SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 8-K/A
Amendment No. 2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 14 , 1999
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Commission File Number 1-5324
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NORTHEAST UTILITIES
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(Exact name of registrant as specified in its charter)
MASSACHUSETTS 1-5324 04-2147929
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(State or other jurisdiction of (Commission (I.R.S.
Employer incorporation or organization) File No.)
Identification No.)
174 BRUSH HILL AVENUE, WEST SPRINGFIELD, MASSACHUSETTS 01090-0010
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (413) 785-
5871
(Former name or former address, if changed since last report) Not
Applicable
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
1. Agreement and Plan of Merger between Yankee Energy System, Inc. and
Northeast Utilities, dated as of June 15, 1999.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTHEAST UTILITIES
(registrant)
By: /S/ David R. McHale
David R. McHale
Vice President and Treasurer
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BETWEEN
YANKEE ENERGY SYSTEM, INC.
AND
NORTHEAST UTILITIES
dated as of June 14, 1999
AGREEMENT AND PLAN OF MERGER, dated as of June 14, 1999 (this
"Agreement"), between Yankee Energy System, Inc., a Connecticut corporation
(the "Company") and Northeast Utilities, a Massachusetts business trust
("Parent").
WHEREAS, the Company and Parent have determined to engage in a business
combination transaction on the terms stated herein;
WHEREAS, the Board of Directors of the Company and the Board of Trustees
of Parent have approved and deemed it advisable and in the best interests of
their respective shareholders to consummate the transactions contemplated
herein under which the businesses of the Company and Parent would be combined
by means of the merger of the Company with and into Merger Sub, a Connecticut
corporation to be formed by Parent prior to Closing (as defined below) as a
wholly-owned subsidiary of Parent ("Merger Sub"); and
WHEREAS, it is intended that the Merger (as defined below) shall
constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.01 THE MERGER. Upon the terms and subject to the conditions
of this Agreement: At the Effective Time (as defined in Section 1.03), the
Company shall be merged with and into Merger Sub (the "Merger") in accordance
with the laws of the State of Connecticut. Merger Sub shall be the surviving
corporation in the Merger and shall continue its corporate existence under
the laws of the State of Connecticut. The effects and the consequences of
the Merger shall be as set forth in Section 1.02. Throughout this Agreement,
the term "Merger Sub" shall refer to Merger Sub prior to the Merger and the
term "Surviving Corporation" shall refer to Merger Sub in its capacity as the
surviving corporation in the Merger.
Section 1.02 EFFECTS OF THE MERGER. At the Effective Time, (i) the
certificate of incorporation of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the certificate of incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
certificate of incorporation, except that the name of the Surviving
Corporation shall be "Yankee Energy System, Inc.," and (ii) the by-laws of
Merger Sub, as in effect immediately prior to the Effective Time, shall be
the by-laws of the Surviving Corporation until thereafter amended as provided
by law, the certificate of incorporation of the Surviving Corporation and
such by-laws. Subject to the foregoing, the additional effects of the Merger
shall be as provided in Section 33-820 of the Connecticut Business
Corporation Act (the "CBCA").
Section 1.03 EFFECTIVE TIME OF THE MERGER. On the Closing Date (as
defined in Section 3.01), with respect to the Merger, a certificate of merger
complying with Section 33-819 of the CBCA (the "Certificate of Merger") shall
be delivered to the Secretary of the State of Connecticut for filing. The
Merger shall become effective upon the filing of the Certificate of Merger,
or at such later date and time as may be set forth in the Certificate of
Merger (the "Effective Time").
Section 1.04 DIRECTORS. The directors of Merger Sub immediately prior
to the Effective Time and those persons listed in Section 1.04(a) of the
Parent Disclosure Schedule (as defined in Section 7.06(i)) shall be the
directors of the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the certificate of
incorporation and by-laws of the Surviving Corporation, or as otherwise
provided by the CBCA. In addition, in accordance with the Declaration of
Trust of Parent (the "Declaration of Trust"), the Board of Trustees of Parent
shall take such action as may be necessary to cause, at the next regularly
scheduled annual meeting of the shareholders of Parent, an increase of at
least two in the number of trustees authorized to serve as trustees on the
Board of Trustees of Parent and shall, as soon as practicable after the
Effective Time, elect as trustees, two directors of the Company designated by
the Parent and reasonably acceptable to the Company.
Section 1.05 OFFICERS. The officers of the Company immediately prior
to the Effective Time shall be the initial officers of, and shall hold the
same positions with, the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the certificate of
incorporation and by-laws of the Surviving Corporation, or as otherwise
provided by the CBCA.
Section 1.06 MERGER SUB. Parent shall cause Merger Sub to be formed
prior to the Closing Date as a wholly-owned subsidiary of Parent and to
fulfill the obligations of Merger Sub provided herein.
ARTICLE II
TREATMENT OF SHARES
Section 2.01 EFFECT OF THE MERGER ON CAPITAL STOCK. At the Effective
Time, by virtue of the Merger and without any action on the part of any
holder of any capital stock of the Company or Merger Sub:
(a) Shares of Merger Sub Stock. Each share of common stock, no par
value, of Merger Sub (the "Merger Sub Common Stock") that is issued and
outstanding immediately prior to the Effective Time shall remain outstanding
unchanged by reason of the Merger as one fully paid and nonassessable share
of common stock, no par value, of the Surviving Corporation.
(b) Cancellation of Certain Company Common Stock. Each share of
common stock, par value $5.00 per share, of the Company (the "Company Common
Stock") that is owned by the Company as treasury stock and all shares of
Company Common Stock that are owned by Parent shall be canceled and shall
cease to exist, and no stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to the provisions
of this Section 2.01, each share of Company Common Stock, other than
Dissenting Shares (as defined in Section 2.01(n)) and shares canceled
pursuant to Section 2.01(b), issued and outstanding immediately prior to the
Effective Time (other than shares held as treasury shares by the Company)
shall by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive (i) $45.00 in cash (as
such amount may be adjusted in accordance with Section 2.01(o) hereof, the
"Cash Consideration") or (ii) a number of validly issued, fully paid and
nonassessable shares of Parent Common Stock equal to the Exchange Ratio (as
defined below) (the "Stock Consideration") or (iii) the right to receive a
combination of cash and shares of Parent Common Stock determined in
accordance with this Section (the "Mixed Consideration"). The "Exchange
Ratio" shall be equal to the Cash Consideration divided by the Parent Share
Price (as defined below). The "Parent Share Price" shall be equal to the
average of the closing prices of the shares of Parent Common Stock on the New
York Stock Exchange ("NYSE") Composite Transactions Reporting System, as
reported in The Wall Street Journal, for the 20 trading days immediately
preceding the second trading day prior to the Effective Time.
(d) Cash Election. Subject to the immediately following sentence,
each record holder of shares of Company Common Stock immediately prior to the
Effective Time shall be entitled to elect to receive cash for all or any part
of such holder's shares of Company Common Stock (a "Cash Election").
Notwithstanding the foregoing and subject to Section 2.01(l), the aggregate
number of shares of Company Common Stock that may be converted into the right
to receive cash in the Merger (the "Cash Election Number") will be 55% of the
total number of shares of Company Common Stock issued and outstanding as of
the close of business on the third trading day prior to the Effective Time.
Cash Elections shall be made on a form designed for that purpose (a "Form of
Election"). A holder of record of shares of Company Common Stock who holds
such shares as nominee, trustee or in another representative capacity (a
"Representative") may submit multiple Forms of Election, provided that such
Representative certifies that each such Form of Election covers all the
shares of Company Common Stock held by such Representative for a particular
beneficial owner.
(e) Cash Election Shares. If the aggregate number of shares of
Company Common Stock covered by Cash Elections (the "Cash Election Shares")
exceeds the Cash Election Number, each Cash Election Share shall be converted
into (i) the right to receive an amount in cash, without interest, equal to
the product of (a) the Cash Consideration and (b) a fraction (the "Cash
Fraction"), the numerator of which shall be the Cash Election Number and the
denominator of which shall be the total number of Cash Election Shares, and
(ii) a number of shares of Parent Common Stock equal to the product of (a)
the Exchange Ratio and (b) a fraction equal to one minus the Cash Fraction.
(f) Stock Election. Subject to the immediately following sentence,
each record holder of shares of Company Common Stock immediately prior to the
Effective Time shall be entitled to elect to receive shares of Parent Common
Stock for all or any part of such holder's shares of Company Common Stock (a
"Stock Election"). Notwithstanding the foregoing and subject to Section
2.01(l), the aggregate number of shares of Company Common Stock that may be
converted into the right to receive shares of Parent Common Stock in the
Merger (the "Stock Election Number") shall be 45% of the total number of
shares of Company Common Stock issued and outstanding as of the close of
business on the third trading day prior to the Effective Time. Stock
Elections shall be made on a Form of Election. A Representative may submit
multiple Forms of Election, provided that such Representative certifies that
each such Form of Election covers all the shares of Company Common Stock held
by such Representative for a particular beneficial owner.
(g) Stock Election Shares. If the aggregate number of shares of
Company Common Stock covered by Stock Elections (the "Stock Election Shares")
exceeds the Stock Election Number, each Stock Election Share shall be
converted into (i) the right to receive a number of shares of Parent Common
Stock, equal to the product of (a) the Exchange Ratio and (b) a fraction (the
"Stock Fraction"), the numerator of which shall be the Stock Election Number
and the denominator of which shall be the total number of Stock Election
Shares, and (ii) an amount in cash, without interest, equal to the product of
(a) the Cash Consideration and (b) a fraction equal to one minus the Stock
Fraction.
(h) Mixed Election. Subject to the immediately following sentence,
each record holder of shares of Company Common Stock immediately prior to the
Effective Time shall be entitled to elect to receive shares of Parent Common
Stock for part of such holder's shares of Company Common Stock and cash for
the remaining part of such holder's shares of Company Common Stock (the
"Mixed Election" and, collectively with Stock Election and Cash Election, the
"Election"). Mixed Elections shall be made on a Form of Election. A
Representative may submit multiple Forms of Election, provided that such
Representative certifies that each such Form of Election covers all the
shares of Company Common Stock held by such Representative for a particular
beneficial owner. With respect to each holder of Company Common Stock who
makes a Mixed Election, the shares of Company Common Stock such holder elects
to be converted into the right to receive Cash Consideration shall be treated
as Cash Election Shares for purposes of the provisions contained in Sections
2.01(d), (e) and (l), and the shares such holder elects to be converted into
the right to receive shares of Parent Common Stock shall be treated as Stock
Election Shares for purposes of the provisions contained in Sections 2.01(f),
(g) and (l).
(i) Form of Election. To be effective, a Form of Election must be
properly completed, signed and submitted to Parent's transfer agent and
registrar, as paying agent (the "Paying Agent"), and accompanied by the
certificates representing the shares of Company Common Stock ("Company
Certificates") as to which the election is being made (or by an appropriate
guarantee of delivery of such Company Certificate signed by a firm that is a
member of any registered national securities exchange or a member of the
National Association of Securities Dealers, Inc. or a bank, broker, dealer,
credit union, savings association or other entity that is a member in good
standing of the Securities Transfer Agent's Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program). Parent shall have the discretion, which it may delegate
in whole or in part to the Paying Agent, to determine whether Forms of
Election have been properly completed, signed and submitted or revoked and to
disregard immaterial defects in Forms of Election. The decision of Parent
(or the Paying Agent) in such matters shall be conclusive and binding.
Neither Parent nor the Paying Agent shall be under any obligation to notify
any person of any defect in a Form of Election submitted to the Paying Agent.
The Paying Agent shall also make all computations contemplated by this
Section 2.01, and all such computations shall be conclusive and binding on
the holders of shares of Company Common Stock.
(j) Deemed Non-Election. For the purposes hereof, a holder of
shares of Company Common Stock who does not submit a Form of Election that is
received by the Paying Agent prior to the Election Deadline (as defined in
Section 2.01(k)) (the "No Election Shares") shall be deemed not to have made
a Cash Election, Stock Election or Mixed Election. If Parent or the Paying
Agent shall determine that any purported Election was not properly made, the
shares subject to such improperly made Election shall be treated as No
Election Shares. No Election Shares may be treated by the Company, in its
sole discretion, as Cash Election Shares or Stock Election Shares.
(k) Election Deadline. Parent and the Company shall each use its
best efforts to cause copies of the Form of Election to be mailed to the
record holders of Company Common Stock not less than thirty days prior to the
Effective Time and to make the Form of Election available to all persons who
become record holders of Company Common Stock subsequent to the date of such
mailing and no later than the close of business on the seventh business day
prior to the Effective Time. A Form of Election must be received by the
Paying Agent by 5:00 p.m., New York City time, on the second day after the
Effective Time, unless extended by the Company (the "Election Deadline") in
order to be effective. All elections may be revoked until the Election
Deadline in writing by the record holders submitting Forms of Election.
(l) Adjustment Per Tax Opinion. Notwithstanding anything in this
Article II to the contrary (other than the last sentence of Section 2.01(m)),
the number of shares of Company Common Stock to be converted into the right
to receive the Stock Consideration in the Merger shall be not less than that
number which would cause the ratio of (i) the closing price per share of
Parent Common Stock on the Closing Date times the aggregate number of shares
of Parent Common Stock to be issued as Stock Consideration pursuant to
Section 2.01(c), to (ii) the sum of (v) the amount set forth in the preceding
clause (i) plus (w) the aggregate Cash Consideration to be issued pursuant to
Section 2.01(c) plus (x) the number of Dissenting Shares times the per share
fair value of such shares determined pursuant to Section 2.01(n) of this
Agreement or, if such fair value has not been determined as of the date the
calculation required by this Section 2.01(l) is required to be made, then
times the per share Cash Consideration, plus (y) any other amounts paid by
the Company (or any affiliate thereof) to, or on behalf of, any Company
shareholder in connection with the sale, redemption or other disposition of
any Company stock in connection with the Merger for purposes of Treasury
Regulation Sections 1.368-1(e) and 1.368-1T(e) plus (z) any extraordinary
dividend distributed by the Company prior to and in connection with the
Merger for purposes of Treasury Regulation Sections 1.368-1(e) and 1.368-
1T(e), to be 45%. To the extent the application of this Section 2.01(l)
results in the number of shares of Company Common Stock to be converted into
the right to receive the Stock Consideration in the Merger being increased,
the number of such shares to be converted into the right to receive the Cash
Consideration will be decreased.
