AGREEMENT AND PLAN OF MERGER
by and among
BERKSHIRE ENERGY RESOURCES,
ENERGY EAST CORPORATION
AND
MOUNTAIN MERGER LLC
November 9, 1999
Table of Contents
Page
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ARTICLE I-THE MERGER
Section 1.1 The Merger
1
Section 1.2 Effects of the Merger
1
Section 1.3 Effective Time of the Merger
1
Section 1.4 Trustees
2
Section 1.5 Officers
2
ARTICLE II-TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Shares and Membership Interests
2
Section 2.2 Exchange of Certificates
3
ARTICLE III-THE CLOSING
Section 3.1 Closing
4
ARTICLE IV-REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization and Qualification
4
Section 4.2 Subsidiaries
5
Section 4.3 Capitalization
5
Section 4.4 Authority; Non-contravention; Statutory Approvals; Compliance
6
Section 4.5 Reports and Financial Statements
8
Section 4.6 Absence of Certain Changes or Events
8
Section 4.7 Litigation
8
Section 4.8 Proxy Statement
9
Section 4.9 Tax Matters
9
Section 4.10 Employee Matters; ERISA
11
Section 4.11 Environmental Protection
14
Section 4.12 Regulation as a Utility
16
Section 4.13 Vote Required
17
Section 4.14 Opinion of Financial Advisor
17
Section 4.15 Ownership of Parent Common Stock
17
Section 4.16 Takeover Laws
17
ARTICLE V-REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.1 Organization and Qualification
17
Section 5.2 Subsidiaries
18
Section 5.3 Capitalization
18
Section 5.4 Authority; Non-contravention; Statutory Approvals
18
Section 5.5 Proxy Statement
19
Section 5.6 Availability of Funds
19
ARTICLE VI-CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of the Parties
19
Section 6.2 Covenant of the Company; Alternative Proposals
23
Section 6.3 Employment Agreements
24
Section 6.4 Additional Statutory Approvals
24
ARTICLE VII-ADDITIONAL AGREEMENTS
Section 7.1 Access to Information
25
Section 7.2 Proxy Statement
25
Section 7.3 Regulatory Matters
25
Section 7.4 Company Shareholders' Approval
26
Section 7.5 Indemnification
26
Section 7.6 Disclosure Schedules
27
Section 7.7 Public Announcements
28
Section 7.8 Certain Employee Agreements
28
Section 7.9 Employee Benefit Plans
28
Section 7.10 Expenses 30
Section 7.11 Further Assurances
30
Section 7.12 Corporate Offices
30
Section 7.13 Community Involvement
30
Section 7.14 Advisory Board
30
ARTICLE VIII-CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger
30
Section 8.2 Conditions to Obligation of Parent to Effect the Merger
31
Section 8.3 Conditions to Obligation of the Company to Effect the Merger
32
ARTICLE IX-TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination
33
Section 9.2 Effect of Termination
34
Section 9.3 Termination Fee; Expenses
35
Section 9.4 Amendment
36
Section 9.5 Waiver
36
ARTICLE X-GENERAL PROVISIONS
Section 10.1 Non-survival; Effect of Representations and Warranties
36
Section 10.2 Brokers
36
Section 10.3 Notices
36
Section 10.4 Miscellaneous
37
Section 10.5 Interpretation
38
Section 10.6 Counterparts; Effect
38
Section 10.7 Parties in Interest
38
Section 10.8 Waiver of Jury Trial and Certain Damages
38
Section 10.9 Enforcement
38
Section 10.10 Disclaimer of Liability
39
List of Defined Terms
Term Page
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1935 Act 5
Advisory Board 30
Agreement 1
Alternative Proposal 24
Certificate 2
Certificate of Merger 1
Closing 4
Closing Agreement 10
Closing Date 4
Code 4
Company 1
Company Common Shares 2
Company Disclosure Schedule 27
Company Financial Statements 8
Company Material Adverse Effect 5
Company Preferred Shares 6
Company Required Consents 6
Company Required Statutory Approvals 7
Company SEC Reports 8
Company Shareholders' Approval 17
Company Special Meeting 26
Confidentiality Agreement 25
Controlled Group Liability 11
Covered Company Employee 29
Disclosure Schedules 27
Effective Time 2
Employee Benefit Plan 11
Employment Agreements 24
Environmental Permits 15
Environmental Claim 15
ERISA 11
ERISA Affiliate 11
Exchange Act 8
Exchange Fund 3
Expenses 35
FERC 8
Final Order 31
GAAP 8
Indemnified Liabilities 26
Indemnified Parties 26
Indemnified Party 26
Initial Termination Date 33
IRS 12
joint venture 5
Liens 6
Merger 1
Merger Consideration 2
Merger Sub 1
Merger Sub Membership Interests 2
MGL 1
MLLCA 1
Multiemployer Plan 11
Multiple Employer Plan 13
Parent 1
Parent Disclosure Schedule 27
Parent Material Adverse Effect 17
Parent Preferred Stock 18
Parent Required Consents 18
Parent Required Statutory Approvals 18
Paying Agent 3
PBGC 13
Plan 11
Proxy Statement 9
Qualified Plans 12
Release 16
Representatives 25
Retiree Plan 29
Robinson Employment Agreement 24
SEC 8
Securities Act 8
SERP 29
subsidiary 5
Surviving Company 1
Takeover Laws 17
Tax Return 9
Tax Ruling 10
Taxes 9
Termination Fee 35
VEBA 12
Violation 6
Withdrawal Liability 12
AGREEMENT AND PLAN OF MERGER, dated as of November 9, 1999 (this
"Agreement"), by and among Berkshire Energy Resources, a Massachusetts
business trust (the "Company"), Energy East Corporation, a New York
corporation ("Parent"), and Mountain Merger LLC, a Massachusetts limited
liability company and a subsidiary of Parent ("Merger Sub").
