STOCK PURCHASE AGREEMENT
EXECUTION
COPY
This STOCK PURCHASE AGREEMENT
(“Agreement”) dated this 21st day of
July, 2008, by and among The Connecticut Water Company, a Connecticut
corporation (the “Buyer”), Xxxxxxxxx Acres Company, a Connecticut corporation
(“EAC”), and the shareholders of EAC listed on Appendix A attached
hereto (the “Shareholders”)
W I T N E
S S E T H :
WHEREAS, EAC owns and operates a water
system located in the Town of Xxxxxxxxx, Connecticut and the Town of Somers,
Connecticut (the “System”), and is subject to the jurisdiction of the
Connecticut Department of Public Utility Control (“DPUC”), the Connecticut
Department of Environmental Protection (“DEP”) and the Connecticut Department of
Public Health (“DPH”); and
WHEREAS, the Shareholders listed on
Appendix A
attached hereto are the owners of an aggregate of 200 shares (the “Shares”) of
EAC’s common stock, no par value per share (the “EAC Common Stock”), the Shares
being 100% of the issued and outstanding shares of capital stock of EAC;
and
WHEREAS, Buyer desires to purchase from
the Shareholders, and the Shareholders desire to sell to Buyer, all of the
Shares for the consideration and upon the terms and conditions hereinafter set
forth; and
WHEREAS, it is the intention
of the parties hereto that, upon the consummation of the purchase and sale of
the Shares pursuant to this Agreement, Buyer will own all of the issued and
outstanding shares of capital stock of EAC; and
NOW, THEREFORE, in consideration of the
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. THE
PURCHASE AND SALE TRANSACTION.
1.1. Purchase and Sale of
Shares. Subject to the terms and conditions of this Agreement,
and in reliance on the representations, warranties, covenants and agreements
contained herein, on the Closing Date (as hereinafter defined), the Shareholders
shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall
purchase and acquire from the Shareholders, in exchange for the Purchase Price
(as hereinafter defined), the Shares. The Shares shall be free and
clear of all liens, claims, options, charges or encumbrances of any nature
whatsoever, except for any liens, claims, options, charges or encumbrances
disclosed in this Agreement or the Disclosure Schedules attached
hereto.
1.2. Purchase
Price. (a) In
consideration of the sale, assignment and delivery of the Shares by the
Shareholders to Buyer, Buyer shall pay to the Shareholders at the Closing the
aggregate sum of one million, four hundred and ninety-five thousand dollars
($1,495,000) (the “Purchase Price”), or $7,475 for each issued and outstanding
share of EAC Common Stock. The Purchase Price shall be paid by wire
transfer of immediately available funds in accordance with wire transfer
instructions to be provided by EAC at least two (2) business days prior to the
Closing Date.
1.3. Due
Diligence.
(a) Buyer
acknowledges that EAC and the Shareholders have previously delivered to Buyer
certain documents and information in response to Buyer’s due diligence request
list dated May 29, 2008.
(b) Buyer
shall have the period from the date hereof and ending at 5:00 p.m. on the date
that is sixty (60) days from the date hereof (the “Inspection Period”) to
conduct such due diligence with respect to EAC, the Property, the Assets and the
System (as each such term is hereinafter defined), including without limitation
such investigation of any matters disclosed or not disclosed herein or in any
Disclosure Schedule hereto as Buyer, in its sole and absolute discretion, deems
appropriate.
(c) During
the Inspection Period, Buyer, through its authorized agents or representatives,
shall be entitled, upon reasonable advance notice to EAC, to enter upon the
Property during normal business hours, and shall have the right to make such
reasonable investigations and conduct such reasonable tests, including
engineering studies, soil tests, and environmental studies (including an
environmental site assessment of EAC’s Property), as Buyer deems necessary or
advisable (the “Testing Rights”), subject to the following limitations: (i)
Buyer shall give EAC written or telephonic notice at least one (1) business day
before conducting any inspections on the Property, and a representative of EAC
shall have the right to be present when Buyer or its agents or representatives
conducts its or their investigations on the Property; (ii) neither Buyer nor its
representatives shall materially interfere with the use, occupancy or enjoyment
of the Property by EAC; (iii) neither Buyer nor its agents or representatives
shall damage the Property or any portion thereof, except for any immaterial
damage caused by invasive tests, all of which shall promptly be repaired by
Buyer; and (iv) Buyer shall indemnify, hold harmless and defend
EAC against all costs (including reasonable attorneys' fees) and
direct damages caused by the activities of Buyer or its agents or
representatives under this Section 1.3(c); provided, however,
that such indemnity shall not include any costs or damages caused by (X) the
acts of EAC or its agents or representatives or (Y) any pre-existing condition
of the Property, except to the extent that such pre-existing condition is
materially adversely affected by actions of Buyer or its agents or
representatives during the Inspection Period. The foregoing indemnification
obligation shall survive the termination of this Agreement for a period of two
(2) years.
(d) (i) At
any time before the end of the Inspection Period, Buyer may, in its discretion,
give one written notice thereof delivered prior to the termination of the
Inspection Period to EAC setting forth any objections (the “Buyer Objections”)
that Buyer has resulting from its due diligence investigation. EAC
and the Shareholders shall have the option to cure the Buyer Objections within
the thirty (30) day period after the date of such notice (the “Cure Period”) and
shall within 10 days of receipt of the Buyer Objections give Buyer a written
response of either their intention to cure the Buyer Objections or their
intention not to cure or inability to cure the Buyer Objections (in either case,
the “EAC Response”).
(ii) If
the EAC Response indicates that EAC and the Shareholders elect not to cure the
Buyer Objections or EAC and the Shareholders attempt, but are unable, to cure
the Buyer Objections prior to the end of the Cure Period, Buyer shall have the
option (in its sole, reasonable discretion) to be exercised within 10 days of
the earlier of the date of Buyer’s receipt of the EAC Response or the end of the
Cure Period of either (X) accepting the situation as it then is for all purposes
under this Agreement, waiving any additional rights Buyer may have arising from
such Buyer Objections, and proceeding to carry out the purchase and sale
transaction contemplated herein, or (Y) terminating this Agreement, whereupon
this Agreement shall terminate and Buyer, EAC and the Shareholders shall have no
further obligations or liabilities hereunder other than Buyer’s indemnity
obligation under Section 1.3(c); provided however,
that if Buyer elects to terminate this Agreement pursuant to this Section 1.3(d)(ii),
then Buyer shall reimburse the Shareholders and EAC for legal and accounting
fees in an amount not to exceed $60,000, provided that the Shareholders submit
copies to Buyer of documents establishing the amount of such legal and
accounting fees.
(iii) If
Buyer does not give EAC a written notice setting forth any Buyer Objections
during the Inspection Period or Buyer accepts the EAC Response and elects to
proceed to carry out the purchase and sale transaction contemplated herein (as
provided in Section
1.3(d)(ii)(X) above), this Agreement shall remain in full force and
effect, except that Buyer's rights pursuant to this Section 1.3 shall
terminate upon the date which is the earlier of Buyer’s election to proceed
under Section
1.3(d)(ii)(X) above or the end of the Inspection Period.