(m) Anti-Dilution Provisions. In the event Parent (i) changes (or
establishes a record date for changing) the number of shares of Parent Common
Stock issued and outstanding prior to the Effective Time as a result of a
stock split, stock dividend, stock combination, recapitalization,
reclassification, reorganization or similar transaction with respect to the
outstanding Parent Common Stock or (ii) pays or makes an extraordinary
dividend or distribution in respect of Parent Common Stock (other than a
distribution referred to in clause (i) of this sentence) and, in either case,
the record date therefor shall be prior to the Effective Time, the Merger
Consideration (as defined in Section 2.02(b)) shall be proportionately
adjusted. Regular quarterly cash dividends and increases thereon shall not be
considered extraordinary for purposes of the preceding sentence. If, between
the date hereof and the Effective Time, Parent shall merge or consolidate
with or into any other corporation (a "Business Combination") and the terms
thereof shall provide that Parent Common Stock shall be converted into or
exchanged for the shares of any other corporation or entity, then provision
shall be made so that shareholders of the Company who would be entitled to
receive shares of Parent Common Stock pursuant to this Agreement shall be
entitled to receive, in lieu of each share of Parent Common Stock issuable to
such shareholders as provided herein, the same kind and amount of securities
or assets as shall be distributable upon such Business Combination with
respect to one share of Parent Common Stock and (subject to the satisfaction
of the condition set forth in Section 8.03(f)) the parties hereto shall agree
on an appropriate restructuring of the transactions contemplated herein.
(n) Dissenting Shares. Each outstanding share of Company Common
Stock the holder of which has perfected his right to dissent under applicable
law and has not effectively withdrawn or lost such right as of the Effective
Time (the "Dissenting Shares") shall not be converted into or represent a
right to receive the Merger Consideration (as defined below), and the holder
thereof shall be entitled only to such rights as are granted by applicable
law; provided, however, that any Dissenting Share held by a person at the
Effective Time who shall, after the Effective Time, withdraw the demand for
payment for shares or lose the right to payment for shares, in either case
pursuant to the Business Corporation Law of the State of Connecticut, shall
be deemed to be converted into, as of the Effective Time, the right to
receive cash pursuant to Section 2.01(c) in the same manner as if such shares
were Cash Election Shares. The Company shall give Parent prompt notice upon
receipt by the Company of any such written demands for payment of the fair
value of such shares of Company Common Stock and of withdrawals of such
notice and any other instruments provided pursuant to applicable law. Any
payments made in respect of Dissenting Shares shall be made by the Surviving
Corporation.
(o) Adjustment in Amount of Cash 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 the Company Shareholders'
Approval (as defined in Section 4.13) is obtained (the "Adjustment Date"),
the Cash Consideration 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 or the Extended Termination Date (as defined in Section
9.01(b)), by an amount equal to $0.005.
Section 2.02 EXCHANGE OF CERTIFICATES.
(a) Deposit with Exchange Agent. As soon as practicable after the
Effective Time, the Surviving Corporation shall deposit with a bank or trust
company mutually agreeable to Parent and the Company (the "Exchange Agent"),
pursuant to an agreement in form and substance reasonably acceptable to
Parent and the Company an amount of cash and certificates representing shares
of Parent Common Stock required to effect the conversion of Company Common
Stock into Parent Common Stock and cash in accordance with Section 2.01(c).
(b) Exchange and Payment Procedures. As soon as practicable after
the Effective Time, Parent shall cause the Paying Agent to mail to each
holder of record as of the Effective Time of a certificate or certificates
representing shares of Company Common Stock (the "Certificates") that have
been converted pursuant to Section 2.01: (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon actual delivery of the Certificates to
the Paying Agent) and (ii) instructions for effecting the surrender of the
Certificates and receiving the Merger Consideration to which such holder
shall be entitled therefor pursuant to Section 2.01. Upon surrender of a
Certificate to the Paying Agent for cancellation, together with a duly
executed letter of transmittal and such other documents as the Paying Agent
may require, the holder of such Certificate shall be entitled to receive in
exchange therefor (i) a certificate representing that number of shares of
Parent Common Stock (the "Parent Shares") into which the shares of Company
Common Stock previously represented by such Certificate are converted in
accordance with Section 2.01(c), (ii) the cash to which such holder is
entitled in accordance with Section 2.01(c), and (iii) the cash in lieu of
fractional Parent Shares to which such holder has the right to receive
pursuant to Section 2.02(d) (the shares of Parent Common Stock and cash
described in clauses (i), (ii) and (iii) above being referred to collectively
as the "Merger Consideration"). In the event the Merger Consideration is to
be delivered to any person who is not the person in whose name the
Certificate surrendered in exchange therefor is registered in the transfer
records of the Company, the Merger Consideration may be delivered to a
transferee if the Certificate is presented to the Paying Agent, accompanied
by all documents required to evidence and effect such transfer and by
evidence satisfactory to the Paying Agent that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by this Section 2.02,
each Certificate (other than a certificate representing shares of Company
Common Stock to be canceled in accordance with Section 2.01(b)) shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration contemplated by this
Section 2.02. No interest will be paid or will accrue on any cash payable to
holders of Certificates pursuant to provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time
with respect to Parent Shares with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to
the Parent Shares represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section
2.02(d) until the holder of record of such Certificate shall surrender such
Certificate. Subject to the effect of unclaimed property, escheat and other
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole Parent
Shares issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Parent Common Stock to which such holder is entitled pursuant to Section
2.02(d) and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole Parent
Shares and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole Parent Shares.
(d) No Fractional Securities. In lieu of any such fractional
securities, each holder of Company Common Stock who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article II will be paid an amount
in cash (without interest) equal to such holder's proportionate interest in
the net proceeds from the sale or sales in the open market by the Exchange
Agent, on behalf of all such holders, of the aggregate fractional shares of
Parent Common Stock issued pursuant to this Article II. As soon as
practicable following the Effective Time, the Exchange Agent shall determine
the excess of (i) the number of full shares of Parent Common Stock delivered
to the Exchange Agent by Parent over (ii) the aggregate number of full shares
of Parent Common Stock to be distributed to holders of Company Common Stock
(such excess being herein called the "Excess Parent Common Shares"). The
Exchange Agent, as agent for the former holders of Company Common Stock,
shall sell the Excess Parent Common Shares at the prevailing prices on the
New York Stock Exchange (the "NYSE"); provided, however, that neither Parent
nor any person related to Parent within the meaning of Treasury Regulations
Section 1.368-1(c)(2) shall be permitted to acquire, directly or indirectly,
any such Excess Parent Common Shares. The sales of the Excess Parent Common
Shares by the Exchange Agent shall be executed on the NYSE through one or
more member firms of the NYSE and shall be executed in round lots to the
extent practicable. Parent shall pay all commissions, transfer taxes and
other out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent, incurred in connection with such sale of
Excess Parent Common Shares. Until the net proceeds of such sale have been
distributed to the former holders of Company Common Stock, the Exchange Agent
will hold such proceeds in trust for such former holders. As soon as
practicable after the determination of the amount of cash to be paid to
former holders of Company Common Stock in lieu of any fractional interests,
the Exchange Agent shall make available in accordance with this Agreement
such amounts to such former holders.
(e) Closing of Transfer Books. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged for certificates representing the appropriate number
of Parent Shares and the appropriate amount of cash as provided in Section
2.01 and in this Section 2.02.
(f) Termination of Exchange Agent. Any certificates representing
Parent Shares deposited with the Exchange Agent pursuant to Section 2.02(a)
and not exchanged within six months after the Effective Time pursuant to this
Section 2.02 shall be returned by the Exchange Agent to Parent, which shall
thereafter act as Exchange Agent. All funds held by the Exchange Agent for
payment to the holders of unsurrendered Certificates and unclaimed at the end
of one year from the Effective Time shall be returned to the Surviving
Corporation, after which time any holder of unsurrendered Certificates shall
look as a general creditor only to Parent for payment of such funds to which
such holder may be due, subject to applicable law.
(g) Escheat. The Company shall not be liable to any person for
such shares or funds delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Company Common
Stock such amounts as it is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of state, local
or foreign tax law. To the extent that amounts are so withheld by the
Surviving Corporation or the Parent, as the case may be, such withheld
amounts shall be treated for all purposes of the Agreement as having been
paid to the holder of the shares of Company Common Stock in respect of which
such deduction and withholding was made by the Surviving Corporation or
Parent, as the case may be.
ARTICLE III
THE CLOSING
Section 3.01 CLOSING. The closing of the Merger (the "Closing") shall
take place at the offices of Winthrop, Stimson, Putnam & Roberts, Stamford,
Connecticut, at 10:00 a.m., New York City time, on the second business day
immediately following the date on which the last of the conditions set forth
in Article VIII hereof is fulfilled or waived (other than conditions that by
their nature are required to be performed on the Closing Date, but subject to
satisfaction of such conditions), or at such other time and date and place as
the Company and Parent shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
Section 4.01 ORGANIZATION AND QUALIFICATION. Except as set forth in
Section 4.01 of the Company Disclosure Schedule (as defined in Section
7.06(ii)), the Company and each of its subsidiaries (as defined below) is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has all requisite
corporate power and authority, and has been duly authorized by all necessary
approvals and orders, to own, lease and operate its assets and properties to
the extent owned, leased and operated and to carry on its business as it is
now being conducted and is duly qualified and in good standing to do business
in each jurisdiction in which the nature of its business or the ownership or
leasing of its assets and properties makes such qualification necessary,
other than in such jurisdictions where the failure to be so qualified and in
good standing would not, when taken together with all other such failures,
reasonably be expected to have a material adverse effect on the business,
properties, financial condition or results of operations or prospects of the
Company and its subsidiaries taken as a whole or on the consummation of this
Agreement (any such material adverse effect being hereafter referred to as a
"Company Material Adverse Effect"). As used in this Agreement, the term
"subsidiary" of a person shall mean any corporation or other entity
(including partnerships and other business associations) of which a majority
of the outstanding capital stock or other voting securities having voting
power under ordinary circumstances to elect directors or similar members of
the governing body of such corporation or entity shall at the time be held,
directly or indirectly, by such person.
Section 4.02 SUBSIDIARIES. Section 4.02 of the Company Disclosure
Schedule sets forth a description as of the date hereof, of all material
subsidiaries and joint ventures of the Company, including the name of each
such entity, the state or jurisdiction of its incorporation or organization,
the Company's interest therein and a brief description of the principal line
or lines of business conducted by each such entity. As of the date hereof,
the Company is an exempt holding company under the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act"). Except as set forth in
Section 4.02 of the Company Disclosure Schedule, all of the issued and
outstanding shares of capital stock owned by the Company of each Company
subsidiary are validly issued, fully paid, nonassessable and free of
preemptive rights, and are owned, directly or indirectly, by the Company free
and clear of any liens, claims, encumbrances, security interests, equities,
charges and options of any nature whatsoever, and there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating any such subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating it to grant, extend or enter into
any such agreement or commitment, except for any of the foregoing that could
not reasonably be expected to have a Company Material Adverse Effect. As
used in this Agreement, the term "joint venture" of a person shall mean any
corporation or other entity (including partnerships and other business
associations) that is not a subsidiary of such person, in which such person
or one or more of its subsidiaries owns an equity interest, other than equity
interests held for passive investment purposes which are less than 10% of any
class of the outstanding voting securities or equity of any such entity.
Section 4.03 CAPITALIZATION. The authorized capital stock of the
Company consists of 20,000,000 shares of Company Common Stock. As of the
close of business on June 11, 1999 there were issued and outstanding
10,625,886 shares of Company Common Stock. All of the issued and outstanding
shares of the capital stock of the Company are validly issued, fully paid,
nonassessable and free of preemptive rights. Except as set forth in Section
4.03 of the Company Disclosure Schedule, as of the date hereof, there are no
outstanding subscriptions, options, calls, contracts, voting trusts, proxies,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating the Company
or any of the subsidiaries of the Company to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of the capital stock of
the Company, or obligating the Company to grant, extend or enter into any
such agreement or commitment.
Section 4.04 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to obtaining the Company
Shareholders' Approval (as defined in Section 4.13) and the Company Required
Statutory Approvals (as defined in Section 4.04(c)), to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Company subject to obtaining the Company
Shareholders' Approval. This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution
and delivery by the other signatories hereto, constitutes the valid and
binding obligations of the Company enforceable against it in accordance with
their terms.
(b) Non-Contravention. Except as set forth in Section 4.04(b) of
the Company Disclosure Schedule, the execution and delivery of this Agreement
by the Company do not, and the consummation of the transactions contemplated
hereby will not, violate, conflict with, or result in a breach of any
provision of, or constitute a default (with or without notice or lapse of
time or both) under, or result in a right of termination, cancellation, or
acceleration of any obligation under, or result in the creation of any lien,
security interest, charge or encumbrance ("Liens") upon any of the properties
or assets of the Company or any of its subsidiaries (any such violation,
conflict, breach, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation" with respect to the Company
(such term when used in Article V having a correlative meaning with respect
to Parent)) pursuant to any provisions of (i) the articles of organization,
by-laws or similar governing documents of the Company, any of its
subsidiaries or any of its joint ventures, (ii) subject to obtaining the
Company Required Statutory Approvals and the receipt of the Company
Shareholders' Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any
Governmental Authority (as defined in Section 4.04(c)) applicable to the
Company, any of its subsidiaries or any of its joint ventures, or any of
their respective properties or assets or (iii) subject to obtaining the
third-party consents or other approvals set forth in Section 4.04(b) of the
Company Disclosure Schedule (the "Company Required Consents") any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which the Company, any of its subsidiaries or any of its joint ventures is a
party or by which it or any of its properties or assets may be bound or
affected, excluding from the foregoing clauses (i), (ii) and (iii) such
Violations as would not reasonably be expected to have, in the aggregate, a
Company Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section 4.04(c)
of the Company Disclosure Schedule, no declaration, filing or registration
with, or notice to or authorization, consent or approval of, any court,
federal, state, local or foreign governmental or regulatory body (including a
stock exchange or other self-regulatory body) or authority (each, a
"Governmental Authority") is necessary for the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, the failure to obtain, make or give which
would reasonably be expected to have, in the aggregate, a Company Material
Adverse Effect (the "Company Required Statutory Approvals"), it being
understood that references in this Agreement to "obtaining" such Company
Required Statutory Approvals shall mean making such declarations, filings or
registrations, giving such notices, obtaining such authorizations, consents
or approvals and having such waiting periods expire, if any, as are necessary
to avoid a violation of law.
