Exhibit 99.1
TERMINATION OF AGREEMENT AND PLAN OF MERGER
This TERMINATION OF AGREEMENT AND PLAN OF MERGER (the "Termination
Agreement") is entered into as of February 4, 2003, by and among
PHILADELPHIA SUBURBAN CORPORATION, a Pennsylvania corporation (the
"Parent"), RALEIGH ACQUISITION CORPORATION, a New Hampshire corporation and
a wholly owned subsidiary of the Parent (the "Acquisition Sub"), and
PENNICHUCK CORPORATION, a New Hampshire corporation (the "Company"), each a
"Party" and collectively the "Parties".
WHEREAS, on April 29, 2002, the Parties entered into an Agreement and
Plan of Merger (the "Merger Agreement"), pursuant to which the Acquisition
Sub would be merged with and into the Company (the "Merger"); and
WHEREAS, on November 26, 2002, the Board of Aldermen of the City of
Nashua, New Hampshire ("Nashua") adopted a resolution calling for a
referendum on January 14, 2003 (the "Referendum") to authorize Nashua to
pursue the acquisition, by an eminent domain proceeding or otherwise, of
all or a portion of the Company's water works system serving the residents
of Nashua and others (the "Nashua Eminent Domain Proposal"); and
WHEREAS, on January 14, 2003, the voters of Nashua passed the
Referendum by a vote of 6,525 to 1,867; and
WHEREAS, the Parent and the Acquisition Sub believe the actions taken
by Nashua with respect to the Nashua Eminent Domain Proposal could
constitute a Material Adverse Effect, as that term is defined in the Merger
Agreement; and
WHEREAS, each Party's obligation to effect the Merger is conditioned
on, among other things, the New Hampshire Public Utilities Commission
having issued an order approving the Merger, and such order having become a
Final Order, as that term is defined in the Merger Agreement; and
WHEREAS, the Parties believe that the New Hampshire Public Utilities
Commission ultimately would approve the Merger but that, as of the date of
this Termination Agreement, it is highly unlikely that any such approval
could become a Final Order on or before March 31, 2003; and
WHEREAS, Section 7.1(c) of the Merger Agreement provides that either
the Company or the Parent may unilaterally terminate the Merger Agreement
if the Merger is not completed on or before March 31, 2003 (provided that
the Party terminating the Merger Agreement has not breached the Merger
Agreement or failed to fulfill its obligations under the Merger Agreement
and such breach or failure caused or resulted in the Merger not being
completed); and
WHEREAS, as a result of the Referendum and Nashua's ongoing efforts
in pursuit of the Nashua Eminent Domain Proposal, the Parent has informed
the Company that it may elect to terminate the Merger Agreement pursuant to
Section 7.1(c) or otherwise; and
WHEREAS, but for the likelihood of Nashua, one or more other
municipalities or a regional water authority pursuing an eminent domain
acquisition of some or all of the Company's water works system, the Parties
would otherwise seek to consummate the Merger; and
WHEREAS, Section 7.1(a) of the Merger Agreement permits the Parties
to terminate the Merger Agreement by mutual written consent duly authorized
by the boards of directors of each of the Parties; and
WHEREAS, in light of the foregoing, the Parties desire to terminate
the Merger Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the Parties, intending to be legally bound,
agree as follows:
1. Definitions. Unless otherwise defined in this Termination
Agreement, all capitalized terms used in this Termination Agreement shall
have the meanings ascribed to them in the Merger Agreement.
2. Termination. The Parties hereto agree to terminate the Merger
Agreement (the "Termination") effective as of February 4, 2003 (the
"Effective Date").
3. Corporate Approvals. Each of the Parties represents that their
respective Board of Directors has duly authorized the Termination and
execution of this Termination Agreement.
4. Fees and Expenses. (a) All fees and expenses incurred in
connection with the Merger, the Merger Agreement, the Termination
Agreement, and the transactions contemplated thereby shall be paid by the
Party incurring such expenses. In particular, the Company expressly agrees
that it shall be solely responsible for all fees and expenses, if any, owed
to XX Xxxx Xxxxxx related in any way to the Merger, the Merger Agreement,
and/or this Termination Agreement.
(b) The Parent hereby waives any claim for the Company Fee
provided for under the Merger Agreement.
