AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
July 14, 1999 is by and among Eastern Enterprises (the "Parent"),
EE Acquisition Company, Inc., a New Hampshire corporation ("Merger Sub"),
and EnergyNorth, Inc. (the "Company"), a New Hampshire corporation.
RECITALS
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the laws of the State of New Hampshire, the Parent and the
Company will enter into a business combination transaction pursuant to which the
Company will merge with and into Merger Sub, a wholly-owned subsidiary of
Parent.
B. The Board of Trustees of the Parent (i) has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of the
Parent and fair to, and in the best interests of, the Parent and its
stockholders, and (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement.
C. The Board of Directors of the Company (i) has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of the
Company and fair to, and in the best interests of, the Company and its
stockholders, and (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement, subject to approval of the Merger
by the stockholders of the Company.
D. The Parent and the Company and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
E. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
I. THE MERGER
I.1. The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of New Hampshire law, the Company shall be merged with and
into Merger Sub, the separate corporate existence of the Company shall cease and
Merger Sub shall continue as the surviving corporation. Merger Sub as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation".
I.2. Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
the Articles of merger (the "Articles of Merger") with the Secretary of the
State of New Hampshire in accordance with the relevant provisions of New
Hampshire law (the time of such filing, or such later time as may be agreed in
writing by the parties and specified in the Articles of Merger, being the
"Effective Time," and the date on which the Effective Time occurs being the
"Effective Date") as soon as practicable on the Closing Date (as herein
defined). Unless the context otherwise requires, the term "Agreement" as used
herein refers collectively to this Agreement and the Articles of Merger. The
closing of the Merger (the "Closing") shall take place at the offices of Ropes &
Gray, at a time and date to be specified by the parties, which shall be no later
than the 35th day after the satisfaction or waiver of the conditions set forth
in Article 6 (other than delivery of items to be delivered at Closing), or at
such other time, date and location as the parties hereto agree in writing (the
"Closing Date"). At the Closing, (a) the Company shall deliver to the Parent the
various Articles and instruments required under Article 6, (b) the Parent and
Merger Sub shall deliver to the Company the various Articles and instruments
required under Article 6, and (c) the Company and Merger Sub shall execute and
file with the Secretary of the State of New Hampshire the Articles of Merger.
I.3. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
New Hampshire law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the estate, property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and obligations of the Company and
Merger Sub shall become the debts, liabilities and obligations of the Surviving
Corporation.
I.4. Articles of Incorporation; Bylaws.
(a) At the Effective Time, the Articles of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall
be the Articles of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Articles of
Incorporation; provided, however, that at the Effective Time the
Articles of Incorporation of the Surviving Corporation shall be amended
so that the name of the Surviving Corporation shall be "EnergyNorth,
Inc." Subject to the foregoing, the additional effects of the Merger
shall be as provided in NH RSA 293-A: 11.06 (the "NHBCA").
(b) The Bylaws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be, at the Effective Time, the Bylaws of
the Surviving Corporation until thereafter amended.
I.5. Directors and Officers. The directors of Merger Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, to serve until their respective successors are duly elected or
appointed and qualified. The officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, to
serve until their successors are duly elected or appointed or qualified.
I.6. Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of Merger Sub, the Company
or the holders of any of the following securities:
(a) Conversion of Company Common Stock. Each share of Common
Stock, $1.00 par value, of the Company (the "Company Common Stock")
issued and outstanding immediately prior to the Effective Time (other
than any shares of Company Common Stock to be canceled pursuant to
Section 1.6(c)) will be canceled and extinguished and automatically
converted (subject to Section 1.6(f) and (h)) into the right to receive
the following (the "Merger Consideration") at the Effective Time:
(i) (A) $47.00 in cash, without interest (the "Per
Share Cash Amount"), (B) a number of shares of Common Stock,
$1.00 par value, of the Parent (the "Parent Common Stock")
equal to the Per Share Cash Amount divided by the Market Value
(as defined below) of Parent Common Stock (the "Exchange
Ratio"), or (C) a combination of cash and shares of Parent
Common Stock determined in accordance with this Section 1.6.
For purposes of this Agreement, "Market Value" of Parent
Common Stock means the average of the Daily Per Share Prices
(as hereinafter defined) of Parent Common Stock for the ten
consecutive trading days ending on the third trading day prior
to the Effective Date. The "Daily Per Share Price" for any
trading day means the weighted average of the per share
selling prices of the Parent Common Stock on the New York
Stock Exchange (the "NYSE"), as reported in the NYSE Composite
Transactions, for that day. Notwithstanding the foregoing, if
the Market Value of Parent Common Stock is less than $36.00
per share, Market Value for purposes of this Section 1.6(a)(i)
shall mean $36.00 and if the Market Value of Parent Common
Stock is greater than $44.00 per share, Market Value for
purposes of this Section 1.6(a)(i) shall mean $44.00.
(ii) The number of shares of Company Common Stock to
be converted into the right to receive cash in the Merger
will, subject to Section 1.6(a)(vii), be 49.9% of outstanding
shares (the "Cash Election Number"). The remaining shares of
Company Common Stock outstanding immediately prior to the
Effective Time (the "Stock Election Number") will be converted
into the right to receive Parent Common Stock in the Merger.
(iii) Subject to the allocation and election
procedures set forth in this Section 1.6, each record holder
of shares of Company Common Stock immediately prior to the
Effective Time will be entitled in respect of each such share
(i) to elect to receive cash for such share (a "Cash
Election"), (ii) to elect to receive Parent Common Stock for
such share (a "Stock Election"), or (iii) to indicate that
such record holder has no preference as to the receipt of cash
or Parent Common Stock for such share (a "Non-Election"). All
such elections will be made on a form designed for that
purpose (a "Form of Election").
(iv) If the aggregate number of shares covered by
Cash Elections (the "Cash Election Shares") exceeds the Cash
Election Number, all shares of Company Common Stock covered by
Stock Elections (the "Stock Election Shares") and all shares
of Company Common Stock covered by Non-Elections (the
"Non-Election Shares") will be converted into the right to
receive Parent Common Stock, and the Cash Election Shares will
be converted into the right to receive Parent Common Stock and
cash in the following manner:
Each Cash Election Share will be converted into the right
to receive (A) an amount in cash, without interest, equal
to the product of (x) the Per Share Cash Amount and (y) a
fraction (the "Cash Fraction"), the numerator of which
will be the Cash Election Number and the denominator of
which will be the total number of Cash Election Shares,
and (B) a number of shares of Parent Common Stock equal
to the product of (x) the Exchange Ratio and (y) a
fraction equal to one minus the Cash Fraction.
(v) If the aggregate number of Stock Election Shares
exceeds the Stock Election Number, all Cash Election Shares
and all Non-Election Shares will be converted into the right
to receive cash, and all Stock Election Shares will be
converted into the right to receive Parent Common Stock and
cash in the following manner:
Each Stock Election Share will be converted into the
right to receive (A) a number of shares of Parent Common
Stock equal to the product of (x) the Exchange Ratio and
(y) a fraction (the "Stock Fraction"), the numerator of
which will be the Stock Election Number and the
denominator of which will be the total number of Stock
Election Shares, and (B) an amount in cash, without
interest, equal to the product of (x) the Per Share Cash
Amount and (y) a fraction equal to one minus the Stock
Fraction.
(vi) In the event that neither subparagraph (iv) nor
subparagraph (v) above is applicable, all Cash Election Shares
will be converted into the right to receive cash, all Stock
Election Shares will be converted into the right to receive
Parent Common Stock, and all Non-Election Shares will be
converted into the right to receive Parent Common Stock and
the right to receive cash on a proportionate basis so that the
Stock Election Number and the Cash Election Number equal their
respective percentages of the number of shares of Company
Common Stock outstanding as closely as possible.
(vii) In the event that the Parent Common Stock
(excluding fractional shares to be paid in cash pursuant to
Section 1.6(f)) to be issued in the Merger in exchange for
shares of Company Common Stock, valued at the lesser of (i)
the Market Value and (ii) the average of the high and low
trading prices as reported on the NYSE for the Effective Date,
minus the aggregate discount, if any, due to trading
restrictions on the Parent Common Stock to be issued in the
Merger (the "Parent Common Stock Value") is less than 45% of
the total consideration to be paid in exchange for the shares
of Company Common Stock (including without limitation the
amount of cash to be paid in lieu of fractional shares
pursuant to Section 1.6(f), plus the number of Dissenting
Shares (as defined below) multiplied by the Per Share Cash
Consideration and any other payments required to be considered
in determining whether the continuity of interest requirement
applicable to reorganizations under Section 368 of the Code
has been satisfied) (the "Total Consideration"), then the Cash
Election Number shall be reduced, and the Stock Election
Number shall be correspondingly increased, to the extent
necessary so that the Parent Common Stock Value is 45% of the
Total Consideration.
(b) Cash Election Procedure.
(i) The Parent and the Company will each use its
reasonable best efforts to cause a Form of Election to be
mailed not less than thirty (30) days prior to the anticipated
Effective Time to all holders of record of shares of Company
Common Stock as of the record date for the Company
Stockholders Meeting (as hereinafter defined) and to all
persons who become holders of Company Common Stock during the
period between the record date for the Company Stockholders
Meeting and 5:00 p.m., New York time, on the date seven
calendar days prior to the anticipated Effective Time and to
make the Form of Election available to all persons who become
holders of Company Common Stock subsequent to such time.
Elections will be made by holders of Company Common Stock by
mailing to the Exchange Agent a Form of Election. Holders of
record of shares of Company Common Stock who hold such shares
as nominees, trustees or in other representative capacities (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 each Representative for a particular beneficial owner.
To be effective, a Form of Election must be properly
completed, signed and submitted to the Exchange Agent and
accompanied by the certificates representing the shares of
Company Common Stock as to which the election is being made
(or by an appropriate guarantee of delivery of such
certificates as set forth in such Form of Election from a
member of any registered national securities exchange or of
the National Association of Securities Dealers, Inc. ("NASD")
or a bank, trust company, credit union, savings association,
broker, dealer or other entity that is a member in good
standing of the Securities Transfer Agent's Medallion Program,
the NYSE Medallion Signature Guaranty Program or the Stock
Exchange Medallion Program). The Parent will have the
discretion, which it may delegate in whole or in part to the
Exchange 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 the Parent (or the Exchange Agent) in such matters
will be conclusive and binding. Neither the Parent nor the
Exchange Agent will be under any obligation to notify any
person of any defect in a Form of Election submitted to the
Exchange Agent. The Exchange Agent will also make computations
contemplated by this Section 1.6 and all such computations
will be conclusive and binding on the holders of Company
Common Stock.
(ii) For the purposes hereof, a holder of Company
Common Stock who does not submit a Form of Election which is
received by the Exchange Agent prior to the Election Deadline
(as defined herein) will be deemed to have made a
Non-Election. If the Parent or the Exchange Agent determine
that any purported Cash Election or Stock Election was not
properly made, such purported Cash Election or Stock Election
will be deemed to be of no force and effect and the
stockholder making such purported election will for purposes
hereof be deemed to have made a Non-Election.
(iii) A Form of Election must be received by the
Exchange Agent by the close of business on the last business
day prior to the Effective Time (the "Election Deadline") in
order to be effective. All elections may be revoked until the
Election Deadline in writing by holders submitting the Forms
of Election.
(c) Cancellation of Certain Shares. Each share of Company
Common Stock held in the treasury of the Company or owned by Merger
Sub, the Parent or any direct or indirect wholly owned subsidiary of
the Company or of the Parent immediately prior to the Effective Time
shall be canceled and extinguished without any conversion thereof.
(d) Capital Stock of Merger Sub. Each share of Common Stock,
no par value, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall continue to be outstanding following, and
shall be unaffected by, the Merger.
(e) Adjustment of Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock), reorganization, recapitalization
or other like change with respect to Parent Common Stock, occurring
after the date hereof and having a record date prior to the Effective
Time.
(f) Fractional Shares. No fraction of a share of Parent Common
Stock will be issued by virtue of the Merger, but in lieu thereof each
holder of shares of Company Common Stock who would otherwise be
entitled to a fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock to be received
by such holder) shall receive from the Parent an amount of cash
(rounded to the nearest whole cent), without interest thereon, equal to
the product of (i) such fraction, multiplied by (ii) the Average
Closing Price. The "Average Closing Price" shall mean the average of
the per share closing prices of Parent Common Stock as reported on the
NYSE for the ten trading days ending on and including the Effective
Date.
(g) At the Effective Time, all options to purchase Company
Common Stock then outstanding under the EnergyNorth, Inc. 1998 Stock
Option Plan shall be assumed by Parent in accordance with Section 5.20
hereof.
(h) 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, 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
NHBCA, shall be deemed to be converted into, as of the Effective Time,
the right to receive cash pursuant to Section 1.6(a) 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.
I.7. Surrender of Certificates.
(a) Exchange Agent. The Parent shall select a bank or trust
company reasonably acceptable to the Company, which may be the Parent's
existing transfer agent, to act as the exchange agent (the "Exchange
Agent") in the Merger.
(b) The Parent to Provide Merger Consideration. Promptly after
the Effective Time, the Parent shall make available to the Exchange
Agent for exchange in accordance with this Article 1, certificates for
the shares of Parent Common Stock issuable, and cash payable, pursuant
to Section 1.6(a) in exchange for outstanding shares of Company Common
Stock and cash in an amount sufficient for payment in lieu of
fractional shares pursuant to Section 1.6(f) and any dividends or
distributions to which holders of shares of Company Common Stock may be
entitled pursuant to Section 1.7(d).
(c) Exchange Procedures. Promptly after the Effective Time,
the Parent shall cause the Exchange Agent to mail to each holder of
record (as of the Effective Time) of a certificate or certificates (the
"Certificates") that immediately prior to the Effective Time
represented outstanding shares of Company Common Stock whose shares
were converted into the right to receive the Merger Consideration,
together with any cash payable pursuant to Section 1.6(f) and Section
1.7(d), (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 delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as the Parent may
reasonably specify, provided that risk of loss and title shall already
have passed with respect to Certificates previously surrendered in
connection with Section 1.6(b)(i)) and (ii) instructions for effecting
the exchange of the Certificates for the Merger Consideration, together
with any cash payable pursuant to Section 1.6(f) and Section 1.7(d).
Upon surrender of a Certificates for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by the Parent,
together with such letter of transmittal duly completed and validly
executed in accordance with the instructions thereto, the holder of
such Certificates shall be entitled to receive in exchange therefor the
Merger Consideration, together with any cash payable pursuant to
Section 1.6(f) and Section 1.7(d), and the Certificates so surrendered
shall forthwith be canceled. Until so surrendered, each outstanding
Certificates will be deemed from and after the Effective Time, for all
corporate purposes, subject to Section 1.7(d) as to the payment of
dividends, to evidence only the ownership of the number of full shares
of Parent Common Stock and the aggregate Per Share Cash Amount into
which such shares of Company Common Stock shall have been so converted
and the right to receive an amount in cash in lieu of the issuance of
any fractional shares in accordance with Section 1.6(f) and any
dividends or distributions payable pursuant to Section 1.7(d).
