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EXHIBIT 10.1
INVESTMENT RESTRUCTURE AGREEMENT
THIS INVESTMENT RESTRUCTURE AGREEMENT (this "Agreement"), dated as of
March 16, 2001, is entered into by and between Western Water Company, a Delaware
corporation ("Western Water"), on the one hand, and Sociedad General de Aguas de
Barcelona, a Spanish corporation ("Agbar"), and Interagua, Servicios Integrales
del Agua, S.A., a Spanish corporation and an affiliate of Agbar ("Interagua"),
on the other.
RECITALS
A. On October 13, 1998, Western Water entered into that certain
Strategic Relationship Agreement (the "SRA") with Agbar to sell to Agbar, or to
an affiliate of Agbar, $10,000,000 of Western Water's Series D Convertible
Redeemable Preferred Stock, par value $.001 per share ("Series D Preferred"), at
a cash purchase price of $1,000 per share;
B. In accordance with the terms of the SRA, Agbar assigned its rights to
purchase the Series D Preferred to Interagua, and on October 27, 1998 Interagua
purchased 10,000 shares of the Series D Preferred for an aggregate cash purchase
price of $10,000,000; and
C. Western Water, Agbar and Interagua desire to restructure the
investment of Interagua in Western Water, to terminate the SRA, and to enter
into a new on-going operating arrangement.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto, and of good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1.
SHARE EXCHANGE; TERMINATION
Subject to the terms and conditions of this Agreement, and in reliance
upon the representations, warranties, covenants and agreements contained herein,
Western Water, Agbar and Interagua hereby agree to restructure the equity
investment of Interagua in Western Water and to enter into a new contractual
arrangement between the parties, all as follows:
1.1. Cancellation of Series D Preferred. Concurrently with the execution
of this Agreement, Interagua is delivering to Western Water for cancellation
stock certificate No. 1, representing all of the 10,000 issued and outstanding
shares of Series D Preferred owned by Interagua. The stock certificate has been
duly endorsed for cancellation by Interagua in a manner satisfactory to Western
Water. Western Water hereby acknowledges receipt of certificate No. 1 and agrees
to cancel all of the shares represented by certificate No. 1.
1.2. Issuance of Series F Preferred and Common Stock. Concurrently with
the execution of this Agreement, Western Water is delivering to Interagua 2,000
shares of its new Series F Convertible Redeemable Preferred Stock (the "Series F
Preferred") and 175,000 shares of Western Water's common stock. The new shares
of Series F Preferred have a $1,000 per
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share stated value, a $5.60 per share conversion price, and such other rights,
preferences and privileges as are set forth in the "Certificate of
Designations--Series F Convertible Redeemable Preferred Stock," a certified copy
of which is attached hereto as Exhibit A. (The 2,000 shares of Series F
Preferred and the 175,000 shares of Common Stock issued to Interagua hereunder
are hereinafter sometimes collectively referred to as the "Shares.") Western
Water covenants and agrees that any shares of Preferred Stock issued in exchange
for Series C Preferred Stock or Series D Preferred Stock will not rank senior to
or prior to the Series F Preferred Stock with respect to payments of dividends,
redemption payments or rights on liquidation.
1.3. Cash Payment. As payment for $187,500 of accrued dividends and for
any additional accrued and unpaid dividends that Western Water may owe Interagua
under the terms of the Series D Preferred through the date of this Agreement,
and as additional consideration for the agreements made by Agbar and Interagua
hereunder, concurrently with the execution and delivery of this Agreement,
Western Water is hereby delivering to Interagua $4,041,143 by wire transfer.
1.4. Termination and Cancellation of SRA. Agbar, Interagua and Western
Water hereby agree that, effective as of the date of this Agreement, the SRA is
hereby terminated and cancelled, and that all rights, obligations and
liabilities of the parties thereto are hereby terminated and forgiven. The
parties hereto agree to execute any and all additional documents either party
hereafter reasonably requests to evidence the termination of the SRA.
1.5. Business Development Agreement. Western Water and Agbar hereby
agree to jointly pursue certain water-related business opportunities in the U.S.