WHEREAS, the Company and Parent have determined to engage in a
business combination transaction on the terms stated herein;
WHEREAS, the Board of Directors of Parent, the Board of Trustees of
the Company and the Managers of Merger Sub have each approved and deemed
it advisable and in the best interests of their respective shareholders and
members to consummate the transactions contemplated herein under which the
businesses of the Company and Parent would be combined by means of the
merger of Merger Sub with and into the Company; and
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions of this Agreement:
At the Effective Time (as defined in Section 1.3), Merger Sub shall
be merged with and into the Company (the "Merger") in accordance with the
declaration of trust of the Company and the laws of the Commonwealth of
Massachusetts. The Company shall be the surviving entity in the Merger and
shall continue its existence under the laws of the Commonwealth of
Massachusetts. The effects and the consequences of the Merger shall be as
set forth in Section 1.2. Throughout this Agreement, the term "the Company"
shall refer to the Company prior to the Merger and the term "Surviving
Company" shall refer to the Company in its capacity as the surviving entity
in the Merger.
Section 1.2 Effects of the Merger. At the Effective Time, (i) the
declaration of trust of the Company, as in effect immediately prior to the
Effective Time, shall be the declaration of trust of the Surviving Company
until thereafter amended as provided by law and such declaration of trust
and (ii) the by-laws of the Company, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Company until
thereafter amended as provided by law, the declaration of trust of the
Surviving Company and such by-laws. Subject to the foregoing, the
additional effects of the Merger shall be as provided in Section 2 of
Chapter 182 of the Massachusetts General Laws ("MGL") and Section 62 of the
Massachusetts Limited Liability Company Act (the "MLLCA").
Section 1.3 Effective Time of the Merger. On the Closing Date (as
defined in Section 3.1), with respect to the Merger, a certificate of
merger complying with Article 56 of the Company's declaration of trust and
Section 61 of the MLLCA (the "Certificate of Merger") shall be delivered to
the Secretary of the Commonwealth of Massachusetts, and to such other
offices as may be required by law, for filing. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary
of the Commonwealth of Massachusetts, or at such later date and time as may
be set forth in the Certificate of Merger (the "Effective Time").
Section 1.4 Trustees. The Managers of Merger Sub immediately
prior to the Effective Time shall be the trustees of the Surviving Company
and shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualified in the manner
provided in the declaration of trust and by-laws of the Surviving Company.
Section 1.5 Officers. Except for the Vice President of the
Company, who shall become the President and Chief Executive Officer of the
Surviving Company, the officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Company and
shall hold office from the Effective Time until their respective successors
are duly elected or appointed and qualified in the manner provided in the
declaration of trust and by-laws of the Surviving Company.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Shares and Membership
Interests. At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any share of the Company or membership
interest of Merger Sub:
(a) Membership Interests of Merger Sub. All of the membership
interests of Merger Sub (the "Merger Sub Membership Interests") that are
issued and outstanding immediately prior to the Effective Time shall be
converted into an aggregate of one thousand (1,000) fully paid and
nonassessable common shares, without par value, of the Surviving Company.
(b) Cancellation of Certain Company Common Shares. Each
common share, without par value, of the Company (the "Company Common
Shares"), that is owned by the Company as treasury shares and all Company
Common Shares that are owned by Parent shall be canceled and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Shares. Subject to the
provisions of this Section 2.1, each Company Common Share, other than
shares canceled pursuant to Section 2.1(b), issued and outstanding
immediately prior to the Effective Time shall by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive $38.00 in cash (the "Merger Consideration"). At the
Effective Time, all such Company Common Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate ("Certificate") representing any
such Company Common Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration.
Section 2.2 Exchange of Certificates.
(a) Deposit With Paying Agent. As soon as practicable after
the Effective Time, Parent shall deposit or cause to be deposited with a
bank or trust company mutually agreeable to Parent and the Company (the
"Paying Agent"), pursuant to an agreement in form and substance reasonably
acceptable to Parent and the Company, cash representing the aggregate
Merger Consideration to which Company shareholders who have properly
completed, signed and submitted letters of transmittal shall be entitled
pursuant to Section 2.1(c); and from time to time cash representing the
aggregate Merger Consideration to which Company shareholders who later
submit letters of transmittal shall be entitled pursuant to Section 2.1(c)
(such amounts being hereinafter referred to as the "Exchange Fund"). The
Paying Agent shall invest the Exchange Fund as Parent directs. Any net
profit resulting from, or interest or income produced by, such investments
shall be payable to Parent. The Exchange Fund shall not be used for any
other purpose except as provided in this Agreement.