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the date of
this Agreement with respect to Parent Common Stock with a record date
after the Effective Time will be paid to the holder of any
unsurrendered Certificates with respect to the shares of Parent Common
Stock represented thereby until the holder of record of such
Certificates shall surrender such Certificates. Subject to applicable
law, following surrender of any such Certificates, there shall be
delivered to the record holder thereof Certificates representing whole
shares of Parent Common Stock and the aggregate Per Share Cash Amount
issuable and payable in exchange therefor, without interest, along with
payments of the amount of dividends or other distributions with a
record date after the Effective Time then payable with respect to such
whole shares of Parent Common Stock and cash in lieu of any fractional
shares in accordance with Section 1.6(f).
(e) Transfers of Ownership. If any Certificates for shares of
Parent Common Stock is to be issued in a name other than that in which
the Certificates surrendered in exchange therefor is registered or if
any of the other Merger Consideration is to be payable to a person
other than the person to whom such Certificates is registered, it will
be a condition of the issuance and payment thereof that the
Certificates so surrendered will be properly endorsed, accompanied by
any documents required to evidence and effect such transfer and
otherwise in proper form for transfer and that the person requesting
such exchange will have paid to the Parent or any agent designated by
it any applicable transfer taxes required by reason of the issuance of
a Certificates for shares of Parent Common Stock in any name other than
that of the registered holder of the Certificates surrendered, or shall
provide evidence that any applicable transfer taxes have been paid.
(f) No Liability. Notwithstanding anything to the contrary in
this Section 1.7, neither the Exchange Agent, the Parent, the Surviving
Corporation nor any other party hereto shall be liable to a holder of
shares of Parent Common Stock or Company Common Stock for any amount
properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(g) Termination of Exchange Agent. Any Merger Consideration
made available to the Exchange Agent pursuant to Section 1.7(b) and not
exchanged within six months after the Effective Time pursuant to this
Section 1.7 shall be returned by the Exchange Agent to Parent, which
shall thereafter act as Exchange Agent, and thereafter any holder of
unsurrendered Certificates shall look as a general creditor only to
Parent for payment of any funds to which such holder may be due,
subject to applicable law.
I.8. No Further Ownership Rights in Company Common Stock. The Merger
Consideration, together with any cash payable pursuant to Sections 1.6(f) and
1.7(d) issued and paid in exchange for shares of Company Common Stock in
accordance with the terms hereof shall be deemed to have been issued and paid in
full satisfaction of all rights pertaining to such shares of Company Common
Stock, and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. If after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article 1.
I.9. Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
deliver in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration; provided, however, that the Parent may, in its discretion and as
a condition precedent to such delivery, require the owner of such lost, stolen
or destroyed Certificates to deliver a bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against the Parent or the
Exchange Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed.
I.10. Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Income Tax Regulations.
I.11. Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action, so long as such action is consistent with this Agreement.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent, subject to the
exceptions set forth in the disclosure schedule supplied by the Company to the
Parent (the "Company Disclosure Schedule"), as follows:
II.1. Organization of the Company. The Company and each of its
Subsidiaries and joint ventures (as defined below) is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, has the requisite
corporate or similar power to own, lease and operate its property and to carry
on its business as now being conducted, and is duly qualified to do business and
in good standing as a foreign corporation or other legal entity in each
jurisdiction in which the failure to be so qualified, when taken with all other
such failures, would have a Company Material Adverse Effect (as defined below).
Included in the Company Disclosure Schedule is a true and complete list of all
of the Company's Subsidiaries and joint ventures, together with the jurisdiction
of incorporation or organization of each Subsidiary and joint venture and the
Company's equity interest therein. The Company has delivered or made available
to the Parent a true and correct copy of the Articles of Incorporation and
Bylaws of the Company and similar governing instruments of each of its
Subsidiaries and joint ventures, each as amended to date. The minute books of
the Company and its Subsidiaries and joint ventures made available to the Parent
are the only minute books of the Company and its Subsidiaries and joint ventures
in the Company's possession, and such minutes contain a reasonably accurate
record of all actions taken in all meetings of directors (or committees thereof)
and stockholders or actions by written consent since January 1, 1994. The term
"Company Material Adverse Effect" means, for purposes of this Agreement, any
change, event or effect that is materially adverse to the business, assets
(including intangible assets), prospects, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole (other than
changes that are the effect of economic factors (other than interest rate
changes) affecting the economy as a whole or changes that are the effect of
factors generally affecting the specific markets in which the Company and its
Subsidiaries compete); provided, however, that a Company Material Adverse Effect
shall not include any adverse effect primarily attributable to the Merger or the
announcement thereof or the transactions contemplated by this Agreement (other
than effects arising out of or resulting from actions by any state or federal
regulatory authority with respect to this Agreement and the transactions
contemplated hereby). "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (ii) at least 50% of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization are directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries. The term "joint venture" of a party shall mean
any corporation or other entity (including partnerships and other business
associations) that is not a Subsidiary of such party, in which such party or one
or more of its Subsidiaries owns an equity interest (other than money market
accounts and other short term investments), 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. Except as set forth
in 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 ("PUHCA").
II.2. The Company Capital Structure.
(a) The authorized capital stock of the Company consists of
10,000,000 shares of Common Stock, $1.00 par value, of which, as of
June 30, 1999, there were 3,319,718 shares issued and outstanding and
no shares in treasury. No shares of Company's capital stock have been
issued since that date except shares of Company Common Stock issued in
the normal course and consistent with past practice pursuant to the (i)
1998 Stock Option Plan, (ii) Employee Performance and Equity Incentive
Plan, (iii) Director Incentive Compensation Plan, and (iv) Dividend
Reinvestment and Stock Purchase Plan (the "Company Stock Plans"). All
outstanding shares of Company Common Stock are duly authorized, validly
issued, fully paid and non-assessable and are not subject to preemptive
rights created by statute, the Articles of Incorporation or Bylaws of
the Company or any agreement or document to which the Company is a
party or by which it is bound. As of June 30, 1999, an aggregate of
520,000 shares of Company Common Stock were reserved for issuance
pursuant to the Company Stock Plans. All shares of Company Common Stock
subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are
issuable, would be duly authorized, validly issued, fully paid and
nonassessable.
(b) The Company Disclosure Schedule includes a true and
complete list of all outstanding rights, subscriptions, warrants,
calls, preemptive rights, options or other agreements of any kind to
purchase or otherwise receive from the Company any shares of the
capital stock or any other security of the Company, and all outstanding
securities of any kind convertible into or exchangeable for such
securities. True and complete copies of all instruments (or other forms
of such instruments) referred to in this Section 2.2(b) have been
previously furnished to the Parent. There are no stockholder
agreements, voting trusts, proxies or other agreements, instruments or
understandings with respect to the outstanding shares of capital stock
of the Company to which the Company is a party.
(c) Except for securities the Company owns directly or
indirectly through one or more Subsidiaries, there are no equity
securities of any class of any Subsidiary of the Company, or any
security exchangeable or convertible into or exercisable for such
equity securities, issued, reserved for issuance or outstanding.
II.3. Authority.
(a) Subject to approval by its stockholders, the Company has
all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject only to
the approval of this Agreement and the Merger by the Company's
stockholders and any necessary or requested review or approval of this
Agreement and the Merger by the State of New Hampshire Public Utilities
Commission ("NHPUC") and the filing and recording of the Articles of
Merger pursuant to the laws of the State of New Hampshire. This
Agreement has been duly executed and delivered by the Company. Assuming
the due authorization, execution and delivery by the Parent and Merger
Sub, upon execution by the Company this Agreement constitutes the valid
and binding obligation of the Company, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity. The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will
not, (i) conflict with or violate the Articles of Incorporation or
Bylaws of the Company or the equivalent organizational documents of any
of its Subsidiaries or joint venture, (ii) subject to obtaining the
approval by the Company's stockholders of this Agreement as
contemplated in Section 5.2 and of the NHPUC in accordance with New
Hampshire law and compliance with the other requirements set forth in
Section 2.3(b) below, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Company or any
of its Subsidiaries or joint venture or by which its or any of their
respective properties is bound, or (iii) subject to obtaining any third
party consents referred to in the final sentence of this Section
2.3(a), result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default)
under, or impair the rights of the Company or any Subsidiary or joint
venture or alter the rights or obligations of any third party under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on
any of the properties or assets of the Company or any of its
Subsidiaries or joint venture pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries or its or any of their respective properties are bound or
affected, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, defaults or other occurrences that would not
have a Company Material Adverse Effect. The Company Disclosure Schedule
lists all consents, waivers and approvals under any of the Company's or
any of its Subsidiaries' agreements, contracts, licenses or leases
required to be obtained in connection with the consummation of the
transactions contemplated hereby, except for those the absence of which
would not have a Company Material Adverse Effect.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative
agency or commission or other governmental or regulatory body or
authority or instrumentality ("Governmental Entity") is required by or
with respect to the Company in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Articles of
Merger with the Secretary of State of New Hampshire, (ii) the filing of
the Proxy Statement (as defined in Section 2.18) with the United States
Securities and Exchange Commission (the "SEC") in accordance with the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii)
the filing of a Current Report on Form 8-K with the SEC, (iv) the
filing with the Antitrust Division of the United States Department of
Justice (the "Antitrust Division") and the Federal Trade Commission
(the "FTC") of such forms as may be required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") and the termination
or expiration of all applicable waiting periods thereunder, (v)
approval of the Merger and the related transactions contemplated
hereunder by NHPUC in accordance with New Hampshire law and any
required filing thereof with the Secretary of State of New Hampshire,
(vi) the approval of the Merger by the SEC pursuant to PUHCA, (vii)
such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal
and state securities laws and the laws of any foreign country and
(viii) such other consents, authorizations, filings, approvals and
registrations that, if not obtained or made, would not have a Company
Material Adverse Effect or a material adverse effect on the ability of
the parties to consummate the Merger.
II.4. Takeover Laws; Rights Plans.
(a) The Company has taken 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, the requirements of any "moratorium," "control
share," "fair price" or other anti-takeover laws and regulations
(collectively, "Takeover Laws") of the State of New Hampshire,
including NH RSA 421-A and under any similar provisions included in the
Company's charter and by-laws.
(b) The Company has (1) duly entered into an appropriate
amendment to the Company's Rights Agreement dated as of June 18, 1990
(the "Rights Agreement") between the Company and State Street Bank and
Trust Company, which amendment has been provided to Parent, and (2)
taken all other action necessary or appropriate so that the entering
into of this Agreement does not and will not result in the ability of
any person to exercise any Rights under the Rights Agreement or enable
or require the Rights issued thereunder to separate from the shares of
Company Common Stock to which they are attached or to be triggered or
become exercisable or redeemable.
(c) No "Distribution Date" or "Triggering Event" (as such
terms are defined in the Rights Agreement) has occurred.
II.5. SEC Filings; Company Financial Statements.
(a) Each of the Company and EnergyNorth Natural Gas, Inc. has
filed all forms, reports and documents required to be filed by it with
the SEC since January 1, 1996. All such required forms, reports and
documents (including those that the Company or EnergyNorth Natural Gas,
Inc. may file after the date hereof until the Closing) are referred to
herein as the "Company SEC Reports". As of their respective dates, the
Company SEC Reports (i) were or will be prepared in compliance in all
material respects with the requirements of the Securities Act of 1933,
as amended (the "Securities Act") or the Exchange Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable to
such Company SEC Reports, and (ii) did not or will not at the time they
were or are filed (or if amended or superseded by a filing prior to the
Closing, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances in which they were made, not misleading.
None of the Company's Subsidiaries, other than EnergyNorth Natural Gas,
Inc., is required to file any forms, reports or other documents with
the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Company SEC
Reports (the "Company Financials"), including any Company SEC Reports
filed after the date hereof until the Closing, (i) complied or will
comply as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (ii) was or will be
prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act) and (iii) fairly presented or will
fairly present, in all material respects, the consolidated financial
position of the Company and its Subsidiaries at the respective dates
thereof and the consolidated results of its operations and cash flows
for the periods indicated, consistent with the books and records of the
Company, except that the unaudited interim financial statements were or
are subject to normal and recurring year-end adjustments which were
not, or are not expected to be, material in amount. The balance sheet
of the Company contained in the Company's SEC Report as of March 31,
1999 is hereinafter referred to as the "Company Balance Sheet" Except
as disclosed in the Company Disclosure Schedule and except for
obligations under this Agreement, neither the Company nor any of its
Subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet or
in the related notes to the consolidated financial statements prepared
in accordance with GAAP that are, individually or in the aggregate,
material to the business, results of operations or financial condition
of the Company and its Subsidiaries taken as a whole, except
liabilities (i) provided for in the Company Balance Sheet and the
related notes or (ii) incurred since the date of the Company Balance
Sheet in the ordinary course of business consistent with past practices
or (iii) incurred in connection with the transactions contemplated
hereby.
II.6. Absence of Certain Changes or Events. Since March 31, 1999, there
has not occurred any Company Material Adverse Effect and there has not been,
occurred or arisen any:
(a) transaction by the Company or its Subsidiaries except in
the ordinary course of business as conducted on the date of the Company
Balance Sheet and consistent with past practices;
(b) except as permitted by this Agreement, amendments or
changes to the Articles of Incorporation or Bylaws of the Company;
(c) individual capital expenditure or commitment, or series of
related capital expenditure or commitments, by the Company or its
Subsidiaries outside the ordinary course of business exceeding
$150,000;
(d) destruction of, damage to or loss of any assets material
to the business of the Company and its Subsidiaries taken as a whole
(whether or not covered by insurance);
(e) any cancellation or termination or written notice of
cancellation or termination by any customer that is material to the
Company and its Subsidiaries, taken as a whole, of its relationship or
a portion of its relationship with the Company or any of its
Subsidiaries that is material to the Company and its Subsidiaries,
taken as a whole, or any decrease, not in the ordinary course of
business, in the usage or purchase of the products or services of the
Company or any of its Subsidiaries by any such customer that is
material to the Company and its Subsidiaries, taken as a whole, or any
by-pass transaction involving any such customer of the Company, other
than any of the foregoing that is primarily the result of weather
factors;
(f) labor trouble or claim of wrongful discharge or other
unlawful labor practice or action that is reasonably likely to have a
Company Material Adverse Effect;
(g) material change in accounting methods or practices
(including any change in depreciation or amortization policies or
rates) by the Company;
(h) material revaluation by the Company or its Subsidiaries of
any of its significant assets;
(i) except as permitted by this Agreement, declaration,
setting aside or payment of a dividend or other distribution with
respect to the capital stock of the Company (other than regular
quarterly dividends in accordance with past practice), or any direct or
indirect redemption, purchase or other acquisition by the Company of
any of its capital stock;
(j) except as permitted by this Agreement, increase in the
salary or other compensation payable or to become payable to any of its
officers or directors or, other than in the ordinary course of business
and consistent with past practices, any of its employees or advisors,
or the declaration, payment or contractually binding commitment or
obligation of any kind for the payment of a bonus or other additional
salary or compensation to any such person except for increases,
payments or commitments in the ordinary course of business and
consistent with past practices;
(k) sale, lease, license or other disposition of any assets or
properties material to the Company and its Subsidiaries, taken as a
whole, except in the ordinary course of business;
(l) except as would not reasonably be expected to result in a
Company Material Adverse Effect, amendment or termination of any
material contract, agreement or license to which the Company or any of
its Subsidiaries is a party or by which it is bound except for
amendments in the ordinary course of business or scheduled expiration
pursuant to the terms of the contract, agreement or license and not as
a result of any breach;
(m) except in the ordinary course of business and consistent
with past practices or as permitted by this Agreement, loan by the
Company or any of its Subsidiaries to any person or entity, incurring
by the Company or any Subsidiary of any indebtedness (except for
indebtedness incurred in the ordinary course under existing credit
lines or arrangements set forth in the Company Disclosure Schedule),
guaranteeing by the Company or any Subsidiary of any indebtedness,
issuance or sale of any debt securities of the Company or any
Subsidiary or guaranteeing of any debt securities of others;
(n) waiver or release of any right or claim material to the
Company and its Subsidiaries, taken as a whole, including any write-off
or other compromise of any account receivable of the Company or any
Subsidiary, other than in the ordinary course of business and
consistent with past practices;
(o) adoption, material amendment or modification, or
termination of any Plan (as defined in Section 2.14) by the Company or
any of its Subsidiaries;
(p) regulatory decision by the NHPUC that would have a
material adverse impact on the Surviving Corporation; or
(q) contractually binding commitment, understanding or
agreement by the Company or any of its Subsidiaries thereof to do any
of the things described in the preceding clauses (a) through (o) (other
than this Agreement).