(d) Compliance. Except as set forth in Section 4.04(d) or Section
4.11 of the Company Disclosure Schedule, or as disclosed in the Company SEC
Reports (as defined in Section 4.05) filed prior to the date hereof, neither
the Company, nor any of its subsidiaries nor (to the best of its knowledge)
any of its joint ventures is in violation of or has been given notice of any
purported violation of, any law, statute, order, rule, regulation or judgment
(including, without limitation, any applicable Environmental Law, as defined
in Section 4.11(f)(ii)) of any Governmental Authority except for violations
that, in the aggregate, are not reasonably expected to have a Material
Adverse Effect. Except as set forth in Section 4.04(d) of the Company
Disclosure Schedule or in Section 4.11 of the Company Disclosure Schedule or
as disclosed in the Company SEC Reports, the Company and its subsidiaries
have all permits, licenses, franchises and other governmental authorizations,
consents and approvals necessary to conduct their respective businesses as
currently conducted in all respects, except those which the failure to obtain
would, in the aggregate, not reasonably be expected to have a Company
Material Adverse Effect. Except as set forth in Section 4.04(d) of the
Company Disclosure Schedule or as disclosed in the Company SEC Reports, the
Company and each of its subsidiaries are not in breach or violation of or in
default in the performance or observance of any term or provision of, and no
event has occurred which, with lapse of time or action by a third party,
could result in a default under, (i) its certificate of incorporation 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 it is bound or to which any of its property is
subject, except for breaches, violations or defaults that, in the aggregate,
are not reasonably expected to have a Company Material Adverse Effect.
(e) Except as set forth in Section 4.04(e) of the Company
Disclosure Schedule, there is no "non-competition" or other similar
consensual contract or agreement that restricts the ability of the Company or
any of its affiliates to conduct business in any geographic area or that
would reasonably be likely to restrict the Surviving Corporation or any of
its affiliates to conduct business in any geographic area.
Section 4.05 REPORTS AND FINANCIAL STATEMENTS. The filings required
to be made by the Company and its subsidiaries since September 30, 1996 under
the Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the 1935 Act, the
Federal Power Act, as amended (the "Power Act") and applicable state public
utility laws and regulations have been filed with the Securities and Exchange
Commission (the "SEC"), the Federal Energy Regulatory Commission (the "FERC")
or the appropriate state public utilities commission, as the case may be,
including all forms, statements, reports, exhibits and amendments
appertaining thereto, and complied, as of their respective dates, in all
material respects with all applicable requirements of the appropriate statute
and the rules and regulations thereunder. The Company has made available to
Parent a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by the Company with the SEC
since September 30, 1996 (as such documents have since the time of their
filing been amended, the "Company SEC Reports"). As of their respective
dates, the Company SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited consolidated
financial statements and unaudited interim financial statements of the
Company included in the Company SEC Reports (collectively, the "Company
Financial Statements") have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis ("GAAP") (except
as may be indicated therein or in the notes thereto and except with respect
to unaudited statements as permitted by Form 10-Q of the SEC) and fairly
present the consolidated financial position of the Company as of the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended. True and complete copies of the articles of organization
and by-laws of the Company, as in effect on the date hereof, have been made
available to Parent.
Section 4.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Company SEC Reports filed prior to the date hereof or as set
forth in Section 4.06 of the Company Disclosure Schedule, since September 30,
1998, the Company and each of its subsidiaries have conducted their business
only in the ordinary course of business consistent with past practice, and
there has not been, and no fact or condition exists which has or could
reasonably be expected to have, a Company Material Adverse Effect.
Section 4.07 LITIGATION. Except as disclosed in the Company SEC
Reports filed prior to the date hereof or as set forth in Section 4.07,
Section 4.09 or Section 4.11 of the Company Disclosure Schedule, (i) there
are no claims, suits, actions or proceedings, pending or threatened, nor are
there any investigations or reviews pending or threatened against, relating
to or affecting the Company or any of its subsidiaries, and (ii) there are no
judgments, decrees, injunctions, rules or orders of any court, governmental
department, commission, agency, instrumentality or authority or any
arbitrator applicable to the Company or any of its subsidiaries, except for
any of the foregoing under clauses (i) and (ii) that individually or in the
aggregate would not reasonably be expected to have a Company Material Adverse
Effect.
Section 4.08 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in (i) the registration statement on
Form S-4 to be filed with the SEC in connection with the issuance of shares
of Parent Common Stock in the Merger (the "Registration Statement") will, at
the time the Registration Statement becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the proxy statement, in definitive
form (the "Proxy Statement"), relating to the Company Special Meeting (as
defined below) shall, at the dates mailed to shareholders and at the time of
the Company Special Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they are made, not misleading; provided that no representation or warranty is
made by the Company with respect to statements made or incorporated by
reference in the Proxy Statement based on information supplied by Parent or
Merger Sub for inclusion or incorporation by reference therein. The
Registration Statement and the Proxy Statement, insofar as they relate to the
Company or any of its subsidiaries, shall comply as to form in all material
respects with the applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder.
Section 4.09 TAX MATTERS. "Taxes," as used in this Agreement, means
any federal, state, county, local or foreign taxes, charges, fees, levies or
other assessments, including, without limitation, all net income, gross
income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipts, capital stock,
production, business and occupation, disability, employment, payroll,
license, estimated, stamp, custom duties, severance or withholding taxes or
charges imposed by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any such taxes. "Tax
Return," as used in this Agreement, means a report, return or other written
information required to be supplied to a governmental entity with respect to
Taxes including, where permitted or required, combined or consolidated
returns for any group of entities that includes the Company or any of its
subsidiaries, on the one hand, or Parent or any of its subsidiaries, on the
other hand.
Except as disclosed in Section 4.09 of the Company Disclosure Schedule:
(a) Filing of Timely Tax Returns. The Company and each of its
subsidiaries have duly filed (or there has been filed on its behalf) within
the time prescribed by law all material Tax Returns required to be filed by
each of them under applicable law. All such Tax Returns were and are in all
material respects true, complete and correct.
(b) Payment of Taxes. The Company and each of its subsidiaries
have, within the time and in the manner prescribed by law, paid all material
Taxes that are currently due and payable except for those contested in good
faith and for which adequate reserves have been taken.
(c) Tax Reserves. The Company and its subsidiaries have
established 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 the
Company nor any of its subsidiaries have requested any extension of time
within which to file any material Tax Return, which Tax Return has not since
been filed.
(e) Waivers of Statute of Limitations. Neither the Company nor
any of its subsidiaries has in effect any extension, outstanding waivers or
comparable consents regarding the application of the statute of limitations
with respect to any material Taxes or material Tax Returns.
(f) Expiration of Statute of Limitations. The federal and state
income Tax Returns of the Company and each 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 1994, and no deficiency for any Taxes has been
proposed, asserted or assessed against the Company or any of its subsidiaries
that has not been resolved and paid in full except for those contested in
good faith and for which adequate reserves have been established.
(g) Audit, Administrative and Court Proceedings. No material
audits or other administrative proceedings are presently pending or
threatened with regard to any Taxes or Tax Returns of the Company or any of
its subsidiaries and no currently pending issue has been raised in writing by
any Tax authority in connection with any Tax or Tax Return (other than those
being contested in good faith and for which adequate reserves have been
established).
(h) Tax Rulings. Neither the Company nor any of its subsidiaries
has received a Tax Ruling (as defined below) or entered into a Closing
Agreement (as defined below) with any taxing authority that would have a
continuing adverse effect after the Closing Date. "Tax Ruling," as used in
this Agreement, shall mean a written ruling of a taxing authority relating to
Taxes. "Closing Agreement," as used in this Agreement, shall mean a written
and legally binding agreement with a taxing authority relating to Taxes.
(i) Availability of Tax Returns. The Company has provided or made
available to Parent complete and accurate copies of (i) all Tax Returns, and
any amendments thereto, filed by the Company or any of its subsidiaries
covering all years ending on or after December 31, 1993, (ii) all audit
reports received from any taxing authority relating to any Tax Return filed
by the Company or any of its subsidiaries covering all years ending on or
after December 31, 1993, (iii) any Closing Agreements entered into by the
Company or any of its subsidiaries with any taxing authority since December
31, 1993 and (iv) any Tax Ruling received by the Company or any of its
subsidiaries from any taxing authority since December 31, 1993.
(j) Tax Sharing Agreements. Neither the Company nor any of its
subsidiaries is a party to any agreement relating to allocating or sharing of
Taxes.
(k) Liability for Others. Neither the Company nor any of its
subsidiaries has any liability for any material Taxes of any person other
than the Company and its subsidiaries (i) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), (ii) as a
transferee or successor, (iii) by contract or (iv) otherwise.
(l) Code Section 481 Adjustments. Neither the Company 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 the Company or any of its subsidiaries for any tax year, and, to
the knowledge of the Company, the IRS has not proposed any such adjustment or
change in accounting method for any tax year for which the statute of
limitations remains open.
(m) Indebtedness. No indebtedness of the Company or any of its
subsidiaries is "corporate acquisition indebtedness" within the meaning of
Code Section 279(b).
(n) Intercompany Transactions. Neither the Company nor any of its
subsidiaries has engaged in any intercompany transactions within the meaning
of Treasury Regulations Section 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.
(o) Code Section 897. To the best knowledge of the Company, no
foreign person owns or has owned beneficially more than five percent of the
total fair market value of Company Common Stock during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
(p) Code Section 355. Neither the Company nor any of its
subsidiaries has constituted a "distributing corporation" in a distribution
of stock qualifying for tax-free treatment under Section 355 of the Code in
the past 24 month period or in a distribution which could otherwise
constitute part of a "plan" or a series of "related transactions" (within the
meaning of Code Section 355(e)).
Section 4.10 EMPLOYEE MATTERS; ERISA. Each "employee benefit plan"
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), bonus, severance, change in control, deferred
compensation, share option or other written agreement, plan, commitment or
arrangement relating to employment or fringe benefits for employees, former
employees, officers, trustees or directors of the Company 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 the Company or pursuant to which the Company or any of its
subsidiaries has or could reasonably be expected to have any liability
(collectively, the "Company Employee Benefit Plans") is listed in Schedule
4.10(a) of the Company Disclosure Schedule, is in material compliance with
applicable law, and has been administered and operated in all material
respects in accordance with its terms. Each Company 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 the Company, 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 Parent as of the date of this Agreement: (i) all
Company Employee Benefit Plans and any related trust agreements or insurance
contracts or funding agreement, (ii) the most current summary descriptions
and summary of material modifications of each Company Employee Benefit Plan
subject to ERISA, (iii) the three most recent Form 5500s and Schedules
thereto for each Company Employee Benefit Plan subject to such reporting,
(iv) the most recent determination of the IRS with respect to the qualified
status of each Company Employee Benefit Plan that is intended to qualify
under Section 401(a) of the Code, (v) the most recent accountings with
respect to each Company Employee Benefit Plan funded through a trust and (vi)
the most recent actuarial report of the qualified actuary of each Company
Employee Benefit Plan with respect to which actuarial valuations are
conducted.
(c) Each Company Employee Benefit Plan subject to the requirements
of Section 601 of ERISA has been operated in material compliance therewith.
The Company has not contributed to a nonconforming group health plan (as
defined in Code Section 5000(c)) and no person under common control with the
Company 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 the Company.
(d) Except as set forth in Schedule 4.10(d) of the Company
Disclosure Schedule, each Company Employee Benefit Plan covers only employees
who are employed by the Company or a subsidiary (or former employees or
beneficiaries with respect to service with the Company or a subsidiary).
(e) Except as set forth in Schedule 4.10(e) of the Company
Disclosure Schedule, neither the Company, 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 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 Company Employee Benefit Plan, under
which the Company 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 a
Company Material Adverse Effect.
(g) Neither the Company 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 Company Employee
Benefit Plan that is a defined benefit plan under Section 3(35) of ERISA.
(h) Except as set forth in Schedule 4.10(h) of the Company
Disclosure Schedule, no employer securities, employer real property or other
employer property is included in the assets of any Company Employee Benefit
Plan.
(i) Except as set forth in Section 4.10(i) of the Company
Disclosure Schedule, full payment has been made of all material amounts which
the Company or any affiliate thereof was required under the terms of Company
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
Company 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 Schedule 4.10(j) of the Company
Disclosure Schedule, no material amounts payable under any Company 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. Except as set forth in Schedule 4.10(j), the
transactions contemplated by this Agreement will not result in accelerated
vesting or accelerated payment of benefits under any Company Employee Benefit
Plan.
(k) Except as set forth in Section 4.10(k) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is a
party to any collective bargaining agreement or other labor agreement with
any union or labor organization. No labor organization or group of employees
of the Company or any of its subsidiaries has made a pending demand for
recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or, to the knowledge of the Company, threatened to be
brought or filed, with the National Labor Relations Board or any other labor
relations tribunal or authority. The Company has delivered or otherwise made
available to Parent true, correct and complete copies of the collective
bargaining agreements listed in Section 4.10(k) of the Company Disclosure
Schedule, together with all amendments, modifications or supplements thereto.
