AGREEMENT AND PLAN OF MERGER
DATED NOVEMBER 23, 1998
BY AND AMONG
BESICORP GROUP INC.
BGI ACQUISITION CORP.
AND
BGI ACQUISITION LLC
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER...............................................................................................1
1.1 The Merger...............................................................................1
1.2 Consummation of the Merger...............................................................1
1.3 Effects of the Merger....................................................................2
1.4 Certificate of Incorporation; Bylaws.....................................................2
1.5 Directors and Officers...................................................................2
1.6 Time and Place of Closing................................................................2
1.7 Further Assurances.......................................................................2
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES........................................................................2
2.1 Conversion of Shares.....................................................................2
2.2 The Additional Amount....................................................................3
2.3 Exchange Procedures......................................................................4
2.4 Adjustment of Merger Consideration.......................................................6
2.5 Options, Warrants and Restricted Shares..................................................6
2.6 Escrow Agreement.........................................................................6
ARTICLE III
PRECLOSING TRANSACTIONS..................................................................................7
3.1 General..................................................................................7
3.2 The Distribution.........................................................................7
3.3 The Power Facility Sales.................................................................8
3.4 Further Assurances.......................................................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES...........................................................................8
4.1 General Statement........................................................................9
4.2 Representations and Warranties of the Company............................................9
4.2.1 Organization and Authority....................................................9
4.2.2 Authority Relative to this Agreement and Related Matters......................9
4.2.3 Required Filings.............................................................10
4.2.4 No Conflicts.................................................................10
4.2.5 Capitalization...............................................................10
4.2.6 Subsidiaries.................................................................11
4.2.7 SEC Documents................................................................11
4.2.8 Financial Statements.........................................................11
4.2.9 Liabilities..................................................................12
4.2.10 Absence of Changes or Events.................................................12
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4.2.11 Status of Distribution.......................................................13
4.2.12 Ownership of Properties......................................................13
4.2.13 Tax Matters Definitions......................................................13
4.2.14 Returns......................................................................14
4.2.15 Tax Liabilities..............................................................14
4.2.16 Issues with Taxing Authorities...............................................14
4.2.17 Miscellaneous Tax Matters....................................................14
4.2.18 Permits......................................................................14
4.2.19 Contracts....................................................................15
4.2.20 Partnership Contracts........................................................16
4.2.21 ERISA Matters................................................................16
4.2.22 Labor Relations..............................................................17
4.2.23 Absence of Litigation........................................................17
4.2.24 Injunctions; Judgments.......................................................17
4.2.25 Compliance with Law..........................................................18
4.2.26 Environmental Matters........................................................18
4.2.27 Owned Real Estate............................................................18
4.2.28 Leased Premises..............................................................19
4.2.29 Intellectual Property........................................................19
4.2.30 Brokers......................................................................19
4.2.31 Fairness Opinion.............................................................19
4.2.32 Form 10 Registration, Proxy Statement and Information Statement..............19
4.2.33 Full Disclosure..............................................................20
4.3 Representations and Warranties of Parent and Purchaser..................................20
4.3.1 Organization and Authority...................................................20
4.3.2 Authority Relative to this Agreement.........................................20
4.3.3 Required Filings.............................................................20
4.3.4 No Conflicts.................................................................20
4.3.5 Capitalization...............................................................21
4.3.6 Investment Intent............................................................21
4.3.7 Financing....................................................................21
4.3.8 Proxy Statement..............................................................21
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER..................................................................21
5.1 Obligations of Each of the Parties......................................................21
5.2 Access..................................................................................22
5.3 The Company's Obligations...............................................................22
5.4 Proxy Statement; Other Regulatory Matters...............................................24
5.5 Acquisition Proposals...................................................................25
5.6 Board Action............................................................................26
5.7 Indemnification and Insurance...........................................................27
5.8 Surviving Corporation...................................................................27
5.9 Parent's Financing......................................................................27
5.10 Liabilities.............................................................................27
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5.11 Other Company Covenants.................................................................28
5.12 Parent Covenant.........................................................................28
ARTICLE VI
CONDITIONS TO CLOSING; CLOSING DELIVERIES; BASE AMOUNT..................................................28
6.1 Conditions to Each Party's Obligations..................................................28
6.2 Conditions to the Company's Obligations.................................................28
6.3 Conditions to Parent's and Purchaser's Obligations......................................29
6.4 Closing Deliveries......................................................................30
ARTICLE VII
TERMINATION/EFFECT OF TERMINATION.......................................................................31
7.1 Right to Terminate......................................................................31
7.2 Certain Effects of Termination..........................................................32
7.3 Remedies................................................................................33
7.4 Right to Damages; Expense Reimbursement.................................................33
ARTICLE VIII
MISCELLANEOUS...........................................................................................35
8.1 Survival of Representations, Warranties and Agreements..................................35
8.2 Amendment...............................................................................35
8.3 Publicity...............................................................................35
8.4 Notices.................................................................................35
8.5 Expenses; Transfer Taxes................................................................36
8.6 Entire Agreement........................................................................36
8.7 Non-Waiver..............................................................................36
8.8 Counterparts............................................................................37
8.9 Severability............................................................................37
8.10 Applicable Law..........................................................................37
8.11 Binding Effect; Benefit.................................................................37
8.12 Assignability...........................................................................37
8.13 Governmental Reporting..................................................................37
8.14 Defined Terms...........................................................................37
8.15 Headings................................................................................39
8.16 Interpretation..........................................................................39
Schedule 3.2.1 - Lease Terms
Schedule 3.2.2 - Schedule of Retained Assets and Permitted Liabilities
Exhibit A - Form of Indemnification Agreement
Exhibit B - Form of Escrow Agreement
Exhibit C - Form of Legal Opinion of Purchaser's Counsel
Exhibit D - Form of Legal Opinion of Company's Counsel
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This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into
this 23 day of November, 1998, by and among BGI Acquisition LLC, a Wyoming
limited liability company ("Parent"), BGI Acquisition Corp., a New York
corporation ("Purchaser"), and Besicorp Group Inc., a New York corporation
formed under the name Bio-Energy Systems Inc. (the "Company").
RECITALS:
A. The respective boards of directors of Purchaser and the Company and
the board of managers of Parent have each adopted a plan of merger as set forth
in this Agreement pursuant to which Purchaser will merge with and into the
Company on the terms and subject to the conditions set forth in this Agreement
(the "Merger") and the New York Business Corporation Law (the "NYBCL").
B. It is a condition to the consummation of the Merger by Purchaser
that, prior to the Merger, the Company distribute to its shareholders all of the
outstanding capital stock of Besicorp Ltd., a New York corporation ("BL") to
which the Company shall have transferred certain of its assets and liabilities,
and subsidiaries, as described herein.
C. Parent, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
D. It is a condition to the willingness of Parent and Purchaser to
enter into this Agreement, and to Parent and Purchaser obligations hereunder
that BL enter into the Indemnification Agreement and the Escrow Agreement and
that the Escrow Agreement be funded as herein provided.
E. Capitalized terms used in this Agreement have the meaning identified
in Section 8.14 of this Agreement.
A G R E E M E N T S
Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. On the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined herein, and a cross-reference
to defined terms is set forth at Section 8.14 to this Agreement), in accordance
with this Agreement and the NYBCL, Purchaser shall merge with and into the
Company, the separate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation. The Company, in its capacity as the
corporation surviving the Merger, is sometimes referred to herein as the
"Surviving Corporation," and Purchaser and the Company are sometimes referred to
collectively herein as the "Constituent Corporations."
1.2 Consummation of the Merger. In order to effectuate the Merger, on
the Closing Date (as herein defined), the parties hereto will cause a
certificate of merger (the "Certificate of Merger") to be filed with the
Secretary of State of the State of New York and such counties within the state
of New York as required by Section 904 of the NYBCL, in such form as required
by, and executed in accordance with the
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NYBCL . The Merger shall be effective as of the time of filing of the
Certificate of Merger or if later, the time specified in the Certificate of
Merger (the "Effective Time") in accordance with Section 906 of the NYBCL.
1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects provided in this Agreement and as set forth in Section
906 of the NYBCL.
1.4 Certificate of Incorporation; Bylaws. At and after the Effective
Time, the Certificate of Incorporation and By-Laws of the Company, as in effect
immediately prior to the Effective Time, shall be adopted as the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and shall thereafter
continue in effect until amended as provided therein and in accordance with the
NYBCL.
1.5 Directors and Officers. At and after the Effective Time, the
directors and officers of Purchaser holding office immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation,
until their respective successors shall have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-Laws.
1.6 Time and Place of Closing. Subject to the provisions of Article VI
and Section 7.1, the transactions contemplated by this Agreement shall be
consummated (the "Closing") at 10:00 a.m., prevailing business time, at the
offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ on the day which is three (3) business days after the
first date on which each of the conditions to Closing set forth in Article VI
hereof shall have been satisfied or waived (and continue to be satisfied or
waived), or on such other date, or at such other place, as shall be agreed upon
by the parties hereto, subject to Section 7.1.2(a). The date on which the
Closing shall occur in accordance with the preceding sentence is referred to in
this Agreement as the "Closing Date."
1.7 Further Assurances. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (i) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title and interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Company or Purchaser, or (ii) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either the Company or Purchaser, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of such
corporations, all such other acts and things as may be necessary, desirable or
proper to vest, perfect or confirm the Surviving Corporation's right, title and
interest in, to and under any of the rights, privileges, powers, franchises,
properties or assets of such corporations and otherwise to carry out the
purposes of this Agreement.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES
2.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger, and without any action on the part of the holders thereof:
2.1.1 Each share of common stock, $.10 par value, of the
Company (the "Common Stock") issued and outstanding immediately prior to the
Effective Time (other than Common Shares held as treasury shares by the Company
or its Subsidiaries) shall, by virtue of the Merger and without any action on
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the part of the holder thereof, be converted into the right to receive in cash
the sum of $34.50 plus the Additional Amount (as herein defined) without
interest (the "Merger Consideration"). Each such share of Common Stock
outstanding immediately prior to the Effective Time shall be deemed to be no
longer outstanding and shall represent solely the right to receive the Merger
Consideration upon surrender of the certificate formerly representing the Common
Stock in accordance with the provisions of this section.
2.1.2 Each share of Common Stock issued and outstanding
immediately prior to the Effective Time which is then held as a treasury share
by the Company or is held by any of the Company's Subsidiaries immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of the Company, be canceled and retired and cease to exist, without any
conversion thereof.
2.1.3 Each share of common stock, par value $.01 per share
of Purchaser outstanding immediately prior to the Effective Time shall be
converted into and exchanged into one validly issued, fully-paid and
non-assessable share of common stock, $.10 par value, of the Surviving
Corporation.
2.2 The Additional Amount. In order to provide for the
determination of the Additional Amount as of the Effective Time, the parties
agree as follows:
2.2.1 Components of the Base Amount. As used herein:
(a) The "Additional Amount" is the amount by which (1) the
quotient of the Base Amount as of the Effective Time divided by the
number of shares of Common Stock outstanding as of immediately prior to
the Effective Time exceeds (2) $34.50.
(b) the "Base Amount" is the dollar amount determined by
[A less B plus C] where
A is equal to (i) $500,000 plus (ii) to the extent
not received in cash, the amount of a claimed
tax refund for fiscal year 1998 not to exceed
$82,387, (iii) the sum of the cash and cash
equivalents on hand or in accounts which are
solely owned by the Company or a Remaining
Subsidiary (free balances only) free of all
Encumbrances as of the Effective Time, plus (iv)
the product of .9975 of the closing price of a
share of Common Stock of Niagra Mohawk
Corporation ("NIMO Stock") on the New York Stock
Exchange as of the trading day immediately
preceding the Closing Date multiplied by the
number of shares of NIMO Stock held by the
Company as of the Effective Time (not to exceed
50,000 shares) less (v), to the extent not
already contributed pursuant to the Escrow
Agreement, $6,000,000.
B is the dollar amount of the Adjustment Amount
(as defined below).
C is the product of .8357 multiplied by the
Specified Current Liabilities (as defined
below).
(c) the "Adjustment Amount" is the sum of (i) all
Liabilities of the Company or a Remaining Subsidiary as of the
Effective Time (including the Specified Current Liabilities but
excluding the Excluded Liability (as defined below) and the
intercompany Liabilities described in Section 3.2.2) which are in the
reasonable judgment of Parent both fixed and quantifiable, (ii) without
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duplication of any item in the preceding clause (i), that amount which
Parent and the Company agree, each acting reasonably, represents the
Damages (as defined in the Indemnification Agreement) and other
damages, if any, incurred or reasonably likely to be incurred by the
Company, any Remaining Subsidiary, Purchaser or Parent, directly or
indirectly as a result of, or arising out of the breach by the Company
of any of its representations or warranties under this Agreement, and
(iii) all transfer, documentary, sales, use, stamp, real estate,
registration and other similar Taxes and similar fees (including
penalties and interest) incurred by the Company, any of its
Subsidiaries, Purchaser or Parent in connection with the Transactions.
(d) the "Specified Current Liabilities" are the
Liabilities of the Company or any Remaining Subsidiary (actual or
accrued) for unpaid federal income Taxes for the current fiscal year
based on the consolidated net income of the Company through the
Effective Time.
(e) the "Excluded Liability" is the Liability of the
Company or its Subsidiaries for New York State income Taxes for the
Company's current fiscal year.
