EXHIBIT 10.20
MERGER AGREEMENT
AND PLAN OF REORGANIZATION
AMONG
SOUTHWEST WATER COMPANY,
SW UTILITY COMPANY,
RTNT, INC.,
XXXXXXX BEND UTILITY COMPANY,
INVERNESS UTILITY COMPANY, INC.,
WINDERMERE UTILITY CO., INC.,
HB MERGER SUB, INC.
AND
IU MERGER SUB, INC.
October 1, 2000
TABLE OF CONTENTS
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Definitions............................................................................ 1
1. Merger and Reorganization..................................................... 4
(a) Merger of HBUC....................................................... 4
(b) Merger of IUC........................................................ 5
(c) Directors and Officers of Surviving Corporations..................... 6
(d) Contribution to Buyer................................................ 6
(e) Reorganization of WUC................................................ 6
(f) Tax-Free Reorganizations............................................. 6
2. Closing....................................................................... 7
(a) Deliveries by Seller at the First Closing............................ 7
(b) Deliveries by Buyer at the First Closing............................. 7
(c) Shareholder Agreement................................................ 8
(d) Consulting Agreement................................................. 8
(e) Escrow Pending Receipt of IUC Transfer Approval...................... 8
3. Representations and Warranties Concerning the Transaction..................... 9
(a) Representations and Warranties of the Seller......................... 9
(b) Representations and Warranties of the Buyer.......................... 10
(c) Representations and Warranties of SWC................................ 11
4. Representations and Warranties Concerning the RTNT Utilities.................. 12
(a) Organization, Qualification, and Corporate Power..................... 13
(b) Capitalization....................................................... 13
(c) Title to Assets...................................................... 13
(d) Financial Statements and Events Subsequent........................... 14
(e) Undisclosed Liabilities.............................................. 15
(f) Tax Matters.......................................................... 15
(g) Contracts............................................................ 16
(h) Bank Accounts........................................................ 17
(i) Powers of Attorney................................................... 17
(j) Insurance............................................................ 17
(k) Litigation........................................................... 18
(l) Employees; Benefits.................................................. 18
(m) Guaranties........................................................... 18
(n) Disclosure........................................................... 18
5. Pre-Closing Covenants......................................................... 18
(a) General.............................................................. 18
(b) Notices and Consents................................................. 19
(c) Operation of Business................................................ 19
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(d) Preservation of Business............................................ 19
(e) Full Access......................................................... 19
(f) Notice of Developments.............................................. 19
(g) Exclusivity......................................................... 19
6. Closing and Post-Closing Covenants........................................... 20
(a) General............................................................. 20
(b) Satisfaction of Certain Obligations of RTNT......................... 20
(c) Transition.......................................................... 20
7. Conditions to Obligation to Close............................................ 20
(a) Conditions to Obligations of the Buyer and SWC...................... 20
(b) Conditions to Obligation of the Seller and the RTNT Utilities....... 22
8. Remedies for Breaches of This Agreement...................................... 23
(a) Survival of Representations and Warranties.......................... 23
(b) Indemnification Provisions for Benefit of the Buyer and SWC......... 23
(c) Indemnification Provisions for Benefit of the Seller................ 23
(d) Matters Involving Third Parties..................................... 23
(e) Limitation on Seller's Liability.................................... 25
(f) Other Indemnification Provisions.................................... 25
9. Tax Matters.................................................................. 25
(a) Tax Periods Ending on or Before December 31, 1999................... 25
(b) Tax Periods Beginning on or After January 1, 2000................... 25
(c) Cooperation on Tax Matters.......................................... 26
(d) Certain Taxes....................................................... 26
10. SWC Common Stock............................................................. 26
(a) Legends............................................................. 26
(b) Seller's Representations and Warranties............................. 27
11. Termination.................................................................. 28
(a) Termination of Agreement............................................ 28
(b) Effect of Termination............................................... 29
12. Miscellaneous................................................................ 29
(a) Press Releases and Public Announcements............................. 29
(b) No Third-Party Beneficiaries........................................ 29
(c) Entire Agreement.................................................... 29
(d) Succession and Assignment........................................... 29
(e) Counterparts........................................................ 29
(f) Headings............................................................ 29
(g) Notices............................................................. 30
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(h) Governing Law....................................................... 30
(i) Amendments and Waivers.............................................. 31
(j) Severability........................................................ 31
(k) Expenses............................................................ 31
(l) Construction........................................................ 31
(m) Incorporation of Exhibits and Schedules............................. 31
(n) Specific Performance................................................ 31
(o) Submission to Jurisdiction.......................................... 32
Exhibit A -- WUC Shareholder Agreement
Exhibit B -- Officers and Directors of HBUC and IUC
Exhibit C -- Real Property Purchase Agreement
Disclosure Schedule -- Exceptions to Representations and Warranties
Concerning the RTNT Utilities
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MERGER AGREEMENT
AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION ("Agreement")
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is made as of October 1, 2000, by and among Southwest Water Company, a Delaware
corporation ("SWC"), SW Utility Company, a Texas corporation ("Buyer"), RTNT,
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Inc., a Texas corporation ("Seller"), Xxxxxxx Bend Utility Company, a Texas
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corporation ("HBUC"), Inverness Utility Company, Inc., a Texas corporation
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("IUC"), Windermere Utility Co., Inc., a Texas corporation ("WUC") (HBUC, IUC
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and WUC are collectively referred to herein as the "RTNT Utilities"), HB Merger
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Sub, Inc., a Texas corporation ("HB Merger Sub") and IU Merger Sub, Inc., a
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Texas corporation ("IU Merger Sub"). The foregoing entities are referred to
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collectively herein as the "Parties."
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RECITALS
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WHEREAS, Seller owns all of the outstanding capital stock of
HBUC, all of the outstanding capital stock of IUC, and fifty one percent (51%)
of the outstanding capital stock of WUC;
WHEREAS, Buyer is a wholly owned subsidiary of SWC and owns
forty nine percent (49%) of the outstanding capital stock of WUC;
WHEREAS, HB Merger Sub and IU Merger Sub are wholly-owned
subsidiaries of SWC; and
WHEREAS, the Board of Directors of each of the Parties hereto
have determined that it is fair, and in the best interests of their respective
shareholders, to reorganize their respective businesses upon the terms and
subject to the conditions set forth herein and in accordance with Texas law.
NOW, THEREFORE, in consideration of the premises and the
mutual promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties agree as follows:
AGREEMENT
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Definitions.
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"Adverse Consequences" means all actions, suits, proceedings,
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hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
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regulations promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the
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meaning of Code Section 1504(a).
"Amended Option Agreements" means that certain RTNT Right of
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First Refusal Agreement and RTNT Call Purchase Agreement, as amended, and that
SWWC Right of First Refusal Agreement and SWWC Call Purchase Agreement, as
amended.
"Basis" means any past or present fact, situation,
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circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could form the
basis for any specified consequence.
"Buyer" has the meaning set forth in the preface above.
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"Closing" has the meaning set forth in Section 2 below.
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"Closing Date" has the meaning set forth in Section 2 below.
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Confidential Information" means any information concerning
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the businesses and affairs of the Company that is not already generally
available to the public.
"Consulting Agreement" has the meaning set forth in Section
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2(c) below.
"Disclosure Schedule" has the meaning set forth in Section 4
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below.
"Disposition" means any sale, assignment, transfer by
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operation of law or otherwise, pledge, hypothecation, or grant of a security
interest or other lien.
