Exhibit 1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
Among
RWE AKTIENGESELLSCHAFT,
THAMES WATER AQUA HOLDINGS GMBH,
APOLLO ACQUISITION COMPANY
and
AMERICAN WATER WORKS COMPANY, INC.
Dated as of September 16, 2001
TABLE OF CONTENTS
Page
----
ARTICLE I The Merger...................................................... 1
SECTION 1.01. The Merger.............................................. 1
SECTION 1.02. Closing................................................. 1
SECTION 1.03. Effective Time.......................................... 2
SECTION 1.04. Effects of the Merger................................... 2
SECTION 1.05. Certificate of Incorporation and By-laws................ 2
SECTION 1.06. Directors............................................... 2
SECTION 1.07. Officers................................................ 3
ARTICLE II Conversion of Securities....................................... 3
SECTION 2.01. Conversion of Capital Stock............................. 3
SECTION 2.02. Exchange of Certificates................................ 4
SECTION 2.03. Redemption of Preferred Stock and Preference Stock...... 6
ARTICLE III Representations and Warranties................................ 6
SECTION 3.01. Representations and Warranties of the Company........... 6
SECTION 3.02. Representations and Warranties of Guarantor,
Parent and Sub.......................................... 21
ARTICLE IV Covenants Relating to Conduct of Business...................... 24
SECTION 4.01. Conduct of Business..................................... 24
SECTION 4.02. No Solicitation......................................... 34
SECTION 4.03. Certain Conduct of the Parties.......................... 37
ARTICLE V Additional Agreements........................................... 38
SECTION 5.01. Preparation of the Proxy Statement; Stockholders
Meeting................................................. 38
SECTION 5.02. Access to Information; Confidentiality; Transition
Planning................................................ 39
SECTION 5.03. Reasonable Best Efforts; Notification................... 39
i
SECTION 5.04. Company Stock Options................................... 41
SECTION 5.05. Indemnification, Exculpation and Insurance.............. 41
SECTION 5.06. Fees and Expenses....................................... 43
SECTION 5.07. [Intentionally omitted]................................. 44
SECTION 5.08. Collective Bargaining Agreements........................ 44
SECTION 5.09. Benefits Matters........................................ 44
SECTION 5.10. Public Announcements.................................... 47
SECTION 5.11. Rights Agreement........................................ 47
SECTION 5.12. Stockholder Litigation.................................. 47
SECTION 5.13. Director Resignations................................... 47
ARTICLE VI Conditions Precedent........................................... 47
SECTION 6.01. Conditions to Each Party's Obligation to Effect
the Merger.............................................. 47
SECTION 6.02. Conditions to Obligations of Guarantor, Parent
and Sub................................................. 48
SECTION 6.03. Conditions to Obligation of the Company................. 49
SECTION 6.04. Frustration of Closing Conditions....................... 50
ARTICLE VII Termination, Amendment and Waiver............................. 50
SECTION 7.01. Termination............................................. 50
SECTION 7.02. Effect of Termination................................... 51
SECTION 7.03. Certain Breaches........................................ 52
SECTION 7.04. Amendment............................................... 53
SECTION 7.05. Extension; Waiver....................................... 53
ARTICLE VIII General Provisions........................................... 53
SECTION 8.01. Nonsurvival of Representations and Warranties........... 53
SECTION 8.02. Notices................................................. 53
SECTION 8.03. Definitions............................................. 54
ii
SECTION 8.04. Interpretation.......................................... 55
SECTION 8.05. Guarantee............................................... 56
SECTION 8.06. Counterparts............................................ 56
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries.......... 56
SECTION 8.08. Governing Law........................................... 56
SECTION 8.09. Assignment.............................................. 57
SECTION 8.10. Enforcement............................................. 57
SECTION 8.11. Severability............................................ 57
SECTION 8.12. Waiver of Jury Trial.................................... 58
EXHIBIT A Certificate of Incorporation
iii
AGREEMENT AND PLAN OF MERGER dated as of September 16, 2001, by and
among RWE AKTIENGESELLSCHAFT, a company organized under the laws of the
Federal Republic of Germany ("Guarantor"), THAMES WATER AQUA HOLDINGS GMBH, a
company organized under the laws of the Federal Republic of Germany and a
wholly owned subsidiary of Guarantor ("Parent"), APOLLO ACQUISITION COMPANY, a
Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), and
AMERICAN WATER WORKS COMPANY, INC., a Delaware corporation (the "Company").
WHEREAS the Board of Directors of each of the Company and Sub has
approved and declared advisable, the Supervisory Board of Guarantor has
approved and deemed advisable, and the Managing Directors of Parent have
approved and declared advisable, this Agreement and the merger of Sub with and
into the Company (the "Merger"), upon the terms and subject to the conditions
set forth in this Agreement, whereby each issued and outstanding share of
Common Stock, par value $1.25 per share, of the Company (the "Company Common
Stock") not owned by Parent, Sub or the Company, other than the Appraisal
Shares (as defined in Section 2.01(d)), will be converted into the right to
receive $46.00 in cash;
WHEREAS simultaneously with the execution and delivery of this
Agreement, Parent and certain stockholders of the Company (the "Specified
Company Stockholders") are entering into a voting agreement (the "Company
Voting Agreement") pursuant to which the Specified Company Stockholders are
agreeing to take certain actions in furtherance of the Merger; and
WHEREAS Guarantor, Parent, Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
The Merger
----------
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.03). At the Effective
Time, the separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Sub in
accordance with the DGCL.
SECTION 1.02. Closing. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the Merger (the "Closing") shall
take place at 11:00 a.m., New
2
York time, on the second business day after the satisfaction or waiver of the
conditions set forth in Article VI (other than those that by their terms
cannot be satisfied until the time of the Closing), at the offices of Cravath,
Swaine & Xxxxx, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other
time, date or place agreed to in writing by Parent and the Company; provided,
however, that if all the conditions set forth in Article VI shall not have
been satisfied or waived on such second business day, then the Closing shall
take place on the first business day on which all such conditions shall have
been satisfied or waived. The date on which the Closing occurs is referred to
in this Agreement as the "Closing Date."
SECTION 1.03. Effective Time. Upon the terms and subject to the
conditions set forth in this Agreement, as soon as practicable on or after the
Closing Date, a certificate of merger or other appropriate documents (in any
such case, the "Certificate of Merger") shall be duly prepared and executed by
the parties in accordance with the relevant provisions of the DGCL and filed
with the Secretary of State of the State of Delaware. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware or at such subsequent time or date as Parent
and the Company shall agree and specify in the Certificate of Merger. The time
at which the Merger becomes effective is referred to in this Agreement as the
"Effective Time."
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
Restated Certificate of Incorporation of the Company shall be amended at the
Effective Time to read in the form of Exhibit A and, as so amended, such
Restated Certificate of Incorporation shall be the Restated Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. (a) The directors of Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
(b) Guarantor shall take all necessary action to cause J. Xxxxx Xxxx
to be elected as a director, as of the Effective Time, of Thames Water
Plc ("Thames").
(c) Guarantor shall take all necessary action to cause Xxxxxxx Xxxx
to be elected as a member, as of the Effective Time, of the Thames Water
International Advisory Council.
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SECTION 1.07. Officers. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
Conversion of Securities
------------------------
SECTION 2.01. Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company or Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
common stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $1.00 per share, of the
Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent-Owned Stock. Each share
of Company Common Stock that is owned by the Company, as treasury stock,
or by Parent or Sub immediately prior to the Effective Time shall
automatically be canceled and shall cease to exist and no consideration
shall be delivered or deliverable in exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be canceled in accordance with Section 2.01(b) and
the Appraisal Shares) shall be converted into the right to receive $46.00
in cash without interest (the "Merger Consideration"). At the Effective
Time all such shares shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any
such shares (a "Certificate") shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration and any
dividends declared and unpaid thereon payable to holders of record
thereof as of a record date preceding the Effective Time. Following the
Effective Time, upon surrender of Certificates in accordance with Section
2.02, the Surviving Corporation shall pay to the holders of Certificates
as of the Effective Time any unpaid dividends declared in respect of the
Company Common Stock with a record date prior to the Effective Time and
which remain unpaid at the Effective Time, including the "stub period"
dividend referred to in Section 4.01(a)(i)(x)(C).
(d) Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, shares (the "Appraisal Shares") of Company Common Stock
issued and outstanding immediately prior to the Effective Time that are
held by any holder who is entitled to demand and properly demands
appraisal of such shares pursuant to, and who complies in all respects
with, the provisions of Section 262 of the DGCL ("Section 262") shall not
be converted into the right to receive the Merger Consideration as
provided in
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Section 2.01(c), but instead such holder shall be entitled to
payment of the fair value of such shares in accordance with the provisions of
Section 262. At the Effective Time, all Appraisal Shares shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each holder of Appraisal Shares shall cease to have any rights with respect
thereto, except the right to receive the fair value of such shares in
accordance with the provisions of Section 262. Notwithstanding the foregoing,
if any such holder shall fail to perfect or otherwise shall waive, withdraw or
lose the right to appraisal under Section 262 or a court of competent
jurisdiction shall determine that such holder is not entitled to the relief
provided by Section 262, then the right of such holder to be paid the fair
value of such holder's Appraisal Shares under Section 262 shall cease and each
such Appraisal Share shall be deemed to have been converted at the Effective
Time into, and shall have become, the right to receive the Merger
Consideration as provided in Section 2.01(c). The Company shall serve prompt
notice to Parent of any demands for appraisal of any shares of Company Common
Stock, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any
such demands, or agree to do any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company to act as agent for the payment of the Merger
Consideration upon surrender of Certificates (the "Paying Agent"). Parent
shall take all steps necessary to enable, and shall cause, the Surviving
Corporation to provide to the Paying Agent immediately following the Effective
Time all the cash necessary to pay for the shares of Company Common Stock
converted into the right to receive the Merger Consideration pursuant to
Section 2.01(c), plus any amounts payable in respect of unpaid dividends
declared in respect of the Company Common Stock with a record date prior to
the Effective Time and which remain unpaid at the Effective Time, including
the "stub period" dividend referred to in Section 4.01(a)(i)(x)(C) (such cash
being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates held by such person shall pass, only upon proper delivery of
the Certificates to the Paying Agent and shall be in customary form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate
for cancelation to the Paying Agent or to such other agent or agents as
may be appointed by Parent, together with such letter of transmittal,
duly completed and validly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount
of cash payable in respect of the shares formerly represented by such
Certificate pursuant to Section 2.01(c), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock that is not registered in the stock
transfer books of the
5
Company, the proper amount of cash may be paid in exchange therefor to a
person other than the person in whose name the Certificate so surrendered
is registered if such Certificate shall be properly endorsed or otherwise
be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of such Certificate or
establish to the satisfaction of Parent that such tax has been paid or is
not applicable. No interest shall be paid or shall accrue on the cash
payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All cash
paid upon the surrender of a Certificate in accordance with the terms of
this Article II shall be deemed to have been paid in full satisfaction of
all rights pertaining to the shares of Company Common Stock formerly
represented by such Certificate. At the close of business on the day on
which the Effective Time occurs the stock transfer books of the Company
shall be closed, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
Company Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented
to the Surviving Corporation or the Paying Agent for transfer or any
other reason, they shall be canceled and exchanged as provided in this
Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of Company Common Stock for one
year after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holder of Company Common Stock who has
not theretofore complied with this Article II shall thereafter look only
to the Surviving Corporation for payment of its claim for Merger
Consideration.