2.2.2 Determination of Base Amount. The Base Amount will
be determined from a statement of the components of the Base Amount ( the
"Statement") as provided in this Section 2.2. Not later than twenty days prior
to Closing, the Company will prepare and deliver to Parent and Purchaser the
Statement setting forth in reasonable detail the components of the Base Amount
and the calculation of the Additional Amount. The Statement will be prepared in
accordance with generally accepted accounting principles applied in preparation
of the Financial Statements, it being understood that items will be reflected
regardless of materiality and all accruals known or contemplated for Liabilities
of the Company or a Remaining Subsidiary as of the Effective Time will be
reflected. The Company will provide appropriate evidence of the components of
the Base Amount and Additional Amount and will permit, and fully cooperate with
Purchaser in obtaining full access to the Company's records and its accountant's
work papers for purposes of independently verifying the components of the Base
Amount and Additional Amount. The Statement will be certified by the Chief
Executive Officer and Chief Financial Officer of the Company on behalf of the
Company, contain an unqualified representation and warranty of such officers
that the information set forth in the Statement is true and correct and be
reviewed by the Company's regular independent auditors. Within five days of the
receipt by Parent and Purchaser of the Statement, Parent and Purchaser shall
notify the Company in writing of their acceptance or rejection of the Statement.
In the event that Parent and Purchaser reject the Statement such notice shall
set forth a schedule detailing the disputed components of the Statement. The
Company, Parent and Purchaser shall use their reasonable best efforts to reach
agreement on such disputed components of the Statement prior to the Closing. In
the event that the Company, Parent and Purchaser are unable to reach an
agreement on the Statement within three days prior to Closing this Agreement
will be deemed terminated pursuant to Section 7.1.1 hereof.
2.3 Exchange Procedures.
2.3.1 Immediately prior to the Effective Time, Parent
will deposit or cause to be deposited with Continental Stock Transfer & Trust
Co., or another paying agent mutually acceptable to Parent and the Company (the
"Paying Agent"), in trust for the holders of record of Common Stock immediately
prior to the Effective Time (the "Company Shareholders") cash in an aggregate
amount equal to the Merger Consideration (such deposit with the Paying Agent
pursuant to this paragraph is referred to as the "Payment Fund"). The Payment
Fund shall not be used for any purpose except as provided in this Agreement.
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2.3.2 As soon as practicable after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each Company
Shareholder a letter of transmittal and instructions for use (the "Letter of
Transmittal") in effecting the surrender of certificates representing Common
Stock outstanding immediately prior to the Effective Time ("Certificates") in
appropriate and customary form. The Letter of Transmittal shall be in customary
form, include provisions stating that delivery shall be effected, and risk of
loss and title to such Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent, provide instructions for effecting the
surrender of such Certificates in exchange for the Merger Consideration and
provide such other provisions as Purchaser may reasonably specify (including
those provisions described in this Section 2.3). Upon surrender of a Certificate
for cancellation to the Paying Agent, together with such Letter of Transmittal,
duly and properly executed, the holder of such Certificate shall be entitled to
receive in exchange therefore the portion of the Merger Consideration
represented by the Certificate pursuant to Section 2.1.1 of this Agreement. If
the Merger Consideration (or any portion thereof) is to be delivered to any
person othe than the person in whose name the Certificate representing Common
Stock surrendered in exchange therefor is registered on the record books of the
Company, it shall be a condition to such exchange that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such exchange shall pay to the Paying
Agent any transfer or other taxes required by reason of the payment of such
consideration to a person other than the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable. No interest will be paid or will
accrue on the cash payable upon surrender of any Certificate. Until surrendered
as contemplated by this Section 2.3, each Certificate shall, at and after the
Effective Time, be deemed to represent only the right to receive, upon surrender
of such Certificate, the Merger Consideration with respect to the shares of
Common Stock represented thereby.
2.3.3 At and after the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged as provided in this Section 2.3. In the event of
a transfer of ownership of shares of Common Stock which is not registered in the
transfer records of the Company, payment may be made with respect to such Common
Stock to such a transferee only if the Certificate representing such shares of
Common Stock is presented to the Paying Agent, accompanied by all documents
required to evidence and effect such transfer and evidence that any applicable
stock transfer taxes have been paid.
2.3.4 In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, upon the posting by such person of a bond in such
amount as the Surviving Corporation may reasonably direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent will issue in respect of such lost,stolen or destroyed Certificate,
the Merger Consideration with respect to the shares of Common Stock represented
thereby.
2.3.5 Any portion of the Payment Fund which remains
unclaimed by the Company Shareholders for nine (9) months after the Effective
Time shall be delivered to the Surviving Corporation upon demand of the
Surviving Corporation, and the holders of Common Stock shall thereafter look
only to the Surviving Corporation for payment of their claim for the Merger
Consideration in respect of their Common Stock. Neither Parent, Purchaser nor
the Surviving Corporation shall be liable to any holder of Common Stock for any
such Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
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2.3.6 Purchaser or the Paying Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of a Certificate surrendered for the Merger
Consideration such amount as Purchaser or the Paying Agent is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code as of 1986, as amended (the "Code"), or any provision of any state
local or foreign tax law. To the extent that amounts are so deducted and
withheld, such amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of such Certificate.
2.3.7 In the case of 100,000 shares of Common Stock held
of record by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or his assigns which the Company represents are the
subject of a dispute between the Company and Enowitz, appropriate provision will
be made in the Paying Agent agreement for the holding of the Merger
Consideration payable in respect of such shares in escrow pending resolution of
the dispute. Purchaser agrees that the rights of Purchaser, Parent or the
Surviving Corporation to such Merger Consideration, if any, will be assigned
without recourse to BL.
2.3.8 The fees and expenses of the Paying Agent will be
paid from earnings on the Payment Fund. To the extent earnings on the Payment
Fund are insufficient to pay such fees and expenses, such fees and expenses
shall be paid from the Escrow Fund (as defined in the Escrow Agreement) pursuant
to the Escrow Agreement. The Company and Parent and Purchaser agree that any
interest earned on the Payment Fund will be transferred to the Escrow Agent and
become part of the Escrow Fund.
2.4 Adjustment of Merger Consideration. In the event of any
reclassification, stock split, stock dividend or other general distribution of
securities, cash or other property with respect to Common Stock other than the
Distribution and related transaction (or if a record date with respect to any of
the foregoing should occur) on or after the date of this Agreement and on or
prior to the date of the Effective Time, appropriate and equitable adjustments,
if any, shall be made to the calculation of the Merger Consideration and all
references herein shall be deemed to be to the Merger Consideration as so
adjusted.
2.5 Options, Warrants and Restricted Shares. Prior to the Effective
Time, the Company will (a) cause each outstanding option to purchase Common
Stock (each, a "Stock Option") granted under the Besicorp Group, Inc. Amended
and Restated 1993 Incentive Plan (the "1993 Plan") or pursuant to any other
stock option plan or restricted agreement entered into by the Company with any
employee or director of the Company or any Subsidiary thereof, whether or not
then vested or exercisable, to become vested and exercisable, (b) cause each
outstanding warrant to purchase Common Stock (each, a "Warrant") to become
exercisable to the extent not currently exercisable, and (c) take such action as
is necessary to cause each holder of a Stock Option or Warrant to exercise such
Stock Option or Warrant in full including paying in cash the exercise price (it
being understood that neither the Company nor any Remaining Subsidiary will
directly or indirectly provide or guarantee any financing or loan arrangements
for the payment of the exercise price) so that there are no outstanding Stock
Options or Warrants at the Effective Time.
2.6 Escrow Agreement. At Closing, the Company will cause $6,000,000 in
cash to be delivered to the Escrow Agent under the Escrow Agreement.
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ARTICLE III
PRECLOSING TRANSACTIONS
3.1 General. The Company recognizes that the obligations of Parent and
Purchaser under this Agreement are subject to the completion by the Company of
each of the Distribution and the Power Facility Sales (each, as defined below).
The Company agrees to use its reasonable best efforts to effect the Distribution
and the Power Facility Sales in accordance with this Agreement.
3.2 The Distribution.
3.2.1 Actions. Promptly following the execution of this
Agreement, the Company will cause the following actions to be taken in
accordance with the requirements of applicable law, including the NYBCL, and the
Company's and its Subsidiaries' certificate of incorporation and bylaws with the
objective of effecting the spinoff to shareholders of the Company immediately
prior to the Effective Time of BL and the Distributed Subsidiaries and the
complete separation of BL and the Distributed Subsidiaries from the Company and
the Remaining Subsidiaries:
(a) the due and valid formation of BL;
(b) the transfer to, and assumption by BL of all of the
assets, personnel, employee benefit plans and Liabilities of the
Company (other than the Retained Assets and Permitted Liabilities) and
the Remaining Subsidiaries and the transfer to BL of all of the
outstanding capital stock of the Distributed Subsidiaries;
(c) the execution and delivery by the Company and BL of
such agreements and arrangements which are customary in connection with
spinoffs and which provide for, among other matters, the provision of
transition, support and administrative services (including access to,
and cooperation regarding historical financial and tax information and
knowledgeable personnel) to the Company by BL without cost to the
Company and indemnification of the Company by BL and its subsidiaries
for any failure of BL to discharge and pay in full all of the
Liabilities so assumed or the failure of any Distributed Subsidiaries
to discharge and pay in full its Liabilities when due including by
means of the Indemnification Agreement and Escrow Agreement, all on
terms reasonably acceptable to Purchaser and Parent;
(d) the withdrawal of the Remaining Subsidiaries as
general or limited partners of the Partnership or the assignment to,
and assumption by a Distributed Subsidiary of all of the general and
limited partnership interests of the Remaining Subsidiary;
(e) distribute to the shareholders of the Company
immediately prior to the Effective Time all of the outstanding capital
stock of BL with a record date to be established by the Board to be
coordinated with the Closing;
(f) the establishment of the fair market value of the
BL capital stock;
(g) provide for the assumption by BL of all Employee
Benefit Plans;
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(h) prior to consummation of the Distribution, Reina
Distributing, Inc. and BL to enter into a written lease providing for
the building and improvements located thereon at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ on the terms set forth in Schedule 3.2.1 to this
Agreement;
(i) prior to consummation of the Distribution, the Company
and BL to execute and deliver the Indemnification Agreement in the form
of Exhibit A hereto (the "Indemnification Agreement") and the Escrow
Agreement in the form of Exhibit B hereto (the "Escrow Agreement");
(j) the preparation and distribution to its stockholders
of record prior to the Effective Time of the Information Statement and
the filing and effectiveness of the Form 10 Registration all in
accordance with applicable law including the Securities Act of 1934, as
amended (the "Exchange Act"); and
(k) all other actions necessary or appropriate to effect
the distribution of BL to the shareholders of the Company.
The foregoing transactions are collectively referred to herein as the
"Distribution."
3.2.2 Defined Terms. The "Retained Assets" are those
assets listed on Schedule 3.2.2 hereto and the "Permitted Liabilities" are the
Specified Current Liabilities and Excluded Liability and the intercompany
Liabilities of the Company to a Remaining Subsidiary as identified in Schedule
3.2.2.
3.2.3 Agreements. The Company agrees to use its best
efforts to effect the Distribution in the manner contemplated hereby and to
take, or cause to be taken, all actions necessary or appropriate so that the
Distribution will be so accomplished no later than the Closing Date.
3.3 The Power Facility Sales. The Company agrees to use its best
efforts to cause the Partnerships to dispose of the Carthage Cogeneration
Facility, South Glens Falls Cogeneration Facility, Natural Dam Cogeneration
Facility, Syracuse Cogeneration Facility and Beaver Falls Cogeneration Facility
for cash and without any Liability of any Remaining Subsidiary (the "Power
Facility Sales"). The Company will consult with Purchaser on a regular basis and
keep Purchaser reasonably informed as to the status and terms of the Power
Facility Sales.
3.4 Further Assurances. If, at any time after the Effective Time, BL
shall consider or be advised that any deeds, bills of sale, assignments or
assurances or any other acts or things are necessary, desirable or proper (i) to
vest, perfect or confirm, of record or otherwise, in BL or its Subsidiaries its
right, title and interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets contributed to any of the Distributed
Subsidiaries in connection with the Distribution or (ii) otherwise carry out the
Distribution, the Surviving Corporation will upon reasonable request of BL
execute and deliver all such deeds, bills of sale, assignments and assurances
and do all such other acts and things as may be necessary, desirable or proper
to carry out the Distribution. Any expenses incurred by the Surviving
Corporation under this Section 3.4 shall be paid by BL.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
8
4.1 General Statement. The parties make the representations and
warranties to each other which are set forth in this Article IV. All
representations and warranties of the Company are made subject to the exceptions
noted in the schedule delivered by the Company to Parent and Purchaser
concurrently herewith and identified by the parties as the "Company Disclosure
Schedule."
