-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Hb40WOhUCplttGF4StsTZ79CP1qcKD/Rddzgo9Q/acBUi7V6D25LBJG0QVDhlZiI zJnDON6LSNMUUtzdWpPDxg== 0000031224-94-000002.txt : 19940121 0000031224-94-000002.hdr.sgml : 19940121 ACCESSION NUMBER: 0000031224-94-000002 CONFORMED SUBMISSION TYPE: POS AMC PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19940120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EASTERN UTILITIES ASSOCIATES CENTRAL INDEX KEY: 0000031224 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 041271872 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AMC SEC ACT: 35 SEC FILE NUMBER: 070-08255 FILM NUMBER: 94502071 BUSINESS ADDRESS: STREET 1: ONE LIBERTY SQ STREET 2: P O BOX 2333 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6173579590 POS AMC 1 POST-EFFECTIVE AMENDMENT NO. 3 - NEMI ACQUISITION File No. 70-8255 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 POST-EFFECTIVE AMENDMENT NO. 3 TO FORM U-1 APPLICATION-DECLARATION WITH RESPECT TO THE ISSUANCE OF COMMON SHARES IN CONNECTION WITH THE ACQUISITION OF TWO ENERGY SERVICES BUSINESSES UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 EASTERN UTILITIES ASSOCIATES P.O. Box 2333, Boston, Massachusetts 02107 EUA COGENEX CORPORATION P.O. Box 2333, BOSTON, MASSACHUSETTS 02107 (Name of companies filing this statement and address of principal executive office) EASTERN UTILITIES ASSOCIATES (Name of top registered holding company parent of applicant or declarant) CLIFFORD J. HEBERT, JR., TREASURER EASTERN UTILITIES ASSOCIATES P.O. Box 2333, BOSTON, MASSACHUSETTS 02107 (Name and address of agent for service) The Commission is requested to mail signed copies of all orders, notices and communications to: ARTHUR I. ANDERSON, ESQ. McDermott, Will & Emery 75 State Street Boston, MA 02109 ITEM 1. DESCRIPTION OF THE PROPOSED TRANSACTIONS. EUA and Cogenex propose to amend and restate the information in Sections IV, V and VI of Item 1 of this Application-Declaration on Form U-1 relating to the proposed acquisition of Northeast Energy Management, Inc., a Maine corporation (NEMI), as follows: IV. The NEMI Acquisition Plan. The NEMI acquisition will be structured as a taxable statutory merger of NEMI into NEWCO with NEWCO as the surviving corporation. The merger will be structured to satisfy the requirements for pooling accounting treatment of the acquisition. Exhibit J filed herewith explains the requirements for using the pooling method of accounting and how the NEMI acquisition meets those requirements. In connection with the merger, EUA will issue to the sole stockholder of NEMI an amount of EUA common shares which equals an aggregate consideration for NEMI of $19,800,000.00, plus an amount equal to the accounts receivable of NEMI due under an agreement with Central Maine filed herewith as Exhibit K to be received by NEWCO which relate to the period prior to the Closing, less the liabilities of NEMI assumed by operation of law in connection with the merger of NEMI into NEWCO (the "Purchase Price"). The accounts receivable of NEMI at the Closing are estimated to be $416,093 through January 30, 1994, and the assumed liabilities as of the Closing Date are estimated to be approximately $8,500,000. A dividend in an amount equal to NEMI's retained earnings through the Closing Date will be declared and paid by NEMI prior to the Closing. If NEMI borrows funds for the purpose of paying the dividend, such amounts shall be included in the NEMI liabilities assumed by NEWCO. The Purchase Price, estimated to be approximately $11,800,000 as calculated on Exhibit L hereto and more fully described on Exhibit I-1 hereto, shall be paid at Closing which is anticipated to occur during the time in which EUA's common shares are trading ex-dividend. Assuming an EUA common share price of $28.00 per share, approximately 425,000 common shares of EUA would be issued in the acquisition. The actual number of EUA Shares to be delivered at Closing shall be determined by dividing the Purchase Price, calculated as described above, by the arithmetic average of (x) the average of the high and low selling price of EUA common shares on the first day prior to the Closing Date that such shares are trading ex-dividend and (y) the average of the high and low selling price of EUA common shares on the second day prior to the Closing Date that such shares are trading ex-dividend. Each high and low selling price shall be as reported in The Wall Street Journal. The common shares of EUA will be registered under the '33 Act and applicable Blue Sky laws for resale by the NEMI stockholder. Cogenex, NEMI and the NEMI stockholder have executed a letter agreement (Exhibit B-2) as amended by further letter agreements (Exhibits B-2.1 and B-2.2), the terms of which will be more fully set forth in a definitive agreement of merger which is filed as Exhibit B- 4 to the Application-Declaration. The obligations of EUA and Cogenex to effect the acquisition through NEWCO will be subject to various Closing conditions including the approval of the Commission under the Act and the delivery of a five year non-competition agreement by the NEMI stockholder in consideration of the payment of $500,000 by NEWCO. The $500,000 non-competition payment is a negotiated amount based on NEWCO's perceived value of ensuring that the NEMI stockholder, Angus S. King, Jr., does not take advantage of his well established relationships with NEMI's customers for a period of five years after Closing. Mr. King has over twenty years experience in Maine's business and political circles, including hosting a public television program, which gives him strong name and face recognition in Maine that NEWCO would have to compete against but for the non-competition agreement. V. Request for Authorization to Form and to Finance a New Subsidiary. Cogenex seeks Commission approval to incorporate NEWCO, a Massachusetts business corporation. The initial authorized capitalization of NEWCO shall be 200,000 shares of Common Stock, $.01 par value per share, of which 10,000 shares will be issued to Cogenex for $100.00. Cogenex also requests Commission approval for the period ending December 31, 1995 to make investments in NEWCO in amounts equal to the liabilities of NEMI to be discharged in connection with the Closing, estimated to be approximately $8,500,000 plus an additional $1,000,000 for working capital purposes and for payment of the consideration due under the non-competition agreement. NEWCO anticipates needing working capital to pursue new projects with NEMI's existing customers and, in the unlikely event that some current NEMI customers are lost, to pursue new projects with other CMP customers. Such investments in NEWCO by Cogenex may take the form of any combination of capital contributions by Cogenex and short-term loans by Cogenex which will be effected upon the same terms as Cogenex borrows funds under the EUA System credit lines. The effective cost of borrowings under such lines, commitment fees and/or compensatory balance requirements will be set forth on Exhibit H to this Application-Declaration. If it becomes necessary to obtain more favorable terms with respect to certain obligations of NEWCO, including the obligation to provide Central Maine a letter of credit in connection with the Central Maine agreement, Cogenex hereby proposes and requests authorization to guaranty obligations of NEWCO in an aggregate amount not to exceed $500,000. No person or entity other than Cogenex will own stock in NEWCO. References to Cogenex herein shall mean Cogenex or NEWCO, where the context so allows, subject to Commission approval of the incorporation of NEWCO and Cogenex's decision to incorporate and use such subsidiary. Forms of Articles of Organization and By-Laws of NEWCO are filed with this application (Exhibits A-2 and A-3 respectively). VI. Request For Authority For Financing The NEMI Acquisition By The Applicants. EUA has filed a registration statement on Form S-4 under the '33 Act (File No. 33-50099) with respect to the issuance and sale of one million five hundred thousand (1,500,000) of its common shares. The maximum number of shares issued by EUA in connection with the acquisition of NEMI will be based upon the various factors described above and will be less than the number of shares registered pursuant to the S-4. The additional shares being registered were for use in connection with the Day Co. acquisition and for possible use in connection with future Cogenex acquisitions. At such time as EUA and Cogenex wish to effect further acquisitions, whether in consideration for the issuance of common shares of EUA or otherwise, they will seek further Commission approval for such acquisitions. If EUA shares are to be issued, EUA will file with the Commission on Form U-1 for authorization to issue said shares. NEWCO does not now, and will not in the future, without prior Commission approval, own or operate or be an equity participant in any exempt wholesale generator or foreign utility company, as such terms are defined in the Energy Policy Act of 1992. Cogenex is currently restricted to earning less than 50% of its revenues from outside New England and New York (the "50% Restriction"). The revenues from NEWCO, on a consolidated basis with the revenues of Cogenex, will be subject to the 50% Restriction just like any aspect of Cogenex's business other than QF projects, the revenues from which are not included in the calculation for the 50% Restriction. ITEM 2. FEES, COMMISSIONS AND EXPENSES. The estimated fees, commissions and expenses to be paid or incurred directly or indirectly in connection with the NEMI acquisition are as follows: Securities and Exchange Commission Fee $ 2,000* EUA Service Corporation Expenses 58,000 EUA Cogenex Corporation Expenses 60,000 Fees and Expenses of Company Counsel 200,000 Miscellaneous 2,000 TOTAL $ 322,000 ======= (*actual) ITEM 5. PROCEDURE. Item 5 is hereby amended by adding the following: (c) Because NEWCO will be a subsidiary of Cogenex, Cogenex proposes to file reports with the Commission, pursuant to Rule 24 on a quarterly basis, 45 days after the end of each calendar quarter, beginning the first calendar quarter after this application- declaration is granted and permitted to become effective. Such reports will consist of NEWCO's balance sheets, statements of income and statements of cash flows. In addition, Cogenex's U-13-60 annual report shall include the revenues of NEWCO in Cogenex's calculation to the 50% Restriction. ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS (* Filed herewith) (** Confidential treatment requested). Section (a) of Item 6 is amended and restated in its entirety as follows: (a) Exhibits. Exhibit A-1 Declaration of Trust of EUA, dated April 2, 1928, as amended (Exhibit A-3, File No. 70-3188; Exhibit 1 to EUA's 8-K reports for April in each of the years 1957, 1962, 1966, 1968, 1972, and 1973, File No. 1-5366; Exhibit A-1(a), Amendment No. 2 to Form U-1, File No. 70-5997, Exhibit 4-3, Registration No. 2- 72589; Exhibit 1 to Certificate of Notification, File No. 70-6713; Exhibit 1 to Certificate of Notification, File No. 70-7084; Exhibit 3-2, Form 10-K of EUA for 1987, File No. 1-5366). *Exhibit A-2 Form of Articles of Organization of NEWCO. *Exhibit A-3 Form of By-Laws of NEWCO. Exhibit B-1 Letter Agreement: James L. Day Co., Inc. Exhibit B-2 Letter Agreement: Northeast Energy Management, Inc. Exhibit B-2.1 Amendment to Letter Agreement: Northeast Energy Management, Inc. Exhibit B-3 Agreement and Plan of Merger: James L. Day Co. (filed pursuant to confidential treatment request). **Exhibit B-4 Agreement of Merger: Northeast Energy Management, Inc. (filed pursuant to confidential treatment request). Exhibit C Registration Statement on Form S-4 of EUA, as amended (File No. 33-50099). Exhibit F Opinion of counsel as to James L. Day Co., Inc. transaction. *Exhibit F-1 Opinion of counsel as to Northeast Energy Management, Inc. transaction. Exhibit G Proposed Form of Notice. *Exhibit H Bank Lines of Credit. Exhibit I Pricing Assumptions for James L. Day Co., Inc. merger into EUA Cogenex Corporation (filed pursuant to confidential treatment request). **Exhibit I-1 Pricing Assumptions for Northeast Energy Management., Inc. merger into EUA Acquisition Corp. (filed pursuant to confidential treatment request). *Exhibit J Pooling Accounting Requirements. *Exhibit K Energy Management Agreement between Northeast Energy Management, Inc. and Central Maine Power Company, as amended (filed under Form SE). *Exhibit L Purchase Price Calculation Section (b) of Item 6 is amended as follows: (b) Financial Statements. *b-7 Financial Statements of Northeast Energy Management, Inc. for the period ended December 31, 1993. *b-8 Financial Statements and Notes of Northeast Energy Management, Inc. for the period ended June 30, 1993. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned Applicants have duly caused this statement to be signed on their behalf by the undersigned duly authorized individuals. EASTERN UTILITIES ASSOCIATES By: Clifford J. Hebert, Jr. Treasurer EUA COGENEX CORPORATION By: Basil G. Pallone Vice President Dated: January 20, 1994 EX-99.A-2 2 ARTICLES OF ORGANIZATION OF EUA ACQUISITION CORP. Exhibit A-2 The Commonwealth of Massachusetts Office of the Secretary of State Michael J. Connolly, Secretary One Ashburton Place, Boston, Massachusetts 02108-1512 ARTICLES OF ORGANIZATION (Under G.L. Ch. 156B) ARTICLE I The name of the corporation is: EUA ACQUISITION CORP. ARTICLE II The purpose of the corporation is to engage in the following activities: To engage in the business of energy conservation programs including but not limited to the creation of alternative energy sources. To contract, enter joint ventures, partnerships or other associations or affiliations with public or private utility companies and other private companies for the purpose of the sale or distribution of energy. To provide conservation services to utility companies and their customers including residential, commercial, industrial, governmental and other users, and to engage in activities reasonably ancillary thereto. To engage in and carry on any other business or activity which may lawfully be engaged in or carried on by a corporation which is organized under the Business Corporation Law of The Commonwealth of Massachusetts, as presently in effect or as amended from time to time. ARTICLE III The type and classes of stock and the total number of shares and par value, if any, of each type and class of stock which the corporation is authorized to issue is as follows: WITHOUT PAR VALUE STOCKS TYPE NUMBER OF SHARES COMMON N/A PREFERRED N/A WITH PAR VALUE STOCKS TYPE NUMBER OF SHARES PAR VALUE COMMON 200,000 $.01 PREFERRED N/A ARTICLE IV If more than one class of stock is authorized, state a distinguishing designation for each class. Prior to the issuance of any shares of a class, if shares of another class are outstanding, the corporation must provide a description of the preferences, voting powers, qualifications, and special or relative rights or privileges of that class and of each other class of which shares are outstanding and of each series then established within any class. N/A ARTICLE V The restrictions, if any, imposed by the Articles of Organization upon the transfer of shares of stock of any class are: N/A ARTICLE VI Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders: ONE: Meetings of the stockholders may be held anywhere in the United States. TWO: The corporation may be a partner, either general or limited, in any business enterprise it would have the power to conduct by itself. THREE: Except as specifically authorized by statute, no stockholder shall have any right to examine any property or any books, accounts or other writings of the corporation if there is reasonable ground for belief that such examination will for any reason be adverse to the interests of the corporation, and a vote of the directors refusing permission to make such examination and setting forth that in the opinion of the directors such examination would be adverse to the interests of the corporation shall be prima facie evidence that such examination would be adverse to the interests of the corporation. Every such examination shall be subject to such reasonable regulations as the directors may establish in regard thereto. FOUR: The Board of Directors may specify the manner in which the accounts of the corporation shall be kept and may determine what constitutes net earnings, profits and surplus, what amounts, if any, shall be reserved for any corporate purpose, and what amounts, if any, shall be declared as dividends. Unless the Board of Directors otherwise specifies, the excess of the consideration for any share of its capital stock with par value issued by it over such par value shall be surplus. The Board of Directors may allocate to capital stock less than all of the consideration for any share of its capital stock without par value issued by it, in which case the balance of such consideration shall be surplus. All surplus shall be available for any corporate purpose, including the payment of dividends. FIVE: The purchase or other acquisition or retention by the corporation of shares of its own capital stock shall not be deemed a reduction of its capital stock. Upon any reduction of capital or capital stock, no stockholder shall have any right to demand any distribution from the corporation, except as and to the extent that the stockholders shall have provided at the time of authorizing such reduction. SIX: In the absence of fraud, no contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other organization of which one or more of its directors or officers are directors, trustees or officers, or in which any of them has any financial or other interest, shall be void or voidable, or in any way affected, solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board of directors or committee thereof which authorizes, approves or ratifies the contract or transaction, or solely because his/her or their votes are counted for such purposes, if: (i) The material facts as to his/her relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee which authorizes, approves or ratifies the contract or transaction, and the board or committee in good faith authorizes, approves or ratifies the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) The material facts as to his/her relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically authorized, approved or ratified in good faith by vote of the stockholders; or (iii) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee thereof which authorizes, approves or ratifies the contract or transaction. No director or officer of the corporation shall be liable or accountable to the corporation or to any of its stockholders or creditors or to any other person, either for any loss to the corporation or to any other person or for any gains or profits realized by such director or officer, by reason of any contract or transaction as to which clauses (i), (ii) or (iii) above are applicable. SEVEN: No current or former director of the corporation shall be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability; provided, however, that this provision shall not eliminate liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 61 or 62 or successor provisions of the Massachusetts Business Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit. If the Massachusetts Business Corporation Law is hereafter amended to authorize corporate action further than the liability of the directors, then the liability of the director of the corporation shall be eliminated or limited to the fullest extent permitted by the Massachusetts Business Corporation Law, as so amended from time to time. No amendment or repeal of this paragraph shall adversely affect any of the rights or protection afforded to a director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. ARTICLE VII The effective date of organization of the corporation shall be the date approved and filed by the Secretary of the Commonwealth. ARTICLE VIII a. The street address of the corporation IN MASSACHUSETTS is: (post office boxes are not acceptable) Boot Mills South 100 Foot of John Street Lowell, MA 