(e) No Liability. None of Parent, the Surviving Corporation or the
Paying Agent shall be liable to any person in respect of any cash
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificates shall not have been
surrendered prior to three years after the Effective Time (or immediately
prior to such earlier date on which any Merger Consideration would
otherwise escheat to or became the property of any Governmental Entity
(as defined in Section 3.01(d)), any such Merger Consideration in respect
thereof shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily
basis; provided, however, that such investments shall be in (i)
obligations of or guaranteed by the United States of America and backed
by the full faith and credit of the United States of America, (ii)
commercial paper obligations rated A-1 or P-1 or better by Xxxxx'x
Investors Service, Inc. or Standard & Poor's Corporation, respectively,
(iii) certificates of deposit maturing not more than 180 days after the
date of purchase issued by a bank organized under the laws of the United
States or any state thereof having a combined capital and
6
surplus of at least $500,000,000 or (iv) a money market fund having
assets of at least $3,000,000,000. Any interest and other income
resulting from such investments shall be paid to Parent.
(g) Lost Certificates. If any Certificate shall have been lost,
stolen, defaced or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen, defaced
or destroyed and, if required by the Surviving Corporation, the posting
by such person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent shall pay
in respect of such lost, stolen, defaced or destroyed Certificate the
Merger Consideration.
(h) Withholding Rights. Parent, the Surviving Corporation or the
Paying Agent shall be entitled to deduct and withhold any applicable
taxes from the consideration otherwise payable pursuant to this Agreement
to any holder of shares of Company Common Stock.
SECTION 2.03. Redemption of Preferred Stock and Preference Stock. On
or prior to the date on which the Effective Time occurs, but in any event
prior to the Effective Time, the Company shall redeem (the "Stock Redemption")
(i) each issued and outstanding share of its Cumulative Preferred Stock, 5%
Series, par value $25.00 per share (the "Company 5% Cumulative Preferred
Stock"), for a redemption price of $25.25 per share plus an amount equal to
full cumulative dividends thereon (as defined in Section 6 ("Section 6") of
Division A of Article Fourth of the Restated Certificate of Incorporation of
the Company, as amended to the date of this Agreement) to the redemption date
(as defined in Section 6) and (ii) each issued and outstanding share of its 5%
Cumulative Preference Stock, par value $25.00 per share (the "Company 5%
Cumulative Preference Stock" and, together with the Company 5% Cumulative
Preferred Stock and the Company Common Stock, the "Company Capital Stock"),
for a redemption price of $25.00 per share plus an amount equal to full
cumulative dividends thereon (as defined in Section 5 ("Section 5") of
Division B of Article Fourth of the Restated Certificate of Incorporation of
the Company, as amended to the date of this Agreement) to the redemption date
(as defined in Section 5) (the redemption price for the Company 5% Cumulative
Preferred Stock and the Company 5% Cumulative Preference Stock being referred
to as the "Redemption Price").
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Representations and Warranties of the Company. The
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Power. Each of the Company and each
of its subsidiaries (as defined in Section 8.03) (i) is duly organized,
validly existing and in good
7
standing under the laws of the jurisdiction of its organization, (ii) has
all requisite corporate power and authority to carry on its business as
now being conducted and (iii) except as set forth in Section 3.01(a) of
the disclosure schedule delivered by the Company to Parent prior to the
execution of this Agreement (the "Company Disclosure Schedule"), is duly
qualified or licensed to do business and is in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than where the failure to be
so qualified or licensed or in good standing individually or in the
aggregate would not reasonably be expected to have a material adverse
effect (as defined in Section 8.03). The Company has made available to
Parent and its representatives true and complete copies of (A) the
Restated Certificate of Incorporation and By-laws of the Company by
reference to the Filed SEC Documents (as defined in Section 3.01(e)), in
each case as amended to the date of this Agreement and (B) the minutes of
all meetings of the stockholders, the Board of Directors and each
committee of the Board of Directors of the Company since June 1, 1998.
(b) Subsidiaries. Section 3.01(b)(i) of the Company Disclosure
Schedule contains a true and complete list of each Significant Subsidiary
(as defined in Section 8.03) of the Company as of the date of this
Agreement, including its jurisdiction of organization, the Company's
interest therein and a brief description of the principal line or lines
of business conducted by each such Significant Subsidiary. Except as set
forth in Section 3.01(b)(i) of the Company Disclosure Schedule, all the
issued and outstanding shares of capital stock of, or other equity or
voting interests in, each subsidiary of the Company as of the date of
this Agreement are owned by the Company, by another wholly owned
subsidiary of the Company or by the Company and another wholly owned
subsidiary of the Company, free and clear of all material pledges,
claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "Liens"), and are duly authorized,
validly issued, fully paid and nonassessable. Except for the capital
stock of, or other equity or voting interests in, its subsidiaries and as
set forth in Section 3.01(b)(ii) of the Company Disclosure Schedule, as
of the date of this Agreement, the Company does not own, directly or
indirectly, any capital stock of, or other equity or voting interests in,
any corporation, partnership, joint venture, association, limited
liability company or other entity.
(c) Capital Structure. The authorized capital stock of the Company
consists of (i) 300,000,000 shares of Company Common Stock, (ii)
1,770,000 shares of Cumulative Preferred Stock, par value $25.00 per
share (the "Company Cumulative Preferred Stock"), of which 101,777 shares
have been designated as Company 5% Cumulative Preferred Stock, (iii)
750,000 shares of Cumulative Preference Stock, par value $25.00 per share
(the "Company Cumulative Preference Stock"), of which 365,158 shares have
been designated as Company 5% Cumulative Preference Stock and (iv)
3,000,000 shares of Cumulative Preferential Stock, par value $35.00 per
share (the "Company Cumulative Preferential Stock"). As of the close of
business on September 10, 2001, (1) 99,817,628 shares of Company Common
Stock (excluding shares held by the Company as treasury shares) were
issued and outstanding, (2) 63,693 shares of Company Common Stock were
held by the Company as treasury shares, (3) 2,232,100
8
shares of Company Common Stock were reserved for issuance pursuant to the
Company's 2000 Stock Award and Incentive Plan and the Company's Long-Term
Performance-Based Incentive Plan (such plans, collectively, the "Company
Stock Plans"), of which 905,751 shares were subject to outstanding
Company Stock Options (as defined below), (4) the following number of
shares of Company Common Stock were reserved (or registered with the SEC
(as defined in Section 3.01(d)) for issuance pursuant to each of the
following Company Benefit Plans (as defined below): 876,125 shares under
the Savings Plan For Employees of American Water Works Company, Inc. and
its Designated Subsidiaries, 942,157 shares under the Employees' Stock
Ownership Plan of American Water Works Company, Inc. and its Designated
Subsidiaries, 50,000 shares under the Company's Deferred Compensation
Plan, 10,000 shares under the Company's Director Deferred Compensation
Plan and 1,755,049 shares under the Company's Dividend Reinvestment and
Stock Purchase Plan (collectively, the "Other Company Stock Plans"), (5)
80,865,863 shares of Company Common Stock were reserved for issuance in
connection with the rights (the "Company Rights") issued pursuant to the
Rights Agreement dated as of February 18, 1999, as amended as of June 1,
2000 (as amended from time to time (the "Company Rights Agreement")),
between the Company and BankBoston N.A. (presently known as Fleet
National Bank), as Rights Agent, (6) 101,777 shares of Company 5%
Cumulative Preferred Stock were issued and outstanding, (7) 365,158
shares of Company 5% Cumulative Preference Stock were issued and
outstanding, (8) no shares of Company Cumulative Preferred Stock (other
than the Company 5% Cumulative Preferred Stock) were issued and
outstanding, (9) no shares of Company Cumulative Preference Stock (other
than the Company 5% Cumulative Preference Stock) were issued and
outstanding and (10) no shares of Company Cumulative Preferential Stock
were issued and outstanding. There are no outstanding stock appreciation
rights or other rights that are linked to the price of Company Common
Stock granted under any Company Stock Plan whether or not granted in
tandem with a related Company Stock Option (as defined below). No shares
of Company Capital Stock are owned by any subsidiary of the Company. As
of the close of business on September 10, 2001, there were outstanding
options to purchase Company Common Stock granted under the Company Stock
Plans (collectively, the "Company Stock Options") to purchase 905,751
shares of Company Common Stock with exercise prices on a per share basis
lower than the Merger Consideration, and the weighted average exercise
price of such Company Stock Options was equal to $23.65. Except as set
forth above, as of the close of business on September 10, 2001, no shares
of capital stock of, or other equity or voting interests in, the Company,
or options, warrants or other rights to acquire any such stock or
securities, were issued, reserved for issuance or outstanding. During the
period from September 10, 2001 to the date of this Agreement, (x) there
have been no issuances by the Company of shares of capital stock of, or
other equity or voting interests in, the Company other than issuances of
shares of Company Common Stock pursuant to the exercise of Company Stock
Options outstanding on such date in accordance with their terms as in
effect on the date of this Agreement and (y) there have been no issuances
by the Company of options, warrants or other rights to acquire shares of
capital stock or other equity or voting interests from the Company. All
outstanding shares of capital stock of the Company are, and all shares
that may be issued pursuant to the Company Stock Plans and Other Company
Stock Plans will be, when
9
issued in accordance with the terms thereof, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive
rights. There are no bonds, debentures, notes or other indebtedness of
the Company or any of its subsidiaries, and, except as set forth above,
no securities or other instruments or obligations of the Company or any
of its subsidiaries the value of which is in any way based upon or
derived from any capital or voting stock of the Company, having in any
such case at any time (whether actual or contingent) the right to vote
(or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of the Company or any of its
subsidiaries may vote. Except as set forth above and except as
specifically permitted under Section 4.01(a) (including as set forth in
Section 4.01(a)(ii) of the Company Disclosure Schedule), there are no
Contracts (as defined in Section 3.01(d)) of any kind to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound obligating the Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock of, or other equity or voting
interests in, or securities convertible into, or exchangeable or
exercisable for, shares of capital stock of, or other equity or voting
interests in, the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, grant, extend or enter into
any such security, option, warrant, call, right or Contract. Except for
the Stock Redemption and the redemption terms of any preferred stock of
any of the Company's subsidiaries and as permitted by Section
4.01(a)(i)(y), there are not any outstanding contractual obligations of
the Company or any of its subsidiaries to (I) repurchase, redeem or
otherwise acquire any shares of capital stock of, or other equity or
voting interests in, the Company or any of its subsidiaries as of the
date of this Agreement or (II) vote or dispose of any shares of the
capital stock of, or other equity or voting interests in, any of the
Company's subsidiaries as of the date of this Agreement. The copy of the
Company Rights Agreement on file with the SEC (as defined in Section
3.01(d)) as an exhibit to the Form 8-A Registration Statement of the
Company filed with the SEC on March 1, 1999, as amended by the amendment
thereto on file with the SEC as an exhibit to the Form 8-A Registration
Statement of the Company filed on June 1, 2000, is complete and correct.