4.2 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Purchaser that, except as set forth in the
Company Disclosure Schedule:
4.2.1 Organization and Authority. Each of the Company and
each Subsidiary: (i) is a corporation or partnership duly organized, validly
existing and in good standing under the laws of the State of its incorporation;
and (ii) has all necessary corporate or partnership power and authority to
conduct its business as now being conducted or as proposed to be conducted
through Closing. Each of the Company and each Remaining Subsidiary is duly
qualified as a foreign corporation and in good standing in each jurisdiction in
which the nature of its business or the nature or location of its assets require
such qualification. All of the Subsidiaries are listed in the Company Disclosure
Schedule.True and complete copies of the certificate of incorporation and bylaws
or agreement of limited partnership, as the case may be, of each of the Company
and each Subsidiary are set forth as exhibits to the Company SEC Documents or
have been made available to Purchaser. As used in this Agreement: "Subsidiary"
means any corporation, partnership, joint venture or other legal entity and of
which the Company or BL, as the case may be (either alone or through or together
with any other Subsidiary or Subsidiaries), either (A) owns, directly or
indirectly, 25% or more of the capital stock or other equity interests, the
holders of which are generally entitled to vote with respect to matters to be
voted on in such corporation, partnership, joint venture or other legal entity
or a 25% or more of the interest in the assets of the corporation, partnership,
joint venture or other legal entity upon its liquidation or (B) is otherwise a
Significant Subsidiary (as such term is defined in Section 1-02(w) of Regulation
S-X of the Securities Act of 1933, as amended (the "Securities Act"));
"Remaining Subsidiary" means each of Beta Carthage, Inc., a New York
corporation, Beta South ▇▇▇▇ Falls, Inc., a New York corporation, Beta Natural
Dam, Inc., a New York corporation, Beta Syracuse Inc. a New York corporation,
Beta Beaver Falls Inc., a New York corporation, Beta Nova, Inc., a New York
corporation, Beta N Ltd., a New York corporation, Beta C&S Ltd., a New York
corporation, and Reina Distributing, Inc., a New Yor corporation, and the
"Distributed Subsidiaries" are BL and all other Subsidiaries of the Company now
or hereafter existing other than the Remaining Subsidiaries.
4.2.2 Authority Relative to this Agreement and Related
Matters. The Board of Directors of the Company (the "Board"), at a meeting duly
called and held has (A) determined that the Merger Agreement and Merger are fair
to, and in the best interests of, the Company and its shareholders, (B) adopted
and approved this Agreement and the Merger, and (C) resolved to submit to the
shareholders of the Company and recommend to the shareholders of the Company
that they adopt and authorize the Merger Agreement , the Merger and, if legally
required, the Distribution (collectively, the Merger, Distribution and Power
Facility Sales and with the other transactions contemplated hereby and thereby,
the "Transactions"). The Company has full corporate power and authority, subject
to shareholder adoption and authorization of with respect to the Merger
Agreement, to enter into and perform this Agreement and the other agreements to
be entered into in connection with this Agreement and the Transactions (the
"Transaction Agreements") to which it is a party. The execution and delivery of
this Agreement and each of the othe Transaction Agreements by the Company and
the performance by the Company of their respective obligations hereunder and
thereunder have been (or in the case of Transaction Agreements not yet entered
into, will be) duly authorized and approved by all requisite corporate action
other than the approval of the holders of at least two-thirds of the outstanding
shares of Common Stock voting at the Meeting with respect to the Merger and, if
legally required, the Distribution. This Agreement has been and, when executed,
each of the other Transaction Agreements will have been, duly executed and
delivered by duly authorized officers of the Company and constitutes, or will
constitute when
9
so executed and delivered, a valid, legal and binding obligation of the Company
or relevant Subsidiary enforceable against it in accordance with its terms. The
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Common Stock voting at the Meeting with respect to the adoption and
authorization of the Merger Agreement are the only votes of the holders of any
class or series of the Company's capital stock necessary to approve the
Transactions. None of the holders of shares of capital stock of the Company have
the right to dissent or demand appraisal of their shares under the NYBCL or
otherwise as a result of any of the Transactions.
4.2.3 Required Filings. No consent, approval or
authorization of, expiration or termination of any waiting period requirement
of, or filing, registration, qualification, declaration or designation
("Authorization") with or by, any federal, state, local or foreign court,
administrative agency, commission or other governmental authority or
instrumentality ("Governmental Entity") is required for the execution and
delivery by the Company of this Agreement or any of the other Transaction
Agreements or the consummation by any of the Company or any Subsidiary of any of
the Transactions, except for (i) the filing and recordation by the Company of
the Merger as required by the NYBCL, (ii) the filing with the United States
Securities and Exchange Commission (the "SEC") of the Proxy Statement, the Form
10 Registration and the Information Statement with respect to the Merger and
Distribution, respectively, under the Exchange Act and (iii) filings pursuant to
applicable state securities laws.
4.2.4 No Conflicts. Neither the execution and delivery
of this Agreement or the other Transaction Agreements by the Company nor the
consummation by Company of any of the Transactions, will (i) conflict with or
result in a breach of any of the terms, conditions or provisions of the
certificate, articles or other instrument of incorporation or limited
partnership or by-laws or agreement of limited partnership or other similar
instrument or of any statute, law or administrative regulation, or of any order,
writ, injunction, judgment or decree of any Governmental Entity or of any
arbitration award to which any of the Company or any Subsidiary is a party or by
which the Company or any Subsidiary is bound, or (ii) violate, conflict with,
breach, constitute a default (or give rise to an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any lien or other claims, equities, security interests, preemptive
rights, judgments and other encumbrances ("Encumbrance")upon any of the
properties or assets of the Company or any Subsidiary under, any written or oral
note, bond, mortgage, indenture, deed of trust, license, lease, contract,
agreement or other instrument or written or oral obligation to which Company is
a party or to which they or any of their respective properties or assets are
subject (each being an "Obligation"), except for such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens or other
Encumbrances that do not and could not, individually or in the aggregate (x)
have a Material Adverse Effect (as defined herein) on the Company, or (y)
materially impair the ability of the Company to perform its obligations under
any Transaction Agreement. Without limiting the generality of the foregoing, the
Company is not subject to any Obligation pursuant to which timely performance of
this Agreement or any of the Transactions may be prohibited, prevented or
materially delayed. As used in this Agreement, with respect to a Person,
"Material Adverse Effect" means an effect which involves $10,000 or more on the
business, operations (or results of operations), condition (financial or
otherwise), properties, assets, liabilities, or prospects of such Person or its
Subsidiaries, and "Person" means an individual, partnership, corporation,
limited liability company, business, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Entity or other entity
of whatever nature or a group, including any pension, profit sharing or other
benefit plan or trust.
4.2.5 Capitalization. The authorized capital stock of the
Company consists solely of 5,000,000 shares of Common Stock, $0.10 par value per
share, and 7,500,000 shares of Preferred Stock, par value $1.00 per share
("Preferred Stock"). As of November 16, 1998, (i) 2,969,195 shares of Common
Stock
10
were outstanding, all of which are entitled to vote as a class, (ii) 265,763
shares of Common Stock were held in the treasury of the Company, (iii) Stock
Options or Warrants with respect to 82,240 shares of Common Stock had been
granted or issued and are outstanding under the 1993 Plan and (iv) no shares of
Preferred Stock were outstanding. There are no other shares of capital stock of
the Company authorized, issued or outstanding. The number of shares of Common
Stock outstanding is subject to increase to no more than 3,051,435 shares
outstanding upon the exercise or conversion of Stock Options and Warrants which
are set forth on Schedule 4.2.5 of the Company Disclosure Schedule. All of the
outstanding shares of Common Stock have been validly issued and are fully paid
and nonassessable. Except as set forth on Schedule 4.2.5 of the Company
Disclosure Schedule, there are no subscriptions, options, stock appreciation
rights, warrants, rights (including preemptive rights), calls, convertible
securities or other agreements or commitments of any character relating to the
issued or unissued capital stock or other securities of the Company obligating
the Company to issue, or register the sale of, any securities of any kind. There
are no agreements or obligations of any kind or character to which the Company
is a party, or as to which the Company has knowledge, with respect to the voting
of Common Stock or the election of Directors to its Board ("Directors").
Schedule 4.2.5 of the Company Disclosure Schedule sets forth the name of the
holder, number of shares underlying and exercise price of each Stock Option and
Warrant outstanding on the date hereof.
4.2.6 Subsidiaries. All of the outstanding shares of
capital stock or other equity interests of each Remaining Subsidiary (i) are
validly issued, fully paid and nonassessable and free of any preemptive rights,
and (ii) except as disclosed in Schedule 4.2.6 to the Company Disclosure
Schedule, are owned of record and beneficially by the Company free and clear of
all Encumbrances. There are no outstanding subscriptions, options, stock
appreciation rights, warrants, rights (including preemptive rights), calls,
convertible securities or other agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of any
Remaining Subsidiary obligating such Remaining Subsidiary to issue any
securities of any kind or which would otherwise affect the Distribution. There
are no agreements or obligations of any kind or character with respect to the
voting of shares of capital stock or the election of directors of any Remaining
Subsidiary. Schedule 4.2.6 lists (iii) each Subsidiary and the Company's direct
or indirect ownership interest in such Subsidiary and (iv each Subsidiary of
which the Company or one of its Subsidiaries is a general or limited partner
(each such Subsidiary of the Company, a "Partnership") and the Company's direct
or indirect ownership interest in such Partnership. Except for the Subsidiaries,
the Company does not have, directly or indirectly, any equity or ownership
interest, or any investment, in any Person.
4.2.7 SEC Documents. The Company has timely filed (and
has delivered to Purchaser a true and complete copy of) each report, schedule,
registration statement and definitive proxy statement required to be filed or
filed by the Company with the SEC (including, without limitation, reports
required to be filed pursuant to Section 13(d) or 13(g) of the Exchange Act)
since January 1, 1995 (the "SEC Documents"). As of their respective dates, the
SEC Documents comply in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable rules
and regulations of the SEC thereunder, and none of the SEC Documents, as of
their respective dates, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The Company has corrected and updated, prior to the date
hereof, all statements in the SEC Documents which have required correction or
updating, as the case may be, and have filed all necessary amendments to the
Company SEC Documents as required by applicable law.
4.2.8 Financial Statements. Each of the consolidated
financial statements (including the notes thereto) included in the SEC Documents
(the "Financial Statements") complies, as of their respective dates, with all
applicable accounting requirements and rules and regulations of the SEC with
respect thereto,
11
has been prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied (except as may be indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-QSB of the SEC)
and presents fairly the consolidated financial position of the Company at the
dates thereof and the consolidated results of its operations, cash flows and
changes in financial position for the periods indicated therein, subject, in the
case of interim Financial Statements, to normal, recurring year-end adjustments
which are not material individually or in the aggregate. The books, accounts and
records of the Company are, and have been, maintained in such Company's usual,
regular and ordinary manner, in accordance with generally accepted accounting
practices, and all transactions to which the Company is or has been a party are
properly reflected therein.
4.2.9 Liabilities. Neither the Company nor any Remaining
Subsidiary has any obligation or liability of any kind or nature whatsoever
(direct or indirect, matured or unmatured, absolute, accrued, contingent, known
or unknown or otherwise), whether or not required by GAAP to be provided or
reserved against on a balance sheet (all the foregoing herein collectively being
referred to as the "Liabilities"), except for:
(a) Liabilities specifically provided for or reserved
against in the balance sheet contained in the Financial Statements or
the balance sheet contained in the most recent interim financial
statement in a Company SEC Document filed prior to the date of this
Agreement (the "Interim Balance Sheet");
(b) as of the Effective Time, Permitted Liabilities and
Liabilities taken into account in determining the Adjustment Amount as
agreed to by Purchaser and Parent; and
(c) Liabilities of the Company or a Remaining Subsidiary
which have been incurred since the date of the Interim Balance Sheet,
in the ordinary course of business and consistent with past practice
which are not material.
Without limiting the generality of the foregoing, upon consummation of the
Distribution neither the Company nor any Remaining Subsidiary will have any
Liability with respect to the Liabilities of the Distributed Subsidiaries or the
business and operations of the Distributed Subsidiaries.
4.2.10 Absence of Changes or Events. Except as
specifically disclosed in the SEC Documents filed prior to the date of this
Agreement and furnished to Purchaser, since June 30, 1998: (x) neither the
Company nor any Subsidiary has suffered or been threatened with (and the Company
has no knowledge of any facts which may cause or result in) any material adverse
change in its assets, properties, liabilities, condition (financial or
otherwise) or prospects; and (y) the Company and each Subsidiary has operated
only in the usual and ordinary course of business consistent with past practice
except as contemplated by the Power Facility Sales or the Distribution. Without
limiting the generality of the foregoing, since such date, neither the Company
nor any Subsidiary has:
(a) sold, assigned, leased, exchanged, transferred or
otherwise disposed of any material portion of its assets or property,
except in the usual and ordinary course of business consistent with
past practice other than the sale of shares of common stock of Niagra
Mohawk Power Corporation ("NIMO") and the Power Facility Sales;
12
(b) suffered any material casualty, damage or loss, or any
material interruption in use, of any material assets or property
(whether or not covered by insurance), on account of fire, flood, riot,
strike or other hazard or Act of God;
(c) paid, declared or set aside any dividends or other
distributions on its securities of any class or purchased or redeemed
any of its securities of any class;
(d) made any change in accounting methods or principles;
(e) with respect to the Remaining Subsidiaries, made or
committed to make capital expenditures;
(f) with respect to the Remaining Subsidiaries, increased
the compensation payable to any officer or employee except in the
ordinary course of business;
(g) with respect to the Remaining Subsidiaries, elected
any director or hired any officer or employee;
(h) borrowed any money or issued any bonds, notes,
debentures or other evidence of indebtedness;
(i) acquired by merger, consolidation or acquisition of
stock or assets any Person or business;
(j) adopted, amended or terminated any Employee Benefit
Plan (as defined herein) except as contemplated by Section 2.5; or
(k) agreed in writing or otherwise to take any of the
foregoing actions.
4.2.11 Status of Distribution. The Distribution will not
result in any federal or state income tax liability to the Company. In
connection with the Distribution, the Company (a) will have sufficient capital
so that upon completion of the Distribution, the fair market value of the assets
of the Company less the amount of its stated capital will exceed its Liabilities
and (b) is solvent and will be solvent prior to and immediately following the
consummation of the Distribution.