Except as set forth in Schedule 4.10(k) of the Company Disclosure Schedule,
there are no organizing activities, strikes, work stoppages, slowdowns,
lockouts, arbitrations or grievances, or other labor practice charges or
disputes pending or, to the knowledge of the Company, threatened against or
involving the Company or any of its subsidiaries which could reasonably be
expected to have a Company Material Adverse Effect. Each of the Company and
its subsidiaries is in compliance with all applicable laws and collective
bargaining agreements respecting employment and employment practices, terms
and conditions of employment, wages and hours and occupational safety and
health, except for non-compliances which in the aggregate could not
reasonably be expected to have a Company Material Adverse Effect.
Section 4.11 ENVIRONMENTAL PROTECTION. Except as set forth in Section
4.11 of the Company Disclosure Schedule or in the Company SEC Reports filed
prior to the date hereof:
(a) Compliance. The Company and each of its subsidiaries are in
compliance with all applicable Environmental Laws (as defined in Section
4.11(f)(ii)) except where the failure to be in such compliance would not, in
the aggregate, reasonably be expected to have a Company Material Adverse
Effect, and neither the Company nor any of its subsidiaries has received any
written communication from any person or Governmental Authority that alleges
that the Company or any of its subsidiaries is not in compliance with
applicable Environmental Laws.
(b) Environmental Permits. The Company and each of its
subsidiaries has obtained or has applied for all permits, consents, licenses,
variances, certificates, exemptions, orders, franchises, authorizations and
approvals necessary under any Environmental Laws (collectively, the
"Environmental Permits") for the construction of its facilities or the
conduct of its operations, and all such Environmental Permits are in good
standing or, where applicable, a renewal application has been timely filed
and is pending agency approval, and the Company and its subsidiaries are in
compliance with all terms and conditions of the Environmental Permits, except
where the failure to obtain or to be in such compliance would not, in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
(c) Environmental Claims. There is no Environmental Claim (as
defined in Section 4.11(f)(i)) pending (i) against the Company or any of its
subsidiaries, or (ii) against any real or personal property or operations
that the Company or any of its subsidiaries owns, leases or manages, in whole
or in part that, if adversely determined, would reasonably be expected to
have, in the aggregate, a Company Material Adverse Effect.
(d) Releases. Except for Releases of Hazardous Materials the
liability for which would not reasonably be expected to have, in the
aggregate, a Company Material Adverse Effect, there have been no Releases (as
defined in Section 4.11(f)(iv)) of any Hazardous Material (as defined in
Section 4.11(f)(iii)) that would be reasonably likely to form the basis of
any Environmental Claim against the Company or any of its subsidiaries.
(e) Predecessors. The Company has no knowledge of any
Environmental Claim pending or threatened, or of any Release of Hazardous
Materials that would be reasonably likely to form the basis of any
Environmental Claim, in each case against any person or entity (including,
without limitation, any predecessor of the Company or any of its
subsidiaries) whose liability the Company or any of its subsidiaries has or
may have retained or assumed either contractually or by operation of law,
except for Releases of Hazardous Materials the liability for which would not
reasonably be expected to have, in the aggregate, a Company Material Adverse
Effect.
(f) As used in this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation by any person or entity (including any Governmental Authority)
alleging potential liability (including, without limitation, potential
responsibility for or liability for enforcement costs, investigatory costs,
cleanup costs, governmental response costs, removal costs, remedial costs,
natural-resources damages, property damages, personal injuries, fines or
penalties) arising out of, based on or resulting from (A) the presence, or
Release or threatened Release into the environment, of any Hazardous
Materials at any location, whether or not owned, operated, leased or managed
by the Company or any of their respective subsidiaries or joint ventures; or
(B) circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law; or (C) any and all claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation
or injunctive relief resulting from the presence or Release of any Hazardous
Materials.
(ii) "Environmental Laws" means all federal, state, local
laws, rules, ordinances and regulations relating to pollution, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or protection of human health
as it relates to the environment including, without limitation, laws and
regulations relating to Releases or threatened Releases of Hazardous
Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials.
(iii) "Hazardous Materials" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation, coal tar residue,
and transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls ("PCBs") in regulated concentrations; and (B) any
chemicals, materials or substances which are now defined as or included in
the definition of "hazardous substances", "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," "hazardous constituents" or words of
similar import, under any Environmental Law; and (C) any other chemical,
material, substance or waste, exposure to which is now prohibited, limited or
regulated under any Environmental Law in a jurisdiction in which the Company
or any of its subsidiaries or joint ventures operates or has stored, treated
or disposed of Hazardous Materials.
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the atmosphere, soil, surface water, groundwater or property.
Section 4.12 REGULATION AS A UTILITY. Except as set forth in Section
4.12 of the Company Disclosure Schedule, neither the Company nor (in the case
of clauses (ii), (iii) and (iv)) any "associate company," "subsidiary
company" or "affiliate" (as such terms are defined in the 1935 Act) of the
Company is (i) registered, or required to be registered, under the 1935 Act,
(ii) subject to regulation as a "public utility" under the Federal Power Act,
(iii) subject to regulation as a "natural-gas company" under the Natural Gas
Act, or (iv) subject to regulation as a public utility or public service
company (or similar designation) by any state in the United States other than
Connecticut or by any foreign country.
Section 4.13 VOTE REQUIRED. The approval of the Merger by two-thirds
of the votes entitled to be cast by all holders of Company Common Stock (the
"Company Shareholders' Approval") is the only vote of the holders of any
class or series of the capital stock of the Company or any of its
subsidiaries required to approve this Agreement, the Merger and the other
transactions contemplated hereby.
Section 4.14 OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of SG Barr Devlin to the effect that, as of June 14, 1999, the
Merger Consideration is fair from a financial point of view to the holders of
Company Common Stock.
Section 4.15 OWNERSHIP OF PARENT COMMON STOCK. Except as set forth in
Section 4.15 of the Company Disclosure Schedule, the Company does not
"beneficially own" (as such term is defined for purposes of Section 13(d) of
the Exchange Act) any shares of Parent Capital Stock.
Section 4.16 TAKEOVER PROVISIONS; RIGHTS PLANS.
(a) The Company has taken (and will take) all action required to
be taken by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the transactions
contemplated hereby are exempt from (i) the requirements of any "moratorium,"
"control share," "fair price" or other anti-takeover laws and regulations
(collectively, "Takeover Laws") of the State of Connecticut, including
Sections 33-841 and 33-844 of the CBCA, and (ii) the provisions of Section 1
of Article VII of the Restated Certificate of Incorporation of the Company.
(b) The Company has taken all action necessary so that the
entering into of this Agreement and the consummation of the transactions
contemplated hereby (including the Merger) do not and will not result in the
ability of any person to exercise any Rights under the Rights Agreement,
dated as of November 20, 1989, between the Company and Mellon Bank, N.A., as
Rights Agent, as amended (the "Company Rights Agreement") or enable or
require the Company Rights to separate from the shares of Company Common
Stock to which they are attached or to be triggered or become exercisable.
(c) No "Distribution Date" or "Triggering Event" (as such terms
are defined in the Company Rights Plan) has occurred.
Section 4.17 INSURANCE. Except as set forth in Section 4.17(a) of the
Company Disclosure Schedule, the Company and each of its subsidiaries is, and
has been continuously since January 1, 1993, insured with financially
responsible insurers in such amounts and against such risks and losses as are
customary in all material respects for companies conducting the business as
conducted by the Company and each of its subsidiaries during such time
period. Except as set forth in Section 4.17(b) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has received any
notice of cancellation or termination with respect to any material insurance
policy of the Company or any of its subsidiaries. The insurance policies of
the Company and each of its subsidiaries are valid and enforceable policies
in all material respects.
Section 4.18 INTELLECTUAL PROPERTY. The Company and each of its
subsidiaries own or have adequate rights to use all material trademarks,
trade names, patents, service marks, brand marks, brand names, computer
programs, databases, industrial designs and copyrights used in the operation
of their business (collectively, the "Company Intellectual Property").
Except as set forth in Section 4.18(a) of the Company Disclosure Schedule,
all of the Company Intellectual Property owned by the Company or any of its
subsidiaries is free and clear of any and all encumbrances, and neither the
Company nor any of its subsidiaries has forfeited or otherwise relinquished
any Company Intellectual Property which forfeiture or relinquishment could
reasonably be expected to have a Company Material Adverse Effect. To the
knowledge of the Company, except as set forth in Section 4.18(b) of the
Company Disclosure Schedule, the use of the Company Intellectual Property by
the Company or any of its subsidiaries does not infringe upon, violate or
constitute a misappropriation of any right, title or interest in any
intellectual property right (including, without limitation, any trademark,
trade name, patent, service mark, brand mark, brand name, computer program,
database, industrial design or copyright) of any other person, and neither
the Company nor any of its subsidiaries has received written notice of any
claim that any of the Company Intellectual Property is invalid or infringes
the asserted rights of any other person, and, to the knowledge of the
Company, the Company Intellectual Property owned by the Company has not been
used or enforced or has failed to be used or enforced in a manner that would
reasonably be expected to result in the abandonment, cancellation or
unenforceability of any of such Company Intellectual Property, except for
such conflicts, infringements, violations, interferences, claims, invalidity,
abandonments, cancellations or unenforceability that could not, individually
or in the aggregate, reasonably be expected to have a Company Material
Adverse Effect.
Section 4.19 YEAR 2000. The computer software, hardware and firmware
(including microprocessors) operated or used by the Company or any of its
subsidiaries which is used in the conduct of their business (in both
information technology and other applications) is, or by September 30, 1999
will be, capable of providing or being adapted (i) to allow the conduct of
the business of the Company and its subsidiaries as currently conducted and
(ii) 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
software, hardware and firmware records, stores, processes and presents such
calendar dates falling on or before December 31, 1999 ("Year 2000
Compliance") other than such interruptions in millennium functionality that
could not, individually or in the aggregate, reasonably be expected to result
in a Company Material Adverse Effect; provided, however, that the Company
makes no representation or warranty with respect to Year 2000 Compliance of
any supplier, third-party vendor or governmental body, agency or
instrumentality. The Company reasonably believes as of the date hereof that
the remaining cost of adaptations referred to in the foregoing sentence will
not materially exceed the amounts reflected in the Form 10-Q filed by the
Company for the quarter ended March 31, 1999.
Section 4.20 COMMODITY DERIVATIVES AND CREDIT EXPOSURE MATTERS.
Except as set forth in Section 4.20 of the Company Disclosure Schedule, the
Company and each of its subsidiaries do not in the aggregate have (quantified
on a market-to-market basis and calculated with respect to physical and
financial positions exposure): (a) natural gas forward price exposure
exceeding $1 million, (b) on-system pipeline transportation (basis) exposure
exceeding $1 million or (c) off-system pipeline transportation (basis)
exposure exceeding $1 million.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.01 ORGANIZATION AND QUALIFICATION. Except as set forth in
Section 5.01 of Parent Disclosure Schedule, Parent and each of its
subsidiaries is a Massachusetts business trust or corporation, as the case
may be, duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has all requisite
corporate power and authority, and has been duly authorized by all necessary
approvals and orders, to own, lease and operate its assets and properties to
the extent owned, leased and operated and to carry on its business as it is
now being conducted and is duly qualified and in good standing to do business
in each jurisdiction in which the nature of its business or the ownership or
leasing of its assets and properties makes such qualification necessary,
other than in such jurisdictions where the failure to be so qualified and in
good standing would not, when taken together with all other such failures,
reasonably be expected to have a material adverse effect on the business,
properties, financial condition, results of operations or prospects of Parent
and its subsidiaries taken as a whole or on the consummation of this
Agreement (any such material adverse effect being hereafter referred to as a
"Parent Material Adverse Effect").
Section 5.02 SUBSIDIARIES. Section 5.02 of Parent Disclosure Schedule
sets forth a description as of the date hereof of all material subsidiaries
and joint ventures of Parent, including the name of each such entity, the
state or jurisdiction of its incorporation or organization, Parent's interest
therein, and a brief description of the principal line or lines of business
conducted by each such entity. As of the date hereof, Parent is a registered
holding company under the 1935 Act. Except as set forth in Section 5.02 of
Parent Disclosure Schedule, all of the issued and outstanding shares of
capital stock of each Parent subsidiary are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned directly or
indirectly by Parent free and clear of any liens, claims, encumbrances,
security interests, equities, charges and options of any nature whatsoever,
and there are no outstanding subscriptions, options, calls, contracts, voting
trusts, proxies, rights or warrants, including any right of conversion or
exchange under any outstanding security, instrument or other agreement,
obligating any such Parent subsidiary to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of its capital stock or
obligating it to grant, extend or enter into any such agreement or
commitment; except for any of the foregoing that could not reasonably be
expected to have a Parent Material Adverse Effect.
Section 5.03 CAPITALIZATION.
(a) Except as set forth in Section 5.03 of Parent Disclosure
Schedule, the authorized capital stock of Parent consists of 225,000,000
shares of Parent Common Stock. As of the close of business on June 11, 1999,
there were issued and outstanding 137,116,862 shares of Parent Common Stock.
All of the issued and outstanding shares of the capital stock of Parent are,
and will be, validly issued, fully paid, nonassessable and, except as set
forth in the Declaration of Trust, free of preemptive rights. Except as set
forth in Section 5.03 of Parent Disclosure Schedule, as of the date hereof,
there are no outstanding subscriptions, options, calls, contracts, voting
trusts, proxies, rights or warrants, including any right of conversion or
exchange under any outstanding security, instrument or other agreement,
obligating Parent or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the capital stock
of Parent, or obligating Parent to grant, extend or enter into any such
agreement or commitment.
(b) The authorized capital stock of Merger Sub, when formed, will
consist of not less than 1,000 shares of common stock, no par value ("Merger
Sub Common Stock"). Immediately prior to the Effective Time, all of the
issued and outstanding shares of Merger Sub Common Stock will be owned by
Parent.
Section 5.04 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) Authority. Parent has all requisite corporate power and
authority to enter into this Agreement and, subject to the applicable Parent
Required Statutory Approvals (as defined in Section 5.04(c)), to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement, and the consummation by Parent of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of Parent. This Agreement has been duly and validly executed and
delivered by Parent and, assuming the due authorization, execution and
delivery by the other signatories hereto, constitutes a valid and binding
obligation of Parent enforceable against it in accordance with its terms.
