EXHIBIT C(2)
AGREEMENT AND PLAN OF MERGER
by and among
UNITED WATER RESOURCES INC.,
LYONNAISE AMERICAN HOLDING, INC.,
LAH ACQUISITION CO.
and
SUEZ LYONNAISE DES EAUX,
dated as of August 20, 1999
TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.1 The Merger................................................ A-1
Section 1.2 Effective Time of the Merger.............................. A-1
Section 1.3 Effects of the Merger..................................... A-1
Certificate of Incorporation and By-laws of the Surviving
Section 1.4 Corporation............................................... A-1
Section 1.5 Directors and Officers of the Surviving Corporation....... A-1
Section 1.6 Further Actions........................................... A-2
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock..................... A-2
Section 2.2 Exchange of Certificates.................................. A-3
ARTICLE III
THE CLOSING
Section 3.1 Closing................................................... A-4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization and Qualification............................ A-4
Section 4.2 Subsidiaries.............................................. A-5
Section 4.3 Capitalization............................................ A-5
Authority; Non-Contravention; Statutory Approvals;
Section 4.4 Compliance................................................ A-6
Section 4.5 Reports and Financial Statements.......................... A-7
Section 4.6 Absence of Certain Changes or Events...................... A-8
Section 4.7 Litigation................................................ A-8
Section 4.8 Proxy Statement Etc....................................... A-8
Section 4.9 Tax Matters............................................... A-9
Section 4.10 Employee Matters; ERISA................................... A-10
Section 4.11 Environmental Protection.................................. A-12
Section 4.12 Regulation as a Utility................................... A-14
Section 4.13 Water Quality............................................. A-14
Section 4.14 Vote Required............................................. A-14
Section 4.15 Opinion of Financial Advisor.............................. A-14
Section 4.16 The Company Rights Agreement.............................. A-14
Section 4.17 Real Property............................................. A-15
Section 4.18 Property Franchises....................................... A-15
Section 4.19 Insurance................................................. A-15
Section 4.20 Trademarks, Patents and Copyrights........................ A-15
Section 4.21 Year 2000................................................. A-16
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.1 Organization and Qualification............................ A-16
Section 5.2 Authority; Non-Contravention; Statutory Approvals......... A-16
Section 5.3 Reports and Financial Statements.......................... A-17
Section 5.4 Proxy Statement........................................... A-17
Section 5.5 Ownership of Company Capital Stock........................ A-17
Section 5.6 Financing................................................. A-17
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of Company...................................... A-18
Section 6.2 Alternative Proposal...................................... A-22
Section 6.3 Covenants of Parent....................................... A-23
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information..................................... A-23
Section 7.2 Proxy Statement........................................... A-23
Section 7.3 Regulatory Matters........................................ A-24
Section 7.4 Stockholder Approval...................................... A-24
Section 7.5 Directors' and Officers' Indemnification.................. A-25
Section 7.6 Disclosure Schedules...................................... A-26
Section 7.7 Public Announcements...................................... A-26
Section 7.8 Certain Employee Agreements............................... A-26
Section 7.9 Employee Benefit Plans.................................... A-26
Section 7.10 The Company Stock Plans................................... A-27
Section 7.11 Expenses.................................................. A-27
Section 7.12 Further Assurances........................................ A-27
Section 7.13 Governance Agreement...................................... A-27
Section 7.14 North American Rights Agreement........................... A-28
Section 7.15 Notice and Cure........................................... A-30
ARTICLE VIII
CONDITIONS
Conditions to Each Party's Obligation to Effect the
Section 8.1 Merger.................................................... A-31
Section 8.2 Conditions to Obligation of Parent to Effect the Merger... A-31
Conditions to Obligation of the Company to Effect the
Section 8.3 Merger.................................................... A-32
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination............................................... A-32
Section 9.2 Effect of Termination..................................... A-34
Section 9.3 Termination Fee; Expenses................................. A-34
Section 9.4 Amendment................................................. A-34
Section 9.5 Waiver.................................................... A-35
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ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations and Warranties.... A-35
Section 10.2 Brokers................................................... A-35
Section 10.3 Notices................................................... A-35
Section 10.4 Miscellaneous............................................. A-36
Section 10.5 Interpretation............................................ X-00
Xxxxxxx 00.0 Xxxxxxxxxxxx; Effect...................................... A-37
Section 10.7 Parties in Interest....................................... A-37
Section 10.8 Waiver of Jury Trial and Certain Damages.................. A-37
Section 10.9 Enforcement............................................... A-37
Section 10.10 Severability.............................................. A-37
ARTICLE XI
PROVISIONS RELATING TO SLDE
Section 11.1 Organization and Authority................................ A-38
Section 11.2 Obligations of SLDE....................................... A-38
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This AGREEMENT AND PLAN OF MERGER dated as of August 20, 1999 (this
"Agreement") is made and entered into by and among United Water Resources Inc.,
a New Jersey corporation (the "Company"), Lyonnaise American Holding, Inc., a
Delaware corporation ("Parent"), LAH Acquisition Co., a New Jersey corporation
and a wholly owned subsidiary of Parent ("Merger Sub"), and, solely with
respect to the provisions of Article XI, Suez Lyonnaise des Eaux, a French
societe anonyme ("SLDE");
WHEREAS, the boards of directors of the Company, Parent and Merger Sub have
approved and deemed it advisable and in the best interests of their respective
stockholders to consummate the transactions contemplated herein under which the
business of the Company and Parent would be combined by means of the merger of
Merger Sub with and into the Company, as a result of which the Company will
become a wholly owned subsidiary of Parent (the "Merger");
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties and agreements in connection with the Merger and to
prescribe various conditions to the Merger; and
WHEREAS, SLDE has agreed to the obligations contained in Article XI of this
Agreement.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time of the Merger (as defined in Section 1.2)
Merger Sub shall be merged with and into the Company in accordance with the
Business Corporation Act of the State of New Jersey (the "NJBCA"). Following
the Merger, the separate corporate existence of Merger Sub shall cease and the
Company shall be the surviving corporation (the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State of New
Jersey.
Section 1.2 Effective Time of the Merger. A certificate of merger (the
"Certificate of Merger") shall be duly prepared and executed by the Surviving
Corporation and thereafter delivered to the office of the Secretary of State of
the State of New Jersey (the "Secretary of State") for filing, as provided in
Section 14A:10-4.1 of the NJBCA, on the Closing Date. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State or at such subsequent time as Parent and the Company shall
agree and specify in the Certificate of Merger (the date and time the Merger
becomes effective being the "Effective Time").
Section 1.3 Effects of the Merger. Subject to the foregoing, the effects of
the Merger shall be as provided in the applicable provisions of the NJBCA.
Section 1.4 Certificate of Incorporation and By-laws of the Surviving
Corporation. At the Effective Time, (i) the certificate of incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall become
the certificate of incorporation of the Surviving Corporation until thereafter
amended as provided by law and such certificate of incorporation and (ii) the
by-laws of Merger Sub as in effect immediately prior to the Effective Time
shall be the by-laws of the Surviving Corporation until thereafter amended as
provided by law, the certificate of incorporation of the Surviving Corporation
and such by-laws.
Section 1.5 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub and the officers of the Company immediately prior to
the Effective Time shall, from and after the Effective Time, be
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the directors and officers, respectively, of the Surviving Corporation until
their 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.
Section 1.6 Further Actions. At and after the Effective Time, the officers
and directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Merger Sub, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of the Company or Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock. At the Effective Time by
virtue of the Merger and without any action on the part of any holder of any
capital stock of the Company or Merger Sub:
(a) Conversion of Merger Sub Stock. Each issued and outstanding share of
common stock, par value $1.00 per share, of Merger Sub shall be converted
into one fully paid and non-assessable share of common stock, no par value,
of the Surviving Corporation (the "Surviving Corporation Common Stock").
(b) Cancellation of Certain Company Stock. Each share of common stock,
no par value, of the Company (the "Company Common Stock"), together with
the associated Right (as defined in Section 4.16) to purchase Company
Preferred Stock pursuant to the Company Rights Agreement (as defined in
Section 4.16), and each share of 5% Series A Cumulative Convertible
Preference Stock, no par value, of the Company ("Series A Preference
Stock") that is owned by the Company as treasury stock and all shares of
Company Common Stock (and associated Rights) and Series A Preference Stock
that are owned, directly or indirectly, by the Company or Parent or any of
their respective wholly-owned subsidiaries shall be canceled and retired
and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock. Each issued and outstanding
share of Company Common Stock, together with the associated Rights, other
than shares and Rights canceled pursuant to Section 2.1(b) of this
Agreement, shall be converted into the right to receive $35.00 per share,
without interest (the "Per Share Cash Consideration"). Each share of
Company Common Stock and each associated Right converted in accordance with
this paragraph 2.1(c) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist. Each holder
of a certificate formerly representing any such shares of Company Common
Stock shall cease to have any rights with respect thereto, except the right
to receive the Per Share Cash Consideration to be issued in consideration
therefor upon surrender of such certificate in accordance with Section 2.2
and any dividends declared and unpaid as of the Effective Time.
(d) Conversion of Series A Preference Stock. Each issued and outstanding
share of Series A Preference Stock, other than shares canceled pursuant to
Section 2.1(b) of this Agreement, shall be converted automatically into the
right to receive an amount in cash equal to the product of the Per Share
Cash Consideration multiplied by the number of shares of Company Common
Stock into which such share of Series A Preference Stock is convertible
immediately prior to the Effective Time. Each share of Series A Preference
Stock converted in accordance with this paragraph 2.1(d) shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist. Each holder of a certificate formerly representing any such
shares of Series A Preference Stock shall cease to have any rights with
respect thereto, except the right to receive the Per Share Cash
Consideration to be issued in consideration therefor upon surrender of such
certificate in accordance with Section 2.2 and any dividends declared and
unpaid as of the Effective Time.
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Section 2.2 Exchange of Certificates. (a) Exchange Agent. At the
Effective Time, Parent shall deposit with a bank or trust company mutually
agreeable to Parent and the Company (the "Exchange Agent"), pursuant to an
agreement with the Exchange Agent in form and substance reasonably
acceptable to Parent and the Company, an amount in cash equal to the sum of
(i) the Per Share Cash Consideration multiplied by the number of shares of
Company Common Stock to be converted into the right to receive the Per
Share Cash Consideration as determined in Section 2.1(c) plus (ii) the Per
Share Cash Consideration multiplied by the number of shares of Company
Common Stock into which the Series A Preference Stock is convertible as
determined in Section 2.1(d) plus (iii) the amount of any dividends which
were declared in respect of Company Common Stock and the Series A
Preference Stock with a record date prior to the Effective Time and which
remain unpaid at the Effective Time (the "Unpaid Company Dividends"). Any
cash deposited with the Exchange Agent shall hereinafter be referred to as
the "Exchange Fund."
(b) Payment of Cash Consideration. Promptly after the Effective Time,
Parent and the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record as of the Effective Time of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock or Series A Preference Stock
(the "Certificates") that were converted into the right to receive the Per
Share Cash Consideration pursuant to Section 2.1: (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon actual delivery
of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Parent and the Surviving Corporation may
reasonably specify) and (ii) instructions for effecting the surrender of
the Certificates in exchange for the Per Share Cash Consideration. Upon
surrender of a Certificate to the Exchange Agent for cancellation, together
with a duly executed letter of transmittal and such other documents as the
Exchange Agent may require, the holder of such Certificate shall be
entitled to receive in exchange therefor a bank check for an amount equal
to the sum of (x) the Per Share Cash Consideration multiplied by (A) if
such Certificate evidenced one or more shares of Company Common Stock, the
number of shares of Company Common Stock evidenced thereby or (B) if such
Certificate evidenced one or more shares of Series A Preference Stock, the
number of shares of Company Common Stock into which the shares of Series A
Preference Stock evidenced thereby were convertible immediately prior to
the Effective Time plus, in either case, (y) any Unpaid Company Dividends
payable in respect of such shares (such sum being referred to as the "Cash
Consideration"). In no event shall the holder of any such surrendered
Certificates be entitled to receive interest on any cash to be received in
the Merger. If such check is to be issued in the name of a person other
than the person in whose name the Certificates surrendered for exchange
therefor are registered, it shall be a condition of the exchange that the
person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of issuance of such check to a
person other than the registered holder of the Certificates surrendered, or
shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
the Cash Consideration as contemplated by this Section 2.2. If for any
reason (including losses) the Exchange Agent is unable to pay the cash
amounts to which holders of the Certificates shall be entitled, Parent
shall in any event remain liable, and shall make available to the Surviving
Corporation additional funds, for the payment thereof.
(c) Closing of Transfer Books. From and after the Effective Time the
stock transfer books of the Company shall be closed and no transfer of any
capital stock of the Company shall thereafter be made. If, after the
Effective Time, Certificates are presented to the Surviving Corporation,
they shall be canceled and exchanged for the Cash Consideration as provided
in Section 2.1 and in this Section 2.2.
(d) Termination of Exchange Agent. All funds held by the Exchange Agent
in the Exchange Fund for payment to the holders of Certificates unclaimed
at the end of one year from the Effective Time shall be returned to the
Surviving Corporation, after which time any holder of Certificates who has
not theretofore complied with this Article II shall thereafter look as a
general creditor only to Parent for payment of the Cash Consideration to
which such holder may be due, subject to applicable law.
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(e) Investment of the Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund only in one or more of the following
investments as directed by the Surviving Corporation from time to time: (i)
obligations of the United States government maturing not more than 90 days
after the date of purchase; (ii) certificates of deposit maturing not more
than 90 days after the date of purchase issued by a bank organized under
the laws of the United States or any state thereof having a combined
capital and surplus of at least $500,000,000; (iii) a money market fund
having assets of at least $3,000,000,000; or (iv) tax-exempt or corporate
debt obligations maturing not more than 90 days after the date of purchase
given the highest investment grade rating by Standard & Poor's and Xxxxx'x
Investor Service. Any interest and other income resulting from such
investments shall promptly be paid to the Surviving Corporation.
(f) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
stockholder claiming such Certificate to be lost, stolen or destroyed and,
if required by the Surviving Corporation, the posting by such stockholder
of a bond in such reasonable amount as the Surviving Corporation may direct
as indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will deliver in exchange for such
lost, stolen or destroyed Certificate the applicable Cash Consideration
with respect to the shares of Company Common Stock or Series A Preference
Stock formerly represented thereby.
(g) Escheat. The Surviving Corporation shall not be liable to any person
for funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of Piper & Marbury L.L.P., 1251 Avenue of the Americas,
New York, New York, at 10:00 A.M., New York time, on the second business day
immediately following the date on which the last of the conditions set forth in
Article VIII hereof is fulfilled or waived (other than conditions that by their
nature are required to be performed on the Closing Date, but subject to
satisfaction of such conditions), or at such other time and date and place as
the Company and Parent shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows:
Section 4.1 Organization and Qualification. Except as set forth in
Section 4.1 of the Company Disclosure Schedule (as defined in Section
7.6(ii)), the Company and each subsidiary (as defined below) of the Company
is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, has
all requisite corporate power and authority, and has been duly authorized
by all necessary approvals and orders, to own, lease and operate its assets
and properties to the extent owned, leased and operated and to carry on its
business as it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its assets and properties makes
such qualification necessary, other than in such jurisdictions where the
failure to be so qualified and in good standing will not, when taken
together with all other such failures, have a Company Material Adverse
Effect. As used in this Agreement, "Company Material Adverse Effect" means
any change, effect, condition or circumstance that is reasonably likely to
be materially adverse to the business, properties, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole, or the consummation of the transactions contemplated by
this Agreement, excluding (i) any occurrence affecting the United States
water supply and waste water services industry as a whole, (ii) any adverse
effect to the extent caused by
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an acquisition made by the Company in accordance with Section 6.1(d) and
(iii) any adverse effect to the extent caused by an acquisition made by
Parent in accordance with Section 7.14. As used in this Agreement, the term
"subsidiary" of a person shall mean any corporation or other entity
(including partnerships and other business associations) of which a
majority of the outstanding capital stock or other voting securities having
voting power under ordinary circumstances to elect directors or similar
members of the governing body of such corporation or entity shall at the
time be held, directly or indirectly, by such person. True, accurate and
complete copies of the certificate of incorporation and by-laws of the
Company (including any amendments thereto) as in effect on the date hereof
have been made available to Parent.