(d) Authority; Noncontravention. (i) The Company has the requisite
corporate power and authority to execute and deliver this Agreement and,
subject to the Stockholder Approval (as defined in Section 3.01(n)) and
the Company Required Consents (as defined below), to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to approve
this Agreement or the Company Voting Agreement or to consummate the
transactions contemplated hereby or thereby subject, in the case of the
consummation of the Merger, to obtaining the Stockholder Approval
(assuming consummation of the Stock Redemption). This Agreement has been
duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms. The Board of Directors of the Company, at a
meeting duly called and held at which all directors of the Company were
present, duly and unanimously adopted
10
resolutions (A) approving the Stock Redemption and the Company Voting
Agreement and approving and declaring advisable this Agreement, the
Merger and the other transactions contemplated hereby, (B) directing that
this Agreement be submitted to a vote at a meeting of the Company's
stockholders and (C) recommending that the Company's stockholders adopt
this Agreement. In its determination of whether the Merger is in the best
interests of the Company's stockholders, the Board of Directors of the
Company has complied with the provisions of Article Tenth of the Restated
Certificate of Incorporation of the Company. The execution and delivery
of this Agreement and the Company Voting Agreement and the consummation
of the transactions contemplated hereby and thereby and compliance with
the provisions hereof and thereof do not and will not conflict with, or
result in any violation or breach of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of, or result
in, termination, cancelation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Lien in or
upon any of the properties or assets of the Company or any of its
subsidiaries under, or give rise to any increased, additional,
accelerated or guaranteed rights or entitlements under, any provision of
(x) the Restated Certificate of Incorporation or By-laws of the Company
or the certificate of incorporation or by-laws (or similar organizational
documents) of any of its subsidiaries, (y) subject to obtaining the third
party consents set forth in Section 3.01(d) of the Company Disclosure
Schedule, any loan or credit agreement, bond, debenture, note, mortgage,
indenture, guarantee, lease or other contract, agreement, instrument,
arrangement or understanding, whether oral or written (each, including
all amendments thereto, a "Contract"), to which the Company or any of its
subsidiaries is a party or any of their respective properties or assets
is subject or (z) subject to obtaining the Company Required Consents and
the receipt of the Stockholder Approval and the other matters referred to
in the following sentence, any (A) statute, law, ordinance, rule or
regulation applicable to the Company or any of its subsidiaries or their
respective properties or assets ("Applicable Law"), (B) judgment, order
or decree applicable to the Company or any of its subsidiaries or their
respective properties or assets ("Judgment"), or (C) Permit (as defined
in Section 3.01(h)) other than, in the case of clauses (y) and (z), any
such conflicts, violations, breaches, defaults, rights, losses, Liens or
entitlements that individually or in the aggregate would not reasonably
be expected to have a material adverse effect. No consent, approval,
order or authorization of, registration, declaration or filing with, or
notice to, any domestic or foreign (whether national, federal, state,
provincial, local or otherwise) government or any court, administrative
agency or commission or other governmental or regulatory authority or
agency (including a state public utility commission, state public service
commission or similar state regulatory body (each, a "PUC")) (each a
"Governmental Entity"), is required by or with respect to the Company or
any of its subsidiaries in connection with (I) the execution and delivery
of this Agreement by the Company, (II) the execution and delivery of the
Company Voting Agreement or (III) the consummation of the transactions
contemplated hereby and thereby or compliance with the provisions hereof
and thereof, except for (1) the filing of a premerger notification and
report form by the Company under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the receipt,
termination or expiration, as applicable, of such other approvals or
waiting periods required under any other applicable competition, merger
control, antitrust or similar law
11
or regulation, including, if the Company has completed its acquisition of
Azurix North America Corp. and Azurix Industrials Corp. prior to the
Closing, the competition, merger control, antitrust or similar laws or
regulations of Canada or the Investment Canada Act, if applicable, (2)
the filing with the Securities and Exchange Commission (the "SEC") of a
proxy statement relating to the adoption by the Company's stockholders of
this Agreement (as amended or supplemented from time to time, the "Proxy
Statement") and such reports under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as may be required in connection with
this Agreement, the Company Voting Agreement, the Merger and the other
transactions contemplated hereby and thereby, (3) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of other
states in which the Company or any of its subsidiaries is qualified to do
business, (4) any filings required under the rules and regulations of the
New York Stock Exchange ("NYSE"), (5) such consents, approvals, orders,
authorizations, registrations, declarations, filings and notices required
under Applicable Laws and Judgments of any PUC, (6) such consents,
approvals, orders, authorizations, registrations, declarations, filings
and notices required under Applicable Laws and Judgments of any state
departments of public health or departments of health or similar state
regulatory bodies or of any federal or state regulatory body having
jurisdiction over environmental protection or environmental conservation
or similar matters (collectively, "Health Agencies"), (7) such consents,
approvals, orders, authorizations, registrations, declarations, filings
and notices required to be obtained from or made to any non-U.S.
Governmental Entity due solely to the identity or involvement of
Guarantor, Parent, Sub or any of their respective subsidiaries and (8)
such other consents, approvals, orders, authorizations, registrations,
declarations, filings and notices the failure of which to be obtained or
made individually or in the aggregate would not reasonably be expected to
have a material adverse effect. Consents, approvals, orders,
authorizations, registrations, declarations, filings and notices (x)
described (i) in the foregoing clause (5) that are required to be
obtained or made by the Company or any of its subsidiaries and (ii) in
the foregoing clause (6) the failure of which to obtain or make would
reasonably be expected to have a material adverse effect or (y) of any
Governmental Entity that would not be required to be obtained or made by
the Company or any of its subsidiaries but for an acquisition of a
business or asset by the Company or any of its subsidiaries that is
consummated after the date of this Agreement the failure of which to
obtain or make would reasonably be expected to have a material adverse
effect are hereinafter referred to as the "Company Required Consents."
(ii) The Company and the Board of Directors of the Company have
taken all action necessary to (A) render the Company Rights
inapplicable to the execution, delivery and performance of this
Agreement and the Company Voting Agreement and to the consummation
of the Merger and any acquisition of Company Common Stock
contemplated by Section 4.03(b) and (B) ensure that (x) neither
Parent nor any of its affiliates or associates is or will become an
"Acquiring Person" (as defined in the Company Rights Agreement) by
reason of the execution, delivery and performance of this Agreement
or the Company Voting Agreement or by reason of the consummation of
the Merger or any acquisition of Company Common Stock contemplated
by Section 4.03(b), (y)
12
neither a "Distribution Date" nor a "Triggering Event" (each as
defined in the Company Rights Agreement) shall occur by reason of
the execution, delivery and performance of this Agreement or the
Company Voting Agreement or by reason of the consummation of the
Merger or any acquisition of Company Common Stock contemplated by
Section 4.03(b) and (z) except as set forth in Section 3.01(d)(ii)
of the Company Disclosure Schedule, the Company Rights shall
terminate or be redeemed prior to the Effective Time.
(e) SEC Documents. The Company has filed with the SEC all forms,
reports, schedules, statements and other documents required to be filed
with the SEC by the Company since January 1, 2000 (together with all
information incorporated therein by reference, the "SEC Documents").
Except as set forth in Section 3.01(e) of the Company Disclosure
Schedule, no subsidiary of the Company is required to file any form,
report, schedule, statement or other document with the SEC. As of their
respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act of 1933 (the "Securities
Act") or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents at the time they were filed
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading. Except to the extent that information
contained in any SEC Document filed and publicly available prior to the
date of this Agreement (a "Filed SEC Document") has been revised or
superseded by a later filed Filed SEC Document, none of the SEC Documents
contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements (including the
related notes) included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
in the United States ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal, recurring year-end audit
adjustments).
(f) Absence of Certain Changes or Events. Since December 31, 2000,
the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice and
other than as set forth in the Filed SEC Documents, there has not been
(i) prior to the date of this Agreement, any state of facts, change,
development, effect, condition or occurrence that individually or in the
aggregate constitutes, has had, or would reasonably be expected to have,
a material adverse effect, (ii) prior to the date of this Agreement, any
declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of, any of
13
the Company's or any of its subsidiaries' capital stock or other equity
or voting interests, except for dividends by a wholly owned subsidiary of
the Company to its shareholders and except for the regular quarterly cash
dividend with respect to (w) preferred stock of the Company's
subsidiaries, in accordance with the terms thereof, (x) the Company
Common Stock in the amount of $0.235 per share, in accordance with the
Company's past dividend policy, (y) the Company 5% Cumulative Preferred
Stock in the amount of $0.3125 per share, in accordance with the terms
thereof, and (z) the Company 5% Cumulative Preference Stock in the amount
of $0.3125 per share, in accordance with the terms thereof, (iii) prior
to the date of this Agreement, any purchase, redemption or other
acquisition of any shares of capital stock of, or other equity or voting
interests in, the Company or any options, warrants, calls or rights to
acquire such shares or other interests, (iv) prior to the date of this
Agreement, any split, combination or reclassification of any of the
Company's capital stock or other equity or voting interests or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of,
or other equity or voting interests in, the Company, (v) prior to the
date of this Agreement, any material unfunded liability incurred as a
result of any entry by the Company or any of its subsidiaries into, or
any amendment of, any Company Benefit Plan (as defined in Section
3.01(k)), (vi) prior to the date of this Agreement, any change in
financial or tax accounting methods, principles or practices by the
Company or any of its subsidiaries, except insofar as may have been
required by a change in GAAP or Applicable Law, (vii) except as set forth
in Section 3.01(f)(vii) of the Company Disclosure Schedule, prior to the
date of this Agreement, any material election with respect to taxes by
the Company or any of its subsidiaries or any settlement or compromise of
any material tax liability or refund or (viii) prior to the date of this
Agreement, any revaluation by the Company or any of its subsidiaries of
any of the material assets of the Company or any of its subsidiaries.
(g) Litigation. Except as set forth in the Filed SEC Documents and
except as set forth in Section 3.01(g) of the Company Disclosure
Schedule, there is no suit, claim, action or proceeding pending or, to
the knowledge of the Company, threatened against the Company or any of
its subsidiaries or any of their respective assets that individually or
in the aggregate would reasonably be expected to have a material adverse
effect, nor is there any Judgment of any Governmental Entity or
arbitrator outstanding against, or, to the knowledge of the Company,
investigation, notice of violation, order of forfeiture or complaint by
any Governmental Entity against, the Company or any of its subsidiaries
that individually or in the aggregate would reasonably be expected to
have a material adverse effect.