1.4. Closing Time and
Place. The closing of the purchase and sale transaction
provided for in this Agreement (the “Closing”) shall take place at the offices
of Xxxxxx Xxxxxxx LLP, CityPlace I, 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx, at
10:00 A.M. on a date mutually agreed to by the parties promptly following the
receipt of DPUC approval as described in Section 6.2 hereof,
or on such other date or at such other place as the parties may mutually agree
upon (the “Closing Date”). All proceedings to be taken and all
documents to be executed and delivered by the parties at the Closing shall be
deemed to have been taken and executed simultaneously and no proceedings shall
be deemed taken or any documents executed or delivered until all have been
taken, executed and delivered.
1.5. Shareholders’
Obligations.
(a) At
least twenty (20) days prior to the Closing Date, EAC shall provide to the Buyer
proper legal descriptions and surveys (to the extent such surveys presently
exist) for the Property (as hereinafter defined).
(b) At
the Closing, EAC and the Shareholders shall deliver or cause to be delivered to
the Buyer the following:
(i) certificates
representing the Shares, which certificates shall be duly endorsed in blank or,
in lieu thereof, shall have affixed thereto stock powers executed in blank, all
in form and substance reasonably satisfactory to the Buyer;
(ii) a
certificate executed by the Secretary of EAC dated as of the Closing Date
certifying that the copies of EAC’s Certificate of Incorporation and Bylaws
previously provided to the Buyer pursuant to Section 2.8 hereof
are true, complete and correct, have not been amended since the date of delivery
to the Buyer and are in full force and effect as of the Closing
Date;
(iii) a
Certificate from the Secretary of the State of the State of Connecticut
confirming EAC’s continuing legal existence and evidencing that EAC is current
in its required filings with that office; and
(iv) the
written resignation of each of EAC’s officers and directors.
1.6. Further
Assurances. The Shareholders shall, at any time and from time
to time after the Closing, upon request of the Buyer, do, execute, acknowledge
and deliver, or will cause to be done, executed, acknowledged and delivered, all
such reasonable further acts, deeds, assignments, transfers, conveyances, powers
of attorney, and assurances as may be required for the better assigning,
transferring, granting, conveying, assuring and confirming to the Buyer, or to
its successors and assigns, or for aiding and assisting in collecting and
reducing to possession of, any or all of the Shares.
1.7. Buyer’s
Obligations. At the Closing, the Buyer shall deliver, or
cause to be delivered in accordance with this Agreement, the Purchase Price by
wire transfer of immediately available funds in accordance with Section 1.2
above.
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2.
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REPRESENTATIONS
AND WARRANTIES OF THE SHAREHOLDERS AND
EAC
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Each of
the Shareholders and EAC, jointly and severally, represent and warrant to the
Buyer that, except as set forth in the Disclosure Schedule, the statements
contained in this Section 2 are true
and correct as of the date of this Agreement, except to the extent that such
representations and warranties are specifically made as of a particular date (in
which case, such representation and warranty shall be true and correct as of
such date). The Disclosure Schedule shall be arranged in sections and
subsections corresponding to the numbered and lettered sections and subsections
contained in this Section 2 (it being
understood that any matter disclosed in any section of the Disclosure Schedule
will be deemed to be disclosed in any other Section thereof).
2.1 EAC Common
Stock. Each Shareholder is the record and beneficial
shareholder of the Shares owned by such Shareholder and has good and valid title
to the Shares which are to be transferred to the Buyer by such Shareholder
pursuant to this Agreement, free and clear of any and all covenants, conditions,
restrictions, voting trust arrangements, liens, charges, encumbrances, options
and adverse claims or rights whatsoever. The authorized capital stock
of EAC consists of 5,000 shares of EAC Common Stock. There are
presently two hundred (200) shares of EAC Common Stock issued and
outstanding. Appendix A sets forth
a true and correct description of all Shares owned by each
Shareholder. All of the issued and outstanding Shares (i) are duly
authorized, validly issued, fully paid and nonassessable, (ii) were not issued
in violation of any preemptive or other rights of any person to acquire the
securities of EAC and (iii) were issued in compliance with all applicable
federal and state securities laws. Except for this Agreement, there
are no outstanding options, convertible securities, rights (preemptive or
other), warrants, calls or agreements relating to any capital stock of
EAC.
2.2 Authority. Each
Shareholder has the full right, power and authority to enter into this Agreement
and to transfer, convey and sell to the Buyer at the Closing the Shares to be
sold by such Shareholder hereunder. This Agreement has been duly and
validly executed and delivered by each Shareholder and constitutes a valid and
binding obligation of each Shareholder, enforceable against each Shareholder in
accordance with its terms, subject as
to enforcement, (a) to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting creditors’ rights generally and (b) to
general equitable principles.
2.3 Regulatory Approvals; No
Brokers. Except as set forth on Schedule 2.3, no
Shareholder is a party to, subject to or bound by any agreement or any judgment,
order, writ, prohibition, injunction or decree of any court or other
governmental body which would prevent the execution or delivery of this
Agreement by any such Shareholder or the transfer, conveyance and sale of the
Shares to be sold by any such Shareholder to the Buyer pursuant to the terms
hereof. All negotiations relative to this Agreement have been carried
on by EAC and the Shareholders directly with the Buyer, without the intervention
of any person as a result of any act of EAC or the Shareholders in such manner
as to give rise to any valid liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the purchase and sale
transaction contemplated by this Agreement.
2.4. Organization and Status of
EAC; Authority of EAC. EAC is a public service company as
defined in Section 16-1 of the Connecticut General Statutes and sells and
distributes water in the Town of Xxxxxxxxx and the Town of Somers (collectively,
the “Towns”). EAC is a corporation legally existing under the laws of
Connecticut, and has all other requisite corporate power and authority and all
necessary licenses and permits to carry on its business as it is now being
conducted, except to the extent that EAC’s failure
to have such licenses or permits has not had, and would not reasonably be
expected to have, an EAC Material Adverse Effect (as hereinafter
defined). EAC’s rates and charges are and have been those shown on
schedules filed with and approved by the DPUC. EAC has all requisite
corporate authority and capacity to enter into this Agreement and all other
documents to be entered into by EAC in connection with the consummation of the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by EAC and constitutes a valid and binding
obligation of EAC, enforceable against EAC in accordance with its terms, subject as to enforcement, (a) to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors’ rights generally and (b) to general equitable
principles. EAC is not under receivership, impediment or
prohibition imposed by any court, regulatory commission, board, administrative
body, arbitration board or tribunal or other federal, state or municipal
government instrumentality (any such entity being referred to herein as a
“Governmental Body”) that would render EAC unable to enter into and carry out
the provisions of this Agreement. As
used in this Agreement, the term “EAC Material Adverse Effect” shall mean and include any effect, event,
development or change which, individually or
together with any other effects, events, developments or changes, either: (i)
has a material adverse effect on the business, financial condition,
assets and liabilities, prospects or
results of operations of EAC taken as a whole, other than any effect, event,
development or change resulting from (A) changes in applicable law or generally
accepted accounting principles in the United States (“GAAP”) or
the enforcement or interpretation thereof, (B) any action taken by the parties
that is expressly permitted by the terms of this Agreement or to which Buyer has
consented in writing, (C) changes generally affecting the water utility industry
(provided, in the cases of clauses (A) or (C), such effects, events, developments or changes do not
disproportionately adversely affect EAC relative to other similarly-situated businesses, in which case such
disproportionate effects, events, developments or
changes may be taken into account in determining whether or not an EAC
Material Adverse Effect has occurred); or
(ii) that prevents or materially adversely
affects the ability of the Shareholders to
consummate the purchase and sale transaction within the time periods
contemplated by this Agreement.