(r)
II.7. Tax Matters.
(a) The Company and its Subsidiaries have filed all material
tax reports and returns required to be filed by them and have paid or
will timely pay all material taxes and other charges shown as due on
such reports and returns. Neither the Company nor any of its
Subsidiaries is delinquent in the payment of any material tax
assessment or other governmental charge (including without limitation
applicable withholding taxes). Any provision for taxes reflected in the
Company Balance Sheet has been properly reflected in accordance with
GAAP. There are no tax liens on any assets of the Company or its
Subsidiaries except for current taxes not yet due and other
non-material tax amounts.
(b) There has not been any audit of any tax return filed by
the Company or any of its Subsidiaries for any period beginning on or
after January 1, 1994 and no audit of any tax return filed by the
Company or any of its Subsidiaries is in progress and neither the
Company nor any Subsidiary has been notified by any tax authority that
any such audit is contemplated or pending. Neither the Company nor any
Subsidiary has received any claim in writing from any tax authority
concerning any tax liability for any period for which tax returns have
been filed. No extension of time with respect to any date on which a
tax return was or is to be filed by the Company or any of its
Subsidiaries is in force, and no waiver or agreement by the Company or
any of its Subsidiaries is in force for the extension of time for the
assessment or payment of any tax. For purposes of this Agreement, the
term "tax" includes all federal, state, local and foreign taxes or
assessments, including income, sales, gross receipts, excise, use,
value added, royalty, franchise, payroll, withholding, property and
import taxes and any interest or penalties applicable thereto.
(c) Neither the Company nor any of its Subsidiaries has any
liability for any 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. Neither the Company
nor any of its Subsidiaries has engaged in any intercompany
transactions within the meaning of Treasury Regulations Section
1.1502-13, or its predecessors, for which any income or gain will
remain unrecognized as of the close of the last taxable year prior to
the Closing Date.
(d) Neither the Company nor any of its Subsidiaries has agreed
to, or is required to, make any adjustments under Section 481(a) of the
Code by reason of a change in accounting method or otherwise.
(e) Each agreement, contract or arrangement to which the
Company or any of its Subsidiaries is a party that could result, on
account of the transactions contemplated hereunder, separately or in
the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code is set forth in Section 2.7 of
the Company Disclosure Schedule.
(f) No indebtedness of the Company or any of its Subsidiaries
is "corporate acquisition indebtedness" within the meaning of Section
279(b) of the Code. 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.
(g) 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)).
(h) Section 2.7 of the Company Disclosure Schedule lists all
examination reports and statements of deficiencies asserted, assessed
against or agreed to by or on behalf of the Company or any Subsidiary
received or agreed to with respect to any tax period beginning on or
after January 1, 1994. No claim has ever been made by any tax authority
that the Company or any Subsidiary is or may be subject to taxation in
a jurisdiction where it does not file tax returns.
II.8. Regulation as a Utility.
(a) The Company is a "holding company" exempt from
registration under Section 3(a)(1) of PUHCA.
(b) The Company is not subject to regulation as a natural gas
distribution utility by the State of New Hampshire. The Company's
subsidiary, EnergyNorth Natural Gas, Inc., is subject to regulation as
a natural gas distribution utility by the NHPUC.
(c) Neither the Company nor any of its Subsidiaries is
currently subject to regulation by the Federal Energy Regulation
Commission under the Federal Power Act or as a "natural gas company"
under the Natural Gas Act or is subject to regulation as a public
utility or public service company (or similar designation) by any state
in the United States other than New Hampshire or in any foreign
country.
II.9. Title to Properties; Absence of Liens and Encumbrances.
(a) The Company and its Subsidiaries have good and valid title
to, or have a valid and enforceable right to use or a valid and
enforceable leasehold interest in, all real property (including all
buildings, fixtures and other improvements thereto) owned by them and
material to the conduct of the business of the Company and its
Subsidiaries, taken as a whole, as such business is now being
conducted, except for easements granted in the ordinary course of
business. Neither the Company's nor any of its Subsidiaries' ownership
of or leasehold interest in any such property is subject to any
mortgage, pledge, lien, option, conditional sale agreement,
encumbrance, security interest, title exception or restriction or claim
or charge of any kind ("Encumbrances"), except for such Encumbrances as
are set forth in the Company Disclosure Schedule or the Company
Financials or are not in the aggregate reasonably likely to have a
Company Material Adverse Effect. Such property is, in the aggregate, in
condition and repair, normal wear and tear excepted, adequate in all
material respects for the continued conduct of the business of the
Company and its Subsidiaries, taken as whole, in the manner in which it
is currently conducted, except to the extent that the condition of any
property is not in the aggregate reasonably likely to have a Company
Material Adverse Effect.
(b) The Company and its Subsidiaries have good and valid title
to, or, in the case of leased properties and assets, valid leasehold
interests in, all of their tangible personal properties and assets,
used or held for use in their business, and such properties and assets,
as well as all other properties and assets of the Company and its
Subsidiaries, whether tangible or intangible, are free and clear of any
Encumbrances, except for such Encumbrances as are set forth in the
Company Disclosure Schedule or the Company Financials or are not in the
aggregate reasonably likely to have a Company Material Adverse Effect.
Such property is, in the aggregate, in condition and repair, normal
wear and tear excepted, adequate in all material respects for the
continued conduct of the business of the Company and its Subsidiaries,
taken as a whole, in the manner in which it is currently conducted,
except to the extent that the condition of any property is not in the
aggregate reasonably likely to have a Company Material Adverse Effect.
II.10. Intellectual Property. The Company and its Subsidiaries own, or
are licensed or otherwise possess legally enforceable rights to use, all
patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, schematics, technology, know-how, computer software
programs or applications, and tangible or intangible proprietary information or
material that are required for the conduct of business of the Company or its
Subsidiaries as currently conducted, the absence of which would have a Company
Material Adverse Effect (collectively, the "Company Intellectual Property
Rights"). All of the Company Intellectual Property Rights are owned or licensed
by the Company or one of its Subsidiaries, free and clear of any and all
Encumbrances, except for those Encumbrances under or set forth in applicable
license agreements or that would not, individually or in the aggregate, have a
Company Material Adverse Effect, and, to the knowledge of the Company, neither
the Company nor any of its Subsidiaries has forfeited or otherwise relinquished
any Company Intellectual Property Rights which forfeiture would have a Company
Material Adverse Effect. To the knowledge of the Company, the use of the Company
Intellectual Property Rights by the Company and its Subsidiaries does not, in
any material respect, conflict with, infringe upon, violate or interfere with or
constitute an appropriation of any right, title, interest or goodwill
(including, without limitation, any intellectual property right, trademark,
trade name, patent, service mark, brand mark, brand name, computer program,
database, industrial design, copyright or any pending application therefor) of
any other person, and neither the Company nor any of its Subsidiaries has
received notice of any claim or otherwise knows that any of the Company
Intellectual Property Rights is invalid, conflicts with the asserted rights of
any other person, has not been used or enforced or has failed to be used or
enforced in a manner that would result in the abandonment, cancellation or
unenforceability of any of the Company Intellectual Property Rights, except for
such conflicts, infringements, violations, interferences, claims, invalidity,
abandonments, cancellations or unenforceability that would not, individually or
in the aggregate, have a Company Material Adverse Effect.
II.11. Compliance; Permits; Restrictions.
(a) Neither the Company nor any of its Subsidiaries is in
conflict with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to the Company or any
of its Subsidiaries or by which its or any of their respective
properties is bound or affected, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries or its or any of their respective properties is bound or
affected, except for any conflicts, defaults or violations that are not
reasonably likely to have a Company Material Adverse Effect.
(b) The Company and its Subsidiaries hold all consents,
permits, licenses, variances, exemptions, orders and approvals from
governmental authorities that are material to the operation of the
business of the Company and its Subsidiaries taken as a whole
(collectively, the "Company Permits"). The Company and its Subsidiaries
are in compliance with the terms of the Company Permits, except where
the failure to so comply is not reasonably likely to have a Company
Material Adverse Effect.
II.12. Litigation. There is no action, suit or proceeding of any nature
pending or to the Company's knowledge threatened against the Company or any of
its Subsidiaries, or any of their respective properties, officers or directors,
in their respective capacities as such (i) in which injunctive or other
equitable relief or damages in excess of $150,000 are or are reasonably likely
to be sought against the Company or any Subsidiary or that otherwise are
reasonably likely to result in a Company Material Adverse Effect or (ii) that in
any manner challenges or seeks to prevent, enjoin, alter or delay any of the
transactions contemplated by this Agreement. To the Company's knowledge, there
is no investigation pending or threatened against the Company or any of its
Subsidiaries, their respective properties or any of their respective officers or
directors by or before any Governmental Entity that is reasonably likely to have
a Company Material Adverse Effect.
II.13. Brokers' and Finders' Fees. Except for fees payable to Salomon
Smith Barney Inc. and disclosed to the Parent, the Company has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
II.14. Employee Benefit Plans. The Company Disclosure Schedule sets
forth a complete list of all pension, profit sharing, retirement, deferred
compensation, employment, welfare, insurance, disability, incentive bonus, stock
option, restricted stock, stock incentive, phantom stock, vacation pay,
severance pay, fringe benefits and similar plans, programs, agreements or
arrangements, benefiting more than one individual, including without limitation
all employee benefit plans as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained by the Company or
its Subsidiaries or to which Company or any of its Subsidiaries are parties or
are required to contribute or under which the Company or any of its Subsidiaries
is or may be required to provide benefits other than any multiemployer plan as
defined in Section 4001(a)(3) of ERISA or any other plans or arrangements
sponsored and maintained by a union (and not by the Company or its Subsidiaries)
(the "Plans"). The Company has delivered or made available to the Parent
current, accurate and complete copies of (i) each Plan that has been reduced to
writing, together with all amendments; (ii) a summary of the material terms of
each Plan that has not been reduced to writing, as amended; (iii) the summary
plan description for each Plan subject to ERISA and, in the case of each other
Plan, any similar employee summary (including employee handbook description) of
the Plan; (iv) for each Plan intended to be qualified and each Plan-related
funding arrangement intended to be exempt under Section 401(a), Section 501(a)
or Section 501(c)(9) of the Code, the most recent determination letter or
exemption determination issued by the Internal Revenue Service ("IRS"); (v) for
each Plan with respect to which a Form 5500 series annual report is required to
be filed, the most recently filed such annual report and the annual report for
the two preceding years, together with all schedules and exhibits; (vi) all
insurance contracts, administrative services contracts, trust agreements,
investment management agreements or similar agreements maintained in connection
with the Plans or any of them; and (vii) copies of any correspondence with the
IRS, the Department of Labor ("DOL") or other U.S. government agency or
department relating to an audit or an asserted or assessed penalty with respect
to a Plan or relating to requested relief from any liability or penalty
(including, but not limited to, any correspondence relating to the IRS's EPRSC,
VCR or CAP programs, or the DOL's amnesty programs for late filers and
non-filers). No employee benefit handbook or similar employee communication
relating to any Plan nor any communication of benefits under such Plan from an
administrator thereof describes the terms of such Plan in a manner that is
materially inconsistent with the documents and summary plan descriptions
relating to such Plan that have been delivered pursuant to the foregoing
sentence. The Company Disclosure Schedule identifies each "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA and any arrangement sponsored and
maintained by a union (and not by the Company or its subsidiaries) which the
Company or any Subsidiary maintains or is obligated to maintain or to which the
Company or any Subsidiary contributes or is obligated to contribute. No
deficiency in funding levels or other circumstance exists and no event has
occurred that has resulted or that could result in a liability to Company or any
Subsidiary under Subtitle E of Title IV of ERISA, except for such liabilities
which, individually and in the aggregate, would not result in a Company Material
Adverse Effect, and the consummation of the transactions contemplated by this
Agreement will not result in any withdrawal liability under such Subtitle.
Except for PBGC premiums paid in the ordinary course, neither the Company nor
any Subsidiary has incurred any liability under Title IV of ERISA which has not
been satisfied in full nor, except for such liabilities which, individually and
in the aggregate, would not result in a Company Material Adverse Effect has any
event occurred that could result in any such liability. Each Plan maintained by
the Company or a Subsidiary and each related fund which is intended to be
qualified or exempt under Section 401(a), Section 501(a) or 501(c)(9) of the
Code is so qualified or exempt except where the failure to be so qualified or
exempt would not result in a Company Material Adverse Effect. Without limiting
the generality of the immediately preceding sentence, each Plan, if any,
containing an account described in Section 401(h) of the Code has been
maintained in accordance with Section 401(h) of the Code and the limitations
described therein and in applicable regulations. Each Plan has been administered
in all material respects in accordance with the terms of such Plan and the
provisions of all applicable statutes, orders or governmental rules or
regulations, and nothing has been done or omitted to be done with respect to any
Plan or related fund that has resulted or could result in any material liability
on the part of the Company or a Subsidiary under Title I of ERISA or Chapter 43
of the Code. All reports required to be filed with respect to each Plan,
including without limitation Form 5500 series annual reports, have been timely
filed. No "reportable event" as defined in Section 4043 of ERISA, other than any
such event for which the notice period has been waived, has occurred with
respect to any Plan subject to Title IV of ERISA. Except to the extent specified
in the Company Disclosure Schedule, each Plan that is subject to Title IV of
ERISA is fully funded on a termination basis. All contributions required to be
made to any Plan by applicable law or regulation or by any Plan document or
other contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any Plan, 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 Financials. All claims for welfare benefits
incurred by employees and their eligible dependents on or before the Closing are
or prior to the Closing will be fully insured under fully paid up third-party
insurance policies or, if self-funded, have been adequately reserved for on the
Company Financials. Except for benefit claims in the ordinary course, there are
no pending or, to the best knowledge of the Company, threatened claims with
respect to any Plan. Except for continuation of health coverage to the extent
required under Section 4980B of the Code or Part 6 of Subtitle B of Title I of
ERISA or applicable state law or as otherwise set forth in the Company
Disclosure Schedule, no Plan that is a "welfare plan" as defined in Section 3(1)
of ERISA provides for any benefits following retirement or other termination of
employment. Except as set forth in the Company Disclosure Schedule, each Plan
can be amended, terminated or modified prospectively on and after the Effective
Time without advance notice to or consent by any employee, former employee or
beneficiary, except as required by law. Except as set forth in the Company
Disclosure Schedule, 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 payment
or benefit to any employee, officer or director of the Company or any of its
Subsidiaries.