water service industry that both find attractive. In order to induce Western
Water to agree to this business development arrangement, Agbar hereby represents
and warrants to Western Water that it intends to pursue water infrastructure
development opportunities, water utilities acquisitions and municipal water and
wastewater privatization business opportunities in the United States (the "Water
Business Opportunity"), and that it has the capability to do so. Accordingly, in
the event that Western Water becomes aware of a Water Business Opportunity that
it is interested in pursuing in joint venture, Western Water shall provide Agbar
with written notice of the Water Business Opportunity, which notice shall
include a brief summary of the Water Business Opportunity including a
description of the project, the potential business opportunity associated with
the project and the estimated costs related to the realization of such
opportunity. Western Water will remain available to answer reasonable requests
for additional information from Agbar. In the event that Agbar is interested in
pursuing the Water Business Opportunity with Western Water, Agbar shall notify
Western Water in writing of its interest within twenty-one (21) calendar days of
its receipt of Western Water's initial notice. If Agbar either declines the
Water Business Opportunity or fails to respond to Western Water's notice within
the foregoing twenty-one -day (21-day) period, Western Water may thereafter
pursue that Water Business Opportunity for its own account, or in joint venture
with other entities, without any further obligation to Agbar. If Agbar timely
notifies Western Water of its interest in jointly developing any Water Business
Opportunity that Western Water has identified, Agbar and Western Water shall
thereafter, in good faith, promptly negotiate the terms of an agreement (a
"Water Agreement") that allocates all of the benefits and obligations related
Water Business Opportunity amongst the parties, including the manner in which
the Water Business Opportunity shall be acquired, developed,
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financed, operated and shared among the parties. Both Agbar and Western Water
may incur expenses related to the Water Business Opportunity during the period
of time commencing with Western Water's receipt of notice from Agbar that it
intends to participate in a Water Business Opportunity. The parties agree that
Western Water's obligation to include Agbar in any such Water Business
Opportunity is contingent upon Agbar's agreement to devote appropriate time and
resources to developing the Water Business Opportunity, and that Western Water
shall not be required to commit resources to develop such Water Business
Opportunity without an affirmative commitment by Agbar to devote appropriate
time and resources to such development.
1.6. Retention of Employees. Pursuant to provisions of the SRA, Western
Water hired and undertook the training of Xxxxxxx Xxxxx and Xxxxx Xxxxxx, both
of whom remain in exodus employees of Agbar. Prior to the date of this
Agreement, Agbar and Western Water instituted a cost sharing arrangement related
to such relocation, expatriate support and employment of Messrs. Onses and
Xxxxxx. As part of the transactions effected by this Agreement, Agbar hereby
agrees that Western Water will have the right, but not the obligation, to
continue the employment of Messrs. Onses and Xxxxxx, on terms mutually
acceptable to each of them and Western Water, through December 31, 2002. Western
Water shall have the right to terminate the employment of either or both of
Messrs. Onses and Xxxxxx upon (ninety) 90 days' written notice to the affected
employee and to Agbar. Each of Messrs. Onses and Xxxxxx shall have the right to
terminate his employment by Western Water upon 90 (ninety) days' written notice
to Western Water and to Agbar. Agbar agrees that it will not solicit or
encourage either Xx. Xxxxx or Xx. Xxxxxx to terminate his employment with
Western Water. Agbar represents that it has binding agreements with Messrs.
Onses and Xxxxxx to provide Messrs. Onses and Xxxxxx full-time, permanent
employment within Agbar at appropriate levels of responsibility and remuneration
and to pay their reasonable relocation expenses. Agbar agrees to credit the time
of employment with Western Water of Messrs. Onses and Xxxxxx as part of their
dates of credited service within the Agbar group of companies. Agbar further
agrees to continue to make Tesoreria de la Seguridad Social TC2 payments on
behalf of Messrs. Onses and Xxxxxx during the time of their employment with
Western Water so as to maintain their retirement, term of service and other
long-term employment benefits within the Spanish Retirement System. Commencing
as of January 1, 2001 through the end of their respective periods of employment
with Western Water, Agbar hereby agrees to reimburse Western Water for 25% of
all of the payroll expenses (consisting primarily of salary, payroll taxes and
benefits other than expatriate expenses or benefits, such as housing allowances,
automobile expense, tax neutralization and tuition reimbursement) incurred in
connection with Western Water's employment of Messrs. Onses and Xxxxxx during
calendar year 2001 and 15% of all of the payroll expenses (consisting primarily
of salary, payroll taxes and benefits other than expatriate expenses or
benefits) incurred in connection with Western Water's employment of Messrs.
Onses and Xxxxxx during calendar year 2002. Such reimbursement shall be made
monthly within 15 days of presentation to Agbar of a proper invoice by Western
Water.
1.7. Payment of Outstanding Fee. As payment in full for all accrued and
unpaid invoices owing by Agbar to Western Water through the date of this
Agreement, concurrently with the execution and delivery of this Agreement, Agbar
is delivering to Western Water a total of U.S. $204,782 by wire transfer.