2.5 No
Subsidiaries. EAC has never had any subsidiaries and does not
otherwise own or control, directly or indirectly, or have any direct or indirect
equity interest in, any domestic or foreign corporation, partnership, trust,
joint venture, limited liability company or other business association or
entity.
2.6 Title to Properties and
Assets; Use of Water. Except as set forth on Schedule 2.6, EAC has good
and valid title to (i) all Assets (as hereinafter defined) of EAC including,
without limitation, the System, the xxxxx, transmission and distribution mains,
tanks and standpipes, pumps and pumping stations, hydrants, meters and personal
property described in EAC’s Annual Report to the DPUC for the year ended
December 31, 2007, and those acquired subsequent to December 31, 2007, and all
of EAC’s right, title and interest in and to the curb stops, service connections
(to the extent curb stops and service connections are purported to be owned by
EAC) and easements, rights of way and leases, and any and all franchise rights,
copies of which have been previously provided to the Buyer, and (ii) all
documents, reports, maps and customer records pertaining to the System
including, but not limited to, all engineering, laboratory and operating
reports, customer service records including meter readings and fixture surveys,
financial books and records, property maps, gate drawings, main laying
specifications and tap and service cards, and EAC’s cash and bank deposits,
except to the extent that EAC’s failure to have such title has not had, and
would not reasonably be expected to have, an EAC Material Adverse Effect. EAC
has good and marketable title in fee simple to all of its real property
(“Property”), except where the failure of EAC to have such title has not had,
and would not reasonably be expected to have, an EAC Material Adverse Effect.
EAC acknowledges and agrees that it must satisfy and discharge all
monetary liens and encumbrances affecting the Property at Closing, except any
statutory liens for non-delinquent real property taxes. All
assets of EAC other than the Property (whether personal or mixed, tangible and
intangible), rights and privileges (whether now and hereafter owned or leased by
EAC) are referred to in this Agreement as the “Assets”, and are free and clear
of all liens and encumbrances, except for any liens or encumbrances which do
not, or would not reasonably be expected to, adversely affect the ability of EAC
to operate the System for water utility purposes in the ordinary course of
business. Other than the Assets owned or leased by EAC, no other
assets are used in the conduct and operation of the System and the distribution
and delivery of water to each of EAC’s water customers. EAC has the
right to use the water it is now using in the manner in which it is using such
water. Except as set forth on Schedule 2.6, all
water supply sources, pump stations and storage facilities for the System are
located on Property owned by EAC in fee simple. All mains and service
connections are located on Property owned by EAC in fee simple, within the
public rights-of-way, or within permanent easements of record in favor of EAC,
except for any deficiencies of title which do not, or would not reasonably be
expected to, adversely affect the ability of EAC to operate the System for water
utility purposes in the ordinary course of business.
2.7 Use of
Property. To the knowledge of EAC and the Shareholders, either
(a) the present use of the Property conforms in all material respects to all
applicable zoning, building, building line and similar restrictions, is a
permitted “non-conforming use” as defined in such zoning, inland wetland,
building, building line or similar restrictions or (b) EAC has obtained the
necessary permits, variances or relief therefore, except where the lack of such
permits, variances or relief do not, or would not reasonably be expected to,
adversely affect the ability of EAC to operate the System for water utility
purposes in the ordinary course of business. All of the Property is
located in the Towns, except for EAC’s main office located in Enfield,
Connecticut.
2.8 Certificate of
Incorporation, By-Laws. The copies previously delivered to the
Buyer of EAC’s Certificate of Incorporation and By-Laws are true and complete
copies of said documents, and said Certificate and By-Laws are in full force and
effect and include any and all amendments thereto.
2.9 Absence of
Defaults. Except as set forth on Schedule 2.9, the
execution and delivery of this Agreement does not and the consummation of the
purchase and sale transaction contemplated hereby will not (a) violate any
provision of the Certificate of Incorporation or Bylaws of EAC; (b) violate,
conflict with or result in the breach or termination of, or constitute a default
under the terms of, any agreement or instrument to which any of the Shareholders
or EAC is a party or by which EAC or any of EAC’s Assets or Property may be
bound; (c) result in the creation of any material lien, charge or encumbrance
upon any of EAC’s Assets or Property pursuant to the terms of any agreement or
instrument; (d) violate any judgment, order, injunction, decree, license,
permit, award, rule or regulation against, or binding upon, EAC or upon any of
the Assets or Property; or (e) constitute a material violation by EAC of any
material law or regulation of any jurisdiction as such law or regulation relates
to EAC, the System or any of the Assets or Property except, in the case of
clauses (b), (d) and (e), where such violation would not reasonably be expected
to have an EAC Material Adverse Effect. EAC has obtained or will
obtain prior to Closing all material consents, releases or waivers from
Governmental Bodies and third parties which may be necessary to prevent the
execution of this Agreement or the consummation of the transactions contemplated
herein from resulting in any violation, breach, default or other event referred
to in this Agreement, it being understood that it is the joint responsibility of
the Buyer and EAC to obtain DPUC approval (as described in Section 6.2 hereof)
of the purchase and sale transaction contemplated by this
Agreement.
2.10 Litigation, Orders,
Etc. Except as set forth on Schedule 2.10, there
are no actions, suits, proceedings or governmental investigations pending, or
insofar as is known to EAC or the Shareholders, in prospect or threatened,
against or relating to EAC or the purchase and sale transaction contemplated by
this Agreement in or before any Governmental Body. The System, and
EAC in its capacity as owner or operator of the System, is not subject to or in
violation of any judgment, order, decree, injunction or award of any
Governmental Body entered in any proceeding to which it was a party or of which
EAC or the Shareholders had knowledge, including, without limitation, decisions,
letter requests or proceedings of the DPUC, the DPH, the DEP, the Internal
Revenue Service and the Towns, where such judgment, order, decree, injunction or
award or said violation would reasonably be expected to have an EAC Material
Adverse Effect. No proceedings are pending or, to the knowledge of
EAC or the Shareholders, threatened against the rates now being charged by
EAC.
2.11 Contracts. Schedule 2.11 sets
forth a description of certain of EAC’s water main extension agreements and is
true, complete and correct in all material respects. All contracts,
agreements and leases to which EAC is a party involving the payment of $10,000
or more by or to EAC in any one fiscal year or that are otherwise material to
the business of EAC are valid, binding and in full force and effect and
enforceable in accordance with their respective terms, and, to the knowledge of
EAC or the Shareholders, no other party to any such contract, agreement or lease
has breached any provision of, or is in default under the terms of, any such
contract, agreement or lease, except when such
violation or breach has not had, or would not reasonably be expected to have, an
EAC Material Adverse Effect.
2.12 Financial Statements; Annual
Reports.
(a) EAC
has heretofore delivered to the Buyer true, correct and complete copies of (X)
EAC’s audited financial statements for the three (3) most recently completed
fiscal years of EAC, which financial statements have been audited by an
independent Certified Public Accountant in accordance with GAAP consistently
applied throughout such periods and which have been prepared consistently with
prior periods (in each case, except as may be described in the notes thereto)
and (Y) the internally prepared unaudited, interim balance sheet and statement
of profits and loss of EAC, each dated as of April 30, 2008 (which unaudited
statements omit depreciation, accruals for taxes and rent expense for four
months) (collectively, the “April 30th
Exceptions”). Each financial statement described in this Section 2.12(a) is
hereinafter referred to as a “Financial Statement” and are collectively referred
to as the “EAC Financial Statements”.