"ECO" means ECO Resources, Inc., a wholly-owned subsidiary of
---
SWC and the provider of certain management services to the RTNT Utilities.
"Effective Time" means, with respect to the HBUC Merger, the
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time of the filing of this Agreement or other appropriate document with the
Secretary of State of the State of Texas following the satisfaction of the
Closing conditions for the HBUC Merger, and with respect to the IUC Merger, the
time of the filing of this Agreement or other appropriate document with the
Secretary of State of the State of Texas following the satisfaction of the
Closing conditions for the IUC Merger (including receipt of the IUC Transfer
Approval), or at such later time as the parties to this Agreement have agreed
and designated in such filing as the effective time of the respective merger.
"Financial Statement" has the meaning set forth in Section
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4(d) below.
"First Closing" has the meaning set forth in Section 2 below.
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"HBUC Merger" has the meaning set forth in Section 1(a)(i)
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below.
"Indemnified Party" has the meaning set forth in Section 8(d)
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below.
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"Indemnifying Party" has the meaning set forth in Section 8(d)
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below.
"IUC Merger" has the meaning set forth in Section 1(b)(i)
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below.
"IUC Transfer Approval" has the meaning set forth in Section
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2(e) below.
"Knowledge" means actual knowledge after reasonable
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investigation.
"Liability" means any liability (whether known or unknown,
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whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet dated as
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of June 30, 2000 attached to the Disclosure Schedule.
"Ordinary Course of Business" means the ordinary course of
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business consistent with past custom and practice (including with respect to
quantity and frequency).
"Party" has the meaning set forth in the preface above.
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"Person" means an individual, a partnership, a corporation, an
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association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Second Closing" has the meaning set forth in Section 2 below.
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"Securities Act" means the Securities Act of 1933, as amended.
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"Securities Exchange Act" means the Securities Exchange Act of
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1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
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encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable,
(c) purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
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"Subsidiary" means any corporation with respect to which a
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specified Person (or a subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
"SWC Common Stock" means the common stock of SWC, par value
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$.01 per share.
"Tax" means any federal, state, local, or foreign income,
---
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss.59A), customs duties, capital stock, franchise,
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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.
"Tax Return" means any return, declaration, report, claim for
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refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Taxpayers" has the meaning set forth in Section 4(f)(ii)
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below.
"Third Party Claim" has the meaning set forth in Section 8(d)
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below.
"TNRCC" means the Texas Natural Resources Conservation
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Commission.
1. Merger and Reorganization.
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(a) Merger of HBUC. On and subject to the terms and conditions
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of this Agreement, and in accordance with Texas law, at the Effective Time:
(i) Basic Transactions. HB Merger Sub will
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merge with and into HBUC and the separate corporate existence
of HB Merger Sub will thereupon cease (the "HBUC Merger").
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HBUC shall be the surviving corporation in the HBUC Merger and
shall be a wholly-owned subsidiary of SWC. Without limiting
the generality of the foregoing sentences, and subject
thereto, at the Effective Time, except as otherwise provided
herein, all the property, rights, privileges, powers and
franchises of the HB Merger Sub and HBUC shall vest in the
surviving corporation, and all debts, liabilities and duties
of HBUC and HB Merger Sub shall become the debts, liabilities
and duties of the surviving corporation (subject to the
indemnification provisions of Section 8 of this Agreement).
The articles of incorporation and bylaws of HBUC, as in effect
immediately prior to the Effective Time, shall be the articles
of incorporation and bylaws of the surviving corporation until
thereafter amended as provided by law and such articles of
incorporation or bylaws.
(ii) Conversion of HBUC Securities. At the
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Effective Time, by virtue of the HBUC Merger, and without any
action on the part of the Parties or the holders of any of the
following securities:
(A) Each share of common stock of HBUC, par
value $1.00, shall be converted into and represent
the right to receive Two Hundred (200) fully paid and
nonassessable shares of SWC Common Stock. The SWC
Common Stock will be payable upon the surrender of
the certificate(s) representing the HBUC common stock
("HBUC Certificates"). All shares of HBUC capital
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stock shall no longer be outstanding and shall
automatically be canceled and shall cease to exist,
and each holder of any certificate that immediately
prior to the Effective Time represented any shares of
HBUC capital stock shall cease to have any rights
with respect
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thereto, except the right to receive a certificate or
certificates of SWC Common Stock upon surrender of
such HBUC Certificates, without interest.
(B) Each issued and outstanding share of
capital stock of HB Merger Sub shall be converted
into and become one validly issued, fully paid and
nonassessable share of common stock of the surviving
corporation.
(C) Notwithstanding anything to the contrary
in this Agreement, the aggregate number of shares of
SWC Common Stock that will be delivered for all of
the capital stock of HBUC is Two Hundred Thousand
(200,000).
(b) Merger of IUC. On and subject to the terms and conditions
of this Agreement, and in accordance with Texas law, at the Effective Time:
(i) Basic Transactions. IU Merger Sub will
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merge with and into IUC and the separate corporate existence
of IU Merger Sub will thereupon cease (the "IUC Merger"). IUC
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shall be the surviving corporation in the IUC Merger and shall
be a wholly-owned subsidiary of SWC. Without limiting the
generality of the foregoing sentences, and subject thereto, at
the Effective Time, except as otherwise provided herein, all
the property, rights, privileges, powers and franchises of the
IU Merger Sub and IUC shall vest in the surviving corporation,
and all debts, liabilities and duties of IUC and IU Merger Sub
shall become the debts, liabilities and duties of the
surviving corporation (subject to the indemnification
provisions of Section 8 of this Agreement). The articles of
incorporation and bylaws of IUC, as in effect immediately
prior to the Effective Time, shall be the articles of
incorporation and bylaws of the surviving corporation until
thereafter amended as provided by law and such articles of
incorporation or bylaws.
(ii) Conversion of IUC Securities. At the
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Effective Time, by virtue of the IUC Merger, and without any
action on the part of the Parties or the holders of any of the
following securities:
(A) Each share of common stock of IUC, par
value $1.00, shall be converted into and represent
the right to receive Five (5) fully paid and
nonassessable shares of SWC Common Stock. The SWC
Common Stock will be payable upon the surrender of
the certificate(s) representing the IUC common stock
("IUC Certificates"). All shares of IUC capital stock
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shall no longer be outstanding and shall
automatically be canceled and shall cease to exist,
and each holder of any certificate that immediately
prior to the Effective Time represented any shares of
IUC capital stock shall cease to have any rights with
respect thereto, except the right to receive a
certificate or certificates of SWC Common Stock upon
surrender of such IUC Certificates, without interest.
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(B) Each issued and outstanding share of
capital stock of IU Merger Sub shall be converted
into and become one validly issued, fully paid and
nonassessable share of common stock of the surviving
corporation.
(C) Notwithstanding anything to the contrary
in this Agreement, the aggregate number of shares of
SWC Common Stock that will be delivered for all of
the capital stock of IUC is Five Thousand (5,000).
(c) Directors and Officers of Surviving Corporations. The
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corporate officers and directors of the surviving corporations in the HBUC
Merger and IUC Merger are as set forth on Exhibit B.
(d) Contribution to Buyer. Immediately after the Effective
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Time of each of the HBUC Merger and the IUC Merger, SWC will contribute the
capital stock of each of the surviving corporations to Buyer whereupon each of
the surviving corporations shall become a wholly-owned subsidiary of the Buyer.