(b) Non-Contravention. Except as set forth in Section 5.04(b) of
Parent Disclosure Schedule, the execution and delivery of this Agreement by
Parent do not, and the consummation of the transactions contemplated hereby
will not, result in a Violation pursuant to any provisions of (i) the
articles of incorporation, by-laws or similar governing documents of Parent
or any of its subsidiaries or any of its joint ventures, (ii) subject to
obtaining Parent Required Statutory Approvals (as defined in Section 5.04(c))
any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Authority applicable
to Parent or any of its subsidiaries or any of its joint ventures or any of
their respective properties or assets or (iii) subject to obtaining the
third-party consents or other approvals set forth in Section 5.04(b) of
Parent Disclosure Schedule (the "Parent Required Consents"), any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which Parent or any of its subsidiaries or any of its joint ventures is a
party or by which it or any of its properties or assets may be bound or
affected, excluding from the foregoing clauses (i), (ii) and (iii) such
Violations as would not reasonably be expected to have, in the aggregate, a
Parent Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section 5.04(c)
of Parent Disclosure Schedule, no declaration, filing or registration with,
or notice to or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by
Parent or the consummation by Parent of the transactions contemplated hereby,
the failure to obtain, make or give which would reasonably be expected to
have, in the aggregate, a Parent Material Adverse Effect (the "Parent
Required Statutory Approvals"), it being understood that references in this
Agreement to "obtaining" such Parent Required Statutory Approvals shall mean
making such declarations, filings or registrations; giving such notices;
obtaining such authorizations, consents or approvals; and having such waiting
periods expire, if any, as are necessary to avoid a violation of law.
(d) Compliance. Except as set forth in Section 5.04(d) or Section
5.11 of Parent Disclosure Schedule, or as disclosed in Parent SEC Reports (as
defined in Section 5.05) filed prior to the date hereof, neither Parent nor
any of its subsidiaries nor (to the best of its knowledge) any of its joint
ventures is in violation of, or has been given notice of any purported
violation of, any law, statute, or order, rule, regulation or judgment
(including, without limitation, any applicable Environmental Law) of any
Governmental Authority, except for violations that, in the aggregate, are not
reasonably expected to have, a Parent Material Adverse Effect. Except as set
forth in Section 5.04(d) of Parent Disclosure Schedule or in Section 5.11 of
Parent Disclosure Schedule or as disclosed in Parent SEC Reports, Parent and
its subsidiaries and joint ventures have all permits, licenses, franchises
and other governmental authorizations, consents and approvals necessary to
conduct their respective businesses as currently conducted in all respects,
except those which the failure to obtain would, in the aggregate, not
reasonably be expected to have a Parent Material Adverse Effect. Except as
set forth in Section 5.04(d) of Parent Disclosure Schedule or as disclosed in
Parent SEC Reports, Parent and each of its subsidiaries are not in breach or
violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action
by a third party, could result in a default under (i) its articles of
organization or by-laws or (ii) any material contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which it is a party or by which it is bound or to which
any of its property is subject; except for breaches, violations or defaults
that, in the aggregate, are not reasonably expected to have, a Parent
Material Adverse Effect.
Section 5.05 REPORTS AND FINANCIAL STATEMENTS. The filings required
to be made by Parent and its subsidiaries since January 1, 1996 under the
Securities Act, the Exchange Act, the 1935 Act, the Power Act and applicable
state public utility laws and regulations have been filed with the SEC, the
FERC or the appropriate state public utilities commission, as the case may
be, including all forms, statements, reports, exhibits and amendments
appertaining thereto, and complied, as of their respective dates, in all
material respects with all applicable requirements of the appropriate statute
and the rules and regulations thereunder. Parent has made available to the
Company a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by Parent or its predecessor
with the SEC since January 1, 1996 (as such documents have since the time of
their filing been amended, "Parent SEC Reports"). As of their respective
dates, Parent SEC Reports did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of Parent included in
Parent SEC Reports (collectively, the "Parent Financial Statements") have
been prepared in accordance with GAAP (except as may be indicated therein or
in the notes thereto and except with respect to unaudited statements as
permitted by Form 10-Q of the SEC) and fairly present the consolidated
financial position of Parent as of the dates thereof and the consolidated
results of its operations and cash flows for the periods then ended. A true
and complete copy of the Declaration of Trust, as in effect on the date
hereof, has been made available to the Company.
Section 5.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in Parent SEC Reports filed prior to the date hereof or as set
forth in Section 5.06 of Parent Disclosure Schedule, since December 31, 1998,
Parent and each of its subsidiaries have as of the date hereof conducted
their businesses only in the ordinary course of business consistent with past
practice and there has not been, and no fact or condition exists, which has
or could reasonably be expected to have, a Parent Material Adverse Effect.
Section 5.07 LITIGATION. Except as disclosed in Parent SEC Reports
filed prior to the date hereof or as set forth in Section 5.07 of Parent
Disclosure Schedule, (i) there are no claims, suits, actions or proceedings,
pending or threatened, nor are there any investigations or reviews pending or
threatened against, relating to or affecting Parent or any of its
subsidiaries, which would have a Parent Material Adverse Effect and (ii)
there are no judgments, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or authority or
any arbitrator applicable to Parent or any of its subsidiaries, except for
such that would not reasonably be expected to have a Parent Material Adverse
Effect.
Section 5.08 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information supplied or to be supplied by or on behalf of Parent for
inclusion or incorporation by reference in (i) the Registration Statement
will, at the time the Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (ii) the Proxy Statement shall, at
the dates mailed to the Company shareholders and at the time of the Company
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement and the Proxy Statement,
insofar as they relate to Parent or any Parent subsidiary, shall comply as to
form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act and the rules and regulations thereunder.
SECTION 5.09 REGULATION AS A UTILITY. Parent is a public utility
holding company registered under, and subject to the provisions, of, the 1935
Act. Section 5.09 of the Parent Disclosure Schedule lists the subsidiaries
of Parent 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 5.09
of the Parent Disclosure Schedule, neither the Parent nor any "subsidiary
company" or "affiliate" (as such terms are defined in the 1935 Act) of Parent
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.
Section 5.10 OWNERSHIP OF THE COMPANY COMMON STOCK. Except as set
forth in Section 5.10 of Parent Disclosure Schedule, Parent does not
"beneficially own" (as such term is defined for purposes of Section 13(d) of
the Exchange Act) any shares of Company Common Stock.
Section 5.11 ENVIRONMENTAL PROTECTION. Except as would not, in the
aggregate, reasonably be expected to result in a Parent Material Adverse
Effect, and except for matters disclosed in Parent SEC Reports, (i) Parent
and its subsidiaries are in compliance with all applicable Environmental Laws
and the terms and conditions of all applicable Environmental Permits, and
neither Parent nor any of its subsidiaries has received any written notice
from any Governmental Authority that alleges that Parent or any of its
subsidiaries is not in material compliance with applicable Environmental Laws
or the terms and conditions of all such Environmental Permits, (ii) there are
no Environmental Claims pending or threatened (A) against Parent or any of
its subsidiaries, or (B) against any person or entity whose liability for any
Environmental Claim Parent or any of its subsidiaries has or may have
retained or assumed either contractually or by operation of law and (iii)
there has been no Release of Hazardous Materials that would be reasonably
likely to form the basis of any Environmental Claim against Parent or any of
its subsidiaries.
Section 5.12 FINANCING. Parent has or will have available, prior to
the Effective Time, sufficient cash in immediately available funds to pay or
to cause Merger Sub to pay all Cash Consideration required to be paid
pursuant to Article II hereof and to consummate the Merger and other
transactions contemplated hereby.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.01 COVENANTS OF THE PARTIES. After the date hereof and
prior to the Effective Time or earlier termination of this Agreement, Parent
and the Company each agree as follows, each as to itself and to each of its
subsidiaries, except as expressly contemplated or permitted in this
Agreement, or to the extent the other parties hereto shall otherwise consent
in writing:
(a) Ordinary Course of Business. Except as disclosed in Section
6.01(a) of the Company Disclosure Schedule, the Company shall, and shall
cause its subsidiaries to, carry on their respective businesses in the
ordinary course in substantially the same manner as heretofore conducted and
use all commercially reasonable efforts to (i) preserve intact their present
business organizations and goodwill and preserve the goodwill and
relationships with customers, suppliers and others having business dealings
with them, (ii) subject to prudent management of workforce needs and ongoing
programs currently in force, keep available the services of their present
officers and employees as a group, and (iii) maintain and keep material
properties and assets in as good repair and condition as at present, subject
to ordinary wear and tear, and maintain supplies and inventories in
quantities consistent with past practice.
(b) Dividends. The Company shall not, nor shall it permit any of
its subsidiaries to: (i) declare or pay any dividends on or make other
distributions in respect of any capital stock other than (A) dividends by a
direct or indirect subsidiary to the Company, (B) regular quarterly dividends
on Company Common Stock that do not exceed the current regular dividends on
Company Common Stock; provided that, the Company may increase the annualized
amount of such dividends by up to $.04 per share at the Company's regular
Board of Directors' meetings in each of June 1999 and June 2000; (ii) split,
combine or reclassify any capital stock or the capital stock of any
subsidiary or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of
capital stock or the capital stock of any subsidiary; or (iii) redeem,
repurchase or otherwise acquire any shares of capital stock or the capital
stock of any subsidiary other than (A) redemptions, repurchases and other
acquisitions of shares of capital stock in connection with the administration
of employee benefit and dividend reinvestment plans as in effect on the date
hereof in the ordinary course of the operation of such plans consistent with
past practice, or (B) intercompany acquisitions of capital stock. Prior to
the Closing Date, each of the parties agrees to cooperate so as not to
adversely affect the Company shareholders because of the timing of record,
declaration or payment dates.
(c) Issuance of Securities. Except as set forth in Section
6.01(c) of the Company Disclosure Schedule, the Company shall not, nor shall
it permit any of its subsidiaries to, issue, agree to issue, deliver, sell,
pledge, dispose of or otherwise encumber any shares of their capital stock of
any class or any securities convertible into or exchangeable for, or any
rights, warrants or options to acquire, any such shares or convertible or
exchangeable securities, other than (i) pursuant to outstanding stock options
granted under Employee Benefit Plans, (ii) pursuant to the Company's dividend
reinvestment plan as in effect on the date hereof, (iii) in the case of
subsidiaries, for issuances of capital stock to the Company or another
subsidiary, or (iv) as may be required by the Company Rights Agreement.
(d) Charter Documents; Other Actions. Neither party shall, nor
shall any party permit any of its subsidiaries to, amend its respective
articles of organization, by-laws or regulations, or similar organic
documents or to take or fail to take any other action, which in any such case
would reasonably be expected to prevent or materially impede or interfere
with the Merger (except to the extent permitted by Section 6.02 and Article
IX).
(e) Acquisitions. Except as disclosed in Section 6.01(e) of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any
of its subsidiaries to, acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or business organization or
division thereof, or otherwise acquire or agree to acquire any material
amount of assets other than (i) in the ordinary course of business, and (ii)
acquisitions having an aggregate acquisition consideration payable by the
Company of not more than $250,000.
(f) Capital Expenditures. Except (i) as set forth in Section
6.01(f) of the Company Disclosure Schedule, (ii) as may be required by law,
or (iii) as reasonably deemed necessary by the Company following a
catastrophic event, the Company shall not, nor shall it permit any of its
subsidiaries to, make capital expenditures in excess of 110% of the aggregate
amount budgeted by the Company or its subsidiaries for capital expenditures
as set forth in Section 6.01(f) of the Company Disclosure Schedule.
(g) No Dispositions. Except as set forth in Section 6.01(g) of
the Company Disclosure Schedule, the Company shall not, nor shall it permit
any of its subsidiaries to, sell, lease, or otherwise dispose of, any of its
respective assets, other than encumbrances or dispositions in the ordinary
course of business consistent with past practice.
(h) Indebtedness. Except as set forth in Section 6.01(h) of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any
of its subsidiaries to, incur or guarantee any indebtedness for borrowed
money (including any such debt guaranteed or otherwise assumed including,
without limitation, the issuance of debt securities or warrants or rights to
acquire debt) or enter into any "keep well" or other agreement to maintain
any financial statement condition of another person other than (i) short-term
indebtedness and "keep well" or similar assurances for the benefit of
customers, in each case in the ordinary course of business consistent with
past practice; (ii) arrangements between the Company and its subsidiaries or
among its subsidiaries; or (iii) in connection with the refunding of existing
indebtedness at a lower cost of funds.
(i) Compensation, Benefits. Except as set forth in Section
6.01(i) of the Company Disclosure Schedule or as may be required by
applicable law, or as expressly contemplated by this Agreement, the Company
shall not, nor shall it permit any of its subsidiaries to, (i) enter into,
adopt or amend or increase the amount or accelerate the payment or vesting of
any benefit or amount payable under any Employee Benefit Plan, or otherwise
increase the compensation or benefits of any director, officer or other
employee of such party or any of its subsidiaries, except for normal
increases in compensation and benefits in the ordinary course of business
consistent with past practice that, with respect to employees who are not
officers, in the aggregate, do not result in an increase in benefits or
compensation expense to the Company or any of its subsidiaries in excess of
five percent per year, or (ii) enter into or amend any employment, severance
or special pay arrangement with respect to the termination of employment or
other similar contract, agreement or arrangement with any director or officer
or other employee other than with respect to employees who are not officers
of the Company in the ordinary course of business consistent with current
industry practice.
(j) 1935 Act. Except as set forth in Section 6.01(j) of the
Company Disclosure Schedule, and except as required or contemplated by this
Agreement, the Company shall not, nor shall it permit any of its subsidiaries
to, engage in any activities which would cause a change in its status, or
that of its subsidiaries, under the 1935 Act.
(k) Accounting. Except as set forth in Section 6.01(k) of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any
of its subsidiaries to, make any changes in their accounting methods, except
as required by law, rule, regulation or GAAP.