(b) Exchange And Payment Procedures. As soon as practicable
after the Effective Time, Parent shall cause the Paying Agent to mail to
each holder of record as of the Effective Time of a Certificate or
Certificates that have been converted pursuant to Section 2.1: (i) a letter
of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon actual
delivery of the Certificates to the Paying Agent) and (ii) instructions for
effecting the surrender of the Certificates and receiving the Merger
Consideration to which such holder shall be entitled therefor pursuant to
Section 2.1. Upon surrender of a Certificate to the Paying Agent for
cancellation, together with a duly executed letter of transmittal and such
other documents as the Paying Agent may require, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration. In the event the Merger Consideration is to be delivered to
any person who is not the person in whose name the Certificate surrendered
in exchange therefor is registered in the transfer records of the Company,
the Merger Consideration may be delivered to a transferee if the
Certificate is presented to the Paying Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence satisfactory
to the Paying Agent that any applicable transfer taxes have been paid.
Until surrendered as contemplated by this Section 2.2, each Certificate
(other than a certificate representing Company Common Shares to be canceled
in accordance with Section 2.1(b)) shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
the Merger Consideration contemplated by this Section 2.2. No interest will
be paid or will accrue on any cash payable to holders of Certificates
pursuant to the provisions of this Article II.
(c) Closing of Transfer Books. From and after the Effective
Time, the share transfer books of the Company shall be closed and no
registration of any transfer of any shares of the Company shall thereafter
be made in the records of the Company. If, after the Effective Time,
Certificates are presented to the Surviving Company, they shall be canceled
and exchanged for the Merger Consideration.
(d) Termination of Exchange Fund. All funds held by the
Paying Agent for payment to the holders of unsurrendered Certificates and
unclaimed at the end of one year from the Effective Time shall be returned
to Parent, after which time any holder of unsurrendered Certificates shall
look as a general creditor only to the Surviving Company for payment of
such funds to which such holder may be due, subject to applicable law.
(e) Escheat. The Company shall not be liable to any person
for such funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) Withholding Rights. Each of the Surviving Company, the
Company and Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Shares such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code
of 1986 as amended (the "Code") and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign Tax law. To the
extent that amounts are so withheld by the Surviving Company, the Company
or Parent, as the case may be, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of Company
Common Shares in respect of which such deduction and withholding was made
by the Surviving Company, the Company or Parent, as the case may be.
Without limitation of the foregoing, unless an exemption applies, the
Paying Agent will be required to withhold and remit to the IRS 31% of any
cash payments to which a holder of Company Common Shares or other payee is
entitled pursuant to the Merger, unless (i) the shareholder or other payee
provides his or her U.S. Federal taxpayer identification number (social
security number or employer identification number) and certifies that such
number is correct by completing and signing the IRS Form W-9 that will be
included as part of the transmittal letter sent to shareholders by the
Paying Agent or (ii) another applicable exemption exists and is proved in a
manner satisfactory to the Paying Agent.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing")
shall take place at the offices of Huber Lawrence & Abell, at 10:00 a.m.,
Eastern time, on the second business day immediately following the date on
which the last of the conditions set forth in Article VIII hereof is
fulfilled or waived (other than conditions that by their nature are
required to be performed on the Closing Date, but subject to satisfaction
of such conditions), or at such other time and date and place as the
Company and Parent shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
Section 4.1 Organization and Qualification. Except as set forth
in Section 4.1 of the Company Disclosure Schedule (as defined in Section
7.6), the Company and each of its subsidiaries (as defined below) is a
business trust or corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization, has all requisite trust or corporate power and authority, and
has been duly authorized by all necessary approvals and orders, to own,
lease and operate its assets and properties to the extent owned, leased and
operated and to carry on its business as it is now being conducted and is
duly qualified and in good standing to do business in each jurisdiction in
which the nature of its business or the ownership or leasing of its assets
and properties makes such qualification necessary, other than in such
jurisdictions where the failure to be so qualified and in good standing
will not, when taken together with all other such failures, have a material
adverse effect on the business, properties, financial condition or results
of operations of the Company and its subsidiaries taken as a whole or on
the consummation of this Agreement (any such material adverse effect being
hereafter referred to as a "Company Material Adverse Effect"). As used in
this Agreement, the term "subsidiary" of a person shall mean any
corporation or other entity (including business trusts, partnerships and
other business associations) of which a majority of the outstanding capital
stock or other voting securities having voting power under ordinary
circumstances to elect directors or similar members of the governing body
of such corporation or entity shall at the time be held, directly or
indirectly, by such person.
Section 4.2 Subsidiaries. Section 4.2 of the Company Disclosure
Schedule sets forth a description as of the date hereof, of all material
and certain other subsidiaries and joint ventures of the Company, including
the name of each such entity, the state or jurisdiction of its
incorporation or organization, the Company's interest therein and a brief
description of the principal line or lines of business conducted by each
such entity. Except as set forth in Section 4.2 of the Company Disclosure
Schedule, none of the Company's subsidiaries is a "public utility company,"
a "holding company," a "subsidiary company" or an "affiliate" of any public
utility company within the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8) or
2(a)(11) of the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"). Except as set forth in Section 4.2 of the Company Disclosure
Schedule, all of the issued and outstanding shares of capital stock owned
by the Company of each Company subsidiary are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned, directly or
indirectly, by the Company free and clear of any liens, claims,
encumbrances, security interests, equities, charges and options of any
nature whatsoever, and there are no outstanding subscriptions, options,
calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating it to grant, extend or enter into
any such agreement or commitment, except for any of the foregoing that
could not reasonably be expected to have a Company Material Adverse Effect.