01852 b. The name, residence and post office address (if different) of the directors and officers of the corporation are: NAME RESIDENCE POST OFFICE ADDRESS President: Joseph S. Fitzpatrick 112 Clark Road Same Lowell, MA 01852 Treasurer: Joseph S. Fitzpatrick 112 Clark Road Same Lowell, MA 01852 Clerk: William F. O'Connor 48 Granite Street Same Medfield, MA 02052 Directors: Joseph S. Fitzpatrick 112 Clark Road Same Lowell, MA 01852 c. The fiscal year (i.e., tax year) of the corporation shall end on the last day of the month of: DECEMBER d. The name and BUSINESS address of the RESIDENT AGENT of the corporation, if any, is: N/A ARTICLE IX By-laws of the corporation have been duly adopted and the president, treasurer, clerk and directors whose names are set forth above, have been duly elected. IN WITNESS WHEREOF and under the pains and penalties of perjury, I, whose signature appears below as incorporator and whose name and business address ARE CLEARLY TYPED OR PRINTED beneath my signature do hereby associate with the intention of forming this corporation under the provisions of General Laws Chapter 156B and do hereby sign these Articles of Organization as incorporator(s) this ___ day of January, 1994. /s/ Alicia M.V. Wyman Alicia M.V. Wyman, Esq. c/o McDermott, Will & Emery 75 State Street Boston, MA 02109 EX-99.A-3 3 BY-LAWS OF EUA ACQUISITION CORPORATION Exhibit A-3 BY-LAWS OF EUA ACQUISITION CORP. ARTICLE I OFFICES Section 1.1. Principal Office. The initial principal office of the Corporation shall be as indicated in the Articles of Organization of the Corporation. The Corporation may have such other offices, either within or without the Commonwealth of Massachusetts, as it may require from time to time. Section l.2. Change in Principal Office. The Board of Directors of the Corporation may at any time and from time to time, change the principal office of the Corporation in the Commonwealth, provided that no such change shall be effective until a certificate of such change, specifying the post-office address of its new principal office in the Commonwealth, signed under the penalties of perjury by the clerk or an assistant clerk of the Corporation, has been filed with the state secretary. ARTICLE II STOCKHOLDERS Section 2.1. Place of Meetings. All meetings of the stockholders for the election of directors shall be held at the offices of the Corporation or elsewhere in the United States as the Board of Directors may designate. Section 2.2. Annual Meetings. An annual meeting of the stockholders, commencing with the year 1994 shall be held on the second Tuesday in April in each year, but if a legal holiday, then on the next business day following, at 10:00 o'clock A.M., at which the stockholders shall elect a Board of Directors and transact such other business as may properly be brought before such meeting. Section 2.3. Special Meetings. Special meetings of the stockholders may be called by the President or by the directors, and shall be called by the Clerk, or in case of the death, absence, incapacity or refusal of the Clerk, by any other officer, upon written application of one or more stockholders who hold at least one-tenth part in interest of the capital stock entitled to vote thereat. In case none of the officers is able and willing to call a special meeting, the Supreme Judicial or Superior Court, upon application of one or more stockholders who hold at least one-tenth part in interest of the capital stock entitled to vote thereat, shall have jurisdiction in equity to authorize one or more of such stockholders to call a meeting by giving such notice as is required by law. Section 2.4. Notice of Meetings. A written notice of the place, date and hour of all meetings of stockholders stating the purposes of the meeting shall be given by the Clerk or an assistant Clerk (or other person authorized by the By-Laws or empowered pursuant to Section 2.3) at least seven days before the meeting to each stockholder entitled to vote thereat and to each stockholder who, under the Articles of Organization or under the By-Laws, is entitled to such notice, by leaving such notice with him or at his residence or usual place of business, or by mailing it, postage prepaid, and addressed to such stockholder at his address as it appears in the records of the Corporation. Section 2.5. Waiver of Notice. Whenever notice of a meeting is required to be given a stockholder under any provision of the law or of the Articles of Organization or these By-Laws, a written waiver thereof, executed before or after the meeting by such stockholder or his attorney thereunto authorized and filed with the records of meeting, shall be deemed equivalent to such notice. Section 2.6. Closing of Transfer Books and Fixing of Record Date. The directors may fix in advance a time, which, unless a shorter period is provided in the Articles of Organization, shall be not more than sixty days before the date of any meeting of stockholders or the date for the payment of any dividend or the making of any distribution to stockholders or the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice of and to vote at such meeting and any adjournment thereof or the right to receive such dividend or distribution or the right to give such consent or dissent, and in such case only stockholders of record on such record date shall have such right, notwithstanding any transfer of stock on the books of the Corporation after the record date; or without fixing such record date the directors may for any of such purposes close the transfer books for all or any part of such period. If no record date is fixed and the transfer books are not closed: (a) The record date for determining stockholders having the right to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given. (b) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors acts with respect thereto. Section 2.7. Quorum. A majority of the shares of the Corporation issued, outstanding and entitled to vote at a meeting represented in person or by proxy shall constitute a quorum at any meeting of stockholders. Section 2.8. Manner of Acting. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting shall be the act of the stockholders, unless the vote of a greater number or voting by classes is required by the Business Corporation Law of the Commonwealth of Massachusetts or the Articles of Organization or these By-Laws. Section 2.9. Proxies. Stockholders may vote in person or by proxy. No proxy dated more than six months before the meeting named therein shall be valid and no proxy shall be valid after the final adjournment of such meeting. Notwithstanding the provisions of the foregoing sentence, a proxy coupled with an interest sufficient in law to support an irrevocable power, including, without limitation, an interest in shares or in the corporation generally, may be made irrevocable if it so provides, need not specify the meeting to which it relates, and shall be valid and enforceable until the interest terminates, or for such shorter period as may be specified in the proxy. Any proxy shall be filed with the Clerk of the Corporation before or at the time of the meeting. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Corporation receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a stockholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. Section 2.10. Voting of Shares. Stockholders entitled to vote shall have one vote for each share of stock owned by them and a proportionate vote for a fractional share, unless otherwise provided by the Articles of Organization. Section 2.11. Informal Action by Stockholders. Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting if all stockholders entitled to vote on the matter consent to the action in writing and the written consents are filed with the records of the meetings of stockholders. Such consent shall be treated for all purposes as a vote at a meeting. Section 2.12. Voting Agreements. An agreement between two or more stockholders or between one or more stockholders and one or more other persons, if in writing and signed by the parties thereto, may provide that the shares held by such stockholders shall be voted under procedures set forth in said agreement. ARTICLE III DIRECTORS Section 3.1. General Powers. The business and affairs of the Corporation shall be managed by a Board of Directors. Section 3.2. Number, Election and Term of Office. The Board of Directors shall consist of not less than three directors, except that whenever there shall be only two stockholders the number of directors shall be not less than two, and whenever there shall be only one stockholder the number of directors shall be not less than one. The number of the directors shall be as determined from time to time by the stockholders and may be enlarged between meetings of the stockholders by the vote of a majority of the directors then in office. The directors shall be chosen at the annual meeting of the stockholders by such stockholders as have the right to vote thereon, and each shall hold office until the next annual election of directors and until his successor is chosen and qualified or until he sooner dies, resigns, is removed or becomes disqualified. No director need be a stockholder. Any election of directors by stockholders shall be by ballot if so requested by any stockholder entitled to vote thereon. Section 3.3. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this By-Law, immediately after, and at the same place as, the annual meeting of stockholders. The Board of Directors may provide, by resolution, the time and place, either within or without the Commonwealth of Massachusetts, for the holding of additional regular meetings in which case no other notice need be given. Section 3.4. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President or any two (2) directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the Commonwealth of Massachusetts, as the place for holding any special meeting of the Board of Directors. Section 3.5. Notice. Written notice of any special meeting of directors shall be given as follows: By mail to each director at his business address at least three days prior to the meeting; or By personal delivery or telegram to each director at his business address at least 24 hours prior to the meeting, or in the event such notice is given on a Saturday, Sunday or holiday, to each director at his residence address at least 24 hours prior to the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice is given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Notice of a meeting need not be given to any director, if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Section 3.6. Quorum. The number of directors required to constitute a quorum shall be a majority of the directors then in office. If a quorum is present, a majority of the directors present may take any action on behalf of the board except to the extent that a larger number is required by law or the Articles of Organization or these By-Laws. Section 3.7. Meetings by Telecommunications. Unless the Articles of Organization otherwise provide, members of the Board of Directors or any committee designated thereby may participate in a meeting of such board or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting. Section 3.8. Vacancies. Any vacancy occurring in the Board of Directors and any directorship to be filled by reason of an increase in the number of directors may be filled by election at a meeting of the stockholders or of the Board of Directors. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Section 3.9. Compensation. By resolution of the Board of Directors, irrespective of any personal interest of any of the members, the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at meetings or a stated salary as directors. These payments shall not preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Section 3.10. Presumption of Assent. A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be conclusively presumed to have assented to the action taken unless his dissent is entered in the minutes of the meeting or unless he files his written dissent to such action with the person acting as the secretary of the meeting before the adjournment of the meeting or forwards such dissent by registered mail to the Clerk of the Corporation immediately after the adjournment of the meeting. Such right to dissent does not apply to a director who voted in favor of such action. Section 3.11. Committees of Directors. The Corporation may provide for an executive committee or other committees to be elected from and by the Board of Directors, and the directors may delegate to any such committee or committees some or all of their powers, except, however, the power (a) to change the principal office of the Corporation; (b) to amend By-Laws; (c) to elect officers and to fill vacancies in any such offices; (d) to change the number of the Board of Directors and to fill vacancies in the Board of Directors; (e) to remove officers or directors from office; (f) to authorize the payment of any dividend or distribution to shareholders; (g) to authorize the reacquisition for value of stock of the Corporation; or (h) to authorize a merger. Except as otherwise provided in the Articles of Organization, the directors may determine the manner of conducting committee business, whether at a meeting or otherwise, and the number of members required to take specified types of action. The designation of any such committee and the delegation of any authority thereto shall not operate to relieve the directors from any responsibility imposed upon them by law. Section 3.12. Informal Action by Directors. Any action required or permitted to be taken at any meeting of the Board of Directors or the Executive Committee, if any, may be taken without a meeting, if all the directors entitled to vote consent to the action in writing and the written consents are filed with the records of the meetings. Such consents shall be treated for all purposes as a vote at a meeting. Section 3.13. Removal of Directors. Any director may be removed from his office with or without cause by vote of the holders of a majority of the shares entitled to vote in the election of directors, provided that the directors of a class elected by a particular class of stockholders may be removed only by the vote of the holders of a majority of the shares of the particular class of stockholders entitled to vote for the election of such directors. Any director may be removed from his office for cause by vote of a majority of the directors then in office. A director may be removed for cause only after a reasonable notice and opportunity to be heard before the body proposing to remove him. ARTICLE IV OFFICERS Section 4.1. Number. The officers of the Corporation shall be a President, a Treasurer and a Clerk, each of whom shall be elected by the Board of Directors. The Board of Directors may appoint such other officers as they deem necessary who shall have such authority and shall perform such duties as from time to time may be prescribed by the Board of Directors. Any person may simultaneously hold more than one office of the Corporation. Section 4.2. Election and Term of Office. The officers of the Corporation shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of stockholders. If the election of officers is not held at that meeting, the election shall be held as soon thereafter as practicable. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Section 4.3. Removal. Any officer or agent of the Corporation may be removed with or without cause by the Board of Directors whenever in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Section 4.4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. Vacancies may be filled or new offices filled at any meeting of the Board of Directors. Section 4.5. Bonds. If the Board of Directors by resolution shall so require, any officer or agent of the Corporation shall give bond to the Corporation in such amount and with such surety as the Board of Directors may deem sufficient, conditioned upon the faithful performance of their respective duties and offices. Section 4.6. President. The President shall be the chief executive officer of the Corporation and shall in general supervise and control all of the business and affairs of the Corporation. He shall preside at all meetings of the stockholders and of the Board of Directors. He may sign, with the Clerk or any other proper officer of the Corporation thereunto authorized by the Board of Directors, certificates for shares of the Corporation, any deeds, mortgages, bonds, contracts or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these By-Laws to some other officer or agent of the Corporation or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. The President need not be a director. Section 4.7. Vice Presidents. In the absence of the President or in the event of his inability or refusal to act, the Vice President (or, in the event there is more than one Vice President, Vice Presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the President. Any Vice President may sign, with the Treasurer or an Assistant Treasurer, certificates for shares of the Corporation, and shall perform those other duties which from time to time may be assigned to him by the Board of Directors or by the chief executive officer. Section 4.8. Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the Corporation; receive and give receipts for moneys due and payable to the Corporation from any source whatsoever and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Article V of these By-Laws; (b) sign with the President or Vice President certificates for shares of the Corporation's stock; and (c) in general, perform all duties incident to the office of Treasurer and all other duties as from time to time may be assigned to him by the Board of Directors or the chief executive officer. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in the sum and with a surety or sureties as the Board of Directors shall determine. Section 4.9. Clerk. The Clerk shall: (a) keep the minutes of the stockholders' and of the Board of Directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these By-Laws or as required by law; (c) be custodian of the corporate records and, if the Corporation has a corporate seal, of the seal of the Corporation and see that the seal of the Corporation is affixed to all certificates for shares prior to the issue thereof and to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with the provisions of these By-Laws; (d) keep a register of the post office address of each stockholder which shall be furnished to the Clerk by such stockholder; (e) have general charge of the share transfer books of the Corporation; and (f) in general, perform all duties incident to the office of Clerk and all other duties as from time to time may be assigned to him by the Board of Directors or the chief executive officer. Section 4.10. Assistant Treasurers and Assistant Clerks. The Assistant Treasurer as thereunto authorized by the Board of Directors may sign with the President or a Vice President certificates for shares of the Corporation's stock, the issue of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers and Assistant Clerks, in general, shall perform such duties as shall be assigned to them by the Treasurer or the Clerk, respectively, or by the Board of Directors or the chief executive officer. The Assistant Treasurers shall, if required by the Board of Directors, give bonds for the faithful discharge of their duties in sums and with sureties as the Board of Directors shall determine. Section 4.11. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. ARTICLE V CONTRACTS, LOANS, CHECKS AND DEPOSITS Section 5.1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. Section 5.2. Loans. No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. No loans shall be made by the Corporation secured by its shares. Section 5.3. Checks, Drafts, Etc. All checks, drafts or other order for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation and in the manner which shall from time to time be determined by resolution of the Board of Directors. Section 5.4. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in banks, trust companies or other depositories which the Board of Directors may select. ARTICLE VI SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF SHARES Section 6.1. Regulation. The Board of Directors may make such rules and regulations as it may deem expedient concerning the issuance, transfer and registration of certificates for shares of the Corporation, including the appointment of transfer agents and registrars. Any unissued capital stock from time to time authorized under the Articles of Organization may be issued by vote of the stockholders or by vote of the directors. No stock shall be issued unless the cash, so far as due, or the property, services or expenses for which it was authorized to be issued, has been actually received or incurred by, or conveyed or rendered to, the Corporation, or is in its possession as surplus. Section 6.2. Certificates for Shares. Each stockholder shall be entitled to a certificate stating the number and the class and the designation of the series, if any, of the shares held by him. Such certificate shall be signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer. Such signatures may be facsimiles if the certificate is signed by a transfer agent, or by a registrar, other than a director, officer or employee of the Corporation. In case any officer who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the time of its issue. Every certificate issued for shares of stock at a time when such shares are subject to any restriction on transfer pursuant to the Articles of Organization, these By-Laws or any agreement to which the Corporation is a party shall have the restriction noted conspicuously on the certificate and shall also set forth on the face or back of the certificate either the full text of the restriction, or a statement of the existence of such restriction and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Every stock certificate issued at a time when the Corporation is authorized to issue more than one class or series of stock shall set forth upon the face or back of the certificate either the full text of the preferences, voting powers, qualifications and special and relative rights of the shares of each class and series, if any, authorized to be issued, as set forth in the Articles of Organization, or a statement of the existence of such preferences, powers, qualifications and rights, and a statement that the Corporation will furnish a copy thereof to the holder of such certificate upon written request and without charge. Each certificate representing shares shall also state the name of the Corporation, the date of issue, that the Corporation is organized under the laws of the Commonwealth of Massachusetts, the name of the person to whom it is issued, and the par value of each share represented by the certificate or a statement that the shares are without par value. Each certificate shall be otherwise in such form as may be prescribed by the Board of Directors and as shall conform to the rules of any Stock Exchange on which the shares may be listed. Section 6.3. Cancellation of Certificates. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificates shall be issued in lieu thereof until the former certificate for a like number of shares shall have been surrendered and canceled, except as herein provided with respect to lost, stolen or destroyed certificates. Section 6.4. Lost, Stolen or Destroyed Certificates. Subject to Section 8-405 of the Massachusetts Uniform Commercial Code, as amended from time to time, the Board of Directors shall determine the conditions upon which a new certificate of stock may be issued in place of any certificate alleged to have been lost, mutilated or destroyed. They may, in their discretion, require the owner of a lost, mutilated or destroyed certificate, or his legal representative, to give a bond, sufficient in their opinion, with or without surety, to indemnify the Corporation against any loss or claim which may arise by reason of the issue of a certificate in place of such lost, mutilated or destroyed stock certificate. Section 6.5. Transfer of Shares. The Corporation may from time to time enter into an agreement or agreements with one or more of its stockholders restricting the transferability of its shares in accordance with the general corporate purpose to have its shares owned by persons actively engaged in the corporate business. Subject to the terms of any such agreement, shares of the Corporation shall be transferable on the books of the Corporation by the holder thereof, in person or by his duly authorized attorney, upon the surrender and cancellation of a certificate or certificates for a like number of shares. Upon presentation and surrender of a certificate for shares properly endorsed and payment of all required taxes, if any, the transferee shall be entitled to a new certificate or certificates in lieu thereof. As against the Corporation, a transfer of shares can be made only on the books of the Corporation and in the manner hereinabove provided, and the Corporation shall be entitled to treat the holder of record of any share as the owner thereof and shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as expressly provided by the statutes of the Commonwealth of Massachusetts. ARTICLE VII FISCAL YEAR The fiscal year of the Corporation shall end on the 31st day of December in each calendar year. ARTICLE VIII DIVIDENDS The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its Articles of Organization. ARTICLE IX SEAL The Board of Directors may provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the Corporation and the words "Corporate Seal, Massachusetts," or shall be in such other form as the Board of Directors may from time to time determine. ARTICLE X INDEMNIFICATION The Corporation shall, to the maximum extent legally permissible, indemnify all directors, officers, employees and other agents of the Corporation, and persons who serve at its request as directors, officers, employees or other agents of another organization, or who serve at its request in any capacity with respect to any employee benefit plan, against all liability and expenses, including counsel fees, reasonably incurred by or imposed upon such person in connection with any proceeding in which he may become involved by reason of his serving or having served in such capacity (other than a proceeding voluntarily initiated by such person unless he is successful on the merits, the proceeding was authorized by a majority of the Board of Directors or the proceeding seeks a declaratory judgment regarding his own conduct). Such indemnification shall include payment by the Corporation of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding, upon receipt of an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification under this Article which undertaking may be accepted without reference to the financial ability of such person to make repayment. Any such indemnification shall be provided although the person to be indemnified is no longer an officer, director, employee or agent of the Corporation or of such other organization or no longer serves with respect to any such employee benefit plan. No indemnification shall be provided for any person with respect to any matter as to which he shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interests of the Corporation or to the extent that such matter relates to service with respect to an employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan. The Board of Directors shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or other agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or other agent of another organization or with respect to any employee benefit plan, against any liability incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability. ARTICLE XI CONFLICT OF INTEREST No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other organization of which one or more of its directors or officers are directors, trustees or officers, or in which any of them has any financial or other interest, shall be void or voidable, or in any way affected, solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board of directors or committee thereof which authorizes, approves or ratifies the contract or transaction, or solely because his or their votes are counted for such purposes, if: (i) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee which authorizes, approves or ratifies the contract or transaction, and the board or committee in good faith authorizes, approves or ratifies the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically authorized, approved or ratified in good faith by vote of the stockholders; or (iii) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee thereof which authorizes, approves or ratifies the contract or transaction. No director or officer of the corporation shall be liable or accountable to the corporation or to any of its stockholders or creditors or to any other person, either for any loss to the corporation or to any other person or for any gains or profits realized by such director or officer, by reason of any contract or transaction as to which clauses (i), (ii) or (iii) above are applicable. ARTICLE XII CORPORATE RECORDS The original, or attested copies, of the Articles of Organization, By-Laws, and records of all meetings of the incorporators and stockholders, and the stock and transfer records, which shall contain the names of all stockholders and the record address and the amount of stock held by each, shall be kept in the Commonwealth for inspection by the stockholders at the Corporation's principal office or an office of the Clerk, or of the transfer agent or the Resident Agent, if any. Said copies and records need not all be kept in the same office. ARTICLE XIII AMENDMENTS These By-Laws may be altered, amended or repealed and new By-Laws may be adopted by a majority of the stockholders present at any meeting of the stockholders of the Corporation at which a quorum is present. These By-Laws may also be altered, amended or repealed and new By-Laws may be adopted by