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ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF INTERAGUA AND AGBAR
To induce Western Water to execute, deliver and perform this Agreement,
Agbar and Interagua hereby jointly and severally represent and warrant to
Western Water as follows:
2.1. Authority Relative to this Agreement. This Agreement has been duly
authorized by all necessary action on the part of Agbar and Interagua and has
been duly executed and delivered by each of Agbar and Interagua, and is a valid
and binding agreement of each them, enforceable in accordance with its terms,
except as such enforcement is subject to any applicable bankruptcy, insolvency,
reorganization or other law relating to or affecting creditors' rights generally
and general principles of equity. Neither the execution nor the delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, or result in the imposition of any lien or
encumbrance upon any of the shares Series D Preferred that Interagua is hereby
delivering to Western Water for cancellation.
2.2. Title to the Shares of Series D Preferred. Interagua owns, of
record and beneficially, all 10,000 shares of Series D Preferred represented by
stock certificate No. 1, free and clear of all pledges, security interests,
liens, charges, encumbrances, equities, claims and options of whatever nature.
No individual, corporation, entity or person has any claim or interest in, to,
or against any of the shares of Series D Preferred represented by certificate
No. 1 and owned by Interagua.
2.3. Investment Intent. Interagua is acquiring the Shares for investment
for its own account, not as a nominee or agent, and not with a view to, or for
resale in connection with, any distribution thereof. Interagua understands that
the issuance of the Shares has not been, and will not be, registered under the
Securities Act of 1933, as amended (the "Securities Act"), by reason of a
specific exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
Interagua's investment intent and the accuracy of Interagua's representations as
expressed herein. Interagua is an "accredited investor" as that term is defined
in the rules and regulations promulgated under the Securities Act, and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment to be made in the Shares.
2.4. Rule 144. Interagua acknowledges that (i) the Shares must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from such registration is available, and (ii) it is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit limited
public resale of securities purchased in a private placement only upon the
satisfaction of certain conditions.
2.5. Restrictions on Transfer; Restrictive Legends. Interagua
understands that the transfer of the Shares is restricted by applicable state
and U.S. federal securities laws, and that the certificates evidencing the
Shares have been imprinted with the following (or substantially equivalent)
legend restricting transfer except in compliance therewith:
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THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT
BE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), SHALL HAVE BECOME
EFFECTIVE WITH RESPECT THERETO, OR (ii) IN THE OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO WESTERN WATER, AN EXEMPTION UNDER THE
SECURITIES ACT AND FROM ANY APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE.
The legend set forth above shall be removed by Western Water from the
aforementioned securities upon delivery to Western Water of an opinion by
counsel, reasonably satisfactory to Western Water, that a registration statement
under the Securities Act is at that time in effect with respect to the legended
security or that such security can be freely transferred in a public sale
without such a registration statement being in effect and that such transfer
will not jeopardize the exemption or exemptions from registration pursuant to
which Western Water issued the Shares.
2.6. Information. Interagua has been furnished with all materials that
it has requested relating to the business, finances and operations of Western
Water and materials relating to the Shares, and has been afforded the
opportunity to ask questions of the principals of Western Water. Interagua
understands that an investment in the Shares involves a high degree of risk and
that it has received such accounting, legal and tax advice as it deems necessary
to make an informed investment decision with respect to its cancellation of the
Series D Preferred and its acquisition of the Shares.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF WESTERN WATER
To induce Agbar and Interagua to execute, deliver and perform this
Agreement, Western Water hereby represents and warrants to each of Agbar and
Interagua as follows:
3.1. Organization. Western Water is a corporation duly formed, validly
existing and in good standing under the laws of the State of Delaware with the
power and authority to conduct its business as it is now being conducted and to
own and lease its properties and assets.
3.2. Authorization; Enforcement; Compliance with Other Laws. Western
Water has the requisite corporate power and authority to enter into and perform
this Agreement and to issue the Shares in accordance with the terms of this
Agreement. The execution and delivery of this Agreement by Western Water and the
consummation by it of the transactions contemplated hereby, including without
limitation the issuance of the Shares, has been duly authorized by Western
Water's Board of Directors and no further consent or authorization is required
by Western Water, its Board of Directors or its stockholders. Neither the
execution nor the delivery of this Agreement nor the consummation of the
transactions contemplated hereby will conflict with, or result in a breach of
the terms, conditions or provisions of or constitute a default under any
agreement to which Western Water is a party. This Agreement has been duly
executed and delivered by Western Water and constitutes the valid and binding
obligation of Western Water,
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enforceable against Western Water in accordance with its terms, except as such
enforcement is subject to any applicable bankruptcy, insolvency, reorganization
or other law relating to or affecting creditors' rights generally and general
principles of equity.
3.3. Validity of Issuance. Upon the issuance of the Shares in accordance
with the terms of this Agreement, the Shares shall be (i) validly issued, fully
paid and non-assessable; (ii) free from all taxes or liens; and (iii) Interagua
will be entitled to all rights accorded to a holder of such Shares.