4.2.12 Ownership of Properties. The Company and each
Remaining Subsidiary has good and marketable title to its respective properties
and assets purported to be owned by them respectively (including all assets
reflected on the Financial Statements) free and clear of any Encumbrances,
except: (i) statutory liens for Taxes not yet due, (ii) statutory liens of
carriers, warehousemen, mechanics and materialmen incurred in the ordinary
course of business for sums not yet due; (iii) liens incurred or deposits made
in the ordinary course of business, in connection with workers' compensation and
unemployment insurance; and (iv) minor imperfections of title which do not in
the aggregate materially detract from the value or use of the asset in question.
The Company and its Subsidiaries have in effect insurance policies of the type
and with coverages which are customary for companies in the businesses in which
the Company and its Subsidiaries are engaged.
4.2.13 Tax Matters Definitions. As used in this Agreement
the following terms shall have the following meanings:
13
(a) the term "Taxes" means all federal, state, local,
foreign and other net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, lease, service,
service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, duties
or other taxes, fees, assessments or charges of any kind whatever,
together with any interest and any penalties, additions to tax or
additional amounts with respect thereto, and the term "Tax" means any
one of the foregoing Taxes; and
(b) the term "Returns" means all returns, declarations,
reports, statements and other documents required to be filed in respect
of Taxes, and the term "Return" means any one of the foregoing Returns.
4.2.14 Returns. There have been properly completed and
filed on a timely basis and in correct form all Returns required to be filed by
the Company. As of the time of filing, the Returns correctly reflected the facts
regarding the income, business, assets, operations, activities, status or other
matters of such Company or any other information required to be shown thereon.
Except as disclosed in Section 4.2.14 to the Company Disclosure Schedule, an
extension of time within which to file any Return which has not been filed has
not been requested or granted.
4.2.15 Tax Liabilities. With respect to all amounts in
respect of Taxes imposed upon the Company, or for which the Company is or could
be liable, whether to taxing authorities (as, for example, under law) or to
other persons or entities (as, for example, under tax allocation agreements),
with respect to all taxable periods or portions of periods ending on or before
the Closing Date, all applicable tax laws and agreements have been fully
complied with, and all amounts required to be paid by any of the Company or any
of its Subsidiaries (other than the Permitted Liabilities), to taxing
authorities or others, on or before the date hereof have been paid. The unpaid
Taxes of the Company do not exceed the reserve for tax liability with respect to
the Company (excluding any reserve for deferred Taxes established to reflect
timing differences between book and tax income) set forth or included in the
Company Disclosure Schedule as adjusted for the passage of time through the
Closing Date, in accordance with the past practices of the Company.
4.2.16 Issues with Taxing Authorities. No issues have
been raised (and are currently pending) by any taxing authority in connection
with any of the Returns filed by the Company or any of its Subsidiaries. No
waivers of statutes of limitation with respect to such Returns have been given
by or requested from the Company or any of its Subsidiaries. The Company
Disclosure Schedule sets forth (i) the taxable years of each of the Company or
any of its Subsidiaries as to which the respective statutes of limitations with
respect to Taxes have not expired, and (ii) with respect to such taxable years
sets forth those years for which examinations have been completed, those years
for which examinations are presently being conducted, those years for which
examinations have not been initiated, and those years for which required Returns
have not yet been filed. No deficiencies have been asserted or assessments made
as a result of any such examinations.
4.2.17 Miscellaneous Tax Matters. Neither the Company
nor any Remaining Subsidiary (i) is a party to or bound by any tax indemnity,
tax sharing or tax allocation agreement; (ii) has agreed to make, or is required
to make, any adjustment under section 481(a) of the Code by reason of a change
in accounting method or otherwise. Neither the Company nor any Subsidiary is a
party to any agreement, contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of section 280G of the Code.
4.2.18 Permits. The Company and its Remaining
Subsidiaries hold or have received all consents, permits, authorizations,
approvals, licenses and certifications of Governmental Entities (collectively,
14
the "Permits") required in connection with the ownership and operation of their
respective properties and the conduct of their respective businesses as now
being conducted, except for such consents, permits, authorizations, approvals,
licenses and certificates which if not held or received would not have a
Material Adverse Effect on the Company.
4.2.19 Contracts. Except as filed as an exhibit to the
SEC Documents, none of the Company or any Remaining Subsidiary is a party to, or
bound by, any undischarged written or oral:
(a) employment or consulting agreement which is not
terminable by the Company at will without premium or penalty or other payment;
(b) collective bargaining agreement;
(c) lease or sublease, either as lessee or sublessee,
lessor or sublessor, of real or personal property or intangibles;
(d) loan or credit agreement, pledge agreement, note,
security agreement, mortgage, debenture, indenture, factoring
agreement, credit card agreement, letter of credit or banker's
acceptance;
(e) governmental order or directive;
(f) agreement for the treatment or disposal of
hazardous materials;
(g) partnership or joint venture agreement;
(h) architect's agreement or construction contract;
(i) lease which is required by GAAP to be classified
as a capital lease;
(j) reciprocal easement or operating agreement with
respect to any parcel of the Real Estate or any of the Leased Premises;
(k) secrecy or confidentiality agreement;
(l) rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction,
collar transaction, currency swap transaction, cross- currency rate
swap transaction, currency option or any other similar transaction
(including any option with respect to any of these transactions), or
any combination of these transactions;
(m) supply or requirements contract;
(n) agreement or arrangement not specifically enumerated
above concerning or which provides for the receipt or expenditure of
any money;
15
(o) agreement to indemnify or pay or advance expenses of
any Person including any officer, director, employee or agent of the
Company, any Subsidiary or any ERISA Affiliate; or
(p) agreement or arrangement by which the Company or any
Remaining Subsidiary has guaranteed or otherwise has any Liability for
any Liability of any Distributed Subsidiary.
Such agreements, leases, subleases and other instruments or arrangements
required to be disclosed in response to this Section 4.2.19, the "Contracts,"
and each a "Contract". Each Contract is in full force and binding upon the
Company and, to the Company's knowledge, the other parties thereto. None of the
Company on the one hand, nor any of the other parties thereto, on the other
hand, are in default under any Contract. No event, occurrence or condition
exists which, with the lapse of time, the giving of notice, or both, or the
happening of any further event or condition, would become a default under any
Contract by the Company, on the one hand, or the other contracting party, on the
other hand. None of the Company has released or waived any of its respective
rights under any Contract. The Company is not subject to any legal obligation to
renegotiate, nor does the Company have knowledge of a claim for a legal right to
renegotiate, any contract, loan, agreement, lease, sublease or instrument to
which it is now or has been a party.
4.2.20 Partnership Contracts. Each of the Partnerships
has settled pursuant to valid and enforceable settlement agreements all
Liabilities of each such Partnership on terms such that none of the Remaining
Subsidiaries has any Liability with respect to the Liabilities of the
Partnerships. Neither the Company nor any of the Remaining Subsidiaries has any
Liability for any of the Liabilities of any Partnership.
4.2.21 ERISA Matters.
(a) The Company, its Subsidiaries, any affiliate of the
Company or its Subsidiaries, as determined under Code Section 414(b),
(c), (m) or (o) (the "ERISA Affiliate"), severally or jointly,
maintains, administers or contributes to, and have any liability with
respect to, only those employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), whether or not excluded from coverage under specific Titles
or Subtitles of ERISA), bonus, deferred compensation, stock purchase,
stock option, stock appreciation, severance, salary continuation,
vacation, holiday, sick leave, fringe benefit, employee discount,
personnel policy, allowances, incentives, insurance, welfare or similar
plan, program, policy or arrangement which are described in the Company
Disclosure Schedule (the "Employee Benefit Plans").
(b) None of the Company, its Subsidiaries or any ERISA
Affiliate has incurred any liability to the Pension Benefit Guaranty
Corporation ("PBGC") as a result of the voluntary or involuntary
termination of any pension plan subject to Title IV of ERISA; neither
the Company nor any ERISA Affiliate has made a complete or partial
withdrawal from a multiemployer plan, as such term is defined in
Section 3(37) of ERISA, resulting in withdrawal liability, as such term
is defined in Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under either Section 4207 or 4208
or ERISA); neither the Company nor any ERISA Affiliate would incur any
withdrawal liability on a complete withdrawal from any Employee Benefit
Plan as of the Closing Date, under applicable law and conditions of
each such Employee Benefit Plan without regard to any limitation,
reduction or adjustment of liability under Title IV of ERISA or any
Employee Benefit Plan provision; and neither the Company nor any ERISA
Affiliate has any contingent liability under Section 4024 of ERISA.
16
(c) The aggregate present value of all accrued benefits
pursuant to each Employee Benefit Plan subject to Title IV of ERISA,
determined on the basis of current participation and projected
compensation for active participants, and including the maximum value
of all subsidized benefits, and earnings, mortality and other actuarial
assumptions set forth in the 1994 actuarial report for the Employee
Benefit Plan does not exceed the current fair market value of such
Employee Benefit Plan's assets, and except as required by Section 4980B
of the Code, neither the Company nor any ERISA Affiliate has any
obligation to provide benefits to any individual not employed by the
Company or any ERISA Affiliate.
(d) Each Employee Benefit Plan complies with and is and
has been operated in accordance with its terms and each applicable
provision of ERISA, the Code, other federal statutes, state law and the
regulations and rules thereunder. With respect to each Employee Benefit
Plan intended to qualify under Section 401(a) of the Code, a favorable
determination as to such qualification of such Employee Benefit Plan
and each amendment thereto has been made by the Internal Revenue
Service and each such Employee Benefit Plan remains qualified under the
Code and each trust funding any Employee Benefit Plan is and has been
tax-exempt. Neither the Company nor any ERISA Affiliate has failed to
make any contributions or pay any amounts required on or before the
Closing Date by the terms of any Employee Benefit Plan, collective
bargaining agreement, ERISA or any other applicable law.
4.2.22 Labor Relations. Neither the Company nor any
Remaining Subsidiary is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by the Company and there are
no known organizational campaigns, petitions or other unionization activities
seeking recognition of a collective bargaining unit. There are no strikes,
slowdowns, work stoppages or material labor relations controversies pending or,
to the knowledge of the Company, threatened between the Company or any of its
Subsidiaries, and any of their employees, and neither the Company nor any
Subsidiary has experienced any such strike, slowdown, work stoppage or material
controversy within the past three years.
4.2.23 Absence of Litigation. Except as set forth in the
SEC Documents filed prior to the date hereof, there is no litigation or
proceeding, in law or in equity, and there are no proceedings or governmental
investigations before or by any Governmental Entity, pending or, to the
Company's knowledge, threatened against the Company or any Remaining Subsidiary
or any of the officers, directors or employees of the Company or any Remaining
Subsidiary, which, if decided adversely to the Company or any Remaining
Subsidiary, officer, director or employee could have a Material Adverse Effect
on the Company or any Subsidiary or would materially impair the consummation of
any of the Transactions. There are no facts which, if known by a potential
claimant or governmental authority, would give rise to a claim or proceeding
which, if asserted or conducted with results unfavorable to the Company, would
have a Material Adverse Effect on the Company or any Remaining Subsidiary or
would materially impair the consummation of any of the Transactions. The Company
has not made any material oral or written warranties with respect to the quality
or absence of defects of its products or services which it has sold or performed
which are in force as of the date hereof, excep for those warranties which are
described in the Company Disclosure Schedule.
4.2.24 Injunctions; Judgments. Neither the Company nor
any Remaining Subsidiary is a party to, or bound by, any judgment, writ,
injunction, decree, order or arbitration award (or agreement entered into with
any Governmental Entity in connection with any administrative, judicial or
arbitration proceeding) with respect to or affecting the properties, assets,
personnel or business activities of the Company.
17
4.2.25 Compliance with Law. Neither the Company nor any
Subsidiary is in violation of, in noncompliance with, or delinquent with respect
to, any judgment, writ, injunction, decree, order or arbitration award or law,
statute, or regulation of or agreement with, or any permit from, any
Governmental Entity to which the property, assets, personnel or business
activities of the Company or any of its Subsidiaries are subject, which
violation, noncompliance or delinquency could have a Material Adverse Effect on
the Company or any Remaining Subsidiary or materially impair the ability of the
Company to carry out or realize the intended benefits of the Transactions.
4.2.26 Environmental Matters. The Company and each
Subsidiary are and at all times have been, and all real property currently or
previously owned, leased, occupied, used by or under the control of the Company
or such Subsidiary, and all operations or activities of the Company or its
Subsidiaries (including those conducted on or taking place at any of such real
property) are and at all times have been, in compliance with and not subject to
any material liability or obligation under any Environmental Law or
Environmental Permit (and any monitoring agreement thereunder). The Company and
its Subsidiaries have every Environmental Permit required under Environmental
Laws for the operation of their respective businesses. As used in this
Agreement: "Environmental Laws" means all applicable federal, state or local
laws, rules, regulations, ordinances or principles of common law relating to the
generation of electricity or to the protection of health and safety, pollution,
or to environmental matters of any kind whatsoever, including with respect to
the storage, treatment, generation, transportation, spillage, use for the
generation of electricity or thermal energy, discharge, emission, leakage,
disposal or other release or threatened release of any hazardous (or otherwise
regulated under Environmental Law) material, substance or waste of any kind
whatsoever ("Hazardous Materials") and "Environmental Permits" means any
permits, licenses, notifications, certifications, consents or approvals required
under any Environmental Law from a Governmental Entity or third party. There are
no underground storage tanks on any such real property. There is no condition or
circumstance regarding the Company, any Subsidiary or their respective
businesses or any such real property or the operations or activities thereon,
which, with the passing of time or upon notice to any other party, is possible
of giving rise to a material violation of, or material liability or obligation
under, any Environmental Law or Environmental Permit. Neither the Company nor
its Subsidiaries nor any Person, the acts or omissions of which may be
attributable to, or the responsibility of, or liability to, the Company or its
Subsidiaries has, or has arranged to have, any Hazardous Materials, treated,
stored or disposed of at, or transported to, any facility or property the
remediation or cleanup of which, or the response costs related thereto, could be
attributed in any manner to, or otherwise become responsibilities of or
liabilities to, the Company or its Subsidiaries. There are no allegations,
claims, demands, citations, notices of violation, or orders of noncompliance
made against, issued to or received by the Company or its Subsidiaries within
the past (5) years relating or pursuant to any Environmental Law or
Environmental Permit except those which have been corrected or complied with to
the satisfaction of the Governmental Entity or other claimant, and no such
allegation, claim, demand, citation, notice of violation or order of
noncompliance is threatened, imminent, likely or contemplated. The Company and
its Subsidiaries have not contractually created or assumed any liabilities or
obligations or indemnifications related to Environmental Law at or related to
any real property currently or formerly owned, operated or leased by the Company
or its Subsidiaries.