As used in this Agreement, the term "joint venture" of a person shall mean
any corporation or other entity (including business trusts, partnerships
and other business associations) that is not a subsidiary of such person,
in which such person or one or more of its subsidiaries owns an equity
interest, other than equity interests held for passive investment purposes
which are less than 10% of any class of the outstanding voting securities
or equity of any such entity.
Section 4.3 Capitalization. The authorized capital of the Company
consists of 10,000,000 Company Common Shares and 1,000,000 preferred
shares, par value $100.00, of the Company ("Company Preferred Shares"). As
of the close of business on November 8, 1999, there were issued and
outstanding 2,523,479 Company Common Shares and no Company Preferred
Shares. All of the issued and outstanding shares of the Company are validly
issued, fully paid, nonassessable and free of preemptive rights. Except as
set forth in Section 4.3 of the Company Disclosure Schedule, as of the date
hereof, there are no outstanding subscriptions, options, stock appreciation
rights, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating the Company or any of the
subsidiaries of the Company to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of the Company, or obligating
the Company to grant, extend or enter into any such agreement or
commitment.
Section 4.4 Authority; Non-contravention; Statutory Approvals;
Compliance.
(a) Authority. The Company has all requisite trust power and
authority to enter into this Agreement and, subject to obtaining the
Company Shareholders' Approval (as defined in Section 4.13) and the Company
Required Statutory Approvals (as defined in Section 4.4(c)), to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary trust action
on the part of the Company subject to obtaining the applicable Company
Shareholders' Approval. This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution
and delivery by the other signatories hereto, constitutes the valid and
binding obligation of the Company enforceable against it in accordance with
its terms.
(b) Non-contravention. Except as set forth in Section 4.4(b)
of the Company Disclosure Schedule, the execution and delivery of this
Agreement by the Company do not, and the consummation of the transactions
contemplated hereby will not, violate, conflict with, or result in a breach
of any provision of, or constitute a default (with or without notice or
lapse of time or both) under, or result in the termination or modification
of, or accelerate the performance required by, or result in a right of
termination, cancellation, or acceleration of any obligation or the loss of
a benefit under, or result in the creation of any lien, security interest,
charge or encumbrance ("Liens") upon any of the properties or assets of the
Company or any of its subsidiaries or any of its joint ventures (any such
violation, conflict, breach, default, right of termination, modification,
cancellation or acceleration, loss or creation, a "Violation" with respect
to the Company (such term when used in Article V having a correlative
meaning with respect to Parent)) pursuant to any provisions of (i) the
articles of organization, by-laws or similar governing documents of the
Company, any of its subsidiaries or any of its joint ventures, (ii) subject
to obtaining the Company Required Statutory Approvals and the receipt of
the Company Shareholders' Approval, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of
any Governmental Authority (as defined in Section 4.4(c)) applicable to the
Company, any of its subsidiaries or any of its joint ventures, or any of
their respective properties or assets or (iii) subject to obtaining the
third-party consents or other approvals set forth in Section 4.4(b) of the
Company Disclosure Schedule (the "Company Required Consents") any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of
any kind to which the Company, any of its subsidiaries or any of its joint
ventures is a party or by which it or any of its properties or assets may
be bound or affected, excluding from the foregoing clauses (i), (ii) and
(iii) such Violations as would not have, in the aggregate, a Company
Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section
4.4(c) of the Company Disclosure Schedule, no declaration, filing or
registration with, or notice to or authorization, consent or approval of,
any court, federal, state, local or foreign governmental or regulatory body
(including a stock exchange or other self-regulatory body) or authority
(each, a "Governmental Authority") is necessary for the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, the failure to obtain,
make or give which would have, in the aggregate, a Company Material Adverse
Effect (the "Company Required Statutory Approvals"), it being understood
that references in this Agreement to "obtaining" such Company Required
Statutory Approvals shall mean making such declarations, filings or
registrations, giving such notices, obtaining such authorizations, consents
or approvals and having such waiting periods expire as are necessary to
avoid a violation of law.
(d) Compliance. Except as set forth in Section 4.4(d) or
Section 4.11 of the Company Disclosure Schedule, or as disclosed in the
Company SEC Reports (as defined in Section 4.5) filed prior to the date
hereof, neither the Company, nor any of its subsidiaries nor any of its
joint ventures is in violation of, is under investigation with respect to
any violation of, or has been given notice or been charged with any
violation of, any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any applicable Environmental Law,
as defined in Section 4.11(f)(ii)) of any Governmental Authority except for
violations that, in the aggregate, do not have and are not reasonably
likely to have a Company Material Adverse Effect. Except as set forth in
Section 4.4(d) of the Company Disclosure Schedule or in Section 4.11 of the
Company Disclosure Schedule, the Company and its subsidiaries and joint
ventures have all permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct their
respective businesses as currently conducted in all respects, except those
which the failure to obtain would, in the aggregate, not have a Company
Material Adverse Effect. Except as set forth in Section 4.4(d) of the
Company Disclosure Schedule, the Company and each of its subsidiaries are
not in breach or violation of or in default in the performance or
observance of any term or provision of, and no event has occurred which,
with lapse of time or action by a third party, could result in a default
under, (i) its declaration of trust, articles of organization or by-laws or
(ii) any material contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which it is a party or by which it is bound or to which any of its property
is subject, except for breaches, violations or defaults that, in the
aggregate, do not have and are not reasonably likely to have, a Company
Material Adverse Effect.