(e) Reorganization of WUC. At the First Closing, the Buyer
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shall deliver Ninety Five Thousand (95,000) fully paid and nonassessable shares
of SWC Common Stock to the Seller in consideration of One Hundred and Eighty
(180) shares of the common stock, par value $1.00, of WUC, which together with
the 284 shares already owned by SWUC, constitute eighty percent (80%) of all of
the issued and outstanding capital stock of WUC. Seller, Buyer and WUC adopt
this Agreement as a plan of reorganization for WUC under Section 368(a)(1)(B) of
the Internal Revenue Code.
(f) Tax-Free Reorganizations. Seller, SWC and Buyer intend for
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the mergers and reorganization of HBUC, IUC and WUC to qualify as tax-free
reorganizations under the Internal Revenue Code. Seller acknowledges that SWC
and Buyer have not made any representation, warranty or covenant regarding the
tax consequences of these transactions for Seller or its shareholders and that
Seller and its shareholders should seek advice from their own accountants,
attorneys and other advisors regarding such tax consequences. Should these
transactions not qualify as tax-free reorganizations, no adjustments will be
made to the number of shares of SWC Common Stock to be delivered or actually
delivered to Seller or any other matter under this Agreement or any transaction
contemplated by this Agreement.
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2. Closing. The closing of the each of the transactions contemplated by
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this Agreement (the "Closing") shall be accomplished simultaneously at the
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offices of Xxxxxx & Xxxxxxx, Costa Mesa, California and the offices of Xxxxxxxx
& Xxxxxxx, L.L.P., in Austin, Texas by fax transmission of signature pages
(followed by overnight delivery of original counterpart signature pages and all
other closing deliveries) commencing at 9:00 a.m. local time on the second
business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself) or such other date as the Buyer and the Seller may
mutually determine (the "Closing Date"). There will be two Closings, a "First
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Closing" with respect to the HBUC Merger and the WUC reorganization, and a
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"Second Closing" with respect to the IUC Merger which will occur after the IUC
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Transfer Approval has been received.
(a) Deliveries by Seller at the First Closing. At the First
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Closing, the Seller will deliver:
(i) to the Buyer, the various certificates,
instruments, agreements and documents referred to in Section
7(a) below;
(ii) to SWC, a stock certificate representing
1,000 shares of HBUC, endorsed in blank or accompanied by duly
executed assignment documents;
(iii) into an escrow held by SWC, a stock
certificate representing 1,000 shares of IUC, endorsed in
blank or accompanied by duly executed assignment documents for
release upon receipt of the IUC Transfer Approval; and
(iv) to the Buyer, a stock certificate
representing 180 shares of WUC, endorsed in blank or
accompanied by duly executed assignment documents.
(b) Deliveries by Buyer at the First Closing. At the First
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Closing, SWC or the Buyer will deliver:
(i) to the Seller, the various certificates,
instruments, agreements and documents referred to in Section
7(b) below;
(ii) to the Seller, a stock certificate
representing 295,000 shares of SWC Common Stock in the name of
Seller representing consideration for all of the capital stock
of HBUC and 180 shares of WUC; and
(iii) into an escrow held by SWC, 5,000 shares
of SWC Common Stock in the name of Seller for release upon
receipt of the IUC Transfer Approval.
(c) Shareholder Agreement. At the First Closing, Buyer and
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Seller shall enter into the WUC Shareholder Agreement in the form attached
hereto as Exhibit A.
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(d) Consulting Agreement. At the First Closing, Xxxx X.
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Xxxxxxx ("Xxxxxxx") and SWC will enter into that certain Consulting Agreement of
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even date herewith (the "Consulting Agreement").
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(e) Escrow Pending Receipt of IUC Transfer Approval. The
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Parties acknowledge that Seller must perfect the approval by the TNRCC of its
ownership of IUC and that SWC, Buyer and Seller must obtain the approval of the
TNRCC to the transfer of IUC to Buyer prior to the IUC Merger (the "IUC Transfer
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Approval"). As an accommodation to the Parties, SWC will hold the 1,000 shares
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of IUC common stock and the 5,000 shares of SWC Common Stock to be exchanged as
part of the IUC Merger in escrow pending receipt of the IUC Transfer Approval
(the "Escrow").
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(i) Until the IUC Transfer Approval has been
received:
(A) the Closing with respect to the IUC
Merger will not occur;
(B) the IUC Merger will not be
consummated;
(C) ownership of IUC will not transfer to
SWC or Buyer;
(D) RTNT will retain full beneficial
ownership of the IUC common stock subject to the
covenants contained in Section 5 of this
Agreement; and
(E) all dividends paid or payable on the
SWC Common Stock will be held in Escrow for
RTNT's benefit.
(ii) If the IUC Transfer Approval has not been
obtained by December 31, 2000, SWC and Buyer shall thereafter
have the right to terminate the Escrow and this Agreement
(solely as this Agreement relates to IUC).
(iii) If the IUC Transfer Approval has not been
obtained by June 1, 2001, RTNT shall thereafter have the right
to terminate the Escrow and this Agreement (solely as this
Agreement relates to IUC).
(iv) Upon termination of the Escrow pursuant to
Section 2(e)(ii) or (iii), the SWC Common Stock held in the
Escrow shall be cancelled and returned to SWC, any dividends
held in the Escrow shall become the property of SWC, and the
shares of IUC common stock will be returned to RTNT.
(f) Deliveries at the Second Closing. At the Second Closing:
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(i) The Seller will deliver to the Buyer the
various certificates, instruments, agreements and documents
referred to in Section 7(a) below as applicable to the Second
Closing;
(ii) The stock certificate representing 1,000
shares of IUC will be released to Buyer from the Escrow;
(iii) The Buyer will deliver to the Seller the
various certificates, instruments, agreements and documents
referred to in Section 7(b) below as applicable to the Second
Closing; and
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(iv) The stock certificate representing 5,000
shares of SWC Common Stock representing the consideration for
all of the outstanding capital stock of IUC will be released
to Seller from the Escrow.
3. Representations and Warranties Concerning the Transaction.
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(a) Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer and SWC that the statements contained in
this Section 3(a) are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date for the respective
transaction contemplated by this Agreement (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 3(a)).
(i) Authorization of Transaction. The Seller
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and each of the RTNT Utilities has full power and authority
(including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally
binding obligation of the Seller and each of the RTNT
Utilities, enforceable in accordance with its terms, subject
to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors'
rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or
at law). Other than approval by the TNRCC, the Seller and each
of the RTNT Utilities need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval
of any person, entity, government or governmental agency in
order to consummate the transactions contemplated by this
Agreement. All necessary approvals of the Seller's Board of
Directors and the Boards of Directors of the RTNT Utilities,
and all of their respective shareholders or other interest
holders, have been obtained.
(ii) Noncontravention. Neither the execution
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and the delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will (A) violate any
articles, bylaws, constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court
to which the Seller or the RTNT Utilities is subject or (B)
conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller or the
RTNT Utilities are a party or by which they are bound or to
which any of their assets is subject.
(iii) Brokers' Fees. Neither the Seller nor the
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RTNT Utilities have any Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(iv) Ownership of the Shares of RTNT Utilities.