II.15. Employment Matters.
(a) The Company and each of its Subsidiaries (i) is in
compliance in all material respects with all applicable foreign,
federal, state and local laws, rules and regulations that are material
to the Company and its Subsidiaries, taken as a whole, respecting
employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to employees; (ii) has
withheld all amounts required by law or by agreement to be withheld
from the wages, salaries and other payments to employees; (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure
to comply with any of the foregoing; and (iv) is not liable for any
payment to any trust or other fund or to any Governmental Entity, with
respect to unemployment compensation benefits, social security or other
benefits or obligations for employees (other than routine payments to
be made in the normal course of business and consistent with past
practice).
(b) No material work stoppage or labor strike against the
Company or any of its Subsidiaries is pending or, to the knowledge of
the Company, threatened. Neither the Company nor any of its
Subsidiaries is involved in or, to the knowledge of the Company,
threatened with, any labor dispute, grievance, or litigation relating
to labor, safety or discrimination matters involving any employee,
including without limitation charges of unfair labor practices or
discrimination complaints, that have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has engaged in any
unfair labor practices within the meaning of the National Labor
Relations Act that is reasonably likely to, in the aggregate, have a
Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is presently a party to or bound by any collective
bargaining agreement or union contract with respect to employees other
than as set forth in the Company Disclosure Schedule and no collective
bargaining agreement is being negotiated by the Company or any of its
Subsidiaries. To the knowledge of the Company, no union organizing
campaign or activity with respect to non-union employees of the Company
or any of its Subsidiaries is ongoing, pending or threatened.
II.16. Environmental Matters.
(a) Except as would not have a Company Material Adverse
Effect, no amount of any substance that has been designated by any
Governmental Entity or by applicable federal, state or local law to be
radioactive, hazardous or otherwise to pose an unreasonable danger to
human health or the environment, including without limitation all
substances listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the
regulations promulgated pursuant to said laws, (a "Hazardous
Material"), is present as a result of the actions of the Company or any
of its Subsidiaries in, on or under any property, including the land
and the improvements, ground water and surface water thereof, that the
Company or any of its Subsidiaries has at any time owned, operated,
occupied or leased, and to the knowledge of the Company, no Hazardous
Materials are present in, on or under such property, including the
improvements, ground water and surface water thereof, as a result of
the conduct of other parties. To the knowledge of the Company, the
Company Disclosure Schedule lists all locations that the Company or any
of its Subsidiaries formerly owned or leased where Hazardous Materials
are present in a volume or concentration that would reasonably be
expected to have a Company Material Adverse Effect.
(b) Except as would not have a Company Material Adverse
Effect, (i) neither the Company nor any of its Subsidiaries has
generated, transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in
violation of, or in a manner which could give rise to liabilities
under, any law in effect prior to or as of the date hereof, nor (ii)
has the Company or any of its Subsidiaries disposed of, transported,
sold, or manufactured any product containing a Hazardous Material
(collectively "Hazardous Materials Activities") in violation of any
rule, regulation, treaty or statute promulgated by any Governmental
Entity in effect prior to or as of the date hereof to prohibit,
regulate or control Hazardous Materials or any Hazardous Material
Activity.
(c) The Company and its Subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents
(the "Company Environmental Permits") necessary for the conduct of the
Company's and its Subsidiaries' Hazardous Material Activities and other
businesses of the Company and its Subsidiaries, taken as a whole, as
such activities and businesses are currently being conducted, except
where the failure to so hold would not have a Company Material Adverse
Effect.
(d) No action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending, or to the Company's
knowledge, threatened concerning any Company Environmental Permit,
Hazardous Material in, on or under any property owned or leased at any
time by the Company or any of its Subsidiaries or any Hazardous
Materials Activity of the Company or any of its Subsidiaries, in which
injunctive or other equitable relief or damages in excess of $150,000
is or is reasonably likely to be sought against the Company or any
Subsidiary or that otherwise would have a Company Material Adverse
Effect.
II.17. Agreements, Contracts and Commitments. Except as identified in
the Company Disclosure Schedule or listed in the Exhibit Index to the Company's
Form 10-K for the year ended September 30, 1998 (the "Company 10-K"), neither
the Company nor any of its Subsidiaries is a party to or is bound by:
(a) any agreement, contract or contractually binding
commitment containing any covenant materially limiting the freedom of
the Company or any of its Subsidiaries to engage in any line of
business or compete with any person;
(b) any agreement, contract or contractually binding
commitment relating to capital expenditures and involving future
obligations in excess of $150,000 and not cancelable without penalty;
(c) any agreement, contract or contractually binding
commitment currently in force relating (i) to the disposition or
acquisition of assets material to the Company and its Subsidiaries,
taken as a whole, not in the ordinary course of business or (ii) any
ownership interest in any corporation, partnership, joint venture or
other business enterprise (other than the Company's wholly-owned
subsidiaries and money market accounts and other short term
investments);
(d) any mortgages, indentures, loans or credit agreements or
security agreements relating to assets material to the Company and its
Subsidiaries, taken as a whole, or other agreements or instruments
relating to the borrowing of money or extension of credit involving
more than $150,000;
(e) any other agreement, contract, binding commitment or lease
which requires annual payments by the Company or any of its
Subsidiaries of $150,000 or more in the aggregate and is not cancelable
without penalty within thirty (30) days.
(f) any consulting arrangements and contracts for
professional, advisory and other services involving payments of more
than $150,000 in any year, including contracts under which the Company
or any of its Subsidiaries performs services for others;
(g) any material contracts relating to the source or supply of
gas, propane and other raw materials essential to the conduct of the
business of the Company and its Subsidiaries, taken as a whole, and any
financial derivatives master agreements, confirmations, or futures
account opening agreements and/or brokerage statements evidencing
financial hedging or other trading activities with respect to the
foregoing;
(h) any contracts, agreements or contractually binding
commitments relating to the employment, engagement, compensation or
termination of directors, officers, employees or agents of the Company
or any of its Subsidiaries not included under Plans (as defined in
Section 2.14);
(i) any collective bargaining agreements;
(j) any agreement, contract or instrument (including
amendments thereto) to which the Company or any of its Subsidiaries is
a party or by which any of them is bound that is required to be
included in the Company 10-K; and
(k) any other contracts made other than in the usual or
ordinary course of business of the Company or any of its Subsidiaries
to which the Company or any of its Subsidiaries is a party or under
which the Company or any of its Subsidiaries is obligated and material
to the Company and its Subsidiaries, taken as a whole.
Neither the Company nor any of its Subsidiaries, nor to the Company's knowledge
any other party to a Company Contract (as defined below), has breached, violated
or defaulted under, or received notice that it has breached violated or
defaulted under, any of the terms or conditions of any of the agreements,
contracts or commitments to which the Company or any Subsidiary is a party or by
which it is bound of the type described in clauses (a) through (k) above (any
such agreement, contract or commitment, a "Company Contract") in such a manner
as would permit any other party to cancel or terminate any such Company
Contract, or would permit any other party to seek damages, in either case, which
would have a Company Material Adverse Effect.
II.18. Statements; Proxy Statement/Prospectus. The information to be
supplied by the Company for inclusion in the Registration Statement on Form S-4
to be filed to register under the Securities Act Parent Common Stock issuable
pursuant to Section 1.6 (the "Registration Statement") shall not at the time the
Registration Statement is filed with the SEC or at the time it 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 in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The information supplied by the Company for
inclusion in the proxy statement/prospectus to be sent to the stockholders of
the Company in connection with the meeting of the Company's stockholders to
consider the approval of this Agreement (the "Company Stockholders' Meeting")
(such proxy statement/prospectus as amended or supplemented, including any joint
proxy statement, is referred to herein as the "Proxy Statement") shall not, on
the dates the Proxy Statement is first mailed to the Company's stockholders and
at the time of the Company Stockholders' 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 false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
written communication with respect to the solicitation of proxies for the
Company Stockholders' Meeting which has become false or misleading. The Proxy
Statement utilized by the Company will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder. If at any time prior to the Effective Time, any event relating to
the Company or any of its affiliates, officers or directors should be discovered
by the Company which is required to be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, or which is
required to be disclosed to the Company's stockholders so that the information
made available to them in connection with electing the form of Merger
Consideration is not false or misleading in any material respect, the Company
shall promptly inform the Parent. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information supplied by
the Parent or Merger Sub that is contained in any of the foregoing documents.
II.19. Fairness Opinion. The Company has received an opinion from
Salomon Smith Barney Inc. dated as of the date hereof, to the effect that as
of the date hereof, the consideration to be received by the Company's
stockholders in the Merger is fair from a financial point of view and will
deliver to the Parent a copy of such written opinion.
II.20. Insurance. The Company and each of its Subsidiaries are, and
have been continuously since January 1, 1994, insured for a minimum amount of
$25,000,000 (subject to deductibles stated in such policies) against such risks
and losses as are customary in all material respects for companies conducting
the business as conducted by the Company and its Subsidiaries during such time
period. Neither the Company nor any of its Subsidiaries has received any notice
of cancellation or termination with respect to any insurance policy material to
the Company and its Subsidiaries, taken as a whole. The insurance policies
material to the Company and its Subsidiaries are, taken as a whole, to the
Company's knowledge, valid and enforceable policies in all material respects.
II.21. Year 2000. The Company Disclosure Schedule identifies each "Year
2000" audit, report or investigation that has been performed by or on behalf of
the Company with respect to its business and operations. Except as set forth in
such audits, reports and investigations, (i) the Company has not been informed
by any customer, vendor or service provider with which the Company or any of its
Subsidiaries transacts business of an inability on the part of such third party
to be Year 2000 Compliant and (ii) to the knowledge of the Company, there is and
will be no failure of the Company's computer hardware or software systems to be
Year 2000 Compliant, which inability or failure is reasonably likely to have a
Company Material Adverse Effect. For purposes of this Agreement, "Year 2000
Compliant" means, with respect to each system referred to in the prior sentence
that is intended to perform date-related functions, that such system, when used
properly in accordance with its documentation, is capable of correctly
receiving, processing and providing date data before, on, between and after
December 31, 1999 and January 1, 2000; provided that all applications, hardware
and other systems used in conjunction with such system correctly exchange data
with or provided data to such system.
II.22. Commodity Derivatives and Credit Exposure Matters. The Company
has provided the Parent copies of the Company's and its Subsidiaries' natural
gas and propane price risk management policies listed in Schedule 2.22 of the
Company Disclosure Schedules. At all times since March 31, 1999, the Company and
its Subsidiaries taken as a whole have been in material compliance with such
policies, and no failure to comply with such policies by the Company and its
Subsidiaries taken as a whole has resulted in a Company Material Adverse Effect.
III. REPRESENTATIONS AND WARRANTIES OF THE PARENT
The Parent represents and warrants to the Company, subject to the
exceptions set forth in the disclosure schedule supplied by the Parent to the
Company (the "Parent Disclosure Schedule"), as follows:
III.1. Organization of the Parent. The Parent and each of its
Subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has the requisite corporate or similar power to
own, lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and in good standing as a foreign corporation or other legal entity in each
jurisdiction in which the failure to be so qualified would have a Parent
Material Adverse Effect (as defined below). The Parent has delivered or made
available a true and correct copy of the Declaration of Trust and Bylaws of the
Parent, each as amended to date, to the Company. The term "Parent Material
Adverse Effect" means, for purposes of this Agreement, any change, event or
effect that is materially adverse to the business, assets (including intangible
assets), prospects, financial condition or results of operations of the Parent
and its Subsidiaries taken as a whole (other than changes that are the effect of
economic factors (other than interest rate changes) affecting the economy as a
whole or changes that are the effect of factors generally affecting the specific
markets in which the Parent and its Subsidiaries compete); provided, however,
that a Parent Material Adverse Effect shall not include any adverse effect
primarily attributable to the Merger or the announcement thereof or the
transactions contemplated by this Agreement (other than effects arising out of
or resulting from actions by any state or federal regulatory authority with
respect to this Agreement and the transactions contemplated hereby)..
III.2. The Parent Capital Structure. The authorized capital stock of
the Parent consists of 50,000,000 shares of Common Stock, $1.00 par value, of
which there were 22,638,996 shares issued and outstanding as of June 30, 1999.
As of the date hereof, except for an aggregate of 1,142.410 shares of Parent
Common Stock reserved for issuance under various stock option and other stock
plans of the Parent, there is no outstanding right, subscription, warrant, call,
preemptive right, option or other agreement of any kind to purchase or otherwise
to receive from the Parent any shares of the capital stock or any other security
of the Parent and there is no outstanding security of any kind convertible into
or exchangeable for such capital stock. Since March 31, 1999, no shares of
Parent Common Stock have been issued except pursuant to the stock option and
other stock plans of the Parent. All outstanding shares of Parent Common Stock
are duly authorized, validly issued, and fully paid and non-assessable and are
not subject to preemptive rights created by statute, the Declaration of Trust or
Bylaws of the Parent or any agreement or document to which the Parent is a party
or by which it is bound. All of the shares of Parent Common Stock to be issued
in the Merger will be, when issued in accordance with this Agreement, duly
authorized, validly issued, fully paid and nonassessable.
III.3. Merger Sub.
(a) Merger Sub is duly organized, validly existing and in good
standing as a New Hampshire corporation, with the requisite corporate
power to own, lease and operate the property and carry on the business
as now being conducted by the Company.
(b) All of the capital stock of Merger Sub has been duly
authorized, and is validly issued, fully paid and nonassessable and
owned of record and beneficially by the Parent.
(c) Merger Sub has been formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and has not
engaged in any other business activities.
III.4. Authority.