(h) Compliance with Laws. Except as set forth in Section 3.01(h) of
the Company Disclosure Schedule, and except with respect to Environmental
Laws (as defined in Section 3.01(j)), the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and taxes, which are the
subject of Sections 3.01(j), 3.01(k) and 3.01(l), respectively, or as set
forth in the Filed SEC Documents, the Company and its subsidiaries are in
compliance with all Applicable Laws and Judgments of any Governmental
Entity applicable to their businesses or operations, except for instances
of noncompliance that individually or in the aggregate would not
reasonably be expected to
14
have a material adverse effect. Neither the Company nor any of its
subsidiaries has received, since January 1, 2001, a written notice or
other written communication alleging a possible violation by the Company
or any of its subsidiaries of any Applicable Law or Judgment of any
Governmental Entity applicable to its businesses or operations, except
for written notices or other written communications alleging possible
violations that individually or in the aggregate would not reasonably be
expected to have a material adverse effect. The Company and its
subsidiaries have in effect all material permits, licenses, variances,
exemptions, authorizations, franchises, orders and approvals of all
Governmental Entities (collectively, "Permits"), necessary or advisable
for them to own, lease or operate their properties and assets and to
carry on their businesses as now conducted, except for those which the
failure to obtain individually or in the aggregate would not reasonably
be expected to have a material adverse effect. Neither the Company nor
any of its subsidiaries is in violation of, default (with or without
notice or lapse of time or both) under, or event giving to any other
person any right of termination, amendment or cancelation of, with or
without notice or lapse of time or both, any Permit of the Company or any
of its subsidiaries, except for any such violations, defaults or events
that individually or in the aggregate would not reasonably be expected to
have a material adverse effect.
(i) [Intentionally omitted].
(j) Environmental Matters. Except as disclosed in the SEC Documents
and as set forth in Section 3.01(j) of the Company Disclosure Schedule,
and except for such matters that individually or in the aggregate would
not reasonably be expected to have a material adverse effect: (i) each of
the Company and its subsidiaries possesses all Environmental Permits (as
defined below) necessary to conduct its businesses and operations; (ii)
each of the Company and its subsidiaries is in compliance with all
applicable Environmental Laws and all applicable Environmental Permits,
and none of the Company or its subsidiaries has received any written
communication from any Governmental Entity or other person that alleges
that the Company or any of its subsidiaries has violated or is liable
under any Environmental Law or Environmental Permit; (iii) there are no
Environmental Claims (as defined below) pending or, to the knowledge of
the Company, threatened in writing (A) against the Company or any of its
subsidiaries or (B) against any person whose liability for any such
Environmental Claim the Company or any of its subsidiaries has retained
or assumed, either contractually or by operation of law; and (iv) to the
knowledge of the Company, there have been no Releases (as defined below)
of any Hazardous Materials (as defined below) that would reasonably be
expected to form the basis of any Environmental Claim or any liability
under any Environmental Law or Environmental Permit.
For the purposes of this Agreement: (A) "Environmental Claims" means
any and all administrative, regulatory or judicial actions, orders,
decrees, suits, demands, demand letters, directives, claims, liens,
investigations, proceedings or notices of noncompliance or violation by
any Governmental Entity or other person alleging liability arising out
of, based on or related to (x) the presence, Release or threatened
Release of, or exposure to, any Hazardous Materials at any location,
whether or not owned, operated, leased or
15
managed by the Company or any of its subsidiaries, or (y) any other
circumstances forming the basis of any violation or alleged violation of
any Environmental Law or Environmental Permit; (B) "Environmental Laws"
means all laws, rules, regulations, orders, decrees, common law,
judgments or binding agreements issued, promulgated or entered into by or
with any Governmental Entity relating to pollution or protection of the
environment (including ambient air, surface water, groundwater, soils or
subsurface strata) or to health and safety as affected by the exposure to
Hazardous Materials, including laws and regulations relating to the
presence of, exposure to, Release of or threatened Release of Hazardous
Materials or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, recycling, transport,
handling of, or the arrangement for such activities with respect to,
Hazardous Materials; (C) "Environmental Permits" means all permits,
licenses, certificates, registrations, waivers, exemptions and other
authorizations required under applicable Environmental Laws; (D)
"Hazardous Materials" means all hazardous, toxic, explosive or
radioactive substances, wastes or other pollutants, including (x)
petroleum, petroleum distillates and all other hydrocarbons, asbestos or
asbestos-containing material, and (y) all other substances or wastes of
any nature prohibited, limited or regulated as harmful to or polluting of
or in order to protect the environment; and (E) "Release" means any
release, spill, emission, leaking, dumping, injection, pouring, deposit,
disposal, discharge, dispersal, leaching or migration into or through the
environment (including ambient air, surface water, groundwater, land
surface or subsurface strata) or within any building, structure, facility
or fixture.
(k) ERISA Compliance. (i) Section 3.01(k)(i) of the Company
Disclosure Schedule contains a true and complete list of any benefit,
employment, personal services, collective bargaining, compensation,
change in control, severance, time-off or perquisite agreement, plan,
policy or other similar arrangement, (A) covering one or more current or
former employees or directors of, or current or former independent
contractors with respect to, the Company or any of its subsidiaries
(each, a "Participant"), and maintained by the Company and/or one or more
of its subsidiaries or (B) with respect to which the Company and/or any
of its subsidiaries has or would reasonably be expected to have any
liability (collectively, "Company Benefit Plans"). The Company has
provided or made available to Parent true and complete copies of (1) each
Company Benefit Plan (or, in the case of any unwritten Company Benefit
Plans, descriptions thereof), (2) the most recent annual report on Form
5500 required to be filed with the United States Internal Revenue Service
(the "IRS") with respect to each Company Benefit Plan (if any such report
was required), (3) the most recent summary plan description for each
Company Benefit Plan for which such summary plan description is required
and (4) each trust agreement and group annuity contract relating to any
Company Benefit Plan; provided that any of the foregoing not provided to
Parent as of the date of this Agreement shall be delivered to Parent
promptly but in no event later than 30 days following the date of this
Agreement. Each Company Benefit Plan has been administered in accordance
with its terms, except where the failure so to be administered
individually or in the aggregate would not reasonably be expected to have
a material adverse effect. The Company and its subsidiaries and all the
Company Benefit Plans are in compliance with all applicable provisions of
ERISA and the Code, except for instances of possible noncompliance that
16
individually or in the aggregate would not reasonably be expected to have
a material adverse effect. Except as set forth in Section 3.01(k)(i) of
the Company Disclosure Schedule, all Company Benefit Plans that are
intended to be qualified under Section 401(a) of the Code have received
favorable determination letters from the IRS to the effect that such
Company Benefit Plans are qualified and exempt from Federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor, to the knowledge of the
Company, has revocation been threatened, and nothing has occurred since
the date of such letter that would reasonably be expected to adversely
affect its qualification. There is not pending or, to the knowledge of
the Company, threatened any litigation relating to the Company Benefit
Plans that individually or in the aggregate would reasonably be expected
to have a material adverse effect.
(ii) Neither the Company nor any of its subsidiaries, nor any
Company Benefit Plan which is subject to ERISA, has engaged in a
"prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) or any other breach of fiduciary
responsibility that could subject the Company, any of its
subsidiaries or any officer of the Company or any of its
subsidiaries to the tax or penalty on prohibited transactions
imposed by such Section 4975 or to any liability under Section
502(i) or 502(1) of ERISA, except for any such tax, penalty or
liability that individually or in the aggregate would not reasonably
be expected to have a material adverse effect. All contributions and
premiums required to be made under the terms of any Company Benefit
Plan as of the date hereof have been timely made or have been
reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Filed SEC Documents, except as,
individually or in the aggregate, would reasonably be expected to
have a material adverse effect.
(iii) Except as, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect, the
deduction of any amount payable pursuant to the terms of the Company
Benefit Plans would not reasonably be expected to be subject to
disallowance under Section 162(m) (before giving effect to Section
162(m)(4)(F)) of the Code for taxable years of the Company ending
prior to the date hereof.
(iv) Section 3.01(k)(iv) of the Company Disclosure Schedule
contains a list of all Company Benefit Plans which, as a consequence
of the consummation of the Merger, are reasonably expected to (x)
entitle any Participant to severance pay and/or (y) accelerate the
time of payment or vesting or trigger any payment or funding
(whether through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or trigger any other
material obligation.
(v) The Company has provided to Parent a true and complete copy
of the Report (as hereinafter defined) given to the compensation
committee of the
17
board of directors of the Company containing the estimates of any
payments and/or benefits that would reasonably be expected to be
received (whether in cash or property or the vesting of property) as
a result of the Merger or any other transaction contemplated by this
Agreement (including as a result of termination of employment on or
following the Effective Time) by any Participant who is a
"disqualified individual" (as such term is defined in proposed
Treasury Regulation Section 1.280G-1) (each, a "Primary Company
Executive") under any Company Benefit Plan (including any additional
payment from the Company or any of its subsidiaries or any other
person in the event that the excise tax under Section 4999 of the
Code is imposed on such individual) that would be reasonably be
expected to be paid to the Primary Company Executives as a result of
the Merger and the other transactions contemplated by this Agreement
(including as a result of termination of employment on or following
the Effective Time) under all Company Benefit Plans and (y) the
"base amount" (as defined in Section 280G(b)(3) of the Code) for
each Primary Company Executive, all as calculated and set forth in
the report (dated August 1, 2001) prepared by the compensation
consultant retained by the Company (the "Report"). To the knowledge
of the Company, the information provided to the compensation
consultant that prepared the Report is accurate in all material
respects.
(l) Taxes. Except as would not, individually or in the aggregate
with respect to clause (i), (ii), (iii) or (iv), reasonably be expected
to have a material adverse effect: (i) Each of the Company and each of
its subsidiaries has filed (or caused to be filed) all tax returns
required to be filed by it and all such returns are true, complete and
correct, or requests for extensions to file such tax returns have been
timely filed, granted and have not expired. Each of the Company and each
of its subsidiaries has paid (or caused to be paid) all taxes shown as
due on such tax returns, and the most recent financial statements
contained in the Filed SEC Documents reflect an adequate reserve (in
addition to any reserve for deferred taxes established to reflect timing
differences between book and tax income) of tax for all taxes payable by
each of the Company and each of its subsidiaries for all taxable periods
and portions thereof accrued through the date of such financial
statements.