(b) Each
EAC Financial Statement fairly and accurately presents in all material respects
the assets, liabilities, financial condition, revenues, expenses and results of
the operations of EAC for the applicable period, subject in the case of the
interim Financial Statements, to (i) the April 30th
Exceptions, (ii) normal recurring year-end adjustments (the effect of which will
not, individually or in the aggregate, have an EAC Material Adverse Effect) and
(iii) the absence of footnotes (that, if presented, would not differ materially
from those included on EAC’s December 31, 2007 balance sheet). Except
for the April 30th
Exceptions, each EAC Financial Statement is true and correct in all material
respects, contains no untrue statement of material fact and does not omit any
material fact necessary to make such financial statement not
misleading.
(c) No
financial statements of any other person or entity are required by GAAP to be
included in the EAC Financial Statements and EAC is not a guarantor, indemnitor,
accommodation party or surety for the Slanetz Corporation or any other person,
entity, liability or obligation.
(d) The
annual reports filed with the DPUC by EAC with respect to EAC and the System
from and after December 31, 2001 (copies of which have been provided to Buyer)
are true, correct and complete in all material respects and accurately represent
in all material respects the financial condition and operations of EAC for the
respective periods and dates covered by such reports.
2.13 Absence of Adverse
Change. Since December 31, 2007, there has not been any
material adverse change in the financial position, results of operations,
assets, liabilities or business of EAC, taken as a whole.
2.14 No Undisclosed
Liabilities. Except for the April 30th
Exceptions, EAC has no liabilities or obligations of any nature (whether known
or unknown, or absolute, accrued, contingent or otherwise), except for
liabilities and obligations reflected or reserved against in the EAC Financial
Statements and current liabilities incurred in the ordinary course of business
since the respective dates of the EAC Financial Statements, except such
liabilities or obligations which have not had, or would not reasonably be
expected to have, an EAC Material Adverse Effect.
2.15 Compliance with Laws; No
Environmental Hazards.
(a) Except
as has not had, or would not reasonably be expected to have, an EAC Material
Adverse Effect, to the knowledge the Shareholders, the location and
construction, occupancy, operation and use of all improvements attached to or
placed, erected, constructed or developed as a portion of any of the Property
(the “Improvements”) do not materially violate any applicable law, statute,
ordinance, rule, regulation, order or determination of any Governmental Body, or
any restrictive covenant or deed restriction affecting the Property including,
without limitation, any applicable health, environmental, rates, utility, water
quality, antitrust, hiring, wages, hours, collective bargaining, safety, price
and wage controls, payment of withholding and social security taxes, zoning
ordinances and building codes, flood and disaster laws, rules and regulations
(hereinafter collectively called the “Applicable Laws”). Schedule 2.15
contains a list of and copies of all material governmental licenses, permits,
certifications and approvals of any governmental authority possessed by or
granted to EAC (“Licenses”) and used or relied upon in the operation of EAC or
the System. To the best knowledge of the Shareholders, no material
License used in or necessary for the operation of EAC, the Assets or the System
will terminate prior to its stated expiration date or not be renewed in
accordance with past practices of EAC or any relevant Governmental Body, and EAC
is not in material violation of any term or condition of any
License.
(b) Without
in any way limiting the generality of Section 2.15(a)
above, neither any of the Assets nor EAC are the subject of any pending or, to
the best knowledge of EAC or the Shareholders, threatened investigation or
inquiry by any Governmental Body, or are subject to any material remedial
obligations under any Applicable Laws pertaining to health or the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (“CERCLA”), the Resource
Conservation Recovery Act of 1987, as amended (“RCRA”), the Safe Drinking Water
Act, as amended (“SDWA”), the Clean Water Act, as amended (“CWA”), the Toxic
Substances Control Act (“TSCA”), the Connecticut Water Pollution Control Act,
C.G.S. §§ 22a-416 et seq., or any other applicable provision of Title 22a of the
Connecticut General Statutes (all collectively hereinafter referred to as
“Applicable Environmental Laws”).
(c) To
the knowledge of the Shareholders, EAC, taken as a whole, is in material
compliance with Applicable Environmental Laws and is not required to obtain any
permits, licenses or authorizations (other than the Licenses) to construct,
occupy, operate or use any portion of the Property as it is now being used by
reason of any material Applicable Environmental Laws.
(d) To
the knowledge of the Shareholders, no prior use of any of the Property, by EAC
or the prior owners of any of the Property, has occurred which violates any
Applicable Environmental Laws in any material respect. EAC has not at any time,
directly or indirectly “treated”, “disposed of”, “generated”, “stored” or
“released” any “toxic or hazardous substances”, as each term is defined under
the Applicable Environmental Laws, or arranged for such activities, in, on or
under any of the Assets or any parcel of land, whether or not owned, occupied or
leased by EAC in material violation of any Applicable Environmental Law, except
to the extent customary and in the ordinary course of a water supply company’s
business.
(e) To
the knowledge of the Shareholders, there has been no litigation brought or
threatened nor any settlement reached by or with any parties alleging the
presence, disposal, release, or threatened release, of any toxic or hazardous
substance or solid wastes from the use or operation of any of the Property, and
none of the Property is on any federal or state “Superfund” list, or subject to
any liens recorded or imposed pursuant to any federal or state “Superfund”
laws.
(f) This
Section 2.15
and Section
2.14 contain the only representations and warranties related to
environmental matters contained in this Agreement.
2.16 Insurance. EAC
maintains insurance in connection with the Assets and the System against hazards
and risks and liability to persons and property to the extent and in the manner
set forth on Schedule
2.16. Except for workers’ compensation insurance, no such
insurance provides for a retroactive premium adjustment or other
experienced-based liability on the part of EAC.
2.17 Description and Condition of
System. EAC has provided to Buyer a map of EAC's System, which
identifies all water mains used in the System, which description or map is true,
complete and correct in all material respects. The System was
designed and installed in compliance with good waterworks engineering practice
and the applicable rules and regulations of the DPUC, except where the failure
to comply with the foregoing has not had, or would not reasonably be expected to
have, an EAC Material Adverse Effect. The System, taken as a whole,
has been adequately maintained and is in good operating condition and repair,
ordinary wear and tear excepted, is fit for its intended purpose and conforms to
all restrictive covenants, applicable laws, regulations and ordinances relating
to its construction, use and operation, except where the failure to comply with
the foregoing has not had, and would not reasonably be expected to have, an EAC
Material Adverse Effect.
2.18 Tax
Matters.