(a) The Parent and Merger Sub have all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of the Parent and Merger Sub, respectively. This Agreement has been
duly executed and delivered by the Parent and Merger Sub, respectively,
and, assuming the due authorization, execution and delivery of this
Agreement by the Company, this Agreement constitutes and will
constitute the valid and binding obligation of the Parent and Merger
Sub, respectively, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity. The execution
and delivery of this Agreement by the Parent and Merger Sub do not, and
the performance of this Agreement by the Parent and Merger Sub will
not, (i) conflict with or violate the charter or bylaws of the Parent
or Merger Sub, (ii) subject to obtaining the approval of the NHPUC in
accordance with New Hampshire law and compliance with the other
requirements set forth in Section 3.4(b) below, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable
to the Parent or any of its Subsidiaries or by which its or any of
their respective properties is bound or affected, or (iii) subject to
obtaining the third party consents referred to in the final sentence of
this Section 3.4(a), result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a
default) under, or impair the Parent's rights or alter the rights or
obligation of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or
assets of the Parent or any of its Subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Parent or any
of its Subsidiaries is a party or by which the Parent or any of its
Subsidiaries or its or any of their respective properties are bound or
affected, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, defaults or other occurrences that would not
have a Parent Material Adverse Effect. The Parent Disclosure Schedule
lists all consents, waivers and approvals under any of the Parent's or
any of its Subsidiaries' agreements, contracts, licenses or leases
required to be obtained in connection with the consummation of the
transactions contemplated hereby, except for those the absence of which
would not have a Parent Material Adverse Effect.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is
required by or with respect to the Parent or Merger Sub in connection
with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for (i) the filing and
effectiveness of the Registration Statement with the SEC in accordance
with the Securities Act, (ii) the filing of the Articles of Merger with
the Secretary of State of New Hampshire, (iii) the filing of a Current
Report on Form 8-K with the SEC, (iv) the filing with the Antitrust
Division and the FTC of such forms as may be required by the HSR Act
and the termination or expiration of all applicable waiting periods
thereunder, (v) the listing of Parent Common Stock issuable pursuant to
Section 1.6 on the NYSE, the Pacific Exchange and the Boston Stock
Exchange, (vi) the approval of the Merger, the related transactions
contemplated hereunder by the NHPUC and any required filing thereof
with the Secretary of State of New Hampshire; (vii) the approval of the
Merger by the SEC pursuant to PUHCA; (viii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may
be required under applicable federal and state securities laws and the
laws of any foreign country; and (ix) such other consents,
authorizations, filings, approvals and registrations that, if not
obtained or made, would not have a Parent Material Adverse Effect or a
material adverse effect on the ability of the Parent to consummate the
Merger.
III.5. SEC Filings; the Parent Financial Statements.
(a) Each of the Parent and each of its Subsidiaries has filed
all forms, reports and documents required to be filed by it with the
SEC since January 1, 1996. All such required forms, reports and
documents (including those that the Parent or its Subsidiaries may file
after the date hereof until the Closing) are referred to herein as the
"Parent SEC Reports." As of their respective dates, the Parent SEC
Reports (i) were or will be prepared in compliance in all material
respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Parent SEC Reports, and (ii) did not and
will not at the time they were or are filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Parent SEC
Reports (the "Parent Financials"), including any Parent SEC Reports
filed after the date hereof until the Closing, (i) complied or will
comply as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, (ii) was or will be
prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited interim financial
statements, as may be permitted by the SEC on Form 10-Q under the
Exchange Act) and (iii) fairly presented or will fairly present, in all
material respects, the consolidated financial position of the Parent
and its Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were
not, or are not expected to be, material in amount. The balance sheet
of the Parent contained in the Parent SEC Reports as of March 31, 1999
is hereinafter referred to as the "Parent Balance Sheet." Except as
disclosed in the Parent Disclosure Schedule and except for obligations
under this Agreement, neither the Parent nor any of its Subsidiaries
has any liabilities (absolute, accrued, contingent or otherwise) of a
nature required to be disclosed on a balance sheet or in the related
notes to the consolidated financial statements prepared in accordance
with GAAP that are, individually or in the aggregate, material to the
business, results of operations or financial condition of the Parent
and its Subsidiaries taken as a whole, except liabilities (i) provided
for in the Parent Balance Sheet or the related notes , (ii) incurred
since the date of the Parent Balance Sheet in the ordinary course of
business consistent with past practices, or (iii) incurred in
connection with the transactions contemplated hereby.
III.6. Absence of Certain Changes and Events. Since March 31, 1999,
there has not occurred, and no fact or condition exists which would have or,
insofar as reasonably can be foreseen, could have any Parent Material Adverse
Effect and there has not been, occurred or arisen any:
(a) material damage, destruction, or loss to the business or
properties of the Parent and its Subsidiaries taken as a whole (whether
or not covered by insurance);
(b) declaration, setting aside, or payment of any dividend or
other distribution in respect of the Parent's capital stock (other than
regular quarterly dividends in accordance with past practice); or
(c) change in the capital stock or in the number of shares or
classes of the Parent's authorized capital stock as described in
Section 3.2.
III.7. Litigation. There is no action, suit, proceeding or
investigation pending or to the Parent's knowledge, threatened against the
Parent or any of its Subsidiaries that would have a Parent Material Adverse
Effect or that in any manner challenges or seeks to prevent, enjoin, alter or
delay any of the transactions contemplated by this Agreement.
III.8. Registration Statement; Proxy Statement/Prospectus. The
information supplied by the Parent for inclusion in the Registration Statement
(as defined in Section 2.18) shall not at the time the Registration Statement is
filed with the SEC and at the time it 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 in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The information supplied by the Parent for inclusion in the
Proxy Statement to be sent to the stockholders of the Company in connection with
the Company Stockholders' Meeting, and the information made available to the
Company's stockholders in connection with their election as to the form of
Merger Consideration, shall not, on the date the Proxy Statement is first mailed
to the Company's stockholders and at the time of the Company Stockholders'
Meeting, as the case may be, and at the time such information is made available
to the Company's stockholders in connection with such election, 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 false or misleading,
or omit to state any material fact necessary to correct any statement in any
earlier written communication with respect to the solicitation of proxies for
the Company Stockholders' Meeting which has become false or misleading. The
Registration Statement and the Proxy Statement used by the Parent will comply as
to form in all material respects with applicable provisions of the Securities
Act and the Exchange Act, respectively, and the rules and regulations
thereunder. If at any time prior to the Effective Time, any event relating to
the Parent or any of its affiliates, officers or directors should be discovered
by the Parent that should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement or as part of the information
made available to the Company's stockholders so that the information made
available to them in connection with electing the form of Merger Consideration
is not false or misleading in any material respect, the Parent shall promptly
inform the Company. Notwithstanding the foregoing, the Parent makes no
representation or warranty with respect to any information supplied by the
Company that is contained in any of the foregoing documents.
III.9. Compliance; Permits; Restrictions.
(a) Neither the Parent nor any of its Subsidiaries is in
conflict with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to the Parent or any
of its Subsidiaries or by which its or any of their respective
properties is bound or affected, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Parent or any of its
Subsidiaries or its or any of their respective properties is bound or
affected, except for any conflicts, defaults or violations that would
not have a Parent Material Adverse Effect.
(b) The Parent and its Subsidiaries hold all consents,
permits, licenses, variances, exemptions, orders and approvals from
governmental authorities that are material to the operation of the
business of the Parent and its Subsidiaries taken as a whole
(collectively, the "Parent Permits"). The Parent and its Subsidiaries
are in compliance with the terms of the Parent Permits, except where
the failure to so comply would not have a Parent Material Adverse
Effect.
III.10. Regulation as a Utility. As of the date of this Agreement, the
Parent is a holding company exempt from registration under Section 3(a)(1) of
the PUHCA.
III.11. Ownership of the Company Common Stock. As of the date of this
Agreement, the 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.
III.12. Environmental Matters.
(a) Except as would not have a Parent Material Adverse Effect,
no amount of any Hazardous Material is present as a result of the
actions of the Parent or any of its Subsidiaries in, on or under any
property, including the land and the improvements, ground water and
surface water thereof, that the Parent or any of its Subsidiaries has
at any time owned, operated, occupied or leased, and the Company is not
aware that any Hazardous Materials are present in, on or under such
property as a result of the conduct of other parties. To the knowledge
of the Parent, the Parent Disclosure Schedule lists all locations that
the Parent or any Subsidiary formerly owned or leased where Hazardous
Materials are present in a volume or concentration that would
reasonably be expected to have a Parent Material Adverse Effect.
(b) Except as would not have a Parent Material Adverse Effect,
(i) neither the Parent nor any of its Subsidiaries has generated,
transported, stored, used, manufactured, disposed of, released or
exposed its employees or others to Hazardous Materials in violation of,
or in a manner which could give rise to liabilities under, any law in
effect prior to or as of the date hereof, nor (ii) has the Parent or
any of its Subsidiaries engaged in Hazardous Materials Activities in
violation of any rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect prior to or as of the date hereof to
prohibit, regulate or control Hazardous Materials or any Hazardous
Material Activity.
(c) The Parent and its Subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents
("Parent Environmental Permits") necessary for the conduct of the
Parent's and its Subsidiaries' Hazardous Material Activities and other
businesses of the Parent and its Subsidiaries, taken as a whole, as
such activities and businesses are currently being conducted, except
where the failure to so hold would not have a Parent Material Adverse
Effect.
(d) No actions, proceedings, revocation proceeding, amendment
procedure, writ, injunction or claim is pending, or to the Parent's
knowledge, threatened concerning any Parent Environmental Permit,
Hazardous Material in, and or under any property owned or leased at any
time by the Parent or any of its Subsidiaries or any Hazardous
Materials Activity of the Parent or any of its Subsidiaries, in which
injunction or other equitable relief or damages in excess of $1,000,000
is or is reasonably likely to be sought against the Parent or any
Subsidiary or that otherwise would have a Parent Material Adverse
Effect.
IV. CONDUCT PRIOR TO THE EFFECTIVE TIME
IV.1. Conduct of Business by the Company and the Parent. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, the Company (which for the
purposes of this Article 4 shall include the Company and each of its
Subsidiaries) and the Parent (which for the purposes of this Article 4 shall
include the Parent and each of its Subsidiaries) agree, except (i) in the case
of the Company as provided in Article 4 of the Company Disclosure Schedule, (ii)
in the case of the Parent (x) as provided in Article 4 of the Parent Disclosure
Schedule or (y) as would not have a material adverse effect on the ability of
the Parent to consummate the Merger or materially delay the Effective Date,
(iii) as otherwise contemplated by this Agreement, or (iv) to the extent that
the other party shall otherwise consent in writing, to carry on its business in
the usual, regular and ordinary course, in substantially the same manner as
heretofore conducted and use its commercially reasonable efforts consistent with
past practices and policies to preserve intact its present business
organization, keep available the services of its present officers and employees,
maintain its properties and assets, in the aggregate, in good condition and
repair, normal wear and tear excepted, and preserve its relationships with
customers, suppliers, distributors, and others with which it has business
dealings.
IV.2. Certain Actions by the Company. In addition, except as is set
forth in Article 4 of the Company Disclosure Schedules notwithstanding Section
4.1 above, without the prior written consent of the Parent, which consent will
not be unreasonably withheld or delayed, the Company shall not do any of the
following, nor shall the Company permit its Subsidiaries to do any of the
following:
(a) Enter into any partnership arrangements, joint
development agreements or strategic alliances;
(b) Grant any severance or termination pay to any officer or
employee except payments pursuant to written agreements
outstanding, or policies existing, on the date hereof
and as previously disclosed in writing to the Parent, or
adopt any new severance plan;
(c) Make any filings with any government authority regarding
its rates or charges, standards of service,
accounting matters or services it provides, except in
the ordinary course of business consistent with past
practices or as required by law;
(d) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in
respect of any capital stock or split, combine or
reclassify any capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu
of or in substitution for any capital stock, other
than the declaration and payment of regular quarterly
cash dividends on the Company Common Stock with record
and payment dates consistent with past practice and at
rates not in excess, in any fiscal year, of the
dividends for the prior fiscal year increased at a rate
consistent with past practice, and dividends payable
by a Subsidiary to the Company, other than a dividend or
distribution in connection with the adoption of a
replacement shareholders rights plan or in connection
with any redemption under the Rights Plan;
(e) Repurchase or otherwise acquire, directly or indirectly,
any shares of capital stock;
(f) Issue, deliver, sell, authorize or propose the issuance,
delivery or sale of, any shares of Company capital
stock or any securities convertible into shares of Company
capital stock, or subscriptions, rights, warrants or
options to acquire any shares of Company capital stock
or any securities convertible into shares of Company
capital stock, or enter into other agreements or
commitments of any character obligating it to issue any
such shares or convertible securities, other than pursuant
to the Company Plans consistent with past practice;
(g) Cause, permit or propose any amendments to its Articles of
Incorporation or Bylaws, except as contemplated by this
Agreement and in connection with adopting a new
shareholder rights plan;
(h) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest (other than
money market accounts and other short-term investments)
in or a material portion of the assets of, or by any
other manner, any business or any corporation,
partnership, association or other business organization
or division thereof, or otherwise acquire or agree to
acquire any material amount of operating assets;
(i) Sell, lease, encumber or otherwise dispose of any
properties or assets that are material, individually or
in the aggregate, to the business of the Company, except
for easements granted in the ordinary course of business;
(j) Incur any indebtedness for borrowed money or guarantee any
such indebtedness (or enter any other guarantee,
keep-well, capital maintenance or other similar agreement)
or issue or sell any debt securities or warrants or
rights to acquire debt securities of the Company or
guarantee any debt securities of others;
(k) Adopt or amend any employee benefit or stock purchase or
option plan, or enter into any employment contract,
pay any special bonus or special remuneration to any
director, officer or employee other than pursuant
to existing agreements, plans and arrangements identified
in the Company Disclosure Schedule, or increase the
salaries or wage rates, other than in the ordinary course
of business and consistent in timing and amount with past
practice or as required by law, of its officers or
employees;
(l) Pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than payment, discharge
or satisfaction in the ordinary course of business or in
an amount, in any individual case, of less than $150,000,
other than any payments made under any of the contracts,
agreements or binding commitments listed in the Company
Disclosure Schedule, in accordance with their respective
terms;
(m) Make any individual capital expenditure or commitment, or
series of related capital expenditures or commitments,
outside the ordinary course of business, exceeding
$150,000;
(n) Take any action that would cause the transactions
contemplated by this Agreement to be subject to
requirements imposed by any Takeover Law or fail to take
all necessary steps within its control to exempt (or
ensure the exemption of) the transactions contemplated by
this Agreement from any applicable Takeover Law,
including NH RSA 421-A; or
(o) Agree in writing or otherwise to take any of the actions
described in this Section.
V. ADDITIONAL AGREEMENTS
V.1. Proxy Statement/Prospectus; Registration Statement; Other Filings.