3.4. Exempt Transaction. The issuance of the Shares hereunder shall
constitute a transaction exempt from the registration requirements of Section 5
of the Securities Act and the qualification or registration requirements of any
applicable state securities laws.
ARTICLE 4.
MISCELLANEOUS
4.1. Survival of Representations, Warranties. Each of the
representations, warranties, agreements, covenants and obligations herein is
material and shall be deemed to have been relied upon by the other party or
parties and shall survive after the date hereof and shall not merge in the
performance of any obligation by any party hereto.
4.2. Entire Agreement. This Agreement, and the other certificates,
agreements, and other instruments to be executed and delivered by the parties in
connection with the transactions contemplated hereby, constitute the sole
understanding of the parties with respect to the subject matter hereof and
supersede all prior oral or written agreements with respect to the subject
matter hereof.
4.3. Parties Bound by Agreement; Successors and Assigns. The terms,
conditions, and obligations of this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns.
4.4. Amendments and Waivers. No modification, termination, extension,
renewal or waiver of any provision of this Agreement shall be binding upon a
party unless made in writing and signed by such party. A waiver on one occasion
shall not be construed as a waiver of any right on any future occasion. No delay
or omission by a party in exercising any of its rights hereunder shall operate
as a waiver of such rights.
4.5. Severability. If for any reason any term or provision of this
Agreement is held to be invalid or unenforceable, all other valid terms and
provisions hereof shall remain in full force and effect, and all of the terms
and provisions of this Agreement shall be deemed to be severable in nature.
4.6. Attorney's Fees. Should any party hereto retain counsel for the
purpose of enforcing, or preventing the breach of, any provision hereof
including the institution of any action or proceeding, whether by arbitration,
judicial or quasi-judicial action or otherwise, to enforce any provision hereof
or for damages for any alleged breach of any provision hereof, or
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for a declaration of such party's rights or obligations hereunder, then, whether
such matter is settled by negotiation, or by arbitration or judicial
determination, the prevailing party shall be entitled to be reimbursed by the
losing party for all costs and expenses incurred thereby, including reasonable
attorneys' fees for the services rendered to such prevailing party.
4.7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
4.8. Headings. The headings of the Sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
4.9. Expenses. Except as specifically provided herein, each of Agbar,
Interagua and Western Water shall pay all of its own costs and expenses incurred
by it or on its behalf in connection with this Agreement and the transactions
contemplated hereby, including fees and expenses of its own financial
consultants, accountants, and counsel.
4.10. Notices. All notices, requests, demands, claims, and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given: when received, if
personally delivered; when transmitted, if transmitted by telecopy, electronic
or digital transmission method; five business days after such notice, request,
demand claim or other communication is sent, if sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
if to Agbar, to:
Sociedad General de Aguas de Barcelona, S.A.
Xxxxxxxxxx 000
00000 Xxxxxxxxx, Xxxxx
Fax: 00-00-000-0000
if to Interagua, to:
Interagua, Servicios Integrales del Agua, S.A.
Xxxxxxxxxx 000
00000 Xxxxxxxxx, Xxxxx
Fax: 00-00-000 0642
if to Western Water, to:
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxxxxx, XX 00000
Fax: (000) 000-0000
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Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means, but no such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it actually is received
by the intended recipient. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
4.11. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of California without giving effect
to the principles of choice of law thereof.
4.12. Arbitration. Any dispute arising under or in connection with any
matter related to this Agreement or any related agreement shall be resolved
exclusively by arbitration. The arbitration shall be in conformity with and
subject to the then-applicable rules and procedures of the American Arbitration
Association or, at the election of the demanding party, any other form of
"alternative dispute resolution" procedure generally recognized in the State of
California; e.g., a reference pursuant to California Code of Civil Procedure
("Code") Section 638 or reliance upon Section 1280 et. seq. of the Code. All
parties agree to be (1) subject to the jurisdiction and venue of the arbitration
in the County of Contra Costa State of California, (2) bound by the decision of
the arbitrator as the final decision with respect to the dispute and (3) subject
to the jurisdiction of the Superior Court of the State of California for the
purpose of confirmation and enforcement of any award.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first indicated above.
INTERAGUA, SERVICIOS INTEGRALES WESTERN WATER COMPANY,
DEL AGUA, S.A., a Spanish a Delaware corporation
corporation
By: /s/ XXXXXX XXXXXXX By: /s/ XXXXXXX X. XXXXXXXXX
-------------------------------- --------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxxxxxx
Title: Director General Title: Senior Vice President &
Chief Financial Officer
SOCIEDAD GENERAL DE AGUAS DE
BARCELONA, a Spanish corporation
By: /s/ XXXX RAS
--------------------------------
Name: Xxxx Ras
Title: Director General
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