(a) EAC
has filed or will file on a timely basis all returns, declarations, reports,
claims for refund, and information returns and statements related to Taxes,
including any schedules or attachments thereto, and including any amendments
(“Tax Returns”) required to be filed under applicable laws and regulations, and
will file on a timely basis, all such Tax Returns required to be filed on or
before the Closing Date. EAC has paid or caused to be paid within the
time and manner prescribed by law all Taxes due with respect to the taxable
periods covered by such Tax Returns and all other Taxes otherwise due and
payable (excluding any Taxes that EAC is contesting in good faith in appropriate
proceedings which are described in Schedule 2.18 and for
which adequate reserves have been specifically taken and made in EAC’s financial
statements). Any unpaid Taxes of EAC did not (i) as of December 31,
2007 exceed the accruals and reserves for Tax liabilities (rather than any
accruals and reserves for deferred Taxes established to reflect timing
differences between book and tax income) set forth on EAC’s balance sheet
(prepared in accordance with GAAP) for the year ended December 31, 2007, and
(ii) exceed the accruals and reserves as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of EAC
in filing its Tax Returns. Since December 31, 2007, EAC has not
incurred any liability for Taxes arising from extraordinary gains or losses, as
that term is used in GAAP, outside the ordinary course of
business. No claim for assessment or collection of Taxes has been
asserted against EAC, and EAC has not agreed to any extension of the period for
the assessment or collection of Taxes. For all purposes under this
Agreement, the terms “Tax” or “Taxes” shall mean and include any federal, state,
local or foreign income, gross receipt, license, payroll, employment, excise,
severance, occupation, premium, windfall profits, environmental, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
(b) EAC
has provided the Buyer with a copy of all federal income Tax Returns filed by
EAC for the three (3) most recently completed taxable years, and a copy of EAC’s
applicable Connecticut income Tax Returns for the three (3) most recently
completed taxable years, along with sales Tax Returns filed by EAC with respect
to the most recently completed calendar year, and the months during the present
calendar year. Each Tax Return fairly and accurately presents the
assets, liabilities, financial condition, income, expenses and results of the
operations of EAC for the applicable period.
(c) There
are no claims, assessments, proceedings, audits or litigation pending against
EAC for any alleged deficiency in Taxes and, to the knowledge of EAC and the
Shareholders, there are no threatened claims, assessments, proceedings, audits
or litigation for Taxes against EAC. There are no liens or
other encumbrances for Taxes (other than for current Taxes not yet due and
payable) on EAC’s Assets or Property. To the knowledge of EAC and the
Shareholders, there is no basis for the assertion of any other claim relating or
attributable to Taxes, which, if adversely determined, would result in any
material lien or encumbrance on EAC’s Assets or Property, or would reasonably be
expected to have, individually or in the aggregate, an EAC Material Adverse
Effect.
(d) EAC
has maintained complete and accurate records, including all applicable
exemption, resale or other certificates, of (i) all sales to purchasers claiming
to be exempt from sale and use Taxes based on the exempt status of the
purchaser, and (ii) all other sales for which sales Tax or use Tax was not
collected by EAC and as to which the seller is required to receive and retain
resale certificates or other certificates relating to the exempt nature of the
sale or use or non-applicability of the sale and use Taxes.
(e) To
the best knowledge of the Shareholders, EAC has no liability under the escheat
laws or any other laws of any jurisdiction relating to abandoned
property.
2.19 Employees. EAC
has no current full- or part-time employees and has never had any such
employees. EAC has no liability to any director, officer, employee or to any
Governmental Body or any other person for any damages, wages, bonus, salary,
commission, deferred compensation, vacation pay, health or hospital insurance,
claim for indemnification, workers’ compensation benefits or unemployment
insurance premium with respect to any employee, except for the last pay period
or any portion thereof. There are no unfair labor practices or
discrimination or sexual harassment charges pending or, to the knowledge of EAC
or the Shareholders, threatened with respect to EAC.
2.20 Related Party
Transactions. Except for ongoing transactions with the Slanetz
Corporation in the ordinary course of business of EAC described on Schedule 2.20, there
are no existing transactions or agreements between EAC and any Shareholder,
officer, director, or affiliate (or member of the immediate family of any of the
foregoing) of EAC.
2.21 Employee Benefit
Plans. EAC has never maintained any “employee pension benefit
plan” or “employee welfare benefit plan” as those terms are defined in
Section 3 of the Employee Retirement Income Security Act of 1974
(“ERISA”). No material liability under ERISA or the Internal Revenue
Code of 1986 (the “Code”) has been or, through the Closing Date will be,
incurred with respect to any Plan or with respect to any “employee benefit plan”
(as such term is defined in Section 3(3) of ERISA) of any trade or business
(whether or not incorporated) which is under common control, or a member of an
affiliated service group, with EAC (within the meaning of Section 4001(b)(1) of
ERISA or Section 414(b), (c) or (m) of the Code) which could result in a
material lien or other claim upon any of the assets of EAC, and no such
liability will be incurred as a result of the transactions contemplated by this
Agreement. EAC is not or has not been since 1984 a party to any
“multiemployer plan” (as such term is defined in Section 3(37) of
ERISA). Each EAC plan, program or arrangement that is subject to
Section 409A of the Code is in material compliance with Section 409A of the
Code, to the extent applicable, and has been operated in good faith compliance
with said Section 409A since January 1, 2005.
2.22 Corporate
Records. The stock transfer books delivered at the Closing,
and the minutes of all EAC directors’ and shareholders’ meetings for the past
five (5) years
heretofore made available to the Buyer, constitute all of the transfer books and
minute books for such periods and are true, complete and accurate records in all
material respects of all material proceedings of the shareholders and directors
of EAC, and the issuance and record ownership of all shares of capital stock of
EAC. The accounting books and records of EAC for the past ten
(10) years are in
all material respects true, correct and complete, and have been maintained in
accordance with good business practices.
2.23 Bank Accounts and/or
Credit. Schedule 2.23 sets
forth a true, correct and complete list of all financial institutions in which
an account is maintained by, or loans, lines of credit or other credit
commitments have been secured by or for, EAC, together with the names of all
persons authorized to draw thereon. EAC does not have any loan or
other agreements for the borrowing of money and none of the loans or lines of
credit impose any prepayment restrictions. There are no loans or
other agreements which upon the Closing of the Merger as contemplated by this
Agreement will accelerate to maturity, increase the rate or charges or otherwise
change their terms or provisions.
2.24 Disclosure. No
representations or warranties in this Section 2 or in any
information, list, Disclosure Schedule or certificate furnished or to be
furnished by or on behalf of EAC or the Shareholders pursuant to this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit a material fact necessary to make the statements contained herein or
therein not misleading.
2.25 No Additional
Representations. Except as
expressly set forth in this Agreement, neither the Shareholders nor EAC, their
representatives nor any other person has made any representation or warranty,
expressed or implied, to Buyer as to any matter relating to EAC, including as to
the accuracy or completeness of any information regarding EAC furnished or made
available to Buyer and its representatives, including any information, documents
or material made available to Buyer in any form in connection with the
transactions contemplated by this Agreement.
3. REPRESENTATIONS
AND WARRANTIES OF THE BUYER
The Buyer hereby represents and
warrants to EAC and the Shareholders as follows:
3.1 Organization. The
Buyer is a corporation legally existing under the laws of the State of
Connecticut, and has all requisite corporate authority and capacity to enter
into and carry out the provisions of the Agreement, and is under no
receivership, impediment or prohibition imposed by any Governmental Body that
would render the Buyer unable to enter into and carry out the provisions of this
Agreement.
3.2 Authority Relative to this
Agreement. The execution and delivery of this Agreement by the
Buyer has been duly and validly authorized by all requisite action on the part
of the Buyer. No approval or other action is required in order to
authorize the Buyer to consummate the transactions contemplated by this
Agreement. This Agreement has been duly executed and delivered by the
Buyer and constitutes a valid and legally binding obligation of the Buyer,
enforceable in accordance with its terms.
3.3 Absence of
Defaults. The execution and delivery of this Agreement does
not and the consummation of the transactions contemplated hereby will not (a)
violate any provision of the Certificate of Incorporation or Bylaws of the
Buyer; (b) violate, conflict with or result in the breach or termination of, or
constitute a default under the terms of, any agreement or instrument to which
the Buyer is a party or by which it or any of its assets may be bound; (c)
violate any judgment, order, injunction, decree, license, permit, award, rule or
regulation against, or binding upon, the Buyer; or (d) constitute a violation by
the Buyer of any law or regulation of any jurisdiction as such law or regulation
relates to the Buyer.