(e) Except as set forth in Section 4.4(e) of the Company
Disclosure Schedule, there is no "non-competition" or other similar
contract, commitment, agreement or understanding that restricts the ability
of the Company or any of its affiliates to conduct business in any
geographic area or that would reasonably be likely to restrict the
Surviving Company or any of its affiliates to conduct business in any
geographic area.
Section 4.5 Reports and Financial Statements. The filings
required to be made by the Company and its subsidiaries since January 1,
1996 under the Securities Act of 1933, as amended (the "Securities Act"),
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
1935 Act and applicable state public utility laws and regulations have been
filed with the Securities and Exchange Commission (the "SEC"), the Federal
Energy Regulatory Commission (the "FERC") or the appropriate state public
utilities commission, as the case may be, including all forms, statements,
reports, agreements (oral or written) and all documents, exhibits,
amendments and supplements appertaining thereto, and complied, as of their
respective dates, in all material respects with all applicable requirements
of the appropriate statute and the rules and regulations thereunder. The
Company has made available to Parent a true and complete copy of each
report, schedule, registration statement and definitive proxy statement
filed by the Company or its predecessor with the SEC since January 1, 1996
(as such documents have since the time of their filing been amended, the
"Company SEC Reports"). As of their respective dates, the Company SEC
Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of the Company included in the
Company SEC Reports (collectively, the "Company Financial Statements") have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis ("GAAP") (except as may be indicated therein
or in the notes thereto and except with respect to unaudited statements as
permitted by Form 10-Q of the SEC) and fairly present the consolidated
financial position of the Company as of the dates thereof and the
consolidated results of operations and cash flows for the periods then
ended. True, accurate and complete copies of the declaration of trust and
by-laws of the Company, as in effect on the date hereof, have been made
available to Parent.
Section 4.6 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports filed prior to the date hereof or as
set forth in Section 4.6 of the Company Disclosure Schedule, from December
31, 1998 the Company and each of its subsidiaries have conducted their
business only in the ordinary course of business consistent with past
practice, and there has not been, and no fact or condition exists which
would have or, insofar as reasonably can be foreseen, could have, a Company
Material Adverse Effect.
Section 4.7 Litigation. Except as disclosed in the Company SEC
Reports filed prior to the date hereof or as set forth in Section 4.7,
Section 4.9 or Section 4.11 of the Company Disclosure Schedule, (a) there
are no claims, suits, actions or proceedings, pending or threatened, nor
are there any investigations or reviews pending or threatened against,
relating to or affecting the Company or any of its subsidiaries, and (b)
there are no judgments, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or authority
or any arbitrator applicable to the Company or any of its subsidiaries,
except for any of the foregoing under clauses (a) and (b) that individually
or in the aggregate would not reasonably be expected to have a Company
Material Adverse Effect.
Section 4.8 Proxy Statement. The proxy statement, in definitive
form (the "Proxy Statement"), relating to the Company Special Meeting (as
defined below) shall not, at the date mailed to shareholders and at the
time of the Company Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy
Statement, insofar as it relates to the Company or any of its subsidiaries,
shall comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act and the rules and
regulations thereunder.
Section 4.9 Tax Matters. "Taxes," as used in this Agreement,
means any federal, state, county, local or foreign taxes, charges, fees,
levies or other assessments, including, without limitation, all net income,
gross income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipts, capital stock,
production, business and occupation, disability, employment, payroll,
license, estimated, stamp, custom duties, severance or withholding taxes or
charges imposed by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any such taxes. "Tax
Return," as used in this Agreement, means a report, return or other written
information required to be supplied to a governmental entity with respect
to Taxes.
Except as disclosed in Section 4.9 of the Company Disclosure
Schedule:
(a) Filing of Timely Tax Returns. The Company and each of
its subsidiaries have duly filed (or there has been filed on its behalf)
within the time prescribed by law all material Tax Returns (including
withholding Tax Returns) required to be filed by each of them under
applicable law. All such Tax Returns were and are in all material respects
true, complete and correct.
(b) Payment of Taxes. The Company and each of its
subsidiaries have, within the time and in the manner prescribed by law,
paid all material Taxes (including withholding Taxes) that are currently
due and payable except for those contested in good faith and for which
adequate reserves have been taken.
(c) Tax Reserves. All material Taxes payable by the Company
and its subsidiaries for all taxable periods and portions thereof through
the date of the most recent financial statements contained in the Company
Financial Statements filed prior to the date of this Agreement are properly
reflected in such financial statements in accordance with GAAP, and the
unpaid Taxes of the Company and its subsidiaries do not exceed the amount
shown therefor on such financial statements adjusted for the passage of
time through the Effective Time in accordance with past custom and practice
of the Company and its subsidiaries in filing their Tax Returns.
(d) Extensions of Time for Filing Tax Returns. Neither the
Company nor any of its subsidiaries have requested any extension of time
within which to file any material Tax Return, which Tax Return has not
since been filed.
(e) Waivers of Statute of Limitations. Neither the Company
nor any of its subsidiaries has executed any outstanding waivers or
comparable consents regarding the application of the statute of limitations
with respect to any material Taxes or material Tax Returns.
(f) Expiration of Statute of Limitations. The statute of
limitations for the assessment of all material Taxes has expired for all
applicable material Tax Returns of the Company and each of its
subsidiaries, or those material Tax Returns have been examined by the
appropriate taxing authorities for all periods through the date hereof, and
no deficiency for any material Taxes has been proposed, asserted or
assessed against the Company or any of its subsidiaries that has not been
resolved and paid in full.