(ii) Except as set forth in Section 3.01(l)(ii) of the Company
Disclosure Schedule, no tax return of the Company or any of its
subsidiaries is under audit or examination by any taxing authority,
and no written notice of such an audit or examination has been
received by the Company or any of its subsidiaries. There is no
deficiency, refund litigation, written proposed adjustment or matter
in controversy with respect to any taxes due and owing by the
Company or any of its subsidiaries. Each deficiency resulting from
any completed audit or examination relating to taxes by any taxing
authority has been timely paid, except for such deficiencies being
contested in good faith and for which adequate reserves are
reflected on the books of the Company. The United States Federal
income tax returns of the Company and each of its subsidiaries
consolidated in such tax returns have been either examined by and
settled with the
18
IRS or closed by virtue of the applicable statute of limitations and
no requests for waivers of the time to assess any such taxes are
pending.
(iii) No liens for taxes (other than for current taxes not yet
due and payable or for taxes being contested in good faith and for
which adequate reserves are reflected on the books of the Company)
exist with respect to any assets or properties of the Company or any
of its subsidiaries. Neither the Company nor any of its subsidiaries
is bound by any agreement with respect to the allocation,
indemnification or sharing of taxes.
(iv) Neither the Company nor any of its subsidiaries has
constituted either a "distributing corporation" or a "controlled
corporation" in a distribution of stock qualifying for tax-free
treatment under Section 355 of the Code (x) in the two years prior
to the date of this Agreement or (y) in a distribution which could
otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(v) As used in this Agreement, (A) "taxes" shall include (1)
all forms of taxation, whenever created or imposed, and whether
domestic or foreign, and whether imposed by a national, federal,
state, provincial, local or other Governmental Entity, including all
interest, penalties and additions imposed with respect to such
amounts, (2) liability for the payment of any amounts of the type
described in clause (1) as a result of being a member of an
affiliated, consolidated, combined or unitary group and (3)
liability for the payment of any amounts as a result of being party
to any tax sharing agreement or as a result of any express or
implied obligation to indemnify any other person with respect to the
payment of any amount described in clause (1) or (2) and (B) "tax
returns" shall mean all domestic or foreign (whether national,
federal, state, provincial, local or otherwise) returns,
declarations, statements, reports, schedules, forms and information
returns relating to taxes and any amended tax return.
(m) State Takeover Statutes. Assuming the accuracy of the
representations and warranties set forth in Section 3.02(h), the approval
by the Board of Directors of the Company of this Agreement, the Company
Voting Agreement and the Merger and any acquisition of Company Common
Stock contemplated by Section 4.03(b) constitutes approval of this
Agreement, the Company Voting Agreement and the Merger and any
acquisition of Company Common Stock contemplated by Section 4.03(b) for
purposes of Section 203 of the DGCL and such approval represents the only
action necessary to ensure that the restrictions contained in Section
203(a) of the DGCL do not and will not apply to the performance of this
Agreement, to the consummation of the Merger in accordance with the
provisions of this Agreement or any acquisition of Company Common Stock
contemplated by Section 4.03(b) or to the Company Voting Agreement.
Assuming the accuracy of the representations and warranties set forth in
Section 3.02(h), no other state takeover or similar statute or regulation
(excluding, for the avoidance of doubt, any Applicable Law which requires
the Company Required Consents or the Parent
19
Required Consents to be obtained) is applicable to this Agreement, the
Company Voting Agreement or the Merger or any acquisition of Company
Common Stock contemplated by Section 4.03(b).
(n) Voting Requirements. The affirmative vote at the Stockholders
Meeting (as defined in Section 5.01(b)) or any adjournment or
postponement thereof of the holders of a majority of the votes
represented by all the outstanding shares of Company Common Stock and
Company 5% Cumulative Preferred Stock, voting together as a single class,
with each share of Company Common Stock entitled to one vote and each
share of Company 5% Cumulative Preferred Stock entitled to 1/10th of a
vote, in favor of adopting this Agreement (the "Stockholder Approval") is
the only vote of the holders of any class or series of the Company's
capital stock necessary to approve or adopt this Agreement or the Merger.
The affirmative vote of the holders of the Company Capital Stock is not
necessary to approve any other action required to be taken by this
Agreement or the Company Voting Agreement (other than the consummation of
the Merger).
(o) Regulation as a Utility. Except as set forth in Section 3.01(o)
of the Company Disclosure Schedule , the Company is not subject to
regulation as a public utility holding company, public utility or public
service company (or similar designation) by any PUC. Section 3.01(o) of
the Company Disclosure Schedule contains a true and complete list of each
subsidiary of the Company that is subject to regulation as a public
utility or public service company (or similar designation) by any PUC,
including the name of each such jurisdiction in which such subsidiary is
subject to such regulation. None of the Company or any of its
subsidiaries is a "public utility company" or a "holding company" within
the meaning of Section 2(a)(5) or 2(a)(7), respectively, of the Public
Utility Holding Company Act of 1935 (the "Holding Company Act") or a
"subsidiary company" or an "affiliate" (within the meaning of Section
2(a)(8) or 2(a)(11), respectively, of the Holding Company Act) of any
holding company which is required to register as a holding company under
the Holding Company Act. All filings required to be made by the Company
or any of its subsidiaries since January 1, 2000, under any Applicable
Laws or Judgments relating to the regulation of public utilities or
public service companies (or similarly designated companies), have been
filed with the appropriate PUC, Health Agency or other appropriate
Governmental Entity, as the case may be, including all forms, statements,
reports, agreements (oral or written) and all documents, exhibits,
amendments and supplements appertaining thereto, including but not
limited to all rates, tariffs, franchises, service agreements and related
documents and all such filings complied, as of their respective dates,
with all applicable requirements of all Applicable Laws or Judgments,
except for such filings or such failures to comply that individually or
in the aggregate would not reasonably be expected to have a material
adverse effect.
(p) Title to Properties. (i) Each of the Company and each of its
subsidiaries owns or has valid and enforceable right to use under
existing franchises, water rights, easements or licenses, or valid and
enforceable leasehold interests in, all of its properties, rights and
assets necessary for the conduct of its respective business and
operations as currently conducted, except where the failure to have such
title, rights or interests
20
individually or in the aggregate would not reasonably be expected to have
a material adverse effect. All such properties, rights and assets, other
than properties, rights and assets in which the Company or any of its
subsidiaries has a leasehold interest, are free and clear of all Liens,
except for Liens relating to secured indebtedness or that individually or
in the aggregate would not reasonably be expected to have a material
adverse effect.
(q) Brokers. No broker, investment banker, financial advisor or
other person, other than Xxxxxxx, Xxxxx & Co., the fees and expenses of
which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or any of its subsidiaries.
(r) Opinion of Financial Advisor. The Company has received the
written opinion of Xxxxxxx, Sachs & Co. to the effect that, as of the
date of this Agreement, the Merger Consideration is fair to the Company's
stockholders from a financial point of view.
(s) Contracts. All material Contracts to which the Company or any of
its subsidiaries is a party or any of their respective properties or
assets is subject that are required to be filed as an exhibit to any
Filed SEC Document have been filed as an exhibit to such Filed SEC
Document (such filed Contracts, the "Filed Contracts"). All the Filed
Contracts are valid and in full force and effect, except to the extent
they have previously expired or terminated in accordance with their terms
or they expire or terminate in compliance with the provisions of Section
4.01(a)(x)(C) and except for any invalidity or failure to be in full
force and effect which would not reasonably be expected to have a
material adverse effect. None of the Company or any of its subsidiaries
is in violation of or default (with or without notice or lapse of time or
both) under, or has waived or failed to enforce any rights or benefits
under, any Filed Contract, except for violations, defaults, waivers or
failures to enforce rights or benefits that individually or in the
aggregate would not reasonably be expected to have a material adverse
effect.
(t) Information Supplied. None of the information included or
incorporated by reference in the Proxy Statement will, at the date the
Proxy Statement is filed with the SEC or mailed to the Company's
stockholders or at the time of the Stockholders Meeting, or at the time
of any amendment or supplement thereof, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that
no representation or warranty is made by the Company with respect to
statements made in the Proxy Statement based on information supplied by
Guarantor, Parent or Sub specifically for inclusion or incorporation by
reference therein. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder.
21
SECTION 3.02. Representations and Warranties of Guarantor, Parent
and Sub. Guarantor, Parent and Sub jointly and severally represent and warrant
to the Company as follows:
(a) Organization. Each of Guarantor and Parent is a company duly
organized and validly existing under the laws of the Federal Republic of
Germany. Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Guarantor,
Parent and Sub (i) has all requisite corporate power and authority to
carry on its business as now being conducted and (ii) is duly qualified
or licensed to do business and is, if applicable, in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such
qualification or licensing necessary, other than where the failure to be
so qualified or licensed or in good standing individually or in the
aggregate would not reasonably be expected to prevent or materially
impede or delay the consummation of the Merger or the other transactions
contemplated hereby. Guarantor owns 100% of the outstanding capital stock
of Parent and, indirectly through Parent, 100% of the outstanding capital
stock of Sub.