3.4 Investment. Buyer
is acquiring the Shares for investment purposes
only and not with a view to any public distribution thereof, and Buyer
represents that it will not offer to sell or otherwise dispose of the Shares so
acquired by it in violation of any applicable law. Buyer acknowledges
that the Shares have not been registered under the Securities Act of 1933, as
amended, and that the Shares may not be sold, transferred or offered for sale
without registration under such act or an exemption therefrom. Buyer
is able to bear the economic risk of holding the Shares for an indefinite period
and has knowledge and experience in financial and business matters such that it
is capable of evaluating the risks of investment in the
Shares.
3.5 Due Diligence
Review. In entering into this Agreement, Buyer has not been
induced by, or relied upon, any representations, warranties or statements by EAC
or the Shareholders not set forth herein or in the Disclosure Schedules attached
hereto, whether or not such representations, warranties or statements have
actually been made, in writing or orally, and Buyer acknowledges that it has
made its own investigation of EAC and the Shareholders prior to the execution of
this Agreement and has not been induced by or relied upon any representations,
warranties or statements as to the advisability of entering this Agreement other
than the representations, warranties and statements set forth herein or in the
Disclosure Schedules.
4. CONDUCT
OF THE PARTIES PENDING THE CLOSING DATE AND
AGREEMENTS OF THE PARTIES
4.1 Approvals and
Consents. EAC, the Shareholders and Buyer will use
commercially reasonable efforts to secure the approval of the purchase and sale
transaction contemplated by this Agreement by all parties whose consent is
required by law or under the terms of any indenture, contract or agreement to
which EAC or Buyer is a party, including, but not limited to, approval by the
DPUC.
4.2 Conduct of EAC’s
Business.
(a) Until
the Closing Date, the Shareholders and EAC will conduct the business of and
affairs of EAC only in the ordinary course and so that the representations and
warranties contained in Section 2 hereof will
be true and correct in all material respects at and as of the Closing Date
(except as to representations that refer to a specified earlier date), except
for changes specifically permitted or contemplated by this Agreement, and so
that the conditions to be satisfied by EAC and the Shareholders on or prior to
the Closing Date shall then have been satisfied. EAC and the
Shareholders will use their commercially reasonable efforts to maintain and
preserve the business and operations of EAC, and to preserve its relationships
with persons or entities having business relations with EAC.
(b) Without
limiting the generality of the foregoing, prior to the Closing Date, without the
prior written consent of Buyer, which consent shall not be unreasonably
withheld:
(i) EAC
will not dispose of any of the Assets having a value of $5,000 or more, except
for the sale of water to customers in the ordinary course of
business.
(ii) Except
for normal expenses incurred in the ordinary course of business, EAC will not
incur any additional liabilities to the Slanetz Corporation or any other third
party in an aggregate amount of $5,000 or more.
(iii) EAC
and the Shareholders will not take any actions that would reasonably be expected
to adversely affect their ability to consummate the purchase and sale
transaction contemplated hereby.
(iv) EAC
will maintain in force all existing liability insurance policies and fidelity
bonds relating to the System, the Property and the Assets, or policies or bonds
providing substantially the same coverage.
(v) EAC
will advise Buyer in writing of any material adverse change or of any event,
occurrence or circumstance which is likely to cause a material adverse change in
any of the Assets or liabilities (whether absolute, accrued, contingent or
otherwise) or operations of EAC, taken as a whole.
(vi) EAC
will maintain the Assets in good condition, reasonable wear and tear
excepted.
(vii) EAC
will not enter into any new leases or contracts or material modifications or
renewals of any existing leases or contracts.
(viii) EAC
will not, in a manner unfavorable to EAC, (i) make any material alterations or
additions to the Assets, except as may be required by law or as may reasonably
be required for the prudent repair and maintenance of the Assets, (ii) change or
attempt to change (or consent to any change in) the zoning or other legal
requirements applicable to the Property, or (iii) cancel, amend or modify in any
respect materially adverse to EAC any material easement, License, permit or
other rights held by EAC.
(ix) EAC
will not enter into or amend any employment, severance, retention, consulting or
special pay arrangements with any person, or increase the compensation payable
to any of its directors, officers or employees.
(x) EAC
will not (i) issue, sell or otherwise dispose of or agree to issue, sell or
otherwise dispose of, any shares of capital stock of EAC, or any other security
convertible into or exchangeable for shares of EAC’s capital stock; (ii) acquire
or agree to acquire (through redemption, repurchase or otherwise) any of its
shares of capital stock; or (iii) authorize, grant or agree to grant any
options, warrants or other rights to acquire any of its shares of capital stock,
or any other security convertible into or exchangeable for shares of capital
stock of EAC.
(xi) EAC
will not declare or pay any other dividends or make any other distributions in
respect of any of the shares of its capital stock, provided, however, that EAC
may pay cash dividends to the Shareholders after the date of this Agreement but
prior to the Closing in an amount not to exceed 70% of the net income of EAC for
the year 2007 (as reflected in the audited EAC Financial Statements for the year
ended December 31, 2007).
(xii) EAC
will not change (A) its methods of accounting, except as required by GAAP or (B)
its fiscal year, settle or compromise any Tax liability or refund claim, or make
any material Tax election inconsistent with prior practice or, if no comparable
Tax election has previously been made, which would increase the current or
future tax liability of EAC.
(xiii) EAC
will not make, propose or agree to any change in its rates, charges, standards
of service or accounting from those in effect on the date of this
Agreement.
(xiv) Neither
EAC nor the Shareholders will authorize, or commit or agree to take any of the
foregoing actions.
4.3 Information and
Access. EAC will give to Buyer and its representatives
reasonable access at such times and locations as are mutually agreed upon by the
Buyer and EAC to all the Assets, and to the books, contracts, documents,
records, and files of EAC, and will furnish to the Buyer copies of documents,
records and financial information with respect to EAC’s business as the Buyer
may reasonably request. Said access shall specifically include access to (i) all
personnel records of EAC (to the extent permitted by applicable law); (ii) all
contracts and agreements referred to in Section 2.11 hereof;
(iii) all files and records described in Section 2.22 hereof;
and (iv) the System.
4.4 Lawsuits. EAC
shall notify Buyer promptly if it becomes aware of any lawsuit, claim,
proceeding or investigation that may be threatened, brought, asserted or
commenced against EAC or the Shareholders (a) involving the purchase and sale
transaction contemplated by this Agreement or (b) which might have an EAC
Material Adverse Effect.
4.5 Compliance with
Laws. From the date hereof, EAC and the Shareholders shall use
commercially reasonable efforts to cause EAC to remain in compliance in all
material respects with all foreign, federal, state, local and other laws,
statutes, ordinances, rules, regulations, orders, judgments, and decrees
applicable to EAC and any of its operations or Assets, the noncompliance with
which could have an EAC Material Adverse Effect.
4.6 Current
Information. During the period from the date of this Agreement to
the Closing Date, EAC will make available one or more of their designated
representatives to confer on a regular and frequent basis with a representative
of Buyer and to report the general status of the ongoing operations of
EAC. EAC will promptly notify Buyer of any material change in the normal
course of business or in the operations or the properties of EAC and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) and will keep Buyer fully informed
of such events.
4.7 Notification of Certain
Matters. Upon actual notice thereof, EAC shall give prompt
notice to Buyer of (a) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Closing Date, and (b) any failure by EAC
or the Shareholders to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by them under this
Agreement.