4.2.27 Owned Real Estate. All of the real estate and any
interest in real estate held by the Company or any Subsidiary is identified
(including by street address and Subsidiary owner) in the Company Disclosure
Schedule as being so owned (the "Real Estate"). Each Remaining Subsidiary so
indicated as owning Real Estate has insurable title to its Real Estate, subject
only to general real estate taxes not delinquent and to Encumbrances, covenants,
conditions, restrictions and easements of record, none of which makes title to
any of such Real Estate uninsurable and none of which are violated by the
Remaining Subsidiary or interfere with such Remaining Subsidiary's use or
occupancy thereof. None of the Real Estate held by a
18
Remaining Subsidiary is subject to any leases or tenancies. None of the
improvements comprising the Real Estate or the businesses conducted by any of
the Company thereon, are in violation of any use or occupancy restriction,
limitation, condition or covenant of record or any zoning or building law, code
or ordinance or public utility easement. No material expenditures are required
to be made for the repair or maintenance of any improvements on any of the Real
Estate for or with respect to any period ending on or including the Closing
Date. All taxes on any Real Estate owned by the Company or any Remaining
Subsidiaries for or with respect to any period ending on or including the
Closing Date have been paid or accrued in full.
4.2.28 Leased Premises. Neither the Company nor any
Remaining Subsidiary leases (or has any commitment to lease) any real estate.
The Distributed Subsidiaries lease (or have a commitment to lease) the premises
identified in the Company Disclosure Schedule as being so leased (the "Leased
Premises"). The Leased Premises are leased to the indicated Subsidiary pursuant
to written leases, true, correct and complete copies of which have been
delivered to Purchaser prior to the date hereof or are contained in the SEC
Documents. The improvements comprising the Leased Premises, and the businesses
conducted by the Company thereon, are not in violation of any use or occupancy
restriction, limitation, condition or covenant of record or any zoning or
building law, code or ordinance or public utility or other easements.
4.2.29 Intellectual Property. No Intellectual Property
has infringed, infringes or in any material way has damaged or damages any of
the rights, title or interests of any third party (nor has any third party given
the Company notice of any claimed infringement or damage). "Intellectual
Property" means all of the following, whether owned, used or licensed by the
Company or any Remaining Subsidiary: (i) all common law, federally registered,
state registered and foreign trademarks and service marks and all applications
for federal, state or foreign registration of trademarks or service marks, (ii)
all slogans, trade dress and trade names, (iii) all proprietary know-how and
methods, (iv) all trade secrets, (v) all federal and foreign patents and patent
applications, (vi) all copyright registrations and material unregistered
copyrights, and (vii) all computer software.
4.2.30 Brokers. No broker, finder, investment banker or
other Person (other than Josephthal & Co., whose compensation arrangement is set
forth in the Company Disclosure Schedule) is entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment from the Company in
connection with the Merger.
4.2.31 Fairness Opinion. The Company has received the
written opinion of Josephthal & Co. (the "Fairness Opinion") on the date of this
Agreement to the effect that, as of the date of this Agreement, the Merger
Consideration to be received by stockholders of the Company is fair from a
financial point of view. The Company has provided a true and correct copy of the
Fairness Opinion to Purchaser. The Company is authorized by Josephthal & Co. to
include a copy of such opinion in the Proxy and Information Statement.
4.2.32 Form 10 Registration, Proxy Statement and
Information Statement. None of the information (other than information provided
by Parent and Purchaser) included or incorporated by reference in the (i) Form
10 registration statement relating to the registration under the Exchange Act of
shares of common stock of BL to be distributed to shareholders of the Company in
the Distribution (as supplemented or amended, the "Form 10 Registration"), (ii)
the proxy statement relating to the Transactions to be approved at the Meeting
(as amended or supplemented, the "Proxy Statement") and the information
statement relating to the Distribution (as supplemented or amended, the
"Information Statement") will (x) in the case of the Form 10 Registration, at
the time it becomes effective, ontain 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 not misleading or (iii) in the case of the
Proxy Statement and the Information Statement, at the time of the mailing
19
thereof, at the time of the Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The Form
10 Registration and the Proxy Statement and the Information Statement will each
comply as to form in all material respects with the provisions of the Exchange
Act and applicable law.
4.2.33 Full Disclosure. The representations, warranties
and statements of the Company in this Agreement or contained in any schedule,
list or document delivered pursuant to this Agreement do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein, in light of the circumstances under
which such representations, warranties and statements are made, not misleading.
The copies of all documents furnished by the Company pursuant to or in
connection with this Agreement are true, complete and correct. True, complete
and accurate copies of each document referred to in the Company Disclosure
Schedule are contained therein or have been furnished to Purchaser prior to the
date hereof.
4.3 Representations and Warranties of Parent and Purchaser. Parent and
Purchaser jointly and severally represent and warrant to the Company that:
4.3.1 Organization and Authority. Parent is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Wyoming. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
Each of Parent and Purchaser has all necessary corporate power and authority to
conduct its business as now being conducted.
4.3.2 Authority Relative to this Agreement. Each of
Parent and Purchaser has full corporate power and authority to enter into and
perform this Agreement and each of the other Transaction Agreements to which it
is a party. The execution and delivery of this Agreement and each of the other
Transaction Agreements by Purchaser and Parent and the performance by Purchaser
and Parent of their respective obligations hereunder or thereunder have been
duly authorized by all requisite corporate action. This Agreement has been, and
each of the other Transaction Agreements to which it is a party will be, duly
executed and delivered by duly authorized officers of Purchaser and Parent and
constitutes, or will constitute when so executed and delivered, a valid and
binding obligation of Purchaser and Parent enforceable against it in accordance
with its terms.
4.3.3 Required Filings. No Authorization is required by
or with respect to Purchaser in connection with the execution and delivery of
this Agreement or the other Transaction Agreements by Purchaser or the
consummation by Purchaser of the Transactions.
4.3.4 No Conflicts. Neither the execution and delivery
of this Agreement or any of the other Transaction Agreements by Parent or
Purchaser, nor the consummation by Parent or Purchaser of the Transactions, will
(i) conflict with or result in a breach of any of the terms or provision of the
Certificate of Incorporation or By-Laws of Purchaser, or Articles of
Organization of Parent or of any statute or administrative regulation, or of any
order, writ, injunction, judgment or decree of any court or governmental
authority or of any arbitration award to which Purchaser is a party or by which
Parent or Purchaser is bound; or (ii) violate, conflict with, breach, constitute
a default (or give rise to an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any lien or
other Encumbrance upon any of the properties or assets of Parent or Purchaser
under, any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Parent or Purchaser is a
party or to which Parent or Purchaser or any of its
20
properties or assets are subject (the "Purchaser Obligations"), except for such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens or other Encumbrances that do not and will not, individually
or in the aggregate, (x) have a Material Adverse Effect on Parent or Purchaser
or (y) materially impair Parent or Purchaser's ability to perform its
obligations under this Agreement or any of the other Transaction Agreements.
Without limiting the generality of the foregoing, Purchaser is not subject to
any Purchaser Obligation pursuant to which timely performance of this Agreement
or any of the Transactions may be prohibited, prevented or materially delayed.
4.3.5 Capitalization. The authorized capital stock of
Purchaser consists of 10,000 shares of common stock, $.01 par value, of which
1,000 shares are outstanding. All of the outstanding shares of common stock of
Purchaser are entitled to vote as a class and are owned of record by Parent.
4.3.6 Investment Intent. Each of Parent and Purchaser is
an "accredited investor" within the meaning of Rule 501(a) of Regulation D under
the Securities Act, and is acquiring the Common Stock for its own account for
investment and with no present intention of distributing or reselling such
Common Stock or any part thereof in any transaction which would constitute a
"distribution" within the meaning of the Securities Act.
4.3.7 Financing. Purchaser has delivered to the Company
a true and correct copy of a letter from a bank (the "Lender"), stating Lender's
interest in providing debt financing ("Financing") to Parent, which, together
with equity to be contributed to Purchaser will be in an amount necessary to pay
the Merger Consideration and consummate the Merger, subject to the negotiation,
preparation and execution of binding documents with respect to the Financing,
and to the fulfillment of the conditions precedent contained in such letter.
None of the Financing will be an obligation of or secured by a lien on the
assets of the Surviving Corporation. Parent and Purchaser have no present
intention to liquidate the Surviving Corporation.
4.3.8 Proxy Statement. None of the information included
in the Proxy Statement and provided by the Parent and Purchaser in writing for
use in the Proxy Statement will, at the time of the mailing thereof, at the time
of the Meeting and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Obligations of Each of the Parties. From and after the date hereof
and until and including the Effective Time, the following shall apply with equal
force to the Company, on the one hand, and Parent and Purchaser, on the other
hand:
5.1.1 Each party shall promptly give the other party
written notice of the existence or occurrence of any event or condition which
would make any representation or warranty herein contained of either party
untrue or which might reasonably be expected to prevent the consummation of the
transactions contemplated hereby. In the case of the Company, such notice
shall include a reasonably detailed description of such event or condition,
the representation or warranty to which it relates and an estimate of the
damages, if any, associated therewith.
21
5.1.2 No party shall intentionally perform any act which,
if performed, or omit to perform any act which, if omitted to be performed,
would prevent or excuse the performance of this Agreement by any party or which
would result in any representation or warranty herein of that party being untrue
in any material respect at any time after the date hereof through and including
the Closing Date as if then originally made.
5.1.3 Subject to the terms and conditions of this
Agreement, each of the parties agrees to use their best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the Transactions
and the other transactions contemplated by this Agreement as expeditiously as
reasonably practicable; provided, however, that nothing in this Section 5.1.3
shall in any event require any party to (i) expend funds which are not
commercially reasonable in relation to the transactions contemplated hereby or
(ii) take or cause to be taken, any action which would have a Material Adverse
Effect with respect to it.
5.2 Access. Subject to any restrictions under applicable law, the
Company shall continue to give to Purchaser's and Parent's respective officers,
employees, agents, attorneys, consultants and accountants reasonable access for
reasonable purposes in light of the transactions contemplated by this Agreement
during normal business hours to all of the properties, books, contracts,
documents, present and expired insurance policies, records and personnel of or
with respect to the Company or any Subsidiary and shall furnish to Parent and
Purchaser and such persons as Parent or Purchaser shall designate to the Company
such information as Purchaser or such persons may at any time and from time to
time reasonably request. It is expressly understood and agreed that all
information obtained pursuant to this Section 5.2 is subject to the terms and
conditions of the Confidentiality Letter dated September 2, 1998, executed by
Parent and Parent expressly reaffirms its obligations thereunder. Without
limiting the generality of the foregoing, the Company will permit Parent and
Purchaser to conduct a Phase I and Phase II environmental investigation with an
environmental consultant selected by Purchaser of the Real Estate held by Reina
Distributing, Inc. The Company will pay the costs of such investigation promptly
upon receipt of such consultant's billing statement.
5.3 The Company's Obligations. From and after the date hereof
and until and including the Effective Time:
5.3.1 The Company shall, and shall cause each Remaining
Subsidiary to, carry on its business with the objective of effecting
the Distribution and Power Facility Sales and, in all other respects
with the objective of winding up the remaining business of the Company
and the Remaining Subsidiaries so that the Company and the Remaining
Subsidiaries will have no assets other than cash and cash equivalents
and the Retained Assets and no Liabilities other than the Permitted
Liabilities and at Closing, Liabilities taken into account in the
calculation of the Adjustment Amount as reflected in the Statement as
finally agreed to by Purchaser. Without the prior written consent of
Purchaser, and without limiting the generality of any other provision
of this Agreement including the foregoing, the Company shall not, and
shall not permit any Remaining Subsidiary to:
(a) amend its Certificate of Incorporation,
By-Laws or other organizational documents;
(b) make any change in its authorized capital
stock; adjust, split, combine or reclassify any capital
stock; or, other than issuances of shares of Common Stock
pursuant to the valid exercise of Stock Options or
Warrants outstanding on the date hereof in accordance with
Section 2.4 of this Agreement, issue any shares of stock
of any class, or
22
issue or become a party to any subscription, warrant,
rights, options, convertible securities or other
agreements or commitments of any character relating to its
issued or unissued capital stock, or other equity
securities, or grant any stock appreciation or similar
rights, or amend the terms of any Stock Option or Warrant
except as contemplated by Section 2.5;
(c) incur any indebtedness for borrowed money or
assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of
any other individual, corporation or other entity,
including the Distributed Subsidiaries;
(d) other than in connection with the Distribution
or Power Facility Sales, sell, transfer, mortgage,
encumber or otherwise dispose of any of its material
properties or assets to any individual, corporation or
other entity other than a Subsidiary, except pursuant to
contracts or agreements in force at the date of this
Agreement, the sale of the NIMO stock, or as specifically
set forth in this Agreement with respect to the
Transactions;
(e) other than in connection with the Distribution
make any (x) investments, either by purchase of stock or
securities, in (y) contributions to capital of, or (z)
purchases of any property or assets from, any other
individual, corporation or other entity;
(f) except as necessary to effect the Distribution
or eliminate a Liability of the Company or Remaining
Subsidiary (with respect to which the Company shall notify
Purchaser promptly in writing), and except for
transactions in the ordinary course of business consistent
with past practice and those transactions contemplated by
the provisions of this Agreement, enter into or terminate
any material contract or agreement, or make any change in
any of its material leases or contracts;
(g) change its method of accounting in effect at
December 31, 1997, except as may be required by changes in
GAAP upon the advice of its independent accountants;
(h) increase the compensation payable to any
employee, or enter into any new employment agreements with
new or existing employees which create other than an at
will relationship, in each case, except in the ordinary
course of business consistent with past practices other
than bonuses to officers and employees which are paid
prior to the Effective Time;
(i) pay or declare any dividend or make any
distribution (other than the Distribution) on its
securities of any class or purchase or redeem any of its
securities of any class;
(j) make any Tax election or settle or
compromise any Tax liability;
(k) fail to maintain in full force and effect
insurance coverage substantially similar to that in effect
on the date hereof; or
23
(l) enter into any business or contract not
related to the Distribution, Power Facility Sales or the
Merger other than contracts which are not material and
which will be fully performed prior to the Effective Time.