(b) Authority; Noncontravention. Guarantor, Parent and Sub have the
requisite corporate power and authority to execute and deliver this
Agreement and, subject to the Parent Required Consents (as defined
below), to consummate the transactions contemplated hereby and Parent has
the requisite corporate power and authority to execute and deliver the
Company Voting Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of this Agreement by Guarantor,
Parent and Sub, the execution and delivery of the Company Voting
Agreement by Parent and the consummation by Guarantor, Parent and Sub of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary company or corporate action, as applicable,
on the part of Guarantor, Parent and Sub and no other corporate
proceedings on the part of Guarantor, Parent or Sub are necessary to
approve this Agreement or the Company Voting Agreement or to consummate
the transactions contemplated hereby or thereby. This Agreement has been
duly executed and delivered by Guarantor, Parent and Sub and the Company
Voting Agreement has been duly executed and delivered by Parent and each
of this Agreement and the Company Voting Agreement constitutes the valid
and binding obligation of Guarantor, Parent and Sub, as applicable,
enforceable against Guarantor, Parent and Sub, as applicable, in
accordance with their terms. The execution and delivery of this Agreement
and the Company Voting Agreement and the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions of
this Agreement and the Company Voting Agreement do not and will not
conflict with, or result in any violation or breach of, or default (with
or without notice or lapse of time, or both) under, or give rise to a
right of, or result in, termination, cancelation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Guarantor,
Parent or Sub under, or give rise to any increased, additional,
accelerated or guaranteed rights or entitlements under, any provision of
(i) the Certificate of Incorporation or By-laws of Sub or equivalent
organizational documents of Guarantor or Parent, (ii) any Contract
applicable to Guarantor, Parent, Sub or their
22
respective subsidiaries or their respective properties or assets or (iii)
subject to obtaining the Parent Required Consents and other matters
referred to in the following sentence, any (A) Applicable Law or (B)
Judgment, in each case applicable to Guarantor, Parent, Sub or their
respective subsidiaries or their respective properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not reasonably be expected to prevent or materially
impede or delay the consummation of the Merger or the other transactions
contemplated hereby. No consent, approval, order or authorization of,
registration, declaration or filing with, or notice to, any Governmental
Entity is required by or with respect to Guarantor, Parent or Sub or
their respective subsidiaries in connection with the execution and
delivery of this Agreement and the Company Voting Agreement or the
consummation by Guarantor, Parent and Sub of the transactions
contemplated hereby and thereby or the compliance with the provisions of
this Agreement and the Company Voting Agreement, except for (1) the
filing of a premerger notification and report form under the HSR Act and
the receipt, termination or expiration, as applicable, of such other
approvals or waiting periods required under any other applicable
competition, merger control, antitrust or similar law or regulation,
including, if the Company has completed its acquisition of Azurix North
America Corp. and Azurix Industrials Corp. prior to the Closing, the
competition, merger control, antitrust or similar laws and regulations of
Canada or the Investment Canada Act, if applicable, (2) the filing with,
or furnishing to, the SEC of such reports under the Exchange Act as may
be required in connection with this Agreement, the Company Voting
Agreement, the Merger and the other transactions contemplated hereby and
thereby, (3) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company is qualified to
do business, (4) such consents, approvals, orders, authorizations,
registrations, declarations, filings and notices required under
Applicable Laws and Judgments of any PUC, (5) such consents, approvals,
orders, authorizations, registrations, declarations, filings and notices
required under the Applicable Laws and Judgments of any Health Agency,
(6) such consents, approvals, orders, authorizations, registrations,
declarations, filings and notices required to be obtained from or made to
any Governmental Entity due solely to any acquisition of any business or
person by the Company or any of its subsidiaries following the date of
this Agreement and (7) such other consents, approvals, orders,
authorizations, registrations, declarations, filings and notices the
failure of which to be obtained or made individually or in the aggregate
would not impair in any material respect the ability of Guarantor, Parent
or Sub to perform its obligations under this Agreement or prevent or
materially impede or delay the consummation of the transactions
contemplated by this Agreement. Consents, approvals, orders,
authorizations, registrations, declarations, filings and notices
described (i) in the foregoing clause (4) that are required to be
obtained or made by Guarantor, Parent or Sub or any of their respective
subsidiaries and (ii) in the foregoing clause (5) the failure of which to
obtain or make would impair in any material respect the ability of
Guarantor, Parent or Sub to perform its obligations under this Agreement
or prevent or materially impede or delay the consummation of the
transactions contemplated by this Agreement, are hereinafter referred to
as the "Parent Required Consents." No consent, approval, order,
authorization, registration, declaration, filing or notice the failure of
which to obtain or make would prevent or materially impede
23
or delay the consummation of the transactions contemplated by this
Agreement with any non-U.S. Governmental Entity is required to be made or
obtained by Guarantor, Parent or Sub or any of their respective
subsidiaries in connection with the execution and delivery of this
Agreement and the Company Voting Agreement or the consummation by
Guarantor, Parent and Sub of the transactions contemplated hereby and
thereby or the compliance with the provisions of this Agreement and the
Company Voting Agreement, except for such consents, approvals, orders,
authorizations, registrations, declarations, filings or notices (x)
required as a result of a change in Applicable Law after the date of this
Agreement or (y) required to be obtained from or made to any Governmental
Entity due solely to any acquisition of a business or person by the
Company or any of its subsidiaries following the date of this Agreement.
To the knowledge of Guarantor and Parent, as of the date of this
Agreement, there exists no state of facts, condition, event or
circumstance which would materially adversely affect Parent's ability to
obtain the Parent Required Consents in a reasonably timely manner.
(c) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby and has engaged in no
business other than in connection with the transactions contemplated by
this Agreement.
(d) Regulation as a Utility. Except as set forth in Section 3.02(d)
of the disclosure schedule delivered by Parent to the Company prior to
the execution of this Agreement (the "Parent Disclosure Schedule") or as
permitted in accordance with Section 4.03(a)(a), neither Guarantor,
Parent, Sub nor any of their respective subsidiaries (i) is a "public
utility company" or a "holding company" or a "subsidiary company" of any
holding company which is required to register as a holding company under
the Holding Company Act, in each case as defined in the Holding Company
Act, or (ii) is otherwise subject to regulation as a public utility
holding company, public utility or public service company (or similar
designation) by any PUC; provided, however, the foregoing representation
shall not be deemed to be breached as a result of (x) after the date
hereof, any of Guarantor, Parent or Sub or any of their respective
subsidiaries entering into any operation and maintenance or concession
contract that would not be prohibited under Section 4.03(a)(b) or (y)
changes in Applicable Law after the date of this Agreement.
(e) Capital Resources. On or prior to the Closing Date, Parent will
have sufficient cash to pay the Merger Consideration and any other
amounts payable under Section 2.02.
(f) Brokers. No broker, investment banker, financial advisor or
other person, other xxxx Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated and Xxxxxx Xxxxxxx & Co. Incorporated, the fees and expenses
of which will be paid by or on behalf of Parent, is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Guarantor,
Parent, Sub or any of their subsidiaries.
23
(g) Information Supplied. None of the information supplied or to be
supplied by Guarantor, Parent or Sub specifically for inclusion in the
Proxy Statement will, at the date the Proxy Statement is filed with the
SEC or mailed to the Company's stockholders or at the time of the
Stockholders Meeting, or at the time of any amendment or supplement
thereof, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading.
(h) Ownership of Company Stock. As of the date of this Agreement,
neither Guarantor, Parent nor Sub nor any of their respective
subsidiaries "beneficially owns" (as such term is defined for purposes of
Section 13(d) of the Exchange Act) any shares of Company Common Stock.
ARTICLE IV
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective
Time, except as consented to in writing by Parent (which consent shall not be
unreasonably withheld or delayed; and which consent shall be deemed given if
the Company has not received written notice otherwise from Parent within five
business days after requesting such consent of Parent as provided in Section
4.01(b)) or as specifically contemplated by this Agreement, the Company shall,
and shall cause each of its subsidiaries to, carry on their respective
businesses in the ordinary course consistent with past practice and use their
commercially reasonable efforts to comply with all Applicable Laws and, to the
extent consistent therewith, use their commercially reasonable efforts to
preserve their material assets and technology, preserve their relationships
with PUCs, Health Agencies, customers, suppliers and others having business
dealings with them and maintain their material franchises, rights and Permits
necessary to the conduct of their business. Without limiting the generality of
the foregoing, during the period from the date of this Agreement to the
Effective Time, except as consented to in writing by Parent (which consent
shall not unreasonably be withheld or delayed; and which consent shall be
deemed given if the Company has not received written notice otherwise from
Parent within five business days after requesting such consent of Parent as
provided in Section 4.01(b)) or as specifically contemplated by this Agreement
or as set forth in Section 4.01(a) of the Company Disclosure Schedule, the
Company shall not, and shall not permit any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect
of, any of its capital stock or other equity or voting interests
except for:
(A) dividends by a direct or indirect wholly owned subsidiary
of the Company to its shareholders;
25
(B) regular quarterly cash dividends with respect to the
Company Common Stock, not in excess of an annual rate of
$0.94 per share in 2001, $0.98 per share in 2002 and $1.02
per share in 2003, in each case with usual declaration,
record and payment dates and in accordance with the
Company's past dividend policy;
(C) if the Effective Time occurs other than on a record date
for quarterly cash dividends with respect to the Company
Common Stock, a "stub period" dividend equal to an amount
not to exceed 25% of the amount of the cash dividend per
share permitted to be paid pursuant to the immediately
preceding clause (B) during such fiscal year in which the
Effective Time occurs multiplied by a fraction, the
numerator of which is the number of days between the
immediately preceding record date and the Effective Time
and the denominator of which is the number of days between
such record date and the next regularly scheduled record
date;
(D) regular cash dividends with respect to outstanding shares
of Company 5% Cumulative Preferred Stock in accordance
with the terms thereof as in effect on the date of this
Agreement;
(E) regular cash dividends with respect to outstanding shares
of Company 5% Cumulative Preference Stock in accordance
with the terms thereof as in effect on the date of this
Agreement; or
(F) (x) cash dividends with respect to any outstanding shares
of preferred stock of any of the Company's subsidiaries or
(y) cash dividends with respect to any outstanding shares
of non-preferred capital stock of any of the Company's
non-wholly owned subsidiaries; provided, however, that in
the case of subsidiaries owned as of the date of this
Agreement, such dividends shall be paid only in the
ordinary course of business consistent with such
subsidiary's past practice; or
(y) purchase, redeem or otherwise acquire any shares of capital
stock of, or other equity or voting interests in, the Company or its
subsidiaries or any options, warrants, calls or rights to acquire any
such shares or other interests, except (A) for the Stock Redemption, (B)
purchases, redemptions or other acquisitions as required by the
respective terms of any preferred stock of the Company or as required or
permitted by the respective terms of any preferred stock of any of the
Company's subsidiaries, (C) for the purpose of funding or providing
benefits under employee benefit plans, stock option and other incentive
compensation plans, directors plans and the dividend reinvestment
provisions of the Company's Dividend Reinvestment and Stock Purchase
Plan, (D) purchases, redemptions or other acquisitions in the ordinary
course of business consistent with past practice of any voting stock of a
subsidiary of the Company not held by the
26
Company or its subsidiaries or (E) the purchases of shares of capital
stock of a wholly owned subsidiary of the Company by the Company or a
wholly owned subsidiary of the Company; or
(z) split, combine or reclassify any of its capital stock or
other equity or voting interests or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock or other equity or voting interests;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other equity or voting interests or
any securities convertible into, or exchangeable for, or any
options, warrants, calls or rights to acquire, any such shares,
interests or securities or any stock appreciation rights or other
rights that are linked to the price of Company Common Stock other
than:
(A) the issuance of shares of Company Common Stock (and
associated Company Rights) upon the exercise of Company
Stock Options and settlement of all other rights to
purchase or receive Company Common Stock (collectively,
the "Company Stock Issuance Rights") in accordance with
the terms of such Company Stock Options and Company Stock
Issuance Rights as in effect on the date of this
Agreement;
(B) the delivery or sale of shares of Company Common Stock
held as treasury stock of the Company as of the date
hereof or thereafter purchased on the open market by the
Company or one of its subsidiaries as permitted by, and
for the purposes set forth in, Section 4.01(a)(i)(y)(C);
(C) the issuance of shares of capital stock to the Company or
a wholly owned subsidiary of the Company by a subsidiary
of the Company;
(D) the issuance of shares of Company Common Stock pursuant to
the Company Rights Agreement pursuant to the terms thereof
as in effect on the date hereof;
(E) to the extent permitted by Section 5.09(i), the issuance
of shares of Company Common Stock pursuant to the
Company's Dividend Reinvestment and Stock Purchase Plan;
or
(F) issuances of shares of Company Common Stock which are
necessary, in the reasonable judgment of the Company, in
order to maintain the credit ratings of the Company or its
subsidiaries; provided that any such issuance of shares
shall be permitted only if prior to such issuance the
Company shall have consulted with
27
Parent, and the Company and Parent shall have been unable
to agree on a mutually acceptable alternative basis to
maintain the credit rating of the Company or its
subsidiary, as the case may be;
(iii) amend its certificate of incorporation or by-laws (or
similar organizational documents) except as may be required by