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The Seller holds of record and owns beneficially the number of
shares of common stock of HBUC,
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IUC and WUC set forth next to its name in Section 4(b) of the
Disclosure Schedule, free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act
and state securities laws and as set forth on the Disclosure
Schedule), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and
demands. The Seller is not a party to any option, warrant,
purchase right, shareholder agreement or other contract or
commitment that could require the Seller to sell, transfer, or
otherwise dispose of any capital stock of any of the RTNT
Utilities (other than this Agreement, the Amended Option
Agreements and as set forth on the Disclosure Statement). The
Seller is not a party to any voting trust, proxy, shareholder
agreement or other agreement or understanding with respect to
the voting of any capital stock of any of the RTNT Utilities.
(v) Organization of the Seller. The Seller is
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a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation.
(b) Representations and Warranties of the Buyer. The Buyer
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represents and warrants to the Seller that the statements contained in this
Section 3(b) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date for the respective transaction
contemplated by this Agreement (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section
3(b)).
(i) Organization of the Buyer. The Buyer is a
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corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation.
(ii) Authorization of Transaction. The Buyer
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has full power and authority (including full corporate power
and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of the Buyer,
enforceable in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors'
rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or
at law). Other than approval by the TNRCC, the Buyer need not
give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any person, entity,
government or governmental agency in order to consummate the
transactions contemplated by this Agreement. All necessary
approvals of the Buyer's Board of Directors and its
shareholders have been obtained.
(iii) Noncontravention. Neither the execution
----------------
and the delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will (A) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Buyer
is subject or any provision of its charter or
10
bylaws or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or
other arrangement to which the Buyer is a party or by which it is
bound or to which any of its assets is subject.
(iv) Brokers' Fees. The Buyer has no Liability or obligation to
-------------
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(v) Investment. The Buyer is not acquiring the shares of stock
----------
in the RTNT Utilities with a view to or for sale in connection with
any distribution thereof within the meaning of the Securities Act.
(c) Representations and Warranties of SWC. SWC represents and
-------------------------------------
warrants to the Seller that the statements contained in this Section 3(c) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date for the respective transaction contemplated by
this Agreement (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3(c)).
(i) Organization of SWC. SWC is a corporation duly organized,
-------------------
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. SWC has full power and
----------------------------
authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of
SWC, enforceable in accordance with its terms, subject to the effect
of any applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws affecting creditors' rights generally and subject, as
to enforceability, to the effect of general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). Other than approval by the TNRCC and
consent of SWC's lenders to the transactions contemplated by this
Agreement, SWC need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any person, entity,
government or governmental agency in order to consummate the
transactions contemplated by this Agreement. All necessary approvals
of the Buyer's Board of Directors and its shareholders have been
obtained.
(iii) Noncontravention. Neither the execution and the delivery
----------------
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which SWC is subject or any provision of its charter or bylaws or
(B) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license,
11
instrument, or other arrangement to which SWC is a party or by which
it is bound or to which any of its assets is subject.
(iv) Brokers' Fees. SWC has no Liability or obligation to pay
-------------
any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement.
(v) SWC Common Stock. The SWC Common Stock, when issued
----------------
pursuant hereto, will be legally and validly authorized and issued,
fully paid and non-assessable, and will not have been issued in
violation of the preemptive rights of any person. When and as
delivered to the Seller, the certificates representing the SWC Common
Stock will vest title to the SWC Common Stock in the Seller, free and
clear of all encumbrances of any character except such restrictions
upon resale as may exist under federal or state securities laws and
the indemnification provisions of Section 8 of this Agreement.
(vi) Investment. SWC is not acquiring the shares of stock in
----------
the RTNT Utilities with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act.
4. Representations and Warranties Concerning the RTNT Utilities. The Seller
------------------------------------------------------------
represents and warrants to the Buyer and SWC that the statements contained in
this Section 4 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date for the respective
transaction contemplated by this Agreement (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the disclosure schedule delivered by the
Seller to the Buyer on the date hereof and attached hereto (the "Disclosure
----------
Schedule"). Nothing in the Disclosure Schedule shall be deemed adequate to
--------
disclose an exception to a representation or warranty made herein, however,
unless the Disclosure Schedule identifies the exception with particularity
(including identifying the RTNT Utility or Utilities to which the exception
applies) and describes the relevant facts in detail excepting the financial
statement disclosures made hereunder in that ECO is the party responsible for
preparation of the same. Without limiting the generality of the foregoing, the
mere listing (or inclusion of a copy) of a document or other item shall not be
deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other item itself). The Disclosure Schedule will be arranged in
sections corresponding to the lettered and numbered paragraphs contained in this
Section 4 and may be cross-referenced when appropriate.
(a) Organization, Qualification, and Corporate Power. Section 4(a) of
------------------------------------------------
the Disclosure Schedule lists the state of incorporation and the names of the
directors and officers of each RTNT Utility. Each RTNT Utility is a corporation
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each RTNT Utility is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Each RTNT Utility has full corporate power
and authority and all licenses, permits, and authorizations necessary to carry
on the businesses in which it is engaged and in which it presently proposes to
engage and to own and use the properties owned and used by it. The Seller has
delivered to the Buyer correct and complete copies of the charter and
12
bylaws of each RTNT Utility (as amended to date). The minute books (containing
the records of meetings of the stockholders, the board of directors, and any
committees of the board of directors), the stock certificate books, and the
stock record books of each of the RTNT Utilities, in the forms provided to the
Buyer for review, are correct and complete. No RTNT Utility is in default under
or in violation of any provision of its charter or bylaws.
(b) Capitalization. Section 4(b) of the Disclosure Schedule lists,
--------------
for each RTNT Utility, (i) the entire authorized capital stock, (ii) the total
number of shares issued and outstanding in each series and class, (iii) the
total number of shares held in treasury, and (iv) the owners of record of all of
the issued and outstanding shares. All of the issued and outstanding shares of
capital stock of each of the RTNT Utilities have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record by the
respective owners as set forth in Section 4(b) of the Disclosure Schedule. There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, shareholder agreement
or other contracts or commitments that could require any of the RTNT Utilities
to issue, sell, or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to the RTNT Utilities.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of the RTNT Utilities.
(c) Title to Assets. Each of the RTNT Utilities has good and
---------------
marketable title to, or a valid leasehold interest in, the properties and assets
used by it, located on its premises, or shown on the Most Recent Balance Sheet
or acquired after the date thereof, free and clear of all Security Interests,
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Most Recent Balance Sheet.
(d) Financial Statements and Events Subsequent. Attached to the
------------------------------------------
Disclosure Schedule are the following financial statements (collectively the
"Financial Statements") with respect to each of the RTNT Utilities: (i)
--------------------
unaudited balance sheet and statement of income for fiscal year ending December
31, 1999; and (ii) unaudited balance sheet and statement of income as of and for
the 6 months ended June 30, 2000. Since June 30, 2000, there has not been any
material adverse change in the business, financial condition, operations,
results of operations, or future prospects of any of the RTNT Utilities. Without
limiting the generality of the foregoing, since that date:
(i) none of the RTNT Utilities has sold, leased,
transferred, or assigned any of its assets, tangible or intangible,
other than for a fair consideration in the Ordinary Course of
Business;
(ii) none of the RTNT Utilities has entered into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) outside the Ordinary
Course of Business;
(iii) no party (including RTNT or any of the RTNT
Utilities) has accelerated, terminated, modified, or cancelled any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving
13
more than Ten Thousand Dollars ($10,000) to which any of the RTNT
Utilities is a party or by which it is bound;
(iv) none of the RTNT Utilities has imposed any Security
Interest upon any of its assets, tangible or intangible;
(v) none of the RTNT Utilities has issued any note,
bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation;
(vi) there has been no change made or authorized in the
charter or bylaws of any of the RTNT Utilities;
(vii) none of the RTNT Utilities has issued, sold, or
otherwise disposed of any of its capital stock, or granted any
options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital stock;
(viii) none of the RTNT Utilities has declared, set aside,
or paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock;
(ix) none of the RTNT Utilities has made any loan to, or
entered into any other transaction with, any of its directors or
officers;
(x) none of the RTNT Utilities has made or pledged to
make any charitable or other capital contribution; and
(xi) there has not been any other material occurrence,
event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving any of the RTNT Utilities.
