granite State Electric
Company serves 36,000 customers in 21 New Hampshire communities.
Information about NEES is available on the World Wide Web at
http://www.nees.com.
Unregulated NEES subsidiaries include AllEnergy, an energy marketing
company, and NEESCom, a telecommunications company. NEES subsidiaries
employ 3,200 people.
EUA is a public utility holding company headquartered in Boston,
Mass., whose shares are traded on the New York and Pacific Stock Exchanges.
Subsidiaries include Eastern Edison Co., which serves 184,000 customers in
22 communities; Blackstone Valley Electric Co., which serves 85,000
customers in 7 communities; and Newport Electric Corp., which serves 33,000
customers in 4 communities. Unregulated subsidiaries include EUA Cogenex
Corp. Together, the regulated and unregulated companies are known as the
EUA System. Information about EUA is available on the World Wide Web at
http://www.eua.com.
This news release may contain statements that are "forward looking
statements" under the federal securities law. Actual results could differ
materially from those discussed, and there can be no assurance that
estimates of future results can be achieved. For a list of factors that
could influence results, please refer to the earnings section of NEES's
Form 10-Q for the period ended Sept. 30, 1998. The NEES/EUA merger is also
subject to contingencies as discussed herein. The NEES/National Grid
merger is subject to the contingencies listed in NEES's Form 8-K dated Dec.
11, 1998.