(g) Audit, Administrative and Court Proceedings. No material
claims, audits, disputes, controversies, examinations, investigations or
other proceedings are presently pending with regard to any Taxes or Tax
Returns of the Company or any of its subsidiaries.
(h) Tax Rulings. Neither the Company nor any of its
subsidiaries has received a Tax Ruling (as defined below) or entered into a
Closing Agreement (as defined below) with any taxing authority that would
have a continuing adverse effect after the Closing Date. "Tax Ruling," as
used in this Agreement, shall mean a written ruling of a taxing authority
relating to Taxes. "Closing Agreement," as used in this Agreement, shall
mean a written and legally binding agreement with a taxing authority
relating to Taxes.
(i) Availability of Tax Returns. The Company has provided or
made available to Parent complete and accurate copies of (i) all Tax
Returns, and any amendments thereto, filed by the Company or any of its
subsidiaries since 1994, (ii) all audit reports received from any taxing
authority relating to any Tax Return filed by the Company or any of its
subsidiaries and (iii) any Closing Agreements entered into by the Company
or any of its subsidiaries with any taxing authority.
(j) Tax Sharing Agreements. Neither the Company nor any of
its subsidiaries is a party to any agreement, understanding or arrangement
relating to allocating or sharing of Taxes.
(k) Liability for Others. Neither the Company nor any of its
subsidiaries has any liability for any material Taxes of any person other
than the Company and its subsidiaries (i) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), (ii) as
a transferee or successor, (iii) by contract or (iv) otherwise.
(l) Code Section 897. To the best knowledge of the Company
after due inquiry, no foreign person owns or has owned beneficially more
than five percent of the total fair market value of the Company Common
Shares during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
(m) Code Section 355(e). Neither the Company nor any of its
subsidiaries has constituted a "distributing corporation" or a "controlled
corporation" in a distribution of shares qualifying for tax-free treatment
under Section 355 of the Code (i) in the past 24 month period or (ii) in a
distribution which could otherwise constitute part of a "plan" or "series
of related transactions" (within the meaning of Section 355(e) of the Code)
in conjunction with the Merger.
Section 4.10 Employee Matters; ERISA. Except as set forth in the
appropriate subsection of Section 4.10 of the Company Disclosure Schedule:
(a) For purposes of this Section 4.10, the following terms
have the definitions set forth below:
(i) "Controlled Group Liability" means any and all
liabilities (a) under Title IV of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), (b) as a result of a
failure to comply with the minimum funding requirements of Section
302 of ERISA or Section 412 of the Code, (c) under Section 4971 of
the Code, and (d) as a result of a failure to comply with the
continuation coverage requirements of Section 601 et seq. of ERISA
and Section 4980B of the Code, other than such liabilities that arise
solely out of, or relate solely to, the Employee Benefit Plans.
(ii) "ERISA Affiliate" means, with respect to any
entity, trade or business, any other entity, trade or business that
is a member of a group described in Section 414(b), (c), (m) or (o)
of the Code or Section 4001(b)(1) of ERISA that includes the first
entity, trade or business, or that is a member of the same
"controlled group" as the first entity, trade or business pursuant to
Section 4001(a)(14) of ERISA.
(iii) An "Employee Benefit Plan" means any material
employee benefit plan, program, policy, practice, or other
arrangement providing benefits to any current or former employee,
officer, trustee or director of the Company or any of its
subsidiaries or any beneficiary or dependent thereof that is
sponsored or maintained by the Company or any of its subsidiaries or
to which the Company or any of its subsidiaries contributes or is
obligated to contribute, whether or not written, including without
limitation any employee welfare benefit plan within the meaning of
Section 3(1) of ERISA, any employee pension benefit plan within the
meaning of Section 3(2) of ERISA (whether or not such plan is subject
to ERISA) and any material bonus, incentive, deferred compensation,
vacation, stock purchase, stock option, severance, employment, change
of control or fringe benefit plan, program or agreement.
(iv) A "Plan" means any Employee Benefit Plan other than
a Multiemployer Plan.
(v) A "Multiemployer Plan" means any "multiemployer
plan" within the meaning of Section 4001(a)(3) of ERISA.
(vi) "Withdrawal Liability" means liability to a
Multiemployer Plan as a result of a complete or partial withdrawal
from such Multiemployer Plan, as those terms are defined in Part I of
Subtitle E of Title IV of ERISA.
(b) Section 4.10(b) of the Company Disclosure Schedule
includes a complete list of all material Employee Benefit Plans and, with
respect to executive welfare benefit plans and nonqualified pension,
savings and deferred compensation plans, states the number of employees
participating in or covered by such plans.
(c) With respect to each Plan, the Company has delivered to
Parent a true, correct and complete copy of: (i) each writing constituting
a part of such Plan, including without limitation all material plan
documents, trust agreements, and insurance contracts and other funding
vehicles; (ii) the most recent Annual Report (Form 5500 Series) and
accompanying schedules, if any; (iii) the current summary plan description
and any material modifications thereto, if required to be furnished under
ERISA; (iv) the most recent annual financial report, if any; (v) the most
recent actuarial report, if any; and (vi) the most recent determination
letter from the Internal Revenue Service (the "IRS"), if any. Except as
specifically provided in the foregoing documents delivered to Parent, there
are no amendments to any Plan that have been adopted or approved nor has
the Company or any of its subsidiaries undertaken to make any such
amendments or to adopt or approve any new Plan.