Section 4.2 Subsidiaries. Section 4.2 of the Company Disclosure Schedule
sets forth a description as of the date hereof, of (x) all "material
subsidiaries" of the Company as defined in Regulation S-X promulgated under
the Securities Act (as defined herein) and (y) all other subsidiaries and
joint ventures of the Company, including (i) the name of each such entity,
(ii) the state or jurisdiction of its incorporation or organization, (iii)
the Company's interest therein, and (iv) if known by the Company, the name
of any other person holding an interest therein and the interest held by
any and all such persons, and a brief description of the principal line or
lines of business conducted by each such entity. Except as set forth in
Section 4.2 of Company Disclosure Schedule, neither the Company nor any of
the Company's subsidiaries is a "public utility company" or a "holding
company" within the meaning of Section 2(a)(5) or 2(a)(7) of the Public
Utility Holding Company Act of 1935, as amended (the "1935 Act") or a
"subsidiary company" or an "affiliate" within the meaning of Section
2(a)(8) or 2(a)(11) of the 1935 Act of any holding company which is
required to register as a holding company under the 1935 Act. Except as set
forth in Section 4.2 of the Company Disclosure Schedule, all of the issued
and outstanding shares of capital stock of each subsidiary of the Company
and, to the knowledge of the Company, each Company Joint Venture (as
defined below) are validly issued, fully paid, nonassessable and free of
preemptive rights, and are owned, directly or indirectly, by the Company
free and clear of any liens, claims, encumbrances, security interests,
equities, charges and options of any nature whatsoever and there are no
outstanding subscriptions, options, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating any such
subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of its capital stock or obligating it to grant,
extend or enter into any such agreement or commitment, except for any of
the foregoing that could not reasonably be expected to have a Company
Material Adverse Effect. As used in this Agreement, the term "joint
venture" of a person shall mean any corporation or other entity (including
partnerships and other business associations) that is not a subsidiary of
such person, in which such person or one or more of its subsidiaries owns
an equity interest, other than equity interests held for passive investment
purposes which are less than 10% of any class of the outstanding voting
securities or equity of any such entity, and the term "Company Joint
Venture" shall mean each joint venture in which the Company holds an equity
interest and in which neither Parent nor any of Parent's affiliates holds a
direct or indirect equity interest apart from their interest in the
Company.
Section 4.3 Capitalization. (a) Company Capitalization. The authorized
capital stock of the Company consists of (i) 100,000,000 shares of Company
Common Stock, (ii) 1,000,000 shares of preferred stock, no par value, of
the Company (the "Company Preferred Stock"), and (iii) 5,000,000 shares of
preference stock, no par value, of the Company (the "Company Preference
Stock") of which 3,983,976 shares are designated as Series A Preference
Stock and no shares are designated as 7 5/8% Series B Cumulative Preferred
Stock, no par value, of the Company ("Series B Preferred Stock"). As of the
close of business on July 17, 1999, there were issued and outstanding
38,810,209 shares of Company Common Stock, 1,956,596 shares of Series A
Preference Stock and no shares of Series B Preferred Stock. All of the
issued and outstanding shares of the capital stock of the Company are
validly issued, fully paid, nonassessable and free of preemptive rights.
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(b) Options, etc. Except as set forth in Section 4.3(b) of the Company
Disclosure Schedule, as of the date hereof, there are no outstanding
subscriptions, options (including employee stock options), calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights (including the Rights) or warrants,
including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating the Company or any of
the subsidiaries of the Company or, to the knowledge of the Company, any
Company Joint Venture to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of such person,
or obligating such person to grant, extend or enter into any such agreement
or commitment. The total number of outstanding options to purchase shares
of Company's capital stock (whether granted pursuant to Company Stock Plans
or otherwise) and the exercise price of each such option is set forth on
Section 4.3(b) of the Company Disclosure Schedule.
(c) Certain Contractual Obligations. There are no outstanding
contractual obligations of the Company, any of its subsidiaries or, to the
knowledge of the Company, any Company Joint Venture to repurchase, redeem
or otherwise acquire any shares of such person's capital stock or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any person other than to subsidiaries of the
Company in the ordinary course of business consistent with past practice or
as disclosed in Section 4.3(c) of the Company Disclosure Schedule.
Section 4.4 Authority; Non-
Contravention; Statutory Approvals; Compliance.
(a) Authority. The Company has all requisite corporate power and
authority (including approval of the Company's Board of Directors) to enter
into this Agreement, to perform its obligations hereunder and, subject to
obtaining the Company Stockholders' Approval (as defined in Section 4.14)
and the Company Required Statutory Approvals (as defined in Section
4.4(c)), to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation by the
Company of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject to
obtaining the Company Stockholders' Approval with respect to consummation
of the Merger. This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by the other signatories hereto, constitutes the valid and
binding obligation of the Company enforceable against it in accordance with
its terms.
(b) Non-Contravention. Except as set forth in Section 4.4(b) of the
Company Disclosure Schedule, the execution and delivery of this Agreement
by the Company does not, and the performance by the Company of its
obligations hereunder and the consummation of the transactions contemplated
hereby will not, violate, conflict with, or result in a breach of any
provision of, or constitute a default (with or without notice or lapse of
time or both) under, or result in the termination or modification of, or
accelerate the performance required by, or result in a right of
termination, cancellation, or acceleration of any obligation or the loss of
a benefit under, or result in the creation of any lien, security interest,
charge or encumbrance ("Liens") upon any of the properties or assets of the
Company or any of the subsidiaries of the Company or, to the knowledge of
the Company, any of the Company Joint Ventures (any such violation,
conflict, breach, default, right of termination, modification, cancellation
or acceleration, loss or creation, a "Violation" with respect to the
Company (such term when used in Article V having a correlative meaning with
respect to Parent)) pursuant to any terms, conditions or provisions of (i)
the certificate of incorporation, by-laws or similar governing documents of
the Company or any of its subsidiaries or, to the knowledge of the Company,
any of the Company Joint Ventures, (ii) subject to obtaining the Company
Required Statutory Approvals and the receipt of the Company Stockholders'
Approval, any statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any Governmental Authority
(as defined in Section 4.4(c)) applicable to the Company or any of its
subsidiaries or, to the knowledge of the Company, any of the Company Joint
Ventures, or any of their respective properties or assets or (iii) subject
to obtaining the third-party consents or other approvals set forth in
Section 4.4(b) of the Company Disclosure Schedule (the "Company Required
Consents") any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other
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instrument, obligation or agreement of any kind to which the Company or any
of its subsidiaries or, to the knowledge of the Company, any of the Company
Joint Ventures is a party or by which the Company or any of the Company's,
its subsidiaries' or any Company Joint Venture's properties or assets may
be bound or affected, excluding from the foregoing clauses (ii) and (iii)
such Violations as would not reasonably be likely to have, individually or
in the aggregate, a Company Material Adverse Effect.
(c) Statutory Approvals. No declaration, filing or registration with, or
notice to or authorization, consent or approval of, any court, federal,
state, local or foreign governmental or regulatory body (including a stock
exchange or other self-regulatory body) or authority, including state
public utility control or public service commissions and similar state
regulatory bodies (each, a "Governmental Authority") is necessary for the
execution and delivery of this Agreement by the Company, the performance of
the Company of its obligations hereunder or the consummation by the Company
of the transactions contemplated hereby, except as described in Section
4.4(c) of the Company Disclosure Schedule, the failure to obtain, make or
give which would reasonably be likely to have, individually or in the
aggregate, a Company Material Adverse Effect (the "Company Required
Statutory Approvals"), it being understood that references in this
Agreement to "obtaining" such Company Required Statutory Approvals shall
mean making such declarations, filings or registrations, giving such
notices, obtaining such authorizations, consents or approvals and having
such waiting periods expire as are necessary to avoid a violation of law.
(d) Compliance. Except as set forth in Section 4.4(d) or Section 4.11 of
the Company Disclosure Schedule, or as disclosed in the Company SEC Reports
(as defined in Section 4.5) filed prior to the date hereof, neither the
Company nor any of its subsidiaries nor, to the knowledge of the Company,
any Company Joint Venture is in violation of, is under investigation with
respect to any violation of, or has been given notice or been charged with
any violation of, any law, statute, order, rule, regulation, ordinance or
judgment of any Governmental Authority except for violations that,
individually or in the aggregate, do not have, and to the knowledge of the
Company, are not reasonably likely to have, a Company Material Adverse
Effect. Except as set forth in Section 4.4(d) of the Company Disclosure
Schedule or in Section 4.11 of the Company Disclosure Schedule, the Company
and its subsidiaries and, to the knowledge of the Company, the Company
Joint Ventures have all permits, licenses, franchises and other
governmental authorizations, consents and approvals necessary to conduct
their respective businesses as currently conducted in all respects, except
those which the failure to obtain would, in the aggregate, not have a
Company Material Adverse Effect. Except as set forth in Section 4.4(d) of
the Company Disclosure Schedule, the Company, each of its subsidiaries and,
to the knowledge of the Company, each Company Joint Venture is not in
breach or violation of or in default in the performance or observance of
any term or provision of, and no event has occurred which, with lapse of
time or action by a third party, could result in a default under, (i) its
certificate of incorporation or by-laws or similar organizational documents
or (ii) any material contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which it is a party or by which it is bound or to which any of its property
is subject, except for breaches, violations or defaults of any of the
foregoing items in clause (ii) that, individually or in the aggregate, do
not have, and are not reasonably likely to have, a Company Material Adverse
Effect.
Section 4.5 Reports and Financial Statements. The filings required to be
made by the Company and its subsidiaries under the Securities Act of 1933,
as amended (the "Securities Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and applicable state public utility laws and
regulations have been filed with the Securities and Exchange Commission
(the "SEC"), or the appropriate state public utilities commission or health
agency, as the case may be, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits, amendments and
supplements appertaining thereto, and complied, as of their respective
dates, in all material respects with all applicable requirements of the
appropriate statute and the rules and regulations thereunder. The Company
has made available to Parent a true and complete copy of each report,
schedule, registration statement and definitive proxy statement filed by
the Company with the SEC since June 30, 1996 (as such documents have since
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the time of their filing been amended, the "Company SEC Reports"). As of
their respective dates, the Company SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial
statements of the Company included in the Company SEC Reports
(collectively, the "Company Financial Statements") have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis ("GAAP") (except as may be indicated therein or in the
notes thereto and except with respect to unaudited statements as permitted
by Form 10-Q of the SEC) and fairly present the consolidated financial
position of the Company as of the dates thereof and the consolidated
results of operations and cash flows for the periods then ended. Except as
and to the extent set forth in the Company Financial Statements, neither
the Company nor any subsidiary of the Company or, to the knowledge of the
Company, any Company Joint Venture has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) which would be
required to be reflected on a balance sheet prepared in accordance with
generally accepted accounting principles, except for liabilities and
obligations that would not reasonably be likely to have, individually or in
the aggregate, a Company Material Adverse Effect.
Section 4.6 Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Reports filed prior to the date hereof or as set forth in
Section 4.6 of the Company Disclosure Schedule, from June 30, 1999, the
Company and each of its subsidiaries have conducted their business only in
the ordinary course of business consistent with past practice and there has
not been, and no fact or condition exists which would, individually or in
the aggregate, have a Company Material Adverse Effect. Without limiting the
foregoing, from June 30, 1999 through the date of this Agreement, and
except as which individually or in the aggregate, does not have or, insofar
as reasonably can be foreseen, is not reasonably likely to have a Company
Material Adverse Effect, there has not been (i) any revaluation by the
Company or any of its subsidiaries or, to the knowledge of the Company, any
Company Joint Venture of any of their respective assets, including, but not
limited to, write-offs of accounts receivable, other than in the ordinary
course of businesses consistent with historical practices, (ii) any
material change by the Company, any of its subsidiaries or, to the
knowledge of the Company, any Company Joint Venture in its accounting
methods, principles or practices, or (iii) any declaration, setting aside
or payment of any dividend or distribution in respect of any capital stock
of the Company or any redemption, repurchase or other acquisition of any of
its securities (other than regular quarterly dividends on the shares of
Company Common Stock and regular dividends on the shares of Series A
Preference Stock).
Section 4.7 Litigation. Except as disclosed in the Company SEC Reports
filed prior to the date hereof or as set forth in Section 4.7, Section 4.9
or Section 4.11 of the Company Disclosure Schedule, (i) there are no
claims, suits, actions or proceedings, pending or, to the knowledge of the
Company, threatened, nor are there, to the knowledge of the Company, any
investigations or reviews pending or threatened against, relating to or
affecting the Company or any of its subsidiaries or any Company Joint
Venture and (ii) there are no judgments, decrees, injunctions, rules or
orders of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator applicable to the Company,
any of its subsidiaries or, to the knowledge of the Company, any Company
Joint Venture, except for any of the foregoing under clauses (i) and (ii)
that individually or in the aggregate would not reasonably be expected to
have a Company Material Adverse Effect.
Section 4.8 Proxy Statement Etc. The proxy statement, in definitive
form, relating to the Company Special Meeting (the "Proxy Statement") shall
not, at the dates mailed to stockholders and at the time of the Company
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein in light of the circumstances under which
they are made, not misleading. The Proxy Statement, insofar as it relates
to the Company or any subsidiary of the Company, shall comply as to form in
all material respects with the applicable provisions of the Securities Act
and the Exchange Act and the rules and regulations thereunder.
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Section 4.9 Tax Matters. "Taxes", as used in this Agreement, means any
federal, state, county, local or foreign taxes, charges, fees, levies or
other assessments, including all net income, gross income, sales and use,
ad valorem, transfer, gains, profits, excise, franchise, real and personal
property, gross receipts, capital stock, production, business and
occupation, disability, employment, alternative minimum, payroll, license,
estimated, stamp, custom duties, severance or withholding taxes or charges
imposed by any governmental entity, and includes any interest and penalties
(civil or criminal) on or additions to any such taxes and any expenses
incurred in connection with the determination, settlement or litigation of
any tax liability. "Tax Return", as used in this Agreement, means a report
or similar statement, return or other information required to be supplied
to a governmental entity with respect to Taxes including, where permitted
or required, combined or consolidated returns for any group of entities
that includes the Company or any of its subsidiaries, or Parent or any of
its subsidiaries, as the case may be.
Except as set forth in Section 4.9 of the Company Disclosure Schedule:
(a) Timely Filing of Tax Returns. The Company and each of its
subsidiaries and, to the Company's knowledge, each Company Joint Venture
have filed (or there has been filed on its behalf) all material Tax Returns
required to be filed by each of them under applicable law. All such Tax
Returns were and are in all material respects true, complete and correct
and filed on a timely basis.
(b) Payment of Taxes. The Company and each of its subsidiaries and, to
the Company's knowledge, each Company Joint Venture have, within the time
and in the manner prescribed by law, paid all Taxes that are currently due
and payable except for those contested in good faith and for which adequate
reserves have been taken.