(l) Tax-Free Status. No party shall, nor shall any party permit
any of its subsidiaries to, take any actions which would, or would be
reasonably likely to, adversely affect the status of the Merger as a
reorganization within the meaning of Section 368(a) of the Code, and each
party hereto shall use all reasonable efforts to achieve such result.
(m) Cooperation, Notification. Each party shall, and shall cause
its subsidiaries to, (i) confer on a regular and frequent basis with one or
more representatives of the other party to discuss, subject to applicable
law, material operational and business matters; (ii) promptly notify the
other party of any significant changes in its business, properties, assets,
condition (financial or other), results of operations or prospects; (iii)
advise the other party of any change or event which has had or could
reasonably be expected to result in, in the case of the Company, a Company
Material Adverse Effect or, in the case of Parent, a Parent Material Adverse
Effect; and (iv) promptly provide the other party with copies of all filings
made by such party or any of its subsidiaries with any state or federal
court, administrative agency, commission or other Governmental Authority in
connection with this Agreement and the transactions contemplated hereby;
provided that no party shall be required to make any disclosure to the extent
such disclosure would constitute a violation of any applicable law or
regulation.
(n) Third-Party Consents. The Company shall, and shall cause its
subsidiaries to, use all commercially reasonable efforts to obtain all the
Company Required Consents. The Company shall promptly notify Parent of any
failure or prospective failure to obtain any such consents and, if requested
by Parent shall provide copies of all the Company Required Consents obtained
by the Company to Parent. Parent shall, and shall cause its subsidiaries to,
use all commercially reasonable efforts to obtain all Parent Required
Consents. Parent shall promptly notify the Company of any failure or
prospective failure to obtain any such consents and, if requested by the
Company, shall provide copies of all Parent Required Consents obtained by
Parent to the Company.
(o) No Breach, Etc. No party shall, nor shall any party permit
any of its subsidiaries to, willfully take any action that would or is
reasonably likely to result in a material breach of any provision of this
Agreement or in any of its representations and warranties set forth in this
Agreement being untrue on and as of the Closing Date.
(p) Discharge of Liabilities. The Company shall not pay,
discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice (which includes the payment of final
and unappealable judgments) or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of the Company
included in the Company's reports filed with the SEC, or incurred in the
ordinary course of business consistent with past practice.
(q) Contracts. Except as set forth in Section 6.01(q) of the
Company Disclosure Schedule, the Company shall not, and shall cause its
subsidiaries not to, except in the ordinary course of business consistent
with past practice, enter into, modify, amend, terminate, renew or fail to
use reasonable business efforts to renew any material contract or agreement
to which the Company or any of its subsidiaries is a party or waive, release
or assign any material rights or claims therein.
(r) Insurance. The Company shall, and shall cause its
subsidiaries to, maintain with financially responsible insurance companies
insurance in such amounts and against such risks and losses as are customary
for companies engaged in the electric and gas utility industry.
(s) Permits. The Company shall, and shall cause its subsidiaries
to, use reasonable efforts to maintain in effect all existing governmental
permits pursuant to which the Company or any of its subsidiaries operate
except for those permits the expiration or termination of which would not
reasonably be expected to have a Company Material Adverse Effect.
(t) Takeover Laws. Neither party shall take any action that would
cause the transactions contemplated by this Agreement to be subject to
requirements imposed by any Takeover Law, and each of them shall take all
necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement from any
applicable Takeover Law, including Sections 33-841 and 33-844 of the CBCA.
(u) No Rights Triggered. The Company shall ensure that the
entering into of this Agreement and the consummation of the transactions
contemplated hereby do not and will not result, directly or indirectly, in
the grant of any rights to any person under any material agreement (other
than the agreements disclosed in Section 6.01(u) of the Company Disclosure
Schedule) to which it or any of its subsidiaries is a party.
(v) Taxes. The Company shall not, and shall cause its
subsidiaries not to, (A) make or rescind any express or deemed material
election relating to Taxes, (B) except as set forth on Schedule 6.01(v),
settle or compromise any material claim, audit, dispute, controversy,
examination, investigation or other proceeding relating to Taxes, (C)
materially change any of its methods of reporting income or deductions for
federal income Tax purposes from those employed in the preparation of its
federal income Tax Return and state Tax Returns for the taxable year ending
December 31, 1997, except as may be required by a change in applicable law
after the date hereof, or (D) file any material Tax Return other than in a
manner consistent with its federal income Tax Return and state Tax Returns
for the taxable year ending December 31, 1997.
(w) Conduct of Business of Merger Sub. Following the
incorporation of Merger Sub as required by Section 1.06, prior to the
Effective Time, except as may be required by applicable law and subject to
the other provisions of this Agreement, Parent shall cause Merger Sub 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.
(x) Certain Mergers. Except with the mutual consent of the Board
of Directors of the Company and the Board of Trustees of the Parent, Parent
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 divisions 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.
(y) Rate Matters. Subject to applicable law and except for non-
material filings in the ordinary course of business consistent with
regulatory orders or past practice, the Company shall consult with Parent
prior to implementing any changes in its or any of its subsidiaries' rates or
charges (other than automatic cost pass-through rate adjustment clauses),
standards of service or accounting or executing any agreement with respect
thereto that is otherwise permitted under this Agreement and the Company
shall, and shall cause each of its subsidiaries to, deliver to Parent a copy
of each such filing or agreement at least three days prior to the filing or
execution thereof so that Parent may comment thereon.
(z) Gas Transmission and Storage. Except as set forth in Section
6.01(z) of the Company Disclosure Schedule or in the ordinary course of
business, neither the Company nor any of its subsidiaries shall commence
construction of any additional gas transmission, gas delivery or gas storage
capacity or obligate itself to purchase or otherwise acquire any additional
transmission, delivery or storage facilities, or to sell or otherwise dispose
of, or to share, any such facilities owned by it.
(aa) Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, neither the Company
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, the Company shall take all steps necessary to
enforce, to the fullest extent permitted under applicable law, the provisions
of any such agreement; provided that nothing in this subsection (aa) shall be
deemed to affect the Company's rights under Section 9.01(e) hereof.
Section 6.02 COVENANT OF THE COMPANY; ALTERNATIVE PROPOSALS. From and
after the date hereof, the Company agrees (a) that it and its subsidiaries
will not, and it will use its best efforts to cause its and its subsidiaries'
officers, directors, employees, agents and representatives (including,
without limitation, any investment banker, attorney or accountant retained by
it or any of its subsidiaries or any of the foregoing) not to, directly or
indirectly, encourage, initiate or solicit (including by way of furnishing
information) or knowingly take any other action designed to facilitate any
inquiries or the making of any proposal or offer (including, without
limitation, any proposal or offer to its shareholders) which constitutes or
may reasonably be expected to lead to an Alternative Proposal (as defined
below) from any person or engage in any discussion or negotiations
concerning, or provide any non-public information or data to make or
implement an Alternative Proposal; (b) that it will immediately cease and
cause to be terminated any existing solicitation, initiation, encouragement,
activity, discussions or negotiations with any parties conducted heretofore
with a view of formulating an Alternative Proposal; and (c) that it will
immediately notify Parent orally and in writing of the receipt of any such
inquiry, offer or proposals, and that it shall keep Parent informed orally
and in writing in reasonable detail of the status of any such inquiry, offer
or proposal; provided however, that notwithstanding any other provision
hereof, the Company may at any time prior to the time the Company
shareholders shall have voted to approve this Agreement (i) engage in
discussions or negotiations with a third party who, without solicitation in
violation of the terms hereof, seeks to initiate such discussions or
negotiations and may furnish such third party information concerning the
Company and its business, properties and assets if, and only to the extent
that, (A)(x) the third party has first made an Alternative Proposal that, in
the good faith judgment of the Company's Board of Directors (after
consultation with its financial advisors), is likely to be more favorable to
the Company's shareholders than the Merger, and has demonstrated that it will
have adequate sources of financing to consummate such Alternative Proposal,
and (y) the Company Board of Directors shall conclude in good faith, based
upon the advice of outside counsel and such other matters as the Company
Board of Directors deems relevant, that such actions are necessary for the
Company Board of Directors to act in a manner consistent with its fiduciary
duties to shareholders under applicable law, and (B) prior to furnishing such
information to, or entering into discussions or negotiations with, such
person or entity, the Company (x) provides prompt written notice to Parent to
the effect that it intends to furnish information to, or intends to enter
into discussions or negotiations with, such person or entity, and of the
identity of the person or group making the Alternative Proposal and the
material terms thereof and (y) receives from such person an executed
confidentiality agreement in reasonably customary form on terms not in the
aggregate materially more favorable to such third party than the terms
contained in the Confidentiality Agreement (as defined in Section 7.01)
except that such confidentiality agreement shall not prohibit such person
from making an unsolicited Alternative Proposal to the Board of Directors of
the Company, (ii) comply with Rule 14e-2 promulgated under the Exchange Act
with regard to a tender or exchange offer and/or (iii) accept an Alternative
Proposal from a third party, provided the Company terminates this Agreement
pursuant to Section 9.01(e). "Alternative Proposal" shall mean any merger,
acquisition, consolidation, reorganization, share exchange, tender offer,
exchange offer or similar transaction involving the Company or any of the
Company's significant subsidiaries (as defined in Rule 1-02(w) of Regulation
S-X under the Exchange Act) or any proposal or offer to acquire in any
manner, directly or indirectly (x) ten percent or more of the outstanding
Company Common Stock, (y) any of the outstanding common stock of Yankee Gas
Services Company, or 50% or more of the outstanding capital stock of any
other significant subsidiary, or (z) all or a substantial portion of the
assets of the Company and its subsidiaries taken as a whole. Nothing herein
shall prohibit a disposition permitted by Section 6.01(g) hereof.
SECTION 6.03 CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in
this Agreement shall give Parent, directly or indirectly, the right to
control or direct the Company's operations prior to the Effective Time.
Nothing contained in this Agreement shall give the Company, directly or
indirectly, the right to control or direct Parent's operations prior to the
Effective Time. Prior to the Effective Time, each of the Company and Parent
shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its respective operations.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01 ACCESS TO INFORMATION. Upon reasonable notice and during
normal business hours, each party shall, and shall cause its subsidiaries to,
afford to the officers, directors, trustees, employees, agents and
accountants of the other (collectively, "Representatives") reasonable access,
throughout the period prior to the Effective Time, to all of its properties,
books, contracts, commitments and records to the extent that such party or
any of its subsidiaries 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 such party. During such period, each party shall,
and shall cause its subsidiaries to, furnish promptly to the other (i) access
to each material report, schedule and other document filed or received by it
or any of its subsidiaries pursuant to the requirements of federal or state
securities laws or filed with or sent to the SEC, the FERC, the Department of
Justice, the Federal Trade Commission or any other federal or state
regulatory agency or commission, and (ii) access to all information
concerning themselves, their subsidiaries, directors, trustees, officers and
shareholders and such other matters as may be reasonably requested by the
other party in connection with any filings, applications or approvals
required or contemplated by this Agreement. Each party shall, and shall
cause its subsidiaries and Representatives to, hold in strict confidence all
Evaluation Material (as defined in the Confidentiality and Standstill
Agreement) concerning the other parties furnished to it in connection with
the transactions contemplated by this Agreement in accordance with the
Confidentiality and Standstill Agreement, dated as of March 31, 1999, between
the Company and Parent, as it may be amended from time to time (the
"Confidentiality Agreement").
Section 7.02 PROXY STATEMENT AND REGISTRATION STATEMENT. (a)
Preparation and Filing. The parties will prepare and file with the SEC as
soon as reasonably practicable after the date hereof the Registration
Statement and the Proxy Statement (together, the "Proxy/Registration
Statement"). The parties hereto shall each use reasonable efforts to cause
the Registration Statement to be declared effective under the Securities Act
as promptly as practicable after such filing. Each party hereto shall also
take such action as may be reasonably required to cause the shares of Parent
Common Stock issuable in connection with the Merger to be registered or to
obtain an exemption from registration under applicable state "blue sky" or
securities laws; provided, however, that no party shall be required to
register or qualify as a foreign corporation or to take other action which
would subject it to service of process in any jurisdiction where it will not
be, following the Merger, so subject. Each of the parties hereto shall
furnish all information concerning itself which is required or customary for
inclusion in the Proxy/Registration Statement. The parties shall use
reasonable efforts to cause the shares of Parent Common Stock issuable in the
Merger to be approved for listing on the NYSE upon official notice of
issuance. The information provided by any party hereto for use in the
Proxy/Registration Statement shall be true and correct in all material
respects without omission of any material fact which is required to make such
information, in the circumstances under which it is provided, not false or
misleading. No representation, covenant or agreement is made by or on behalf
of any party hereto with respect to information supplied by any other party
for inclusion in the Proxy Statement/ Registration Statement.
(b) Letter of the Company's Accountant. Following receipt by
Arthur Andersen, LLP, the Company's independent auditor, of an appropriate
request from the Company pursuant to SAS No. 72, the Company shall use its
best efforts to cause to be delivered to Parent a letter of Arthur Andersen
LLP dated a date within two business days before the date of the
Proxy/Registration Statement, and addressed to Parent, in form and substance
reasonably satisfactory to Parent and customary in scope and substance for
"cold comfort" letters delivered by independent public accountants in
connection with registration statements similar to the Proxy/Registration
Statement.
(c) Letter of Parent's Accountant. Following receipt by Arthur
Anderson, LLP, Parent's independent auditor, of an appropriate request from
Parent pursuant to SAS No. 72, Parent shall use best efforts to cause to be
delivered to the Company a letter of Arthur Anderson, LLP, dated a date
within two business days before the date of the Proxy/Registration Statement,
and addressed to the Company, in form and substance reasonably satisfactory
to the Company and customary in scope and substance for "cold comfort"
letters delivered by independent public accountants in connection with
registration statements similar to the Proxy/Registration Statement.
Section 7.03 REGULATORY MATTERS. Each party hereto shall cooperate
and use its best efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions,
filings and other documents, and to use all commercially reasonable efforts
to obtain no later than the Initial Termination Date, as such date may be
extended pursuant to Section 9.01(b), all necessary permits, consents,
approvals and authorizations of all Governmental Authorities necessary to
consummate the transactions contemplated by this Agreement, including,
without limitation, the Company Required Statutory Approvals and Parent
Required Statutory Approvals.