(d) Section 4.10(b) of the Company Disclosure Schedule
identifies each Plan that is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code ("Qualified Plans"). The IRS has
issued a favorable determination letter with respect to each Qualified Plan
and the related trust that has not been revoked, and except as would not
have a Company Material Adverse Effect, there are no existing circumstances
nor any events that have occurred that could adversely affect the qualified
status of any Qualified Plan or the related trust. Section 4.10(b) of the
Company Disclosure Schedule identifies each Plan or related trust which is
intended to meet the requirements of Code Section 501(c)(9) (a "VEBA"), and
except as would not have a Company Material Adverse Effect, each such VEBA
meets such requirements and provides no disqualified benefits (as such term
is defined in Code Section 4976(b)).
(e) All material contributions required to be made to any
Plan by applicable law or regulation or by any Plan document or other
contractual undertaking, and all material premiums due or payable with
respect to insurance policies funding any Plan, for any period through the
date hereof have been timely made or paid in full or, to the extent not
required to be made or paid on or before the date hereof, have been fully
reflected on the Company Financial Statements. Each Plan that is an
employee welfare benefit plan under Section 3(1) of ERISA (i) is funded
through an insurance company contract or a contract with a health
maintenance organization, (ii) is, or is funded through, a VEBA identified
as such in Section 4.10(b) of the Company Disclosure Schedule, or (iii) is
unfunded.
(f) Except as would not have a Company Material Adverse
Effect, with respect to each Employee Benefit Plan, the Company and its
subsidiaries have complied, and are now in compliance, with all provisions
of ERISA, the Code and all laws and regulations applicable to such Employee
Benefit Plans and each Plan has been administered in all material respects
in accordance with its terms. There is not now, nor do any circumstances
exist that could reasonably be expected to give rise to, any requirement
for the posting of security with respect to a Plan or the imposition of any
lien on the assets of the Company or any of its subsidiaries under ERISA or
the Code.
(g) With respect to each Plan that is subject to Title IV of
ERISA, the minimum funding requirements of Section 302 of ERISA or Section
412 of the Code, or Section 4971 of the Code: (i) there does not exist any
accumulated funding deficiency within the meaning of Section 412 of the
Code or Section 302 of ERISA, whether or not waived, in respect of any plan
year ended prior to the date hereof and for which the time for making
contributions in order to avoid incurring an accumulated funding deficiency
for such year has expired; (ii) the fair market value of the assets of each
such Plan that is a defined benefit plan equals or exceeds the actuarial
present value of the accumulated benefit obligation (as of the date of the
most recent actuarial report prepared for such Plan) under such Plan
(whether or not vested), based upon the actuarial assumptions set forth in
the most recent actuarial report for such Plan; (iii) no reportable event
within the meaning of Section 4043(c) of ERISA for which the 30-day notice
requirement has not been waived has occurred since December 31, 1993 in
respect of any such Plan which is a defined benefit Plan; (iv) all material
premiums to the Pension Benefit Guaranty Corporation ("PBGC") have been
timely paid in full; (v) no material liability (other than for premiums to
the PBGC and for the payment of benefits and contributions in the ordinary
course) under Title IV of ERISA has been or could reasonably be expected to
be incurred by the Company or any of its subsidiaries; and (vi) to the
knowledge of the Company, the PBGC has not instituted proceedings to
terminate any such Plan and no condition exists that presents a material
risk that such proceedings will be instituted or which would constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any such Plan.
(h) No Employee Benefit Plan is a Multiemployer Plan or a
plan that has two or more contributing sponsors at least two of which are
not under common control, within the meaning of Section 4063 of ERISA (a
"Multiple Employer Plan"). None of the Company and its subsidiaries nor any
of their respective ERISA Affiliates has, at any time during the last six
years, contributed to or been obligated to contribute to any Multiemployer
Plan or Multiple Employer Plan. None of the Company and its subsidiaries
nor any ERISA Affiliates has incurred any Withdrawal Liability that has not
been satisfied in full.
(i) There does not now exist, nor do any circumstances exist
that could reasonably be expected to result in, any Controlled Group
Liability that would have a Company Material Adverse Effect following the
Closing. Without limiting the generality of the foregoing, neither the
Company nor any of its subsidiaries, nor any of their respective ERISA
Affiliates, has engaged in any transaction described in Section 4069 or
Section 4204 or 4212 of ERISA since December 31, 1993.
(j) Except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA or applicable state
law, the Company and its subsidiaries have no material liability for life,
health, medical or other welfare benefits to former employees or
beneficiaries or dependents of former employees.
(k) Neither the execution and delivery of this Agreement nor
the consummation of any of the transactions contemplated hereby will
(either alone or in conjunction with any other event) result in, cause the
accelerated funding, vesting or delivery of, or increase the amount or
value of, any material payment or benefit to any employee, officer, trustee
or director of the Company or any of its subsidiaries. Section 4.10(k) of
the Company Disclosure Schedule sets forth the estimated amount that will
be required to be contributed to each trust listed thereon as a result of
the consummation of the transactions contemplated hereby.