As promptly as practicable after the execution of this Agreement, the Company
will prepare and file with the SEC the Proxy Statement, and the Parent will
prepare and file with the SEC the Registration Statement in which the Proxy
Statement will be included as a prospectus. Each of the Company and the Parent
will respond to any comments of the SEC and will use its best efforts to have
the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. The Company will cause the Proxy
Statement to be mailed to its stockholders at the earliest practicable time. As
promptly as practicable after the date of this Agreement, the Company and the
Parent will prepare and file any other filings required under the Exchange Act,
the Securities Act or any other Federal, foreign or state securities laws
relating to the Merger and the transactions contemplated by this Agreement (the
"Other Filings"). Each party will notify the other party promptly upon the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff or any other government officials for amendments or supplements to
the Registration Statement, the Proxy Statement or any Other Filing or for
additional information and will supply the other party with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC or its staff or any other government officials, on the other
hand, with respect to the Registration Statement, the Proxy Statement, the
Merger or any Other Filing. From and after the date of this Agreement until the
Effective Time, the Parent and the Company shall file with the SEC when due all
reports required to be filed pursuant to Section 13 or 15(d) of the Exchange
Act, and the Parent shall make available to the Company's stockholders such
information as may be required in connection with their election as to the form
of Merger Consideration. Whenever any event occurs that is required to be set
forth in an amendment or supplement to the Proxy Statement, the Registration
Statement or any Other Filing or to be made available to the Company's
stockholders in connection with such election, the Company or the Parent, as the
case may be, will promptly inform the other party of such occurrence and
cooperate in filing with the SEC or its staff or any other government officials,
and/or mailing to stockholders of the Company, such amendment, supplement or
information. The Proxy Statement will also include the recommendations of the
Board of Directors of the Company in favor of approval of this Agreement (except
that the Board of the Company may withdraw, modify or refrain from making such
recommendation to the extent that the Board determines in good faith, after
consulting with outside legal counsel, that the Board's fiduciary duties under
applicable law require it to do so).
V.2. Meetings of Stockholders.
The Company will take all action necessary in accordance with
applicable New Hampshire law and its Articles of Incorporation and Bylaws to
convene the Company Stockholders' Meeting to be held as promptly as practicable,
and in any event within 60 days after the declaration of effectiveness of the
Registration Statement , and in any event will use all commercially reasonable
efforts to convene the Company Stockholders' Meeting prior to December 31, 1999,
for the purpose of considering the approval of this Agreement. Unless otherwise
required by the fiduciary duties of the Company's Board of Directors, the
Company will use its best efforts to solicit from its stockholders proxies in
favor of the approval of this Agreement, and will take all other action
necessary or advisable to secure the vote or consent of its stockholders
required to obtain such approval.
V.3. Access to Information; Confidentiality.
(a) Each party will afford the other party and its
accountants, counsel and other representatives reasonable access during
normal business hours to the properties, books, records and personnel
of the other party during the period prior to the Effective Time to
obtain all information concerning the business, including properties,
results of operations and personnel of such party, as the other party
may reasonably request. No information or knowledge obtained in any
investigation pursuant to this Section 5.3 will affect or be deemed to
modify or waive any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
(b) The parties acknowledge that the Company and the Parent
have previously executed Confidentiality Agreements dated June 9 and
June 11, 1999 (the "Confidentiality Agreements"), which Confidentiality
Agreements will continue in full force and effect in accordance with
its terms, except as is necessary to comply with the terms of this
Agreement.
V.4. No Solicitation.
(a) From and after the date of this Agreement until the
earlier of the Effective Time or termination of this Agreement, the
Company and its Subsidiaries will not, and will instruct their
respective directors, officers, employees, representatives, investment
bankers, agents and affiliates not to, directly or indirectly, (i)
solicit or encourage or facilitate submission of, any proposals or
offers (or anything that is reasonably likely to lead to a proposal or
offer) by any person, entity or group (other than the Parent and its
affiliates, agents and representatives), or (ii) participate in any
discussions or negotiations with, or disclose any non-public
information concerning the Company or any of its Subsidiaries to, or
afford any access to the properties, books or records of the Company or
any of its Subsidiaries to, or otherwise assist or facilitate, or enter
into any agreement or understanding with, any person, entity or group
(other than the Parent and its affiliates, agents and representatives),
in connection with any Acquisition Proposal, or that constitute or may
reasonably be expected to lead to an Acquisition Proposal, with respect
to the Company. For the purposes of this Agreement, an "Acquisition
Proposal" means (x) any proposal or offer relating to (i) any merger,
consolidation, sale of substantial assets of the Company or similar
transactions involving the Company or any Subsidiary (other than sales
of assets or inventory in the ordinary course of business or permitted
under the terms of this Agreement), (ii) sale of 20% or more of the
outstanding shares of capital stock of the Company (including without
limitation by way of a tender offer or an exchange offer), or (iii) the
acquisition by any person of beneficial ownership or a right to acquire
beneficial ownership of, or the formation of any "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) that beneficially owns, or has the right to acquire
beneficial ownership of, 20% or more of the then outstanding shares of
capital stock of the Company (except for acquisitions for passive
investment purposes only in circumstances where the person or group
qualifies for and files a Schedule 13G with respect thereto); or (y)
any public announcement of a proposal, plan or intention to do any of
the foregoing or any agreement to engage in any of the foregoing. The
Company will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing and will use reasonable efforts to
obtain the return of any confidential information furnished to any such
parties. The Company will (i) notify the Parent promptly if any inquiry
or proposal is made or any information or access is requested in
connection with an Acquisition Proposal or potential Acquisition
Proposal and (ii) notify the Parent within one business day of the
receipt thereof of the identity of the person making the Acquisition
Proposal and the applicable terms and conditions of such Acquisition
Proposal and of any modification thereof or any proposed agreement. In
addition, subject to the other provisions of this Section 5.4, from and
after the date of this Agreement until the earlier of the Effective
Time and termination of this Agreement, the Company and its
Subsidiaries will not, and will instruct their respective directors,
officers, employees, representatives, investment bankers, agents and
affiliates not to, directly or indirectly, make or authorize any public
statement, recommendation or solicitation in support of any Acquisition
Proposal made by any person, entity or group (other than the Parent);
provided, however, that nothing herein shall prohibit the Company's
Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer pursuant to
Rules 14d-9 and 14e-2 promulgated under the Exchange Act or any other
disclosure required by law.
(b) Notwithstanding the provisions of paragraph (a) above but
subject to compliance with the notification requirements thereof, the
Company may, to the extent the Board of Directors of the Company
determines, in good faith, after consultation with its outside legal
counsel and financial advisors, that the Board's fiduciary duties under
applicable law require it to do so, participate in discussions or
negotiations with, and, subject to the requirements of paragraph (c)
below, furnish information to any person, entity or group after such
person, entity or group has delivered to the Company in writing an
Acquisition Proposal that the Board of Directors of the Company
determines in good faith, (i) would result in a transaction more
favorable to the stockholders of the Company than the Merger and (ii)
has been made by a person, entity or group that is financially capable
of consummating the Acquisition Proposal. In addition, notwithstanding
the provisions of paragraph (a) above, in connection with a possible
Acquisition Proposal, the Company shall refer any third party to this
Section 5.4 or make a copy of this Section 5.4 available to a third
party. In the event the Company receives an Acquisition Proposal,
nothing contained in this Agreement (but subject to the terms hereof)
will prevent the Board of Directors of the Company from approving such
Acquisition Proposal, or recommending such Acquisition Proposal to the
Company's stockholders, if the Board determines in good faith, after
consultation with its outside legal counsel and financial advisors,
that such action is required by its fiduciary duties under applicable
law; in such case, the Board of Directors of the Company may withdraw,
modify or refrain from making its recommendation concerning the
approval of this Agreement, provided that the Company provides Parent
with at least three business days' prior notice thereof, during which
time the Parent may make, and in such event the Company shall consider,
a counterproposal to such Acquisition Proposal, and shall itself and
shall cause its financial and legal advisors to negotiate on its behalf
with the Parent with respect to the terms and conditions of such
counterproposal. Nothing in this Section 5.4 shall (x) permit the
Company to terminate this Agreement (except as specifically provided in
Section 7.1 hereof), (y) permit the Company to enter into any agreement
with respect to an Acquisition Proposal during the term of this
Agreement (it being agreed that during the term of this Agreement, the
Company shall not enter into any agreement with any person that
provides for, or in any way facilitates, an Acquisition Proposal (other
than a confidentiality agreement of the type referred to below)) or (z)
affect any other obligation of the Company under this Agreement.
(c) Notwithstanding anything to the contrary in this Section
5.4, the Company will not provide any non-public information to a third
party unless (i) the Company provides such non-public information
pursuant to a nondisclosure agreement with terms comparable to the
terms in the Confidentiality Agreement dated June 9, 1999 protecting
confidential information of the Company and (ii) such non-public
information has previously been delivered or made available to the
Parent.
V.5. Public Disclosure. The Parent will consult with the Company, and
the Company will consult the Parent, and each will get the approval of the other
(which will not be unreasonably withheld or delayed), before issuing any press
release or otherwise making any public statement with respect to the Merger or
this Agreement and will not issue any such press release or make any such public
statement prior to such consultation and approval, except as may be required by
law or any listing agreement with or rule of a national securities exchange.
V.6. Legal Requirements.
(a) Each of the Parent, Merger Sub and the Company will take
all reasonable actions necessary or desirable to comply promptly with
all legal requirements that may be imposed on them with respect to the
consummation of the transactions contemplated by this Agreement
(including furnishing all information required in connection with
approvals of or filings with any Governmental Entity) and will promptly
cooperate with and furnish information to any party hereto necessary in
connection with any such requirements imposed upon any of them or their
respective Subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement. The Parent will use its
commercially reasonable efforts to take such steps as may be necessary
to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of Parent Common Stock pursuant
hereto. The Company will use its commercially reasonable efforts to
assist the Parent as may be necessary to comply with the securities and
blue sky laws of all jurisdictions that are applicable in connection
with the issuance of Parent Common Stock pursuant hereto.
(b) As soon as practicable after execution of this Agreement
or as otherwise mutually agreed by the parties, each of the Parent and
the Company shall file with the Antitrust Division and the FTC a
premerger notification form and any supplemental information (other
than privileged information) which may be requested in connection
therewith pursuant to the HSR Act, which filings and supplemental
information will comply in all material respects with the requirements
of the HSR Act. Each of the Parent and the Company shall cooperate
fully with the other in connection with the preparation of such filings
and shall use its best efforts to respond to any requests for
supplemental information from the Antitrust Division or the FTC and to
obtain early termination of any waiting period applicable to the Merger
under the HSR Act without any materially burdensome conditions or any
divestiture. Filing fees required to be paid in connection with the
premerger notification pursuant to the HSR Act shall be borne and paid
by the Parent.
(c) As soon as practicable after execution of this Agreement,
to the extent applicable, the Parent shall file with the SEC an
application for approval under Section 9(a)(2) of PUHCA and such other
applications and information (other than privileged information) which
may be requested by the SEC in connection therewith pursuant to PUHCA
and the rules of the SEC thereunder, which filings and information will
comply in all material respects with the requirements of PUHCA and such
rules. The Parent will diligently prosecute such applications and,
subject to the understanding set forth in clause (ii) of Section 6.1(d)
below, take such actions as may reasonably be necessary to obtain the
requisite SEC approval under PUHCA.
V.7. Third Party Consents. As soon as practicable following the date
hereof, each of the Company and the Parent will use its commercially reasonable
efforts to obtain all material consents, waivers and approvals under any of its
or its Subsidiaries' agreements, contracts, licenses, leases or franchises
required to be obtained in connection with the consummation of the transactions
contemplated hereby, it being understood that neither Company nor Parent shall
be required to make materially burdensome payments in connection with
fulfillment of its obligations under this Section 5.7.
V.8. Notification of Certain Matters. The Parent will give prompt
notice to the Company, and the Company will give prompt notice to the Parent, of
the occurrence, or failure to occur, of any event, which occurrence or failure
to occur would be reasonably likely to cause (a) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date of this Agreement to the Effective Time, or (b) any
material failure of the Parent and Merger Sub or the Company, as the case may
be, or of any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement. Notwithstanding the above, the delivery of any notice
pursuant to this section will not limit or otherwise affect the remedies
available hereunder to the party receiving such notice or the conditions to such
party's obligation to consummate the Merger.
V.9. Best Efforts and Further Assurances. Subject to the respective
rights and obligations of the Parent and the Company under this Agreement, each
of the parties to this Agreement will and the Parent will cause Merger Sub to,
use its best efforts to effectuate the Merger and the other transactions
contemplated hereby and to fulfill and cause to be fulfilled the conditions to
closing under this Agreement. Each party hereto, at the reasonable request of
another party hereto, will, and the Parent will cause Merger Sub to, execute and
deliver such other instruments and do and perform such other acts and things as
may be necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby. Notwithstanding the foregoing, nothing in this
Agreement shall require the Parent to agree to any materially burdensome
condition or any divestiture in order to obtain any clearance for the Merger
under the HSR Act or in connection with any other regulatory order or approval.
V.10. Certain Employee Agreements. Parent and the Surviving Corporation
and its Subsidiaries shall honor in accordance with their terms all contracts,
agreements, collective bargaining agreements and commitments of the Company and
its Subsidiaries prior to the date hereof which apply to any current or former
employee or current or former director of the Company and which are disclosed in
the Company Disclosure Schedule; provided, however, that the foregoing shall not
prevent Parent or the Surviving Corporation from administering and 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. It is the present intention of
Parent and the Company that following the Effective Time, if any reductions in
workforce in respect of employees of the Company or any of its Subsidiaries
become necessary they shall be made on a fair and equitable basis, in light of
the circumstances and the objectives to be achieved, giving consideration to
previous work history, job experience, and qualifications, without regard to
whether employment prior to the Effective Time was with the Company or its
Subsidiaries or Parent or its Subsidiaries, and that any employees whose
employment is terminated or jobs are eliminated by Parent, the Surviving
Corporation or any of their respective Subsidiaries during such period shall be
entitled to participate on a fair and equitable basis in the job opportunity and
employment placement programs offered by Parent, the Surviving Corporation or
any of their respective subsidiaries, subject in each case to the provisions of
any labor agreements that may be applicable. Any workforce reductions carried
out following the Effective Time by Parent or the Surviving Corporation and
their respective subsidiaries shall be done in accordance with all applicable
collective bargaining agreements, and all laws and regulations governing the
employment relationship and termination thereof including, without limitation,
the Worker Adjustment and Retraining Notification Act and regulations
promulgated thereunder, to the extent applicable, and any comparable applicable
state or local law.
V.11. Corporate Offices. The corporate headquarters of the
Surviving Corporation shall initially be located in
Manchester, New Hampshire.
V.12. Community Involvement. Subsequent to the Effective Time,
Parent will, or will cause the Surviving Corporation to,
continue to make charitable contributions to the communities
served by the Company and its Subsidiaries and otherwise
maintain a level of involvement in community activities in
the State of New Hampshire at a level as generous as
established practice carried on in recent years by the
Company and its Subsidiaries.
V.13. Advisory Board. Following the Effective Time, EnergyNorth
Natural Gas, Inc. shall maintain an advisory board (the
"Advisory Board") consisting of not less than five members
and to be chaired by Mr. Giordano, for a period of at
least three years following the Closing Date. Membership on
the Advisory Board shall be offered to Mr. Giordano and all
current members of the Company's Board of Directors who are
residents of the State of New Hampshire and who are not
employees of the Surviving Corporation and all such persons
who join the Advisory Board shall be referred to as "Company
Designees". Any vacancy on the Advisory Board which arises
after the Effective Time (including any shortfall in
Advisory Board membership arising from the failure of at
least five eligible members of the Company's Board of
Directors to elect to join the Advisory Board) shall be
filled by Parent with the advice of the then remaining
Company Designees (and such replacement person shall be
deemed a "Company Designee" for all purposes hereunder).