a majority of the directors present at any meeting of the Board of Directors of the Corporation at which a quorum is present, except with respect to any provision thereof which by law, the Articles of Organization or these By-Laws requires action by the stockholders. Not later than the time of giving notice of the meeting of stockholders next following the making, amending or repealing by the directors of any by-law, notice thereof stating the substance of such changes shall be given to all stockholders entitled to vote on amending the by-laws. Any by-law adopted by the directors may be amended or repealed by the stockholders. EX-5 4 OPINION OF MCDERMOTT, WILL & EMERY January 20, 1994 Securities and Exchange Commission Washington, D.C. 20549 Re: File No. 70-8255: Eastern Utilities Associates and EUA Cogenex Corporation--Acquisition of Northeast Energy Management, Inc. Ladies and Gentlemen: As counsel for Eastern Utilities Associates ("EUA") and its wholly-owned subsidiary, EUA Cogenex Corporation ("Cogenex"), we are furnishing this opinion to be used in connection with the application- declaration on Form U-1 (the "Application-Declaration") dated August 19, 1993 under the Public Utility Holding Company Act of 1935 filed on behalf of EUA and Cogenex with the Securities and Exchange Commission (the "Commission"), File No. 70-8255, as amended, concerning the issuance by EUA of up to 1,500,000 of its common shares to fund certain acquisitions by Cogenex, including the acquisition of Northeast Energy Management, Inc. ("NEMI") by EUA Acquisition Corp., a wholly-owned subsidiary of Cogenex ("EUA Acquisition"), (the "Proposed NEMI Transaction"), all as more fully described in the Application- Declaration. A Registration Statement on Form S-4 relating to EUA's common shares was filed with the Commission under the Securities Act of 1933 and such Registration Statement became effective on February 22, 1993. The Commission issued an order on December 8, 1993 authorizing the acquisition of James L. Day Co. and reserved jurisdiction at that time over the Proposed NEMI Transaction. It is our opinion, subject to the additional assumptions, exceptions and qualifications hereinafter stated, that in the event that the Proposed NEMI Transaction is consummated in accordance with the Application-Declaration: (a) all State laws applicable to the Proposed NEMI Transaction will have been complied with by EUA, Cogenex and EUA Acquisition; (b) EUA, the issuer of the common shares, is a validly organized and duly existing voluntary association under the laws of The Commonwealth of Massachusetts and the common shares in connection with the Proposed NEMI Transaction will be validly issued, fully paid and non-assessable, and the holders thereof will be entitled to the rights and privileges appertaining thereto set forth in the Declaration of Trust of EUA, as amended, which is the document defining such rights and privileges; (c) EUA Acquisition will legally acquire the assets of NEMI through a statutory merger; and (d) the consummation of the Proposed NEMI Transaction will not violate the legal rights of the holders of any of the securities issued by EUA, Cogenex or EUA Acquisition or by Eastern Edison Company ("Eastern Edison"), Montaup Electric Company ("Montaup"), EUA Service Corporation ("EUA Service"), EUA Energy Investment Corporation ("EUA Energy"), and OSP Finance Company ("OSP") all associate companies of EUA, Cogenex and EUA Acquisition. This opinion in addition to being subject to the consummation of the Proposed NEMI Transaction in accordance with the Application- Declaration is also subject to the following additional assumptions, exceptions and qualifications: (1) compliance with such order or orders as the Commission may issue from time to time upon the Application-Declaration and the continued effectiveness of the Registration Statement on Form S-4 relating to the EUA common shares; (2) the accuracy of information furnished to us (a) as to the outstanding securities of EUA, Cogenex, EUA Acquisition, Eastern Edison, Montaup, EUA Service, EUA Energy, and OSP and (b) that there is no provision or condition in any note or other document in connection with outstanding short-term borrowings of any of those companies limiting the transaction which is the subject of the Application-Declaration; (3) that requirements of applicable state securities or "blue sky" laws will have been complied with; (4) that the common shares are properly listed on the New York Stock Exchange and the Pacific Stock Exchange; (5) that the enforceability of the Proposed NEMI Transaction may be subject to and affected by applicable bankruptcy, receivership, insolvency, reorganization, moratorium, fraudulent conveyance or other laws affecting the enforcement of the rights and remedies of creditors generally (including, without limitation, such as may deny giving effect to waivers of rights to debtors or guarantors); and such duties and standards as are or may be imposed on creditors, including, without limitation, good faith, reasonableness and fair dealing under any applicable statute, rule, regulation or judicial decision; and (6) that the enforceability of the Proposed NEMI Transaction may be subject to and affected by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and the exercise of equitable powers by a court of competent jurisdiction (and no opinion is given herein as to specific performance or as to the availability of other equitable remedies or equitable relief of any kind). This opinion relates only to federal law and the laws of The Commonwealth of Massachusetts and we express no opinion with respect to any other jurisdiction. To the extent that certain matters addressed may involve the laws of other states, we have assumed that such laws are not materially different from the laws of The Commonwealth of Massachusetts. We consent to the use of this opinion in connection with the Application-Declaration filed with the Commission. Very truly yours, McDERMOTT, WILL & EMERY EX-99.H 5 LINES OF CREDIT OF EUA Exhibit H
EUA SYSTEM CREDIT LINES EFFECTIVE TOTAL EXPIRATION BORROWING BANKS * CREDIT LINE ARRANGEMENTS DATE COST ** BANK OF NEW YORK $40,000,000 FEE - 1/4% x LINE 06-30-94 6.2500% CITIBANK, N.A. $15,000,000 FEE - 1/4% x LINE 06-30-94 6.2500% STATE STREET BANK $15,000,000 FEE - 1/4% x LINE 06-30-94 6.2500% BANK OF BOSTON $10,000,000 FEE - 1/4% x LINE 06-30-94 6.2500% $10,000,000 FEE - NONE 06-30-94 6.0000% SHAWMUT, N.A. $20,000,000 FEE - 1/4% x LINE 06-30-94 6.2500% $10,000,000 FEE - NONE 06-30-94 6.0000% CANADIAN IMPERIAL $10,000,000 FEE - 1/4% x LINE 06-30-94 6.2500% CREDIT LYONNAIS $10,000,000 FEE - 1/4% x LINE 08-15-94 6.2500% $140,000,000
[FN] (*) THE CREDIT LINES, BORROWINGS AND ARRANGEMENTS FOR ANY BANK LISTED ABOVE, AND IN THE AGGREGATE, MAY INCREASE, DECREASE OR CHANGE. THE AVAILABILIITY OF CERTAIN LINES ARE CURRENTLY BEING REVIEWED AND ADDITIONAL BANKS MAY BE ADDED TO THE ABOVE LIST. (**) ASSUMES BORROWING AND PRIME RATE OF 6.00%. EX-99.J 6 POOLING CRITERIA OUTLINE
EXHIBIT J EASTERN UTILITIES ASSOCIATES EUA COGENEX CORPORATION FILE NO. 70-8255 CRITERIA FOR A POOLING OF INTERESTS - APB 16 CRITERIA PER APB 16 AND SEC STAFF INTERPRETATIONS PER MERGER AGREEMENT 1 A CORPORATION OFFERS AND ISSUES ONLY COMMON ARTICLE III, PARAGRAPH 3.1 STOCK WITH RIGHTS IDENTICAL TO THOSE OF ITS EUA SHALL ISSUE SHARES OF VALIDLY ISSUED, OUTSTANDING VOTING COMMON STOCK IN EXCHANGE FULLY PAID, AND NON-ASSESABLE COMMON SHARES, FOR SUBSTANTIALLY ALL (AT LEAST 90% OF THE $5 PAR VALUE FOR ALL OF THE ASSETS AND OUTSTANDING VOTING COMMON STOCK) OF THE ASSUMED LIABILITIES OF NORTHEAST ENERGY VOTING COMMON STOCK OF ANOTHER COMPANY AT MANAGEMENT, INC. (NEMI) THE DATE THE COMBINATION IS CONSUMMATED. PARAGRAPH 47b, .106(b) 2 EACH OF THE COMBINING COMPANIES IS EUA ACQUISITION CORPORATION (NEWCO) WILL BE A AUTONOMOUS AND HAS NOT BEEN A SUBSIDIARY OR WHOLLY OWNED SUBSIDIARY OF EUA COGENEX. EUA DIVISION OF ANOTHER CORPORATION WITHIN TWO COGENEX IS A WHOLLY OWNED SUBSIDIARY OF YEARS BEFORE THE PLAN OF COMBINATION IS EASTERN UTILITIES ASSOCIATES. UNDER ARTICLE INITIATED. PARAGRAPH 46a, .105(a) III, PARAGRAPH 3.1 IN CONSIDERATION OF NEWCO'S RECEIPT OF ALL OF THE ASSETS OF PARAGRAPH 46, .105(a)2 ALLOWS FOR A WHOLLY NEMI AND THE ASSUMED LIABILITIES, EUA WILL OWNED SUBSIDIARY THAT DISTRIBUTES VOTING ISSUE AN AGREEDED UPON NUMBER OF EUA COMMON STOCK OF ITS PARENT TO EFFECT THE SHARES TO THE STOCKHOLDER. COMBINATION IS CONSIDERED AUTONOMOUS PROVIDED THAT THE PARENT MEETS ALL 12 ARTICLE IV, PARAGRAPH 4.2(f) REPRESENTATIONS CRITERIA. AND WARRANTIES BY THE COMPANY AND THE SHAREHOLDER. PARENTS AND SUBSIDIARIES. COMPANY (NEMI) HAS NO OWNERSHIP OR CONTROL RELATIONSHIP WITH ANY ENTITY. NEMI OR NEMI'S SOLE SHAREHOLDER DO NOT OWN 10% OR MORE OF EUA. 3 EACH OF THE COMBINING COMPANIES IS ARTICLE IV, PARAGRAPH 4.2(b) INDEPENDENT OF THE OTHER COMBINING COMPANIES. NEMI HAS 100,000 SHARES OF COMMON STOCK PARAGRAPH 46b, .105(b) AUTHORIZED AND 100 SHARES ISSUED, ALL OF WHICH THE SOLE SHAREHOLDER OF NEMI HAS TITLE TO. THEREFORE EUA OWNS NO STOCK OF NEMI. IN ADDITION, NEMI OWNS NO STOCK OF EUA. 4 THE COMBINATION IS EFFECTED IN A SINGLE AMENDMENT NO. 3 OF THE FORM U-1/A, FILE NO. TRANSACTION OR IS COMPLETED IN ACCORDANCE 70-8255 DATED NOVEMBER 29, 1993 IS THE WITH A SPECIFIC PLAN WITHIN ONE YEAR AFTER INITIATION DATE FOR POOLING PURPOSES. THE PLAN IS INITIATED. PARAGRAPH 47a, .106(a) CLOSING OF THE TRANSACTIONS IN THE AGREEMENT IS ANTICIPATED TO BE ON JANUARY 31, 1994 ACCORDING TO PARAGRAPH 46, .105(a)(1) THE (PER ARTICLE III, PARAGRAPH 3.4) AT WHICH PLAN IS INITIATED ON THE DATE THE MAJOR TIME THE EUA COMMON SHARES WILL BE EXCHANGED TERMS OF A PLAN, INCLUDING THE RATIO OF FOR ALL THE ASSETS AND ASSUMED LIABILITIES EXCHANGE OF STOCK, ARE ANNOUNCED OR FORMALLY OF NEMI. THEREFORE THE COMBINATION WILL BE MADE KNOWN TO STOCKHOLDERS OF ANY ONE OF THE EFFECTED WITHIN ONE YEAR OF INITIATION. COMBINING ENTERPRISES. 