(l) No labor organization or group of employees of the
Company or any of its subsidiaries has made a pending demand for
recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or, to the knowledge of the Company, threatened to be
brought or filed, with the National Labor Relations Board or any other
labor relations tribunal or authority. There are no organizing activities,
strikes, work stoppages, slowdowns, lockouts, material arbitrations or
material grievances, or other material labor disputes pending or, to the
knowledge of the Company, threatened against or involving the Company or
any of its subsidiaries. Each of the Company and its subsidiaries is in
compliance in all material respects with all applicable laws and collective
bargaining agreements respecting employment and employment practices, terms
and conditions of employment, wages and hours and occupational safety and
health.
(m) There are no pending or, to the knowledge of the Company,
threatened claims (other than claims for benefits in the ordinary course),
lawsuits or arbitrations which have been asserted or instituted, and there
is no set of circumstances which may reasonably give rise to a claim or
lawsuit, against the Plans, any fiduciaries thereof with respect to their
duties to the Plans or the assets of any of the trusts under any of the
Plans which could reasonably be expected to result in a Company Material
Adverse Effect.
(n) The Company, its subsidiaries and each member of their
respective business enterprise has complied with the Worker Adjustment and
Retraining Notification Act.
(o) None of the Company and its subsidiaries nor any other
person, including any fiduciary, has engaged in any "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of
ERISA), which could subject any of the Employee Benefit Plans or their
related trusts, the Company, any of its subsidiaries or any person that the
Company or any of its subsidiaries has an obligation to indemnify, to any
tax or penalty imposed under Section 4975 of the Code or Section 502 of
ERISA.
Section 4.11 Environmental Protection. Except as set forth in
Section 4.11 of the Company Disclosure Schedule or in the Company SEC
Reports filed prior to the date hereof:
(a) Compliance. Except where the failure to be in such
compliance would not in the aggregate have a Company Material Adverse
Effect, (i) the Company and each of its subsidiaries are in compliance with
all applicable Environmental Laws (as defined in Section 4.11(f)(ii)) and
(ii) neither the Company nor any of its subsidiaries has received any
communication from any Governmental Authority or any written communication
from any other person that alleges that the Company or any of its
subsidiaries is not in compliance with applicable Environmental Laws.
(b) Environmental Permits. The Company and each of its
subsidiaries has obtained or has applied for all environmental, health and
safety permits and governmental authorizations (collectively, the
"Environmental Permits") necessary for the construction of its facilities
or the conduct of its operations, and all such Environmental Permits are in
good standing or, where applicable, a renewal application has been timely
filed and is pending agency approval, and the Company and its subsidiaries
are in compliance with all terms and conditions of the Environmental
Permits, and the Company reasonably believes that any transfer, renewal or
reapplication for any Environmental Permit required as a result of the
Merger can be accomplished in the ordinary course of business, except where
the failure to obtain or to be in such compliance would not, in the
aggregate, have a Company Material Adverse Effect.
(c) Environmental Claims. There are no Environmental Claims
(as defined in Section 4.11(f)(i)) pending (i) against the Company or any
of its subsidiaries or joint ventures, or (ii) against any real or personal
property or operations that the Company or any of its subsidiaries owns,
leases or manages, in whole or in part that, if adversely determined, would
have, in the aggregate, a Company Material Adverse Effect.
(d) Releases. Except for Releases of Hazardous Materials the
liability for which would not have, in the aggregate, a Company Material
Adverse Effect, there have been no Releases (as defined in Section
4.11(f)(iv)) of any Hazardous Material (as defined in Section 4.11(f)(iii))
that would be reasonably likely to (i) form the basis of any Environmental
Claim against the Company or any of its subsidiaries, or (ii) to the
knowledge of the Company, cause, damage or diminution of value to any of
the operations or real properties owned, leased or managed, in whole or in
part, by Company or any of its subsidiaries.
(e) Predecessors. The Company has no knowledge of any
Environmental Claim pending or threatened, or of any Release of Hazardous
Materials that would be reasonably likely to form the basis of any
Environmental Claim, in each case against any person or entity (including,
without limitation, any predecessor of the Company or any of its
subsidiaries) whose liability the Company or any of its subsidiaries has or
may have retained or assumed either contractually or by operation of law or
against any real or personal property which the Company or any of its
subsidiaries formerly owned, leased or managed, in whole or in part, except
for Releases of Hazardous Materials the liability for which would not have,
in the aggregate, a Company Material Adverse Effect.
(f) As used in this Agreement:
(i) "Environmental Claim" means any and all
administrative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, liens, investigations,
proceedings or notices of noncompliance or violation by any person or
entity (including any Governmental Authority) alleging potential
liability (including, without limitation, potential responsibility
for or liability for enforcement costs, investigatory costs, cleanup
costs, governmental response costs, removal costs, remedial costs,
natural-resources damages, property damages, personal injuries, fines
or penalties) arising out of, based on or resulting from (A) the
presence, or Release or threatened Release into the environment, of
any Hazardous Materials at any location, whether or not owned,
operated, leased or managed by the Company, Parent or any of their
respective subsidiaries or joint ventures; or (B) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law; or (C) any and all claims by any third party
seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence or
Release of any Hazardous Materials.
(ii) "Environmental Laws" means all federal, state,
local laws, rules, ordinances and regulations relating to pollution,
the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or protection
of human health as it relates to the environment including, without
limitation, laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that
is or could become friable, urea formaldehyde foam insulation, coal
tar residue, and transformers or other equipment that contain
dielectric fluid containing poly