(e) Undisclosed Liabilities. None of the RTNT Utilities has any
-----------------------
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability), except for (i) Liabilities set forth
on the face of the Most Recent Balance Sheet (rather than in any notes thereto)
and (ii) Liabilities which have arisen after the Most Recent Balance Sheet in
the Ordinary Course of Business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract, breach
of warranty, tort, infringement, or violation of law).
(f) Tax Matters.
-----------
(i) Except as set forth in Section 4(f) of the
Disclosure Schedule, none of the federal, state, local, and foreign
income Tax Returns filed with respect to each of the RTNT Utilities
for taxable periods ended on or after December 31, 1994, have been
audited or currently are the subject of audit. The Seller has
14
delivered to the Buyer correct and complete copies of all federal
income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any of the RTNT
Utilities since December 31, 1994.
(ii) Each of the RTNT Utilities and any affiliated group
of companies within the meaning of Section 1504(a) of the Code (and
any similar state, local or foreign combined, consolidated or
affiliated group) of which the Seller has been a member (collectively,
the "Taxpayers") has filed all Tax Returns that they were required to
---------
file. All such Tax Returns were correct and complete in all respects.
All Taxes owed by any of the Taxpayers (whether or not shown on any
Tax Return) have been paid. None of the Taxpayers currently is the
beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction
where any of the Taxpayers does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of any of the Taxpayers that arose in
connection with any failure (or alleged failure) to pay any Tax. None
of the RTNT Utilities has waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(iii) Each of the Taxpayers has withheld and paid all
Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(iv) Neither the Seller nor any director or officer (or
employee responsible for Tax matters) of any of the Taxpayers expects
any authority to assess any additional Taxes for any period for which
Tax Returns have been filed. There is no dispute or claim concerning
any Tax Liability of any of the Taxpayers either (A) claimed or raised
by any authority in writing or (B) as to which the Seller and the
directors and officers (and employees responsible for Tax matters) of
the Taxpayers have Knowledge based upon personal contact with any
agent of such authority.
(v) None of the RTNT Utilities has made any payments, is
obligated to make any payments, or is a party to any agreement that
under certain circumstances could obligate it to make any payments
that will not be deductible under Code (S) 280G. None of the RTNT
Utilities is a party to any Tax allocation or sharing agreement. None
of the RTNT Utilities (A) has been a member of an Affiliated Group
filing a consolidated federal income Tax Return (other than a group
the common parent of which was RTNT) or (B) has any Liability for the
Taxes of any Person (other than the applicable RTNT Utility) under
Reg. (S) 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(vi) The unpaid Taxes of each of the RTNT Utilities did
not, as of June 30, 2000, exceed the reserve for Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing
differences between book and Tax
15
income) set forth on the face of the Most Recent Balance Sheet (rather
than in any notes thereto).
(g) Contracts. Section 4(g) of the Disclosure Schedule lists the
---------
following contracts and other agreements (oral or written) as to which the RTNT
Utilities or any of the RTNT Utilities is a party:
(i) any agreement concerning a partnership or joint
venture;
(ii) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation,
in excess of Ten Thousand Dollars ($10,000) or under which it has
imposed a Security Interest on any of its assets, tangible or
intangible, not reflected on the Most Recent Balance Sheet;
(iii) any agreement concerning confidentiality or
noncompetition;
(iv) any agreement for the employment of any individual on
a full-time, part-time, consulting, or other basis or providing
severance benefits, and any profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation, severance, or
other material plan or arrangement for the benefit of its current or
former directors, officers, or employees;
(v) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, or employees;
(vi) any agreement under which the consequences of a
default or termination could have a material adverse effect on the
business, financial condition, operations, results of operations, or
future prospects of any of the RTNT Utilities; or
(vii) any other agreement (or group of related agreements)
which is out of the Ordinary Course of Business.
The Seller has delivered to the Buyer a correct and complete copy of
each written agreement listed in Section 4(g) of the Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and conditions of
each oral agreement referred to in Section 4(g) of the Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby; (C)
none of the Seller or any of the RTNT Utilities is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under the
agreement; (D) to Seller's knowledge no third party is in breach or default, and
no event has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or acceleration, under
the agreement; and (E) ) none of the Seller or any of the RTNT Utilities has,
and to Seller's knowledge no third party has, repudiated any provision of the
agreement.
16
(h) Bank Accounts. Schedule 4(h) lists all bank accounts (including
-------------
deposit accounts, checking accounts, Certificates of Deposit, safe deposit boxes
and the like) holding funds or other assets owned by one or more of the RTNT
Utilities. Except as listed on Schedule 4(h), there are no other bank accounts
holding funds or other assets owned by one or more of the RTNT Utilities.
(i) Powers of Attorney. There are no outstanding powers of attorney
------------------
executed on behalf of any of the RTNT Utilities.
(j) Insurance. Section 4(j) of the Disclosure Schedule sets forth the
---------
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which any of the RTNT Utilities has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
within the past seven (7) years, that were not obtained for the RTNT Utilities
by ECO:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured; and
(iii) the policy number and the period of coverage.
(k) Litigation. Section 4(k) of the Disclosure Schedule sets forth
----------
each instance in which any of the RTNT Utilities (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or, to the Knowledge of any of the Seller or the directors and officers
(and employees with responsibility for litigation matters) of the RTNT
Utilities, is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. Except where noted, none of the actions, suits,
proceedings, hearings, and investigations set forth in Section 4(k) of the
Disclosure Schedule could result in any material adverse change in the business,
financial condition, operations, results of operations, or future prospects of
any of the RTNT Utilities. None of the Seller or the directors and officers (and
employees with responsibility for litigation matters) of the RTNT Utilities has
any reason to believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against any of the RTNT Utilities.
(l) Employees; Benefits. None of the RTNT Utilities now have or ever
-------------------
have had any employees, and do not now nor ever have contributed to, any
Employee Benefit Plan, Employee Pension Benefit Plan or Employee Welfare Benefit
Plan.
(m) Guaranties. None of the RTNT Utilities is a guarantor or
----------
otherwise is liable for any Liability or obligation (including indebtedness) of
any other Person.
(n) Disclosure. The representations and warranties contained in this
----------
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
17
5. Pre-Closing Covenants. The Parties agree as follows with respect to the
---------------------
period between the execution of this Agreement and the Closing of the merger or
reorganization with respect to each RTNT Utility.
(a) General. Each of the Parties will use its reasonable efforts to
-------
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 7
below).
(b) Notices and Consents. Each of the Parties will give any notices
--------------------
to, make any filings with, and use its reasonable efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Section 3(a)(i) and Section
3(b)(ii) above, including without limitation obtaining the necessary approvals
from the TNRCC.