Applicable Law or by the rules and regulations of the New York Stock
Exchange; or
(iv) (A) directly or indirectly acquire or agree to acquire,
whether by merging or consolidating with, or by purchasing assets
of, or by any other manner, any assets constituting a business or
any corporation, partnership, joint venture, association, limited
liability company or other entity or division thereof, other than:
(x) the acquisition of any business which is regulated by a PUC or
owned or operated by a municipality or local Governmental
Entity; provided, that all such acquisitions permitted by this
clause (x) shall not involve aggregate payments (including debt
assumption) by the Company and its subsidiaries of more than
$300,000,000; or
(y) the acquisition of any business in or related to (1) the water
services or wastewater services industry or (2) any line of
business conducted by Azurix North America Corp. or Azurix
Industrials Corp. on or prior to the date of consummation of
the acquisition of such entities which is not regulated by a
PUC or owned or operated by a municipality or local
Governmental Entity; provided that all such acquisitions
permitted by this clause (y) shall not involve aggregate
payments (including debt assumption) by the Company or any of
its subsidiaries of more than $100,000,000;
provided that, if the Company or any of its subsidiaries requests
the consent of Parent for any acquisition not otherwise permitted by
this clause (A) then Parent shall promptly inform the Company
whether Guarantor or any of its subsidiaries is participating or
intends to participate in the bidding for such acquisition and, if
Parent informs the Company that Guarantor or one of its subsidiaries
is participating or intends to participate in the bidding for such
acquisition or if Guarantor or one of its subsidiaries does in fact
so participate, then the Company shall not be subject to the
provisions of this Section 4.01(a)(iv) with respect to such
acquisition (provided further that, for the purposes of this Section
4.01(a)(iv), the Company may presume (absent written notice to the
contrary from Parent) that Guarantor or one of its subsidiaries is
participating in any competitive bidding process for an acquisition
which (i) is not prohibited by Section 4.03 and (ii) has been
marketed broadly to major participants in the water services or
wastewater services industries and shall not be required to request
the consent of
28
Parent or otherwise be subject to the provisions of this Section
4.01(a)(iv) with respect to any such acquisition); or
(B) any other assets that are material (unless such assets
are acquired in the ordinary course of business), other than assets
constituting a business the acquisition of which does not require
consent or approval under Section 4.01(a)(iv)(A);
it being understood and agreed that the Company and its subsidiaries
shall, reasonably in advance of the applicable meeting of the
Company's Board of Directors, provide Parent with reasonable
documentation describing, and consult with Parent with respect to,
any acquisition which requires approval of the Company's Board of
Directors; or
(v) directly or indirectly sell, lease, license, sell and
leaseback, mortgage or otherwise encumber or subject to any Lien or
otherwise dispose of any real property, or any other properties or
assets or any interest therein that are material, individually or in
the aggregate, other than:
(A) sales of real property or other properties or assets,
provided that the fair market value of all such properties
and assets does not exceed $100,000,000;
(B) the sale of any property or asset that the Company or one
of its subsidiaries is legally required, or under bona
fide threat of condemnation or similar proceedings, to
sell to any Governmental Entity so long as the Company
sells such property or asset to such Governmental Entity
in a manner consistent with past practice;
(C) the sale of shares of capital stock or other securities
which are held as passive minority investments so long as
such sale is made in an arm's-length transaction; or
(D) the grant of easements, rights of way and Liens in the
ordinary course of business consistent with past practice,
or in connection with secured indebtedness of the Company
or any of its subsidiaries permitted by Section
4.01(a)(vi) and consistent with past practice;
it being understood and agreed that the Company and its subsidiaries
shall, reasonably in advance of the applicable meeting of the
Company's Board of Directors, provide Parent with reasonable
documentation describing, and consult with Parent with respect to,
any sale, lease, license, sale/leaseback, mortgage,
29
encumbrance or other disposition which requires approval of the
Company's Board of Directors; or
(vi) (x) incur any indebtedness or guarantee any indebtedness
of another person or issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of
the Company or any of its subsidiaries, enter into any interest rate
protection agreement or other hedging arrangement, guarantee any
debt securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic
effect of any of the foregoing (excluding for purposes of
clarification, advances received as contemplated by Section
4.01(a)(vii)(B)), except for:
(A) the incurrence of short-term indebtedness in the ordinary
course of business consistent with past practice;
(B) the incurrence of long-term indebtedness and interest rate
protection and other hedging arrangements in respect of
such long-term indebtedness so long as the aggregate
amount of such long-term indebtedness outstanding as of
the end of each fiscal year ended after the date of this
Agreement (excluding, without duplication, long-term
indebtedness otherwise permitted under this Section
4.01(a)(vi)(x), but including long-term indebtedness
incurred to fund capital expenditures permitted by Section
4.01(a)(vii) to the extent the incurrence of such
indebtedness is included in the Company's business plan
described below), does not exceed 110% of the aggregate
amount of all long-term indebtedness contemplated to be
outstanding as of the end of such fiscal year by the
Company's business plan for the five-year period ending on
December 31, 2005, a true and complete copy of which has
been provided to Parent prior to the date of this
Agreement;
(C) (1) the incurrence of indebtedness or guarantees of
indebtedness to finance acquisitions and the incurrence or
assumption of indebtedness of the entities acquired in
such acquisitions, in either case in connection with
acquisitions permitted by Section 4.01(a)(iv), or (2) the
incurrence of indebtedness or guarantees of indebtedness
to fund capital expenditures permitted by Section
4.01(a)(vii);
(D) the incurrence of any guarantees, bid bonds, performance
bonds, surety bonds, payment bonds, letters of credit and
"keep well" agreements and other similar arrangements
entered into in the ordinary course of business consistent
with past practice between the Company and its
subsidiaries or in support of the indebtedness
30
or other obligations of the Company, the Company's
subsidiaries or among the Company's subsidiaries; or
(E) the incurrence of indebtedness in an amount equal to (1)
the cost of Company Common Stock purchased for issuance
pursuant to Section 4.01(a)(ii)(B), plus (2) the amount of
cash proceeds that would otherwise be expected to be
received by the Company from the sale of Company Common
Stock under the Company's Dividend Reinvestment and Stock
Purchase Plan after the date, and for so long as, such
plan is indefinitely suspended pursuant to Section
5.09(i); or
(y) make any material loans, advances or capital contributions to,
or investments in, any other person, other than the Company or
any direct or indirect subsidiary of the Company other than (A)
investments made in joint ventures formed for purposes
permitted pursuant to Section 4.01(a)(iv), (B) loans, advances,
capital contributions and investments made in connection with
actions permitted pursuant to Sections 4.01(a)(iv), (v),
(vi)(x), (vii) or (x) or (C) in the ordinary course of
business;
it being understood and agreed that the Company and its subsidiaries
shall consult with Parent (i) on the Company's and its subsidiaries'
credit ratings and (ii) prior to incurring any material long-term
indebtedness (other than issuances of tax-free long-term
indebtedness) of the Company or any of its subsidiaries; or
(vii) incur or commit to incur any capital expenditures in
excess of 120% of the amount budgeted in the Company's five-year
capital plan, a true and complete copy of which has been provided to
Parent prior to the date of this Agreement, other than:
(A) capital expenditures required by changes in or newly
promulgated Applicable Laws or Judgments or applicable
standards or policies of any Governmental Entity after the
date of this Agreement;
(B) capital expenditures funded by customer advances or
contributions in aid of construction;
(C) capital expenditures incremental to the Company's
five-year capital plan as may be required to serve
customers who generate sufficient revenues to fully fund
the cost of such capital expenditures without adversely
affecting customer rates;
31
(D) capital expenditures related to the operation of any
business acquired through an acquisition permitted by
Section 4.01(a)(iv);
(E) capital expenditures to the extent covered by insurance or
as reasonably required in the Company's judgment following
a catastrophic event; or
(F) capital expenditures in connection with performance by the
Company or one of its subsidiaries under any Contract to
the extent the Company's or such subsidiary's obligations
in connection with any such capital expenditure are
non-recourse to the Company or such subsidiary and funded
by the United States government;
it being understood and agreed that the Company and its subsidiaries
shall, reasonably in advance of the applicable meeting of the
Company's Board of Directors, provide Parent with reasonable
documentation describing, and consult with Parent with respect to,
any capital expenditure which requires approval of the Company's
Board of Directors; or
(viii) except as required by Applicable Law or any Judgment (x)
pay, discharge, settle or satisfy any material claims (including
claims of stockholders), liabilities or obligations (whether
absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge, settlement or satisfaction of
claims, liabilities or obligations (A) in the ordinary course of
business consistent with past practice, (B) as required by their
terms as in effect on the date of this Agreement or on the date of
acquisition of the person subject thereto or (C) incurred since the
date of this Agreement in the ordinary course of business consistent
with past practice, (y) waive, release, grant or transfer any right
of material value, other than in the ordinary course of business
consistent with past practice or (z) waive any material benefits of,
or agree to modify in any materially adverse respect, or fail to
enforce in any material respect, or consent to any material matter
with respect to which its consent is required under, any material
confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party;
(ix) except (i) as required to comply with Applicable Law or
any Judgment, any Collective Bargaining Agreement or any provision
of any Company Benefit Plan or other Contract as in effect on the
date of this Agreement, (ii) in the ordinary course of the Company
or its subsidiaries conducting their respective businesses
consistent with past practice, (iii) as would, in the discretion of
the Company, be commercially reasonable in order to retain Company
Employees (as defined in Section 5.09(a)) or to hire (or promote) or
replace new executives, (iv) as is or would be required to give
effect to acquisition agreements entered into by the Company and/or
its subsidiaries or (v)
32
as would not, individually or in the aggregate, materially increase
the Company's and its subsidiaries' annual expense for compensation
and benefits provided or to be provided to the Company Employees:
(A) take any action to fund or in any other way secure the
payment of compensation or benefits under any Company
Benefit Plan or other Contract;
(B) take any action to accelerate the vesting or payment of
any compensation or benefit under any Company Benefit Plan
or other Contract;
(C) grant any compensation, benefits, severance or termination
pay or increases therein to any Participant; or
(D) establish, adopt, enter into, amend or terminate any
Company Benefit Plan, except as required to implement
grants or increases permitted under Section
4.01(a)(ix)(C); or
(x) (A) enter into any material Contract other than:
(1) any Contract related to the Company's PUC-regulated
business entered into in the ordinary course of
business consistent with past practice;
(2) any Contract related to the water services or
wastewater services industry; provided that the
average aggregate annual revenues to be received by
the Company and its subsidiaries over the first three
years of such Contract, together with the total
average aggregate annual revenues to be received by
the Company and its subsidiaries over the first three
years of all such other Contracts entered into
pursuant to this clause (2) during the twelve-month
period beginning on the date of this Agreement or
during any subsequent twelve-month period shall not
exceed $60 million per year (excluding any consumer
price index or other similar adjustments and without
regard to any extension thereof); provided, further
that (A) the average annual amounts of any payments
to be made to the Company during the first three
years of such Contract in respect of any capital
expenditures permitted by Section 4.01(a)(vii)(F) of
this Agreement and other recovered costs of capital
in respect thereof shall not count against such $60
million per year limit and (B) the average annual
amounts
33
of any associated recovery of capital improvement
costs (and, in the case of any "design-build-operate"
Contract, payments in respect of the "design-build"
portion of such Contract to the extent that those
payments are (x) guaranteed by a non-affiliate of the
Company which the Company reasonably determines is
sufficiently creditworthy or (y) passed through to
third parties who perform the "design-build" portion
of such Contract) during the first three years of
such Contract shall not count against such $60
million per year limit; or
(3) any Contract providing for any transaction otherwise
permitted by this Section 4.01(a);
provided that if the Company or any of its subsidiaries
requests the consent of Parent to enter into any Contract not
otherwise permitted by this clause (A) then Parent shall
promptly inform the Company whether Guarantor or any of its
subsidiaries is participating or intends to participate in the
bidding for such Contract and, if Parent informs the Company
that Guarantor or one of its subsidiaries is participating or
intends to participate in the bidding for such Contract or if
Guarantor or one of its subsidiaries does in fact so
participate, then the Company shall not be subject to the
provisions of this clause (A) with respect to such Contract
(provided further that, for the purposes of this clause (A),
the Company may presume (absent written notice to the contrary
from Parent) that Guarantor or one of its subsidiaries is
participating in any competitive bidding process for a Contract
which has been marketed broadly to major participants in the
water services or wastewater services industries and shall not
be required to request the consent of Parent or otherwise be
subject to the provisions of this clause (A) with respect to
any such Contract);
it being understood and agreed that the Company and its
subsidiaries shall, reasonably in advance of the applicable
meeting of the Company's Board of Directors, provide Parent
with reasonable documentation describing, and consult with
Parent with respect to, any material Contract which requires
the approval of the Company's Board of Directors;
(B) renew any material Contract unless such renewal (i)
shall not modify the terms of such Contract, taken as a whole, in
any material adverse respect or (ii) is on terms that are reasonably
agreed to by the Company in carrying on its business in the ordinary
course; or
(C) modify, amend, waive or terminate (x) any material
Contract other than in the ordinary course of business or (y) the
Filed Contracts, in either case without consulting with Parent in
good faith in advance; or
34
(xi) authorize any of, or commit, resolve or agree to take
any of, the foregoing actions.