5.3.2 The Company shall cause the Distributed Subsidiaries
to carry on their respective businesses only in the ordinary course
consistent with past practice and shall not and shall cause the
Distributed Subsidiaries not to create any Liabilities of the Company
or any Remaining Subsidiary for the Liabilities of the Distributed
Subsidiaries following the Effective Time.
5.3.3 The Company shall furnish to Purchaser the Company's
internal unaudited statement of condition and statement of income for
each month ending after the date of this Agreement. Such monthly
statements shall be prepared in accordance with existing practice and
shall fairly present in all material respects the consolidated
financial position and results of operation for the Company as of and
for the periods indicated therein in accordance with past practice. The
Company will advise Purchaser upon request as to the status of the
components of the Base Amount and Additional Amount and provide
reasonable evidence supporting the determination of the amount of such
components.
5.4 Proxy Statement; Other Regulatory Matters.
5.4.1 The Company will (i) call a meeting of its
shareholders (the "Meeting") for the purpose of voting upon adoption and
authorization of the Merger, (ii) hold the Meeting as soon as practicable
following the date of this Agreement, (iii) subject to Section 5.6 recommend to
its shareholders the approval of the Merger through its Board of Directors and
(iv) use its best efforts to obtain the necessary adoption and authorization of
this Agreement by the shareholders of the Company.
5.4.2 The Company will (i) as soon as practicable
following the date of this Agreement, prepare in correct and appropriate form
and file with the SEC the Form 10 Registration and a preliminary Proxy Statement
and Information Statement and (ii) use its reasonable best efforts to respond to
any comments of the SEC or its staff and to cause the Form 10 Registration to be
effective and each of the Proxy and the Information Statement to be cleared by
the SEC. The Company will notify Purchaser of the receipt of any comments from
the SEC or its staff and of any request by the SEC or its staff for amendments
or supplements to the Form 10 Registration, the Proxy or the Information
Statement or for additional information and will supply Purchaser with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Form 10
Registration or the Proxy Statement and Information Statement or any of the
Transactions. The Company shall give Purchaser and its counsel (who shall
provide any comments thereon as soon as practicable) the opportunity to review
the Form 10 Registration, the Proxy Statement and the Information Statement
prior to being filed with the SEC and shall give Purchaser and its counsel (who
shall provide any comments thereon as soon as practicable) the opportunity to
review all amendments and supplements to the Form 10 Registration, the Proxy and
the Information Statement and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent to,
the SEC. Each of the Company and Purchaser agrees to use its reasonable best
efforts, after consultation with the other parties hereto, to respond promptly
to all such comments of and requests by the SEC. As promptly as practicable
after the Proxy Statement and the Information Statement have been cleared by the
SEC, the Company shall mail the Proxy Statement and the Information Statement,
respectively, to the stockholders of the Company. The Purchaser and the Parent
shall supply to the Company on a timely basis in connection with the preparation
of the Proxy Statement and the Information Statement all information necessary
to be included therein with respect to the Purchaser and the Parent.
24
5.4.3 Each party agrees to notify the other of, and to
correct, any information contained in the Form 10 Registration, the Proxy
Statement and Information Statement furnished by such party to the other for
inclusion therein, which information shall be, at the time of furnishing, or
become, prior to the Meeting, false or misleading in any material respect. If at
any time prior to the Meeting or any adjournment thereof there shall occur any
event that should be set forth in an amendment to the Form 10 Registration Proxy
Statement or the Information Statement, the Company will prepare and mail to its
stockholders such an amendment or supplement.
5.4.4 The Company will file all reports, schedules and
definitive proxy statements (including the Proxy Statement and the Information
Statement) (the "Company Filings") required to be filed by the Company with the
SEC (including reports required by Section 13(d) or 13(g) of the Exchange Act
and will provide copies thereof to the Company promptly upon the filing thereof.
As of its respective date, the Company represents, warrants and covenants that
each the Company Filing will comply in all material respects with the
requirements of the Exchange Act and the applicable rules and regulations of the
SEC thereunder and none of the Company Filings will contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. Upon learning of any
such false or misleading information, the Company will cause all required the
Company Filings (including the Proxy Statement and the Information Statement) to
be corrected, filed with the SEC and disseminated to holders of the Common
Stock, in each case as and to the extent required by applicable law.
5.4.5 Subject to the terms and conditions herein
provided, the Company and Parent and Purchaser will cooperate and consult with
one another in (a) determining which consents, approvals, Permits,
authorizations or waivers (collectively, "Consents") are required to be obtained
prior to the Effective Time from Governmental Entities or other third parties in
connection with the execution and delivery of this Agreement (including those
Consents with respect to those matters disclosed as a result of Section 4.2.4 of
this Agreement or with respect to any of the Transactions or the Transaction
Agreements and the consummation of the transactions contemplated hereby or
thereby, (b) preparing all Consents and all other filings, submissions and
presentations required or prudent to obtain all Consents, including by providing
to the other party drafts of such material reasonably in advance of the
anticipated filing or submission dates, and (c) timely seeking all such Consents
(it being understood that the parties will make or seek to Consents, whether
mandatory or voluntary and that each party will be responsible and pay for the
costs, penalties and expenses associated with the Consents required with respect
to it). The Company will obtain and deliver to Purchaser at or prior to Closing
originals of full and complete releases of the Company and each Remaining
Subsidiary from any and all Liabilities of the Company or such Remaining
Subsidiary (x) fo Liabilities (other than Permitted Liabilities) of any
Distributed Subsidiary (the "Third Party Releases") (y) to provide
indemnification by contract, law or otherwise to any current director, officer,
employee agent or affiliates except to the extent of the Surviving Corporation
rights under the Escrow Agreement or the D&O Insurance, the form and substance
of which shall be reasonably acceptable to Purchaser and Parent ("D&O
Releases").
5.5 Acquisition Proposals.
----------------------
5.5.1 From and after the date hereof and until and
including the Effective Time (or earlier termination of this Agreement), the
Company shall immediately cease and cause to be terminated any activities,
discussions or negotiations with respect to an Acquisition Proposal (as defined
herein), and the Company shall not, nor shall it permit any Subsidiary, or
authorize or permit any of its officers, directors or employees or holders of
more than five percent of its outstanding shares of Common Stock or any
investment banker, financial advisor, attorney, accountant or other
representative or agent of the Company or any
25
Subsidiary, to, directly or indirectly, (i) solicit, initiate, or encourage
(including by way of furnishing or otherwise providing, or providing access to
nonpublic information) any Acquisition Proposal; (ii) participate in any
discussions or negotiations relating to any Acquisition Proposal (or any inquiry
relating to an Acquisition Proposal) or take any other action to facilitate any
inquiries or the making of any proposal that constitutes an Acquisition
Proposal; or (iii) enter into any letter of intent, agreement in principle or
definitive agreement with respect to any Acquisition Proposal; provided,
however, that nothing contained in this Section 5.5 shall prohibit the Company
or the Board from furnishing nonpublic information to, or entering into
discussions or negotiations with, any person or entity with respect to any
unsolicited Acquisition Proposal if (but only if): (a) the Board determines
reasonably and in good faith, after due investigation and after consultation
with and based upon the advice of its outside financial advisor, that such
Acquisition Proposal is a Superior Proposal (as defined below); (b) the Board
determines reasonably and in good faith, after due investigation and after
consultation with and based upon the advice of outside counsel, that the failure
to take such action would cause the Board to violate its fiduciary duties to
stockholders under applicable law in the context of the Transactions; and (c)
the Company (x) provides at least two business days' notice to Acquiror to the
effect that it is taking such action and (y) receives from such person or entity
an executed confidentiality agreement substantially similar to the
Confidentiality Agreement. Notwithstanding the foregoing, nothing in this
Section 5.5 will restrict the Company from effecting the Power Facility Sales as
contemplated hereby.
5.5.2 Notwithstanding anything in this Agreement to the
contrary, the Company shall promptly advise Parent orally and in writing of the
receipt by it (or by any of the other entities or persons referred to above)
after the date hereof of any Acquisition Proposal or any inquiry which could
reasonably lead to an Acquisition Proposal, the material terms and conditions of
such Acquisition Proposal or inquiry, and the identity of the person or entity
making any such Acquisition Proposal. The Company agrees that it will fully
enforce (including by way of obtaining an injunction), and not waive any
provision of, any confidentiality agreement to which it is a party.
5.5.3 For purposes of this Agreement: "Acquisition
Proposal" means any bona fide offe or proposal with respect to a merger,
consolidation, share exchange or similar transaction involving the Company or
any Subsidiary or any purchase of all or any significant portion of the assets
or capital stock of the Company or any significant Subsidiary or any other
business combination (including the acquisition of any equity interest therein)
involving the Company excluding, however, any proposal or transaction with
respect to the Power Facilities; and "Superior Proposal" means an Acquisition
Proposal which the Board believes in good faith, after due investigation (taking
into account, among other things, the financing terms and the likelihood of
consummation) and based upon the advice of its outside legal and financial
advisors, is more favorable to the Company's stockholders from a financial point
of view than the Merger (taking into account the Distribution).
5.6 Board Action. The Board shall not (i) withdraw or modify its
approval, adoption or recommendation of this Agreement, the Merger or any of the
Transactions , (ii) approve, adopt or recommend or publicly propose to approve,
adopt or recommend an Acquisition Proposal, (iii) cause the Company to enter
into any letter agreement, agreement in principle or definitive agreement with
respect to an Acquisition Proposal, or (iv) resolve to do any of the foregoing
unless the Company receives an unsolicited Acquisition Proposal in accordance
with Section 5.5 and the Board determines reasonably and in good faith, after
due investigation (a) based upon the advice of its outside financial advisor
that a pending Acquisition Proposal is more favorable to the Company
Stockholders than the Merger and the Distribution, taken as a whole, (b) such
Acquisition Proposal is reasonably likely to be consummated, (c) there is a
substantial probability that the approval of the Merger and the Distribution
will not be obtained due to the pending Acquisition Proposal, and (d) based upon
the advice of outside counsel, that the failure of the Board to withdraw or
modify its approval,
26
adoption or recommendation of this Agreement or the Merger, or approve or
recommend such Acquisition Proposal would cause the Board to violate its
fiduciary duties to stockholders under applicable law in the context of the
Transactions. In such case, the Board may withdraw or modify its recommendation,
and approve and recommend such Acquisition Proposal, provided the Board provides
to Parent and Purchaser written notice of the Company's intention to accept the
Superior Proposal at least two business days prior to taking such action and, at
the end of such two business day period (x) simultaneously terminates this
Agreement, (y) concurrently causes the Company to enter into a definitive
acquisition agreement with respect to such Superior Proposal and (z)
concurrently pays to Purchaser the Termination Payment and Covered Expenses
pursuant to Section 7.4.2. Nothing contained in this Section 5.6 shall prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act; provided that
the Company does not withdraw or modify its position with respect to the Merger
or approve or recommend an Acquisition Proposal, except under the circumstances
described in the immediately preceding sentence and on two business days' notice
to Purchaser to the effect that it is taking such action.
5.7 Indemnification and Insurance.
-----------------------------
5.7.1 Purchaser and the Company agree that prior to the
Effective Time, the Company will procure and pay for officers' and directors'
liability insurance ("D&O Insurance") covering each present and former director,
officer, employee and agent of the Company and each Subsidiary and each present
and former director, officer, employee, agent or trustee of any employee benefit
plan for employees of the Company (individually, an "Indemnified Person", and
collectively, the "Indemnified Persons"), who is currently covered by the
Company's officers' and directors' liability insurance or will be so covered on
the Closing Date with respect to actions and omissions occurring on or prior to
the Closing Date (including, without limitation, any which arise out of or
relate to the transaction contemplated by this Agreement). Purchaser shall not
be required to provide or cause the Surviving Corporation to provide any such
insurance for the Indemnified Persons.