(c) Operation of Business. The Seller will not cause or permit any of
---------------------
the RTNT Utilities to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, the Seller will not cause or permit any of the RTNT
Utilities to (i) cause any representation or warranty hereunder to become
untrue, (ii) declare, set aside, or pay any dividend or make any distribution
with respect to its capital stock or redeem, purchase, or otherwise acquire any
of its capital stock, or (iii) otherwise engage in any practice, take any
action, or enter into any transaction of the sort described in Section 4(d)
above.
(d) Preservation of Business. The Seller will cause each of the RTNT
------------------------
Utilities to keep its business and properties substantially intact, including
its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
(e) Full Access. The Seller will permit, and the Seller will cause
-----------
each of the RTNT Utilities to permit, representatives of the Buyer to have full
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of the RTNT Utilities, to all books and records
(including Tax records), contracts, and documents of or pertaining to any of the
RTNT Utilities that are not on site at or in the offices of the RTNT Utilities.
(f) Notice of Developments. The Seller will give prompt written
----------------------
notice to the Buyer of any material adverse development causing a breach of any
of the representations and warranties in Section 4 above. Each Party will give
prompt written notice to the others of any material adverse development causing
a breach of any of his or its own representations and warranties in Section 3
above. No disclosure by any Party pursuant to this Section 5(f), however, shall
be deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
(g) Exclusivity. The Seller will not (and the Seller will not cause
-----------
or permit any of the RTNT Utilities to) (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion of
the assets of, any of RTNT or the RTNT Utilities (including any
18
acquisition structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Seller will not vote its shares in favor of any such acquisition
structured as a merger, consolidation, or share exchange. The Seller will notify
the Buyer immediately if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing.
6. Closing and Post-Closing Covenants. The Parties agree as follows with
----------------------------------
respect to the Closing and the period following the Closing of the merger or
reorganization with respect to each RTNT Utility.
(a) General. In case at any time after the Closing any further action
-------
is necessary to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party reasonably may request,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Section 8 below). The Seller
acknowledges and agrees that from and after the Closing the Buyer will be
entitled to possession of all documents, books, records (including Tax records),
agreements, and financial data of any sort relating to each of the RTNT
Utilities.
(b) Satisfaction of Certain Obligations of RTNT. In satisfaction
-------------------------------------------
of certain payment obligations of RTNT recorded as accounts receivable on the
books of HBUC in the aggregate amount of approximately $500,000, RTNT will
transfer certain real properties (collectively, the "Real Property") to Buyer at
-------------
or immediately after the First Closing. Prior to and as a condition to the
transfer of the Real Property, SWC must determine in its sole discretion that
the land value constitutes adequate value in repayment of the accounts
receivable. The transfer of the Real Property will be made pursuant to that
certain Real Property Purchase Agreement between Seller and SWC of even date
herewith in the form attached hereto as Exhibit C.
(c) Transition. The Seller will not take any action that is designed
----------
or intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of any of the RTNT Utilities from
maintaining the same business relationships with the RTNT Utilities after the
Closing as it maintained with the RTNT Utilities prior to the Closing.
7. Conditions to Obligation to Close.
---------------------------------
(a) Conditions to Obligations of the Buyer and SWC. The obligation of
----------------------------------------------
the Buyer and SWC to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in Section
3(a) and Section 4 above shall be true and correct in all material
respects at and as of the Closing Date;
19
(ii) the Seller and the RTNT Utilities shall have
performed and complied with all of their covenants hereunder in all
material respects through the Closing;
(iii) each of the Seller and the RTNT Utilities shall
have procured all of the third party consents to be obtained by them
specified in Section 5(b) above;
(iv) the Parties shall have obtained the approval of the
transactions contemplated by this Agreement from the TNRCC and no
action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitration wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated
by this Agreement, (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, (C) affect
adversely the right of Seller or the Buyer to own the shares of stock
of the RTNT Utilities and to control the RTNT Utilities, or (D) affect
adversely the right of the RTNT Utilities to own their assets and to
operate their businesses (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above
in Section 7(a)(i)-(iv) is satisfied in all respects;
(vi) the Seller shall have entered into the WUC
Shareholder Agreement and the Real Property Purchase Agreement;
(vii) Xxxx Xxxxxxx shall have entered into the Consulting
Agreement;
(viii) the Buyer shall have received the resignations,
effective as of the Closing, of each director and officer of each of
the RTNT Utilities designated by the Buyer;
(ix) the Seller shall have executed termination notices
with respect to each of the Amended Option Agreements;
(x) the Seller shall have procured, executed and
delivered all of the documents, instruments and agreements
contemplated by the Real Property Purchase Agreement including,
without limitation, the deeds and title policies referred to therein;
(xi) SWC shall have received the consent of its lenders
to the transactions contemplated by this Agreement; and
(xii) all actions to be taken by the Seller or the RTNT
Utilities in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and
other documents required to effect the
20
transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 7(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller and the RTNT
---------------------------------------------------
Utilities. The obligation of the Seller and the RTNT Utilities to consummate the
---------
transactions to be performed by them in connection with the Closing is subject
to satisfaction of the following conditions:
(i) the representations and warranties set
forth in Sections 3(b) and 3(c) above shall be true and
correct in all material respects at and as of the Closing
Date;
(ii) the Buyer and SWC shall have performed and
complied with all of their covenants hereunder in all material
respects through the Closing;
(iii) the Parties shall have obtained the
approval of the transactions contemplated by this Agreement
from the TNRCC and no action, suit, or proceeding shall be
pending before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iv) the Buyer shall have delivered to the
Seller a certificate to the effect that each of the conditions
specified above in Section 7(b)(i)-(iii) is satisfied in all
respects;
(v) the Buyer and/or SWC, as applicable, shall
have entered into the agreements specified in Section 7(a)(vi)
and 7(a)(vii); and
(vi) all actions to be taken by the Buyer and
SWC in connection with consummation of the transactions
contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Seller.
The Seller and the RTNT Utilities may waive any condition specified in this
Section 7(b) if they execute a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
---------------------------------------
(a) Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties contained in Section 3 above (other than Sections
3(a)(iv) and 4(b)) shall survive the Closing hereunder and continue in full
force and effect for a period of one (1) year thereafter.
21
The representations and warranties contained in Sections 3(a)(iv) and 4(b) shall
survive the Closing hereunder and continue in full force and effect forever. All
of the representations and warranties contained in Section 4 above shall survive
the Closing hereunder and continue in full force and effect for a period of four
(4) years thereafter.
(b) Indemnification Provisions for Benefit of the Buyer and
-------------------------------------------------------
SWC. In the event the Seller or any of the RTNT Utilities breach (or in the
---
event any third party alleges facts that, if true, would mean the Seller has
breached) any of its representations, warranties, and covenants contained
herein, and, if there is an applicable survival period pursuant to Section 8(a)
above, provided that the Buyer or SWC makes a written claim for indemnification
against the Seller within such survival period, then the Seller agrees to
indemnify the Buyer and SWC from and against the entirety of any Adverse
Consequences the Buyer or SWC may suffer through and after the date of the claim
for indemnification (including any Adverse Consequences the Buyer or SWC may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the alleged
breach).
(c) Indemnification Provisions for Benefit of the Seller. In
----------------------------------------------------
the event the Buyer or SWC breaches (or in the event any third party alleges
facts that, if true, would mean the Buyer or SWC has breached) any of its
representations, warranties, and covenants contained herein, and, if there is an
applicable survival period pursuant to Section 8(a) above, provided that the
Seller makes a written claim for indemnification against the Buyer or SWC
pursuant to Section 12(g) below within such survival period, then the Buyer and
SWC agree to indemnify the Seller from and against the entirety of any Adverse
Consequences the Seller may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Seller may suffer after
the end of any applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged breach).