5 NONE OF THE COMBINING COMPANIES CHANGES THE THERE HAVE BEEN NO CHANGES IN THE EQUITY EQUITY INTEREST OF THE VOTING COMMON STOCK INTEREST OF THE VOTING COMMON STOCK OF IN CONTEMPLATION OF EFFECTING THE EITHER COMPANY IN CONTEMPLATION OF EFFECTING COMBINATION EITHER WITHIN TWO YEARS BEFORE THE MERGER. A COPY OF THE 12/31/93 AUDITED THE PLAN OF COMBINATION IS INITIATED OR FINANCIAL STATEMENTS OF NEMI WILL BE BETWEEN THE DATES THE COMBINATION IS PROVIDED TO CONFIRM THIS STATEMENT. INITIATED AND CONSUMMATED. PARAGRAPH 47c, .106(c) 6 TREASURY STOCK ACQUIRED WITHIN A TWO-YEAR ARTICLE IV, PARAGRAPH 4.1(d) PERIOD GENERALLY CANNOT BE USED IN A POOLING THE COMMON SHARES TO BE DELIVERED TO OF INTERESTS. PARAGRAPH 47d, 106(d) SHAREHOLDER WILL BE DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND NON-ASSESSABLE. PER THE 1992 ANNUAL REPORT OF EUA AND THE 9/30/93 EUA 10Q THERE HAS BEEN NO TREASURY STOCK ACTIVITY OF EUA COMMON SHARES. THESE REPORTS HAVE BEEN DELIVERED TO THE SHAREHOLDER PER ARTICLE IV, PARAGRAPH 4.1(f). 7 THE RATIO OF THE INTEREST OF AN INDIVIDUAL ARTICLE IV, PARAGRAPH 4.2(b), STATES THAT COMMON SHAREHOLDER TO THOSE OF OTHER COMMON "THE SHAREHOLDER" HAS GOOD AND MARKETABLE SHAREHOLDERS IN A COMBINING COMPANY REMAINS TITLE TO ALL OF THE ISSUED AND OUTSTANDING THE SAME AS A RESULT OF THE EXCHANGE OF NEMI COMMON STOCK. BECAUSE THERE IS ONLY STOCK. PARAGRAPH 47e, .106(e) ONE SHAREHOLDER THIS CRITERIA IS SATISFIED. 8 THE VOTING RIGHTS TO WHICH THE COMMON STOCK ARTICLE III, PARAGRAPH 3.2 OWNERSHIP INTERESTS IN THE RESULTING AT THE CLOSING, THE SHAREHOLDER WILL BE CORPORATION ARE ENTITLED ARE EXERCISABLE ENTITLED TO RECEIVE FROM EUA CERTIFICATES ONLY BY THE SHAREHOLDERS. REPRESENTING THE NUMBER OF EUA COMMON SHARES PARAGRAPH 47f, .106(f) AGREED TO IN PARAGRAPH 3.1. BECAUSE THESE SHARES ARE TRANSFERRED DIRECTLY TO THE SHAREHOLDER (NOT INTO A VOTING TRUST) AND ARE NOT SUBJECT TO ANY RESTRICTIONS THIS CRITERIA IS SATISFIED. EXHIBIT J 9 THE COMBINATION MUST BE RESOLVED WHEN THE ARTICLE III, PARAGRAPH 3.2 - AT THE CLOSING PLAN IS CONSUMMATED AND NO PROVISION OF THE THE SHAREHOLDER WILL BE ENTITLED TO RECEIVE PLAN RELATING TO THE ISSUE OF SECURITIES MAY FROM EUA IMMEDIATELY UPON THE MERGER, BE PENDING. PARAGRAPH 47g, .106(g) CERTIFICATES REPRESENTING THE NUMBER OF SHARES SET FORTH IN SECTION 3.1 AND CASH IN LIEU OF ANY FRACTIONAL EUA COMMON SHARES. THERE ARE NO CONTINGENCIES REGARDING THE ISSUANCE OF SECURITIES AFTER THE CLOSING IN THE AGREEMENT. 10 THE COMBINED CORPORATION DOES NOT AGREE ARTICLE III, PARAGRAPH 3.5 DIRECTLY OR INDIRECTLY TO RETIRE OR SHAREHOLDER AGREES TO HOLD EUA SHARES ISSUED REACQUIRE ALL OR PART OF THE COMMON STOCK TO HIM THROUGH THE EARLIER OF MARCH 31, 1994 ISSUED TO EFFECT THE COMBINATION. OR THE DATE FOLLOWING THE DATE UPON WHICH PARAGRAPH 48a, .107(a) EUA PUBLISHES FINANCIAL RESULTS FOR THE MONTH OF FEBRUARY, 1994 WHICH WILL BE FILED ON FORM 8K. THE AGREEMENT DOES ALLOW FOR THE TRANSFER OF SOME EUA SHARES, INCLUDING GIFTS AND SALE OF DIMINIMIS AMOUNT WHICH AGGREGATE NO MORE THAN 1% OF COMMON SHARES HELD BY HIM, TO THE EXTENT PERMITTED BY SEC RULES AND INTERPRETATIONS. ASR 135 AS INTERPRETED BY SAB NO. 65 STATES NO AFFILIATE OF EITHER COMBINING COMPANY MAY REDUCE ITS RELATIVE RISK 30 DAYS PRIOR TO CONSUMMATION AND ENDING WHEN FINANCIAL RESULTS COVERING AT LEAST 30 DAYS OF POST-MERGER ACTIVITY HAVE BEEN PUBLISHED. THE SEC STAFF INTERPRETATION OF SAB NO.76 PERMITS EACH AFFILIATE TO SELL A DE MINIMIS NUMBER OF COMMON SHARES. DEMINIMIS IS DEFINED BY SEC AS NO MORE THAN 10% OF COMMON SHARES HELD BY AFFILIATE, LIMITED TO NO MORE THAN 1 PERCENT OF TOTAL OUTSTANDING SHARES OF THE ISSUING COMPANY. ALSO PERMITS CHARITABLE CONTRIBUTIONS OR BONA FIDE GIFTS IF RECIPIENT ABIDES BY THE SAME RESTRICTIONS. 11 THE COMBINED CORPORATION DOES NOT ENTER INTO THE AGREEMENT DOES NOT PROVIDE FOR ANY OTHER FINANCIAL ARRANGEMENTS FOR THE BENEFIT FINANCIAL ARRANGEMENTS FOR THE BENEFIT OF OF THE FORMER STOCKHOLDERS OF THE ACQUIRED FORMER STOCKHOLDERS OF THE ACQUIRED COMPANY. COMPANY, i.e., GUARANTEE OF LOANS SECURED BY THE STOCK ISSUED. PARAGRAPH 48b, .107(b) 12 THE COMBINED COMPANY DOES NOT INTEND OR PLAN EUA AND EUA COGENEX HAVE NO PLAN OR TO DISPOSE OF A SIGNIFICANT PART OF THE INTENTIONS TO DISPOSE OF A SIGNIFICANT PART ASSETS OF THE COMBINING COMPANIES WITHIN TWO OF THE ASSETS OF THE COMBINING COMPANIES YEARS AFTER THE COMBINATION, OTHER THAN WITHIN TWO YEARS. DISPOSALS IN THE ORDINARY COURSE OF BUSINESS OF THE FORMERLY SEPERATE COMPANIES AND TO ELIMINATE DUPLICATE FACILITIES OR EXCESS CAPACITY. PARAGRAPH 48c, .107(c)
EX-99.L 7 PURCHASE PRICE CALCULATION OF NEMI DRAFT EXHIBIT L EUA COGENEX CORPORATION PURCHASE PRICE FOR NORTHEAST ENERGY MANAGEMENT Purchase Price $19,800,000 +Accounts Receivable as of 12/31/93 186,801 +Accounts Receivable est. through 1/31/94 226,200 - -General Liabilities as of 12/31/93 6,520,502 - -Other Assumed Liabilities 1,487,460 - -Est. Fleet borrowing to pay NEMI dividend 450,000 ----------- Adjusted Purchase Price $11,755,039 (a) Est. EUA Share Price $27.00 Approximate Number of EUA Common Shares 435,000 (a) Adjusted purchase price does not include the $500,000 cash payment to the NEMI shareholder, Angus S. King, Jr. in consideration for a five year non-competition agreement. EX-27 8 YEAR END 1993 FINANCIALS OF NEMI NORTHEAST ENERGY MANAGEMENT, INC. ----------------- FINANCIAL STATEMENTS for the year ended December 31, 1993 (Unaudited) *new page* NORTHEAST ENERGY MANAGEMENT, INC. BALANCE SHEET December 31, 1993 (Unaudited) _______ ASSETS Current assets: Cash $ 206,593 Accounts receivable 186,801 Prepaid expenses 1,402 ---------- Total current assets 394,796 Property and Equipment: ---------- Furniture and equipment 46,108 Less: accumulated depreciation (39,043) ---------- Net property and equipment 7,065 ---------- Other assets: Project costs 7,549,165 Deferred charges 176,053 Other 1,806 Less: accumulated amortization (1,228,861) ---------- Total other assets 6,498,163 ---------- Total assets $ 6,900,024 =========== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable 105,233 Accrued interest payable 6,172 Notes payable, current portion 999,996 ---------- Total current liabilities 1,111,401 Notes payable, net of current portion 5,436,201 ---------- Total liabilities 6,547,602 Stockholder's equity: ---------- Common stock - $.01 par value, 100,000 shares authorized, issued and outstanding 1,000 Additional paid-in capital 48,883 Retained earnings 302,539 Total stockholder's equity ---------- 352,422 ----------- Total liabilities and stockholder's equity $ 6,900,024 =========== The accompanying notes are an integral part of the financial statements 2 *new page* NORTHEAST ENERGY MANAGEMENT, INC. STATEMENT OF INCOME AND RETAINED EARNINGS for the year ended December 31, 1993 (Unaudited) ----------- Revenue: Fees from Central Maine Power Co. $2,314,418 Operating expenses: Depreciation and amortization 512,665 General and administrative expenses 621,239 ---------- Total operating expenses 1,133,904 ---------- Income from operations 1,180,514 ---------- Other income (expense): Investment income 5,391 Gain on sale of investment 1,496 Interest expense (484,042) ---------- Total other (expense) (477,155) ---------- Net income 703,359 Retained earnings, beginning of year 421,970 Less: distributions to stockholder (822,790) ---------- Retained earnings, end of year $ 302,359 ========== The accompanying notes are an integral part of the financial statements 3 *new page* NORTHEAST ENERGY MANAGEMENT, INC. STATEMENT OF CASH FLOWS for the year ended December 31, 1993 (Unaudited) _______ Cash flows from operating activities: Net income $ 703,359 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 512,665 Gain on sale of investment (1,496) Changes in operating assets and liabilities: Accounts receivable 201,772 Accounts payable (243,265) Accrued interest payable (4,828) Other, net (473) ---------- Net cash provided by operating activities 1,167,736 Cash flows from investing activities: ---------- Project costs (480,648) Purchase of property and equipment (1,298) Net proceeds from sale of short-term investments 249,434 ---------- Net cash (used) by investing activities (232,512) ---------- Cash flows from financing activities: Proceeds from issuance of long-term debt 75,902 Distributions to stockholder (822,790) ---------- Net cash provided by financing activities (746,888) ---------- Net increase in cash 188,336 Cash, beginning of year 18,257 ---------- Cash, end of year $ 206,593 ========== Cash paid during the year for: Interest $ 488,870 Income taxes - The accompanying notes are an integral part of the financial statements. 4 *NEW PAGE* EX-27.B-8 9 JUNE 1993 FINANCIALS OF NEMI (b) Financial Statements Exhibit b-8 Northeast Energy Management, Inc. FINANCIAL STATEMENTS June 30, 1993 CONTENTS Accountants' compilation report Balance sheet Exhibit A Statement of income and retained earnings Exhibit B Schedule of operating expenses Schedule B Statement of cash flows Exhibit C Notes to financial statements EXHIBIT A Northeast Energy Management, Inc. BALANCE SHEET June 30, 1993 ASSETS CURRENT ASSETS Cash (Exhibit C) $ 202,376 Accounts receivable 187,765 Investments (Note 8) 207,213 Prepaid expenses 1,869 TOTAL CURRENT ASSETS $ 599,223 PROPERTY AND EQUIPMENT (Note 1) Furniture and equipment $ 45,634 Less: accumulated depreciation (36,403) NET PROPERTY AND EQUIPMENT 9,231 OTHER ASSETS (Note 1) Software $ 1,724 Deferred charges 176,053 Project costs 7,522,482 Less: accumulated amortization (990,320) TOTAL OTHER ASSETS 6,709,939 TOTAL ASSETS $ 7,318,393 LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT LIABILITIES Accounts payable $ 10,087 Accrued wages 6,179 Accrued interest payable 3,909 Notes payable, current portion (Note 2) 857,268 TOTAL CURRENT LIABILITIES $ 877,443 LONG-TERM LIABILITIES Notes payable, net of current portion (Note 2) 5,936,200 TOTAL LIABILITIES $ 6,813,643 STOCKHOLDER'S EQUITY Common stock - $.01 par value, 100,000 shares authorized, issued and outstanding $ 1,000 Additional paid-in capital 48,883 Retained earnings (Exhibit B) 454,867 TOTAL STOCKHOLDER'S EQUITY 504,750 TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 7,318,393 EXHIBIT B Northeast Energy Management, Inc. STATEMENT OF INCOME AND RETAINED EARNINGS For the