(c) Deferred Taxes. The Company and each of its subsidiaries and, to the
Company's knowledge, each Company Joint Venture have accounted for deferred
income taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the assets of the Company or
any of its subsidiaries or, to the Company's knowledge, any Company Joint
Venture except liens for Taxes not yet due.
(e) Withholding Taxes. The Company and each of its subsidiaries and, to
the Company's knowledge, each Company Joint Venture have complied in all
material respects with the provisions of the Code relating to the
withholding of Taxes, as well as similar provisions under any other laws,
and have, within the time and in the manner prescribed by law, withheld
from employee wages and paid over to the proper governmental authorities
all amounts required.
(f) Extensions of Time for Filing Tax Returns. Neither the Company nor
any of its subsidiaries nor, to the Company's knowledge, any Company Joint
Venture has requested any extension of time within which to file any Tax
Return which Tax Return has not since been filed.
(g) Waivers of Statute of Limitations. Neither the Company nor any of
its subsidiaries nor, to the Company's knowledge, any Company Joint Venture
has executed any outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns.
(h) Expiration of Statute of Limitations. The statute of limitations for
the assessment of all Taxes has expired for all applicable Tax Returns of
the Company and each of its subsidiaries and, to the Company's knowledge,
each Company Joint Venture, or those Tax Returns have been examined by the
appropriate taxing authorities for all periods through the date hereof, and
no deficiency for any Taxes has been proposed, asserted or assessed against
the Company or any of its subsidiaries or, to the Company's knowledge, any
Company Joint Venture that has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. No audits or other
administrative proceedings or court proceedings are presently pending,
proposed or threatened with regard to any Taxes or Tax Returns of the
Company or any of its subsidiaries or, to the Company's knowledge, any
Company Joint Venture.
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(j) Powers of Attorney. No power of attorney currently in force has been
granted by the Company or any of its subsidiaries or, to the Company's
knowledge, any Company Joint Venture concerning any Tax matter.
(k) Tax Rulings. Neither the Company nor any of its subsidiaries nor, to
the Company's knowledge, any Company Joint Venture has received a Tax
Ruling (as defined below) or entered into a Closing Agreement (as defined
below) with any taxing authority that would have a continuing adverse
effect after the Closing Date. "Tax Ruling", as used in this Agreement,
shall mean a written ruling of a taxing authority relating to Taxes.
"Closing Agreement", as used in this Agreement, shall mean a written and
legally binding agreement with a taxing authority relating to Taxes.
(l) Availability of Tax Returns. The Company has made or has used its
best efforts in making available to Parent complete and accurate copies of
(i) all Tax Returns, and any amendments thereto, filed by the Company or
any of its subsidiaries since December 31, 1997, (ii) all audit reports
received from any taxing authority relating to any Tax Return filed by the
Company or any of its subsidiaries or, to the Company's knowledge, any
Company Joint Venture and (iii) any Closing Agreements entered into by the
Company or any of its subsidiaries or, to the Company's knowledge, any
Company Joint Venture with any taxing authority.
(m) Tax Sharing Agreements. Neither the Company nor any of its
subsidiaries nor, to the Company's knowledge, any Company Joint Venture is
a party to any agreement relating to allocating or sharing of Taxes.
(n) Code Section 280G. Section 4.9 of the Company Disclosure Schedule
contains a true and complete list of any agreement, contract or arrangement
to which the Company or any of its subsidiaries or, to Company's knowledge,
any Company Joint Venture, is a party that could result, on account of the
transactions contemplated hereunder, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
(o) Liability for Others. Neither the Company nor any of its
subsidiaries nor, to the Company's knowledge, any Company Joint Venture has
any liability for Taxes of any person other than the Company, its
subsidiaries and, to the Company's knowledge, such Company Joint Ventures
(i) under Treasury Regulations Section 1.1502-6 (or any similar provision
of state, local or foreign law) as a transferee or successor, (ii) by
contract or (iii) otherwise.
(p) Code Section 897. To the Company's knowledge after due inquiry, no
foreign person owns or has owned, for purposes of Section 897 of the Code,
more than five percent of the total fair market value of the Company Common
Stock during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code, and, at all times during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code, the Company Common Stock has been
regularly traded in an established securities market within the meaning of
Treasury Regulation Section 1.897-1(m).
Section 4.10 Employee Matters; ERISA. Except as set forth in Section 4.10 of
the Company Disclosure Schedule:
(a) Benefit Plans. Section 4.10(a) of the Company Disclosure Schedule
contains a true and complete list of each material employee benefit plan
sponsored, contributed to or maintained by the Company or any of its
subsidiaries covering employees, former employees, directors or former
directors of the Company or any of its subsidiaries or their beneficiaries,
or providing benefits to such persons in respect of services provided to
any such entity, including, but not limited to, any employee benefit plans
within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and any severance or change in
control agreement between the Company or any of its subsidiaries and any
current or former employee or director thereof pursuant to which benefits
may become payable (collectively, the "Company Benefit Plans"). No Company
Benefit Plan is a "multiemployer plan" as defined in Section 3(37) of
ERISA. There are no trades or businesses which, together with the Company
and its subsidiaries, would be treated as a "single employer" within the
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meaning of Section 414 of the Code or Section 4001(a)(14) of ERISA ("ERISA
Affiliates"), except as set forth on Section 4.10(a) of the Company
Disclosure Schedule. Except as disclosed in Section 4.10(a) of the Company
Disclosure Schedule, no ERISA Affiliates sponsor, maintain or contribute to
any employee benefit plan subject to Title IV of ERISA or Section 412 of
the Code.
(b) Contributions. All material contributions and other payments
required to be made for any period through the date to which this
representation speaks, by the Company or any of its subsidiaries to any
Company Benefit Plan (or to any person pursuant to the terms thereof) have
been timely made or paid in full or, to the extent not required to be made
or paid on or before the date to which this representation speaks have been
reflected in the Company Financial Statements.
(c) Qualification; Compliance. Each of the Company Benefit Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code
has received from the Internal Revenue Service (the "IRS") a determination
letter that the plan is qualified with respect to all applicable provisions
of the Code for which the applicable remedial amendment period has expired
or an application for such a determination, which was filed before the
expiration of the applicable remedial amendment period, is pending, and, to
the knowledge of the Company, no circumstances exist that could reasonably
be expected to result in the revocation of any such determination, and each
trust forming a part of any such plan is exempt from federal income tax
pursuant to Section 501(a) of the Code. The Company and each of its
subsidiaries is in compliance with, and each of the Company Benefit Plans
is and has been operated in compliance with, the terms of such plans and
all applicable laws, rules and regulations governing such plan, including,
without limitation, ERISA and the Code, except where failure to so comply
would not reasonably be likely to have, individually or in the aggregate, a
Company Material Adverse Effect. There are no pending or, to the knowledge
of the Company, threatened claims under or in respect of any Company
Benefit Plan by or on behalf of any employee, former employee, director,
former director, or beneficiary thereof, or otherwise involving any Company
Benefit Plan (other than routine claims for benefits).
(d) Title IV Liabilities. No event has occurred and, to the knowledge of
the Company, there exists no condition or set of circumstances, that could
subject or potentially subject the Company or any of its subsidiaries to
any liability arising under or based upon any provision of Title IV of
ERISA (whether to a governmental agency, a multiemployer plan or to any
other person or entity) which could reasonably be expected to have a
Company Material Adverse Effect.
(e) Documents Made Available. The Company has made available to Parent a
true and correct copy of each collective bargaining agreement to which the
Company or any of its subsidiaries is a party or under which the Company or
any of its subsidiaries has obligations and, with respect to each Company
Benefit Plan, where applicable, (i) such plan and the most recent summary
plan description, (ii) the most recent annual report filed with the IRS,
(iii) each related trust agreement or insurance contract, (iv) the most
recent determination of the IRS with respect to the qualified status of
such Company Benefit Plan, and (v) the most recent actuarial report or
valuation.
(f) Labor Agreements. Except as disclosed in Section 4.10(f) of the
Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or other
labor agreement with any union or labor organization. To the best knowledge
of the Company, there is no current union representation question involving
employees of the Company or any of its subsidiaries, nor does the Company
know of any activity or proceeding of any labor organization (or
representative thereof) or employee group to organize any such employees.
Except as disclosed in the Company SEC Reports filed prior to the date
hereof or in Section 4.10(f) of the Company Disclosure Schedule, (i) there
is no unfair labor practice, employment discrimination or other material
complaint against the Company or any of its subsidiaries pending or, to the
best knowledge of the Company, threatened, (ii) there is no strike or
lockout or material dispute, slowdown or work stoppage pending, or to the
best knowledge of the Company, threatened, against or involving the
Company, and (iii) there is no proceeding, claim, suit, action or
governmental investigation pending or, to the best knowledge of the
Company, threatened, in
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respect of which any director, officer, employee or agent (or, except as
disclosed in Section 4.10(f) of the Company Disclosure Schedule, any former
director, officer, employee or agent) of the Company or any of its
subsidiaries are or may be entitled to claim indemnification from the
Company or such subsidiary pursuant to their respective certificates of
incorporation or by-laws or as provided in the indemnification agreements
listed in Section 4.10(f) of the Company Disclosure Schedule.
(g) Except as required by law or as would not reasonably be likely to
have, individually or in the aggregate, a Company Material Adverse Effect,
no Company Benefit Plan provides retiree medical or retiree life insurance
benefits to any person except as disclosed in Section 4.10(g) of the
Company Disclosure Schedule. The accumulated post-retirement benefit
obligation of the Company and its subsidiaries (as determined under FASB
Statement No. 106) as of December 31, 1998 does not exceed $6,400,000.
(h) Except as disclosed in Section 4.10(h) of the Company Disclosure
Schedule, no director or officer or other employee of the Company or its
subsidiaries will become entitled to any retirement, severance or similar
benefit or enhanced or accelerated benefit solely as a result of the
transactions contemplated hereby. Except as disclosed on Schedule 4.10(h)
of the Company Disclosure Schedule, such benefit would not be an "excess
parachute payment" to a "disqualified individual" as those terms are
defined in Code Section 280G.
(i) Except as disclosed on Section 4.10(i) of the Company Disclosure
Schedule, since June 30, 1999, there has been no change in the terms and
conditions of employment of any director or any of the fifteen most senior
officers of the Company.
(j) There has been no amendment to, written interpretation of or
announcement (whether or not written) by the Company or any of its
subsidiaries relating to, or change in employee participation or coverage
under, any Company Benefit Plan which would increase materially the expense
of maintaining such plan above the level of expense incurred in respect
thereto for the most recent 12 month period updated on the Company
Financial Statements except as set forth in Section 4.10(i) of the Company
Disclosure Schedule.
Section 4.11 Environmental Protection. Except as set forth in Section 4.11
of the Company Disclosure Schedule or in the Company SEC Reports filed prior to
the date hereof:
(a) Compliance. The Company and to the Company's knowledge each of its
subsidiaries are in compliance with all Environmental Laws and the Company
has not received any communication from any Governmental Authority or third
party that alleges that the Company or any of its subsidiaries is not in
compliance with applicable Environmental Laws, except where the failure to
be in such compliance would not reasonably be likely to have, individually
or in the aggregate, a Company Material Adverse Effect. The Company has
made available to Parent copies of any and all material environmental
assessment or audit reports or other similar studies or analyses generated
within the last three years and in Company's possession, that relate to the
Company or any of its subsidiaries or the Company Joint Ventures.
(b) Environmental Permits. The Company and to the Company's knowledge
each of its subsidiaries have obtained all applicable environmental, health
and safety permits, licenses, approvals and governmental authorizations
(collectively, the "Environmental Permits") which are required, pursuant to
Environmental Laws, for the construction of their facilities and the
conduct of their operations; all such Environmental Permits are in current
effect and in good standing; all required renewal applications have been
timely filed and are pending agency approval; the Company reasonably
believes that such renewals will be accomplished in the ordinary course of
business without material delay or expense (except where failure to
accomplish such renewals would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect); and the
Company has received no information that when renewed such permit(s) will
impose material restrictions or obligations not required in the current
permit; no capital expense will be required to meet the requirements of any
permit or Environmental Law existing as of the date hereof except for such
capital expenditure as would not reasonably be likely to have,
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individually or in the aggregate, a Company Material Adverse Effect; the
Company and its subsidiaries are in compliance with all terms and
conditions of the Environmental Permits, except for such noncompliance as
would not reasonably be likely to have, individually or in the aggregate, a
Company Material Adverse Effect; the Company reasonably believes that any
transfer or renewal of or reapplication for any Environmental Permit
required as a result of the Merger can be accomplished in the ordinary
course of business without material delay or expense (except where failure
to accomplish such transfer or renewal will not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect).
(c) Environmental Claims. There is no Environmental Claim pending or, to
the best knowledge of the Company, threatened against the Company or any of
its subsidiaries that, if adversely determined, would have, individually or
in the aggregate, a Company Material Adverse Effect. There are no
circumstances existing, to the knowledge of the Company, that would form a
reasonable basis for an Environmental Claim against the Company or any of
its subsidiaries which, if adversely determined, would have, individually
or in the aggregate, a Company Material Adverse Effect. To the Company's
knowledge, no real property currently or formerly owned or operated by the
Company or any subsidiary is listed on the National Priorities List, the
CERCLIS or any state or local list of sites with known or suspected
Release.
(d) Releases. The Company has no knowledge of any Releases that would be
reasonably likely to form the basis of any Environmental Claim against the
Company or any of its subsidiaries, except for Releases the liability for
which would not reasonably be likely to have, individually or in the
aggregate, a Company Material Adverse Effect.
(e) Predecessors. The Company has no knowledge of any Environmental
Claim pending or of any Release that would be reasonably likely to form the
basis of any Environmental Claim, in each case against any predecessor of
the Company or any of its subsidiaries or any other party whose liability
the Company or any of its subsidiaries has or may have retained or assumed
either contractually or by operation of law, except for such Releases the
liability for which would not, individually or in the aggregate, have a
Company Material Adverse Effect.
(f) As used in this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation by any person or by any Governmental
Authority with jurisdiction under Environmental Laws alleging potential
responsibility or liability for enforcement costs, investigatory costs,
cleanup costs, governmental response costs, removal costs, remedial
costs, natural-resources damages, property damages, personal injuries,
fines or penalties, or other liabilities pursuant to Environmental Laws
including, but not limited to those arising out of, based on or
resulting from (A) the presence of any Hazardous Materials or (B)
circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law.
(ii) "Environmental Laws" means any applicable statute, regulation,
rule, code, common law, order or judgment of any federal, state, local
or foreign jurisdiction where the Company or any of its subsidiaries
operates concerning protection or preservation of the environment,
human health or natural resources, including but not limited to
statutes, regulations, rules, codes, common law, orders or judgments
relating to (i) any discharges, releases or emissions to air, water
(including surface water, ground water and wetlands), soil or sediment,
(ii) the quality of any environmental medium, (iii) the generation,
treatment, recycling, storage, disposal, transportation or other
management of waste, (iv) the manufacture, distribution, disposal, or
recycling of chemical substances and mixtures, or (v) responsibility or
liability for environmental conditions.
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(iii) "Hazardous Materials" means any substance, material or waste
(in any relevant physical form or concentration) regulated, listed or
identified under any Environmental Law and any other substance,
material or waste (in any form or concentration) which is hazardous,
dangerous, or toxic to living things or the environment.
(iv) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment of any Hazardous Materials.