(c) Notwithstanding the foregoing, the Company shall reimburse
the Parent for the actual fees and expenses the Parent incurred in
connection with the Merger Agreement and the transactions contemplated
thereby, up to a maximum of $300,000 (the "Reimbursement"), if the Company
or any of its Subsidiaries enters into a definitive agreement, within
twelve (12) months from the Effective Date, with a third party with respect
to an eminent domain acquisition or any other Acquisition Proposal,
including, without limitation, the Nashua Eminent Domain Proposal, an
Acquisition Proposal by one or more other municipalities, or an Acquisition
Proposal by a regional water authority or similar governmental entity
(each, an "Acquisition"), so long as the value of the consideration per
share of Company Common Stock (on a fully diluted basis) received by the
Company's shareholders in connection with that Acquisition and one or more
related transactions, including a subsequent liquidation of the Company, is
equal to or greater than $33.00, after giving effect to (i) all Taxes
required to be paid by the Company, any of its Subsidiaries and the
Company's shareholders as a consequence of such Acquisition or any related
transaction and (ii) the payment of the Reimbursement. The Reimbursement
shall become payable only upon, and shall be paid to the Parent promptly
following, the completion of the Acquisition and all related transactions
and the presentation of documentation reasonably acceptable to the Company
confirming the fees and expenses actually incurred by the Parent in
connection with the Merger Agreement. For purposes of this Section 4(c),
the Parties agree that, if in connection with an Acquisition, the Company's
shareholders could defer recognition of any Tax by investing
in "suitable replacement stock," such Tax would not be deemed to be a
required Tax pursuant to Section 4(c)(i).
5. Release by the Company. The Company agrees to release and hold
harmless the Parent and the Acquisition Sub and their past, present, and
future shareholders, directors, officers, trustees, attorneys, agents,
servants, representatives, employees, subsidiaries, affiliates, successors,
and assigns (collectively referred to in this Section 5 as the "Parent
Parties" or individually as a "Parent Party") of and from any and all (i)
losses, damages, liabilities, obligations, claims, penalties, costs,
attorneys' fees, and demands that the Company has, may have, or ever had
against the Parent Parties, and (ii) actions and causes of action (whether
in law or equity), known and unknown, foreseen and unforeseen, matured and
unmatured, which the Company has, may have, or ever had against the Parent
Parties arising out of the acts or omissions of any Parent Party,
including, without limitation, any crossclaim that the Company may assert
against any Parent Party in any action brought by a third party, occurring
on or before the Effective Date and in any way related to the Merger, the
Merger Agreement, the Termination Agreement, and/or any transactions
contemplated thereby.
6. Release by the Parent and the Acquisition Sub. The Parent and
the Acquisition Sub agree to release and hold harmless the Company and its
past, present, and future shareholders, directors, officers, trustees,
attorneys, agents, servants, representatives, employees, subsidiaries,
affiliates, successors, and assigns (collectively referred to in this
Section 6 as the "Company Parties" or individually as a "Company Party") of
and from any and all (i) losses, damages, liabilities, obligations, claims,
penalties, costs, attorneys' fees, and demands that the Parent and/or the
Acquisition Sub have, may have, or ever had against the Company Parties,
and (ii) actions and causes of action (whether in law or equity), known and
unknown, foreseen and unforeseen, matured and unmatured, which the Parent
and/or the Acquisition Sub have, may have, or ever had against the Company
Parties arising out of the acts or omissions of any Company Party,
including, without limitation, any crossclaim that the Parent and/or the
Acquisition Sub may assert against any Company Party in any action brought
by a third party, occurring on or before the Effective Date and in any way
related to the Merger, the Merger Agreement, the Termination Agreement,
and/or any transactions contemplated thereby.
7. Cooperation; Confidentiality. (a) The Parties agree that they
will undertake such acts and execute such documents as are necessary to
give effect to the terms and provisions of this Termination Agreement,
including, without limitation, effecting a joint withdrawal of any pending
regulatory applications and registration statements and the issuance of
mutually agreed upon press releases.
(b) The Parent agrees to provide reasonable cooperation to the
Company, in response to the Company's request, with respect to the
Company's efforts concerning an eminent domain proceeding or similar
transaction, whether under NHRSA Ch. 38 or any similar provision of law.
Without limiting the scope of the immediately preceding sentence, the
Parent agrees to (i) preserve for at least thirty-six (36) months (or such
longer period during which any proceeding regarding such eminent domain
acquisition is pending or on appeal) the Parent's files relating to the
Merger Agreement and its valuation of the Company, (ii) make available to
the Company as Evaluation Material under the April 20, 2002 Confidentiality
Agreements, without requiring the issuance of a subpoena, any document or
analysis concerning the Parent's valuation of the Company in connection
with the Merger Agreement, (iii) make members of the Parent's management
available for interviews by the Company and its advisors and otherwise
providing the Company with advice and insight into its experiences with
respect to the municipalization process and its valuation of the Company,
and (iv) cause appropriate members of its management to provide written
and/or oral testimony, whether at hearings or in depositions, and responses
to discovery requests, and to consult with the Company in preparation for
such testimony, without requiring the issuance of a subpoena. The Parent's
obligations under this Section 7(b) shall be conditioned upon the provision
by the Company of reasonable advance notice as to the timing of any
request, giving due regard for the responsibilities that the management of
the Parent have to the Parent and its subsidiaries. The Company shall
reimburse the Parent for all of its reasonable out-of-pocket expenses
incurred in connection with its compliance under this Section 7(b). To the
extent that pursuant to Section 7(b)(i), (ii), and (iii), the Company seeks
the participation of an employee of the Parent in any meeting, telephone
call or document production project that exceeds one (1) hour in length
during any one day, or with respect to such employee, an aggregate of ten
(10) hours following the Effective Date, the Company shall reimburse the
Parent for such employee's time based upon an hourly rate equal to his or
her base salary per week divided by forty (40). To the extent that
pursuant to Section 7(b)(iv) the Company seeks the participation of an
employee of the Parent, the Company shall reimburse the Parent for such
employee's time at a rate equal to the reasonable commercial rates for such
services commensurate with the experience and expertise of the employee
providing such services, and the Parent agrees that such services will be
provided in a commercially reasonable manner for services of that kind.