Section 7.04 SHAREHOLDER APPROVAL.
(a) The Company Shareholders. The Company shall, as soon as
reasonably practicable after the date hereof (i) take all steps necessary to
duly call, give notice of, convene and hold a meeting of its shareholders
(the "Company Special Meeting") for the purpose of securing the Company
Shareholders' Approval, (ii) distribute to its shareholders the Proxy
Statement in accordance with applicable federal and state law and with its
Certificate of Incorporation and by-laws, (iii) subject to the fiduciary
duties of its Board of Directors, recommend to its shareholders the approval
of this Agreement and the transactions contemplated hereby and (iv) cooperate
and consult with Parent with respect to each of the foregoing matters.
Section 7.05 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) Indemnification. To the extent, if any, not provided by an
existing right of indemnification or other agreement or policy, from and
after the Effective Time, Parent and the Surviving Corporation shall, to the
fullest extent permitted by applicable law, indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time, an officer, director or
employee of the Company or any of its subsidiaries (each an "Indemnified
Party" and collectively, the "Indemnified Parties") against (i) all losses,
expenses (including reasonable attorney's fees and expenses), claims, damages
or liabilities or, subject to the proviso of the next succeeding sentence,
amounts paid in settlement, arising out of actions or omissions occurring at
or prior to the Effective Time (and whether asserted or claimed prior to, at
or after the Effective Time) that are, in whole or in part, based on or
arising out of the fact that such person is or was a director, officer or
employee of the Company or a subsidiary of the Company (the "Indemnified
Liabilities") and (ii) all Indemnified Liabilities to the extent they are
based on or arise out of or pertain to the transactions contemplated by this
Agreement. In the event of any such loss, expense, claim, damage or liability
(whether or not arising before the Effective Time), (i) Parent shall pay the
reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to Parent, promptly after
statements therefor are received and otherwise advance to such Indemnified
Party upon request reimbursement of documented expenses reasonably incurred
and (ii) any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth in Section
33-756, 33-757 and 33-765 of the CBCA, and the articles of organization or
by-laws shall be made by independent counsel mutually acceptable to Parent
and the Indemnified Party; provided, however, that Parent shall not be liable
for any settlement effected without its written consent (which consent shall
not be unreasonably withheld).
(b) Insurance. For a period of six years after the Effective
Time, Parent shall (i) cause to be maintained in effect policies of
directors' and officers' liability insurance for the benefit of those persons
who are currently covered by such policies of the Company on terms no less
favorable than the terms of such current insurance coverage or (ii) provide
tail coverage for such persons which provides coverage for a period of six
years for acts prior to the Effective Time on terms no less favorable than
the terms of such current insurance coverage; provided, however, that Parent
shall not be required to expend in any year an amount in excess of 200% of
the annual aggregate premiums currently paid by the Company, for such
insurance; and provided, further, that if the annual premiums of such
insurance coverage exceed such amount, Parent shall be obligated to obtain a
policy with the best coverage available, in the reasonable judgment of the
Board of Trustees of Parent, for a cost not exceeding such amount.
(c) Successors. In the event Parent or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any person, then, and in either such case, proper provisions shall
be made so that the successors and assigns of Parent shall assume the
obligations set forth in this Section 7.05.
(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 and officers
of the Company, and its subsidiaries with respect to their activities as such
prior to the Effective Time, as provided in its respective articles of
organization and by-laws in effect on the date hereof, or otherwise in effect
on the date hereof, shall survive the Merger and shall continue in full force
and effect for a period of not less than six years from the Effective Time.
(e) Benefit. The provisions of this Section 7.05 are intended to
be for the benefit of, and shall be enforceable by, each Indemnified Party,
his or her heirs and his or her representatives.
Section 7.06 DISCLOSURE SCHEDULES. On the date hereof, (i) Parent has
delivered to the Company a schedule (the "Parent Disclosure Schedule"),
accompanied by a certificate signed by an executive officer of Parent stating
that the Parent Disclosure Schedule is being delivered pursuant to this
Section 7.06(i), and (ii) the Company has delivered to Parent a schedule (the
"Company Disclosure Schedule"), accompanied by a certificate signed by an
executive officer of the Company stating that the Company Disclosure Schedule
is being delivered pursuant to this Section 7.06(ii). The Company Disclosure
Schedule and Parent Disclosure Schedule are collectively referred to herein
as the "Disclosure Schedules." The Disclosure Schedules constitute an
integral part of this Agreement and modify the respective representations,
warranties, covenants or agreements of the parties hereto contained herein to
the extent that such representations, warranties, covenants or agreements
expressly refer to the Disclosure Schedules. Anything to the contrary
contained herein or in the Disclosure Schedules notwithstanding, any and all
statements, representations, warranties or disclosures set forth in the
Disclosure Schedules shall be deemed to have been made on and as of the date
hereof.
Section 7.07 PUBLIC ANNOUNCEMENTS. Subject to each party's disclosure
obligations imposed by law or the rules of any applicable securities exchange
or Governmental Authority, the Company and Parent will cooperate with each
other in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement or any of the
transactions contemplated hereby and shall not issue any public announcement
or statement with respect hereto without the consent of the other party
(which consent shall not be unreasonably withheld).
Section 7.08 RULE 145 AFFILIATES. Within 30 days after the date of
this Agreement, the Company shall identify in a letter to Parent all persons
who are, and to such person's best knowledge who will be at the Closing Date,
"affiliates" of the Company, as such term is used in Rule 145 under the
Securities Act. The Company shall use all reasonable efforts to cause its
affiliates (including any person who may be deemed to have become an
affiliate after the date of the letter referred to in the prior sentence) to
deliver to Parent on or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit 7.08 (each, an "Affiliate
Agreement").
Section 7.09 CERTAIN EMPLOYEE AGREEMENTS AND ARRANGEMENTS. Subject to
Section 7.10, Parent and the Surviving Corporation and its subsidiaries shall
honor, without modification, all contracts, agreements, collective bargaining
agreements and commitments of the Company, or its subsidiaries, prior to the
date hereof which apply to any current or former employee or current or
former director of the Company, or its subsidiaries; provided, however, that
the foregoing shall not prevent Parent or the Surviving Corporation from
enforcing such contracts, agreements, collective bargaining agreements and
commitments in accordance with their terms, including, without limitation,
any reserved right to amend, modify, suspend, revoke or terminate any such
contract, agreement, collective bargaining agreement or commitment. Any
workforce reductions affecting employees of the Company carried out within
the twelve-month period following the Effective Time by Parent or the
Surviving Corporation or their respective subsidiaries shall be done in
accordance with (i) the provisions of this agreement, (ii) the
recommendations of the Transition Steering Team to be established pursuant to
Section 7.16 hereof, and (iii) all applicable collective bargaining
agreements, and all laws and regulations governing the employment
relationship and termination thereof including, without limitation, the
Worker Adjustment and Retraining Notification Act and regulations promulgated
thereunder, and any comparable state or local law.
Section 7.10 EMPLOYEE BENEFIT PLANS.
(a) For a period of twelve months immediately following the
Closing Date, the compensation, benefits and coverage provided to those non-
union individuals who are employees of the Company, or its subsidiaries, and
who continue to be employees of the Surviving Corporation, Parent or their
respective subsidiaries (the "Nonunion Continuing Company Employees")
pursuant to employee benefit plans or arrangements maintained by Parent, the
Surviving Corporation, or their respective subsidiaries shall be not less
favorable in the aggregate (as determined by Parent, the Surviving
Corporation, or their respective subsidiaries using reasonable assumptions
and benefit valuation methods) than those provided to each such employee
immediately prior to the Closing Date. In addition to the foregoing, Parent
shall, or shall cause the Surviving Corporation, or their respective
subsidiaries, to pay any Nonunion Continuing Company Employee whose
employment is terminated by Parent, the Surviving Corporation, or their
respective subsidiaries, within twelve months of the Closing Date a severance
benefit package equivalent to the severance benefit package that would be
provided under the Company's Severance Pay Plan, effective November 1, 1991,
as in effect on the date hereof.
(c) Parent shall, or shall cause the Surviving Corporation to,
give the Nonunion Continuing Company Employee 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 Parent or the Surviving Corporation in effect as of the Closing Date for
such Nonunion Continuing Company Employees' service with the Company or any
subsidiary of the Company (or any prior employer) to the same extent
recognized by the Company or such subsidiary immediately prior to the Closing
Date. With respect to any employee benefit plan or arrangement established
by Parent or the Surviving Corporation after the Closing Date (the "Post
Closing Plans"), service shall be credited in accordance with the terms of
such Post Closing Plans.
Section 7.11 COMPANY STOCK PLANS. Parent shall, or shall cause the
Surviving Corporation to, (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Nonunion Continuing Company Employees
under any welfare benefit plan established to replace any Company welfare
benefit plans in which such Nonunion Continuing Company 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 Nonunion
Continuing Company Employees and that have not been satisfied as of the
Closing Date under any welfare plan maintained for the Nonunion Continuing
Company Employees immediately prior to the Closing Date and (ii) provide each
Nonunion Continuing Company 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
Nonunion Continuing Company Employees are eligible to participate in after
the Closing Date.
Section 7.12 EXPENSES. With respect to each Plan that provides for
benefits in the form of Company Common Stock ("Company Stock Plans"), the
Company and Parent shall take all corporate action necessary or appropriate
to (i) provide for the issuance or purchase in the open market of Parent
Common Stock rather than Company Common Stock, pursuant thereto, and
otherwise to amend such Company Stock Plans to reflect this Agreement and the
Merger, (ii) obtain shareholder approval with respect to such Company Stock
Plans to the extent such approval is required for purposes of the Code or
other applicable law, or to enable such Company Stock Plans to comply with
Rule 16b-3 promulgated under the Exchange Act, (iii) reserve for issuance
under such Company Stock Plans or otherwise provide a sufficient number of
shares of Parent Common Stock for delivery upon payment of benefits, grant of
awards or exercise of options under such Company Stock Plans and (iv) as soon
as practicable after the Effective Time, file registration statements on Form
S-8 or amendments on such forms to the Form S-4 Registration Statement, as
the case may be (or any successor or other appropriate forms), with respect
to the shares of Parent Common Stock subject to such Company Stock Plans to
the extent such registration statement is required under applicable law, and
Parent shall use its best efforts to maintain the effectiveness of such
registration statements (and maintain the current status of the prospectuses
contained therein) for so long as such benefits and grants remain payable and
such options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act, the Company shall administer the Company
Stock Plans, where applicable, in a manner that complies with Rule 16b-3
promulgated under the Exchange Act.
Section 7.12 EXPENSES. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses, except that those expenses incurred in
connection with printing the Proxy/Registration Statement, as well as the
filing fee relating thereto, shall be shared equally by the Company and
Parent.
Section 7.13 FURTHER ASSURANCES. Each party will, and will cause its
subsidiaries to, execute such further documents and instruments and take such
further actions as may reasonably be requested by any other party in order to
consummate the Merger in accordance with the terms hereof.
Section 7.14 EMPLOYMENT CONTRACTS. Parent and Mr. Gooley have entered
into an employment agreement of even date herewith, and Parent shall, prior
to the Closing Date, offer to enter into binding employment arrangements
having the principal terms set forth in Section 7.14 of the Parent Disclosure
Schedule with the persons identified thereon and on the Closing Date shall
enter into such arrangements with those persons who have accepted such
offers.
Section 7.15 TRANSITION STEERING TEAM. As soon as reasonably
practicable after the date hereof, Parent and the Company shall create a
special transition steering team, with representation from Parent and the
Company, that will develop recommendations concerning the future structure
and operations of the Company after the Effective Time, subject to applicable
law. The transition steering team will be jointly chaired by the Chief
Executive Officers of Parent and the Company and the members of the
transition steering team shall be appointed by the co-chairmen. 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.
Section 7.16 CONVEYANCE TAXES. The Company and Parent shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfers or
gains, sales, use, transfer, value added, stock transfer or stamp taxes, any
transfer, recording, registration or other fees, or any similar taxes which
become payable in connection with the transaction contemplated by this
Agreement that are required or permitted to be filed on or before the
Effective Time. The Company shall pay, without deduction or withholding
(except where such deduction or withholding is required by applicable law)
from any amounts payable to the holders of any Company Common Stock, any such
Taxes which become payable in connection with the transactions contemplated
by this Agreement, on behalf of the stockholders of the Company.
ARTICLE VIII
CONDITIONS
Section 8.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction or waiver on or prior to the Closing Date of
each of the following conditions:
(a) Shareholder Approval. The Company Shareholders' Approval
shall have been obtained.
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1978, as amended, shall have expired or been
terminated.
(c) No Injunction. No temporary restraining order or preliminary
or permanent injunction or other order by any federal or state court
preventing consummation of the Merger shall have been issued and be
continuing in effect, and the Merger and the other transactions contemplated
hereby shall not have been prohibited under any applicable federal or state
law or regulation.
(d) Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act, and
no stop order suspending such effectiveness shall have been issued and remain
in effect.
(e) Listing of Shares. The shares of Parent Common Stock issuable
in the Merger pursuant to Article II shall have been approved for listing on
the NYSE upon official notice of issuance.
(f) Statutory Approvals. The Company Required Statutory Approvals
and Parent Required Statutory Approvals shall have been obtained at or prior
to the Effective Time, such approvals shall have become Final Orders (as
defined below) and such Final Orders shall not impose terms or conditions
which, in the aggregate, could reasonably be expected to have a Company
Material Adverse Effect or a Parent Material Adverse Effect. A "Final Order"
means action by the relevant regulatory authority which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, with respect to
which any waiting period prescribed by law before the transactions
contemplated hereby may be consummated has expired, and as to which all
conditions to the consummation of such transactions prescribed by law,
regulation or order have been satisfied.
Section 8.02 CONDITIONS TO OBLIGATION OF PARENT TO EFFECT THE MERGER.