Meetings of the Advisory Board shall be called by
EnergyNorth Natural Gas, Inc. and shall be held no less
frequently than quarterly, and EnergyNorth Natural Gas, Inc.
shall consult with the Advisory Board with respect to
regulatory and legislative matters and community affairs
of EnergyNorth Natural Gas, Inc. in EnergyNorth Natural Gas,
Inc.'s current service area (including consultations with
the Advisory Board in which the Advisory Board may review
and make recommendations consistent with Section 5.12
with respect to the civic, charitable and business and
customer development activities of EnergyNorth Natural Gas,
Inc. in such area). Company Designees shall receive a fee
of $1,500 per meeting attended for serving on the Advisory
Board, and shall be reimbursed for reasonable out-of-pocket
expenses incurred in connection with their service on the
Advisory Board. The members of the Advisory Board shall be
committed to the advancement of the affairs of the
Surviving Corporation, EnergyNorth Natural Gas, Inc., and
the Parent in the State of New Hampshire. The Surviving
Corporation shall provide to Company Designees
indemnification rights to the same extent as provided to
Surviving Corporation's directors pursuant to the Surviving
Corporation's Articles of Incorporation and bylaws.
V.14. Representation on Parent Board. The Parent shall take such
action as may be necessary to cause the number of Trustees
comprising of the Parent's Board of Trustees at the
Effective Time to be sufficient to permit one director of the
Company to serve thereon and shall elect Edward T. Borer
or another director of the Company designated by the Board
of Directors of the Company who is reasonably satisfactory
to the Parent. The Parent shall, as of the Effective Time,
appoint such director to serve on the Parent's Board of
Trustees for an initial term ending at the 2003 Annual
Meeting of Shareholders of the Parent.
V.15. Employee Benefit Matters.
(a) For a period of 12 months after the Closing Date, and
subject to applicable law, the Parent shall provide to continuing
employees who were employees of the Company and its Subsidiaries
immediately prior to the Effective Time (for purposes of this Section
5.15, "affected employees") benefits under welfare plans (as that term
is defined in Section 3(1) of ERISA) and tax-qualified pension plans
(as that term is defined in Section 3(2) of ERISA) that are
substantially comparable in the aggregate to the welfare and
tax-qualified pension benefits provided under the Company's Plans (as
defined in Section 2.14), other than individual agreements, disclosed
in the Company Disclosure Schedule as in effect on the Closing Date.
Such employee benefits shall be made available to such employees
without regard to preexisting condition limitations other than any such
condition or limitation (including without limitation preexisting
condition exclusions, waiting periods, actively-at-work requirements
and other similar exclusions and conditions) as to which the relevant
corresponding Plan of the Company or its Subsidiaries provided only a
conditional waiver and as to which the employee (or his or her spouse
or dependents) had not, as of the Closing Date, satisfied the relevant
conditions for such waiver. For purposes of each employee benefits plan
of the Parent or its Subsidiaries (a "Parent plan") that determines an
individual's eligibility to become a participant in the Parent plan (an
"eligibility requirement") or the extent of a participant's
nonforfeitable right to benefits otherwise accrued under the Parent
plan (a "vesting requirement") by reference to service for the Parent
and its Subsidiaries, the Parent plan's eligibility and vesting
requirements shall be applied to the extent permitted by law by taking
into account for each affected employee such services of such employee
for the Company or its subsidiaries prior to the Effective Time as
would have been taken into account for purposes of the Parent's plan's
eligibility and vesting requirements had such services been performed
for the Parent and its Subsidiaries. The provisions of this Section
5.15 shall not apply to affected employees whose terms and conditions
of employment are governed by a collective bargaining agreement.
(b) The Company may establish a retention pool of up to a
maximum of $650,000 in order to retain the services of certain officers
and employees through and following the Effective Date. A listing of
the individuals proposed to be covered and their respective retention
amounts shall be provided by the Company to the Parent for its approval
within 90 days following the date of this Agreement, such approval not
to be unreasonably withheld. The amounts shall be payable to the
individuals, as approved by the Parent pursuant to the immediately
preceding sentence, 90 days following the Closing if such individuals
have remained employed with the Surviving Corporation or its
Subsidiaries through such date, except as set forth in Schedule 5.15(b)
of the Parent Disclosure Schedules.
V.16. Indemnification; D&O Insurance.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or
administrative, including without limitation any such claim, action,
suit, proceeding or investigation in which any person who is now, or
has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Time, a director or officer of the
Company or any of its Subsidiaries (the "Indemnified Parties") is, or
is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that
he is or was a director or officer of the Company, any of its
Subsidiaries or any of their respective predecessors or (ii) this
Agreement or any of the transactions contemplated hereby, whether in
any case asserted or arising before or after the Effective Time, the
parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto. It is understood and agreed that after the
Effective Time, to the extent, if any, not provided by an existing
right of indemnification or other agreement or policy, the Parent shall
indemnify and hold harmless, as and to the fullest extent permitted by
law and the charter and by-laws of the relevant entity, each such
Indemnified Party against any losses, claims, damages, liabilities,
costs, expenses (including reasonable attorney's fees and expenses in
advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted
by law upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or
investigation. In the event of any such threatened or actual claim,
action, suit, proceeding or investigation (whether asserted or arising
before or after the Effective Time), the Indemnified Parties may retain
counsel reasonably satisfactory to them after consultation with the
Parent; provided, however, that (i) the Parent shall have the right to
assume the defense thereof and upon such assumption the Parent shall
not be liable to any Indemnified Party in connection with the defense
thereof, except that if the Parent elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises the Indemnified
Parties that there are issues which raise conflicts of interest between
the Parent and the Indemnified Parties, the Indemnified Parties may
retain counsel reasonably satisfactory to them after consultation with
the Parent, and the Parent shall pay the reasonable fees and expenses
of such counsel for the Indemnified Parties, (ii) the Parent shall be
obligated pursuant to this paragraph to pay for only one counsel in any
jurisdiction for all Indemnified Parties, (iii) the Parent shall not be
liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld) and (iv) the Parent
shall have no obligation hereunder to any Indemnified Party when and if
a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law. Any Indemnified Party wishing
to claim indemnification under this Section 5.16 upon learning of any
such claim, action, suit, proceeding or investigation shall notify the
Parent thereof, provided that the failure to so notify shall not affect
the obligations of the Parent under this Section 5.16 except to the
extent such failure to notify materially prejudices the Parent. The
Company's obligations under this Section 5.16(a) shall continue in full
force and effect for a period of six (6) years from the Effective Time,
provided, however, that all rights to indemnification in respect of any
claim asserted or made within such period shall continue until the
final disposition of such claim.
(b) From and after the Effective Time, the Surviving
Corporation will fulfill and honor in all respects the indemnification
obligations of the Company pursuant to the provisions of the Articles
of Incorporation and the Bylaws of the Company as in effect immediately
prior to the Effective Time.
(c) For a period of six (6) years after the Effective Time,
the Parent shall cause the Surviving Corporation to maintain (to the
extent available in the market) in effect a directors' and officers'
liability insurance policy covering those persons who are currently
covered by the Company's directors' and officers' liability insurance
policy (a copy of which has been heretofore delivered to the Parent)
with coverage in amount and scope at least as favorable as the
Company's existing coverage (which coverage may be an endorsement
extending the period in which claims may be made under such existing
policy); provided that in no event shall the Parent or the Surviving
Corporation be required to expend per year under this Section 5.16(c)
more than an aggregate of 150% of the current annual premium expended
by the Company to provide such coverage; and, further provided that if
the premium for such coverage exceeds such amount, the Parent or the
Surviving Corporation shall purchase a policy with the greatest
coverage available for such 150% of the current annual premium.
(d) In the event the 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 or conveys all or
substantially all of its assets to any person, then, and in each such
case, to the extent necessary, proper provision shall be made so that
the successors and assigns of the Parent assume the obligations set
forth in this Section 5.16.
(e) The provisions of this Section 5.16 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and
his or her heirs and representatives, and nothing herein shall affect
any indemnification rights that any Indemnified Party and his or her
heirs and representatives may have under the Bylaws of the Company or
any of its Subsidiaries, any contract or applicable law.
V.17. Tax-Free Reorganization. The Parent and the Company will each use
its best efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368 of the Code, and neither party will take any action
that would cause the Merger to fail to qualify as a reorganization within the
meaning of Section 368(a) of the Code. Each of the parties shall report the
Merger for income tax purposes as a reorganization within the meaning of Section
368(a) of the Code (and any comparable state or local tax statute). The Parent
and the Company will each make available to the other party and their respective
legal counsel copies of all tax returns as may be requested by the other party.
Each of the Parent and the Company will make and will use its best efforts to
obtain from its affiliates such reasonable representations as may be requested
by legal counsel for the purpose of rendering the opinions contemplated by
Section 6.1(f).
V.18. Listing. The Parent shall use its best efforts to cause the
shares of Parent Common Stock to be issued in the Merger to be approved for
listing on the NYSE, the Pacific Exchange and the Boston Stock Exchange prior to
the Effective Time.
V.19. Dividend Record Date. The Company agrees to coordinate with the
Parent in establishing the record date for the payment of any dividends on the
Company Common Stock in order to assure that the holders of record of Company
Common Stock (i) are entitled to receive a dividend on either Company Common
Stock or Parent Common Stock received in the Merger in the quarter in which the
Closing occurs, and (ii) are not entitled to receive a dividend on both Company
Common Stock and Parent Common Stock received in the Merger in the quarter in
which the Closing occurs.
V.20. Stock Options and Employee Benefits.
(a) At the Effective Time, each outstanding option to purchase
shares of the Company Common Stock (each a "Company Stock Option")
under the Company Stock Option Plans, whether or not exercisable, will
be assumed by Parent. Each Company Stock Option so assumed by Parent
under this Agreement will continue to have, and be subject to, the same
terms and conditions set forth in the applicable Company Stock Option
Plan and option certificate immediately prior to the Effective Time
(including, without limitation, any existing repurchase rights or
vesting provisions other than any provision providing for accelerated
vesting in connection with the Merger, which provisions shall not apply
with respect to the Merger), except that (i) each Company Stock Option
will be exercisable for that number of whole shares of Parent Common
Stock as the holder would have been entitled to receive pursuant to the
Merger had such holder exercised such option in full immediately prior
to the Effective Time, without taking into account whether or not such
option is in fact then exercisable and all shares of Company Common
Stock issuable upon the exercise of such option were converted into
Parent Common Stock pursuant to Section 1.6, rounded down to the
nearest whole number of shares of Parent Common Stock and (ii) the per
share exercise price for the shares of Parent Common Stock issuable
upon exercise of such assumed Company Stock Option will be equal to the
quotient determined by dividing the exercise price per share of Company
Common Stock at which such Company Stock Option was exercisable
immediately prior to the Effective Time by the number of shares of
Parent Common Stock deemed purchasable, in accordance with the terms of
this Section, pursuant to such Company Common Stock Option, rounded up
to the nearest whole cent. Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of
Parent Common Stock for delivery upon exercise of options assumed by
Parent pursuant to this Section. As soon as practicable after the
Effective Time, Parent shall deliver to each holder of a Company Stock
Option an appropriate notice setting forth such holder's rights
pursuant thereto.
(b) It is intended that the Company Stock Options assumed by
Parent shall qualify following the Effective Time as incentive stock
options as defined in Section 422 of the Code to the extent the Company
Stock Options qualified as incentive stock options immediately prior to
the Effective Time and the provisions of this Section 5.20 shall be
applied consistent with such intent.
(c) Parent agrees to file a registration statement on Form S-8
for the shares of Parent Common Stock issuable with respect to assumed
Company Stock Options within 10 business days after the Effective Time
and shall use its reasonable efforts to maintain the effectiveness of
such registration statement thereafter for so long as any of such
options or other rights remain outstanding.
V.21. Rights Plan Redemption. Not later than immediately prior to the
Effective Time, the Company shall redeem all outstanding rights under the Rights
Agreement so that the Rights Agreement will not apply to the consummation of the
transactions contemplated hereby.
VI. CONDITIONS TO THE MERGER
VI.1. Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction or waiver at or prior to the Effective Time
of the following conditions:
(a) Stockholder Approval. This Agreement shall have been
approved by the requisite vote under the Company's charter and bylaws,
applicable laws of the State of New Hampshire and the rules and
regulations of the NYSE, as and to the extent required.
(b) NHPUC Approval. The Merger, the Merger Agreement and the
related transactions contemplated hereunder shall have received all
required or requested approvals or reviews from the NHPUC pursuant to
applicable New Hampshire law on terms and conditions which (i) with
respect to rates and recovery of costs, including without limitation
transaction, premium and integration costs, associated with the Merger,
are not less favorable to the Surviving Corporation or EnergyNorth
Natural Gas, Inc. or Parent than those contained in the order of the
NHPUC, dated July 20, 1998, In Re Northern Utilities, Inc. (DF-040,
Order No. 22,983), and (ii) do not otherwise have or constitute a
material adverse effect on the business, assets (including intangible
assets), prospects, financial condition or results of operations of the
Surviving Corporation or EnergyNorth Natural Gas, Inc. or the other gas
distribution Subsidiaries of the Parent, and such approval shall be
final, nonappealable and not under appeal.
(c) Registration Statement Effective. The SEC shall have
declared the Registration Statement effective, and no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose, and
no similar proceeding in respect of the Proxy Statement, shall have
been initiated or threatened in writing by the SEC.
(d) PUHCA Approval. The requisite approval of the SEC under
PUHCA shall have been obtained on terms and conditions that (i) do not
have and cannot reasonably be expected to have a Parent Material
Adverse Effect and (ii) are not otherwise materially burdensome to the
Parent, it being understood that any requirement that the Parent
register as a non-exempt "holding company" under PUHCA or divest any of
its or the Surviving Corporation's operations shall be deemed to be
materially burdensome for purposes of this provision unless such
requirement arises as a result of any other transaction or transactions
engaged in by Parent or its Subsidiaries after the date of this
Agreement and not solely as a result of the transactions contemplated
by this Agreement.
(e) No Order. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal, otherwise prohibiting consummation of the
Merger or having a material adverse effect on the Merger.
(f) Tax Opinions. The Parent and the Company shall each have
received substantially identical written opinions from their counsel,
Ropes & Gray and Hale and Dorr LLP, respectively, in form and substance
reasonably satisfactory to them, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Code; provided that if the respective counsel to the Parent or the
Company does not render such opinion, this condition shall nonetheless
be deemed satisfied with respect to such party if counsel to the other
party renders such opinion to such party.
(g) HSR and Similar Compliance. Any applicable waiting period
relating to the consummation of Merger under the HSR Act shall have
expired or been terminated by the reviewing agency.
(h) Required Approvals. All consents and approvals referred to
in Section 6.1(h) of the Company Disclosure Schedule (or in the
applicable Disclosure Schedule with respect thereto) shall have been
obtained.