six months ended June 30, 1993 Amount Percent REVENUE (Note 3) Fees from Central Maine Power Co. $ 1,127,820 100.0 OPERATING EXPENSES (Schedule B) 470,217 41.7 INCOME FROM OPERATIONS $ 657,603 58.3 OTHER INCOME (EXPENSE) Investment income (Note 8) $ 2,727 .2 Interest income 1,088 .2 Gain on sale of investment (Note 8) 1,496 .1 Interest (expense) (245,381) (21.8) TOTAL OTHER INCOME (EXPENSE) $ (240,070) (21.3) NET INCOME $ 417,533 37.0 RETAINED EARNINGS, beginning of period 421,970 DISTRIBUTIONS (384,636) RETAINED EARNINGS, end of period $ 454,867 SCHEDULE B Northeast Energy Management, Inc. SCHEDULE OF OPERATING EXPENSES For the six months ended June 30, 1993 Amount Percent Amortization (Note 1) $ 274,152 24.3 Wages and salaries 112,520 10.0 Employee benefits (Note 7) 13,616 1.2 Engineering royalty fees (Note 6) 13,733 1.2 Payroll taxes 9,767 1.0 Depreciation (Note 1) 2,321 .2 Monitoring costs 5,114 .5 Telephone and utilities 4,947 .4 Legal and accounting 9,006 .8 Rent (Note 4) 4,740 .4 Travel and entertainment 1,386 .1 Insurance 4,455 .4 Postage and supplies 2,108 .2 Repairs and maintenance 240 .0 Miscellaneous 324 .0 Contributions 4,125 .4 Licenses and fees 624 .0 Payroll service fees 345 .0 Projected reimbursements (Note 9) 3,592 .3 Engineering expense 3,102 .3 TOTAL OPERATING EXPENSES $ 470,217 41.7 EXHIBIT C Northeast Energy Management, Inc. STATEMENT OF CASH FLOWS For the six months ended June 30, 1993 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from Central Maine Power Co. $1,328,628 Gain on sale of investment 1,496 Interest and dividends received 3,815 Cash (paid) for wages and other operating expenses (526,195) Interest (paid) (252,472) NET CASH PROVIDED BY OPERATING ACTIVITIES $ 555,272 CASH FLOWS FROM INVESTING ACTIVITIES Project (costs) $ (458,954) (Purchase) of property and equipment (1,461) Proceeds from sale of short-term investments and marketable securities 114,000 (Purchase) of short-term investments and marketable securities (73,275) (Distributions) to stockholder (384,636) NET CASH (USED) BY INVESTING ACTIVITIES (804,326) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from issuance of long-term debt $ 775,900 Principal (payments) on long-term debt (342,727) NET CASH PROVIDED BY FINANCING ACTIVITIES 433,173 NET INCREASE IN CASH $ 184,119 CASH, beginning of period 18,257 CASH, end of period $ 202,376 RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: NET INCOME $ 417,533 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Depreciation $ 2,321 Amortization 274,152 Decrease in accounts receivable 200,808 (Increase) in prepaid expenses (143) (Decrease) in accounts payable (338,411) (Decrease) in payroll taxes payable (76) (Decrease) in accrued interest payable (912) TOTAL ADJUSTMENTS 137,739 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 555,272 Northeast Energy Management, Inc. NOTES TO FINANCIAL STATEMENTS June 30, 1993 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Northeast Energy Management, Inc. was established in January 1989, to develop, under contract with Central Maine Power Co., 9.5 million megawatts of electrical conservation capacity. Under the original contract, Northeast Energy Management, Inc. will be paid by Central Maine Power Co. for the electrical savings from its conservation projects over a fifteen year period. Under an amendment to the contract signed September 11, 1991, Northeast Energy Management, Inc. was given authority by Central Maine Power Co. to develop an additional 1.3 megawatts of electrical conservation capacity. This additional capacity is to be paid for in an agreed-upon lump sum amount per kwh of annual savings at the conclusion of construction of each of the additional projects. These projects are referred to as Stage VI projects. The following is a summary of Northeast Energy Management, Inc.'s significant accounting policies: PROPERTY AND EQUIPMENT - Property and equipment are carried at cost. Depreciation of property and equipment is provided using accelerated methods. The range of estimated useful lives are as follows: Years Furniture and equipment 5 - 7 SOFTWARE - Software is carried at cost and amortized over five years using the straight-line method. DEFERRED CHARGES - Fees paid for obtaining a loan are capitalized and amortized over the life of the loan. Deferred charges were $176,053 and accumulated expense at June 30, 1993 was $14,671. PROJECT COSTS AND AMORTIZATION - Project costs are accumulated for each active project and are amortized using the straight-line method over fifteen years. Project costs include expenses relating to the project, net of institutional reimbursements, engineering costs identified for a particular project and a pro-rated share of the Company's operating expenses. As projects are discontinued, the unamortized portion of the related project is included in the amortization expense in the discontinuing year. For 1993, $4,989 previously capitalized costs were included in amortization expense. INCOME TAXES - The Company has elected to be treated as an S Corporation under IRC Section 1362(a). Under this election, the Company's net income or loss is reportable by the stockholder. Consequently, there is no provision for corporate income taxes. NOTE 2 - NOTES PAYABLE The Company has a note with Fleet bank which bears interest at a variable rate, currently 7%. Monthly principal payments of $59,545 plus interest through December, 1993, $83,333 plus interest through December 1994, $104,167 plus interest through December, 1995, $141,667 plus interest through December 1996, $125,000 plus interest through December 1997, $83,199 plus interest through December 1998 with the balance due in full December 1998. Secured by income, assets, and personally guaranteed by the Company's stockholder. The total indebtedness of the note is $7,713,338, the amount available for draw down is $919,870. Maturities of notes payable in the five subsequent years from June 30, 1993 are as follows: June 30, 1994 $ 857,268 June 30, 1995 1,125,000 June 30, 1996 1,475,004 June 30, 1997 1,600,002 June 30, 1998 1,249,194 Thereafter 487,000 $ 6,793,468 NOTE 3 - REVENUE Project fee revenue represents fees earned from customer projects undertaken. All other contracts contain no provision for fee income and amounts received from customers are fully applied as reduction of hard project costs. Under the contract discussed in Note 1, fees from Central Maine Power Co. are to be earned over a fifteen year period. Initial Central Maine Power Co. revenue was received in 1991 and will increase as projects become completed. NOTE 4 - RENT The Company rents space under an operating lease which requires monthly lease payments of $790 through May 31, 1994. At the end of two years, the lease may be renewed for an additional year. Rent expense was $4,740 in 1993. NOTE 5 - LETTER OF CREDIT Under the requirements of its Central Maine Power Co. contract, the Company has delivered a letter of credit to Central Maine Power Co. for indemnification against unpaid project costs. As of June 30, 1993, the Company was contingently liable to Fleet Bank under this outstanding letter of credit in the amount of $180,000 due to expire on December 31, 1993. NOTE 6 - ENGINEERING ROYALTY FEES The Company entered into an agreement on November 29, 1989 for professional consulting services aiding in marketing, conducting engineering analysis design, construction, management and measuring the energy savings of various projects. For payments of these services, Northeast Energy Management, Inc. has agreed to pay a royalty. The royalty is 2.5% of the gross payments received by the Company from Central Maine Power Co. for each project less actual total construction costs of the project. This royalty fee is in effect for seven years. Upon each succeeding year, the royalty rate is 3.5% of the gross receipts from Central Maine Power Co. for each project without set off or deduction. NOTE 7 - EMPLOYEE BENEFITS The Company pays 13% of gross wages to a simplified employee pension plan. All employees who meet certain age, income, and service requirements are eligible. Pension expense was $0 for the six months ended June 30, 1993. NOTE 8 - INVESTMENTS Investments consist of mutual funds consisting of municipal bonds and equity growth stocks. The investment account is carried at the lower of aggregate cost or market value. The investments are all considered short-term. Gain or loss is determined by valuing securities at cost. Realized gain on sale of investments for 1993 was $1,496. Total market value at 6/30/93 $ 212,645 Total cost at 6/30/93 207,213 Unrealized gain $ 5,432 In August, 1993, the Company transferred the entire investment account balance to the sole stockholder. The estimated market value of the fund is not estimated to be materially different from that of June 30, 1993. NOTE 9 - PROJECT REIMBURSEMENTS The Company has an agreement with each project to review the project's actual cost savings. In the event the actual savings exceeds the projected, the Company shall pay to the project an amount based on per kilowatt hour saved. During 1993, $3,592 has been paid under this agreement. NOTE 10 - SUBSEQUENT EVENTS The Company has a letter of understanding that Eastern Utilities Associates (EUA) Congenex Corporation, a Massachusetts business and subsidiary of EUA, wants to acquire the existing business of Northeast Energy Management, Inc. The sale would include all of the Company's utility demand side management contracts which are primarily with Central Maine Power Company (CMP). These contracts were written for CMP's Power Partner's Program for commercial/industrial energy efficient projects. Between June 30, 1993 and September 7, 1993, the Company distributed cash, in excess of amounts disclosed in Note 8, totaling $57,919 to the sole stockholder. NOTE 11 - UNINSURED CASH At June 30, 1993, the carrying amount of the Company's deposits (checking and savings) was $202,376 and the related bank balance was $202,526. Of the bank balance, $100,000 was covered by federal depository insurance, and $102,526 was uninsured. -----END PRIVACY-ENHANCED MESSAGE-----