(d) Matters Involving Third Parties.
-------------------------------
(i) If any third party shall notify any Party
(the "Indemnified Party") with respect to any matter (a "Third
----------------- -----
Party Claim") which may give rise to a claim for
-----------
indemnification against any other Party (the "Indemnifying
Party") under this Section 8, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the
-------- -------
Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(ii) Any Indemnifying Party will have the right
to defend the Indemnified Party against the Third Party Claim
with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (A) the Indemnifying Party
notifies the Indemnified Party in writing within fourteen (14)
days after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by
the Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably
22
acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the
Third Party Claim and fulfill its indemnification obligations
hereunder, (C) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable
relief, (D) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment
of the Indemnified Party, likely to establish a precedential
custom or practice materially adverse to the continuing
business interests of the Indemnified Party, and (E) the
Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently.
(iii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance
with Section 8(d)(ii) above, (A) the Indemnified Party may
retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C)
the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in
Section 8(d)(ii) above is or becomes unsatisfied, however, (A)
the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it reasonably
may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying
Party in connection therewith), (B) the Indemnifying Parties
will reimburse the Indemnified Party promptly and periodically
for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (C)
the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent
provided in this Section 8.
(e) Limitation on Seller's Liability. Seller shall not be in
--------------------------------
breach of or be required to indemnify for any alleged breach of any
representation or warranty in Sections 3 or 4 (other than Sections 3(a)(iv) and
4(b)) to the extent that the facts giving rise to the alleged breach were
actually known to an officer, director or manager of Buyer, SWC, or ECO or to a
director of WUC appointed by SWC prior to the execution of this Agreement, or
such breach was caused or resulted through the act or omission of ECO. In
addition, any liability for Taxes payable by WUC relating to a period in which
SWC was an owner of capital stock of WUC and other liabilities shall be
allocated between Seller and Buyer pro rata by the amount of capital stock in
WUC held by Seller and SWC, respectively, during such period.
(f) Other Indemnification Provisions. The foregoing
--------------------------------
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy any Party may have for breach of
representation, warranty, or covenant. The Seller hereby agrees
23
that it will not make any claim for indemnification against any of the RTNT
Utilities by reason of the fact that it was the parent company or agent of any
such entity (whether such claim is for judgments, damages, penalties, fines,
costs, amounts paid in settlement, losses, expenses, or otherwise and whether
such claim is pursuant to any statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit, proceeding, complaint, claim, or
demand brought by the Buyer or SWC against the Seller (whether such action,
suit, proceeding, complaint, claim, or demand is pursuant to this Agreement,
applicable law, or otherwise).
9. Tax Matters. The following provisions shall govern the allocation
-----------
of responsibility as between Buyer and Seller for certain tax matters following
the Closing Date:
(a) Tax Periods Ending on or Before December 31, 1999. Buyer
-------------------------------------------------
shall prepare and file all Tax Returns for the RTNT Utilities for all periods
ending on or prior to December 31, 1999 which are filed after the Closing Date,
other than income Tax Returns with respect to periods for which a consolidated,
unitary or combined income Tax Return of Seller will include the operations of
the RTNT Utilities. Buyer shall permit Seller to review and comment on each such
Tax Return prior to filing. Seller shall reimburse Buyer for Taxes of the RTNT
Utilities with respect to such periods within fifteen (15) days after payment by
Buyer or the RTNT Utilities of such Taxes to the extent such Taxes are not
reflected in the reserve for Tax Liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax income)
shown on the face of the balance sheet for December 31, 1999; provided, however,
that any liability for Taxes payable by WUC relating to a period in which SWC
was an owner of capital stock of WUC shall be allocated between Seller and Buyer
pro rata by the amount of capital stock in WUC held by Seller and SWC,
respectively.
(b) Tax Periods Beginning on or After January 1, 2000. Buyer
-------------------------------------------------
shall prepare and file all Tax Returns of the RTNT Utilities for Tax periods
which begin on or after January 1, 2000 and shall be responsible for the payment
of all Taxes related to such periods.
(c) Cooperation on Tax Matters.
--------------------------
(i) Buyer, the RTNT Utilities, and Seller 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 which 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. The RTNT Utilities and Seller agree (A) to retain
all books and records with respect to Tax matters pertinent to
the RTNT Utilities relating to any taxable period beginning
before January 1, 2000 until the expiration of the statute of
limitations (and, to the extent notified by Buyer or Seller,
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, the
24
RTNT Utilities, or Seller, as the case may be, shall allow the
other Party to take possession of such books and records.
(ii) Buyer and Seller further agree, upon
request, to use their best 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 transactions contemplated hereby).
(iii) Buyer and Seller further agree, upon
request, to provide the other Party with all information that
either Party may be required to report pursuant to Section
6043 of the Code and all Treasury Department Regulations
promulgated thereunder.
(d) Certain Taxes. All transfer, documentary, sales, use,
-------------
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by Seller
when due, and Seller will, at its own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and, if required by
applicable law, Buyer will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
10. SWC Common Stock.
----------------
(a) Legends. All certificates for shares of SWC Common Stock
-------
which are issued pursuant to this Agreement shall bear the following legend:
The shares represented by this certificate (the "Shares") have
not been registered under the Securities Act of 1933, as
amended, and no sale, transfer or other disposition may be
made of the Shares unless they have been so registered or
Southwest Water Company has been furnished with a legal
opinion from a nationally recognized law firm satisfactory to
it that such registration is not required.
(b) Seller's Representations and Warranties. Seller hereby
---------------------------------------
acknowledges and hereby makes each of the following representations and
warranties with respect to the SWC Common Stock:
(i) Seller acknowledges that the issuance of
the SWC Common Stock has not been nor will be registered under
the Securities Act, or any state securities laws, and that the
SWC Common Stock is being issued pursuant to exemptions from
registration under the Securities Act for issuance of
securities not involving a public offering;
(ii) Seller is acquiring the SWC Common Stock
solely for its own account for investment and not with a view
to resale or distribution and has no present intention of
making a Disposition of the SWC Common Stock to any other
person or entity;
25
(iii) Seller was not formed for the specific
purpose of acquiring or holding the SWC Common Stock;
(iv) Seller is a sophisticated investor and
has such knowledge and experience in financial, tax, business
matters, securities and investments including, without
limitation, experience in investments by actual participation,
so as to evaluate the merits and risks of investing in and
holding the SWC Common Stock and to make an informed
investment decision with respect thereto, and has made such
investigation into SWC as is necessary to make an informed
investment decision;
(v) Seller qualifies as an "accredited
investor," as that term is defined under Rule 501 of
Regulation D promulgated under the Securities Act;
(vi) Seller has not received any advertisement
or general solicitation with respect to the issuance of the
SWC Common Stock;
(vii) Neither the Securities and Exchange
Commission nor any state securities commission has approved
the SWC Common Stock or passed upon or endorsed the merits of
the SWC Common Stock;
(viii) Seller must bear the economic risk of the
investment indefinitely because the SWC Common Stock has not
been registered under applicable securities laws and therefore
the SWC Common Stock may not be sold, hypothecated or
otherwise disposed of unless subsequently registered under the
Securities Act and applicable state securities laws or an
exemption from registration is available;
(ix) Seller will not make a Disposition of any
shares of the SWC Common Stock without registration under
applicable securities laws or a valid exemption therefrom;
(x) The legend set forth in Section 10(a) of
this Agreement shall be placed on the shares of SWC Common
Stock and notations thereof will be made in SWC's books and
stock transfer records; and
(xi) The information contained herein is
accurate and may be relied upon by SWC in determining the
availability of an exemption from registration under federal
and state securities laws.