Section 4.12 Regulation as a Utility. The Company and/or its subsidiaries
are regulated as a public utility in the states set forth on Section 4.12 of
the Company Disclosure Schedule. Except as set forth on Section 4.12 of Company
Disclosure Schedule, neither the Company nor any "subsidiary company" or
"affiliate" of the Company is subject to regulation as a public utility or
public service company (or similar designation) by the United States or any
other state of the United States. All filings required to be made by the
Company or any of its subsidiaries since December 31, 1998, under any
applicable laws or orders relating to the regulation of public utilities, have
been filed with the appropriate public utility commission, health agency or
other appropriate governmental entity (including, without limitation, to the
extent required, the state public utility regulatory agencies in the states
identified in Section 4.12 of the Company Disclosure Schedule), as the case may
be, including all forms, statements, reports, agreements (oral or written) and
all documents, exhibits, amendments and supplements appertaining thereto,
including but not limited to all rates, tariffs, franchises, service agreements
and related documents and all such filings complied, as of their respective
dates, with all applicable requirements of the appropriate laws or orders,
except for such filings or such failure to comply that would not reasonably be
likely to have, individually or in the aggregate, a Company Material Adverse
Effect. Except as specified on Section 4.12 of the Company Disclosure Schedule,
no approval of any public utilities regulatory authority (including all public
utility control or public service commissions and similar state regulatory
bodies) is required for the Company's execution and delivery of this Agreement
by the Company or the performance of its obligations under this Agreement or
the consummation of the transactions contemplated by this Agreement.
Section 4.13 Water Quality. Except as set forth on Section 4.13 of the
Company Disclosure Schedule, the quality of water supplied by the Company and
its subsidiaries meets or exceeds all standards for quality and safety of water
in all material respects in accordance with all applicable federal, state,
local or foreign statutes, laws, ordinances, rules and regulations.
Section 4.14 Vote Required. The approval of (i) two-thirds of the
outstanding shares of Company Common Stock not owned by Parent or any affiliate
of Parent which is an "interested shareholder" as defined in NJBCA (S) 14A:10A-
3 and (ii) two-thirds of the outstanding shares of the Series A Preference
Stock at the Company Special Meeting (collectively, the "Company Stockholders'
Approval") are the only votes of the holders of any class or series of the
capital stock of the Company or any of its subsidiaries required to approve
this Agreement, the Merger and the other transactions contemplated hereby.
Section 4.15 Opinion of Financial Advisor. The Company has received the
opinion of Xxxxxx Xxxxxxx & Co. Incorporated to the effect that, as of the date
hereof, the Per Share Cash Consideration is fair from a financial point of view
to the holders of Company Common Stock.
Section 4.16 The Company Rights Agreement. The Company has taken all
necessary action with respect to all of the outstanding stock purchase rights
of the Company (the "Rights") issued pursuant to the Rights Agreement, dated as
of July 12, 1989, as amended by Amendment No. 1 thereto dated as of September
15, 1993, Amendment No. 2 thereto dated as of July 30, 1999 and Amendment No. 3
thereto dated as of August 20, 1999 (the "Rights Agreement"), between the
Company and ChaseMellon Shareholder Services, LLC, as Rights Agent, so that the
Company, as of the time immediately prior to the Effective Time, will have no
obligations under the Rights or the Rights Agreement and so that the holders of
the Rights will have no rights under the Rights or the Rights Agreement. The
Board of Directors of the Company has taken all necessary action to amend the
Rights Agreement so that neither the execution and delivery of this Agreement,
the performance of the parties' obligations hereunder nor the consummation of
the Merger will (a) cause the
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Rights issued pursuant to the Rights Agreement to become exercisable, (b) cause
Parent or Merger Sub to become an Acquiring Person (as such term is defined in
the Rights Agreement) or (c) give rise to a Distribution Date (as such term is
defined in the Rights Agreement). The execution, delivery and performance of
this Agreement will not result in a distribution of, or otherwise trigger, the
Rights under the Rights Agreement.
Section 4.17 Real Property. The Company and each of its subsidiaries and, to
the Company's knowledge, each of the Company Joint Ventures has good title or
valid leases with respect to all of their real property free and clear of any
and all liens, claims and encumbrances other than (i) as set forth in Section
4.17 of the Company Disclosure Schedule, (ii) those reflected or reserved
against in the Company Financial Statements and the notes thereto, (iii)
imperfections of title, easements, pledges, charges, restrictions and
encumbrances, including, without limitation, survey matters and mechanics'
liens, if any, that do not materially detract from the value of the property
subject thereto, or materially interfere with the manner in which it is
currently being used, (iv) taxes and general and special assessments not in
default and payable without penalty or interest, and (v) such other liens,
claims and encumbrances as would not reasonably be likely to have, individually
or in the aggregate, a Company Material Adverse Effect. Except, in each case,
as would not, individually or in the aggregate, have a Company Material Adverse
Effect, (A) neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any of the Company Joint Ventures has received any notice
for assessments for public improvements against the real property and, to the
knowledge of the Company and its subsidiaries, no such assessment has been
proposed; and (B) neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any of the Company Joint Ventures has received any notice
or order by any governmental or other public authority, any insurance company
which has issued a policy with respect to any of such properties or any board
of fire underwriters or other body exercising similar functions which (i)
relates to violations of building, safety, fire or other ordinances or
regulations, (ii) claims any defect or deficiency with respect to any of such
properties or (iii) requests the performance of any repairs, alterations or
other work to or in any of such properties or in the streets bounding the same.
Except as set forth in Section 4.17 of the Company Disclosure Schedule or as
would not reasonably be likely to have, individually or in the aggregate, a
Company Material Adverse Effect, there is no pending condemnation,
expropriation, eminent domain or similar proceeding affecting all or any
portion of any of such properties and, to the Company's knowledge, no such
proceeding is threatened.
Section 4.18 Property Franchises. The Company and each of its subsidiaries
owns or has sufficient rights and consents to use under existing franchises,
easements, leases, and license agreements all properties, rights and assets
necessary for the conduct of their business and operations as currently
conducted, except where the failure to own or have sufficient rights and
consents to use such properties, rights and assets would not reasonably be
likely to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 4.19 Insurance. The Company and each of its subsidiaries is, and has
been continuously since at least January 1, 1995, insured with financially
responsible insurers in such amounts and against such risks and losses as are
customary for companies conducting the business as conducted by the Company and
its subsidiaries during such time period. Neither the Company nor any of its
subsidiaries has received any notice of cancellation or termination with
respect to any material insurance policy of the Company or any of its
subsidiaries. All material insurance policies of the Company and each of its
subsidiaries are valid and enforceable policies.
Section 4.20 Trademarks, Patents and Copyrights. Except where a failure is
not reasonably likely, individually or in the aggregate, to have a Company
Material Adverse Effect, the Company and its subsidiaries and, to the Company's
knowledge, the Company Joint Ventures own, or possess licenses or other valid
rights to use, all patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, copyrights, service marks, trade secrets,
applications for trademarks and for service marks, know-how and other
proprietary rights and information that are material to the business of the
Company and its subsidiaries and, to the Company's knowledge, Company Joint
Ventures as currently conducted, and the Company is unaware of any assertion or
claim challenging the validity of any of the foregoing, other than any
assertions or claims which, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.
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The conduct of the business of the Company and its subsidiaries and, to the
Company's knowledge, the Company Joint Ventures as currently conducted does not
conflict with any patent, patent right, license, trademark, trademark right,
trade name, trade name right, service xxxx or copyright of any third party,
other than conflicts that, individually or in the aggregate, would not
reasonably be likely to have a Company Material Adverse Effect. To the
knowledge of the Company, there are no infringements by any third party of any
proprietary rights owned or licensed by or to the Company or any subsidiary
which are reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 4.21 Year 2000. Except as would not reasonably be likely to have,
individually or in the aggregate, a Company Material Adverse Effect, to the
knowledge of the Company, all internal computer systems, computer software,
equipment or technology that are material to the business, finances or
operations of the Company and its subsidiaries or were sold or licensed to
customers of the Company and its subsidiaries are (i) able to receive, record,
store, process, calculate, manipulate and output dates from and after January
1, 2000, time periods that include January 1, 2000 and information that is
dependent on or relates to such dates or time periods, in the same manner and
with the same accuracy, functionality, data integrity and performance as when
dates or time periods prior to January 1, 2000 are involved, (ii) able to store
and output date information in a manner that is unambiguous as to century and
(iii) able to recognize Year 2000 as a leap year.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.1 Organization and Qualification. Except as set forth in
Section 5.1 of the Parent Disclosure Schedule (as defined in Section
7.6(ii)), Parent, Merger Sub and each of Parent's other subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has all
requisite corporate power and authority, and has been duly authorized by
all necessary approvals and orders, to own, lease and operate its assets
and properties to the extent owned, leased and operated and to carry on its
business as it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its assets and properties makes
such qualification necessary, other than in such jurisdictions where the
failure to be so qualified and in good standing will not, when taken
together with all other such failures, have a Parent Material Adverse
Effect. As used in this Agreement, "Parent Material Adverse Effect" means
any change, effect, condition or circumstance that will, or is reasonably
likely to, have a material adverse effect on Parent's or Merger Sub's
ability to consummate the transactions contemplated by this Agreement.
Section 5.2 Authority; Non-Contravention; Statutory
Approvals. Authority. Each of Parent and Merger Sub has all requisite
corporate power and authority to enter into this Agreement and, subject to
the applicable Parent Required Statutory Approvals (as defined in Section
5.2(c)), to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Parent and Merger Sub, the performance by
Parent and Merger Sub of their respective obligations hereunder and the
consummation by Parent and Merger Sub of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of Parent and Merger Sub, respectively. This Agreement has been duly
and validly executed and delivered by Parent and Merger Sub and, assuming
the due authorization, execution and delivery hereof by the other
signatories hereto, constitutes the valid and binding obligation of each of
Parent and Merger Sub enforceable against each in accordance with its
terms.
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(b) Non-Contravention. Except as set forth in Section 5.2(b) of the
Parent Disclosure Schedule, the execution and delivery of this Agreement by
Parent and Merger Sub do not, and the consummation of the transactions
contemplated hereby will not, result in a Violation pursuant to any
provisions of (i) the certificate of incorporation, by-laws or similar
governing documents of Parent or Merger Sub, respectively, or any of
Parent's other subsidiaries or, to Parent's knowledge, any of its joint
ventures, (ii) subject to obtaining the Parent Required Statutory
Approvals, any statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any Governmental Authority
applicable to Parent, Merger Sub or any of Parent's other subsidiaries or,
to Parent's knowledge, any of its joint ventures or any of their respective
properties or assets or (iii) subject to obtaining the third-party consents
or other approvals set forth in Section 5.2(b) of the Parent Disclosure
Schedule (the "Parent Required Consents"), any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which
Parent, Merger Sub or any of Parent's other subsidiaries or, to Parent's
knowledge, any of its joint ventures is a party or by which it or any of
their respective properties or assets may be bound or affected, excluding
from the foregoing clauses (ii) and (iii) such violations as would not
have, in the aggregate, a Parent Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section 5.2(c) of the
Parent Disclosure Schedule, no declaration, filing or registration with, or
notice to or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by
Parent or Merger Sub, the performance by Parent or Merger Sub of their
respective obligations hereunder or the consummation by Parent or Merger
Sub of the transactions contemplated hereby, the failure to obtain, make or
give which would reasonably be likely to have, individually and in the
aggregate, a Parent Material Adverse Effect (the "Parent Required Statutory
Approvals"), it being understood that references in this Agreement to
"obtaining" such Parent Required Statutory Approvals shall mean making such
declarations, filings or registrations; giving such notices; obtaining such
authorizations, consents or approvals; and having such waiting periods
expire as are necessary to avoid a violation of law.
Section 5.3 Reports and Financial Statements. The audited consolidated
financial statements and unaudited interim financial statements of Parent
since December 31, 1995 (collectively, the "Parent Financial Statements")
have been prepared in accordance with generally accepted accounting
principles (except as may be indicated therein or in the notes thereto) and
fairly present the consolidated financial position of Parent as of the
dates thereof and the consolidated results of its operations and cash flows
for the periods then ended. True, accurate and complete copies of the
certificate of incorporation and by-laws of Parent (including all
amendments thereto) as in effect on the date hereof, have been made
available to the Company.
Section 5.4 Proxy Statement. None of the information supplied or to be
supplied by or on behalf of Parent or Merger Sub for inclusion or
incorporation by reference in the Proxy Statement shall, at the dates
mailed to the Company stockholders and at the times of the meeting of the
Company stockholders to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement, insofar as it relates to Parent, Merger
Sub or any other Parent subsidiary, shall comply as to form in all material
respects with the applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder.
Section 5.5 Ownership of Company Capital Stock. Except as set forth in
Section 5.5 of the Parent Disclosure Schedule, Parent does not
"beneficially own" (as such term is defined for purposes of Section 13(d)
of the Exchange Act) any shares of Company Common Stock or Series A
Preference Stock.
Section 5.6 Financing. Parent has or will have available, prior to the
Effective Time, sufficient cash in immediately available funds to pay all
Cash Consideration required to be paid pursuant to Article II hereof and to
consummate the Merger and other transactions contemplated hereby.
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ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of Company. After the date hereof and prior to the
Effective Time or earlier termination of this Agreement, the Company agrees as
to itself and to its subsidiaries, as follows, except as expressly contemplated
or permitted in this Agreement, or to the extent Parent shall otherwise consent
in writing:
(a) Ordinary Course of Business. The Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore
conducted. In addition, the Company shall, and shall cause its subsidiaries
to, use all commercially reasonable efforts to (i) preserve intact its
present business organization and goodwill, preserve the goodwill and
relationships with customers, suppliers and others having business dealings
with it, (ii) subject to prudent management of workforce needs and ongoing
programs currently in force, keep available the services of its present
officers and employees as a group, and (iii) maintain and keep material
properties and assets in as good repair and condition as at present,
subject to ordinary wear and tear, and maintain supplies and inventories in
quantities consistent with past practice.
(b) Dividends. The Company shall not nor shall it permit any of its
subsidiaries to: (i) declare or pay any dividends on or make other
distributions in respect of any of their capital stock other than (A)
dividends by a wholly-owned subsidiary to the Company or another wholly-
owned subsidiary, (B) dividends by a less than wholly-owned subsidiary
consistent with past practice, (C) stated dividends on Company Preferred
Stock, (D) regular dividends on Company Common Stock with usual record and
payment dates that, in any fiscal quarter, do not exceed 100% of the
dividends for the same quarter of the prior fiscal year, (E) if the
Effective Time occurs on a date other than a usual record date for
dividends on Company Common Stock, a "stub period" dividend equal to an
amount not to exceed 100% of the dividends for the same quarter of the
prior fiscal year as the quarter in which the Effective Time occurs
multiplied by a fraction, the numerator of which is the number of days
between the immediately preceding record date and the Effective Time and
the denominator of which is the number of days between such record date and
the next regularly scheduled record date, (F) an additional dividend on
Company Common Stock in each of the first three fiscal quarters following
the date of this Agreement in an amount not to exceed $0.06 per share per
quarter, and (G) a special dividend payable to each holder of record of
Company Common Stock immediately prior to the Effective Time in an amount
per share equal to the difference between $0.48 and the amount of the
aggregate dividends per share payable pursuant to clause (F) of this
Section 6.1(b); (ii) split, combine or reclassify any capital stock or the
capital stock of any subsidiary or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of, or in
substitution for, shares of capital stock or the capital stock of any
subsidiary; or (iii) redeem, repurchase or otherwise acquire any shares of
capital stock or the capital stock of any subsidiary (or any option with
respect thereto) other than (A) redemptions, repurchases and other
acquisitions of shares of capital stock in connection with the
administration of employee benefit and dividend reinvestment plans as in
effect on the date hereof in the ordinary course of the operation of such
plans consistent with past practice, or (B) the intercompany acquisitions
of capital stock described in Section 6.1(b) of the Company Disclosure
Schedule.
(c) Issuance of Securities. The Company shall not, nor shall it permit
any of its subsidiaries to, issue, agree to issue, deliver, sell, award,
pledge, dispose of or otherwise encumber or authorize or propose the
issuance, delivery, sale, award, pledge, disposal or other encumbrance of,
any shares of their capital stock of any class or any securities
convertible into or exchangeable for, or any rights, warrants or options to
acquire, any such shares or convertible or exchangeable securities, other
than as provided for in the Company Benefit Plans consistent with past
practice or as set forth in Section 6.1(c) of the Company Disclosure
Schedule. The Company shall promptly furnish to Parent such information as
may be reasonably requested including financial information. Without
limiting the foregoing, as soon as
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practicable following the date of this Agreement, the Company shall
exercise and shall cause any applicable administrator to exercise all
discretion to (i) purchase Company Common Stock for participants under its
Dividend Reinvestment and Stock Purchase Plan (the "DRIP Program") on the
open market for all dividend payment dates following the date of this
Agreement and terminate the issuance or distribution of shares under the
DRIP Program at the earliest possible date; (ii) purchase Company Common
Stock for distribution to participants under its Management Incentive Plan
and other Company Stock Plans on the open market for all distributions
following the date of this Agreement; and (iii) make any and all purchases
of Company Common Stock for its 401(k) plan (or other retirement plan) on
the open market.
(d) Acquisitions. Except as disclosed in Section 6.1(d) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
subsidiaries to, acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or business organization or division
thereof, or otherwise acquire or agree to acquire any material amount of
assets other than in the ordinary course of business; provided, however,
that notwithstanding the foregoing, the Company may acquire solely for cash
or agree to acquire solely for cash equity interests or the business or
assets of businesses that (i) are water or wastewater utilities, (ii) have
a value not in excess of $5 million individually and $25 million in the
aggregate (in each case, including the assumption of debt and other
liabilities), and (iii) would not reasonably be expected to prevent or
materially delay the receipt of the Company Required Statutory Approvals.
The Company shall inform Parent reasonably in advance of taking, or
permitting any of its subsidiaries to take, action relating to any such
direct or indirect acquisition.
(e) Capital Expenditures. Except as set forth in Section 6.1(e) of the
Company Disclosure Schedule or as required by law, the Company shall not,
nor shall it permit any of its subsidiaries to, make aggregate capital
expenditures that exceed 110% of the cumulative amount budgeted by the
Company or its subsidiaries for capital expenditures as set forth in
Section 6.1(e) of the Company Disclosure Schedule.
(f) No Dispositions. Except as set forth in Section 6.1(f) of the
Company Disclosure Schedule, and other than in the ordinary course of
business or consistent with past practice, the Company shall not, nor shall
it permit any of its subsidiaries to, sell, lease, license, encumber or
otherwise dispose of, any of its assets, other than encumbrances or
dispositions in the ordinary course of its business consistent with past
practice.
(g) Indebtedness. Except as set forth in Section 6.1(g) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
subsidiaries to, incur or guarantee any indebtedness (including any debt
borrowed or guaranteed or otherwise assumed including, without limitation,
the issuance of debt securities or warrants or rights to acquire debt) or
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing other than (i) a net increase
in short-term indebtedness in the ordinary course of business consistent
with past practice in amounts not exceeding $65 million; (ii) arrangements
between the Company and its wholly-owned subsidiaries or among its wholly-
owned subsidiaries; (iii) net increase in total indebtedness in an amount
not to exceed in the aggregate $35 million; or (iv) indebtedness in
connection with acquisitions permitted by Section 6.1(d) hereof or long-
term indebtedness in connection with the refunding of existing indebtedness
either at its stated maturity or at a lower cost of funds.
(h) Compensation, Benefits. Except as set forth in Section 6.1(h) of the
Company Disclosure Schedule, as may be required by applicable law, as may
be required to facilitate or obtain a determination from the IRS that a
plan is "qualified" within the meaning of Section 401(a) of the Code or as
contemplated by this Agreement, the Company shall not, nor shall it permit
any of its subsidiaries to, (i) enter into, adopt or amend or increase the
amount or accelerate the payment or vesting of any benefit or amount
payable under, any employee benefit plan or other contract, agreement,
commitment, arrangement, plan or policy covering employees, former
employees, directors or former directors or their beneficiaries
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or providing benefits to such persons that is maintained by, contributed to
or entered into by such party or any of its subsidiaries, or increase or
enter into any contract, agreement commitment or arrangement to increase in
any manner, the compensation or fringe benefits, or otherwise to extend
expand or enhance the engagement employment or any related rights of, or
take any other action or grant any benefit (including, without limitation,
any stock options or stock option plan) not required under the terms of any
existing employee benefit plan or other contract, agreement, commitment,
arrangement, plan or policy to or with any current or former director,
officer or other employee of such party or any of its subsidiaries, except
for normal increases or grants or actions in the ordinary course of
business consistent with past practice that, in the aggregate, do not
result in a material increase in benefits or compensation expense to the
Company or any of its subsidiaries or (ii) enter into or amend any
employment, severance or special pay arrangement with respect to the
termination of employment or other similar contract, agreement or
arrangement with any current or former director or officer or other
employee other than in the ordinary course of business consistent with
current industry practice.
(i) Accounting. Except as set forth in Section 6.1(i) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
subsidiaries to, make any changes in their accounting methods, policies or
procedures, except as required by law, rule, regulation or GAAP, nor shall
the Company or any of its subsidiaries file any Tax Return inconsistent
with past practice, or, on any such Tax Return, take any position or method
that is inconsistent with positions taken, elections made or methods used
in preparing or filing similar Tax Returns in prior periods, or settle or
compromise any Tax liability that is subject to an audit, claim for
delinquent Taxes, examination, suit or proceeding.
(j) Cooperation, Notification. The Company shall, and shall cause its
subsidiaries to, (i) confer on a regular and frequent basis with one or
more representatives of Parent to discuss, subject to applicable law,
material operational matters and the general status of its ongoing
operations and other matters relating to the Merger; (ii) promptly notify
Parent of any significant changes in its business, properties, assets,
condition (financial or other), results of operations or prospects or of
the receipt of any written complaint or notice of the commencement of any
investigation or proceeding which alleges the occurrence of any event or
the existence of any fact which is reasonably likely to result in a Company
Material Adverse Effect or the institution or, to the actual knowledge of
the Company, threat of any material litigation; (iii) advise Parent of any
change or event which has had or, insofar as reasonably can be foreseen, is
reasonably likely to result in a Company Material Adverse Effect; and (iv)
promptly provide Parent with copies of all filings made by the Company or
any of its subsidiaries with any state or federal court, administrative
agency, commission or other Governmental Authority in connection with this
Agreement and the transactions contemplated hereby.
(k) Third-Party Consents. The Company shall, and shall cause its
subsidiaries to, use all commercially reasonable efforts to obtain all the
Company Required Consents. The Company shall promptly notify Parent of any
failure or prospective failure to obtain any such consents and, if
requested by Parent shall provide copies of all the Company Required
Consents obtained by the Company to Parent.
(l) No Breach, Etc. The Company shall not, nor shall it permit any of
its subsidiaries to, willfully take any action that would or is reasonably
likely to result in a material breach of any provision of this Agreement or
in any of its representations and warranties set forth in this Agreement
being untrue on and as of the Closing Date.
(m) Discharge of Liabilities. The Company shall not, nor shall it permit
any of its subsidiaries to, pay, discharge or satisfy any material claims,
liabilities or obligations (absolute accrued, asserted or unasserted
contingent or otherwise), or settle any material claim or litigation, other
than the payment, discharge, satisfaction or settlement, in the ordinary
course of business consistent with past practice (which includes the
payment of final and non-appealable judgments) or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by,
the most recent consolidated financial statements (or the notes thereto) of
the Company included in the Company SEC Reports or incurred in the ordinary
course of business consistent with past practice.
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(n) Contracts. The Company shall not, nor shall it permit any of its
subsidiaries to, except in the ordinary course of business consistent with
past practice, modify, amend, terminate, renew or fail to use reasonable
business efforts to renew any material contract or agreement to which the
Company or any subsidiary of the Company is a party, or, except in
connection with an acquisition permitted under Section 6.1(d) hereof, enter
into any new material contract, or waive, release or assign any material
rights or claims, or enter into any material contracts or arrangements
other than on terms that are arm's length.
(o) Insurance. The Company shall, and shall cause its subsidiaries to,
maintain with financially responsible insurance companies insurance in such
amounts and against such risks and losses as are customary for companies
engaged in the water utility industry.
(p) Permits. The Company shall, and shall cause its subsidiaries to, use
reasonable efforts to maintain in effect all existing governmental permits
pursuant to which such party or its subsidiaries operate.
(q) Charter Amendments. The Company shall not, nor shall it permit any
of its subsidiaries to, amend or otherwise change its certificate of
incorporation or bylaws or equivalent organizational documents or take or
fail to take any other action, which in any case would reasonably be
expected to prevent or materially impede or interfere with the Merger
(except as permitted in Section 6.2).
(r) Tax Elections. Except as set forth in Section 6.1(r) of the Company
Disclosure Schedule, the Company shall not nor shall it permit any of its
subsidiaries to make, change or rescind any material Tax election, other
than (i) recurring elections that customarily are made in connection with
the filing of any Tax Return; provided that any such elections are
consistent with the past practices of the Company or its subsidiaries, as
the case may be; (ii) gain recognition agreements under Section 367 of the
Code and Treasury regulations thereunder with respect to transactions
occurring in the 1998 fiscal year of the Company; (iii) elections with
respect to subsidiaries purchased by the Company under Section 338(h)(10)
of the Code or, solely in the case of non-U.S. subsidiaries purchased by
the Company, Section 338(g) of the Code; and (iv) elections with respect to
partnership interests purchased by the Company under Section 754 of the
Code, or settle or compromise any material Tax liability that is the
subject of an audit, claim for delinquent Taxes, examination, action, suit,
proceeding or investigation by any taxing authority.
(s) Non-Competition Agreements. Except as set forth in Section 6.1(s) of
the Company Disclosure Schedule, the Company shall not nor shall it permit
any of its subsidiaries to enter into any agreement, understanding or
commitment that restrains, limits or impedes the Company's or any of its
subsidiaries' ability to compete with or conduct any business or line of
business, including, but not limited to, geographic limitations on the
Company's or any of its subsidiaries' activities, other than in the
ordinary course of business consistent with past practice.
(t) Regulatory Matters. The Company shall, and shall cause its
subsidiaries to (i) timely file, in the ordinary course of business
consistent with past practice, rate applications and other required filings
with state public utility control or public service commissions and similar
state regulatory bodies and (ii) except with respect to filings in the
ordinary course of business consistent with past practice that would not
reasonably be likely to have, individually or in the aggregate, a Company
Material Adverse Effect, consult with Parent reasonably in advance of
making any filing to implement changes in any of its or its subsidiaries'
rates or surcharges for water service, standards of service or accounting
or executing any agreement with respect thereto that is otherwise permitted
under this Agreement. The Company shall, and shall cause its subsidiaries
to, deliver to Parent a copy of each such filing or agreement.
(u) Other Agreements. The Company shall not nor shall it permit any of
its subsidiaries to agree or enter into, in writing or otherwise, or amend
any written contract or agreement that would be in violation of the
covenants set forth in this Section 6.1.
(v) Company Joint Ventures. The Company shall use reasonable efforts to
cause the Company Joint Ventures to operate their respective businesses
only in the ordinary course consistent with past practice and, except as
contemplated by Section 7.14, not to expand the scope of their respective
businesses.
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Section 6.2 Alternative Proposal.
(a) The Company shall, and shall direct and use reasonable efforts to cause
its subsidiaries and any of its or its subsidiaries' directors, officers,
employees, investment bankers, attorneys or other agents or representatives
immediately to cease any discussions or negotiations with any parties that may
be ongoing with respect to any Alternative Proposal (as defined below). The
Company agrees that, prior to the Effective Time, it shall not, and shall not
authorize or permit any of its subsidiaries or any of its or its subsidiaries'
directors, officers, employees, investment bankers, attorneys or other agents
or representatives, (x) directly or indirectly, to initiate, solicit or
encourage, or take any action to facilitate the making of any offer or proposal
that constitutes or is reasonably likely to lead to any Alternative Proposal or
(y) directly or indirectly, engage in negotiations or provide any confidential
information or data to any person relating to any Alternative Proposal. The
Company shall notify Parent orally and in writing of any such inquiries, offers
or proposals (including, without limitation, the terms and conditions of any
such proposal). Notwithstanding anything in this Section 6.2 to the contrary,
in response to an unsolicited Alternative Proposal which did not result from a
breach of this Section 6.2, unless the Company Shareholders Approval has been
obtained, the Company may furnish information to, and afford access to the
properties, books and records of the Company and its subsidiaries to the person
making the Alternative Proposal (i) not earlier than 24 hours after providing
written notice to Parent regarding such Alternative Proposal, including the
terms and conditions thereof, and the identity of the person or group making
the Alternative Proposal and (ii) participate in discussions with such person
or group regarding the Alternative Proposal if, but only to the extent that (A)
the Board of Directors of the Company has reasonably concluded in good faith
(after consultation with its financial advisors) that the person or group
making the Alternative Proposal will have adequate sources of financing to
consummate the Alternative Proposal and that the Alternative Proposal is more
favorable to the Company's shareholders than the Merger (taking into account,
without limitation, the likelihood that all required regulatory approvals for
such Alternative Proposal will be obtained in a prompt and timely manner), (B)
the Board of Directors of the Company has determined in good faith, based on
advice of outside counsel with respect to such Board's fiduciary duties under
applicable law with respect to the proposed Alternative Proposal and such other
matters as such Board deems relevant, that it is necessary to do so in order to
act in a manner consistent with its fiduciary duties to its shareholders, and
(C) such person or group has entered into a confidentiality agreement with the
person or group making the Alternative Proposal (the "Alternative Proposal
Confidentiality Agreement") containing terms and conditions no less favorable
to the Company than the Confidentiality Agreement (as defined in Section 7.1)
and the other agreements and arrangements governing the Company's relationship
with Parent, it being understood that nothing herein to the contrary shall
restrict the Board of Directors of the Company from exercising its authority
under the Alternative Proposal Confidentiality Agreement as it may deem
appropriate and (iii) not terminate this Agreement in respect of an Alternative
Proposal except as provided in Section 9.1(h). The Company will keep Parent
informed on a timely and current basis on the status and details (including
amendments or proposed amendments) of any request for information or
Alternative Proposal. The Company will immediately provide to Parent any non-
public information concerning the Company provided to any other person in
connection with an Alternative Proposal which was not previously provided to
Parent. As used in this Agreement, "Alternative Proposal" shall mean any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of a business that constitutes 20% or more of the net
revenues, net income or the assets of the Company and its subsidiaries, taken
as a whole, or 20% or more of any class of equity securities of the Company, or
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company, other than the
transactions contemplated by this Agreement.
(b) The Board of Directors of the Company shall not withdraw or modify, or
propose to withdraw or modify, in any manner adverse to Parent or Merger Sub or
both, the approval or recommendation of the Board of Directors of the Company
of this Agreement unless the Board of Directors of the Company shall have
(i) determined in good faith as a result of changed circumstances and based on
the advice of outside counsel with respect to the Board of Directors of the
Company's fiduciary duties under applicable law that such fiduciary duties
require the directors to withdraw or modify such approval or recommendation,
and
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(ii) provided to Parent a statement in writing in reasonable detail stating the
reasons therefor. Notwithstanding the foregoing, nothing contained in this
Section 6.2(b) shall prohibit the Company from taking and disclosing to
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the Company's stockholders if, in
the good faith judgment of the Board of Directors of the Company, after
consultation without outside counsel, failure to so disclose would be
inconsistent with its obligations under applicable law.
Section 6.3 Covenants of Parent. After the date hereof and prior to the
Effective Time or earlier termination of their Agreement, Parent agrees, as to
itself and to its subsidiaries, as follows, except as expressly contemplated or
permitted in this Agreement, or to the extent the other parties hereto shall
otherwise consent in writing:
(a) Third-Party Consents. Parent shall, and shall cause its subsidiaries
to, use all commercially reasonable efforts to obtain all Parent Required
Consents. Parent shall promptly notify the Company of any failure or
prospective failure to obtain any such consents and, if requested by the
Company, shall provide copies of all Parent Required Consents obtained by
Parent to the Company.
(b) No Breach, Etc. Parent shall not, nor shall it permit any of its
subsidiaries to, willfully take any action that would or is reasonably
likely to result in a material breach of any provision of this Agreement or
in any of its representations and warranties set forth in this Agreement
being untrue on and as of the Closing Date.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. Upon reasonable notice and during normal
business hours the Company shall, and shall cause its subsidiaries and shall
use reasonable efforts to cause the Company Joint Ventures to, afford to the
officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives of Parent (collectively,
"Representatives") reasonable access, during normal business hours throughout
the period prior to the Effective Time, to all of its properties, books,
contracts, commitments and records (including, but not limited to, Tax Returns)
and, during such period, the Company shall, and shall cause its subsidiaries
to, furnish promptly to Parent (i) access to each report, schedule and other
document filed or received by it or any of its subsidiaries pursuant to the
requirements of federal or state securities laws or filed with or sent to the
SEC, the Department of Justice, the Federal Trade Commission, and any other
Governmental Authority, and (ii) access to all information concerning the
Company, its subsidiaries, directors, officers and stockholders and such other
matters as may be reasonably requested by Parent, including in connection with
any filings, applications or approvals required or contemplated by this
Agreement; provided that no investigation pursuant to this Section 7.1 shall
affect any representation or warranty made herein or any condition to the
obligations of the respective parties to consummate the Merger. Parent shall,
in accordance with the Confidentiality Agreement dated as of July 26, 1999
between the Company and Parent (the "Confidentiality Agreement"), and shall
cause its subsidiaries and Representatives to, hold in strict confidence all
information concerning the Company furnished to it in connection with the
transactions contemplated by this Agreement.
Section 7.2 Proxy Statement.
(a) The Company will prepare and file the Proxy Statement with the SEC as
soon as reasonably practicable after the date hereof and shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC at the
earliest practicable time. Parent, Merger Sub and the Company shall cooperate
with each other in the preparation of the Proxy Statement, and the Company
shall notify Parent of the receipt of any comments of the SEC with respect to
the Proxy Statement and of any requests by the SEC for any amendment or
supplement thereto or for additional information and shall provide to Parent
promptly copies of all correspondence between
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the Company, or any representative of the Company, and the SEC or its staff.
The Company shall give Parent and their counsel the opportunity to review the
Proxy Statement prior to its being filed with the SEC and shall give Parent and
their counsel the opportunity to review all amendments and supplements to the
Proxy 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, Parent and Merger Sub agrees to use all reasonable efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC and to cause the Proxy Statement and
all required amendments and supplements thereto to be mailed to the holders of
Shares entitled to vote at the Company Special Meeting at the earliest
practicable time. Parent shall furnish all information concerning itself which
is required or customary for inclusion in such Proxy Statement. The information
provided by Parent for use in the Proxy Statement shall be true and correct in
all material respects without omission of any material fact which is required
to make such information not false or misleading. No representation, covenant
or agreement is made by or on behalf of the Company with respect to information
supplied by Parent for inclusion in the Proxy Statement.
(b) If, at any time prior to the Effective Time, any event with respect to
the Company, its officers and directors or any of its subsidiaries should occur
which is required to be described in an amendment of, or a supplement to, the
Proxy Statement, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the Company's stockholders. Prior to the filing of such
amendment or supplement with the SEC, a copy thereof will be delivered to
Parent and their counsel, who shall, to the extent practicable under the
circumstances and applicable law, have the opportunity to comment on such
amendment or supplement.
Section 7.3 Regulatory Matters. Each party hereto shall cooperate and use
its best efforts to promptly prepare and file all necessary documentation to
effect all necessary applications, notices, petitions, filings and other
documents, and to use all commercially reasonable efforts to obtain as soon as
reasonably practicable following the date hereof all necessary permits,
consents, approvals and authorizations of all Governmental Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement, including, but not limited to, (a) all notifications required to be
filed under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder, (b) the other Company
Required Statutory Approvals and (c) the other Parent Required Statutory
Approvals. The parties agree that they will consult with each other with
respect to obtaining Company Required Statutory Approvals and the Parent
Required Statutory Approvals; provided, however, that it is agreed that the
Company shall have primary responsibility for the preparation and filing of any
applications, filings or other material with state utility commissions required
to be filed or submitted in connection with obtaining the Company Required
Statutory Approvals. Parent shall have the right to review and approve in
advance drafts of and final applications, filings and other material submitted
to or filed with state utility commissions, which approval shall not be
unreasonably conditioned, withheld or delayed.
Section 7.4 Stockholder Approval.
(a) The Company Stockholders. Subject to the provisions of Section 7.4(b)
and the NJBCA, the Company shall, as soon as reasonably practicable after the
date hereof (i) take all steps necessary to duly call, give notice of, convene
and hold a meeting of its stockholders (the "Company Special Meeting") for the
purpose of securing Company Stockholders' Approval, (ii) distribute to its
stockholders the Proxy Statement in accordance with applicable federal and
state law and with its certificate of incorporation and by-laws, (iii) subject
to Section 6.2(b), recommend to its stockholders the approval of this Agreement
and the transactions contemplated hereby, (iv) subject to Section 6.2(b), use
its reasonable best efforts to obtain the Company Stockholders' Approval at the
Company Special Meeting, and (v) cooperate and consult with Parent with respect
to each of the foregoing matters.
(b) Meeting Date. Subject to Section 7.4(a), the Company Special Meeting for
the purpose of securing the Company Stockholders' Approval shall be held on
such date as the Company shall determine.
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Section 7.5 Directors' and Officers' Indemnification.
(a) Indemnification. To the extent, if any, not provided by an existing
right of indemnification or other agreement or policy, after the Effective
Time, Parent, the Surviving Corporation and the Company shall, to the fullest
extent permitted by applicable law, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, an officer or director of any of the
parties hereto or any subsidiary (each, an "Indemnified Party" and
collectively, the "Indemnified Parties") against (i) all losses, expenses
(including reasonable attorneys' fees and expenses), claims, damages or
liabilities or, subject to the proviso of the next sentence, amounts paid in
settlement, arising out of actions or omissions occurring at or prior to the
Effective Time (and whether asserted or claimed prior to, at or after the
Effective Time) that are, in whole or in part, based on or arising out of the
fact that such person is or was a director or officer of such party or a
subsidiary of such party (the "Indemnified Liabilities"), and (ii) all
Indemnified Liabilities to the extent they are based on or arise out of or
pertain to the transactions contemplated by this Agreement. In the event of any
such loss, expense, claim, damage or liability (whether or not arising before
the Effective Time), (i) Parent shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to Parent, promptly after statements therefor are received and
otherwise advance to such Indemnified Party upon request reimbursement of
documented expenses reasonably incurred, (ii) Parent and the Company will
cooperate in the defense of any such matter and (iii) any determination
required to be made with respect to whether an Indemnified Party's conduct
complies with the standards set forth under New Jersey law and other applicable
law, and the certificate of incorporation or by-laws shall be made by
independent counsel mutually acceptable to Parent and the Indemnified Party;
provided, however, that Parent shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld).
The Indemnified Parties as a group may retain only one law firm with respect to
each related matter except to the extent there is, in the written opinion of
counsel to an Indemnified Party, under applicable standards of professional
conduct, a conflict on any significant issue between positions of such
Indemnified Party and any other Indemnified Party or Indemnified Parties. Any
Indemnified Party wishing to claim indemnification under this Section 7.5, upon
learning of any such claim, action, suit or proceeding eligible for
indemnification under this Section 7.5, shall notify the Indemnifying Parties,
but the failure so to notify an Indemnifying Party shall not relieve it from
any liability which it may have under this Section 7.5, except to the extent
that such failure results in the forfeiture of substantive rights or defenses.
(b) Insurance. For a period of six years after the Effective Time, Parent
shall cause to be maintained in effect policies of directors' and officers'
liability insurance for the benefit of those persons who are currently covered
by such policies of the Company or its Subsidiaries on terms no less favorable
than the terms of such current insurance coverage; provided, however, that
Parent shall not be required to expend in any year an amount in excess of two
hundred percent (200%) of the annual aggregate premiums currently paid by the
Company, for such insurance; and provided, further, that if the annual premiums
of such insurance coverage exceed such amount, Parent shall be obligated to
obtain a policy with the best coverage available, in the reasonable judgment of
the Board of Directors of Parent, for a cost not exceeding such amount.
(c) Successors. In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets, then
and in either such case, proper provisions shall be made so that the successors
and assigns of Parent shall assume the obligations set forth in this Section
7.5.
(d) Survival of Indemnification. To the fullest extent permitted by law,
from and after the Effective Time, all rights to indemnification as of the date
hereof in favor of the directors and officers of the Company, and its
subsidiaries with respect to their activities as such prior to the Effective
Time, as provided in its respective certificate of incorporation and by-laws in
effect on the date hereof, or otherwise in effect on the date hereof, shall
survive the Merger and shall continue in full force and effect for a period of
not less than six years from the Effective Time.
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(e) Benefit. The provisions of this Section 7.5 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 7.6 Disclosure Schedules. On the date hereof, (i) Parent has
delivered to the Company a schedule (the "Parent Disclosure Schedule"),
accompanied by a certificate signed by the chief financial officer of Parent
stating the Parent Disclosure Schedule is being delivered pursuant to this
Section 7.6(i) and (ii) the Company has delivered to Parent a schedule (the
"Company Disclosure Schedule"), accompanied by a certificate signed by the
chief financial officer of the Company stating the Company Disclosure Schedule
is being delivered pursuant to this Section 7.6(ii). The Company Disclosure
Schedule and the Parent Disclosure Schedule are collectively referred to herein
as the "Disclosure Schedules". The Disclosure Schedules constitute an integral
part of this Agreement and modify the respective representations, warranties,
covenants or agreements of the parties hereto contained herein to the extent
that such representations, warranties, covenants or agreements expressly refer
to the Disclosure Schedules. Anything to the contrary contained herein or in
the Disclosure Schedules notwithstanding, any and all statements,
representations, warranties or disclosures set forth in the Disclosure
Schedules shall be deemed to have been made on and as of the date hereof.
Section 7.7 Public Announcements. Subject to each party's disclosure
obligations imposed by law, the Company and Parent will cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby and, except as may be required by law or the
rules of any applicable stock exchange, shall not issue any public announcement
or statement with respect hereto without the consent of the other party (which
consent shall not be unreasonably withheld).
Section 7.8 Certain Employee Agreements. Subject to Section 7.9, Parent and
the Company and its subsidiaries shall honor, without modification, all
contracts, agreements, collective bargaining agreements and commitments of the
parties prior to the date hereof which apply to any current or former employee
or current or former director of the parties hereto; provided, however, that
this undertaking is not intended to prevent Parent or the Company from
enforcing or complying with such contracts, agreements, collective bargaining
agreements and commitments in accordance with their terms, including, without
limitation, exercising any right to amend, modify, suspend, revoke or terminate
any such contract, agreement, collective bargaining agreement or commitment
under any such contract, agreement, collective bargaining agreement or
commitment or under applicable law. Any workforce reductions carried out
following the Effective Time by Parent or the Company and their subsidiaries
shall be done in accordance with all applicable collective bargaining
agreements, and all laws and regulations governing the employment relationship
and termination thereof, including, without limitation, the Worker Adjustment
and Retraining Notification Act and regulations promulgated thereunder, and any
comparable state or local law.
Section 7.9 Employee Benefit Plans.
(a) Maintenance of the Company Benefit Plans. Each of the Company Benefit
Plans (other than Company Stock Plans) in effect at the date hereof shall be
maintained in effect with respect to the employees or former employees of the
Company and any of its subsidiaries, who are covered by any such benefit plan
immediately prior to the Closing Date (the "Affiliated Employees") until Parent
or the Company otherwise determine after the Effective Time; provided, however,
that nothing herein contained shall limit any right contained in any such
Company Benefit Plan or under applicable law to amend, modify, suspend, revoke
or terminate any such plan; provided further, however, that Parent or the
Company or their subsidiaries shall provide benefits to the Affiliated
Employees for a period of not less than one year following the Effective Time
which are no less favorable in the aggregate than those provided under the
Company Benefit Plans (with respect to employees and former employees of the
Company and its subsidiaries). Without limitation of the foregoing, each
participant in any such Company Benefit Plan shall receive credit for purposes
of eligibility to participate, vesting, and eligibility to receive benefits
under any benefit plan of the Company or any of its subsidiaries or affiliates
for service credited for the corresponding purpose under such benefit plan;
provided, however, that such crediting of service shall not operate to
duplicate any benefit to any such participant or the funding for any such
benefit or cause any such Company Benefit Plan to fail to comply with the
applicable provisions of the Code or ERISA.
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(b) Welfare Benefits Plans. With respect to any welfare benefit plan
established to replace any Company Benefit Plan which is a welfare benefit plan
in which Affiliated Employees may be eligible to participate after the Closing
Date, other than limitations, exclusions or waiting periods that are already in
effect with respect to such Affiliated Employees and that have not been
satisfied as of the Closing Date, such replacement plans shall waive all
limitations to pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements and provide each Affiliated
Employee with credit for other co-payments and deductibles paid prior to the
Closing Date in satisfying any applicable deductible or out-of-pocket
requirements applicable to the same calendar year under any welfare plans that
such Affiliated Employees are eligible to participate in after the Closing
Date.
Section 7.10 The Company Stock Plans. With respect to each Company Benefit
Plan or other plan, agreement or arrangement that provides for benefits in the
form of Company Common Stock or options to purchase Company Common Stock (the
"Company Stock Plans"), the Company and its subsidiaries and Parent and its
subsidiaries, including the Surviving Corporation and its subsidiaries, shall
take all actions necessary to provide that upon the Effective Time, (i) each
outstanding option to purchase Company Common Stock under any Company Stock
Plan, whether or not then vested and exercisable, shall be canceled in exchange
for a cash payment equal to (A) the excess of the Per Share Cash Consideration
over the exercise price thereof times (B) the number of shares of Company
Common Stock subject thereto, less applicable tax withholding, and (ii) each
outstanding restricted share of Company Common Stock granted under any Company
Stock Plans shall become fully vested as provided in the applicable Company
Stock Plan and shall be simultaneously converted into the right to receive the
Per Share Cash Consideration as provided in Section 2.1. The Company and its
subsidiaries shall take all actions needed to terminate all Company Stock
Plans, subject, however, to the payments required under the preceding sentence.
Section 7.11 Expenses. Subject to Section 9.3, all costs, and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
Section 7.12 Further Assurances. Each party will, and will cause its
subsidiaries to, (i) execute such further documents and instruments and use
their reasonable best efforts to take such further actions as may be necessary
or appropriate or as may reasonably be requested by any other party in order to
consummate the Merger in accordance with the terms hereof, and (ii) not take
action (including effecting or agreeing to effect or announcing an intention or
proposal to effect any acquisition, business combination or other transaction)
which could reasonably be expected to impede, interfere with, prevent, impair
or delay the ability of the parties to consummate the Merger. In case at any
time any further action is necessary or desirable to carry out the terms and
provisions of this Agreement, the proper officers and directors of each party
to this Agreement shall use their reasonable best efforts to take all such
action.
Section 7.13 Governance Agreement.
(a) General. Except as set forth herein, the terms and conditions of the
Governance Agreement, dated as of April 22, 1994, as amended, between Parent
and the Company (the "Governance Agreement") shall remain in full force and
effect and the parties shall continue to be fully bound by the provisions
thereof as modified hereby. The Company and Parent agree that the Governance
Agreement is hereby modified (i) as expressly set forth in Section 7.13(b)
hereof, (ii) as long as this Agreement is in effect, to waive any provisions of
the Governance Agreement that are inconsistent with Section 6.2 hereof,
including the "30 day" right granted to Parent under Section 3.1(a) of the
Governance Agreement and Parent's right to acquire the Company Common Stock
during any "Second 120-day Period" as defined in Section 3.1(b) of the
Governance Agreement, and (iii) as may otherwise be required to give effect to
the provisions of this Agreement.
(b) Waivers Upon Acceptance of Alternative Proposal. Upon any termination of
this Agreement by the Company pursuant to Section 9.1(h) hereof, the Company
shall, and it hereby does, waive any and all obligations of or restrictions on
Parent and affiliates contained in Sections 3.7 (Conversion of Preference
Stock).
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(c) Waivers Upon Termination of Agreement in Certain Circumstances. If this
Agreement is terminated by the Company pursuant to Section 9.1(h), by Parent
pursuant to Section 9.1(e) or by either the Company or Parent pursuant to
Section 9.1(c) due to the failure to obtain the approval of the Company's
stockholders at the Company Special Meeting and at the time of such failure,
any person shall have made a public announcement or otherwise communicated to
the Company or its stockholders with respect to an Alternative Proposal with
respect to the Company which has not been rejected by the Company and
terminated or withdrawn by the party making the Alternative Proposal, then:
(1) Notwithstanding anything in Sections 3.1(a) or (b) or Sections
3.3(a), (d) or (e) of the Governance Agreement to the contrary, Parent
shall be permitted to make a proposal or proposals to the Board of
Directors of the Company for the acquisition of 100% of the outstanding
equity of the Company or substantially all of the assets of the Company and
its subsidiaries during the period commencing on the date of termination of
this Agreement and ending on the date 120 days after such date if the
Company has not entered into a definitive agreement with a third party
effecting an Alternative Proposal during such 120 day period, or if the
Company enters into such definitive Agreement with a third party during
such 120 day period, the earlier of the date on which the Company's
stockholders approve such Alternative Proposal or the date on which such
definitive agreement is terminated. Parent agrees that it shall have no "30
day" right with respect to any third party Alternative Proposal made during
such period.
(2) Notwithstanding anything in Sections 4.1(a) and (b) of the
Governance Agreement to the contrary, Parent shall not be required to vote
any Company Common Stock in favor of any Alternative Proposal; provided,
however, that if Parent determines not to vote in favor of any Alternative
Proposal, it shall, at the request of the Company, not be present at the
shareholders meeting at which approval of the Alternative Proposal is
sought for quorum or any other purposes.
Section 7.14 North American Rights Agreement.
(a) General. The Company and Parent agree that, except as otherwise set
forth in this Section 7.14(b), the terms and conditions of the North American
Rights Agreement, dated July 14, 1997, as amended, among the Company, Parent
and other parties (the "NARA") shall remain in full force and effect and
further agree, except as set forth in Section 7.14(b), to continue to be fully
bound by the provisions thereof.
(b) Exceptions for Market Opportunities. In order to permit the Company and
Parent to respond appropriately to market opportunities while this Agreement is
in effect, notwithstanding any contrary provisions of the NARA, Parent and the
Company, on their own behalf and on behalf of their respective affiliates,
agree as follows:
(i) Acquisitions of Rate-Regulated Businesses.
(A) Acquisitions Prior to Termination. From the date hereof until
the termination of this Agreement, (1) the Company and its subsidiaries
may acquire or invest in rate-regulated water and wastewater utility
businesses as permitted by Section 6.1(d) hereof and (2) Parent and its
affiliates may acquire or invest in rate-regulated water and wastewater
utility businesses in the United States, provided that neither Parent
nor any of its affiliates shall make or agree to make any such
acquisition or investment if such acquisition or agreement could
reasonably be expected to prevent, or materially delay the receipt of
regulatory approvals necessary to consummate the Merger.
(B) Rights After Termination.
(1) The Company's Right to Acquire Regulated Company
Interests. Subject to Section 7.14(b)(i)(B)(2), from the date of
termination of this Agreement through the first anniversary of such
termination, the Company shall have the right and option, on not
less that 15 days' notice to Parent, to purchase up to 50% of any
interests in regulated water businesses in the United States
acquired by Parent or its affiliates as permitted by Section
7.14(b)(i)(A) (each, a "Regulated Company Interest"). The price of
any portion of a Regulated Company Interest
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purchased by the Company under this subsection shall equal the full
cost of the interest to be transferred, including (1) a pro rata
portion of the consideration paid by Parent or such affiliate to
acquire the Regulated Company Interest, (2) a pro rata portion of
the actual out-of-pocket third party transaction costs (including
fees and disbursements of counsel and other advisors) incurred by
Parent or such affiliate in acquiring the Regulated Company
Interest, and (3) interest on the foregoing amounts at the rate of
8.00% per annum from the date the Regulated Company Interest was
acquired by Parent or its affiliate through the date of transfer to
the Company.
(2) Parent Right to Retain Regulated Company Interests. If (w)
the Company shall terminate this Agreement pursuant to Section
9.1(h), (x) Parent shall terminate this Agreement pursuant to
Section 9.1(e), (y) Parent or the Company shall terminate this
Agreement pursuant to Section 9.1(c) due to the failure to obtain
the approval of the Company' stockholders at the Company Special
Meeting and, at the time of such failure, any person shall have made
a public announcement or otherwise communicated to the Company or
its stockholders with respect to an Alternative Proposal with
respect to the Company which has not been rejected by the Company
and terminated or withdrawn by the party making the Alternative
Proposal, or (z) Parent shall terminate this Agreement for a
Terminating the Company Breach pursuant to Section 9.1(g), then,
notwithstanding Section 7.14(b)(i)(B)(1), Parent and its affiliates
shall have the right to own and retain any and all Regulated Company
Interests that (x) they may have acquired prior to such termination
or (y) with respect to which Parent or its affiliates shall have
entered into a binding commitment or agreement prior to such
termination, and, in each case, the right to manage, operate and
control the business thereof.
(ii) Acquisitions of Delegated Services Businesses.
(A) UWS Entity Right of First Refusal.
(1) Rights to Acquire Delegated Services Company
Interests. United Water Services LLC, a Delaware limited liability
company ("UWS"), United Water Services Canada L.P., an Ontario,
Canada limited partnership ("UWS Canada"), and United Water Services
Mexico LLC, a Delaware limited liability company ("UWS Mexico"),
each of which is owned jointly by Parent and the Company (each, a
"UWS Entity"), shall have the right, at its sole option (each, a
"UWS Option"), to purchase on the terms and subject to the
conditions set forth in this Section 7.14(b)(ii) all but not less
than all of any interests in Delegated Services Providers (as
defined in the NARA) in the United States, Canada or Mexico,
respectively (each, a "Delegated Services Company Interest"), that
Parent or any of its affiliates wishes to acquire under this Section
7.14(b)(ii). From the date hereof until the termination of this
Agreement, Parent and its affiliates shall have the right to acquire
any and all such Delegated Services Company Interests subject only
to the UWS Option.
(2) Exercise of UWS Option. Prior to acquiring any Delegated
Services Company Interest, Parent (or its affiliate, as the case may
be) shall first give written notice to the applicable UWS Entity of
such proposed acquisition (a "Notice of Option"). Each such Notice
of Option shall include the identity of the proposed target, the
terms of the proposed acquisition and the price or other
consideration proposed to be paid for such Delegated Services
Company Interest. The applicable UWS Entity may exercise any UWS
Option by written notice to Parent given within 15 days after the
date of the applicable Notice of Option. If such UWS Entity fails to
exercise any UWS Option for any reason other than a Parent Veto
(defined below), or if such UWS Entity fails to acquire any
Delegated Services Company Interest with respect to which it has
exercised a UWS Option within 90 days of such exercise, Parent (or
its affiliate) shall have the right to purchase such Delegated
Services Company Interest at the price and on substantially the
terms set forth in the applicable Notice of Option.
(3) If the acquisition of any Delegated Services Company Interest
by either a UWS Entity or Parent and/or any of its affiliates could
reasonably be expected to prevent or materially delay
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the receipt of regulatory approvals necessary to consummate the
Merger, then, notwithstanding anything to the contrary set forth in
this Section 7.14(b)(i), Parent and its affiliates shall not have
the right to acquire such Delegated Services Company Interest
without first obtaining the prior written consent of the Company.
(4) As used in this Section 7.14(b)(ii), "Parent Veto" means (1)
a failure of the Board of Managers of UWS or UWS Mexico, or the
Board of Directors of the general partner of UWS Canada, to approve
the exercise of the UWS Option with respect to any Delegated
Services Company Interest solely due to one or more Managers or
Directors appointed by Parent to such Board voting against the
exercise of such UWS Option or (2) a failure of the members or
partners of such UWS Entity to approve the exercise of the UWS
Option with respect to such Delegated Services Company Interest
solely due to Parent voting against the exercise of such UWS Option,
if a vote of the members or partners is required for such approval.
(B) Rights After Termination.
(1) Subject to Section 7.14(b)(ii)(B)(2), from the date of
termination of this Agreement through the first anniversary of such
termination, the UWS Entities shall have the right and option,
without regard to any Parent Veto, on not less than 15 days' notice
to Parent, to purchase all but not less than all of any Delegated
Services Company Interests acquired by Parent or any affiliate
thereof in accordance with this Section 7.14(b). The price of any
Delegated Services Company Interest purchased by a UWS Entity under
this subsection shall equal the full cost of such Delegated Services
Company Interest, including (1) the consideration paid by Parent or
such affiliate to acquire the Delegated Services Company Interest,
(2) the actual out-of-pocket third party transaction costs
(including fees and disbursements of counsel and other advisors)
incurred by Parent or such affiliate in acquiring the Delegated
Services Company Interest, and (3) interest on the foregoing amounts
at the rate of 8% per annum from the date the Delegated Services
Company Interest was acquired by Parent or its affiliate through the
date of transfer to the UWS Entity.
(2) If (w) the Company shall terminate this Agreement pursuant to
Section 9.1(h), (x) Parent shall terminate this Agreement pursuant
to Section 9.1(e), (y) Parent or the Company shall terminate this
Agreement pursuant to Section 9.1(c) due to the failure to obtain
the approval of the Company's stockholders at Company Special
Meeting and, at the time of such failure, any person shall have made
a public announcement or otherwise communicated to the Company or
its stockholders with respect to an Alternative Proposal with
respect to the Company which has not been rejected by the Company
and terminated or withdrawn by the party making the Alternative
Proposal, or (z) Parent shall terminate this Agreement for a
Terminating Company Breach pursuant to Section 9.1(g), then,
notwithstanding Section 7.14(b)(ii)(B)(1), Parent and its affiliates
shall have the right to own and retain any and all Delegated
Services Company Interests that (x) they may have acquired prior to
such termination or (y) with respect to which Parent or its
affiliates shall have entered into a binding commitment or agreement
prior to such termination, and, in each case, the right to manage,
operate and control the business thereof.
Section 7.15 Notice and Cure. The Company will notify Parent in writing of,
and will use all commercially reasonable efforts to cure before the Closing,
any event, transaction or circumstance, as soon as practicable after it becomes
known to the Company, that causes or will or may be likely to cause any
covenant or agreement of the Company under the Agreement to be breached or that
renders or will render untrue in any material respect any representation or
warranty of the Company contained in the Agreement. No notice given pursuant to
this paragraph shall have any effect on the representations, warranties,
covenants or agreements contained in the Agreement for purposes of determining
satisfaction of any condition contained in the Agreement.
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ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of the following conditions,
except that such conditions may be waived in writing pursuant to Section 9.5 by
the joint action of the parties hereto to the extent permitted by applicable
law:
(a) Stockholder Approval. The Company Stockholders' Approval shall have
been obtained.
(b) No Injunction. No temporary restraining order or preliminary or
permanent injunction or other order, decree, ruling or action taken by any
United States or French federal or state court of competent jurisdiction or
other United States or French federal or state or other governmental
authority of competent jurisdiction restraining, enjoining or otherwise
prohibiting the Merger shall have been issued and be continuing in effect,
and the Merger and the other transactions contemplated hereby shall not
have been prohibited under any United States or French federal or state or
other applicable law, order, rule or regulation.
(c) Statutory Approvals. The Company Required Statutory Approvals and
the Parent Required Statutory Approvals shall have been obtained at or
prior to the Effective Time, such approvals shall have become Final Orders
(as defined below) and such Final Orders shall not impose terms or
conditions which, individually or in the aggregate, insofar as reasonably
can be foreseen, will have, a Company Material Adverse Effect. A "Final
Order" means action by the relevant regulatory authority which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, with respect
to which any waiting period prescribed by law before the transactions
contemplated hereby may be consummated has expired, and as to which all
conditions to the consummation of such transactions prescribed by law,
regulation or order have been satisfied.
Section 8.2 Conditions to Obligation of Parent to Effect the Merger. The
obligation of Parent and Merger Sub to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions except as may be waived by Parent and Merger Sub in writing pursuant
to Section 9.5:
(a) Performance of Obligations of the Company. The Company (and/or its
appropriate subsidiaries) shall have performed in all material respects its
agreements and covenants contained in or contemplated by this Agreement to
be performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct in all
material respects (i) on and as of the date hereof and (ii) on and as of
the Closing Date with the same effect as if such representations and
warranties had been made on and as of the Closing Date (other than
representations and warranties that expressly speak only as of a specific
date or time other than the date hereof or the Closing Date which need only
be true and correct as of such date or time) except, in the case of
representations and warranties other than those contained in Section 4.2
(but only to the extent that such Section contains a representation as to
the ownership of the Company of its subsidiaries described in clause (x) of
the first sentence thereof) and Sections 4.3(a), 4.4(a), 4.15 and 4.16, for
such failures of representations and warranties to be true and correct
(determined without regard to any materiality standard contained therein)
which individually or in the aggregate would not be reasonably likely to
result in a Company Material Adverse Effect.
(c) Closing Certificates. Parent shall have received a certificate
signed by the chief financial officer of the Company, dated the Closing
Date, to the effect that, to the best of such officer's knowledge, the
conditions set forth in Section 8.2(a) and Section 8.2(b) have been
satisfied.
(d) No Company Material Adverse Effect. No Company Material Adverse
Effect shall have occurred and be continuing and there shall exist no fact
or circumstance which individually or in the aggregate would reasonably be
likely to have a Company Material Adverse Effect.
A-31
(e) Company Required Consents. Company Required Consents the failure of
which to obtain would, individually or in the aggregate, reasonably be
likely to have a Company Material Adverse Effect shall have been obtained.
(f) Other Evidence. Parent and Merger Sub shall have received from the
Company such further certificates and documents evidencing due action in
accordance with this Agreement, including certified copies of proceedings
of the Board of Directors and stockholders of the Company, as Parent or
Merger Sub reasonably shall request.
Section 8.3 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by the Company in writing pursuant to
Section 9.5.
(a) Performance of Obligations of Parent. Parent (and/or its appropriate
subsidiaries) shall have performed in all material respects its agreements and
covenants contained in or contemplated by this Agreement to be performed by it
at or prior to the Effective Time.
(b) Representations and Warranties. The representations and warranties of
Parent set forth in this Agreement shall be true and correct in all material
respects (i) on and as of the date hereof and (ii) on and as of the Closing
Date with the same effect as though such representations and warranties had
been made on and as of the Closing Date (other than representations and
warranties that expressly speak only as of a specific date or time other than
the date hereof or the Closing Date which need only be true and correct as of
such date or time) except for such failures of representations and warranties
to be true and correct (determined without regard to any materiality standard)
which individually or in the aggregate would not be reasonably likely to result
in a Parent Material Adverse Effect.
(c) Closing Certificates. The Company shall have received a certificate
signed by the chief financial officer of Parent, dated the Closing Date to the
effect that, to the best of such officer's knowledge, the conditions set forth
in Section 8.3(a) and Section 8.3(b) have been satisfied.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval by the stockholders of
the respective parties hereto contemplated by this Agreement:
(a) by mutual written consent of the Boards of Directors of the Company
and Parent;
(b) by either Parent or the Company, by written notice to the other
party, if the Effective Time shall not have occurred on or before the
twelve month anniversary of the date hereof (the "Initial Termination
Date"); provided, however, that the right to terminate the Agreement under
this Section 9.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date; and provided, further, that if on the Initial Termination Date the
conditions to the Closing set forth in Sections 8.1(c) and/or 8.2(e) shall
not have been fulfilled but all other conditions to the Closing shall be
fulfilled or shall be capable of being fulfilled, then the Initial
Termination Date shall be extended to the eighteen month anniversary of the
date hereof;
(c) by either Parent or the Company, by written notice to the other
party if the Company Stockholders' Approval shall not have been obtained at
a duly held Company Special Meeting, including any adjournments thereof;
(d) by either Parent or the Company, if any United States or French
federal, state or other law, order, rule or regulation is adopted or
issued, which has the effect, as supported by the written opinion of
outside
A-32
counsel for such party, of prohibiting the Merger, or by any party hereto
if any United States or French federal, state or other court of competent
jurisdiction or other United States federal or state or French governmental
authority of competent jurisdiction shall have issued an order, decree or
ruling, or taken any other action, restraining, enjoining or otherwise
prohibiting the Merger, and such order, decree or ruling or other action
shall have become final and non-appealable;
(e) by Parent, if (i) the Board of Directors of the Company withdraws,
modifies or changes its approval or recommendation of this Agreement in a
manner adverse to Parent or shall have resolved to do so, (ii) the Board of
Directors of the Company shall have recommended to the stockholders of the
Company an Alternative Proposal or shall have resolved to do so, or (iii) a
tender offer or exchange offer for 20% or more of the outstanding shares of
capital stock of the Company is commenced and the Board of Directors of the
Company fails to recommend against acceptance of such tender offer or
exchange offer by its stockholders (including by taking no position with
respect to the acceptance of such tender offer or exchange offer by its
stockholders);
(f) by the Company, by written notice to Parent, if (i) there exist
breaches of the representations and warranties of Parent made herein as of
the date hereof which breaches, individually or in the aggregate, would or
would be reasonably likely to result in a Parent Material Adverse Effect,
and such breaches shall not have been remedied within 20 days after receipt
by Parent of notice in writing from the Company, specifying the nature of
such breaches and requesting that they be remedied, or (ii) Parent (and/or
its appropriate subsidiaries) shall not have performed and complied with,
in all material respects, its agreements and covenants hereunder and such
failure to perform or comply shall not have been remedied within 20 days
after receipt by Parent of notice in writing from the Company, specifying
the nature of such failure and requesting that it be remedied;
(g) by Parent, by written notice to the Company, if (i) there exist
material breaches of the representations and warranties of the Company made
herein as of the date hereof which breaches, individually or in the
aggregate, would or would be reasonably likely to result in a Company
Material Adverse Effect, and such breaches shall not have been remedied
within 20 days after receipt by the Company of notice in writing from
Parent, specifying the nature of such breaches and requesting that they be
remedied, (ii) the Company (and/or its appropriate subsidiaries) shall not
have performed and complied with its agreements and covenants contained in
Sections 6.1(b) and 6.1(c) or shall have failed to perform and comply with,
in all material respects, its other agreements and covenants hereunder, and
such failure to perform or comply shall not have been remedied within 20
days after receipt by the Company;
(h) prior to the Company Shareholders' Approval, by the Company, upon
five (5) Business Days' prior written notice to Parent, if, as a result of
any written offer or proposal in respect of an Alternative Proposal, the
Board of Directors of the Company determines that such written offer or
proposal be accepted; provided, however, that (i)(A) the Board of Directors
of the Company shall have reasonably concluded in good faith (after
consultation with its financial advisors) that the person or group making
the Alternative Proposal will have adequate sources of financing to
consummate the Alternative Proposal and that the Alternative Proposal is
more favorable to the Company shareholders than the Merger (taking into
account, without limitation, the likelihood that all required regulatory
approvals for such Alternative Proposal will be obtained in a prompt and
timely manner) and (B) the Board of Directors of the Company shall have
determined in good faith, based on advice of outside counsel with respect
to such Board's fiduciary duties under applicable law with respect to the
proposed Alternative Proposal as the Board of Directors deem to be
relevant, that, notwithstanding a binding commitment to consummate an
agreement of the nature of this Agreement entered into in the proper
exercise of their applicable fiduciary duties, and notwithstanding all
modifications that may be offered by Parent in negotiations entered into
pursuant to clause (ii) below, such fiduciary duties would also require the
directors to reconsider such commitment and terminate this Agreement as a
result of such written offer or proposal and (ii) prior to any such
termination, the Company shall, and shall cause its respective financial
and legal advisors to, negotiate in good faith with Parent to make such
adjustments in the terms and conditions of this Agreement as would not
require termination of this Agreement.
A-33
Section 9.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 9.1 there shall be no liability under this
Agreement on the part of Parent, Merger Sub or the Company or any of their
respective representatives, and all rights and obligations of each party hereto
shall cease, except as set forth in Sections 6.2, 7.14, 9.3 and 10.1; provided,
however, that nothing in this Agreement shall relieve any party from liability
for the willful breach of any of its representations and warranties or the
breach of any of its covenants or agreements set forth in this Agreement.
Section 9.3 Termination Fee; Expenses.
(a) The Company agrees that, if (i) the Company shall terminate this
Agreement pursuant to Section 9.1(h), (ii) Parent shall terminate this
Agreement pursuant to Section 9.1(e), or (iii) Parent or the Company shall
terminate this Agreement pursuant to Section 9.1(c) due to the failure to
obtain the approval of the Company's stockholders at a Company Special
Meeting and at the time of such failure, any person shall have made a
public announcement or otherwise communicated to the Company or its
stockholders with respect to an Alternative Proposal with respect to the
Company which has not been rejected by the Company and terminated or
withdrawn by the party making the Alternative Proposal, then in accordance
with Section 9.3(c), immediately prior to such termination in the case of
clause (i), or in the case of clause (ii) or (iii) if, within two years
following the date of termination, the Company enters into a definitive
acquisition, merger or similar agreement to effect an Alternative Proposal
upon execution of such agreement, the Company shall pay to Parent an amount
equal to Parent's documented Expenses (as defined below) not in excess of
$3,000,000 in connection with this Agreement and the transactions
contemplated hereby and a termination fee in an amount equal to $42,000,000
(collectively, such Expenses and such fee, the "Termination Amount").
(b) Each of Parent and the Company agrees that the payments provided for
in Section 9.3(a) shall be the sole and exclusive remedy of the parties
upon a termination of this Agreement pursuant to Section 9.1(c), (e) or
(h), as the case may be, and such remedy shall be limited to the payment
stipulated in Section 9.3(a); provided, however, that nothing in this
Agreement shall relieve any party from liability for the willful breach of
any of its representations and warranties or the willful breach of any of
its covenants or agreements set forth in this Agreement.
(c) Any payment required to be made pursuant to clause (i) of Section
9.3(a) shall be made to Parent by the Company immediately prior to the
termination of this Agreement and shall be made by wire transfer of
immediately available funds to an account designated by Parent.
(d) The parties agree that the agreements contained in this Section 9.3
are an integral part of the transactions contemplated by the Agreement and
constitute liquidated damages and not a penalty. If one party fails to
promptly pay to the other any fee due hereunder, the defaulting party shall
pay the costs and expenses (including legal fees and expenses) in
connection with any action, including the filing of any lawsuit or other
legal action, taken to collect payment, together with interest on the
amount of any unpaid fee at the publicly announced prime rate of Citibank,
N.A. from the date such fee was required to be paid.
(e) For purposes of this Agreement, "Expenses" consist of all out-of-
pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
affiliates) incurred by a party or on its behalf, in connection with or
related to, the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and
mailing of the Proxy Statement and/or any documents relating thereto, the
solicitation of stockholder approvals and all other matters relating to the
transactions contemplated hereby.
Section 9.4 Amendment. This Agreement may be amended by the Boards of
Directors of the parties hereto, at any time before or after approval hereof by
the stockholders of the Company and prior to the Effective Time, but after such
approval, no such amendment shall (i) alter or change the amount or kind of
shares, rights or any of the proceedings of the treatment of shares under
Article II, or (ii) alter or change any of the terms and conditions of this
Agreement if any of the alterations or changes, alone or in the aggregate,
A-34
would materially adversely affect the rights of holders of the Company's
capital stock, except for alterations or changes that could otherwise be
adopted by the Board of Directors of the Company without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
Section 9.5 Waiver. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein, to the extent permitted by applicable law. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations and Warranties. (a) All
representations, warranties and agreements in this Agreement shall not survive
the Merger, except as otherwise provided in this Agreement and except for the
agreements contained in this Section 10.1 and in Article II, Section 7.5,
Section 7.8, Section 7.9, Section 7.10, Section 7.11, Section 7.12, Section
7.13, Section 7.14, Section 10.8 and Section 10.9.
(b) No party may assert a claim for breach of any representation or warranty
contained in this Agreement (whether by direct claim or counterclaim) except in
connection with the cancellation of this Agreement pursuant to Section
9.1(f)(i) or Section 9.1(g)(i) (or pursuant to any other subsection of Section
9.l if the terminating party would have been entitled to terminate this
Agreement pursuant to Section 9.1(f)(i) or Section 9.1(g)(i)).
Section 10.2 Brokers. The Company represents and warrants that, except for
Xxxxxx Xxxxxxx & Co. Incorporated whose fees have been disclosed to Parent
prior to the date hereof, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. Parent represents and
warrants that, except for Rothschild Inc., prior to the date hereof no broker
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent.
Section 10.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if (i) delivered personally, (ii) sent
by reputable overnight courier service, (iii) telecopied (receipt of which is
confirmed), or (iv) five days after being mailed by registered or certified
mail (return receipt requested) postage prepaid to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to the Company, to:
United Water Resources Inc.
000 Xxx Xxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
A-35
with a copy to:
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) If to Parent or Merger Sub, to:
Lyonnaise American Holding, Inc.
000 Xxx Xxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000
Attention: Mr. Jean Xxxxxx Xxxxxx,
Executive Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Piper & Marbury L.L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx X. XxXxxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(c) If to SLDE, to:
Suez Xxxxxxxxx xxx Xxxx
00 Xxxxxx Xxxxxxx XXX
00000 Xxxxx Xxxxx 00
Xxxxxx
Attention: Xx. Xxxxxx Xxxxx, Directeur
Telephone: 00 0.00.00.00.00
Telecopy: 00 0.00.00.00.00
with a copy to:
Piper & Marbury L.L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx X. XxXxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Section 10.4 Miscellaneous. This Agreement (including the Disclosure
Schedules and the documents and instruments referred to herein) (i) constitutes
the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof other than the Confidentiality Agreement,
the Governance Agreement and the NARA, each of which remains in full force and
effect except as expressly herein modified; (ii) shall not be assigned by
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operation of law or otherwise; except that Parent or Merger Sub may assign all
or any of their rights and obligations hereunder to any wholly-owned subsidiary
of Parent; provided that no such assignment shall relieve the assigning party
of its obligations hereunder if such assignee does not perform such
obligations; and (iii) shall be governed by and construed in accordance with
the laws of the State of New Jersey applicable to contracts executed in and to
be fully performed in such State, without giving effect to its conflicts of
law, rules or principles and except to the extent the provisions of this
Agreement (including the documents or instruments referred to herein) are
expressly governed by or derive their authority from the NJBCA.
Section 10.5 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit of this
Agreement, respectively, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
Section 10.6 Counterparts; Effect. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 10.7 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except for rights of
Indemnified Parties as set forth in Section 7.5, nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 10.8 Waiver of Jury Trial and Certain Damages. Each party to this
Agreement waives, to the fullest extent permitted by applicable law, (i) any
right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement and (ii) except as
expressly set forth in this Agreement (including, but not limited to, Section
9.3 hereof), any right it may have to receive damages from any other party on
any claim arising out of this Agreement (but not any other agreement the
parties to which include any or all parties to this Agreement) based on any
theory of liability for any special, indirect, consequential (including lost
profits) or punitive damages.
Section 10.9 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any United States federal state
court located in the States of New Jersey, New York or Delaware, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
exclusive personal jurisdiction of any federal or state court located in any of
the States of New Jersey, New York or Delaware solely with respect to any
dispute arising out of this Agreement or any of the transactions contemplated
by this Agreement, (b) agrees that it will not attempt to deny such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court.
Section 10.10 Severability. If any term or other provision of this Agreement
is determined by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated hereby be consummated as originally contemplated
to the fullest extent possible.
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ARTICLE XI
PROVISIONS RELATING TO SLDE
Section 11.1 Organization and Authority. SLDE is a societe anonyme duly
organized and validly existing under the laws of the Republic of France and has
full power, corporate or otherwise, to execute and deliver and to perform all
of its obligations contained in Section 11.2 of this Agreement. The execution
and delivery of this Agreement by SLDE and the performance by SLDE of its
obligations hereunder have been duly authorized by all necessary action on
behalf of SLDE, and this Agreement has been duly and validly executed and
delivered by SLDE and, assuming the due authorization, execution and delivery
hereof by the other signatories hereto, constitutes the valid and binding
obligation of SLDE enforceable against it in accordance with its terms.
Section 11.2 Obligations of SLDE. SLDE agrees (i) to cause Parent and Merger
Sub to have at the Closing sufficient funds to consummate the transactions
contemplated by this Agreement at the Closing, and (ii) to cause Parent and
Merger Sub to have sufficient funds to meet all of their other financial
obligations under or related to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Company, Parent, Merger Co. and SLDE have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
United Water Resources Inc.
/s/ Xxxxxx X. Xxxxxxx
By: _________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and CEO
/s/ Xxxxxxx X. X. Xxxxxx
Attest: _________________________
Lyonnaise American Holding, Inc.
/s/ Xxxx Xxxxxx Xxxxxx
By: _________________________________
Name: Xxxx Xxxxxx Xxxxxx
Title: Executive Vice President
/s/ Xxxxx X. XxXxxxxxx
Attest: _________________________
Lah Acquisition Co.
/s/ Xxxx Xxxxxx Xxxxxx
By: _________________________________
Name: Xxxx Xxxxxx Xxxxxx
Title: President
/s/ Xxxxx X. XxXxxxxxx
Attest: _________________________
Suez Lyonnaise Des Eaux
/s/ Xxxxxx Xxxxx
By: _________________________________
Name: Xxxxxx Xxxxx
Title: Executive Vice President -
Water
/s/ Xxxx-Xxxx Xxxxxxx
Attest: _________________________
A-39