VI.2. Additional Conditions to Obligations of the Company. The
obligations of the Company to consummate and effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company:
(a) Representations and Warranties. The representations and
warranties of the Parent and Merger Sub contained in this Agreement
shall be true and correct on and as of the Effective Time (without
regard to any updates to the Parent Disclosure Schedule, unless
otherwise agreed by the Company), except for changes contemplated by
this Agreement and except for those representations and warranties that
address matters only as of a particular date (which shall remain true
and correct as of such particular date), with the same force and effect
as if made on and as of the Effective Time, except, in all such cases,
where the failure to be so true and correct (without regard to any
materiality or knowledge qualifications contained therein) would not
have a Parent Material Adverse Effect, and the Company shall have
received a certificate to such effect signed on behalf of the Parent by
the Chief Executive Officer, Chief Operating Officer or Chief Financial
Officer of the Parent.
(b) Agreements and Covenants. The Parent and Merger Sub shall
have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied
with by them on or prior to the Effective Time, and the Company shall
have received a certificate to such effect signed on behalf of the
Parent by the Chief Executive Officer, Chief Operating Officer or Chief
Financial Officer of the Parent.
(c) Listing. The shares of Parent Common Stock issuable to
stockholders of the Company pursuant to this Agreement shall have been
authorized for listing on the NYSE, the Pacific Exchange and the Boston
Stock Exchange.
VI.3. Additional Conditions to the Obligations of the Parent and Merger
Sub. The obligations of the Parent and Merger Sub to consummate and effect the
Merger shall be subject to the satisfaction at or prior to the Effective Time of
each of the following conditions, any of which may be waived, in writing,
exclusively by the Parent:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and
correct on and as of the Effective Time (without regard to any updates
to the Company Disclosure Schedule, unless otherwise agreed by the
Parent), except for changes contemplated by this Agreement and except
for those representations and warranties that address matters only as
of a particular date (which shall remain true and correct as of such
particular date), with the same force and effect as if made on and as
of the Effective Time, except, in all such cases, where the failure to
be so true and correct (without regard to any materiality or knowledge
qualifications contained therein) would not have a Company Material
Adverse Effect, and the Parent and Merger Sub shall have received a
certificate to such effect signed on behalf of the Company by the Chief
Executive Officer, Chief Operating Officer or Chief Financial Officer
of the Company.
(b) Agreements and Covenants. The Company shall have performed
or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, and the Parent shall have received a
certificate to such effect signed on behalf of the Company by the Chief
Executive Officer, Chief Operating Officer or Chief Financial Officer
of the Company.
VII. TERMINATION
VII.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, whether before or after approval of
the Merger by the stockholders of the Company or the NHPUC:
(a) by mutual written consent duly authorized by the Board of
Trustees of the Parent and the Board of Directors of the Company;
(b) by either the Company or the Parent if the Merger shall
not have been consummated by July 14, 2000 (which date may be extended
at the written request of either the Parent or the Company to January
14, 2001 to the extent necessary to satisfy the condition set forth in
Section 6.1(b), (d) or (g) and so long as all other conditions have
been or shall be capable of being fulfilled); provided, however, that
the right to terminate this Agreement under this Section 7.1(b) shall
not be available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Merger to occur on
or before such date if such action or failure to act constitutes a
breach of this Agreement;
(c) by either the Company or the Parent if a court of
competent jurisdiction or governmental, regulatory or administrative
agency or commission shall have issued an order, decree or ruling or
taken any other action (an "Order"), in any case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger,
which order is final, nonappealable and not under appeal;
(d) by either the Company or the Parent if the required
approval of the stockholders of the Company contemplated by this
Agreement shall not have been obtained on or before March 1, 2000 or by
reason of the failure to obtain the required vote upon a vote taken at
a duly held meeting of the Company's stockholders duly convened
therefor or at any adjournment thereof (a "Company Stockholder Approval
Failure Event"); provided, however, that the right to terminate this
Agreement under this Section 7.1(d) shall not be available to the
Company where the failure to obtain Company stockholder approval shall
have been caused by the action or failure to act of the Company in
breach of this Agreement and shall not be available to Parent where
such failure is caused by a breach of this Agreement by Parent;
(e) by either the Company or the Parent, if the Company shall
have accepted or approved an Acquisition Proposal or if the Company's
Board of Directors recommends an Acquisition Proposal to the
stockholders of the Company as permitted by Section 5.4(b);
(f) by the Parent, if the Board of Directors of the Company
shall have (i) failed to convene the Company Stockholders' Meeting, as
required by Section 5.2, (ii) failed to recommend approval of this
Agreement in the Proxy Statement or withheld, withdrawn or modified in
a manner adverse to the Parent such recommendation or resolved to do
so, or (iii) approved or recommended an Acquisition Proposal;
(g) by the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of the Parent set forth in
this Agreement, if (i) as a result of such breach the conditions set
forth in Section 6.2(a) or Section 6.2(b) would not be satisfied as of
the time of such breach and (ii) such breach shall not have been cured
by the Parent within ten (10) business days following receipt by the
Parent of written notice of such breach from the Company;
(h) by the Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in
this Agreement, if (i) as a result of such breach the conditions set
forth in Section 6.3(a) or Section 6.3(b) would not be satisfied as of
the time of such breach and (ii) such breach shall not have been cured
by the Company within ten (10) business days following receipt by the
Company of written notice of such breach from the Parent;
(i) by the Parent, if there shall have occurred any event or
condition that constitutes a Company Material Adverse Effect since the
date of this Agreement which condition or event shall not have been
ameliorated such that it is no longer a Company Material Adverse Effect
within ten (10) business days following receipt by the Company of
notice from the Parent; or
(j) by the Company, if there shall have occurred any event or
condition that constitutes a Parent Material Adverse Effect since the
date of this Agreement, which condition or event shall not have been
ameliorated such that it is no longer a Parent Material Adverse Effect
within ten (10) business days following receipt by the Parent of notice
from the Company.
VII.2. Notice of Termination; Effect of Termination. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8 (General Provisions), each of
which shall survive the termination of this Agreement. No termination of this
Agreement shall affect the obligations of the parties contained in the
Confidentiality Agreements, all of which obligations shall survive termination
of this Agreement in accordance with their terms.
VII.3. Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated; provided,
however, that the Parent and the Company shall share equally all fees
and expenses, other than attorneys' and accountants' fees and expenses,
incurred in relation to the printing and filing of the Proxy Statement
(including any preliminary materials related thereto) and the
Registration Statement (including financial statements and exhibits)
and any amendments or supplements thereto.
(b) The Company shall pay to the Parent an amount equal to all
out-of-pocket expenses and fees incurred by the Parent, including
without limitation fees and expenses payable to all legal, accounting,
financial and other professional advisors, relating to the Merger or
the transactions contemplated by this Agreement not exceeding
$2,000,000 in the aggregate upon the termination of this Agreement by
the Parent pursuant to 7.1(h) or upon any termination of this Agreement
as to which subparagraph (i), (ii) or (iii) of Section 7.3(c) is
applicable.
(c) The Company shall pay the Parent a termination fee of
$5,500,000 (plus all amounts payable pursuant to Section 7.3(b)), upon
the earliest to occur of the following events:
(i) the termination of this Agreement pursuant
to Section 7.1(e) or (f);
(ii) the termination of this Agreement pursuant to
Section 7.1(d) if, at the time of the Seller Stockholder
Approval Failure Event;
(A) there shall have been announced,
commenced or occurred an Alternative Transaction (as
defined in Section 7.3(g)) and the Company shall have
either (x) executed an agreement to engage in the
same or (y) the Company's Board of Directors shall
not have recommended against such Alternative
Transaction affirmatively or, if the Company's Board
of Directors has recommended against such Alternative
Transaction, the Company's Board of Directors shall
have withdrawn such recommendation against such
Alternative Transaction or modified such
recommendation in a manner adverse to the Parent; or
(B) there shall have been announced,
commenced or occurred an Alternative Transaction with
a Third Party (as defined in Section 7.3(g)) and (x)
the Company shall have engaged in, or entered into an
agreement to engage in, an Alternative Transaction
with such Third Party or any affiliate thereof or
with a Competing Party (as defined in Section 7.3(g))
within 12 months of the date of the Company
Stockholder Approval Failure Event or (y) the
Company's Board of Directors shall have recommended
an Alternative Transaction with such Third Party or
any affiliate thereof or with a Competing Party
within 12 months after the date of the Company
Stockholder Approval Failure Event; or
(iii) the termination of this Agreement by the Parent
pursuant to Section 7.1(h) after a willful breach by the
Company of this Agreement, if before such termination or
within twelve months thereafter the Company shall have entered
into an agreement to engage in or shall have engaged in an
Alternative Transaction.
(d) The Parent shall pay to the Company an amount equal to all
out-of-pocket expenses and fees incurred by the Company, including
without limitation fees and expenses payable to all legal, accounting,
financial and other professional advisors, relating to the Merger or
the transactions contemplated by this Agreement not exceeding
$2,000,000 in the aggregate upon the termination of this Agreement by
the Company pursuant to Section 7.1(g).
(e) The amounts payable pursuant to Section 7.3(b), (c) or (d)
shall be paid by wire transfer within three business days after the
event giving rise to such payment; provided that in no event shall the
Company or the Parent be required to pay any expenses or termination
fees to the other party if, immediately prior to the termination of
this Agreement, the other party was in material breach of any of its
material obligations under this Agreement. If one party fails to
promptly pay to the other any fee due hereunder, 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
BankBoston, N.A. from the date such fee was required to be paid.
(f) As used in this Agreement, (A) "Alternative Transaction"
means either (i) a transaction pursuant to which any person (or group
of persons) other than the Parent or its Affiliates (a "Third Party"),
acquires 33% or more of the outstanding shares of Company Common Stock,
pursuant to a tender offer or exchange offer or otherwise, (ii) a
merger, consolidation or combination involving the Company in which the
holders of Company Common Stock do not own at least a majority of the
equity of the surviving entity, or (iii) any other transaction pursuant
to which any Third Party acquires control of assets (including for this
purpose the outstanding equity securities of Subsidiaries of the
Company, and the entity surviving any merger or business combination
including any of them) of the Company having a fair market value (as
determined by the Board of Directors of the Company in good faith)
equal to more than 33% of the fair market value of all the assets of
the Company immediately prior to such transaction, or (iv) any public
announcement by the Company of a proposal, plan or intention to do any
of the foregoing or any agreement to engage in any of the foregoing,
and (B) "Competing Party" shall mean any person other than the Parent
or its affiliates who announces or commences an Alternative
Transaction, or with whom an Alternative Transaction occurs, while an
Alternative Transaction with a Third Party is pending.
(g) If this Agreement is terminated by a party as a result of
a willful breach by the other party (other than under the circumstances
described in Section 7.3(c)(iii) above, provided that under such
circumstances Parent may exercise and enforce its rights and remedies
under this paragraph (g) until and unless the Company engages in an
Alternative Transaction, in which event the provisions of Section
7.3(c)(iii) shall thereupon apply), the terminating party may pursue
any remedies available to it at law or in equity and shall, in addition
to its out-of-pocket expenses (which shall be paid as specified above
and shall not be limited to $2,000,000), be entitled to retain such
additional amounts as the terminating party may be entitled to receive
at law or in equity; provided, however, no party shall be responsible
for any special, consequential or incidental damages hereunder, it
being understood and agreed that no party shall be entitled to payment
under both this Section 7.3(g) and Section 7.3(c)(iii).
VIII. GENERAL PROVISIONS
VIII.1. Non-Survival of Representations and Warranties. The
representations and warranties of the Company, the Parent and Merger Sub
contained in this Agreement shall terminate at the Effective Time, and only the
covenants that by their terms survive the Effective Time shall survive the
Effective Time.
VIII.2. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
if to the Parent or Merger Sub, to:
Eastern Enterprises
9 Riverside Road
Weston, Massachusetts 02493
Attention: J. Atwood Ives
Chairman and Chief Executive Officer
Telephone: (781) 647-2302
Facsimile: (781) 647-2350
with a copy to:
Eastern Enterprises
9 Riverside Road
Weston, Massachusetts 02493
Attention: L. William Law, Jr., Esq.
Senior Vice President and General Counsel
Telephone: (781) 647-2313
Facsimile: (781) 647-2398
if to the Company, to:
EnergyNorth, Inc.
1260 Elm Street
Manchester, New Hampshire 03101
Attention: Robert R. Giordano
President and Chief Executive Officer
Telephone: (603) 668-3779
Facsimile: (603) 621-2982
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: David E. Redlick, Esq.
Telephone: (617) 526-6484
Facsimile: (617) 526-5000
VIII.3. Interpretation; Knowledge. When a reference is made in this
Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement
unless otherwise indicated. The words "include," "includes" and "including" when
used herein shall be deemed in each case to be followed by the words "without
limitation." 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. When reference is made herein to "business of"
an entity, such reference shall be deemed to include the business of all direct
and indirect subsidiaries of such entity. Reference to the Subsidiaries of an
entity shall be deemed to include all direct and indirect subsidiaries of such
entity. References to the "knowledge of the Company," or any similar expression
shall mean the actual knowledge of any executive officer of the Company.
VIII.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
VIII.5. Entire Agreement. This Agreement and the documents and
instruments and other agreements among the parties hereto as contemplated by or
referred to herein, including the Company Disclosure Schedule and the Parent
Disclosure Schedule (i) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the Confidentiality Agreements
shall continue in full force and effect until the Closing and shall survive any
termination of this Agreement; and (ii) are not intended to confer upon any
other person any rights or remedies hereunder, except as set forth herein.
VIII.6. Severability. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
VIII.7. Amendment. Subject to applicable law, this Agreement may
be amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto.
VIII.8. Extension; Waiver. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
VIII.9. Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto 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 hereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
VIII.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Hampshire, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of law thereof.
VIII.11. Assignment. No party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the of the other parties.
VIII.12. Parties in Interest. Except for rights of Indemnified Parties
as set forth in Sections 5.13, 5.14 and 5.16, 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.
VIII.13. Waiver of Jury Trial. EACH OF THE PARENT, MERGER SUB AND
COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARENT, THE
MERGER SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
VIII.14. Reference is hereby made to the declaration of trust
establishing Eastern Enterprises (formerly Eastern Gas and Fuel Associates)
dated July 18, 1929, as amended, a copy of which is on file in the office of the
Secretary of the Commonwealth of Massachusetts. The name "Eastern Enterprises"
refers to the trustees under said declaration as trustees and not personally;
and no trustee shareholder, officer or agent of Eastern Enterprises shall be
held to any personal liability in connection with the affairs of said Eastern
Enterprises, but the trust estate only is liable.
IN WITNESS WHEREOF, Eastern Enterprises, EE Acquisition Company, Inc.
and EnergyNorth, Inc. have caused this Agreement to be signed as a sealed
instrument by their duly authorized respective officers, all as of the date
first written above.
EASTERN ENTERPRISES
By: /s/ J. Atwood Ives
Title: Chief Executive Officer
EE ACQUISITION COMPANY, INC.
By: /s/ Walter J. Flaherty
Title: President
ENERGYNORTH, INC.
By: /s/ Robert R. Giordano
Title: President and Chief
Executive Officer