The obligation of Parent to effect the Merger shall be further subject to the
satisfaction (or waiver by Parent), on or prior to the Closing Date, of each
of the following conditions:
(a) Performance of Obligations of the Company. The Company shall
have performed in all material respects each of its agreements and covenants
required by this Agreement to be so performed by the Company at or prior to
the Closing.
(b) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(except for representations and warranties that expressly speak only as of a
specific date or time other than the date hereof or the Closing Date, which
need only be true and correct as of such date or time) except for such
failures of representations or warranties to be true and correct (without
regard to any materiality qualifications contained therein) which,
individually and in the aggregate, would not reasonably be expected to result
in a Company Material Adverse Effect.
(c) Closing Certificates. Parent shall have received a
certificate signed by the Chief Executive Officer or Chief Financial Officer
of the Company, dated the Closing Date, to the effect that, to the best of
such officer's knowledge, the conditions set forth in Section 8.02(a) and
Section 8.02(b) have been satisfied.
(d) No Company Material Adverse Effect. No Company Material
Adverse Effect shall have occurred, and there shall exist no fact or
circumstance other than facts and circumstances described in Section 8.02(d)
of the Company Disclosure Schedule or the Company SEC Reports filed prior to
the date hereof which could reasonably be expected to have a Company Material
Adverse Effect.
(e) Company Required Consents. The Company Required Consents the
failure of which to obtain would reasonably be expected to have a Company
Material Adverse Effect shall have been obtained.
(f) Affiliate Agreements. Parent shall have received Affiliate
Agreements, duly executed by each "affiliate" of the Company, substantially
in the form of Exhibit 7.08, as provided in Section 7.08.
(g) Tax Opinion. Prior to the mailing of the Proxy Statement (and
to be reconfirmed at the Closing Date), Parent shall have received an opinion
from LeBoeuf, Lamb, Greene & MacRae, L.L.P. to the effect that the Merger
will be treated as a reorganization within the meaning of Section 368(a) of
the Code. In rendering such opinion, LeBoeuf, Lamb, Greene & MacRae, L.L.P.
may receive and rely upon representations contained in certificates of
Parent, the Company and others, in each case in form and substance reasonably
acceptable to such counsel.
Section 8.03 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be further
subject to the satisfaction (or waiver by the Company), on or prior to the
Closing Date, of each of the following conditions:
(a) Performance of Obligations of Parent. Parent shall have
performed in all material respects each of its agreements and covenants
required by this Agreement to be so performed by Parent at or prior to the
Closing.
(b) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement shall be true and correct on
and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(except for representations and warranties that expressly speak only as of a
specific date or time other than the date hereof or the Closing Date, which
need only be true and correct as of such date or time) except for such
failures of representations or warranties to be true and correct (without
regard to any materiality qualifications contained therein) which,
individually and in the aggregate, would not reasonably be expected to result
in a Parent Material Adverse Effect.
(c) Closing Certificates. The Company shall have received a
certificate signed by the chief Executive Officer or Chief Financial Officer
of Parent, dated the Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Section 8.03(a) and Section
8.03(b) have been satisfied.
(d) No Parent Material Adverse Effect. No Parent Material Adverse
Effect shall have occurred, and there shall exist no fact or circumstance
other than facts and circumstances described in Section 8.03(d) of the Parent
Disclosure Schedule or the Parent SEC Reports filed prior to the date hereof
which could reasonably be expected to have a Parent Material Adverse Effect.
(e) Parent Required Consents. Parent Required Consents the
failure of which to obtain would reasonably be expected to have a Parent
Material Adverse Effect shall have been obtained.
(f) Tax Opinion. Prior to the mailing of the Proxy Statement (and
to be reconfirmed at the Closing Date), the Company shall have received an
opinion from Winthrop, Stimson, Putnam & Roberts to the effect that the
Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code. In rendering such opinion, Winthrop, Stimson, Putnam &
Roberts may receive and rely upon representations contained in certificates
of Parent, the Company and others, in each case in form and substance
reasonably acceptable to such counsel.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 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 before or after approval by the
shareholders of the respective parties hereto contemplated by this Agreement:
(a) by mutual written consent of the Board of Directors of the
Company and Board of Trustees of Parent;
(b) by Parent or the Company hereto, by written notice to the
other parties, if the Effective Time shall not have occurred on or before the
date which is ten months from the date hereof (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 directly or indirectly 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(f)
shall not have been fulfilled but all other conditions to the Closing shall
be fulfilled or shall be capable of being fulfilled, then the Initial
Termination Date shall be extended to the 15th-month anniversary of the date
hereof (the "Extended Termination Date");
(c) by Parent or the Company, by written notice to the other
parties, if the Company Shareholders' Approval shall not have been obtained
at a duly held Company Special Meeting, including any adjournments thereof;
(d) by Parent or the Company, if any state or federal law, order,
rule or regulation is adopted or issued, which has the effect, as supported
by the written opinion of outside counsel for such party, of prohibiting the
Merger, or if any court of competent jurisdiction in the United States or any
State shall have issued an order, judgment or decree permanently restraining,
enjoining or otherwise prohibiting the Merger, and such order, judgment or
decree shall have become final and nonappealable; (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 the Company upon ten (10) days' prior written notice to
Parent if the Board of Directors of the Company determines in good faith,
that termination of this Agreement is necessary for the Board of Directors of
the Company to act in a manner consistent with its fiduciary duties to
shareholders under applicable law by reason of an Alternative Proposal
meeting the requirements of Section 6.02 having been made; provided that
(A) the Board of Directors of the Company shall determine
based on advice of outside counsel with respect to the Board of Directors'
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 Parent in negotiation entered into pursuant to clause (B)
below, it is necessary pursuant to such fiduciary duties that the directors
reconsider such commitment as a result of such Alternative Proposal;
(B) prior to any such termination, the Company shall, and
shall cause its respective financial and legal advisors to, give Parent a
reasonable opportunity during such ten-day period following receipt by Parent
of such written notice to make such adjustments in the terms and conditions
of this Agreement as would enable the Company to proceed with the Merger or
other transactions contemplated hereby on such adjusted terms and negotiate
in good faith with Parent with respect to any such adjustments; and
(C) the Company's ability to terminate this Agreement
pursuant to Section 9.01(e) is conditioned upon the payment by the Company to
Parent of any amounts owed by it pursuant to Section 9.03(b).
(f) by the Company, by written notice to Parent, if (i) there
exist material breaches of the representations and warranties of Parent made
herein as of the date hereof which breaches, individually or in the
aggregate, would or would reasonably be expected to result in a Parent
Material Adverse Effect, and such breaches shall not have been remedied
within 20 days after receipt by Parent of notice in writing from the Company,
specifying the nature of such breaches and requesting that they be remedied,
or (ii) there shall have been a material breach of any agreement or covenant
of Parent hereunder, and such breach shall not have been remedied within 20
days after receipt by Parent of notice in writing from the Company,
specifying the nature of such failure and requesting that it be remedied; or
(g) by Parent, by written notice to the Company, if (i) there exist
material breaches of the representations and warranties of the Company made
herein as of the date hereof which breaches, individually or in the
aggregate, would or would reasonably be expected to result in a Company
Material Adverse Effect, and such breaches shall not have been remedied
within 20 days after receipt by the Company of notice in writing from Parent,
specifying the nature of such breaches and requesting that they be remedied,
(ii) there shall have been a material breach of any agreement or covenant of
the Company hereunder, and such failure to perform or comply shall not have
been remedied within 20 days after receipt by the Company of notice in
writing from Parent, specifying the nature of such failure and requesting
that it be remedied; or (iii) the Board of Directors of the Company (A) shall
withdraw or modify in any manner materially adverse to Parent its approval or
recommendation of this Agreement or the transactions contemplated herein, (B)
shall approve or recommend an Alternative Proposal or (C) shall resolve to
take any of the actions specified in clause (A) or (B).
Section 9.02 EFFECT OF TERMINATION. In the event of a valid
termination of this Agreement by either the Company or Parent pursuant to
Section 9.01, this Agreement shall forthwith become null and void and there
shall be no liability on the part of either the Company or Parent or their
respective officers, trustees or directors hereunder, except that Section
7.12, Section 9.03, the agreement contained in the last sentence of Section
7.01, Section 10.08 and Section 10.09 shall survive the termination.
Section 9.03 TERMINATION FEE; EXPENSES.
(a) Payment of Expenses Following Termination Pursuant to 9.01(f)
and (g). If this Agreement is terminated pursuant to Section 9.01(g)(i) or
(ii), then the Company shall promptly (but not later than five business days
after receiving notice of termination) pay to Parent in cash an amount equal
to all documented out-of-pocket expenses and fees incurred by Parent
(including, without limitation, fees and expenses payable to all legal,
accounting, financial, and other professionals arising out of, in connection
with or related to the transactions contemplated by this Agreement) not in
excess of $5 million. If this Agreement is terminated pursuant to Section
9.01(f), then Parent shall promptly (but not later than five business days
after receiving notice of termination) pay to the Company in cash an amount
equal to all documented out-of-pocket expenses and fees incurred by the
Company (including, without limitation, fees and expenses payable to all
legal, accounting, financial, and other professionals arising out of, in
connection with or related to the transactions contemplated by this
Agreement) not in excess of $5 million.
(b) In the event that (i) this Agreement is terminated by the
Company pursuant to Section 9.01(e) or by Parent pursuant to Section
9.01(g)(iii) or (ii) any person or group shall have made an Alternative
Proposal that has not been withdrawn and this Agreement is terminated by (A)
Parent pursuant to Section 9.01(c) or (B) by the Company pursuant to Section
9.01(b), then the Company shall promptly (but in no event later than the date
of such termination) pay to Parent, by wire transfer of same day funds, a
termination fee of $19 million plus an amount equal to all documented out-of-
pocket expenses and fees incurred by Parent 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; provided, however, that if this
Agreement is terminated pursuant to the provisions of clause (ii) above, then
no payment of a termination fee or expenses by the Company to Parent shall be
required unless and until a definitive agreement with respect to the
applicable Alternative Proposal is executed within two years after such
termination and, in such event, a termination fee and expenses shall be
payable within five (5) business days after the execution of such definitive
agreement.
(c) In the event that this Agreement is terminated by either
Parent or the Company pursuant to Section 9.01(b) or by mutual written
consent of the Company and Parent pursuant to 9.01(a), and, on the date of
such termination, there are no remaining conditions (unsatisfied or not
waived) to the obligations of either party to effect the Merger except for
the receipt by Parent of any Parent Required Statutory Approval under the
1935 Act as required by, and in accordance with the terms of, Section
8.01(f), then Parent shall pay to the Company, by wire transfer of same day
funds within five (5) business days after such termination, a termination fee
of $10.625 million.
(d) 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 or expenses pursuant to Sections 9.03(a),
9.03(b) or 9.03(c), the right to receive such termination fee or expenses
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, 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 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.
Section 9.04 AMENDMENT. This Agreement may be amended by the Boards
of Directors and Trustees of the parties hereto, at any time before or after
approval hereof by the shareholders of the Company and prior to the Effective
Time, but after such approval only to the extent permitted by applicable law.
This Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto.
Section 9.05 WAIVER. At any time prior to the Effective Time, the
Parent or the Company may (a) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein, to the extent permitted by
applicable law. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party. 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
Section 10.01 NON-SURVIVAL; EFFECT OF REPRESENTATIONS AND WARRANTIES.
All representations, warranties and agreements in this Agreement shall not
survive the Merger, except as otherwise provided in this Agreement and except
for the agreements contained in this Section 10.01, in Articles I and II and
in Sections 7.05, 7.09, 7.10, 7.11, 10.07, 10.08 and 10.09.
Section 10.02 BROKERS. The Company represents and warrants that,
except for SG Barr Devlin whose fees have been disclosed to Parent prior to
the date hereof, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger
or the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company. Parent represents and warrants that,
except for Credit Suisse First Boston, ,whose fees have been disclosed to the
Company prior to the date hereof, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent.
Section 10.03 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if (i) delivered personally,
(ii) sent by reputable overnight courier service, (iii) telecopied (which is
confirmed), or (iv) five days after being mailed by registered or certified
mail (return receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) If to the Company, to:
Yankee Energy System, Inc.
599 Research Parkway
Meriden, Connecticut 06604-4918
Attention: Mary J. Healey, Esq.
Telephone: (203) 639-4405
Telecopy: (203) 639-4185
with a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
Attention: David P. Falck, Esq.
Telephone: (212) 858-1000
Telecopy: (212) 858-1500
(b) If to Parent, to:
Northeast Utilities Service Company
107 Selden Street
Berlin, Connecticut 06037
Attention: John H. Forsgren
Telephone: (860) 665-5000
Telecopy: (860) 665-3718
with a copy to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019
Attention: Steven H. Davis, Esq.
Telephone: (212) 424-8000
Telecopy: (212) 424-8500
Section 10.04 MISCELLANEOUS. This Agreement (including the documents
and instruments referred to herein) (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof other than the Confidentiality Agreement; (ii) shall not be assigned
by operation of law or otherwise; and (iii) shall be governed by and
construed in accordance with the laws of the State of Connecticut applicable
to contracts executed in and to be fully performed in such State, without
giving effect to its conflicts of law, rules or principles.
Section 10.05 INTERPRETATION. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement, respectively, unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
Section 10.06 COUNTERPARTS; EFFECT. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
Section 10.07 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, except for
Article II and for rights of Indemnified Parties as set forth in Section
7.05, nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights or remedies of any nature whatsoever under
or by reason of this Agreement.
Section 10.08 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 HEREBY (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.
Section 10.09 ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court
of the United States located in the State of Connecticut or in Connecticut
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of Connecticut or any Connecticut state court in the
event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny
such personal jurisdiction by motion or other request for leave from any such
court and (c) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any
court other than a federal or state court sitting in the State of
Connecticut.
IN WITNESS WHEREOF, the Company and Parent have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the
date first written above.
YANKEE ENERGY SYSTEM, INC.
By:
Name:
Title:
NORTHEAST UTILITIES
By:
Name:
Title:
