AMERICAN WATER CAPITAL CORP.
UP TO $170,000,000 5.65% SENIOR NOTES DUE JUNE 12, 2007
$150,000,000 FLOATING RATE SENIOR NOTES DUE JUNE 26, 2003
________________
Support Agreement from
AMERICAN WATER WORKS COMPANY, INC.
________________
NOTE PURCHASE AGREEMENT
________________
Dated as of June 12, 2002
Table of Contents
Page
SECTION 1. AUTHORIZATION OF NOTES, SUPPORT AGREEMENT 1
SECTION 2. SALE AND PURCHASE OF NOTES 2
SECTION 3. CLOSINGS 2
Section 3.1. Fixed Rate Note Closings 2
Section 3.2. Floating Rate Note Closing 2
Section 3.3. Payment 2
SECTION 4. CONDITIONS TO CLOSING 3
Section 4.1. Representations and Warranties 3
Section 4.2. Performance; No Default 3
Section 4.3. Compliance Certificates and Organizational
Documents. 3
Section 4.4. Opinions of Counsel 3
Section 4.5. Purchase Permitted by Applicable Law, etc. 4
Section 4.6. Changes in Corporate Structure 4
Section 4.7. Proceedings and Documents 4
Section 4.8. Merger Agreement 4
Section 4.9. Registration Rights 4
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND AMERICAN WATER WORKS 4
SECTION 6. REPRESENTATIONS OF THE PURCHASER 9
Section 6.1. Purchase for Investment 9
SECTION 7. INFORMATION AS TO AMERICAN WATER WORKS AND THE
COMPANY 9
Section 7.1. Financial and Business Information 9
Section 7.2. Inspection 11
SECTION 8. PREPAYMENT OF THE NOTES 11
Section 8.1. Final Maturity 11
Section 8.2. Optional Prepayments with Make-Whole Amount 11
Section 8.3. Allocation of Partial Prepayments 12
Section 8.4. Maturity; Surrender, etc 12
Section 8.5. Purchase of Notes 12
Section 8.6. Make-Whole Amount 12
SECTION 9. AFFIRMATIVE COVENANTS 14
Section 9.1. Corporate Existence 14
Section 9.2. Support Agreement 14
Section 9.3. Maintenance of Properties 15
Section 9.4. Payment of Taxes and Other Claims 15
Section 9.5. Nature of Business of the Company 15
Section 9.6. Rating of the Notes 15
Section 9.7. Transfer of Notes 15
SECTION 10. NEGATIVE COVENANTS 16
Section 10.1. Restrictions on Liens 16
Section 10.2. Company and American Water Works May
Consolidate, Etc., Only on Certain Terms 17
Section 10.3. Successor Corporation Substituted 18
SECTION 11. EVENTS OF DEFAULT 18
SECTION 12. REMEDIES ON DEFAULT, ETC. 20
Section 12.1. Acceleration of the Notes 20
Section 12.2. Other Remedies 21
Section 12.3. Rescission 21
Section 12.4. No Waivers or Election of Remedies, Expenses,
etc. 21
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES 22
Section 13.1. Registration of Notes 22
Section 13.2. Transfer and Exchange of Notes 22
Section 13.3. Replacement of Notes 22
SECTION 14. PAYMENTS ON NOTES 23
Section 14.1. Place of Payment 23
Section 14.2. Home Office Payment 23
SECTION 15. EXPENSES, ETC. 23
Section 15.1. Transaction Expenses 23
Section 15.2. Survival 24
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT 24
SECTION 17. AMENDMENT AND WAIVER 24
Section 17.1. Requirements 24
Section 17.2. Solicitation of Holders of Notes 24
Section 17.3. Binding Effect, etc 25
Section 17.4. Notes Held by American Water Works or the
Company, etc. 25
SCHEDULE A - Defined Terms
EXHIBIT 1-A - Form of Fixed Rate Note
EXHIBIT 1-B - Form of Floating Rate Note
EXHIBIT 2 - Form of Support Agreement
EXHIBIT 4.4 - Form of Opinion of Counsel for the Company and
American Water Works
EXHIBIT 4.9 - Form of Registration Rights Agreement
AMERICAN WATER CAPITAL CORP.
AMERICAN WATER WORKS COMPANY, INC.
0000 Xxxxxx Xxx Xxxx,
Xxxxxxxx, Xxx Xxxxxx 00000
5.65% SENIOR NOTES DUE JUNE 12, 2007
FLOATING RATE SENIOR NOTES DUE JUNE 26, 2003
Dated as of June 12, 2002
RWE AKTIENGESELLSCHAFT
XXXXXXXXXX 0, 00000
XXXXX, XXXXXXX
Ladies and Gentlemen:
The undersigned, American Water Capital Corp., a Delaware
corporation (the "Company"), and American Water Works Company,
Inc., a Delaware corporation ("American Water Works"), hereby
jointly and severally agree with RWE Aktiengesellschaft (the
"Purchaser") as follows:
Section 1. AUTHORIZATION OF NOTES, SUPPORT AGREEMENT.
The Company will authorize the issue and sale of (i) up to
$170,000,000 aggregate principal amount of its 5.65% Senior
Notes due June 12, 2007 (the "Fixed Rate Notes") and (ii)
$150,000,000 aggregate principal amount of its Floating Rate
Senior Notes due June 26, 2003 (the "Floating Rate Notes," and,
together with the Fixed Rate Notes, the "Notes," such term to
include any such notes issued in substitution therefor pursuant
to Section 13.2 or Section 13.3 of this Agreement). The Fixed
Rate Notes shall be in the form set out in Exhibit 1-A and the
Floating Rate Notes shall be in the form set out in Exhibit 1-B,
with such changes therefrom, if any, as may be approved by the
Purchaser and the Company. Certain capitalized terms used in
this Agreement are defined in Schedule A; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement.
American Water Works previously entered into a Support
Agreement, dated June 22, 2000 and amended as of July 26, 2000
(as such agreement may be hereafter amended, modified or
supplemented from time to time in accordance with its terms and
the provisions of this Agreement, the "Support Agreement"), with
the Company, a copy of which (as in effect on the date of this
Agreement) is attached hereto as Exhibit 2, pursuant to which
American Water Works has agreed, among other things, to ensure
the timely payment of principal of and premium, if any, and
interest on Debt (as defined in the Support Agreement) issued by
the Company.
Section 2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the
Company will issue and sell to the Purchaser and the Purchaser
will purchase from the Company, at the Fixed Rate Note Closings
as defined and provided for in Section 3, Fixed Rate Notes in
the principal amount of up to $170,000,000 at the purchase price
of 100% of the principal amount thereof.
Subject to the terms and conditions of this Agreement, the
Company will issue and sell to the Purchaser and the Purchaser
will purchase from the Company, at the Floating Rate Note
Closing as defined and provided for in Section 3, Floating Rate
Notes in the principal amount of $150,000,000 at the purchase
price of 100% of the principal amount thereof.
Section 3. CLOSINGS.
The sale and purchase of the Fixed Rate Notes and the
Floating Rate Notes to be purchased by the Purchaser shall occur
at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m., New York time
(the "Fixed Rate Note Closings" and the "Floating Rate Note
Closing," respectively, each being a "Closing") on the dates
specified herein.
Section 3.1. Fixed Rate Note Closings. The initial Fixed
Rate Note Closing shall occur on June 12, 2002, or on such later
Business Day as may be agreed upon by the Company and the
Purchaser, at which time the Company shall sell and the
Purchaser shall purchase Fixed Rate Notes in an aggregate
principal amount of $40,000,000. An additional Fixed Rate Note
Closing shall occur on October 1, 2002, or on such later
Business Day as may be agreed upon by the Company and the
Purchaser, at which time the Company shall sell and the
Purchaser shall purchase Fixed Rate Notes in an aggregate
principal amount specified by the Company in writing to the
Purchaser not less than three Business Days prior to such
Closing; provided that such amount shall not exceed
$130,000,000.
Section 3.2. Floating Rate Note Closing. The Floating Rate
Note Closing shall occur on the tenth calendar day (or, if such
date is not a Business Day, the next succeeding Business Day)
following the giving of written notice by the Company to the
Purchaser of such Closing, or on such later Business Day as may
be agreed upon by the Company and the Purchaser; provided,
however, that in no event shall a Closing occur prior to June
27, 2002, and provided further that there shall only be one
Floating Rate Note Closing.
Section 3.3. Payment. At each Closing, the Company will
deliver to the Purchaser the Notes to be so purchased in the
form of a single Note (or such greater number of Notes in
denominations of at least $5,000,000 as the Purchaser may
request) dated the date of such Closing and registered in the
Purchaser's name, against delivery by the Purchaser to the
Company or its order, of immediately available funds in the
amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to
account number 8013583379 at PNC Bank, National Association,
Moorestown, New Jersey 08057, ABA# 000000000, or to such other
account or accounts as the Company shall have designated in
writing. If at a Closing the Company shall fail to tender such
Notes to the Purchaser as provided above in this Section 3, or
any of the conditions specified in Section 4 shall not have been
fulfilled to the Purchaser's satisfaction, the Purchaser shall,
at the Purchaser's election, be relieved of all obligations
under this Agreement with respect to such Closing, without
thereby waiving any rights the Purchaser may have by reason of
such failure or such nonfulfillment.
Section 4. CONDITIONS TO CLOSING.
The obligation of the Purchaser to purchase and pay for the
Notes at a Closing is subject to the fulfillment to the
Purchaser's satisfaction, prior to or at such Closing, of the
following conditions with respect to such Notes:
Section 4.1. Representations and Warranties. The
representations and warranties of the Company and American Water
Works in this Agreement that are qualified as to materiality
shall be true and correct at the time of the Closing and the
representations and warranties of the Company and American Water
Works in this Agreement that are not qualified as to materiality
shall be true and correct in all material respects at the time
of the Closing.
Section 4.2. Performance; No Default. The Company and
American Water Works shall have performed and complied with all
agreements and conditions contained in this Agreement required
to be performed or complied with by each of them prior to or at
the Closing and, after giving effect to the issue and sale of
the Notes (and the application of the proceeds thereof), no
Default or Event of Default shall have occurred and be
continuing.
Section 4.3. Compliance Certificates and Organizational
Documents.
(a) Officer's Certificate. The Company and American
Water Works shall each have delivered to the Purchaser an
Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.1,
4.2 and 4.6, and in the case of American Water Works
Section 4.8, have been fulfilled.
(b) Secretary's Certificate. The Company and
American Water Works shall each have delivered to the
Purchaser a certificate, dated the date of the Closing,
certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization,
execution and delivery of the Notes and this Agreement.
(c) Organizational Documents. The Company and
American Water Works shall each have delivered such other
certificates and documents relating to the organization,
existence and good standing of each such party as the
Purchaser may reasonably request.
Section 5. OPINIONS OF COUNSEL
The Purchaser shall have received opinions in form and
substance satisfactory to the Purchaser and the Purchaser's
special counsel, dated the date of the Closing, from Xxxxxxx
Xxxxxxx & Xxxxxxxx, special counsel for American Water Works and
the Company, and X. Xxxxxxx Xxxx, General Counsel and Secretary
to American Water Works, covering the matters set forth in
Exhibit 4.4 and covering such other matters incident to the
transactions contemplated hereby as the Purchaser or the
Purchaser's special counsel may reasonably request.
Section 5.1. Purchase Permitted by Applicable Law, etc. On
the date of the Closing, each purchase of Notes shall (a) not
violate any applicable law or regulation (including, without
limitation, Regulation U, T or X of the Board of Governors of
the Federal Reserve System) and (b) not subject any Purchaser to
any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in
effect on the date hereof.
Section 5.2. Changes in Corporate Structure. Neither the
Company nor American Water Works shall have changed its
jurisdiction of incorporation or, with the exception of the
Merger Agreement or any transaction permitted or contemplated
thereby, been a party to any merger or consolidation or shall
have succeeded to all or any substantial part of the liabilities
of any other entity, at any time following the date of the most
recent financial statements referred to in the Disclosure
Documents filed prior to the date of this Agreement.
Section 5.3. Proceedings and Documents. All corporate and
other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments
incident to such transactions shall be reasonably satisfactory
to the Purchaser and the Purchaser's special counsel, and the
Purchaser and the Purchaser's special counsel shall have
received all such counterpart originals or certified or other
copies of documents as the Purchaser or the Purchaser's special
counsel may reasonably request.
Section 5.4. Merger Agreement. The Merger Agreement shall
not have been terminated by American Water Works pursuant to
Article VII thereof. American Water Works shall not be in
default in the performance of its obligations under the
covenants and agreements set forth in Articles IV and V of the
Merger Agreement, and the representations and warranties of
American Works contained in the Merger Agreement shall be true
and correct, other than for such failures to be true and correct
that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
Section 5.5. Registration Rights. American Water Works, the
Company and the Purchaser shall have entered into a registration
rights agreement substantially in the form of Exhibit 4.9
hereto.
Section 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND AMERICAN WATER WORKS.
The Company and American Water Works, jointly and
severally, represent and warrant to the Purchaser that:
(a) Disclosure. The Disclosure Documents do not
include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(b) Organization; Power and Authority. Each of the
Company and American Water Works has been duly incorporated
and is an existing corporation in good standing under the
laws of the State of Delaware, with corporate power and
corporate authority to own its properties and conduct its
business as described in the Disclosure Documents; and,
except as set forth in Section 3.01(a) of the Company
Disclosure Schedule to the Merger Agreement, each of the
Company and American Water Works is duly qualified to do
business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification, unless such failure to be so qualified by
the Company or American Water Works would not, individually
or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(a) Organization and Ownership of Shares of
Subsidiaries. Each Subsidiary of American Water Works
other than the Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its
business as described in the Disclosure Documents; and each
Subsidiary is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of
its business requires such qualification, except where the
failure to be so qualified or be in good standing would not
reasonably be expected to have a Material Adverse Effect;
all of the issued and outstanding capital stock of each
Subsidiary of American Water Works has been duly authorized
and validly issued and is fully paid and nonassessable;
and, except as disclosed in the Disclosure Documents and as
otherwise set forth in Section 3.01(b) of the Company
Disclosure Schedule to the Merger Agreement, all of the
issued and outstanding shares of capital stock of, or other
equity or voting interests in, each Subsidiary of American
Water Works as of the date of this Agreement are owned by
American Water Works, by another wholly-owned Subsidiary of
American Water Works or by American Water Works and another
wholly-owned Subsidiary of American Water Works, free and
clear of all material pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature
whatsoever and are duly authorized, validly issued, fully
paid and nonassessable.
(c) Authorization by Company. This Agreement has
been duly authorized, executed and delivered by the Company
and, assuming due authorization, execution and delivery by
the Purchaser, constitutes a valid and legally binding
agreement of the Company and is enforceable in accordance
with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles. Each
of the Fixed Rate Notes and the Floating Rate Notes have
been duly authorized by the Company and, at any Closing,
will have been duly executed by the Company, and when
issued and delivered in the manner provided for in this
Agreement, will constitute valid and binding obligations of
the Company, enforceable against the Company in accordance
with their terms, subject to bankruptcy, insolvency,
fraudulent transfer reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(d) Governmental Authorization. No consent,
approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required to be
obtained or made by American Water Works or the Company for
the consummation of the transactions contemplated by this
Agreement or for the compliance by American Water Works
with the provisions of the Support Agreement in connection
with the issuance and sale of the Notes by the Company.
(e) Observance of Statutes and Orders. The
execution, delivery and performance of the Support
Agreement and this Agreement and the issuance and sale of
the Notes in accordance with this Agreement and compliance
with the terms and provisions of this Agreement, the Notes
and the Support Agreement will not result in a breach or
violation of or conflict with any of the terms and
provisions of, or constitute a default under, (i) any
statute, any rule, regulation, order, judgment or decree of
any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company, American
Water Works or any other Subsidiary or any of their
respective properties, or (ii) any agreement or instrument
to which the Company, American Water Works or any such
other Subsidiary is a party or by which the Company,
American Water Works or any such other Subsidiary is bound
or to which any of the properties of the Company, American
Water Works or any such other Subsidiary is subject, or
(iii) the charter or by-laws of the Company, American Water
Works or any such other Subsidiary, except in each case
(other than with respect to such charter or by-laws) for
such breaches, violations or defaults that would not
reasonably be expected to have a Material Adverse Effect.
The Company has full corporate power and corporate
authority to authorize, issue and sell the Notes as
contemplated by this Agreement.
(f) Authorization by American Water Works. This
Agreement and the Support Agreement have been duly
authorized, executed and delivered by American Water Works
and, assuming due authorization, execution and delivery of
this Agreement by the Purchaser, such agreements constitute
valid and legally binding obligations of American Water
Works enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights
and to general equity principles.
(g) Title to Properties; Leases. Except as disclosed
in the Disclosure Documents, the Company, American Water
Works and the Subsidiaries have good and marketable title
to all real properties and all other properties and assets
owned by them that are necessary to the conduct of their
respective businesses as presently conducted, in each case
free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere
with the use made or to be made thereof by them; and except
as disclosed in the Disclosure Documents, the Company,
American Water Works and the Subsidiaries hold any leased
real or personal property that are necessary to the conduct
of their respective businesses as presently conducted under
valid and enforceable leases with no exceptions that would
materially interfere with the use made or to be made
thereof by them.
(h) Licenses, Permits. The Company, American Water
Works and the other Subsidiaries possess adequate
certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct in all
material respects the businesses now operated by them and
have not received any notice of proceedings relating to the
revocation or modification of any such certificate,
authority or permit that, if determined adversely to the
Company, American Water Works or any of the other
Subsidiaries, would individually or in the aggregate
reasonably be expected to have a Material Adverse Effect.
(i) Labor Disputes. No labor dispute with the
employees of the Company, American Water Works or any other
Subsidiary exists or, to the knowledge of the Company or
American Water Works, is imminent, that would reasonably be
expected to have a Material Adverse Effect.
(j) Patents and Trademarks. The Company, American
Water Works and the other Subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade
names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual
property (collectively, "intellectual property rights")
necessary to conduct the businesses now operated by them or
presently employed by them, except where the failure to
own, possess or acquire such intellectual property rights
would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect; and none of the
Company, American Water Works, or any other Subsidiary has
received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the
Company, American Water Works or any other Subsidiary,
would individually or in the aggregate reasonably be
expected to have a Material Adverse Effect.
(k) Environmental Matters. Except as disclosed in
the Disclosure Documents and as set forth in Section
3.01(j) of the Company Disclosure Schedule to the Merger
Agreement, neither the Company, American Water Works nor
any of the other Subsidiaries is in violation of any
statute, any rule, regulation, decision or order of any
governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental
laws"), owns or operates any real property contaminated
with any substance that is subject to any environmental
laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation,
contamination, liability or claim would individually or in
the aggregate reasonably be expected to have a Material
Adverse Effect; and neither the Company nor American Water
Works is aware of any pending investigation which might
lead to such a claim.
(l) Litigation; Observance of Agreements, Statutes
and Orders. Except as disclosed in the Disclosure
Documents and as set forth in Section 3.01(g) of the
Company Disclosure Schedule to the Merger Agreement, there
are no pending actions, suits or proceedings against or
affecting the Company, American Water Works or any of the
Subsidiaries or any of their respective properties that, if
determined adversely to the Company, American Water Works
or any of the Subsidiaries, would individually or in the
aggregate reasonably be expected to have a Material Adverse
Effect, or that are otherwise material in the context of
the sale of the Notes; and no such actions, suits or
proceedings are, to the Company's or American Water Works'
knowledge, threatened. None of American Water Works, the
Company or any other Subsidiary is, to the knowledge of
American Water Works or the Company, in default under any
term of any agreement or instrument to which it is a party
or by which it is bound, or any order, judgment, decree or
ruling of any court, arbitrator or governmental authority
or is in violation of any applicable law, ordinance, rule
or regulation (including, without limitation, environmental
laws) of any governmental authority, which default or
violation, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
(m) Financial Statements. The financial statements
included in the Disclosure Documents present fairly in all
material respects the financial position of American Water
Works and its consolidated subsidiaries as of the dates
shown and their results of operations and cash flows for
the periods shown, and such financial statements have been
prepared in conformity with GAAP applied on a consistent
basis, except as otherwise disclosed therein.
(n) Absence of Material Adverse Change. Except as
disclosed in the Disclosure Documents filed prior to the
date of this Agreement, since the date of the latest
audited financial statements included in the Disclosure
Documents filed prior to the date of this Agreement there
has been no development or event that would reasonably be
expected to result in a Material Adverse Effect and, except
as disclosed in or contemplated by the Disclosure Documents
and as disclosed in or contemplated by Section 3.01(f) of
the Merger Agreement, there has been no dividend or
distribution of any kind declared, paid or made by American
Water Works on any class of its capital stock.
(o) Investment Company. None of American Water
Works, the Company or any other Subsidiary is or, after
giving effect to the sale of the Notes and the application
of the proceeds thereof, will be an "investment company" as
defined in the Investment Company Act of 1940 (the "1940
Act"). The Company has received an order from the
Commission exempting it from all provisions of the 1940
Act, a copy of which has been delivered to the Purchaser.
None of American Water Works, the Company or any other
Subsidiary is subject to regulation under the Public
Utility Holding Company Act of 1935, as amended, or the
Federal Power Act, as amended.
(p) Private Offering. Neither American Water Works
nor the Company has, directly or indirectly, sold or
offered, or attempted to offer or dispose of, any of the
Notes to or solicited any offers to buy any of the Notes
from, or otherwise approached or negotiated in respect
thereof with, any Person, other than the Purchaser.
(b) ERISA. Neither American Water Works nor any
Subsidiary has incurred any accumulated funding deficiency
within the meaning of ERISA; and neither American Water
Works nor any Subsidiary has incurred any material
liability to the PBGC established under ERISA in connection
with any employee pension benefit plan established or
maintained by American Water Works or any Subsidiary other
than for premium payments, all of which have been made when
due.
(q) Use of Proceeds; Margin Regulations. The Company
will use the proceeds from the sale of the Notes to repay
short-term borrowings and for general corporate purposes.
No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the
purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such
circumstances as to involve American Water Works or the
Company in a violation of Regulation X of said Board
(12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220).
Neither American Water Works nor the Company owns any
margin stock in an amount in excess of 5% of consolidated
total assets. As used in this paragraph, the terms "margin
stock" and "purpose of buying or carrying" shall have the
meanings assigned to them in said Regulation U.
Section 7. REPRESENTATIONS OF THE PURCHASER.
Section 7.1. Purchase for Investment. The Purchaser
represents that it is purchasing the Notes for its own account
and not with a view to the distribution thereof that would
violate the Securities Act. The Purchaser understands that the
Notes have not been registered under the Securities Act and may
be resold only if registered pursuant to the provisions of the
Securities Act or if an exemption from registration is
available, except under circumstances where neither such
registration nor such an exemption is required by law.
Section 2. INFORMATION AS TO AMERICAN WATER WORKS AND THE
COMPANY.
Section 7.2. Financial and Business Information. American
Water Works and the Company, as the case may be, shall deliver
to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements. Within 60 days after the
end of each of the first three quarterly fiscal periods of
each year or within 10 days of filing with the Securities
and Exchange Commission, whichever is earlier:
(i) a comparative consolidated balance sheet of
American Water Works and its Subsidiaries, as at the
end of each such quarterly fiscal period and as of the
end of the immediately preceding fiscal year; and
(ii) comparative consolidated statements of
income and retained earnings of American Water Works
and its Subsidiaries, for the three months then ended
and for the portion of the fiscal year to the end of
such quarterly period and for the corresponding
periods of the previous fiscal year and a comparative
consolidated statement of changes in cash flows of
American Water Works and its Subsidiaries, for the
portion of the fiscal year to the end of such
quarterly period and for the corresponding period of
the previous fiscal year;
all in reasonable detail and accompanied by a certificate
of a Senior Financial Officer of American Water Works that
such financial statements have been prepared in accordance
with GAAP and fairly present, in all material respects, the
financial position of the companies being reported on and
their results of operations and cash flows; provided that
delivery within the time period specified above of copies
of the American Water Works Quarterly Report on Form 10-Q
for such quarter prepared in compliance with the
requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a).
(b) Annual Statements. Within 100 days after end of
each fiscal year or within 10 days of filing with the
Securities and Exchange Commission, whichever is earlier:
(i) a comparative consolidated balance sheet of
American Water Works and its Subsidiaries as at the
end of such year and the previous fiscal year; and
(ii) comparative consolidated statements of
income, surplus, retained earnings and cash flows of
American Water Works and its Subsidiaries for such
year and for the previous fiscal year;
all in reasonable detail and in the case of the
consolidated statements certified by independent
accountants to have been prepared in accordance with GAAP
and fairly present, in all material respects, the financial
position of the companies being reported on and their
results of operations and cash flows; provided that the
delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year
(together with the Company's annual report to shareholders,
if any, prepared pursuant to Rule 14a-3 under the Exchange
Act (to the extent required to be filed)) prepared in
accordance with the requirements therefor and filed with
the Securities and Exchange Commission shall be deemed to
satisfy the requirements of this Section 7.1(b).
(c) Balance Sheet of Company. Concurrently with the
delivery of the financial statements referred to in
paragraphs (a) and (b) of this Section 7.1, the Company
shall deliver to holders of the Notes an unaudited balance
sheet of the Company, as at the end of each such quarterly
or annual fiscal period and as of the end of the
immediately preceding fiscal year, all in reasonable detail
and accompanied by a certificate of a Senior Financial
Officer of American Water Works that such financial
statements have been prepared in accordance with GAAP.
(d) Statement as to Default, Notices. Concurrently
with the delivery of the financial statements referred to
in this Section 7.1, a certificate, signed by a Senior
Financial Officer of the Company and American Water Works
stating whether or not to the best knowledge of the signers
thereof the Company or American Water Works, as the case
may be, is in Default in the performance and observance of
any of the terms, provisions and conditions of this
Agreement and, if the Company or American Water Works shall
be in Default, specifying all such Defaults and the nature
and status thereof of which they may have knowledge. In
addition, the Company or American Water Works, as
applicable, will deliver to the holders of the Notes,
within ten days after the occurrence thereof, written
notice of (i) any Default pursuant to Section 11 and
(ii) any event or any contest that if adversely determined
would result in the occurrence of an Event of Default under
Section 11(g).
(e) Public Information. Promptly upon transmission
thereof, copies of such financial statements and reports as
American Water Works shall send to the Securities and
Exchange Commission, the New York Stock Exchange or to its
stockholders in any general mailing.
(f) Requested Information. With reasonable
promptness, such other data and information relating to the
business, operations, affairs, financial condition, assets
or properties of American Water Works, the Company or any
other Subsidiary or relating to the ability of the Company
or American Water Works to perform its respective
obligations hereunder and under the Notes, as from time to
time may be reasonably requested by any such holder of
Notes.
(d) Deliveries Under the Merger Agreement. In the
event the information required to be delivered by any of
paragraphs (a), (b) or (c) of this Section 7.1 is delivered
to the Purchaser pursuant to the terms of the Merger
Agreement, such delivery shall be deemed to satisfy the
requirements of such paragraph of this Section 7.1 with
regard to the Purchaser.
Section 7.3. Inspection. American Water Works will permit
any Institutional Investor that is a holder of 10% or more of
the aggregate principal amount of any series of the outstanding
Notes, and any agents or representatives of such holder
designated by such holder, at all reasonable intervals and
places and upon reasonable prior written notice, to (i) examine
the books of account, records, reports and other papers of
American Water Works and its Subsidiaries and to make copies and
extracts therefrom for the purpose of determining whether
American Water Works is complying with the terms and provisions
of this Agreement, (ii) visit and inspect, under the guidance of
American Water Works, the properties of American Water Works or
of any of its Subsidiaries and (iii) discuss its or their
affairs, finances and accounts with, and be advised as to the
same by, its or their officers; provided that unless an Event of
Default has occurred and is continuing no such visit to,
inspection of or discussions with officers of, any Subsidiary
shall be permitted if the book value of American Water Works'
investment therein (as determined in accordance with GAAP) is
less than 2% of all of American Water Works' investments in its
Subsidiaries. So long as any Default or Event of Default shall
have occurred and shall be continuing, all expenses incurred by
an Institutional Investor in the exercise of any rights under
this Section shall be borne by the Company.
Section 8. PREPAYMENT OF THE NOTES.
Section 8.1. Final Maturity. (g) The entire unpaid
principal amount of each Fixed Rate Note shall become due and
payable on June 12, 2007.
(a) The entire unpaid principal amount of each
Floating Rate Note shall become due and payable on June 26,
2003.
Section 8.2. Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part of, the
Notes at 100% of the principal amount so prepaid, and accrued
interest thereon to the date of such prepayment, plus the Make-
Whole Amount determined in accordance with Section 8.6 for the
prepayment date with respect to such principal amount. The
Company will give each holder of Notes to be prepaid written
notice of each optional prepayment under this Section 8.2 not
less than 30 days and not more than 60 days prior to the date
fixed for such prepayment. Each such notice shall specify such
date, the aggregate principal amount of the Notes to be prepaid
on such date, the principal amount of each Note held by such
holder to be prepaid (determined in accordance with
Section 8.3), and the interest to be paid on the prepayment date
with respect to such principal amount being prepaid, and shall
be accompanied by a certificate of a Senior Financial Officer as
to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the
date of the prepayment), setting forth the details of such
computation. Two Business Days prior to such prepayment, the
Company shall deliver to each holder of the series of Notes to
be prepaid a certificate of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the
specified prepayment date. The holders of the Notes then to be
prepaid shall be reasonably satisfied that such calculation of
the Make-Whole Amount has been made in accordance with this
Section 8.
Section 8.3. Allocation of Partial Prepayments. In the case
of each partial prepayment of the Notes, the principal amount of
the Notes to be prepaid shall be allocated among all of the
Notes of that series at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal
amounts thereof not theretofore called for prepayment.
Section 8.4. Maturity; Surrender, etc. In the case of each
prepayment of Notes pursuant to this Section 8, the principal
amount of each Note to be prepaid shall mature and become due
and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the
applicable Make-Whole Amount, if any. From and after such date,
unless the Company shall fail to pay such principal amount when
so due and payable, together with the interest and Make-Whole
Amount, if any, as aforesaid, interest on such principal amount
shall cease to accrue. Any Note paid or prepaid in full shall
be surrendered to the Company upon written request and cancelled
and shall not be reissued, and no Note shall be issued in lieu
of any prepaid principal amount of any Note.
Section 8.5. Purchase of Notes. The Company will not and
will not permit any Affiliate to purchase, redeem, prepay or
otherwise acquire, directly or indirectly, any of the
outstanding Notes except (a) upon the payment or prepayment of
the Notes in accordance with the terms of this Agreement and the
Notes or (b) pursuant to an offer to purchase made by the
Company or an Affiliate pro rata to the holders of all Notes of
a series at the time outstanding upon the same terms and
conditions. Any such offer shall provide each holder with
sufficient information to enable it to make an informed decision
with respect to such offer, and shall remain open for at least
ten Business Days. If the holders of more than 20% of the
principal amount of a series of the Notes then outstanding
accept such offer, the Company shall promptly notify the
remaining holders of such series of Notes of such fact and the
expiration date for the acceptance by holders of Notes of such
offer shall be extended by the number of days necessary to give
each such remaining holder at least ten Business Days from its
receipt of such notice to accept such offer. The Company will
promptly cancel all Notes acquired by it or any Affiliate
pursuant to any payment, prepayment or purchase of Notes
pursuant to any provision of this Agreement and no Notes may be
issued in substitution or exchange for any such Notes.
Section 8.6. Make-Whole Amount. The term "Make-Whole
Amount" means, with respect to any Note, an amount equal to the
excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such
Note over the amount of such Called Principal, provided that the
Make-Whole Amount may in no event be less than zero. For the
purposes of determining the Make-Whole Amount, the following
terms have the following meanings:
"Called Principal" means, with respect to any Note,
the principal of such Note that is to be prepaid pursuant
to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as
the context requires.
"Discounted Value" means, with respect to the Called
Principal of any Note, the amount obtained by discounting
all Remaining Scheduled Payments with respect to such
Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice
and at a discount factor (applied on the same periodic
basis as that on which interest on the Notes is payable)
equal to the Reinvestment Yield with respect to such Called
Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, 0.50% (or if at any time the Company
shall agree to a lesser spread over a U.S. Treasury
obligation for purposes of calculating the make whole
amount or any other yield maintenance formula in connection
with the issuance of debt obligations of the Company having
a weighted average life to maturity which is five or more
years from the date of issue of such debt obligation, then
such lesser spread shall automatically be substituted for
..50% from and after the issuance of such other debt
obligation and the Company shall promptly so notify the
holders of such change) over the yield to maturity implied
by (i) the yields reported, as of 10:00 A.M. (New York City
time) on the second Business Day preceding the Settlement
Date with respect to such Called Principal, on the display
designated as "PX-1" on the Bloomberg Financial Market
Screen (or such other display as may replace "PX-1" on the
Bloomberg Financial Market Screen) for actively traded U.S.
Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields are not reported as
of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding
the Settlement Date with respect to such Called Principal,
in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield will be determined, if
necessary, by (a) converting U.S. Treasury bill quotations
to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between
(1) the actively traded U.S. Treasury security with the
maturity closest to and greater than the Remaining Average
Life and (2) the actively traded U.S. Treasury security
with the maturity closest to and less than the Remaining
Average Life.
"Remaining Average Life" means, with respect to any
Called Principal, the number of years (calculated to the
nearest one-twelfth year) obtained by dividing (i) such
Called Principal into (ii) the sum of the products obtained
by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called
Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the
Settlement Date with respect to such Called Principal and
the scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to
the Called Principal of any Note, all payments of such
Called Principal and interest thereon that would be due
after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made
prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the
amount of the next succeeding scheduled interest payment
will be reduced by the amount of interest accrued to such
Settlement Date and required to be paid on such Settlement
Date pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called
Principal of any Note, the date on which such Called
Principal is to be prepaid pursuant to Section 8.2 or has
become or is declared to be immediately due and payable
pursuant to Section 12.1 as the context requires.
Section 9. AFFIRMATIVE COVENANTS.
Section 9.1. Corporate Existence. (a) So long as any of
the Notes are outstanding, subject to Sections 10.2 and 10.3,
the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence and its rights (charter and statutory) and franchises.
(b) So long as any of the Notes are outstanding,
except as contemplated by the Merger Agreement (so long as the
Merger Agreement has not been terminated pursuant to Article VII
thereof) and subject to Sections 10.2 and 10.3 hereof, American
Water Works will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence.
Section 9.2. Support Agreement. So long as any of the Notes
are outstanding, each of the Company and American Water Works
covenants and agrees for the benefit of the holders of the Notes
that (1) it will perform its respective obligations under the
Support Agreement, and (2) it will not agree to any amendment or
termination of the Support Agreement as in effect on the date of
this Agreement, except in accordance with the terms of the
Support Agreement as in effect on the date of this Agreement.
The holders of the Notes are entitled to the benefits of the
Support Agreement available to Lenders (as defined in the
Support Agreement), it being understood and agreed that the
Notes constitute Debt (as defined in the Support Agreement) for
purposes of the Support Agreement. If the Company and American
Water Works shall at any time modify the obligations of American
Water Works under the Support Agreement (whether by amendment or
supplement thereto) for the benefit of any holder of any Debt of
the Company, the Company and American Water Works shall also
provide in such amendment or supplement that the benefits of
such modification extend to the Notes and the holders thereof.
If American Water Works shall at any time enter into another
form of support agreement or guaranty of indebtedness of the
Company (or any other Subsidiary that is primarily engaged in
the financing of the business of American Water Works or its
utility Subsidiaries) that is to be sold in a public offering
that has been registered under the Securities Act, then American
Water Works shall also enter into an amendment of the Support
Agreement or guaranty providing the same benefits to the Notes
and the holders thereof.
Section 9.3. Maintenance of Properties. So long as any of
the Notes are outstanding, except as permitted pursuant to
Section 4.01(a)(v) of the Merger Agreement (so long as the
Merger Agreement has not been terminated pursuant to Article VII
thereof), each of the Company and American Water Works will
cause all properties used or held for use in the conduct of its
respective businesses, and in the case of American Water Works,
will cause all properties used or held for use in the business
of its Subsidiaries, to be maintained and kept in good
condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements
thereof, all as may be necessary so that the businesses carried
on in connection therewith may be properly and advantageously
conducted at all times; provided, that nothing in this
Section 9.3 shall prevent the Company or American Water Works
from discontinuing the operation or maintenance of any of such
properties or disposing of them if such discontinuance or
disposal is, in the judgment of the Company or American Water
Works, desirable in the conduct of its business and not
disadvantageous in any material respect to the holders of Notes.
Section 9.4. Payment of Taxes and Other Claims. So long as
any of the Notes are outstanding, each of the Company and
American Water Works will pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (1) all
taxes, assessments and governmental charges levied or imposed
upon it or upon the income, profits or property of the Company
or American Water Works, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, would by law become a
lien upon the property of the Company or American Water Works;
provided, that neither the Company nor American Water Works
shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which the Company or
American Water Works has set aside on its books adequate
reserves with respect thereto in accordance with GAAP.
Section 9.5. Nature of Business of the Company. So long as
any of the Notes are outstanding, the Company will at all times
remain engaged solely in the business of financing the capital
requirements of American Water Works and its utility
Subsidiaries and activities reasonably related thereto,
including, without limitation, cash management activities, all
treasury activities and loan administration for such
subsidiaries.
Section 9.6. Rating of the Notes. In the event that the
Merger Agreement is terminated pursuant to Article VII thereof,
American Water Works and the Company shall use their best
reasonable efforts to obtain a rating for the Notes from
Standard & Poor's Rating Group and Xxxxx'x Investor Service,
Inc. within 30 days of such termination; provided that if at
such time either such rating agency shall cease to be in the
business of rating corporate debt, an organization as shall be
mutually agreed by American Water Works, the Company and the
Purchaser shall be substituted therefor.
Section 9.7. Transfer of Notes. In the event that the
Merger Agreement is terminated pursuant to Article VII thereof,
then at such time as the Purchaser notifies American Water Works
that it intends to transfer any of the Notes it holds, (i)
American Water Works shall actively assist the Purchaser in
transferring such notes to a third party, which assistance shall
include, but is not limited to (a) assisting in the preparation
of marketing materials to be used in connection with the
transfer of the Notes and (b) the hosting of one or more
meetings of prospective transferees and (ii) none of American
Water Works, the Company or any other Subsidiary shall offer,
sell, contract to sell or otherwise dispose of any securities
substantially similar to the Notes so long as such offer, sale
or disposition would impair the ability of the Purchaser to
transfer the Notes; provided, however, that such obligations of
American Water Works are subject to the condition that such
transfer by the Purchaser shall not be in violation of any
applicable federal or state securities laws.
Section 10. NEGATIVE COVENANTS.
Section 10.1. Restrictions on Liens. (h) The Company shall
not issue, assume or guarantee any indebtedness for money
borrowed (hereinafter in this Section 10.1 referred to as
"Debt"), secured by any mortgage, security interest, pledge,
lien or other encumbrance (hereinafter in this Section 10.1
called "mortgage" or "mortgages") upon any property of the
Company without in any such case effectively securing, prior to
or concurrently with the issuance, assumption or guarantee of
any such Debt, the Notes (together with, if the Company shall so
determine, any other Debt of or guaranteed by the Company
ranking equally with the Notes and then existing or thereafter
created) equally and ratably with (or prior to) such Debt;
provided, that the foregoing restrictions shall not apply to nor
prevent the creation or existence of:
(i) mortgages on any property, acquired, constructed
or improved by the Company after the date of this
Agreement, and any improvements thereon, accessions thereto
or other property acquired or constructed for use in
connection therewith or related thereto, that are created
or assumed prior to or contemporaneously with, or within
180 days after, such acquisition or completion of such
construction or improvement, or within one year thereafter
pursuant to a firm commitment for financing arranged with a
lender or investor within such 180-day period, to secure or
provide for the payment of all or any part of the purchase
price of such property or the cost of such construction or
improvement incurred after the date of this Agreement, or,
in addition to mortgages contemplated by clauses (ii) and
(iii) below, mortgages on any property existing at the time
of acquisition thereof; provided, that the mortgages shall
not extend to any property theretofore owned by the Company
other than, in the case of any such construction or
improvement, (1) unimproved real property on which the
property so constructed or the improvement is located, (2)
other property (or improvement thereon) that is an
improvement to or is acquired or constructed for use in
connection therewith or related thereto, (3) any right and
interest under any agreement or other documents relating to
the property being so constructed or improved or such other
property and (4) the stock of any Subsidiary created or
maintained for the primary purpose of owning the property
so constructed or improved;
(ii) existing mortgages on any property of a Person
which is acquired by, merged with or into or consolidated
with the Company; provided, that mortgages shall not extend
to any property theretofore owned by the Company;
(iii) mortgages, security interests, pledges,
liens or other encumbrances to secure Debt of the Company
to American Water Works;
(iv) mortgages, security interests, pledges, liens or
other encumbrances in favor of the United States of
America, any State, any foreign country or any department,
agency or instrumentality or political subdivision of any
such jurisdiction, to secure partial, progress, advance or
other payments pursuant to any contract or statute or to
secure any Debt incurred for the purpose of financing all
or any part of the purchase price or the cost of
constructing or improving the property subject to such
mortgages, security interests, pledges, liens or other
encumbrances including, without limitation, mortgages to
secure Debt of the industrial revenue bond type;
(v) mortgages to secure Debt of the Company maturing
within 12 months from the creation thereof and incurred in
the ordinary course of business;
(vi) mortgages existing on the date of this Agreement;
and
(vii) mortgages for the purposes of extending,
renewing or replacing in whole or in part Debt secured by
any mortgage referred to in the foregoing clauses (i) to
(vi), inclusive, or this clause (vii); provided, that the
principal amount of Debt secured thereby shall not exceed
the principal amount of Debt so secured at the time of such
extension, renewal or replacement, and that such extension,
renewal or replacement shall be limited to all or a part of
the property or Debt that secured the mortgage so extended,
renewed or replaced (plus improvements on such property).
Notwithstanding the foregoing, nothing herein shall be deemed
(1) to prohibit the Company from assuming or guaranteeing any
Debt of American Water Works or any Subsidiary of American Water
Works (other than the Company), which Debt is secured by assets
of American Water Works or any Subsidiary of American Water
Works (other than the Company), or (2) to prohibit the Company
(or a Subsidiary of the Company) from securing Debt with
accounts receivable in an accounts receivable financing.
(b) The provisions of subsection (a) of this Section 10.1
shall not apply to the issuance, assumption or guarantee by the
Company of Debt secured by a mortgage that would otherwise be
subject to the foregoing restrictions up to an aggregate amount
that does not at the time exceed 10% of Consolidated Net
Tangible Assets.
(c) If at any time the Company shall issue, assume or
guarantee any Debt secured by any mortgage and if subsection (a)
of this Section 10.1 requires that the Notes be secured equally
and ratably with such Debt, the Company will promptly deliver to
holders of the Notes an Officers' Certificate stating that, and
Opinion of Counsel to the effect that, the covenants of the
Company contained in subsection (a) of this Section 10.1 have
been complied with.
Section 10.2. Company and American Water Works May
Consolidate, Etc., Only on Certain Terms. Except as
contemplated pursuant to the terms of the Merger Agreement (so
long as the Merger Agreement has not been terminated pursuant to
Article VII thereof), neither the Company nor American Water
Works shall consolidate with or merge into any other Corporation
or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless:
(1) the Corporation formed by any such consolidation
or into which it is merged or the Person that acquires by
conveyance or transfer, or that leases, its properties and
assets substantially as an entirety shall be a Corporation
organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia
and shall expressly assume, in the case of the Company, the
due and punctual payment of the principal of (and premium,
if any) and interest on the Notes, the performance of every
covenant of this Agreement on the part of the Company or
American Water Works, as applicable, and in the case of
American Water Works, all the obligations under the Support
Agreement to be performed or observed;
(2) immediately after giving effect to such
transaction, no Event of Default, and no event that, after
notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing; and
(3) the Company or American Water Works, as
applicable, has delivered to the holders of the Notes an
Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance,
transfer or lease complies with this Section 10.2 and that
all conditions precedent herein provided for relating to
such transaction have been complied with.
The Company covenants and agrees that if, upon its consolidation
with or merger into any other Corporation, or upon any
consolidation or merger of any other Corporation with or into
it, or upon any sale or conveyance of all or substantially all
of its property and assets to any other Corporation, any of its
property or any property of its Subsidiaries, if any, would
thereupon become subject to any mortgage, security interest,
pledge, lien or other encumbrance not permitted by Section 10.1
hereof, prior to or concurrently with such consolidation,
merger, sale or conveyance, it will effectively secure the Notes
(equally and ratably with (or prior to) any other indebtedness
of or guaranteed by it then entitled thereto) by a direct lien,
on such of its property or such property of a Subsidiary or such
indebtedness issued by a Subsidiary, prior to all liens other
than any theretofore existing thereon.
Section 10.3. Successor Corporation Substituted. Upon any
consolidation by the Company or American Water Works with or
merger by the Company or American Water Works into any other
Corporation or any conveyance, transfer or lease of either the
Company's or American Water Works' properties and assets
substantially as an entirety in accordance with Section 10.2,
the successor Corporation formed by such consolidation or into
which it is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company or American Water
Works, as applicable, under this Agreement with the same effect
as if such successor Corporation had been named as the Company
or American Water Works, as applicable, herein, and thereafter,
except in the case of a lease, the predecessor Corporation shall
be relieved of all obligations and covenants under this
Agreement, the Notes and, in the case of American Water Works,
the Support Agreement.
Section 11. EVENTS OF DEFAULT.
"Event of Default" with respect to a series of Notes
means any one of the following events with respect to such
series (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative
or governmental body):
(a) the Company defaults in the payment of any
interest upon any Note when it becomes due and payable and
continuance of such default for a period of 10 days; or
(b) the Company defaults in the payment of the
principal of (or Make Whole Amount, if any, on) any Note
when the same becomes due and payable, whether at maturity
or a date fixed for prepayment or by declaration of
acceleration or otherwise and continuance of such default
for a period of three Business Days thereafter; or
(c) the Company or American Water Works defaults in
the performance of or breaches any covenant or warranty of
the Company or American Water Works, as the case may be, in
this Agreement or the Support Agreement (other than a
covenant or warranty a default in whose performance or
whose breach is elsewhere in this Section 11 specifically
dealt with), and continuance of such default or breach for
a period of 90 days after the earlier of (i) a Responsible
Officer of American Water Works or the Company obtaining
actual knowledge of such default and (ii) written notice,
to the Company and American Water Works by the holders of
at least 33% in aggregate principal amount of such series
of Notes, specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice
of Default" hereunder; provided, however, that, except with
respect to defaults under or breaches of the covenants
contained in Section 9.4 or Section 10.1, the holder of
such principal amount of Notes shall be deemed to have
agreed to an extension of such period if corrective action
is initiated by the Company or American Water Works within
such period and is being diligently pursued; or
(d) the Company or American Water Works defaults
under any bond, debenture, note or other evidence of
indebtedness for money borrowed or under any mortgage,
indenture or instrument under which there may be issued or
by which there may be secured or evidenced any indebtedness
for money borrowed by the Company or American Water Works,
whether such indebtedness now exists or shall hereafter be
created, which default shall constitute a failure to pay in
excess of $20,000,000 of the principal or interest of such
indebtedness when due and payable after the expiration of
any applicable grace period with respect thereto or shall
have resulted in such indebtedness in any amount in excess
of $20,000,000 becoming or being declared due and payable
prior to the date on which it would otherwise have become
due and payable, without such indebtedness having been
discharged or such acceleration having been rescinded or
annulled within a period of 60 days after a Responsible
Officer of the Company or American Water Works obtains
actual knowledge thereof; or
(e) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of
any of the Company or American Water Works in an
involuntary case or proceeding under any applicable Federal
or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging any of the
Company or American Water Works a bankrupt or insolvent, or
approving as properly filed a petition by one or more
Persons other than the Company, American Water Works, or
any of their Affiliates seeking reorganization,
arrangement, adjustment or composition of or in respect of
any of the Company or American Water Works under any
applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or
other similar official for any of the Company or American
Water Works or for any substantial part of the property of
any of the Company or American Water Works or ordering the
liquidation or winding up of the affairs of any of the
Company or American Water Works and the continuance of any
such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 90 consecutive
days; or
(f) the commencement by the Company or American Water
Works of a case or proceeding under any applicable Federal
or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it
to the entry of a decree or order for relief in respect of
it in a case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by
it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or
State law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official in respect of it or any
substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or its admission
in writing of its inability to pay its debts generally as
they become due, or its taking of corporate action in
furtherance of any such action; or
(g) the Support Agreement shall cease to be in full
force and effect for any reason whatsoever, including,
without limitation, a final and nonappealable determination
by any governmental body or court that the Support
Agreement is invalid, void or unenforceable, or American
Water Works shall contest or deny in writing the validity
or enforceability of any provision of, or obligation under,
the Support Agreement.
Section 12. REMEDIES ON DEFAULT, ETC.
Section 12.1. Acceleration of the Notes. (a) If an Event of
Default with respect to American Water Works or the Company
described in paragraph (e) or (f) of Section 11 has occurred,
all the Notes then outstanding shall automatically become
immediately due and payable.
(a) If any other Event of Default described in Section 11
has occurred and is continuing with respect to a series of
Notes, any holder or holders of more than 50% in principal
amount of such series of Notes at the time outstanding may at
any time at its or their option, by notice or notices to the
Company and American Water Works, declare all the Notes of such
series then outstanding to be immediately due and payable.
(b) If any Event of Default described in paragraph (a) or
(b) of Section 11 has occurred and is continuing with respect to
a series of Notes, any holder or holders of such series of Notes
at the time outstanding affected by such Event of Default may at
any time, at its or their option, by notice or notices to the
Company and American Water Works, declare all the Notes of such
series held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this
Section 12.1, whether automatically or by declaration, such
Notes will forthwith mature and the entire unpaid principal
amount of such Notes, plus (i) all accrued and unpaid interest
thereon and (ii) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by
applicable law), shall all be immediately due and payable, in
each and every case without presentment, demand, protest or
further notice, all of which are hereby waived. American Water
Works and the Company acknowledge, and the parties hereto agree,
that each holder of a Note has the right to maintain its
investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the
provision for payment of a Make-Whole Amount by the Company in
the event that the Notes are prepaid or are accelerated as a
result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such
circumstances.
Section 12.2. Other Remedies. If any Event of Default has
occurred and is continuing, and irrespective of whether any
Notes have become or have been declared immediately due and
payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of
such holder by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of
any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Note of a
series has been declared due and payable pursuant to clause (b)
or (c) of Section 12.1, the holders of not less than 67% in
principal amount of the Notes of such series then outstanding,
by written notice to the Company and American Water Works, may
rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on such Notes, all
principal of and Make-Whole Amount, if any, on any such Notes
that are due and payable and are unpaid other than by reason of
such declaration, and all interest on such overdue principal and
Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of such Notes,
at the Default Rate, (b) all Events of Default and Defaults,
other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived
pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to
the Notes. No rescission and annulment under this Section 12.3
will extend to or affect any subsequent Event of Default or
Default or impair any right consequent thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses,
etc. No course of dealing and no delay on the part of any
holder of any Note in exercising any right, power or remedy
shall operate as a waiver thereof or otherwise prejudice such
holder's rights, powers or remedies. No right, power or remedy
conferred by this Agreement or by any Note upon any holder
thereof shall be exclusive of any other right, power or remedy
referred to herein or therein or now or hereafter available at
law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 15, the Company will
pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such
holder incurred in any enforcement or collection under this
Section 12, including, without limitation, reasonable attorneys'
fees, expenses and disbursements.
Section 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
Section 13.1. Registration of Notes. The Company shall keep
at its principal executive office a register for the
registration and registration of transfers of Notes. The name
and address of each holder of one or more Notes, each transfer
thereof and the name and address of each transferee of one or
more Notes shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose
name any Note shall be registered shall be deemed and treated as
the owner and holder thereof for all purposes hereof, and the
Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that
is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all
registered holders of Notes.
Section 13.2. Transfer and Exchange of Notes. Upon surrender
of any Note at the principal executive office of the Company for
registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by
the registered holder of such Note or his attorney duly
authorized in writing and accompanied by the address for notices
of each transferee of such Note or part thereof), the Company
shall execute and deliver, at the Company's expense (except as
provided below), one or more new Notes of the applicable series
(as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount
of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be in the form
of Exhibit 1-A or 1-B hereto, as applicable. Each such new Note
shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date
of the surrendered Note if no interest shall have been paid
thereon. The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of
any such transfer of Notes. Notes shall not be transferred in
denominations of less than $5,000,000, provided that if
necessary to enable the registration of transfer by a holder of
its entire holding of Notes, one Note may be in a denomination
of less than $5,000,000.
Section 13.3. Replacement of Notes. Upon receipt by the
Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of
any Note (which evidence shall be, in the case of an
Institutional Investor, notice from such Institutional Investor
of such ownership and such loss, theft, destruction or
mutilation), and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided that if
the holder of such Note is, or is a nominee for, the
original Purchaser or is an Institutional Investor, such
Person's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Company, at its own expense, shall execute and deliver, in
lieu thereof, a new Note, dated and bearing interest from the
date to which interest shall have been paid on such lost,
stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
Section 14. PAYMENTS ON NOTES.
Section 14.1. Place of Payment. Subject to Section 14.2,
payments of principal, Make-Whole Amount, if any, and interest
becoming due and payable on the Notes shall be made at the
principal office of PNC Bank, National Association, in New York,
New York.
Section 14.2. Home Office Payment. So long as the Purchaser
or the Purchaser's nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such
Note to the contrary, the Company will pay all sums becoming due
on such Note for principal, Make-Whole Amount, if any, and
interest at the principal office of PNC Bank, National
Association, in New York, New York and by the method specified
on the first page hereof, or by such other method or at such
other address as the Purchaser shall have from time to time
specified to the Company in writing for such purpose, without
the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, the Purchaser shall
surrender such Note for cancellation, reasonably promptly after
any such request, to the Company at its principal executive
office or at the place of payment most recently designated by
the Company pursuant to Section 14.1. Prior to any sale or
other disposition of any Note held by the Purchaser or the
Purchaser's nominee, the Purchaser will, at its election, either
endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes
pursuant to Section 13.2. The Company will afford the benefits
of this Section 14.2 to any Institutional Investor that is the
direct or indirect transferee of any Note purchased by the
Purchaser under this Agreement and that has made the same
agreement relating to such Note as the Purchaser has made in
this Section 14.2.
Section 15. EXPENSES, ETC.
Section 15.1. Transaction Expenses. Whether or not the
transactions contemplated hereby are consummated, the Company
will pay all costs and expenses (including reasonable attorneys'
fees of Xxxxxxx, Swaine & Xxxxx, special counsel to the
Purchaser, directly related to this Agreement and the actions
contemplated hereby but excluding, (i) with respect to (a)
below, the fees and expenses of any other counsel to the
Purchaser, (ii) with respect to (b) below, the fees and expenses
of more than one counsel to the Purchaser and (iii) any fees and
expenses incurred by or in connection with a transferee of the
Purchaser) incurred by the Purchaser in connection with (a) the
negotiation, preparation, execution, and delivery of this
Agreement and the Notes, (b) any amendments, waivers or consents
under or in respect of this Agreement, the Support Agreement or
the Notes (whether or not such amendment, waiver or consent
becomes effective), (c) the reasonable costs and expenses
incurred in enforcing or defending (or determining whether or
how to enforce or defend) any rights under this Agreement, the
Support Agreement or the Notes or in responding to any subpoena
or other legal process or informal investigative demand issued
in connection with this Agreement, the Support Agreement or the
Notes, or by reason of being a holder of any Note, and (d) the
reasonable costs and expenses, including financial advisors'
fees, incurred in connection with the insolvency or bankruptcy
of American Water Works or the Company or any other Subsidiary
or in connection with any work-out or restructuring of the
transactions contemplated hereby, by the Support Agreement and
by the Notes. The Company will pay, and will hold the Purchaser
harmless from, all claims in respect of any fees, costs or
expenses, if any, of brokers and finders (other than those
retained by or on behalf of the Purchaser).
Section 15.2. Survival. The obligations of the Company under
this Section 15 will survive the payment or transfer of any
Note, the enforcement, amendment or waiver of any provision of
this Agreement or the Notes, and the termination of this
Agreement.
Section 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT.
All representations and warranties contained herein shall
survive the execution and delivery of this Agreement and the
Notes, the purchase or transfer by the Purchaser of any Note or
portion thereof or interest therein and the payment of any Note,
and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf
of the Purchaser or any other holder of a Note. All statements
contained in any certificate or other instrument delivered by or
on behalf of American Water Works or the Company pursuant to
this Agreement shall be deemed representations and warranties of
American Water Works or the Company, as the case may be, under
this Agreement. Subject to the preceding sentence, this
Agreement and the Notes embody the entire agreement and
understanding among the Purchaser, American Water Works and the
Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
Section 17. AMENDMENT AND WAIVER.
Section 17.1. Requirements. This Agreement and the Notes may
be amended, and the observance of any term hereof or of the
Notes may be waived (either retroactively or prospectively),
with (and only with) the written consent of American Water
Works, the Company and the Required Holders, except that (a) no
amendment or waiver of any of the provisions of Section 1, 2, 3,
4 or 21 hereof, or any defined term (as it is used therein),
will be effective as to any holder of a Note unless consented to
by such holder in writing, and (b) no such amendment or waiver
may, without the written consent of the holder of each Note at
the time outstanding affected thereby, (i) subject to the
provisions of Section 12 relating to acceleration or rescission,
change the amount or time of any prepayment or payment of
principal of, or change the rate or change the time of payment
or method of computation of interest or of the Make-Whole Amount
on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent
to any such amendment or waiver, or (iii) amend any of Sections
8, 11(a), 11(b), 12, 17 or 20.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. American Water Works and the Company
will provide each holder of the Notes (irrespective of the
amount of Notes then owned by it) with sufficient information,
sufficiently far in advance of the date a decision is required,
to enable such holder to make an informed and considered
decision with respect to any proposed amendment, waiver or
consent in respect of any of the provisions hereof or of the
Notes. American Water Works and the Company will deliver
executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 17
to each holder of outstanding Notes of a series affected thereby
promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the
requisite holders of Notes.
(b) Payment. Neither American Water Works nor the Company
will, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder
of Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or amendment
of any of the terms and provisions hereof or of the Notes unless
such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder
of Notes of such series then outstanding even if such holder did
not consent to such waiver or amendment.
(c) Consent in Contemplation of Transfer. At any time
prior to a Public Offering, any consent made pursuant to this
Section 17.2(c) by a holder of Notes that has transferred or has
agreed to transfer its Notes to American Water Works or the
Company or any other Subsidiary or any Affiliates of American
Water Works and has provided or has agreed to provide such
written consent as a condition to such transfer shall be void
and of no force or effect except solely as to such holder, and
any amendments effected or waivers granted or to be effected or
granted that would not have been or would not be so effected or
granted but for such consent (and the consents of all other
holders of Notes that were acquired under the same or similar
conditions) shall be void and of no force or effect except
solely as to such holder.
Section 17.3. Binding Effect, etc. Any amendment or waiver
consented to as provided in this Section 17 applies equally to
all holders of Notes and is binding upon them and upon each
future holder of any Note, as applicable, and upon American
Water Works and the Company without regard to whether such Note
has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon. No
course of dealing between American Water Works or the Company
and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of
any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or
supplemented.
Section 17.4. Notes Held by American Water Works or the
Company, etc. Solely for the purpose of determining whether the
holders of the requisite percentage of the aggregate principal
amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or
the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal
amount of Notes then outstanding, Notes directly or indirectly
owned by American Water Works or the Company or any of their
respective Affiliates shall be deemed not to be outstanding.
Section 18. NOTICES.
All notices and communications provided for hereunder shall
be in writing and sent (a) by telecopy if the sender on the same
day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by
registered or certified mail with return receipt requested
(postage prepaid), or (c) by a recognized overnight delivery
service (with charges prepaid). Any such notice must be sent:
(i) if to the Purchaser or the Purchaser's nominee,
to the Purchaser or the Purchaser's nominee at the address
set forth on the first page hereof, or at such other
address as the Purchaser or the Purchaser's nominee shall
have specified to American Water Works and the Company in
writing,
(ii) if to any other holder of any Note, to such
holder at such address as such other holder shall have
specified to American Water Works and the Company in
writing, or
(iii) if to American Water Works or the Company,
as the case may be, at the address set forth at the
beginning hereof to the attention of its Senior Financial
Officer, or at such other address as American Water Works
or the Company shall have specified to the holder of each
Note in writing.
Notices under this Section 18 will be deemed given only when
actually received.
Section 19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto,
including, without limitation, (a) consents, waivers and
modifications that may hereafter be executed, (b) documents
received by the Purchaser at any Closing (except the Notes
themselves), and (c) financial statements, certificates and
other information previously or hereafter furnished to the
Purchaser, may be reproduced by the Purchaser by any
photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and the Purchaser may
destroy any original document so reproduced. American Water
Works and the Company agree and stipulate that, to the extent
permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the
Purchaser in the regular course of business) and any
enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit American Water Works or the
Company or any other holder of Notes from contesting any such
reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the
inaccuracy of any such reproduction.
Section 20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential
Information" means information delivered to a holder of any Note
or its representatives by or on behalf of American Water Works
or the Company or any other Subsidiary, or any of their
respective representatives, in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that was clearly marked or labeled or
otherwise adequately identified when received by such holder as
being confidential information of American Water Works or the
Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known prior to the
time of such disclosure, (b) subsequently becomes publicly known
through no act or omission by such holder or any Person acting
on such holder's behalf, (c) otherwise becomes known to such
holder other than through disclosure by American Water Works or
the Company or any other Subsidiary or any of their respective
representatives or (d) constitutes financial statements
delivered to such holder under Section 7.1 that are otherwise
publicly available. Each holder of a Note, other than the
Purchaser (so long as the letter agreement dated July 26, 2001
among the Purchaser, Thames Water plc and American Water Works
is still in effect), will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted
by such holder in good faith to protect confidential information
of third parties delivered to such holder, provided that such
holder may deliver or disclose Confidential Information to (i)
such holder's directors, trustees, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment
represented by the Notes), (ii) such holder's financial advisors
and other professional advisors who agree to hold confidential
the Confidential Information substantially in accordance with
the terms of this Section 20, (iii) any other holder of any
Note, (iv) any Institutional Investor to which such holder sells
or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing with
the Company prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20),
(v) any Person from which such holder offers to purchase any
security of the Company (if such Person has agreed in writing
with the Company prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having
jurisdiction over such holder, or (vii) any other Person to
which such delivery or disclosure may be required in the
reasonable opinion of such holder (w) to effect compliance with
any law, rule, regulation or order applicable to such holder,
(x) in response to any subpoena or other legal process, (y) in
connection with any litigation to which such holder is a party
or (z) if an Event of Default has occurred and is continuing, to
the extent such holder may reasonably determine such delivery
and disclosure to be necessary or appropriate in the enforcement
or for the protection of the rights and remedies under the Notes
and this Agreement. Each holder of a Note, by its acceptance of
a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a
party to this Agreement. On reasonable request by American
Water Works or the Company in connection with the delivery to
any holder of a Note of information required to be delivered to
such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with American
Water Works and the Company embodying the provisions of this
Section 20. Each holder of a Note recognizes its responsibility
for compliance with applicable securities laws and regulations
in connection with its use of non-public information regarding
American Water Works and its Subsidiaries.
Section 21. SUBSTITUTION OF PURCHASER.
The Purchaser shall have the right to substitute any one of
the Purchaser's Affiliates as the purchaser of the Notes, by
written notice to American Water Works and the Company, which
notice shall be signed by both the Purchaser and the Purchaser's
Affiliate, shall contain such Affiliate's agreement to be bound
by this Agreement and shall contain a confirmation by such
Affiliate of the accuracy with respect to it of the
representations set forth in Section 6; provided that such
notice shall also contain the agreement of the Purchaser to
unconditionally and irrevocably guarantee the obligations of the
Purchaser's Affiliate under this Agreement. Upon receipt of
such notice, wherever the word "Purchaser" is used in this
Agreement (other than in this Section 21), such word shall be
deemed to refer to such Affiliate in lieu of the Purchaser. In
the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to the
Purchaser all of the Notes then held by such Affiliate, upon
receipt by American Water Works and the Company of notice of
such transfer, wherever the word "Purchaser" is used in this
Agreement (other than in this Section 21), such word shall no
longer be deemed to refer to such Affiliate, but shall refer to
the Purchaser, and the Purchaser shall have all the rights of an
original holder of the Notes under this Agreement.
Section 22. MISCELLANEOUS.
Section 22.1. Assumption by American Water Works or
Subsidiary. American Water Works or a Subsidiary may directly
assume, by a written instrument, executed and delivered to the
holders of the Notes, in form satisfactory to the Required
Holders, the due and punctual payment of the principal of (Make-
Whole Amount, if any) and interest on all the Notes and the
performance of every covenant of this Agreement on the part of
the Company to be performed or observed. Upon any such
assumption, American Water Works or such Subsidiary shall
succeed to and be substituted for and may exercise every right
and power of the Company under this Agreement with the same
effect as if American Water Works or such Subsidiary had been
named as the Company herein and the Company shall be released
from its liability as obligor on the Notes; provided that, in
the case of such assumption by a Subsidiary, that American Water
Works' obligations under this Agreement (modified as aforesaid)
remain in full force and effect and American Water Works and
such Subsidiary shall have entered into a support agreement in
the form of the Support Agreement, satisfactory to the Required
Holders.
Section 22.2. Successors and Assigns. All covenants and
other agreements contained in this Agreement by or on behalf of
any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without
limitation, any subsequent holder of a Note) whether so
expressed or not.
Section 22.3. Entire Agreement. This Agreement, together
with the Schedules and Exhibits hereto, along with the Notes
constitute the entire agreement among the parties hereto with
respect to the subject matter hereof. The terms hereof in no
way amend, alter or otherwise modify the terms of the Merger
Agreement and, except as expressly stated herein, the terms of
the Merger Agreement in no way amend, alter or otherwise modify
the terms hereof.
Section 22.4. Payments Due on Non-Business Days. Anything in
this Agreement or the Notes to the contrary notwithstanding, any
payment of principal of or Make-Whole Amount or interest on any
Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day without including the
additional days elapsed in the computation of the interest
payable on such next succeeding Business Day.
Section 22.5. Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent
permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction.
Section 22.6. Construction. Each covenant contained herein
shall be construed (absent express provision to the contrary) as
being independent of each other covenant contained herein, so
that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action
to be taken by any Person, or that such Person is prohibited
from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such Person.
Section 22.7. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an
original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by
all, of the parties hereto.
Section 22.8. Governing Law. This Agreement shall be
construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of New York.
Section 22.9. No Right of Set-off. American Water Works and
the Company each hereby expressly waive any and all right to
set-off any amounts that may be owed, or may be claimed to be
owed, to American Water Works or the Company by any Holder of
any Note, including, but not limited to, amounts that may be
owed or claimed to be owed to American Water Works under the
Merger Agreement.
* * * * *
The execution hereof by the Purchaser shall constitute a
contract among American Water Works, the Company and the
Purchaser for the uses and purposes hereinabove set forth. This
Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all together
only one agreement.
Very truly yours,
AMERICAN WATER CAPITAL CORP.
By
Its
AMERICAN WATER WORKS
COMPANY, INC.
By
Its
The foregoing is hereby
agreed to as of the
date thereof.
RWE AKTIENGESELLSCHAFT
By
Its
DEFINED TERMS
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof
following such term:
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person.
For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"American Water Works" means the American Water Works
Company, Inc., and any permitted successors or assigns thereto.
"Board of Directors" means either the board of directors of
the Company or American Water Works, as the case may be, or any
duly authorized committee thereof.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which commercial banks in New York City or
Essen, Germany are required or authorized to be closed.
"Closing" is defined in Section 3.
"Company" means the American Water Capital Corp., and any
permitted successors or assigns thereto.
"Confidential Information" is defined in Section 20.
"Consolidated Net Tangible Assets" means the total amount
of assets appearing on a consolidated balance sheet of the
Company and its subsidiaries less, without duplication, the
following:
(a) all current liabilities (excluding any thereof
that are by their terms extendable or renewable at the sole
option of the obligor thereon without requiring the consent
of the obligee to a date more than 12 months after the date
of determination);
(b) all reserves for depreciation and other asset
valuation reserves but excluding any reserves for deferred
Federal income taxes arising from accelerated amortization
or otherwise; and
(c) all intangible assets such as goodwill,
trademarks, trade names, patents and unamortized debt
discount and expense carried as an asset on said balance
sheet.
Consolidated Net Tangible Assets shall be determined
in accordance with generally accepted accounting principles
and as of a date not more than 90 days prior to the
happening of the event for which such determination is
being made.
"Corporation" includes any corporation, association,
company, limited liability company or business trust.
"Default" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving
of notice or both, become an Event of Default.
"Default Rate" means, with respect to the Notes, the
greater of (a) the prime (i.e. index or base) rate of interest
published or publicly announced as such from time to time by PNC
Bank, National Association, plus 2%; and (b) the rate of
interest borne by the Notes prior to Default plus 2%.
"Disclosure Documents" shall mean the Registration
Statement of the Company filed with the Securities and Exchange
Commission on January 30, 2001 (including the documents
incorporated by reference therein) and all forms, reports,
schedules, statements and other documents required to be filed
by the Company or American Water Works with the Securities and
Exchange Commission since such date.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time in effect.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Fixed Rate Notes" is defined in Section 1.
"Floating Rate Notes" is defined in Section 1.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"holder" means, with respect to any Note, the Person in
whose name such Note is registered in the register maintained by
the Company pursuant to Section 13.1.
"Institutional Investor" means (a) any original purchaser
of a Note, (b) any holder of a Note holding more than 5% of the
aggregate principal amount of the Notes then outstanding, and
(c) any bank, trust company, savings and loan association or
other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any
other similar financial institution or entity, regardless of
legal form; provided, however that for the purposes of this
Agreement, any holder of Notes that purchased such Notes in, or
subsequent to, a Public Offering shall not be an Institutional
Investor.
"Make-Whole Amount" is defined in Section 8.6.
"Material Adverse Effect" means a material adverse change
or effect on (a) the business, assets, properties, condition
(financial or otherwise) or results of operations of American
Water Works and its Subsidiaries taken as a whole or (b) the
ability of American Water Works or the Company to perform its
respective obligations under this Agreement and the Notes, and,
in the case of American Water Works, the Support Agreement or
(c) the validity or enforceability of this Agreement, the
Support Agreement or the Notes.
"Merger Agreement" means the Agreement and Plan of Merger,
dated as of September 16, 2001, by and among RWE
Aktiengesellschaft, Thames Water Aqua Holdings GMBH, Apollo
Acquisition Company and American Water Works, as amended or
modified from time to time.
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior
Financial Officer or of any other officer of American Water
Works or the Company, as the case may be, whose responsibilities
extend to the subject matter of such certificate.
"Opinion of Counsel" means a written opinion of counsel,
who may be counsel for the Company or American Water Works, as
the case may be, and who shall be reasonably acceptable to the
Required Holders.
"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision
thereof.
"property" or "properties" means, unless otherwise
specifically limited, real or personal property of any kind,
tangible or intangible, xxxxxx or inchoate.
"Public Offering" means any sale or transfer of the Notes
pursuant to a registration statement filed with the Securities
and Exchange Commission pursuant to the Securities Act.
"Purchaser" means RWE Aktiengesellschaft.
"Required Holders" means, at any time, the holders of at
least 51% in principal amount of the Fixed Rate Notes or
Floating Rate Notes, as applicable, at the time outstanding
(exclusive of Notes then owned by American Water Works, the
Company or any of their respective Affiliates which, for the
avoidance of doubt, does not include the Purchaser or its
Affiliates).
"Responsible Officer" means any Senior Financial Officer
and any other officer of American Water Works or the Company, as
the context requires, with responsibility for the administration
of the relevant portion of this Agreement.
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Senior Financial Officer" means the senior financial
officer, principal accounting officer, treasurer or controller
of American Water Works or the Company, as the context requires.
"Subsidiary" means a Person more than 50% of the
outstanding voting stock of which is owned, directly or
indirectly, by American Water Works or by one or more other
Subsidiaries, or by American Water Works and one or more other
Subsidiaries. For the purposes of this definition, "voting
stock" means stock or other security which ordinarily has voting
power for the election of directors or similar officials,
whether at all times or only so long as no senior class of stock
has such voting power by reason of any contingency.
"Support Agreement" is defined in Section 1.
Exhibit 1-A
[FORM OF FIXED RATE NOTE]
AMERICAN WATER CAPITAL CORP.
5.65% SENIOR NOTE DUE JUNE 12, 2007
No. _______ [Date]
$__________
For Value Received, the undersigned, American Water Capital
Corp. (herein called the "Company"), a corporation organized and
existing under the laws of the State of Delaware, hereby
promises to pay to _____________________ or registered assigns,
the principal sum of ______________ Dollars on June 12, 2007
with interest (computed on the basis of a 360-day year of twelve
30-day months) (a) on the unpaid balance thereof at the rate of
5.65% per annum from the date hereof, payable annually, on the
12th day of June of each year, commencing with June 12, 2003,
until the principal hereof shall have become due and payable,
and (b) to the extent permitted by law, on any overdue payment
(including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole
Amount (as defined in the Note Purchase Agreement referred to
below), payable annually as aforesaid (or, at the option of the
registered holder hereof, on demand), at the Default Rate.
Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money
of the United States of America at the principal office of PNC
Bank, National Association, in New York, New York or at such
other place as the Company shall have designated by written
notice to the holder of this Note as provided in the Note
Agreement referred to below.
This Note is one of the Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated
as of June 12, 2002 (as from time to time amended, the "Note
Purchase Agreement"), among American Water Capital Corp.,
American Water Works Company, Inc. and the Purchaser named
therein and is entitled to the benefits thereof. Each holder of
this Note will be deemed, by its acceptance hereof, (i) to have
agreed to the confidentiality provisions set forth in Section 20
of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.1 of the Note Purchase
Agreement.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (THE "ACT") OR REGISTERED OR QUALIFIED UNDER THE SECURITIES
LAWS OF ANY STATE. THIS NOTE MAY NOT BE SOLD OR TRANSFERRED, IN THE
ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration
of transfer, duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the registered holder
hereof or such xxxxxx's attorney duly authorized in writing, a
new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat
the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other
purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to optional prepayment, in whole or
from time to time in part, at the times and on the terms
specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the
manner, in the amount (including any applicable Make-Whole
Amount) and with the effect provided in the Note Purchase
Agreement.
The Notes and the holders thereof are entitled to the
benefits of a Support Agreement (as defined in the Note Purchase
Agreement) between American Water Capital Corp. and American
Water Works Company, Inc.
[the remainder of this page has been left blank
intentionally]
This Note and said Note Purchase Agreement are governed by
and construed in accordance with the laws of New York.
AMERICAN WATER CAPITAL CORP.
By
Its
Exhibit 1-B
[FORM OF FLOATING RATE NOTE]
AMERICAN WATER CAPITAL CORP.
FLOATING RATE SENIOR NOTE DUE JUNE 26, 2003
No. _______ [Date]
$__________
For Value Received, the undersigned, American Water Capital
Corp. (herein called the "Company"), a corporation organized and
existing under the laws of the State of Delaware, hereby
promises to pay to _____________________ or registered assigns,
the principal sum of ______________ Dollars on June 23, 2003
with interest (computed on the basis of the actual number of
days in the relevant interest period and a 360-day year) (a) on
the unpaid balance thereof at the Interest Rate (as defined
below) from the date hereof, payable on [_________ ___, 200__,
_________ ___, 200__, _________ ___, 200__, and _________ ___,
200__,] [to be adjusted depending on date of issuance] (each
such date, an "Interest Payment Date"), and (b) to the extent
permitted by law, on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and
any overdue payment of any Make-Whole Amount (as defined in the
Note Purchase Agreement referred to below), payable on the
applicable Interest Payment Date (or, at the option of the
registered holder hereof, on demand), at the Default Rate.
The rate at which interest shall be payable on the Notes
(the "Interest Rate") shall be a floating rate, which for each
interest period shall be the Three-Month LIBOR Rate determined
for that interest period plus 20 basis points (0.20%). The
Interest Rate for the initial interest period shall be ______%
(the "Initial Interest Rate"), which was calculated with
reference to the Three-Month LIBOR Rate on the Interest
Determination Date for the initial interest period, plus 20
basis points (0.20%).
The Company will reset the rate of interest on the Notes on
each of [_________ ___, 200__, _________ ___, 200__ and
_________ ___, 200__] (each, an "Interest Reset Date"). [these
dates will be the same as the first three Interest Payment
Dates]
The Company shall determine the applicable Interest Rate on
the Notes for the succeeding interest period on the date that is
two London Business Days prior to the applicable Interest Reset
Date (each an "Interest Determination Date"). The Interest
Determination Date for the Initial Interest Rate was __________
___, 200__. [this date will be two London Business Days prior to
the issue date]
The Interest Rate determined on an Interest Determination
Date for the Notes (a) shall become effective on and as of the
next succeeding Interest Reset Date and (b) shall be the rate at
which interest is payable on the Notes for the interest period
from and including the Interest Reset Date on which that
Interest Rate becomes effective to but excluding the succeeding
Interest Reset Date. The calculations of the Company in
determining the Interest Rate will, in the absence of manifest
error, be conclusive for all purposes and binding on the holders
of the Notes.
"London Business Day" means any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank
market.
"Three-Month LIBOR Rate" means, with respect to any
Interest Reset Date, the rate for deposits in U.S. dollars
having a three-month maturity which appears on the Down Xxxxx
Page 3750 (as defined below) as of 11:00 a.m., London time, on
the Interest Determination Date immediately preceding such
Interest Reset Date; provided, that if on any Interest
Determination Date the applicable London interbank offered rate
for deposits in U.S. dollars having a three-month maturity does
not appear on Dow Xxxxx Page 3750, or if Dow Xxxxx Page 3750 is
not available, then the Three-Month LIBOR Rate will be
determined on the basis of the rates at which deposits in U.S.
dollars are offered by four major banks in the London interbank
market (which banks are to be selected by the Company and shall
be reasonably acceptable to the Purchaser) at approximately
11:00 a.m., London time, on such Interest Determination Date to
prime banks in the London interbank market for deposits in U.S.
dollars and having a three-month maturity and in a principal
amount equal to at least $1,000,000 and in a principal amount
that is representative for a single transaction in U.S. dollars
in such market at such time. The Company will request the
principal London office of each of such banks to provide a
quotation of its rate for such deposits. If at least two such
quotations are provided, the rate in respect of such Interest
Determination Date will be the arithmetic mean of the quotations
provided to the Company. If fewer than two such quotations are
provided, the Three-Month LIBOR Rate in respect of such Interest
Determination Date will be determined on the basis of the rates
quoted by three major banks in the Borough of Manhattan, The
City of New York (which banks are to be selected by the Company
and shall be reasonably acceptable to the Purchaser), at
approximately 11:00 a.m., New York City time, on such Interest
Determination Date for loans in U.S. dollars to leading European
banks and having a three-month maturity and in a principal
amount equal to an amount of at least $1,000,000 and in a
principal amount that is representative for a single transaction
in U.S. dollars in such market at such time. If at least two
such quotations are provided, the rate in respect of such
Interest Determination Date will be at the arithmetic mean of
the quotations provided; provided, however, that if none of the
banks selected as aforesaid by the Company are quoting as
described in the immediately preceding sentence, the Interest
Rate will be the interest rate on the Notes in effect on such
Interest Determination Date.
"Dow Xxxxx Page 3750" means the display page designated as
page 3750 on the Dow Xxxxx Market Screen, formerly known as the
Bridge Telerate, Inc. (or any successor service or such other
page as may replace page 3750 on that service for the purpose of
displaying London interbank offered rates).
The Interest Rate on the Notes will in no event be higher
than the maximum rate permitted by the laws of the State of New
York, as the same may be modified by the laws of the United
States of general application.
At the request of the holder hereof, the Company will
provide to such holder the Interest Rate then in effect for this
Note, if available, and, if different, the Interest Rate to be
in effect as a result of a determination made on the most recent
Interest Determination Date with respect to this Note.
Interest payments hereon will include the amount of
interest accrued from and including the most recent Interest
Payment Date to which interest has been paid to but excluding
the applicable Interest Payment Date.
Unless otherwise specified herein, all percentages
resulting from any calculation of the rate of interest on this
Note will be rounded, if necessary, to the nearest one hundred-
thousandth of a percentage point, with five one-millionths of a
percentage point rounded upward (e.g., [2.102545%] (or
[.02102545]) will be rounded upward to [2.10255]% (or
[.0210255])), and all U.S. dollar amounts used in or resulting
from such calculation will be rounded to the nearest cent (with
one-half cent being rounded upward).
Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money
of the United States of America at the principal office of PNC
Bank, National Association, in New York, New York or at such
other place as the Company shall have designated by written
notice to the holder of this Note as provided in the Note
Agreement referred to below.
This Note is one of the Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated
as of June 12, 2002 (as from time to time amended, the "Note
Purchase Agreement"), between American Water Capital Corp.,
American Water Works Company, Inc. and the Purchaser named
therein and is entitled to the benefits thereof. Each holder of
this Note will be deemed, by its acceptance hereof, (i) to have
agreed to the confidentiality provisions set forth in Section 20
of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.1 of the Note Purchase
Agreement.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (THE "ACT") OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS
OF ANY STATE. THIS NOTE MAY NOT BE SOLD OR TRANSFERRED, IN THE ABSENCE OF
SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration
of transfer, duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the registered holder
hereof or such xxxxxx's attorney duly authorized in writing, a
new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat
the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other
purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to optional prepayment, in whole or
from time to time in part, at the times and on the terms
specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the
manner, in the amount (including any applicable Make-Whole
Amount) and with the effect provided in the Note Purchase
Agreement.
The Notes and the holders thereof are entitled to the
benefits of a Support Agreement (as defined in the Note Purchase
Agreement) between American Water Capital Corp. and American
Water Works Company, Inc.
[the remainder of this page has been left blank
intentionally]
This Note and said Note Purchase Agreement are governed by
and construed in accordance with the laws of New York.
AMERICAN WATER CAPITAL CORP.
By
Its
FORM OF OPINION OF COUNSEL
FOR THE COMPANY AND AMERICAN WATER WORKS
The closing opinions of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel
for American Water Works and the Company, and X. Xxxxxxx Xxxx,
General Counsel and Secretary of American Water Works, that are
called for by Section 4.4 of the Note Purchase Agreement, shall
be dated the date of the Closing and addressed to the Purchaser,
shall be reasonably satisfactory in scope and form to the
Purchaser and shall be to the effect that:
1. The Company has been duly incorporated and is
validly existing and in good standing as a corporation
under the laws of the State of Delaware, has full corporate
power and authority to execute and perform the Note
Agreement and the Registration Rights Agreement and to
issue the Notes and has full corporate power and authority
to carry on its business as now conducted and is duly
qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction in which
its conduct requires such qualification except where the
failure to do so would not reasonably be expected to result
in a Material Adverse Effect.
2. American Water Works has been duly incorporated and
is validly existing and in good standing as a corporation
under the laws of the State of Delaware, has full corporate
power and authority to execute and perform the Note
Agreement, the Registration Rights Agreement and the
Support Agreement and has full corporate power and
authority to carry on its business as now conducted and is
duly qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction in
which its conduct requires such qualification except where
the failure to do so would not reasonably be expected to
result in a Material Adverse Effect.
3. The Note Purchase Agreement has been duly
authorized, executed and delivered by each of American
Water Works and the Company, and assuming due
authorization, execution and delivery thereof by the
Purchaser, constitutes a valid and legally binding
obligation of American Water Works and the Company
enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and
fair dealing.
4. The Registration Rights Agreement has been duly
authorized, executed and delivered by each of American
Water Works and the Company, and assuming due
authorization, execution and delivery thereof by the
Purchaser, constitutes a valid and legally binding
obligation of American Water Works and the Company
enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and
fair dealing.
5. The Support Agreement has been duly authorized,
executed and delivered by each of American Water Works and
the Company and constitutes the legal, valid and binding
contract of American Water Works and the Company
enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and
fair dealing.
6. The Notes have been duly authorized, executed and
issued by the Company and, upon payment and delivery in
accordance with the Note Purchase Agreement, will
constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject
to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of
good faith and fair dealing.
7. No consent, approval, authorization, order,
registration or qualification of or with any Federal or New
York governmental agency or body or any Delaware
governmental agency or body acting pursuant to the Delaware
General Corporation Law is required for the issue and sale
of the Notes by the Company and the compliance by the
Company with all of the provisions of the Note Purchase
Agreement, the Registration Rights Agreement and the
Support Agreement.
8. No registration under the Securities Act of 1933, as
amended, of the Notes and no qualification of an indenture
under the Trust Indenture Act of 1939, as amended, is
required for the offer and sale of the Notes to the
Purchaser in the manner contemplated by the Note Purchase
Agreement.
9. The issue and sale of the Notes by the Company and
the compliance by the Company with all of the provisions of
the Note Purchase Agreement and the Support Agreement will
not breach or result in a default under any indenture,
mortgage, deed of trust, loan agreement or other agreement
or instrument filed or incorporated by reference as an
exhibit to the Disclosure Documents, nor will such action
violate the Certificate of Incorporation or By-laws of the
Company or any Federal or New York statute or the Delaware
General Corporation Law or any rule or regulation that has
been issued pursuant to any Federal or New York statute or
the Delaware General Corporation Law or any order known to
us issued pursuant to any Federal or New York statute or
the Delaware General Corporation Law by any court or
governmental agency or body or court having jurisdiction
over the Company or any of its subsidiaries or any of their
properties.
10. The compliance by American Water Works with all
of the provisions of the Note Purchase Agreement and the
Support Agreement will not breach or result in a default
under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument filed or
incorporated by reference as an exhibit to the Disclosure
Documents, nor will such action violate the Certificate of
Incorporation or By-laws of American Water Works or any
Federal or New York statute or the Delaware General
Corporation Law or any rule or regulation that has been
issued pursuant to any Federal or New York statute or the
Delaware General Corporation Law or any order known to us
issued pursuant to any Federal or New York statute or the
Delaware General Corporation Law by any court or
governmental agency or body or court having jurisdiction
over American Water Works or any of its subsidiaries or any
of their properties.
11. Assuming the accuracy of the representations of
the Company and American Water Works set forth in the Note
Purchase Agreement, neither the issuance of the Notes nor
the application of the proceeds of the sale of the Notes
will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any
regulation issued pursuant thereto, including, without
limitation, Regulation T, U or X of the Board of Governors
of the Federal Reserve System.
12. To the knowledge of such counsel, there are no
statutes or pending or threatened legal or governmental
proceedings against or affecting American Water Works or
the Company in any court or before any governmental
authority or arbitration board or tribunal that, if
adversely determined, would have a materially adverse
effect on the legality, validity or enforceability of
American Water Works obligations under the Support
Agreement or American Water Works' or the Company's
obligations under the Note Purchase Agreement or the Notes.
13. American Water Works is not an "investment
company" within the meaning of and subject to regulation
under the Investment Company Act of 1940, as amended (the
"Act"). The Company has received an order from the
Securities and Exchange Commission exempting it from all
provisions of the Act.
With respect to matters of fact on which such opinion is
based, such counsel shall be entitled to rely on appropriate
certificates of public officials and officers of American Water
Works and the Company.
AMERICAN WATER CAPITAL CORP.
5.65% SENIOR NOTE DUE JUNE 12, 2007
No. 1 June 12, 2002
$40,000,000
For Value Received, the undersigned, American Water Capital
Corp. (herein called the "Company"), a corporation organized and
existing under the laws of the State of Delaware, hereby
promises to pay to RWE Aktiengesellschaft or registered assigns,
the principal sum of Forty Million Dollars on June 12, 2007 with
interest (computed on the basis of a 360-day year of twelve 30-
day months) (a) on the unpaid balance thereof at the rate of
5.65% per annum from the date hereof, payable annually, on the
12th day of June of each year, commencing with June 12, 2003,
until the principal hereof shall have become due and payable,
and (b) to the extent permitted by law, on any overdue payment
(including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole
Amount (as defined in the Note Purchase Agreement referred to
below), payable annually as aforesaid (or, at the option of the
registered holder hereof, on demand), at the Default Rate.
Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money
of the United States of America at the principal office of PNC
Bank, National Association, in New York, New York or at such
other place as the Company shall have designated by written
notice to the holder of this Note as provided in the Note
Agreement referred to below.
This Note is one of the Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated
as of June 12, 2002 (as from time to time amended, the "Note
Purchase Agreement"), among American Water Capital Corp.,
American Water Works Company, Inc. and the Purchaser named
therein and is entitled to the benefits thereof. Each holder of
this Note will be deemed, by its acceptance hereof, (i) to have
agreed to the confidentiality provisions set forth in Section 20
of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.1 of the Note Purchase
Agreement.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (THE "ACT") OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS
OF ANY STATE. THIS NOTE MAY NOT BE SOLD OR TRANSFERRED, IN THE ABSENCE
OF SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration
of transfer, duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the registered holder
hereof or such xxxxxx's attorney duly authorized in writing, a
new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat
the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other
purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to optional prepayment, in whole or
from time to time in part, at the times and on the terms
specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the
manner, in the amount (including any applicable Make-Whole
Amount) and with the effect provided in the Note Purchase
Agreement.
The Notes and the holders thereof are entitled to the
benefits of a Support Agreement (as defined in the Note Purchase
Agreement) between American Water Capital Corp. and American
Water Works Company, Inc.
[the remainder of this page has been left blank
intentionally]
This Note and said Note Purchase Agreement are governed by
and construed in accordance with the laws of New York.
AMERICAN WATER CAPITAL CORP.
By:
Name:
Title:
EXECUTION COPY
American Water Capital Corp.
5.65% Senior Notes due June 12, 2007
Floating Rate Senior Notes due June 26, 2003
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
June 12, 2002
RWE Aktiengesellschaft
Xxxxxxxxxx 0, 00000
Xxxxx, Xxxxxxx
Ladies and Gentlemen:
American Water Capital Corp., a Delaware
corporation (the "Company"), proposes to issue and sell to
RWE Aktiengesellschaft (the "Initial Purchaser"), upon the
terms and subject to the conditions set forth in the Note
Purchase Agreement dated as of June 12, 2002 (the "Purchase
Agreement"), among the Initial Purchaser, American Water
Works Company, Inc., a Delaware corporation ("American Water
Works") and the Company up to $170,000,000 aggregate
principal amount of its 5.65% Senior Notes due June 12, 2007
(the "Fixed Rate Notes") and $150,000,000 aggregate principal
amount of its Floating Rate Senior Notes due June 26, 2003
(the "Floating Rate Notes" and together with the Fixed Rate
Notes, the "Notes"). Capitalized terms used but not defined
herein shall have the meanings given to such terms in the
Purchase Agreement.
As an inducement to the Initial Purchaser to enter
into the Purchase Agreement and in satisfaction of a
condition to the obligations of the Initial Purchaser
thereunder, American Water Works and the Company agree with
the Initial Purchaser, for the benefit of the holders of the
Notes (including the Initial Purchaser of the Notes)
(collectively the "Holders") as follows:
Section 23. REGISTERED EXCHANGE OFFER. THE COMPANY SHALL, UPON
DEMAND BY ANY HOLDER OF FIXED RATE NOTES ON THE ONE HAND, OR BY ANY HOLDER
OF FLOATING RATE NOTES ON THE OTHER HAND, MADE AFTER TERMINATION OF THE
MERGER AGREEMENT PURSUANT TO ARTICLE VII THEREOF, (I) PREPARE AND, NOT
LATER THAN 60 DAYS AFTER SUCH DEMAND (THE "FILING DATE"), FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") A REGISTRATION
STATEMENT (THE "EXCHANGE OFFER REGISTRATION STATEMENT") ON AN APPROPRIATE
FORM UNDER THE SECURITIES ACT WITH RESPECT TO A PROPOSED OFFER TO THE HOLDERS
(THE "REGISTERED EXCHANGE OFFER") TO ISSUE AND DELIVER TO SUCH HOLDERS (X)
OF FIXED RATE NOTES, IN EXCHANGE FOR THE FIXED RATE NOTES, A LIKE AGGREGATE
PRINCIPAL AMOUNT OF DEBT SECURITIES OF THE COMPANY (THE "FIXED RATE EXCHANGE
SECURITIES") OR (Y) OF FLOATING RATE NOTES, IN EXCHANGE FOR THE FLOATING
RATE NOTES, A LIKE AGGREGATE PRINCIPAL AMOUNT OF DEBT SECURITIES OF THE
COMPANY (THE "FLOATING RATE EXCHANGE SECURITIES" AND TOGETHER WITH THE
FIXED RATE EXCHANGE SECURITIES, THE "EXCHANGE SECURITIES"), AS APPLICABLE,
IN EACH CASE THAT ARE IDENTICAL IN ALL MATERIAL RESPECTS TO THE NOTES, EXCEPT
FOR ANY TRANSFER RESTRICTIONS RELATING TO THE NOTES, (II) USE ITS REASONABLE
BEST EFFORTS TO CAUSE THE EXCHANGE OFFER REGISTRATION STATEMENT TO BECOME
EFFECTIVE UNDER THE SECURITIES ACT NO LATER THAN 75 DAYS AFTER THE FILING
DATE AND THE REGISTERED EXCHANGE OFFER TO BE CONSUMMATED NO LATER THAN 105
DAYS AFTER THE FILING DATE AND (III) KEEP THE EXCHANGE OFFER REGISTRATION
STATEMENT EFFECTIVE FOR NOT LESS THAN 30 DAYS (OR LONGER, IF REQUIRED BY
APPLICABLE LAW) AFTER THE DATE ON WHICH NOTICE OF THE REGISTERED EXCHANGE
OFFER IS MAILED TO THE HOLDERS (SUCH PERIOD BEING CALLED THE "EXCHANGE OFFER
REGISTRATION PERIOD"). THE EXCHANGE SECURITIES WILL BE ISSUED UNDER AN
INDENTURE BETWEEN THE COMPANY AND SUCH BANK OR TRUST COMPANY THAT IS
REASONABLY SATISFACTORY TO THE INITIAL PURCHASER, AS TRUSTEE (THE "EXCHANGE
SECURITIES TRUSTEE"), IN THE FORM OF THE INDENTURE FILED AS EXHIBIT 4(A) TO
THE REGISTRATION STATEMENT ON FORM S-3 FILED BY AMERICAN WATER WORKS AND THE
COMPANY WITH THE COMMISSION ON JANUARY 30, 2001 (WITH SUCH REVISIONS TO
PROVIDE FOR FLOATING RATE EXCHANGE SECURITIES AS THE COMPANY AND THE INITIAL
PURCHASER DEEM APPROPRIATE) AND SHALL CONTAIN THE SAME COVENANTS AND EVENTS
OF DEFAULT WITH THE RESPECT TO THE COMPANY AS SET FORTH IN THE PURCHASE
AGREEMENT (THE "EXCHANGE SECURITIES INDENTURE").
Upon the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence
the Registered Exchange Offer, it being the objective of such
Registered Exchange Offer to enable each Holder electing to
exchange Fixed Rate Notes for Fixed Rate Exchange Securities
or each Holder electing to exchange Floating Rate Notes for
Floating Rate Exchange Securities (assuming that such Holder
(a) is not an affiliate of the Company or an Exchanging
Dealer (as defined herein) not complying with the
requirements of the next sentence, (b) is not an Initial
Purchaser holding Notes that have, or that are reasonably
likely to have, the status of an unsold allotment in an
initial distribution, (c) acquires the Exchange Securities in
the ordinary course of such Holder's business and (d) has no
arrangements or understandings with any person to participate
in the distribution of the Exchange Securities) and to trade
such Exchange Securities from and after their receipt without
any limitations or restrictions under the Securities Act and
without material restrictions under the securities laws of
the several states of the United States. American Water
Works, the Company, the Initial Purchaser and each Exchanging
Dealer acknowledge that, pursuant to current interpretations
by the Commission's staff of Section 5 of the Securities Act,
each Holder that is a broker-dealer electing to exchange
Notes, acquired for its own account as a result of market-
making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required to deliver a
prospectus containing substantially the information set forth
in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the
Exchange Offer" section and in Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a
sale of any such Exchange Securities received by such
Exchanging Dealer pursuant to the Registered Exchange Offer.
If, prior to the consummation of the Registered
Exchange Offer, any Holder holds any Notes acquired by it
that have, or that are reasonably likely to be determined to
have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in
the Registered Exchange Offer, the Company shall, upon the
request of any such Holder, simultaneously with the delivery
of the applicable Exchange Securities in the Registered
Exchange Offer, issue and deliver to any such Holder, in
exchange for the Notes held by such Holder (the "Private
Exchange"), a like aggregate principal amount of debt
securities of the Company (the "Private Exchange Securities")
that are identical in all material respects to the Exchange
Securities, except for the transfer restrictions relating to
such Private Exchange Securities. The Private Exchange
Securities will be issued under the same indenture as the
applicable Exchange Securities, and the Company shall use its
reasonable best efforts to cause the Private Exchange
Securities to bear the same CUSIP number as the applicable
Exchange Securities.
In connection with the Registered Exchange Offer,
the Company shall:
Section 23.1. mail to each Holder a copy of the prospectus
forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and
related documents;
Section 23.2. keep the Registered Exchange Offer open for
not less than 30 days (or longer, if required by applicable
law) after the date on which notice of the Registered
Exchange Offer is mailed to the Holders;
Section 23.3. utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough of
Manhattan, The City of New York;
Section 23.4. permit Holders to withdraw tendered Notes at
any time prior to the close of business, New York City time,
on the last business day on which the Registered Exchange
Offer shall remain open; and
Section 23.5. otherwise comply in all respects with all
laws that are applicable to the Registered Exchange Offer.
As soon as practicable after the close of the
Registered Exchange Offer and any Private Exchange, as the
case may be, the Company shall:
(a) accept for exchange all Notes tendered and
not validly withdrawn pursuant to the Registered
Exchange Offer and the Private Exchange;
Section 23.6. deliver to the applicable Exchange
Securities Trustee for cancellation all Securities so
accepted for exchange; and
Section 23.7. cause the applicable Exchange Securities
Trustee, promptly to authenticate and deliver to each Holder,
Exchange Securities or Private Exchange Securities, as the
case may be, equal in principal amount to the Notes of such
Holder so accepted for exchange.
The Company shall use its reasonable best efforts
to keep the Exchange Offer Registration Statement effective
and to amend and supplement the prospectus contained therein
in order to permit such prospectus to be used by all persons
subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must
comply with such requirements in order to resell the Exchange
Securities; provided that (i) in the case where such
prospectus and any amendment or supplement thereto must be
delivered by an Exchanging Dealer, such period shall be the
lesser of 180 days and the date on which all Exchanging
Dealers have sold all Exchange Securities held by them and
(ii) the Company or American Water Works, as applicable,
shall make such prospectus and any amendment or supplement
thereto available to any broker-dealer for use in connection
with any resale of any Exchange Securities for a period of
not less than 90 days after the consummation of the
Registered Exchange Offer.
The Exchange Securities Indenture shall provide
that the Exchange Securities and the Private Exchange
Securities of each series shall vote and consent together on
all matters as one class and that none of the Exchange
Securities or the Private Exchange Securities of a single
series will have the right to vote or consent as a separate
class on any matter.
Interest on each Exchange Security and Private
Exchange Security issued pursuant to the Registered Exchange
Offer and in the Private Exchange will accrue from the last
interest payment date on which interest was paid on the
applicable Notes surrendered in exchange therefor or, if no
interest has been paid on such Notes, from the date of
original issuance of such Notes (each an "Issue Date").
Each Holder participating in the Registered
Exchange Offer shall be required to represent to the Company
that at the time of the consummation of the Registered
Exchange Offer (i) any Exchange Securities received by such
Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding
with any person to participate in the distribution of the
Securities or the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an affiliate
of the Company or, if it is such an affiliate, such Holder
will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
Each Holder participating in the Registered Exchange Offer
shall furthermore make all representations as may be
necessary under the applicable rules, regulations or
interpretations of the Commission to render use of Form S-4
or another appropriate form under the Securities Act
available.
Notwithstanding any other provisions hereof, the
Company will ensure that (i) any Exchange Offer Registration
Statement and any amendment thereto and any prospectus
forming part thereof and any supplement thereto complies in
all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any
Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an
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 not misleading and (iii) any
prospectus forming part of any Exchange Offer Registration
Statement, and any supplement to such prospectus, does not,
as of the consummation of the Registered Exchange Offer,
include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
Section 24. SHELF REGISTRATION. IF (I) BECAUSE OF ANY CHANGE IN LAW
OR APPLICABLE INTERPRETATIONS THEREOF BY THE COMMISSION'S STAFF, THE COMPANY
IS NOT PERMITTED TO EFFECT THE REGISTERED EXCHANGE OFFER AS CONTEMPLATED BY
SECTION 1 HEREOF, OR (II) ANY NOTES VALIDLY TENDERED PURSUANT TO THE
REGISTERED EXCHANGE OFFER ARE NOT EXCHANGED FOR EXCHANGE SECURITIES WITHIN
105 DAYS AFTER THE FILING DATE, OR (III) THE INITIAL PURCHASER SO REQUESTS
WITH RESPECT TO NOTES OR PRIVATE EXCHANGE SECURITIES NOT ELIGIBLE TO BE
EXCHANGED FOR EXCHANGE SECURITIES IN THE REGISTERED EXCHANGE OFFER AND HELD
BY IT FOLLOWING THE CONSUMMATION OF THE REGISTERED EXCHANGE OFFER, OR (IV)
ANY APPLICABLE LAW OR INTERPRETATIONS DO NOT PERMIT ANY HOLDER TO PARTICIPATE
IN THE REGISTERED EXCHANGE OFFER, OR (V) ANY HOLDER THAT PARTICIPATES IN
THE REGISTERED EXCHANGE OFFER DOES NOT RECEIVE FREELY TRANSFERABLE EXCHANGE
SECURITIES IN EXCHANGE FOR TENDERED NOTES, OR (VI) THE COMPANY SO ELECTS,
THEN THE FOLLOWING PROVISIONS SHALL APPLY:
Section 24.1. If the Company is required by Section 2(b)
hereof to file a shelf registration statement and the
Registered Exchange Offer has not been consummated, the
Company shall, as promptly as practicable (but in no event
less than 15 days prior to filing such shelf registration)
issue and deliver to any Holder, in exchange for the Notes
held by such Holder, a like aggregate principal amount of
debt securities (the "Alternate Private Exchange Securities")
of the Company in a private exchange offer that complies with
the requirements for a Private Exchange pursuant to Section 1
of this Agreement. For purposes of this Agreement, "Private
Exchange Securities" shall include any Alternate Private
Exchange Securities. Such Alternate Private Exchange
Securities shall be issued under the same indenture as the
Exchange Securities would have been issued under had the
Exchange Offer been consummated, and the Company will cause
the Alternate Private Exchange Securities to bear the same
CUSIP number as the applicable Exchange Securities.
Section 24.2. The Company shall use its reasonable best
efforts to file as promptly as practicable (but in no event
more than 45 days after so required or requested pursuant to
this Section 2) with the Commission, and thereafter shall use
its reasonable best efforts to cause to be declared
effective, a shelf registration statement on an appropriate
form under the Securities Act relating to the offer and sale
of the Transfer Restricted Securities (as defined below) by
the Holders thereof from time to time in accordance with the
methods of distribution set forth in such registration
statement (hereafter, a "Shelf Registration Statement" and,
together with any Exchange Offer Registration Statement, a
"Registration Statement").
Section 24.3. The Company shall use its reasonable best
efforts to keep the Shelf Registration Statement continuously
effective in order to permit the prospectus forming part
thereof to be used by Holders of Transfer Restricted
Securities for a period ending on the earlier of (i) two
years from the applicable Issue Date or such shorter period
that will terminate when all the Transfer Restricted
Securities covered by the Shelf Registration Statement have
been sold pursuant thereto and (ii) the date on which the
Securities become eligible for resale without volume
restrictions pursuant to Rule 144 under the Securities Act
(in any such case, such period being called the "Shelf
Registration Period"). The Company shall be deemed not to
have used its reasonable best efforts to keep the Shelf
Registration Statement effective during the requisite period
if it voluntarily takes any action that would result in
Holders of Transfer Restricted Securities covered thereby not
being able to offer and sell such Transfer Restricted
Securities during that period, unless such action is required
by applicable law.
Section 24.4. Notwithstanding any other provisions hereof,
the Company will ensure that (i) any Shelf Registration
Statement and any amendment thereto and any prospectus
forming part thereof and any supplement thereto complies in
all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Shelf
Registration Statement and any amendment thereto (in either
case, other than with respect to information included therein
in reliance upon or in conformity with written information
furnished to the Company by or on behalf of any Holder
specifically for use therein (the "Holders' Information"))
does not contain an 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 not misleading
and (iii) any prospectus forming part of any Shelf
Registration Statement, and any supplement to such prospectus
(in either case, other than with respect to Holders'
Information), does not include an untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Section 25. INCREASE IN INTEREST RATE. (a) THE PARTIES HERETO
AGREE THAT THE HOLDERS OF TRANSFER RESTRICTED SECURITIES WILL SUFFER DAMAGES
IF THE COMPANY FAILS TO FULFILL ITS OBLIGATIONS UNDER SECTION 1 OR SECTION
2, AS APPLICABLE, AND THAT IT WOULD NOT BE FEASIBLE TO ASCERTAIN THE EXTENT
OF SUCH DAMAGES. ACCORDINGLY, IF (I) THE APPLICABLE REGISTRATION STATEMENT
IS NOT FILED WITH THE COMMISSION ON OR PRIOR TO THE FILING DATE, (II) THE
EXCHANGE OFFER REGISTRATION STATEMENT OR THE SHELF REGISTRATION STATEMENT,
AS THE CASE MAY BE, IS NOT DECLARED EFFECTIVE WITHIN 75 DAYS AFTER THE
FILING DATE (OR IN THE CASE OF A SHELF REGISTRATION STATEMENT REQUIRED TO BE
FILED IN RESPONSE TO A CHANGE IN LAW OR THE APPLICABLE INTERPRETATIONS OF
COMMISSION'S STAFF, IF LATER, WITHIN 60 DAYS AFTER PUBLICATION OF THE
CHANGE IN LAW OR INTERPRETATION), (III) THE REGISTERED EXCHANGE OFFER IS
NOT CONSUMMATED ON OR PRIOR TO 105 DAYS AFTER THE FILING DATE, OR (IV) THE
SHELF REGISTRATION STATEMENT IS FILED AND DECLARED EFFECTIVE WITHIN 75 DAYS
AFTER THE FILING DATE (OR IN THE CASE OF A SHELF REGISTRATION STATEMENT
REQUIRED TO BE FILED IN RESPONSE TO A CHANGE IN LAW OR THE APPLICABLE
INTERPRETATIONS OF COMMISSION'S STAFF, IF LATER, WITHIN 60 DAYS AFTER
PUBLICATION OF THE CHANGE IN LAW OR INTERPRETATION) BUT SHALL THEREAFTER
CEASE TO BE EFFECTIVE (AT ANY TIME THAT THE COMPANY IS OBLIGATED TO MAINTAIN
THE EFFECTIVENESS THEREOF) WITHOUT BEING SUCCEEDED WITHIN 45 DAYS BY AN
ADDITIONAL REGISTRATION STATEMENT FILED AND DECLARED EFFECTIVE (EACH SUCH
EVENT REFERRED TO IN CLAUSES (I) THROUGH (IV), A "REGISTRATION DEFAULT"),
THE COMPANY WILL BE OBLIGATED TO PAY ADDITIONAL INTEREST IN CASH ON EACH
INTEREST PAYMENT DATE IN AN AMOUNT EQUAL TO ONE-QUARTER OF ONE PERCENT
(0.25%) PER ANNUM ON THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE
SERIES OF NOTES SUBJECT TO SUCH REGISTRATION DEFAULT WITH RESPECT TO THE
FIRST 90 DAYS FOLLOWING SUCH REGISTRATION DEFAULT. THE AMOUNT OF SUCH
ADDITIONAL INTEREST WILL INCREASE BY AN ADDITIONAL ONE-QUARTER OF ONE PERCENT
(0.25%) PER ANNUM FOR EACH SUBSEQUENT 90-DAY PERIOD UNTIL SUCH
REGISTRATION DEFAULT HAS BEEN CURED, UP TO A MAXIMUM OF ONE PERCENT (1.0%)
PER ANNUM. SUCH ADDITIONAL INTEREST SHALL CEASE TO ACCRUE WHEN (I) THE
APPLICABLE REGISTRATION STATEMENT IS FILED, (II) THE EXCHANGE OFFER
REGISTRATION STATEMENT IS DECLARED EFFECTIVE AND THE REGISTERED EXCHANGE
OFFER IS CONSUMMATED, (III) THE SHELF REGISTRATION STATEMENT IS DECLARED
EFFECTIVE OR (IV) THE SHELF REGISTRATION STATEMENT AGAIN BECOMES EFFECTIVE,
AS THE CASE MAY BE. AS USED HEREIN, THE TERM "TRANSFER RESTRICTED
SECURITIES" MEANS (I) EACH NOTE UNTIL THE DATE ON WHICH SUCH NOTE HAS BEEN
EXCHANGED FOR A FREELY TRANSFERABLE EXCHANGE SECURITY IN THE REGISTERED
EXCHANGE OFFER, (II) EACH NOTE OR PRIVATE EXCHANGE SECURITY UNTIL THE DATE
ON WHICH IT HAS BEEN EFFECTIVELY REGISTERED UNDER THE SECURITIES ACT AND
DISPOSED OF IN ACCORDANCE WITH THE SHELF REGISTRATION STATEMENT OR (III)
EACH NOTE OR PRIVATE EXCHANGE SECURITY UNTIL THE DATE ON WHICH IT IS
DISTRIBUTED TO THE PUBLIC PURSUANT TO RULE 144 UNDER THE SECURITIES ACT OR
IS SALEABLE PURSUANT TO RULE 144(K) UNDER THE SECURITIES ACT.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 3(A), THE COMPANY
SHALL NOT BE REQUIRED TO PAY ADDITIONAL INTEREST TO A HOLDER OF TRANSFER
RESTRICTED SECURITIES IF SUCH HOLDER FAILED TO COMPLY WITH ITS OBLIGATIONS TO
MAKE THE REPRESENTATIONS SET FORTH IN THE SECOND TO LAST PARAGRAPH OF SECTION
1 OR FAILED TO PROVIDE THE INFORMATION REQUIRED TO BE PROVIDED BY IT, IF
ANY, PURSUANT TO SECTION 4(N).
(a) The Company may, by notice to the Holders in
accordance with Section 10(b) hereof, suspend the
availability of the Shelf Registration Statement pending
the announcement by the Company of a material corporate
transaction or as otherwise required by applicable
securities laws without paying additional interest
pursuant to Section 3(a) above. In the event that the
Shelf Registration Statement is suspended pursuant to
the immediately preceding sentence for more than 60 days
in the aggregate in any consecutive twelve-month period
(a "Registration Suspension Default"), the Company shall
be required to pay additional interest pursuant to
Section 3(a) until such Registration Suspension Default
has been cured. The accrual of such additional interest
will cease when such Registration Suspension Default has
been cured.
(b) The Company shall pay the additional interest
due on the Transfer Restricted Securities to the
Holders, prior to 10:00 a.m., New York City time, on the
next interest payment date specified by the applicable
Notes. The additional interest due shall be payable on
each interest payment date specified by the Notes to the
record holder entitled to receive the interest payment
to be made on such date. Each obligation to pay
additional interest shall be deemed to accrue from and
including the date of the applicable Registration
Default.
(c) The parties hereto agree that the additional
interest provided for in this Section 3 constitute a
reasonable estimate of and are intended to constitute
the sole damages that will be suffered by Holders of
Transfer Restricted Securities by reason of the failure
of (i) the Shelf Registration Statement or the Exchange
Offer Registration Statement to be filed, (ii) the Shelf
Registration Statement to remain effective or (iii) the
Exchange Offer Registration Statement to be declared
effective and the Registered Exchange Offer to be
consummated, in each case to the extent required by this
Agreement.
Section 26. REGISTRATION PROCEDURES. IN CONNECTION WITH ANY
REGISTRATION STATEMENT, THE FOLLOWING PROVISIONS SHALL APPLY:
Section 26.1. The Company shall (i) furnish to the Initial
Purchaser, prior to the filing thereof with the Commission, a
copy of the Registration Statement and each amendment thereof
and each supplement, if any, to the prospectus included
therein and shall use its reasonable best efforts to reflect
in each such document, when so filed with the Commission,
such comments as any Initial Purchaser may reasonably
propose; (ii) include the information set forth in Annex A
hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution"
section of the prospectus forming a part of the Exchange
Offer Registration Statement, and include the information set
forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; and
(iii) if requested by any Initial Purchaser, include the
information required by Items 507 or 508 of Regulation S-K
under the Securities Act, as applicable, in the prospectus
forming a part of the Exchange Offer Registration Statement.
Section 26.2. The Company shall advise the Initial
Purchaser, each Exchanging Dealer and the Holders (if
applicable) and, if requested by any such person, confirm
such advice in writing (which advice pursuant to clauses
(ii)-(v) hereof shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes
have been made):
(i) when any Registration Statement and any
amendment thereto has been filed with the
Commission and when such Registration Statement or
any post-effective amendment thereto has become
effective;
(ii) of any request by the Commission for
amendments or supplements to any Registration
Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission or
any other governmental agency or court of any stop
order suspending the effectiveness of any
Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the suspension of availability of the
Shelf Registration Statement pursuant to Section
3(b) hereof;
(v) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Notes, the Exchange Securities
or the Private Exchange Securities for sale in any
jurisdiction or the initiation or threatening of
any proceeding for such purpose; and
(vi) of the happening of any event that
requires the making of any changes in any
Registration Statement or the prospectus included
therein in order that the statements therein are
not misleading and do not omit to state a material
fact required to be stated therein or necessary to
make the statements therein not misleading.
Section 26.3. The Company will use its reasonable best
efforts to obtain the withdrawal of any order suspending the
effectiveness of any Registration Statement as soon as
practicable.
Section 26.4. The Company will furnish to each Holder of
Transfer Restricted Securities included within the coverage
of any Shelf Registration Statement, without charge, at least
one conformed copy of such Shelf Registration Statement and
any post-effective amendment thereto, including financial
statements and schedules and, if any such Holder so requests
in writing, all exhibits thereto (including those, if any,
incorporated by reference).
Section 26.5. The Company will, during the Shelf
Registration Period, promptly deliver to each Holder of
Transfer Restricted Securities included within the coverage
of any Shelf Registration Statement, without charge, as many
copies of the prospectus (including each preliminary
prospectus) included in such Shelf Registration Statement and
any amendment or supplement thereto as such Holder may
reasonably request; and the Company consents to the use of
such prospectus or any amendment or supplement thereto by
each of the selling Holders of Transfer Restricted Securities
in connection with the offer and sale of the Transfer
Restricted Securities covered by such prospectus or any
amendment or supplement thereto.
Section 26.6. The Company will furnish to the Initial
Purchaser and each Exchanging Dealer, and to any other Holder
who so requests, without charge, at least one conformed copy
of the Exchange Offer Registration Statement and any post-
effective amendment thereto, including financial statements
and schedules and, if the Initial Purchaser or Exchanging
Dealer or any such Holder so requests in writing, all
exhibits thereto (including those, if any, incorporated by
reference).
Section 26.7. The Company will, during the Exchange Offer
Registration Period or the Shelf Registration Period, as
applicable, promptly deliver to the Initial Purchaser, each
Exchanging Dealer and such other persons that are required to
deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus
included in the Exchange Offer Registration Statement or the
Shelf Registration Statement and any amendment or supplement
thereto as the Initial Purchaser, Exchanging Dealer or other
persons may reasonably request; and American Water Works and
the Company consent to the use of such prospectus or any
amendment or supplement thereto by any the Initial Purchaser,
Exchanging Dealer or other persons, as applicable, as
aforesaid.
Section 26.8. Prior to the effective date of any
Registration Statement, the Company will use its reasonable
best efforts to register or qualify, or cooperate with the
Holders of Notes, Exchange Securities or Private Exchange
Securities included therein and its respective counsel in
connection with the registration or qualification of, such
Notes, Exchange Securities or Private Exchange Securities for
offer and sale under the securities or blue sky laws of such
jurisdictions as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions
of the Notes, Exchange Securities or Private Exchange
Securities covered by such Registration Statement; provided
that the Company will not be required to qualify generally to
do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to
general service of process or to taxation in any such
jurisdiction where it is not then so subject.
Section 26.9. The Company will cooperate with the Holders
of Notes, Exchange Securities or Private Exchange Securities
to facilitate the timely preparation and delivery of
certificates representing Notes, Exchange Securities or
Private Exchange Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in
such denominations (consistent with the Indentures) and
registered in such names as the Holders thereof may request
in writing prior to sales of Notes, Exchange Securities or
Private Exchange Securities pursuant to such Registration
Statement.
Section 26.10. If any event contemplated by Section
4(b)(ii) through (v) occurs during the period for which the
Company is required to maintain an effective Registration
Statement, the Company will promptly prepare and file with
the Commission a post-effective amendment to the Registration
Statement or a supplement to the related prospectus or file
any other required document so that, as thereafter delivered
to purchasers of the Notes, Exchange Securities or Private
Exchange Securities from a Holder, the prospectus will not
include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
Section 26.11. Not later than the effective date of the
applicable Registration Statement, the Company will provide a
CUSIP number for the Notes, the Exchange Securities and the
Private Exchange Securities, as the case may be, and provide
the applicable trustee with printed certificates for the
Notes, the Exchange Securities or the Private Exchange
Securities, as the case may be, in a form eligible for
deposit with The Depository Trust Company.
Section 26.12. The Company will comply with all
applicable rules and regulations of the Commission and will
make generally available to its security holders as soon as
practicable after the effective date of the applicable
Registration Statement an earning statement satisfying the
provisions of Section 11(a) of the Securities Act; provided
that in no event shall such earning statement be delivered
later than 45 days after the end of a 12-month period (or 90
days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing
after the effective date of the applicable Registration
Statement, which statement shall cover such 12-month period.
Section 26.13. The Company will cause each of the
Exchange Securities Indentures to be qualified under the
Trust Indenture Act as required by applicable law in a timely
manner.
Section 26.14. The Company may require each Holder of
Transfer Restricted Securities to be registered pursuant to
any Shelf Registration Statement to furnish to the Company
such information concerning the Holder and the distribution
of such Transfer Restricted Securities as the Company may
from time to time reasonably require for inclusion in such
Shelf Registration Statement, and American Water Works and
the Company may exclude from such registration the Transfer
Restricted Securities of any Holder that fails to furnish
such information within a reasonable time after receiving
such request. No such Holder shall be entitled to liquidated
damages unless and until such Holder shall have used its
reasonable best efforts to provide all such information.
Section 26.15. In the case of a Shelf Registration
Statement, each Holder of Transfer Restricted Securities to
be registered pursuant thereto agrees by acquisition of such
Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 4(b)(ii) through
(v), such Holder will discontinue disposition of such
Transfer Restricted Securities until such Xxxxxx's receipt of
copies of the supplemental or amended prospectus contemplated
by Section 4(j) or until advised in writing (the "Advice") by
the Company that the use of the applicable prospectus may be
resumed. If the Company shall give any notice under Section
4(b)(ii) through (v) during the period that the Company is
required to maintain an effective Registration Statement (the
"Effectiveness Period"), such Effectiveness Period shall be
extended by the number of days during such period from and
including the date of the giving of such notice to and
including the date when each seller of Transfer Restricted
Securities covered by such Registration Statement shall have
received (x) the copies of the supplemental or amended
prospectus contemplated by Section 4(j) (if an amended or
supplemental prospectus is required) or (y) the Advice (if no
amended or supplemental prospectus is required).
Section 26.16. In the case of a Shelf Registration
Statement, the Company shall enter into such customary
agreements (including, if requested, an underwriting
agreement in customary form on no more than one occasion) and
take all such other action, if any, as Holders of a majority
in aggregate principal amount of the Notes, Exchange
Securities and Private Exchange Securities being sold or the
managing underwriters (if any) shall reasonably request in
order to facilitate any disposition of Notes, Exchange
Securities or Private Exchange Securities pursuant to such
Shelf Registration Statement.
Section 26.17. In the case of a Shelf Registration
Statement, the Company shall (i) make reasonably available
for inspection by a representative of, and Special Counsel
(as defined below) acting for, Holders of a majority in
aggregate principal amount of the Notes, Exchange Securities
and Private Exchange Securities being sold and any
underwriter participating in any disposition of Notes,
Exchange Securities or Private Exchange Securities pursuant
to such Shelf Registration Statement, all relevant financial
and other records, pertinent corporate documents and
properties of the Company and its subsidiaries and (ii) use
its reasonable best efforts to have its officers, directors,
employees, accountants and counsel supply all relevant
information reasonably requested by such representative,
Special Counsel or any such underwriter (an "Inspector") in
connection with such Shelf Registration Statement.
Section 26.18. In the case of a Shelf Registration
Statement, the Company shall, if requested by Holders of a
majority in aggregate principal amount of the Notes, Exchange
Securities and Private Exchange Securities being sold, their
Special Counsel or the managing underwriters (if any) in
connection with such Shelf Registration Statement, use its
reasonable best efforts to cause (i) its counsel to deliver
an opinion relating to the Shelf Registration Statement and
the Notes, Exchange Securities or Private Exchange
Securities, as applicable, in customary form, (ii) its
officers to execute and deliver all customary documents and
certificates reasonably requested by Holders of a majority in
aggregate principal amount of the Notes, Exchange Securities
and Private Exchange Securities being sold, its Special
Counsel or the managing underwriters (if any) and (iii) its
independent public accountants to provide a comfort letter or
letters in customary form, subject to receipt of appropriate
documentation as contemplated, and only if permitted, by
Statement of Auditing Standards No. 72.
Section 27. REGISTRATION EXPENSES. THE COMPANY WILL BEAR ALL
EXPENSES INCURRED IN CONNECTION WITH THE PERFORMANCE OF ITS OBLIGATIONS UNDER
SECTIONS 1, 2, 3 AND 4 AND THE COMPANY WILL REIMBURSE THE INITIAL
PURCHASER AND THE HOLDERS FOR THE REASONABLE FEES AND DISBURSEMENTS OF ONE
FIRM OF ATTORNEYS (IN ADDITION TO ANY LOCAL COUNSEL) DESIGNATED IN WRITING BY
THE HOLDERS OF A MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF THE NOTES, THE
EXCHANGE SECURITIES AND THE PRIVATE EXCHANGE SECURITIES TO BE SOLD PURSUANT
TO EACH REGISTRATION STATEMENT (THE "SPECIAL COUNSEL") ACTING FOR THE
INITIAL PURCHASER OR HOLDERS IN CONNECTION THEREWITH.
Section 28. INDEMNIFICATION. (b) IN THE EVENT OF A SHELF
REGISTRATION STATEMENT OR IN CONNECTION WITH ANY PROSPECTUS DELIVERY PURSUANT
TO AN EXCHANGE OFFER REGISTRATION STATEMENT BY THE INITIAL PURCHASER OR
EXCHANGING DEALER, AS APPLICABLE, THE COMPANY SHALL INDEMNIFY AND HOLD
HARMLESS EACH HOLDER (INCLUDING, WITHOUT LIMITATION, THE INITIAL PURCHASER
OR ANY SUCH EXCHANGING DEALER), ITS AFFILIATES, THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, REPRESENTATIVES AND AGENTS, AND EACH PERSON, IF ANY,
WHO CONTROLS SUCH HOLDER WITHIN THE MEANING OF THE SECURITIES ACT OR THE
EXCHANGE ACT (COLLECTIVELY REFERRED TO FOR PURPOSES OF THIS SECTION 6 AND
SECTION 7 AS A HOLDER) FROM AND AGAINST ANY LOSS, CLAIM, DAMAGE OR
LIABILITY, JOINT OR SEVERAL, OR ANY ACTION IN RESPECT THEREOF (INCLUDING,
WITHOUT LIMITATION, ANY LOSS, CLAIM, DAMAGE, LIABILITY OR ACTION RELATING TO
PURCHASES AND SALES OF NOTES, EXCHANGE SECURITIES OR PRIVATE EXCHANGE
SECURITIES), TO WHICH THAT HOLDER MAY BECOME SUBJECT, WHETHER COMMENCED OR
THREATENED, UNDER THE SECURITIES ACT, THE EXCHANGE ACT, ANY OTHER FEDERAL
OR STATE STATUTORY LAW OR REGULATION, AT COMMON LAW OR OTHERWISE, INSOFAR AS
SUCH LOSS, CLAIM, DAMAGE, LIABILITY OR ACTION ARISES OUT OF, OR IS BASED
UPON, (I) ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL
FACT CONTAINED IN ANY SUCH REGISTRATION STATEMENT OR ANY PROSPECTUS FORMING
PART THEREOF OR IN ANY AMENDMENT OR SUPPLEMENT THERETO OR (II) THE OMISSION
OR ALLEGED OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED
THEREIN OR NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN, IN THE LIGHT OF
THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING, AND SHALL
REIMBURSE EACH HOLDER PROMPTLY UPON DEMAND FOR ANY LEGAL OR OTHER EXPENSES
REASONABLY INCURRED BY THAT HOLDER IN CONNECTION WITH INVESTIGATING OR
DEFENDING OR PREPARING TO DEFEND AGAINST OR APPEARING AS A THIRD PARTY WITNESS
IN CONNECTION WITH ANY SUCH LOSS, CLAIM, DAMAGE, LIABILITY OR ACTION AS SUCH
EXPENSES ARE INCURRED; PROVIDED, HOWEVER, THAT THE COMPANY SHALL NOT BE
LIABLE IN ANY SUCH CASE TO THE EXTENT THAT ANY SUCH LOSS, CLAIM, DAMAGE,
LIABILITY OR ACTION ARISES OUT OF, OR IS BASED UPON, AN UNTRUE STATEMENT OR
ALLEGED UNTRUE STATEMENT IN OR OMISSION OR ALLEGED OMISSION FROM ANY OF SUCH
DOCUMENTS IN RELIANCE UPON AND IN CONFORMITY WITH ANY HOLDERS' INFORMATION;
AND PROVIDED, FURTHER, THAT WITH RESPECT TO ANY SUCH UNTRUE STATEMENT IN OR
OMISSION FROM ANY RELATED PRELIMINARY PROSPECTUS, THE INDEMNITY AGREEMENT
CONTAINED IN THIS SECTION 6(A) SHALL NOT INURE TO THE BENEFIT OF ANY HOLDER
FROM WHOM THE PERSON ASSERTING ANY SUCH LOSS, CLAIM, DAMAGE, LIABILITY OR
ACTION RECEIVED NOTES, EXCHANGE SECURITIES OR PRIVATE EXCHANGE SECURITIES TO
THE EXTENT THAT SUCH LOSS, CLAIM, DAMAGE, LIABILITY OR ACTION OF OR WITH
RESPECT TO SUCH HOLDER RESULTS FROM THE FACT THAT BOTH (A) A COPY OF THE
FINAL PROSPECTUS WAS NOT SENT OR GIVEN TO SUCH PERSON AT OR PRIOR TO THE
WRITTEN CONFIRMATION OF THE SALE OF SUCH NOTES, EXCHANGE SECURITIES OR
PRIVATE EXCHANGE SECURITIES TO SUCH PERSON AND (B) THE UNTRUE STATEMENT IN
OR OMISSION FROM THE RELATED PRELIMINARY PROSPECTUS WAS CORRECTED IN THE FINAL
PROSPECTUS UNLESS, IN EITHER CASE, SUCH FAILURE TO DELIVER THE FINAL
PROSPECTUS WAS A RESULT OF NON-COMPLIANCE BY THE COMPANY WITH SECTION 4(D),
4(E), 4(F) OR 4(G).
(a) In the event of a Shelf Registration
Statement, each Holder shall indemnify and hold harmless
the Company, its affiliates, their respective officers,
directors, employees, representatives and agents, and
each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section
6(b) and Section 7 as the Company), from and against any
loss, claim, damage or liability, joint or several, or
any action in respect thereof, to which the Company may
become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, any other federal
or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a
material fact contained in any such Registration
Statement or any prospectus forming part thereof or in
any amendment or supplement thereto or (ii) the omission
or alleged omission to state therein a material fact
required to be stated therein or necessary in order to
make the statements therein, in the light of the
circumstances under which they were made, not
misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in
conformity with any Holders' Information furnished to
the Company by such Holder, and shall reimburse the
Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating
or defending or preparing to defend against or appearing
as a third party witness in connection with any such
loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that no such
Holder shall be liable for any indemnity claims
hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Notes, Exchange
Securities or Private Exchange Securities pursuant to
such Shelf Registration Statement.
(b) Promptly after receipt by an indemnified party
under this Section 6 of notice of any claim or the
commencement of any action, the indemnified party shall,
if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b),
notify the indemnifying party in writing of the claim or
the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under
this Section 6 except to the extent that it has been
materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and
provided, further, that the failure to notify the
indemnifying party shall not relieve it from any
liability which it may have to an indemnified party
otherwise than under this Section 6. If any such claim
or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal
or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof
other than the reasonable costs of investigation;
provided, however, that an indemnified party shall have
the right to employ its own counsel in any such action,
but the fees, expenses and other charges of such counsel
for the indemnified party will be at the expense of such
indemnified party unless (1) the employment of counsel
by the indemnified party has been authorized in writing
by the indemnifying party, (2) the indemnified party has
reasonably concluded (based upon advice of counsel to
the indemnified party) that there may be legal defenses
available to it or other indemnified parties that are
different from or in addition to those available to the
indemnifying party, (3) a conflict or potential conflict
exists (based upon advice of counsel to the indemnified
party) between the indemnified party and the
indemnifying party (in which case the indemnifying party
will not have the right to direct the defense of such
action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel
reasonably satisfactory to the indemnified party to
assume the defense of such action within a reasonable
time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall
not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the
reasonable fees, disbursements and other charges of more
than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified
party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in
Sections 6(a) and 6(b), shall use all reasonable efforts
to cooperate with the indemnifying party in the defense
of any such action or claim. No indemnifying party
shall be liable for any settlement of any such action
effected without its written consent (which consent
shall not be unreasonably withheld), but if settled with
its written consent or if there be a final judgment for
the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party
shall, without the prior written consent of the
indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and
indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all
liability on claims that are the subject matter of such
proceeding.
Section 29. CONTRIBUTION. IF THE INDEMNIFICATION PROVIDED FOR IN
SECTION 6 IS UNAVAILABLE OR INSUFFICIENT TO HOLD HARMLESS AN INDEMNIFIED
PARTY UNDER SECTION 6(A) OR 6(B), THEN EACH INDEMNIFYING PARTY SHALL, IN
LIEU OF INDEMNIFYING SUCH INDEMNIFIED PARTY, CONTRIBUTE TO THE AMOUNT PAID OR
PAYABLE BY SUCH INDEMNIFIED PARTY AS A RESULT OF SUCH LOSS, CLAIM, DAMAGE OR
LIABILITY, OR ACTION IN RESPECT THEREOF, (I) IN SUCH PROPORTION AS SHALL BE
APPROPRIATE TO REFLECT THE RELATIVE BENEFITS RECEIVED BY THE COMPANY FROM THE
OFFERING AND SALE OF THE NOTES, ON THE ONE HAND, AND BY A HOLDER FROM
RECEIVING NOTES, EXCHANGE SECURITIES OR PRIVATE EXCHANGE SECURITIES, AS
APPLICABLE, REGISTERED UNDER THE SECURITIES ACT, ON THE OTHER, OR (II) IF
THE ALLOCATION PROVIDED BY CLAUSE (I) ABOVE IS NOT PERMITTED BY APPLICABLE
LAW, IN SUCH PROPORTION AS IS APPROPRIATE TO REFLECT NOT ONLY THE RELATIVE
BENEFITS REFERRED TO IN CLAUSE (I) ABOVE BUT ALSO THE RELATIVE FAULT OF THE
COMPANY, ON THE ONE HAND, AND SUCH HOLDER, ON THE OTHER, WITH RESPECT TO
THE STATEMENTS OR OMISSIONS THAT RESULTED IN SUCH LOSS, CLAIM, DAMAGE OR
LIABILITY, OR ACTION IN RESPECT THEREOF, AS WELL AS ANY OTHER RELEVANT
EQUITABLE CONSIDERATIONS. THE RELATIVE BENEFITS RECEIVED BY THE COMPANY, ON
THE ONE HAND, AND A HOLDER, ON THE OTHER, WITH RESPECT TO SUCH OFFERING AND
SUCH SALE SHALL BE DEEMED TO BE IN THE SAME PROPORTION AS THE TOTAL NET
PROCEEDS FROM THE OFFERING OF THE NOTES (BEFORE DEDUCTING EXPENSES) RECEIVED
BY OR ON BEHALF OF THE COMPANY, ON THE ONE HAND, BEAR TO THE TOTAL PROCEEDS
RECEIVED BY SUCH HOLDER WITH RESPECT TO ITS SALE OF NOTES, EXCHANGE
SECURITIES OR PRIVATE EXCHANGE SECURITIES, ON THE OTHER. THE RELATIVE
FAULT SHALL BE DETERMINED BY REFERENCE TO, AMONG OTHER THINGS, WHETHER THE
UNTRUE OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT OR THE OMISSION OR
ALLEGED OMISSION TO STATE A MATERIAL FACT RELATES TO THE COMPANY OR
INFORMATION SUPPLIED BY THE COMPANY, ON THE ONE HAND, OR TO ANY HOLDERS?
INFORMATION SUPPLIED BY SUCH HOLDER, ON THE OTHER, THE INTENT OF THE PARTIES
AND THEIR RELATIVE KNOWLEDGE, ACCESS TO INFORMATION AND OPPORTUNITY TO
CORRECT OR PREVENT SUCH UNTRUE STATEMENT OR OMISSION. THE PARTIES HERETO
AGREE THAT IT WOULD NOT BE JUST AND EQUITABLE IF CONTRIBUTIONS PURSUANT TO
THIS SECTION 7 WERE TO BE DETERMINED BY PRO RATA ALLOCATION OR BY ANY OTHER
METHOD OF ALLOCATION THAT DOES NOT TAKE INTO ACCOUNT THE EQUITABLE
CONSIDERATIONS REFERRED TO HEREIN. THE AMOUNT PAID OR PAYABLE BY AN
INDEMNIFIED PARTY AS A RESULT OF THE LOSS, CLAIM, DAMAGE OR LIABILITY, OR
ACTION IN RESPECT THEREOF, REFERRED TO ABOVE IN THIS SECTION 7 SHALL BE
DEEMED TO INCLUDE, FOR PURPOSES OF THIS SECTION 7, ANY LEGAL OR OTHER
EXPENSES REASONABLY INCURRED BY SUCH INDEMNIFIED PARTY IN CONNECTION WITH
INVESTIGATING OR DEFENDING OR PREPARING TO DEFEND ANY SUCH ACTION OR CLAIM.
NOTWITHSTANDING THE PROVISIONS OF THIS SECTION 7, AN INDEMNIFYING PARTY THAT
IS A HOLDER OF NOTES, EXCHANGE SECURITIES OR PRIVATE EXCHANGE SECURITIES
SHALL NOT BE REQUIRED TO CONTRIBUTE ANY AMOUNT IN EXCESS OF THE AMOUNT BY
WHICH THE TOTAL PRICE AT WHICH THE NOTES, EXCHANGE SECURITIES OR PRIVATE
EXCHANGE SECURITIES SOLD BY SUCH INDEMNIFYING PARTY TO ANY PURCHASER EXCEEDS
THE AMOUNT OF ANY DAMAGES WHICH SUCH INDEMNIFYING PARTY HAS OTHERWISE PAID OR
BECOME LIABLE TO PAY BY REASON OF ANY UNTRUE OR ALLEGED UNTRUE STATEMENT OR
OMISSION OR ALLEGED OMISSION. NO PERSON GUILTY OF FRAUDULENT
MISREPRESENTATION (WITHIN THE MEANING OF SECTION 11(F) OF THE SECURITIES
ACT) SHALL BE ENTITLED TO CONTRIBUTION FROM ANY PERSON WHO WAS NOT GUILTY OF
SUCH FRAUDULENT MISREPRESENTATION.
Section 30. RULES 144 AND 144A. THE COMPANY SHALL USE ITS
REASONABLE BEST EFFORTS TO FILE THE REPORTS REQUIRED TO BE FILED BY EACH OF
THEM UNDER THE SECURITIES ACT AND THE EXCHANGE ACT IN A TIMELY MANNER AND,
IF AT ANY TIME THE COMPANY IS NOT REQUIRED TO FILE SUCH REPORTS, THE COMPANY
WILL, UPON THE WRITTEN REQUEST OF ANY HOLDER OF TRANSFER RESTRICTED
SECURITIES, MAKE PUBLICLY AVAILABLE OTHER INFORMATION SO LONG AS NECESSARY TO
PERMIT SALES OF SUCH HOLDER'S SECURITIES PURSUANT TO RULES 144 AND 144A.
THE COMPANY COVENANTS THAT IT WILL TAKE SUCH FURTHER ACTION AS ANY HOLDER OF
TRANSFER RESTRICTED SECURITIES MAY REASONABLY REQUEST, ALL TO THE EXTENT
REQUIRED FROM TIME TO TIME TO ENABLE SUCH HOLDER TO SELL TRANSFER RESTRICTED
SECURITIES WITHOUT REGISTRATION UNDER THE SECURITIES ACT WITHIN THE
LIMITATION OF THE EXEMPTIONS PROVIDED BY RULES 144 AND 144A (INCLUDING,
WITHOUT LIMITATION, THE REQUIREMENTS OF RULE 144A(D)(4)). UPON THE
WRITTEN REQUEST OF ANY HOLDER OF TRANSFER RESTRICTED SECURITIES, THE COMPANY
SHALL DELIVER TO SUCH HOLDER A WRITTEN STATEMENT AS TO WHETHER IT HAS
COMPLIED WITH SUCH REQUIREMENTS. NOTWITHSTANDING THE FOREGOING, NOTHING IN
THIS SECTION 8 SHALL BE DEEMED TO REQUIRE THE COMPANY TO REGISTER ANY OF ITS
SECURITIES PURSUANT TO THE EXCHANGE ACT.
Section 31. UNDERWRITTEN REGISTRATIONS. IF ANY OF THE TRANSFER
RESTRICTED SECURITIES COVERED BY ANY SHELF REGISTRATION STATEMENT ARE TO BE
SOLD IN AN UNDERWRITTEN OFFERING, THE INVESTMENT BANKER OR INVESTMENT BANKERS
AND MANAGER OR MANAGERS THAT WILL ADMINISTER THE OFFERING WILL BE SELECTED BY
THE HOLDERS OF A MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF SUCH TRANSFER
RESTRICTED SECURITIES INCLUDED IN SUCH OFFERING, SUBJECT TO THE CONSENT OF
THE COMPANY (WHICH SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED), AND SUCH
HOLDERS SHALL BE RESPONSIBLE FOR ALL UNDERWRITING COMMISSIONS AND DISCOUNTS
IN CONNECTION THEREWITH.
No person may participate in any underwritten
registration hereunder unless such person (i) agrees to sell
such person's Transfer Restricted Securities on the basis
reasonably provided in any underwriting arrangements approved
by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the
terms of such underwriting arrangements.
Section 32. MISCELLANEOUS. (c) AMENDMENTS AND WAIVERS. THE
PROVISIONS OF THIS AGREEMENT MAY NOT BE AMENDED, MODIFIED OR SUPPLEMENTED,
AND WAIVERS OR CONSENTS TO DEPARTURES FROM THE PROVISIONS HEREOF MAY NOT BE
GIVEN, UNLESS AMERICAN WATER WORKS AND THE COMPANY HAVE OBTAINED THE WRITTEN
CONSENT OF HOLDERS OF A MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF THE NOTES,
THE EXCHANGE SECURITIES AND THE PRIVATE EXCHANGE SECURITIES, TAKEN AS A
SINGLE CLASS. NOTWITHSTANDING THE FOREGOING, A WAIVER OR CONSENT TO DEPART
FROM THE PROVISIONS HEREOF WITH RESPECT TO A MATTER THAT RELATES EXCLUSIVELY
TO THE RIGHTS OF HOLDERS WHOSE NOTES, EXCHANGE SECURITIES OR PRIVATE
EXCHANGE SECURITIES ARE BEING SOLD PURSUANT TO A REGISTRATION STATEMENT AND
THAT DOES NOT DIRECTLY OR INDIRECTLY AFFECT THE RIGHTS OF OTHER HOLDERS MAY
BE GIVEN BY HOLDERS OF A MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF THE NOTES,
THE EXCHANGE SECURITIES AND THE PRIVATE EXCHANGE SECURITIES BEING SOLD BY
SUCH HOLDERS PURSUANT TO SUCH REGISTRATION STATEMENT.
(a) Notices. All notices and other communications
provided for or permitted hereunder shall be made in
writing by hand-delivery, first-class mail, telecopier
or air courier guaranteeing next-day delivery:
(a) if to a Holder, at the most current address given
by such Holder to American Water Works or the Company in
accordance with the provisions of this Section 10(b);
(b) if to the Initial Purchaser, initially at its
address set forth in the Purchase Agreement; and
(c) if to American Water Works or the Company,
initially at the address of American Water Works and the
Company set forth in the Purchase Agreement.
All such notices and communications shall be deemed
to have been duly given: when delivered by hand, if
personally delivered; five business days after being
delivered to a next-day air courier; five business days after
being deposited in the mail; and when receipt is acknowledged
by the recipient's telecopier machine, if sent by telecopier.
(b) Successors And Assigns. This Agreement shall
be binding upon American Water Works and the Company and
its successors and assigns, including, without
limitation, subsequent Holders; provided that nothing
herein shall be deemed to permit the assignment,
transfer or other disposition of Notes in violation of
the terms hereof or of the Purchase Agreement or the
applicable Indenture.
(c) Counterparts. This Agreement may be executed
in any number of counterparts (which may be delivered in
original form or by telecopier) and by the parties
hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of
which taken together shall constitute one and the same
agreement.
(d) Definition of Terms. For purposes of this
Agreement, (a) the term "business day" means any day on
which the New York Stock Exchange, Inc. is open for
trading, (b) the term "subsidiary" has the meaning set
forth in Rule 405 under the Securities Act and (c)
except where otherwise expressly provided, the term
"affiliate" has the meaning set forth in Rule 405 under
the Securities Act.
(e) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
(f) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the State of New York.
(g) Remedies. In the event of a breach by the
Company or by any Holder of any of their obligations
under this Agreement, each Holder or the Company, as the
case may be, in addition to being entitled to exercise
all rights granted by law, including recovery of damages
(other than the recovery of damages for a breach by the
Company of its obligations under Sections 1 or 2 hereof
for which liquidated damages have been paid pursuant to
Section 3 hereof), will be entitled to specific
performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages
would not be adequate compensation for any loss incurred
by reason of a breach by it of any of the provisions of
this Agreement and hereby further agree that, in the
event of any action for specific performance in respect
of such breach, it shall waive the defense that a remedy
at law would be adequate.
(h) No Inconsistent Agreements. The Company
represents, warrants and agrees that (i) it has not
entered into, and shall not, on or after the date of
this Agreement, enter into any agreement that is
inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the
provisions hereof and (ii) without limiting the
generality of the foregoing, without the written consent
of the Holders of a majority in aggregate principal
amount of the then outstanding Transfer Restricted
Securities, it shall not grant to any person the right
to request the Company to register any debt securities
of the Company under the Securities Act unless the
rights so granted are not in conflict or inconsistent
with the provisions of this Agreement.
(i) No Piggyback on Registrations. Neither the
Company nor any of its security holders (other than the
Holders of Transfer Restricted Securities in such
capacity) shall have the right to include any securities
of the Company in any Shelf Registration or Registered
Exchange Offer other than Transfer Restricted
Securities.
(j) Severability. The remedies provided herein
are cumulative and not exclusive of any remedies
provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find
and employ an alternative means to achieve the same or
substantially the same result as that contemplated by
such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
Please confirm that the foregoing correctly sets
forth the agreement among the Company and the Initial
Purchasers.
Very truly yours,
AMERICAN WATER WORKS
COMPANY, INC.,
By:
______________________
______________
Name:
Title:
AMERICAN WATER CAPITAL
CORP.,
By:
______________________
______________
Name:
Title:
Accepted:
RWE AKTIENGESELLSCHAFT,
By: ___________________________
Name:
Title:
ANNEX A
Each broker-dealer that receives Exchange Securities
for its own account pursuant to the Registered Exchange Offer
must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with
resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-
dealer as a result of market-making activities or other trading
activities. American Water Works and the Company has agreed
that, for a period of 180 days after the Expiration Date (as
defined herein), it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See
"Plan of Distribution".
ANNEX B
Each broker-dealer that receives Exchange Securities
for its own account in exchange for Notes, where such Securities
were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such
Exchange Securities. See "Plan of Distribution".
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities
for its own account pursuant to the Registered Exchange Offer
must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. This Prospectus,
as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange
Securities received in exchange for Securities where such
Securities were acquired as a result of market-making activities
or other trading activities. The Company has agreed that, for a
period of 180 days after the Expiration Date, it will make this
prospectus, as amended or supplemented, available to any broker-
dealer for use in connection with any such resale. In addition,
until [ ] 200[ ], all dealers
effecting transactions in the Exchange Securities may be
required to deliver a prospectus.
The Company will not receive any proceeds from any
sale of Exchange Securities by broker-dealers. Exchange
Securities received by broker-dealers for their own account
pursuant to the Registered Exchange Offer may be sold from time
to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of
options on the Exchange Securities or a combination of such
methods of resale, at market prices prevailing at the time of
resale, at prices related to such prevailing market prices or at
negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any
such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities
that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Securities may
be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange
Securities and any commission or concessions received by any
such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date,
the Company will promptly send additional copies of this
Prospectus and any amendment or supplement to this Prospectus to
any broker-dealer that requests such documents in the Letter of
Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the
expenses of one counsel for the Holders of the Securities) other
than commissions or concessions of any broker-dealers and will
indemnify the Holders of the Securities (including any broker-
dealers) against certain liabilities, including liabilities
under the Securities Act.
ANNEX D
? CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO
RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10
COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to
engage in, a distribution of Exchange Securities. If the
undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that
were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a
prospectus in connection with any resale of such Exchange
Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
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EXECUTION COPY
American Water Capital Corp. Note Purchase Agreement
A-5
SCHEDULE A
(to Note Purchase Agreement)
E-1A-3
EXHIBIT 1-A
(to Note Purchase Agreement)
E-1B-6
EXHIBIT 1-B
(to Note Purchase Agreement)
E-4.4-4
EXHIBIT 4.4
(to Note Purchase Agreement)
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