4.8 Certain EAC
Assets. Schedule 4.8 sets
forth a description of certain assets of EAC which Buyer agrees may be retained
by the Shareholders after the Closing. On or before the Closing Date,
EAC shall arrange to transfer the motor vehicle registration of EAC’s 1990
pickup truck and the accounts and billing records for EAC’s cellular phones to
the name and responsibility of the Shareholders.
5. COVENANTS
OF THE BUYER
5.1 Cooperation. The
Buyer will use its best efforts (a) to prevent any representation or warranty of
the Buyer contained in this Agreement from becoming inaccurate, (b) to satisfy
the requirements, covenants, and agreements applicable to it as set forth in
this Agreement, and (c) to satisfy the conditions to the consummation of the
purchase and sale transaction contemplated by this Agreement.
5.2 Notification of Certain
Matters. Upon actual notice thereof, the Buyer shall give
prompt notice to EAC of (i) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Closing Date, and (ii) any
failure of the Buyer or any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement.
5.3 Public
Announcements. Buyer shall consult with EAC before issuing any
press release or public announcement with respect to this Agreement or the
purchase and sale transaction contemplated by this Agreement.
6. CONDITIONS
OF THE BUYER’S OBLIGATIONS
The obligations of the Buyer to be
performed by it under this Agreement on the Closing Date shall be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions. Each condition may be waived in whole or in part only by written
notice of such waiver from the Buyer to EAC and the Shareholders.
6.1 EAC
Approvals. This Agreement and the other transactions
contemplated hereby shall have been approved by the Shareholders and Board of
Directors of EAC.
6.2 DPUC
Approval. This Agreement and the purchase and sale transaction
contemplated hereby shall have been approved by the DPUC in form and substance
satisfactory to the Buyer in its reasonably exercised
judgment. Without limiting the generality of the foregoing, such
approval shall include a ruling by the DPUC that the Purchase Price paid by the
Buyer to the Shareholders for the EAC Common Stock is a prudent investment, that
the purchase and sale transaction contemplated hereby is in the best interest of
ratepayers of both EAC and the Buyer and that the entire Purchase Price will be
recognized in the Buyer’s rate base at the time of the Buyer’s next general rate
case (meaning that the Buyer will be allowed to earn a return on the Purchase
Price and will be allowed to depreciate the investment in each case in the same
manner as other investments in plant), such ruling not to include any conditions
that adversely affect the rate or regulatory treatment of the
Buyer.
6.3 Consents. EAC
shall have obtained any other consents required to enable EAC and the
Shareholders to consummate the purchase and sale transaction contemplated by
this Agreement, including those required from the DEP or DPH if any, which shall be in form and
substance reasonably satisfactory to the Buyer.
6.4 Performance by EAC and the
Shareholders. The representations and warranties of EAC and
the Shareholders contained in this Agreement or in any document delivered by or
on behalf of EAC or the Shareholders to the Buyer pursuant to this Agreement
shall be true, complete and correct in all material respects at and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date (except as to representations and
warranties which speak as of a specified earlier date). EAC and the
Shareholders shall have performed and complied in all material respects with all
agreements and conditions required by this Agreement to be performed or complied
with by it on or prior to the Closing Date. A duly authorized officer
of EAC and the Shareholders shall each have certified to such effect in writing
to the Buyer.
6.5 Adverse
Change. Since the date which is the earlier of (a) Buyer’s
election to proceed with the purchase and sale transaction contemplated herein
as provided in Section
1.3(d)(ii)(X) above or (b) the end of the Inspection Period, there shall
have been no EAC Material Adverse Effect, and Buyer shall have received a
certificate of a duly authorized officer of EAC to such effect.
6.6 Condition of
Property. On the Closing Date, except as disclosed herein,
there shall be no judicial or administrative or condemnation proceeding pending
or, to the knowledge of EAC or the Shareholders, threatened concerning the
Property which could have an EAC Material Adverse Effect.
6.7 Repayment of the Slanetz
Corporation. On or before the Closing Date, the Shareholders
shall cause EAC to repay all unpaid principal and interested owed to the Slanetz
Corporation under the promissory note of EAC dated February 17, 2006 and all
“accounts payable – associated company” to the Slanetz Corporation for all
services performed on behalf of EAC by the Slanetz Corporation on or before the
Closing Date.
6.8 Form of
Documents. All actions, proceedings, instruments and documents
to be taken or delivered by EAC in connection with the consummation of the
purchase and sale transaction contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Buyer.
6.9 Litigation. No
suit, action, proceeding or governmental investigation shall be pending or, to
the knowledge of EAC, the Shareholders or the Buyer, threatened before or by any
Governmental Body which would, in the reasonable opinion of the Buyer or its
legal counsel, have an EAC Material Adverse Effect.
6.10 Resignations. At
the Closing, the Shareholders shall cause each of EAC’s officers and directors
to resign their positions effective upon the Closing Date.
7. CONDITIONS
OF THE OBLIGATIONS OF EAC AND THE SHAREHOLDERS
The obligations of EAC and the
Shareholders to be performed under this Agreement on the Closing Date shall be
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions. Each condition may be waived in whole or in part only by
written notice of such waiver from EAC and the Shareholders to the
Buyer.
7.1 DPUC
Approval. This Agreement and the other transactions
contemplated hereby shall have been approved by the DPUC.
7.2 Performance by the
Buyer. The representations and warranties of the Buyer
contained in this Agreement or in any document delivered by or on behalf of the
Buyer to EAC and the Shareholders pursuant to this Agreement shall be true,
complete and correct in all material respects at and as of the Closing Date with
the same effect as if such representations and warranties had been made on and
as of such date. The Buyer shall have performed and complied in all
material respects with all agreements and conditions required by this Agreement
to be performed or complied with by it on or prior to the Closing
Date. A duly authorized officer of the Buyer shall have certified to
such effect in writing to EAC.
7.3 Form of
Documents. All actions, proceedings, instruments and documents
to be taken or delivered by the Buyer in connection with the consummation of the
purchase and sale transaction contemplated by this Agreement shall be reasonably
satisfactory in form and substance to EAC.
8. FRUSTRATION
OF CLOSING CONDITIONS
Neither party may rely on the failure
of any condition set forth in Article 6 or Article 7 hereof to be satisfied if
such failure was caused by such party’s failure to act in good faith or to use
its commercially reasonable efforts to cause the Closing to occur, as required
by Section 4.1
hereof.
9. EXPENSES
If the
purchase and sale transaction contemplated herein is consummated, all fees,
costs, Taxes and expenses incurred in connection therewith shall be paid by
Buyer. Except as otherwise specifically provided in Section 1.3(c) of
this Agreement, if such purchase and sale transaction (a) is not consummated for
any reason other than matters which are within the control of EAC or the
Shareholders or the result of an EAC Material Adverse Effect, then all fees,
costs, Taxes and expenses shall be paid in each case by the party incurring such
expenses, except that Buyer shall reimburse the Shareholders and EAC for legal
and accounting fees in an amount not to exceed $60,000, provided that the
Shareholders submit copies to Buyer of documents establishing the amount of such
legal and accounting fees; or (b) is not consummated because of matters which
are within the control of EAC or the Shareholders or the result of an EAC
Material Adverse Effect, then all fees, costs, Taxes and expenses shall be paid
in each case by the party incurring such expenses.