Any reimbursement pursuant to this Section 7(b) shall be made within a
reasonable time following presentation of documentation reasonably
acceptable to the Company of applicable expenses and/or time incurred. A
breach of this Section 7(b) shall not constitute a breach of any other
provision of this Termination Agreement, but the non-breaching party shall
be entitled to remedies as it shall have at law or in equity for any such
breach of this Section 7(b).
(c) Notwithstanding anything to the contrary contained in this
Termination Agreement or in the Confidentiality Agreements, the
Confidentiality Agreements shall remain in full force and effect (as
amended by this Section 7(c)). The Parent, the Acquisition Sub and the
Company hereby agree that each shall keep all Evaluation Material (as
defined in the respective Confidentiality Agreements) confidential in
accordance with the terms of the Confidentiality Agreements for a period of
three (3) years from the Effective Date.
8. Governing Law. This Termination Agreement shall be governed
by, and construed in accordance with, the internal laws of the State of New
Hampshire applicable to contracts executed and fully performed within the
State of New Hampshire, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of this
Termination Agreement to the substantive law of
another jurisdiction. Any action brought in connection with this
Termination Agreement shall be brought in the federal courts located in the
State of New Hampshire, and each party hereto hereby irrevocably consents
to the jurisdiction of such court and waives any objection to such court as
the forum for such action.
9. Severability. In the event any term, covenant or condition of
this Termination Agreement shall be declared invalid or unenforceable, the
remainder of this Termination Agreement other than the term, covenant or
condition which is held invalid or unenforceable, unless the invalidity or
unenforceability defeats the main purpose of this Termination Agreement,
shall be valid or enforceable to the full extent permitted by law.
10. Amendment. This Termination Agreement may not be modified or
amended except by an amendment in writing signed by the Parties.
11. Assignment. This Termination Agreement shall be binding upon
and inure to the benefit of the Parties and their successors and assigns.
This Termination Agreement and the rights and obligations of the Parties
shall not be assigned by any Party hereto without the prior written consent
of the other Parties.
12. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to
the Parties at the following addresses or sent by electronic transmission,
with confirmation received, to the telecopy numbers specified below (or at
such other address or telecopy number for a Party as shall be specified by
like notice):
(a) If to the Parent or the Acquisition Sub:
Philadelphia Suburban Corporation
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxxx XxXxxxxxxxxx
Chairman, President and Chief Executive Officer
With a copy to:
Xxxx Xxxxx LLP
2500 One Liberty Place
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(b) If to the Company:
Pennichuck Corporation
Four Xxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
President and Chief Executive Officer
With a copy to:
Xxxxxx, XxXxxxxxx & Fish, LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
13. Headings. The headings contained in this Termination Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Termination Agreement.
14. Entire Agreement. This Termination Agreement constitutes the
entire agreement and supersedes all prior agreements and undertakings
(other than the Confidentiality Agreements), both written and oral, among
the Parties, or any of them, with respect to the subject matter hereof and,
except as otherwise expressly provided herein.
15. Counterparts and Facsimile Delivery. This Termination
Agreement may be executed in one or more counterparts, and by the different
Parties hereto in separate counterparts, each of which when executed shall
be deemed to be an original but all of which taken together shall
constitute one and the same agreement. The delivery of a signature page of
this Termination Agreement by one Party to each of the other Parties via
facsimile transmission shall constitute the execution and delivery of this
Termination Agreement by the transmitting Party.
IN WITNESS WHEREOF, the Parties hereto have caused this Termination
Agreement to be executed by their properly authorized officers as of the
day and year first above written.
PHILADELPHIA SUBURBAN CORPORATION
By: /s/ Xxxxxxxx XxXxxxxxxxxx
------------------------------
Name: Xxxxxxxx XxXxxxxxxxxx
Title: Chairman, President and Chief
Executive Officer
RALEIGH ACQUISITION CORPORATION
By: /s/ Xxxxxxxx XxXxxxxxxxxx
------------------------------
Name: Xxxxxxxx XxXxxxxxxxxx
Title: Chairman and President
PENNICHUCK CORPORATION
By: /s/ Xxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxx X. Xxxx
Title: President and Chief Executive
Officer