11. Termination.
-----------
(a) Termination of Agreement. The Parties may terminate this
------------------------
Agreement as provided below:
(i) the Buyer and the Seller may terminate
this Agreement by mutual written consent at any time;
26
(ii) the Buyer may terminate this Agreement by
giving written notice to the Seller at any time (A) in the
event any of the Seller or RTNT Utilities has breached any
material representation, warranty, or covenant contained in
this Agreement in any material respect and the breach has
continued without cure for a period of five (5) days after the
notice of breach, (B) if the First Closing shall not have
occurred on or before October 1, 2000, by reason of the
failure of any condition precedent under Section 7(a) hereof
(unless the failure results primarily from the Buyer or SWC
itself breaching any representation, warranty, or covenant
contained in this Agreement) or (C) as provided in Section
2(e)(ii); and
(iii) the Seller may terminate this Agreement by
giving written notice to the Buyer and SWC at any time (A) in
the event the Buyer or SWC has breached any material
representation, warranty, or covenant contained in this
Agreement in any material respect, the Seller has notified the
Buyer and SWC of the breach, and the breach has continued
without cure for a period of five (5) days after the notice of
breach or (B) if the First Closing shall not have occurred on
or before October 1, 2000, by reason of the failure of any
condition precedent under Section 7(b) hereof (unless the
failure results primarily from the Seller or any of the RTNT
Utilities itself breaching any representation, warranty, or
covenant contained in this Agreement) or (C) as provided in
Section 2(e)(iii).
(b) Effect of Termination. If any Party terminates this
---------------------
Agreement pursuant to Section 11(a) above, all rights and obligations of the
Parties hereunder shall terminate without any Liability of any Party to any
other Party (except for any Liability of any Party then in breach).
12. Miscellaneous.
-------------
(a) Press Releases and Public Announcements. No Party shall
---------------------------------------
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the Buyer and the
Seller; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other
Parties prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not
----------------------------
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents
----------------
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding
-------------------------
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns.
27
No Party may assign either this Agreement or any of his or its rights,
interests, or obligations hereunder without the prior written approval of the
Buyer and the Seller; provided, however, that SWC or the Buyer may (i) assign
any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement
--------
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller:
----------------
RTNT, Inc.
0000 Xxxx Xxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx
Telecopier: ______________
If to the Buyer, SWC, HB Merger Sub or IU Merger Sub:
-----------------------------------------------------
Southwest Water Company
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Vice President, Finance
Telecopier: (000) 000-0000
Copy to: Xxxxxx & Xxxxxxx
-------
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
If to HBUC, IUC, WUC:
---------------------
Pre-Closing - c/o Seller
Post-Closing - c/o Buyer
28
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 (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), 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.
(h) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Texas.
(i) Amendments and Waivers. No amendment of any provision of
----------------------
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that
------------
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear its own costs and
--------
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(l) Construction. Each definition in this Agreement includes
------------
the singular and the plural, and references to the neuter gender include the
masculine and feminine whenever appropriate. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean including without limitation. The
Parties intend that each representation, warranty, and covenant contained herein
shall have independent significance. If any Party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant. Following
the Closing, any representation or warranty by an RTNT Utility shall be deemed
to be a representation or warranty of Seller for the purposes of any
indemnification provided hereunder.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
---------------------------------------
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and
--------------------
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached.
29
Accordingly, each of the Parties agrees that the other Parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the Parties and the matter, subject
to the provisions set forth in Section 12(o) below, in addition to any other
remedy to which they may be entitled, at law or in equity.
(o) Submission to Jurisdiction. Each of the Parties submits to
--------------------------
the jurisdiction of any state or federal court sitting in Austin, Texas, in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
Party with respect thereto. Any Party may make service on any other Party by
sending or delivering a copy of the process to the Party to be served at the
address and in the manner provided for the giving of notices in Section 12(g)
above. Nothing in this Section 12(o), however, shall affect the right of any
Party to bring any action or proceeding arising out of or relating to this
Agreement in any other court or to serve legal process in any other manner
permitted by law or at equity. Each Party agrees that a final judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law or at equity.
*****
Signatures follow on next page.
30
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the date first above written.
SOUTHWEST WATER COMPANY,
a Delaware corporation
/s/ XXXXX X. XXXXXXXX
---------------------------------------
By: Xxxxx X. Xxxxxxxx
---------------------------------------
Title: CFO
---------------------------------------
SW UTILITY COMPANY,
a Texas corporation
/s/XXXXX X. XXXXXXXX
---------------------------------------
By: Xxxxx X. Xxxxxxxx
---------------------------------------
Title: President
---------------------------------------
HB MERGER SUB, INC.,
a Texas corporation
/s/XXXXX X. XXXXXXXX
---------------------------------------
By: Xxxxx X. Xxxxxxxx
---------------------------------------
Title: Director
---------------------------------------
IU MERGER SUB, INC.,
a Texas corporation
/s/XXXXX X. XXXXXXXX
---------------------------------------
By: Xxxxx X. Xxxxxxxx
---------------------------------------
Title: Director
---------------------------------------
31
RTNT, INC.,
a Texas corporation
/s/XXXX X. XXXXXXX
---------------------------------------
Xxxx X. Xxxxxxx
Title: President
---------------------------------------
XXXXXXX BEND UTILITY COMPANY,
a Texas corporation
/s/XXXX X. XXXXXXX
---------------------------------------
Xxxx X. Xxxxxxx
Title: President
---------------------------------------
INVERNESS UTILITY COMPANY, INC.,
a Texas corporation
/s/XXXX X. XXXXXXX
---------------------------------------
Xxxx X. Xxxxxxx
Title: President
---------------------------------------
WINDERMERE UTILITY CO., INC.,
a Texas corporation
/s/XXXX X. XXXXXXX
---------------------------------------
Xxxx X. Xxxxxxx
Title: President
---------------------------------------
32
EXHIBIT A
WUC SHAREHOLDER AGREEMENT
-------------------------
EXHIBIT B
OFFICERS AND DIRECTORS OF HBUC
------------------------------
(immediately after the Effective Time for the HBUC Merger)
Name Title
---- -----
Xxxxxx Xxxxxxxx Director
Xxxxxxx Xxxxx Director
Xxxxx Xxxxxxxx Director
Xxxx Xxxxxxx Director
Xxxxxxx Xxxxxx President
Xxx Xxxxxxx Treasurer, Secretary
OFFICERS AND DIRECTORS OF IUC
-----------------------------
(immediately after the Effective Time for the IUC Merger)
Name Title
---- -----
Xxxxxx Xxxxxxxx Director
Xxxxxxx Xxxxx Director
Xxxxx Xxxxxxxx Director
Xxxx Xxxxxxx Director
Xxxxxxx Xxxxxx President
Xxx Xxxxxxx Treasurer, Secretary
EXHIBIT C
REAL PROPERTY PURCHASE AGREEMENT
--------------------------------