10. TAX
MATTERS
The following provisions shall govern
the allocation of responsibility as between the Buyer and the Shareholders for
certain tax matters following the Closing Date:
(a) Buyer
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns for EAC that are filed after the Closing Date. Buyer shall
permit the Shareholders to review and comment on each such Tax Return described
in the preceding sentence prior to filing.
(b) Buyer
and the Shareholders shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax Returns and
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information that are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Buyer and the Shareholders agree (A)
to retain all books and records with respect to Tax matters pertinent to EAC
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by Buyer
or the Shareholders, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any taxing
authority, and (B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other party so requests, Buyer or the Shareholders, as the case may be, shall
allow the other party to take possession of such books and
records. Buyer and the Shareholders further agree, upon request, to
use their commercially reasonable efforts to obtain any certificate or other
document from any governmental authority or any other person as may be necessary
to mitigate, reduce or eliminate any Tax that could be imposed (including, but
not limited to, with respect to the purchase and sale transaction contemplated
hereby). Buyer and the Shareholders further agree, upon request, to
provide the other party with all information that either party may be required
to report pursuant to Code Section 6043, or Code Section 6043A, or Treasury
Regulations promulgated thereunder.
(c) All
tax-sharing agreements or similar agreements with respect to or involving
EAC shall be terminated as of the Closing Date and, after the Closing
Date, EAC shall not be bound thereby or have any liability
thereunder.
11. TERMINATION
11.1 Termination by Mutual
Consent. This Agreement may be terminated at any time prior to
the Closing Date by the mutual written consent of both (a) EAC and the
Shareholders and (b) Buyer.
11.2 Termination by the
Shareholders or by the Buyer. This Agreement may be terminated
at any time prior to the Closing Date by the Shareholders or Buyer if (a) the
Closing has not occurred on or before January 31, 2009, unless the party seeking
to invoke this Section
11.2(a) is then in breach of any of its obligations under this Agreement;
(b) a court of competent jurisdiction or any governmental authority shall have
issued an order, decree or ruling or taken any other action, in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other action
shall have become final and nonappealable; or (c) the other party shall have
breached or failed to comply in all respects with its representations,
warranties, covenants and agreements contained in this Agreement; provided, however, that if the
final DPUC order with respect to the purchase and sale transaction has not been
received by January 5, 2009, this Agreement may not be terminated unless the
Closing has not occurred within 30 days of receipt of such DPUC
order.
11.3 Remedies. In
the event of termination of this Agreement, no party hereto shall, except as
otherwise set forth in this Agreement, have any liability or further obligation
to any other party to this Agreement; provided, however, that, if
this Agreement is so terminated by a party because one or more of the conditions
to such party’s obligations hereunder is not satisfied as a result of the other
party’s willful failure to comply with its obligations under this Agreement, the
terminating party shall have the right to pursue all legal remedies for breach
of contract or otherwise including, without limitation, damages relating
thereto. The rights, powers and remedies of the parties under this
Agreement are cumulative and not exclusive of any other right, power or remedy
which such parties may have under any other agreement or law. No
single or partial assertion or exercise of any right, power or remedy of a party
hereunder shall preclude any other or further assertion or exercise
thereof.
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12.
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AMENDMENT,
WAIVER, AND INTERPRETATION
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This Agreement may be amended in
writing at any time prior to the Closing Date, but only by a writing signed by
EAC, the Shareholders and Buyer. At any time prior to the Closing
Date, the parties hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) waive
compliance by the other parties with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
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13.
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OTHER
PROVISIONS
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13.1 Governing
Law. This Agreement shall be construed and interpreted
according to the laws of the State of Connecticut, without regard to conflicts
of laws provisions.
13.2 Assignment. This
Agreement may not be assigned by any party hereto without the prior written
consent of the other parties hereto and any attempt to assign without such
consent shall be voidable by any party.
13.3 Books and
Records. The Shareholders agree that they will deliver or
cause to be delivered to Buyer on the Closing Date all corporate minute books
and stock transfer records of EAC, to the extent that such books and records are
not then in the possession of EAC. The Shareholders may retain any
Tax Returns, and Buyer shall be provided with copies of such Tax
Returns.
13.4 Notices. All
notices, waivers and consents under this Agreement shall be in writing and shall
be deemed to have been duly given if delivered, mailed, first-class mail,
postage prepaid, or sent via facsimile addressed as follows:
If to EAC or the
Shareholders: The
Xxxxxxxxx Acres Company
000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx
XxXxxxxx
Facsimile: (000) 000-0000
with a copy
to: Xxxxxxx
X. Xxxxxxxx, Esq.
Xxx Xxxxxx LLP
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to CWC
to: Connecticut
Water Company
00 Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X.
Xxxxxxx,
Vice President – Business
Development
Facsimile: (000) 000-0000
with a copy
to: Xxxxxx
X. Xxxxxxxxxx, Esq.
Xxxxxx Xxxxxxx LLP
CityPlace I, 000 Xxxxxx
Xxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
13.5 Entire
Agreement. This Agreement supersedes all prior written or oral
agreements between the parties with respect to the transactions contemplated
herein, other than Sections 6 and 7 of the Letter of Intent between the Buyer
and the Shareholders dated February 8, 2008, as amended, and is intended as
a complete and
exclusive statement of the terms of this Agreement between the parties with
respect to the transactions contemplated herein.
13.6 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
treated as an original, but all of which, collectively, shall constitute only
one instrument.
13.7 Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and the successors and assigns of the parties
hereto.
13.8 Severability. In
case one or more provisions contained in this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, rule or
regulation, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected or impaired
thereby. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties shall negotiate in good faith to modify this Agreement so as to
affect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
are consummated as originally contemplated to the greatest extent
possible.
[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
* * * * *
*
IN WITNESS WHEREOF, the parties hereto
have caused this Stock Purchase Agreement to be duly executed as of the date
first above written.
THE
CONNECTICUT WATER
COMPANY THE
XXXXXXXXX ACRES COMPANY
By: /s/ Xxxx
Xxxxxxxxx By: /s/ Xxxxxx
Xxxxxxx
Name:
Xxxx
Xxxxxxxxx
Name: Xxxxxx Xxxxxxx
Title:
Chairman,
President/CEO
Title: President
SHAREHOLDERS:
/s/ Xxxxx
XxXxxxxx
Xxxxx XxXxxxxx
/s/ Xxxxx
Xxxxxxx
Xxxxx Xxxxxxx
/s/ Xxxxxx
Xxxxxxx
Xxxxxx Xxxxxxx
THE SLANETZ FAMILY TRUST
By:
/s/ Xxxxxx
Xxxxxxx
Name: Xxxxxx
Xxxxxxx
Title: Trustee
Appendix A – List of EAC
Shareholders
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Stockholder
|
Shares
Held
|
|
Xxxxxx
X. Xxxxxxx, 000 X. Xxxxx Xxxxxx, Xxxxxxx, XX 00000
|
72
|
|
Xxxxx
X. Xxxxxxx, 000 X. Xxxxx Xxxxxx, Xxxxxxx, XX 00000
|
52
|
|
Xxxxx
X. XxXxxxxx, 000 X. Xxxxx Xxxxxx, Xxxxxxx, XX 00000
|
52
|
|
Slanetz
Family Trust, c/o Xxxxxx Xxxxxxx, Trustee, 0000 Xxxxx Xxxx Xxxx,
Xxxxxxxxxx, XX 00000
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24
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DISCLOSURE
SCHEDULES
[TO
COME]