5.7.2 Purchaser and the Surviving Corporation hereby
jointly and severally agree that, for the lesser of (a) six (6) years after the
Closing Date, or (b) the period during which the Surviving Corporation maintains
its existence, the provisions of the Certificate of Incorporation and By-Laws of
the Surviving Corporation shall provide indemnification to the Indemnified
Persons on terms, in a manner, and with respect to matters, which are no less
favorable (in favor of persons indemnified) than the Company Certificate of
Incorporation and By-Laws, as in effect on the date hereof, and further agree
that such indemnification provisions shall not be modified or amended except as
required by law, unless such modification or amendment expands the rights of the
Indemnified Persons to indemnification. Notwithstanding the foregoing, it is
expressly understood and agreed that the obligation of the Surviving Corporation
to provide such indemnification is limited to the D&O Insurance and the
Surviving Corporation's rights under the Escrow Agreement and that the
provisions of the Certificate of Incorporation and By-laws of the Surviving
Corporation may be amended accordingly.
5.8 Surviving Corporation. The Surviving Corporation or its successors
will maintain its or their existence until at least March 31, 2003.
5.9 Parent's Financing. Parent will use its reasonable best
efforts to obtain the proceeds of the Financing.
5.10 Liabilities. The Company agrees to use its best efforts so that
neither the Company nor any Remaining Subsidiary will have as of the Effective
Time any Liability other than the Permitted Liabilities and Liabilities, if any,
included in the calculation of the Adjustment Amount as agreed to by Parent and
Purchaser.
27
5.11 Other Company Covenants. Prior to the Effective Time, the Company
will (a) as soon as practicable, obtain from General Electric Capital
Corporation ("GECC") a release from pledge of all of the outstanding shares of
any Remaining Subsidiary which have been pledged to GECC, and (b) cause to be
paid in full at or prior to the Closing all expenses associated with the
transactions contemplated hereby including fees and expenses of investment
bankers, counsel, accountants, consultants and other advisors to the Company,
all severance, bonus and other compensation payable in connection with or as a
result of the Merger and all other expenses of the Company and each of the
Remaining Subsidiaries.
5.12 Parent Covenants. Parent agrees to cause the Surviving Corporation
to amend its Certificate of Incorporation within thirty (30) days after the
Closing Date to change the name of the Surviving Corporation to a name which
does not include the word "Besicorp". The Surviving Corporation agrees to (a)
quitclaim without recourse to BL the net proceeds of any recovery under a
derivative claim against its officers or directors and (b) file all income Tax
Returns for the current fiscal year and pay all Taxes shown to be due thereon.
ARTICLE VI
CONDITIONS TO CLOSING; CLOSING DELIVERIES; BASE AMOUNT
6.1 Conditions to Each Party's Obligations. The respective obligations
of each party to effect the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
6.1.1 The Merger Agreement and, to the extent required
under the NYBCL, the Distribution shall have been adopted and authorized by th
requisite vote of the stockholders of the Company.
6.1.2 This Agreement, the Merger and (to the extent
approval thereof is necessary to consummate the Transactions) the Transactions
shall have been approved by each Governmental Entity whose approval is required
for the consummation of the Merger or such Transactions, such approvals shall
remain in full force and effect and all waiting periods relating to such
approvals shall have expired.
6.1.3 No Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent)which is then in effect and
has the effect of making the Merger or any of the Transactions illegal.
6.2 Conditions to the Company's Obligations. The obligation of the
Company to consummate the transactions contemplated hereby is subject to the
fulfillment (or waiver) of all of the following conditions prior to the
Effective Time, upon the non-fulfillment (and non-waiver) of any of which this
Agreement may, at the Company's option, be terminated pursuant to and with the
effect set forth in Article VII:
6.2.1 Each and every representation and warranty made by
Parent and Purchaser shall be true and correct when made and as if originally
made on and as of the Closing Date.
28
6.2.2 All obligations of Parent and Purchaser to be
performed hereunder through, and including on, the Closing Date (including,
without limitation, all obligations which Purchaser would be required to perform
at the Closing if the transaction contemplated hereby was consummated shall have
been fully performed.
6.2.3 Purchaser shall have delivered to the Company the
written opinion of Altheimer & ▇▇▇▇, counsel for Purchaser, dated as of the
Closing Date, in substantially the form of Exhibit C attached hereto.
6.2.4 Immediately prior to the Merger Purchaser is, and
assuming that the condition set forth in Section 6.3.1 is satisfied, immediately
following the effectiveness of the Merger the Surviving Corporation shall be,
solvent.
6.3 Conditions to Parent's and Purchaser's Obligations. The obligations
of Parent and Purchaser to consummate the transactions contemplated hereby is
subject to the fulfillment (or waiver) of all of the following conditions on or
prior to the Closing Date, upon the non-fulfillment (and non-waiver) of any of
which this Agreement may, at Purchaser's option, be terminated pursuant to and
with the effect set forth in Article VII:
6.3.1 The representations and warranties made by the
Company shall be true and correct when made and as if originally made on and as
of the Closing Date, except to the extent reflected in the Statement as finally
agreed to by Parent and Purchaser.
6.3.2 All obligations of the Company to be performed
hereunder through, and including on, the Closing Date (including, without
limitation, all obligations which the Company would be required to perform at
the Closing if the transaction contemplated hereby was consummated)shall have
been fully performed.
6.3.3 No suit, proceeding or investigation shall have been
commenced (to Purchaser's knowledge) by any Governmental Entity on any grounds
to restrain, enjoin or hinder, or seek material damages on account of, the
consummation of any of the Transactions or the other transactions contemplated
hereby.
6.3.4 The Company shall have delivered to Purchaser the
written opinion of ▇▇▇▇▇▇▇▇ Brog Leinwand ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C., counsel
to the Company, dated as of the Closing Date, in substantially the form of
Exhibit D attached hereto.
6.3.5 Since June 30, 1998 there shall have been no
changes, either individually or in the aggregate, taking into account the
completion of the Transactions other than the Merger, in the results of
operations, condition (financial or otherwise), properties, assets, business or
prospects of the Company or any Subsidiary which has had or would be reasonably
likely to have a Material Adverse Effect on the Company or any Remaining
Subsidiary.
6.3.6 There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any Governmental Entity which imposes any condition
or restriction upon Purchaser, the Surviving Corporation or its Subsidiaries
which would in Purchaser's opinion be commercially unreasonable from a financial
standpoint relative to the transactions contemplated by this Agreement.
6.3.7 Purchaser shall be satisfied in its reasonable
discretion that each of the Distribution and the Power Facility Sales shall have
been completed as provided in this Agreement and that neither the
29
Surviving Corporation nor any of the Remaining Subsidiaries has any Liability as
a result of or arising out of the Distribution or Power Facility Sales.
6.3.8 The Indemnification Agreement and the Escrow
Agreement shall have been executed and delivered by BL and shall each be valid,
legal, binding and enforceable obligations of BL, and the Company shall have
deposited $6,000,000 in cash with the Escrow Agent under the Escrow Agreement.
6.3.9 The Base Amount shall be no less than $ 105,275,000.
6.3.10 Purchaser shall have received the proceeds of the
Financing.
6.3.11 Neither the Company nor any Remaining Subsidiary
shall have any Liabilities other than the Permitted Liabilities and the
Liabilities taken into account in determining the Adjustment Amount as agreed to
by Purchaser and Parent.
6.3.12 The Company shall have received all of the Consents
and obtained the Third Party Releases and DB&O Releases (it being understood
that this condition with respect to the Third Party Releases will be satisfied
if Third Party Releases with respect to Liabilities aggregating no more than
$50,000 are not obtained).
6.3.13 The number of shares of Common Stock outstanding
immediately prior to the Effective Time does not exceed 3,051,435.
6.3.14 Purchaser shall have received the results of a
Phase I and, if reasonably requested by Purchaser, Phase II environmental
investigation of the Real Estate held by Reina Distributing, Inc. with results
satisfactory to Parent and Purchaser in their sole discretion.
6.4 Closing Deliveries.
------------------
6.4.1 At the Closing, the Company shall cause to be
executed and delivered to Parent and Purchaser all of the following:
(a) a closing certificate dated the Closing Date and
executed on behalf of the Company by a duly authorized officer of the
Company to the effect set forth in Sections 6.3.1, 6.3.2, 6.3.5, 6.3.6,
6.3.10(g), 6.3.11, 6.3.12 and 6.3.13;
(b) certified copies of such corporate records of the
Company and the Subsidiaries and copies of such other documents as
Purchaser or its counsel may reasonably have requested in connection
with the consummation of the transactions contemplated hereby;
(c) D&O Releases and resignations of all of the officers
and directors of each of the Remaining Subsidiaries and the Company in
form satisfactory to Purchaser and Parent;
(d) the Indemnification Agreement and Escrow Agreement;
and
(e) the minute books and corporate records of the Company
and the Remaining Subsidiaries and originals of the stock certificates
evidencing all of the outstanding capital stock of each of the
Remaining Subsidiaries free of all Encumbrances.
30
6.4.2 At the Closing, Parent and Purchaser shall cause
to be delivered to the Company all of the following:
(a) a closing certificate dated the Closing Date and
executed on behalf of Parent and Purchaser by a duly authorized officer
of Parent and Purchaser to the effect set forth in Sections 6.2.1,
6.2.2 and 6.2.4; and
(b) certified copies of such corporate records of Parent
and Purchaser and copies of such other documents as the Company or its
counsel may reasonably have requested in connection with the
consummation of the transactions contemplated hereby.
ARTICLE VII
TERMINATION/EFFECT OF TERMINATION
7.1 Right to Terminate. Anything to the contrary herein
notwithstanding, this Agreement and the transaction contemplated hereby may be
terminated at any time prior to the Effective Time by prompt notice given in
accordance with Section 8.4:
7.1.1 by the mutual written consent of Parent and
Purchaser and the Company (with the approval of their respective Boards of
Directors);
7.1.2 by Purchaser and Parent, or the Company (with the
approval of the Board) if:
(a) the Effective Time shall not have
occurred at or before 11:59 p.m. on February 15, 1999 (the "Termination
Date"); provided, however, that the right to terminate this Agreement
under this Section 7.1.2 shall not be available to any party whose
failure to fulfill any of its obligations under this Agreement has been
the cause of the failure of the Effective Time to have occurred as of
such time; or
(b) upon a vote at the Meeting any of this Agreement
or any of the Transactions required to be adopted or authorized by the
shareholders of the Company shall fail to be adopted and authorized.
7.1.3 by Parent and Purchaser, by giving written notice
of such termination to the Company, if:
(a) there has been a material breach of any
material agreement or covenant on the part of the Company which has not
been cured or adequate assurance of cure given, in either case within
ten (10) business days following notice of such breach from Purchaser
or either of the Indemnification Agreement or the Escrow Agreement
shall not be a valid, legal and binding agreement or enforceable
against BL;
(b) there has been a breach of a
representation or warranty of the Company the Damages from which Purchaser
reasonably determines would cause the Base Amount to be less than $105,275,000;
31
(c) the Board shall have taken any action
contemplated by clause (i), (ii), (iii) or (iv) of Section 5.6;
(d) a tender offer or exchange offer for 15%
or more of the shares of Common Stock of the Company is commenced, and
the Board fails to recommend against acceptance of such tender offer or
exchange offer by its stockholder within the time period required by
Section 14e-2 of the Exchange Act (the taking of no position by the
expiration of such period with respect to the acceptance of such tender
offer or exchange offer by its shareholders constituting such a
failure) or any Person acquires by any means 20% or more of the
outstanding shares of Common Stock;
(e) the Company shall have breached any of
its covenants or agreements in Section 5.5;
(f) there shall be pending or threatened any
proceeding seeking material damages on account of this Agreement or the
consummation of the Merger or any of the other Transactions which
Purchaser determines in good faith, after due investigation and
consultation with counsel representing the Company in such proceeding,
could reasonably be expected to result in the Company incurring a
material amount of damages or expenses relative to the protections to
Parent afforded by the Escrow Agreement, after taking into account
applicable insurance coverage; or
(g) the Base Amount is less than $105,275,000.
7.1.4 by the Company (with the approval of the Board ), by
giving written notice of such termination to Parent and Purchaser, if:
(a) there has been a material breach of any
agreement herein on the part of Purchaser which has not been cured or
adequate assurance of cure given, in either case within ten (10)
business days following notice of such breach from the Company;
(b) there has been a breach of a
representation or warranty of Parent or Purchaser herein which could
reasonably be expected to prevent Parent or Purchaser from fulfilling
their obligations under this Agreement and which, in the reasonable
opinion of the Company, by its nature cannot be cured within twenty
(20) days (or, if sooner, the Closing Date);
(c) if the Board determines to enter into and
enters into a definitive agreement providing for a Superior Proposal
which was obtained consistent with Section 5.5; provided, however, that
the Company shall have no right to terminate this Agreement under this
Section 7.1.4(c) unless (i) the Company has provided Purchaser with
written notice of the material terms of the Superior Proposal at least
two business days prior to such termination, and (ii) the Company
simultaneously pays to Purchaser the Termination Payment and Covered
Expenses required under Section 7.4.2.
7.2 Certain Effects of Termination. In the event of the
termination of this Agreement as provided in Section 7.1:
7.2.1 each party, if so requested by the other party, will
return promptly every document furnished to it by or on behalf of the other
party in connection with the transaction contemplated hereby, whether so
obtained before or after the execution of this Agreement, and any copies thereof
(except for copies of documents publicly available) which may have been made,
and will use reasonable efforts to cause its
32
representatives and any representatives of financial institutions and investors
and others to whom such documents were furnished promptly to return such
documents and any copies thereof any of them may have made; and
7.2.2 the obligation of Purchaser under the
Confidentiality Letter referred to in Section 5.2 shall continue indefinitely
(subject to its terms) notwithstanding any termination of this Agreement.
This Section 7.2 shall survive any termination of this Agreement.
7.3 Remedies. Notwithstanding any termination right granted in Section
7.1, in the event of the nonfulfillment of any condition to a party's closing
obligations, in the alternative, such party may elect to do one of the
following:
(a) proceed to close despite the nonfulfillment of any
closing condition without waiving any claim for any breach and
specifically in the case of Parent and Purchaser without waiving any
right to proceed under the Indemnification Agreement;
(b) decline to close, terminate this Agreement as provided
in Section 7.1, and thereafter exercise the remedies provided, or seek
damages to the extent permitted in Section 7.4; or
(c) seek specific performance of the obligations of the
other party. Each party hereby agrees that, in the event of any breach
of this Agreement by such party, the remedies available to the other
party at law would be inadequate and that such party's obligations
under this Agreement may be specifically enforced.
7.4 Right to Damages; Expense Reimbursement.
---------------------------------------
7.4.1 If this Agreement is terminated in accordance with
Section 7.1, neither party will have any claim against the other, subject to the
following sentence and, if applicable, the remaining provisions of this Section
7.4. A party terminating this Agreement in accordance with Section 7.1 (other
than Section 7.1.1) will retain any and all of such party's legal and equitable
rights and remedies if, but only if, the circumstances giving rise to such
termination were (i) caused by the other party's willful failure to comply with
a material covenant set forth herein or (ii) that a material representation or
warranty of the other party was materially false when made and that party knew
or should have reasonably known such representation or warranty was materially
false when made. In either of such events, termination shall not be deemed or
construed as limiting or denying any legal or equitable right or remedy of said
party, and said party shall also be entitled to recover its costs and expenses
which are incurred in pursuing its rights and remedies (including reasonable
attorneys' fees).
7.4.2 If (x) the Company terminates this Agreement
pursuant to Section 7.1.4(c) or 5.6 or (y) Purchaser and Parent terminate this
Agreement pursuant to 7.1.3(c), (d)or (e), and Parent and Purchaser are ready,
willing and able to execute or have executed definitive documentation to effect
the Financing or substantially similar financing arrangements, with an able
financing source, the Company will (a) pay Purchaser $3,500,000 in cash
immediately upon such termination (the "Termination Payment"), by wire transfer
of same-day funds to an account designated by Purchaser and (b) reimburse Parent
and Purchaser for their out-of-pocket costs and expenses reasonably incurred and
due to third parties in connection with this Agreement and the Transactions
(including fees and disbursements of counsel, accountants, financial advisors
and consultants, commitment fees, due diligence expenses, travel costs, filing
fees, and similar fees and
33
expenses, all of which shall be conclusively established by Purchaser's good
faith statement therefor) (collectively, "Covered Expenses"), up to a maximum of
$600,000, by wire transfer of same-day funds to an account designated by
Purchaser, immediately following receipt of Purchaser's statement evidencing the
Covered Expenses.
7.4.3 If this Agreement is terminated pursuant to Section
7.1.2(b), (x) the Company will pay to Purchaser immediately upon such
termination Parent and Purchaser's Covered Expenses up to a maximum of $600,000
by wire transfer of same day funds to an account designated by Purchaser and (y)
if ▇▇▇▇▇▇▇ ▇▇▇▇ or his direct or indirect transferees have failed to vote in
person or by proxy at least 1,600,000 shares in favor of the Merger and any
other matter presented to stockholders in connection with the Merger, the
Company shall pay the Termination Payment to Purchaser immediately upon such
termination by wire transfer of same day funds to an account designated by
Purchaser. If this Agreement is terminated pursuant to (x) Section 7.1.2(b) or
(y) by the Company, or Parent and Purchaser pursuant t Section 7.1.2(a) and the
Company, on or before March 31, 1999, enters into a written agreement to effect
an Acquisition Proposal with, or an Acquisition Proposal is or has been made by,
a party other than Parent, Purchaser or any of their Subsidiaries, and the
Acquisition Proposal is thereafter consummated the Company will pay to Purchaser
the Termination Payment plus the amount of Parent's and Purchaser's Covered
Expenses (to the extent not paid under the first sentence of this Section
7.4.3). The Termination Payment contemplated by the prior sentence shall be paid
in same-day funds by wire transfer to an account designated by Purchaser
immediately prior to consummation of such Acquisition Proposal.
7.4.4 If this Agreement is terminated by Parent and
Purchaser pursuant to Section 7.1.3(a) (other than by virtue of a breach of
Sections 5.5 or 5.6), (b), (f), or (g) the Company shall reimburse Parent and
Purchaser for their Covered Expenses up to a maximum of $600,000, by wire
transfer of same-day funds to an account designated by Parent and Purchaser,
immediately following receipt of Purchaser's statement evidencing such expenses.
If this Agreement is terminated as provided in the immediately preceding
sentence and the Company, on or before March 31, 1999, enters into a written
agreement to effect an Acquisition Proposal with, or an Acquisition Proposal is
or has been made by, a party other than Parent, Purchaser or any of their
Subsidiaries, and the Acquisition Proposal is thereafter consummated the Company
will pay to Purchaser the Termination Payment plus the amount of Parent's and
Purchaser's Covered Expenses (to the extent not paid under the first sentence of
this Section 7.4.4). The Termination Payment contemplated by the prior sentence
shall be paid in same-day funds by wire transfer to an account designated by
Purchaser immediately prior to consummation of such Acquisition Proposal.
7.4.5 If Purchaser and Parent terminate this Agreement
solely as a result of the failure of the conditions set forth in to Section
6.3.10, Parent and Purchaser shall reimburse the Company for its Covered
Expenses up to $600,000 by wire transfer of same day funds to an account
designated by the Company, immediately following receipt of the Company's
statement evidencing such expenses.
7.4.6 If the Company or Parent and Purchaser fail to
promptly pay any amounts owing pursuant to this Section 7.4. when due, the
Company or Parent and Purchaser, as the case may be, shall in addition to paying
such amounts pay all costs andexpenses (including, fees and disbursements of
counsel) incurred in collecting such amounts, together with interest on such
amounts (or any unpaid portion thereof) from the date such payment was required
to be made until the date such payment is received by the Company or Parent and
Purchaser, as the case may be, at the rate of 9% per annum as in effect from
time to time during such period. This Section 7.4 shall survive the termination
of this Agreement.
34
ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations, Warranties and Agreements. All of the
representations, warranties, and agreements contained in this Agreement or in
any certificate or other document delivered pursuant to this Agreement shall
survive the Merger for a period of five years following the Effective Time,
subject to the terms of the Indemnification Agreement.
8.2 Amendment. This Agreement may be amended by the parties hereto,
with the approval of their respective Boards of Directors, at any time prior to
the Effective Time, whether before or after approval hereof by the stockholders
of the Company, but, after such approval by the stockholders of the Company, no
amendment shall be made without the further approval of such stockholders if
such amendment would violate Section 903 of the NYBCL. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.3 Publicity. Except as otherwise required by law or applicable stock
exchange rules, press releases and other publicity concerning the transactions
contemplated by this Agreement shall be made only with the prior agreement of
the Company and Purchaser.
8.4 Notices. All notices required or otherwise given hereunder shall be
in writing and may be delivered by hand, by facsimile, by nationally recognized
private courier, or by United States mail. Notices delivered by mail shall be
deemed given three (3) business days after being deposited in the United States
mail, postage prepaid, registered or certified mail, return receipt requested.
Notices delivered by hand by facsimile, or by nationally recognized private
courier shall be deemed given on the day of receipt (if such day is a business
day or, if such day is not a business day, the next succeeding business day);
provided, however, that a notice delivered by facsimile shall only be effective
if and when confirmation is received of receipt of the facsimile at the number
provided in this Section 8.4. All notices shall be addressed as follows:
If to the Company:
Besicorp Group Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., General Counsel
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: A. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Purchaser or the Surviving Corporation:
BGI Acquisition LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Altheimer & ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 8.4.
8.5 Expenses; Transfer Taxes. Except as set forth in Section 7.4
herein, each party hereto shall bear all fees and expenses incurred by such
party in connection with, relating to or arising out of the negotiation,
preparation, execution, delivery and performance of this Agreement and the
consummation of the transaction contemplated hereby, including, without
limitation, financial advisors', attorneys', accountants' and other professional
fees and expenses.
8.6 Entire Agreement. This Agreement, the Confidentiality Agreement
referred to in Section 5.2 and the instruments to be delivered by the parties
pursuant to the provisions hereof constitute the entire agreement between the
parties and shall be binding upon and inure to the benefit of the parties hereto
and their respective legal representatives, successors and permitted assigns.
Each Exhibit and schedule (including the Company Disclosure Schedule) shall be
considered incorporated into this Agreement.
8.7 Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.
8.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.
8.9 Severability. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
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8.10 Applicable Law. This Agreement shall be governed and controlled as
to validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of New York applicable to contracts
made in that State.
8.11 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, and their successors and permitted
assigns. Except as expressly provided herein, nothing in this Agreement, express
or implied, shall confer on any person other than the parties hereto, and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, including, without
limitation, third party beneficiary rights.
8.12 Assignability. This Agreement shall not be assignable by either
party without the prior written consent of the other party.
8.13 Governmental Reporting. Anything to the contrary in this Agreement
notwithstanding, nothing in this Agreement shall be construed to mean that a
party hereto or other person must make or file, or cooperate in the making or
filing of, any return or report to any Governmental Entity in any manner that
such person or such party reasonably believes or reasonably is advised is not in
accordance with law.
8.14 Defined Terms. The following terms are defined in the
following sections of this Agreement:
Defined Term Where Found
Acquisition Proposal 5.5.3
Additional Amount 2.2.2(a)
Adjustment Amount 6.5.2
Agreement Preamble
Authorization 4.2.3
BL Preamble
Base Amount 2.2.1(a)
Board 4.2.2
Certificate of Merger 1.2
Certificates 2.3.2
Closing 1.6
Closing Date 1.6
Code 2.3.6
Common Stock 2.1.1
Company Preamble
Company Disclosure Schedule 4.1
Company Filings 5.4.3
Company Shareholders 2.3.1
Consents 5.4.4
Constituent Corporation 1.1
Contract 4.2.19
Contracts 4.2.19
Covered Expenses 7.4.2
D&O Insurance 5.7.1
D&O Releases 5.4.5
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Defined Term Where Found
efined Term Where Found
Directors 4.2.5
Distributed Subsidiaries 4.2.1
Distribution 3.2.1
Effective Time 1.2
Employee Benefit Plans 4.2.21(a)
Encumbrance 4.2.4
Environmental Laws 4.2.26
Environmental Permits 4.2.26
ERISA 4.2.21(a)
ERISA Affiliate 4.2.21(b)
Escrow Agreement 3.2.1((i)
Exchange Act 3.2.1(j)
Excluded Liability 2.2.1(e)
Fairness Opinion 4.2.31
Financial Statements 4.2.8
Financing 4.3.7
Form 10 Registration 4.2.32
GAAP 4.2.8
GECC 5.11
Governmental Entity 4.2.3
Hazardous Material 4.2.26
Indemnification Agreement 3.2.1(i)
Indemnified Person 5.7.1
Indemnified Persons 5.7.1
Information Statement 4.2.32
Intellectual Property 4.2.29
Interim Balance Sheet 4.2.9(a)
Leased Premises 4.2.28
Lender 4.3.7
Letter of Transmittal 2.3.2
Liabilities 4.2.9
Material Adverse Effect 4.2.4
Meeting 5.4.1
Merger Preamble
Merger Consideration 2.1.1
1993 Plan 2.5
NIMO 4.2.10(a)
NYBCL Preamble
NYSERDA 5.4.4
Obligation 4.2.4
Parent Preamble
Partnership 4.2.6
Paying Agent 2.3.1
Payment Fund 2.3.1
PBGC 4.2.21(b)
Permits 4.2.18
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Defined Term Where Found
efined Term Where Found
Permitted Liabilities 3.2.2(b)
Person 4.2.4
Plans 2.5
Power Facility Sales 3.3
Preferred Stock 4.2.5
Proxy Statement 4.2.32
Purchaser Preamble
Purchaser Obligations 4.3.4
Real Estate 4.2.27
Remaining Subsidiary 4.2.1
Retained Assets 3.2.1(a)
Return 4.2.13(b)
Returns 4.2.13(b)
SEC 4.2.3
SEC Documents 4.2.7
Securities Act 4.2.1
Special Account 6.5.1
Specified Current Liabilities 6.5.1(b)
Statement 3.2.2
Stock Option 2.4
Subsidiary 4.2.1
Superior Proposal 5.5.3
Surviving Corporation 1.1
Tax 4.2.13(a)
Taxes 4.2.13(a)
Termination Date 7.1.2(a)
Termination Payment 7.4.2
Third Party Releases 5.4.5
Transaction Agreements 4.2.2
Transactions 4.2.2
Warrants 2.5
8.15 Headings. The headings contained in this Agreement and the
Agreement's Table of Contents are for convenience of reference only and shall
not affect the meaning or interpretation of this Agreement.
8.16 Interpretation. Whenever the term "including" is used in this
Agreement it shall mean "including, without limitation," (whether or not such
language is specifically set forth) and shall not be deemed to limit the range
of possibilities to those items specifically enumerated. All joint obligations
herein shall be deemed to be joint and several whether or not specifically so
specified.
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IN WITNESS WHEREOF, the parties have executed this Agreement and Plan
of Merger on the date first above written.
PARENT:
BGI ACQUISITION LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President of the
Sole Manager of BGI Acquisition LLC
PURCHASER:
BGI ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Its: President
THE COMPANY:
BESICORP GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: President and Chief Executive
Officer
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