(b) Administration of Consents. Any request for a consent of
Parent under Section 4.01(a), and any correspondence between the
parties with respect to those consents (including the granting or
refusal to grant any such consent) and any consultation required
under Section 4.01(a) shall be made solely by and between the person
identified in Section 4.01(b) of the Company Disclosure Schedule, on
behalf of the Company and its subsidiaries, and the person
identified in Section 4.01(b) of the Parent Disclosure Schedule, on
behalf of Guarantor, Parent and their respective subsidiaries.
(c) Control of the Company's Business. It is understood and
agreed that Guarantor, Parent, Sub and their affiliates do not have
the right to control or direct the Company's operations prior to the
Effective Time. Prior to the Effective Time, the Company shall
exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.
(d) Certain Tax Matters. Except as set forth in Section 4.01(d)
of the Company Disclosure Schedule, during the period from the date
of this Agreement to the Effective Time, the Company shall, and
shall cause each of its subsidiaries to, (i) not make any material
tax election without Parent's consent and (ii) to the extent
permitted by the applicable agreement, cause all existing tax
sharing agreements to be terminated as of the Closing Date.
(e) Utility Filings. The Company shall, and shall cause each of
its subsidiaries to, timely file in the ordinary course of business
consistent with past practice all rate applications and all other
material filings required to be made with PUCs. Except for filings
in the ordinary course of business consistent with past practice
that individually or in the aggregate would not reasonably be
expected to have a material adverse effect, the Company shall, and
shall cause each of its subsidiaries to, consult with Parent
reasonably in advance of making any filing to implement any changes
in any of its or any of its subsidiaries' rates or surcharges for
water service, standards of service or accounting.
SECTION 4.02. No Solicitation. (a) From and after the date hereof,
the Company agrees (i) that it and its subsidiaries shall not, nor shall it or
its subsidiaries authorize or knowingly permit any director, officer or
employee of the Company or any of its subsidiaries or any investment banker,
attorney, accountant or other advisor or representative of the Company or any
of its subsidiaries (collectively, the "Representatives") to, directly or
indirectly, solicit, initiate or encourage, or take any other action knowingly
to facilitate, any Takeover Proposal (as defined below) or engage in any
discussions or negotiations regarding, or provide any nonpublic information or
data to make or implement, any Takeover Proposal, in each case other than a
Takeover Proposal made by Parent; (ii) that it shall immediately cease and
cause to be terminated any existing discussions or negotiations with any third
persons conducted heretofore
35
with a view to formulating a Takeover Proposal; and (iii) that it shall
immediately notify Parent of the receipt of any Takeover Proposal and that it
shall keep Parent informed of the status of such Takeover Proposal; provided,
however, that, at any time prior to obtaining the Stockholder Approval, the
Company may, in response to a bona fide Takeover Proposal that the Board of
Directors of the Company determines in good faith could reasonably be expected
to lead to a Superior Proposal (as defined below) and which Takeover Proposal
did not result from a breach of this Section 4.02, (x) furnish information
with respect to the Company and its subsidiaries to the person making such
Takeover Proposal (and its representatives) pursuant to a customary
confidentiality agreement (except that such confidentiality agreement shall
not prohibit such person from making an unsolicited Takeover Proposal),
provided that all such information is provided on a prior or substantially
concurrent basis to Parent, and (y) participate in discussions or negotiations
with the person making such Takeover Proposal (and its representatives)
regarding such Takeover Proposal.
The term "Takeover Proposal" means any inquiry, proposal or offer
from any person relating to, or that is reasonably likely to lead to, any
direct or indirect acquisition, in one transaction or a series of
transactions, including by way of any merger, consolidation, tender offer,
exchange offer, binding share exchange, business combination,
recapitalization, liquidation, dissolution, joint venture or similar
transaction, of (A) assets or businesses that constitute or represent 20% or
more of the total revenue, operating income, EBITDA or assets of the Company
and its subsidiaries, taken as a whole, or (B) 20% or more of the outstanding
shares of Company Capital Stock or capital stock of, or other equity or voting
interests in, any of the Company's subsidiaries directly or indirectly holding
the assets or businesses referred to in clause (A) above.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw (or modify in a manner adverse to Parent or
Sub) or propose publicly to withdraw (or modify in a manner adverse to
Parent or Sub) the recommendation or declaration of advisability by such
Board of Directors of the Company or any such committee of this Agreement
or the Merger, or recommend, or propose publicly to recommend, the
approval or adoption of any Takeover Proposal (other than a Takeover
Proposal made by Parent) (each such action being referred to herein as an
"Adverse Recommendation Change"), unless the Board of Directors of the
Company determines in good faith, based on such matters as it deems
appropriate, after consulting with legal counsel, that such action is
necessary for the Board of Directors of the Company to comply with its
fiduciary duties to the Company's stockholders under applicable law and
the Company's certificate of incorporation, (ii) adopt or approve, or
publicly propose to adopt or approve, any Takeover Proposal (other than a
Takeover Proposal made by Parent), or withdraw its approval of the
Merger, (iii) cause or permit the Company to enter into any letter of
intent, memorandum of understanding, agreement in principle, acquisition
agreement, merger agreement, joint venture agreement, partnership
agreement or other agreement (each, an "Acquisition Agreement")
constituting or related to any Takeover Proposal (other than a
confidentiality agreement referred to in Section 4.02(a)) or (iv) agree
or resolve to take any of the actions prohibited by clauses (i), (ii) or
(iii) of this sentence. Notwithstanding anything in this Agreement to the
contrary, at any time prior to obtaining the Stockholder Approval, the
Board of Directors of the Company may,
36
in response to a Superior Proposal (as defined below) that did not result
from a breach of Section 4.02(a), cause the Company to terminate this
Agreement pursuant to Section 7.01(f) and concurrently or promptly
thereafter enter into an Acquisition Agreement; provided, however, that
the Company shall not terminate this Agreement pursuant to Section
7.01(f), unless the Company shall have complied with all the provisions
of this Section 4.02 (except for any failure to comply that would not
adversely affect the rights of Parent under this Section 4.02), including
the notification provisions in this Section 4.02, and with all applicable
requirements of Section 5.06(b) (including the payment of the Termination
Fee (as defined in Section 5.06(b)) prior to or concurrently with such
termination); and provided further, however, that the Company shall not
exercise its right to terminate this Agreement pursuant to Section
7.01(f) until the fifth business day following Parent's receipt of
written notice (a "Notice of Superior Proposal") from the Company
advising Parent that the Board of Directors of the Company has received a
Superior Proposal specifying the terms and conditions of the Superior
Proposal, identifying the person making such Superior Proposal and
stating that the Board of Directors of the Company intends to exercise
its right to terminate this Agreement pursuant to Section 7.01(f) (it
being understood and agreed that, prior to any such termination taking
effect, any amendment to the price or any other material term of a
Superior Proposal shall require a new Notice of Superior Proposal and a
new five business day period).
The term "Superior Proposal" means any bona fide written offer made
by a third party in respect of (i) a transaction that if consummated would
result in such third party acquiring, directly or indirectly, 50% or more of
the voting power of the Company Common Stock or 50% or more of the assets of
the Company and its subsidiaries, taken as a whole, or (ii) a direct merger
between such third party and the Company, in either case providing for
consideration to the Company's stockholders consisting of cash and/or
securities (it being understood that securities retained by the Company's
stockholders be included for purposes of this determination), which
transaction the Board of Directors of the Company determines in its good faith
judgment (after consultation with a financial advisor of nationally recognized
reputation) (taking into account the person making the offer, the
consideration offered, the likelihood of consummation (including the legal,
financial and regulatory aspects of the offer) as well as any other factors
deemed relevant by the Board of Directors of the Company) to be more favorable
from a financial point of view to the stockholders of the Company, taking into
account any changes to the terms of this Agreement offered by Parent in
response to such Superior Proposal or otherwise.
(c) Nothing contained in this Section 4.02 or elsewhere in this
Agreement shall prohibit the Company from (i) taking and disclosing to
its stockholders a position contemplated by Rule 14e-2(a) promulgated
under the Exchange Act or (ii) making any disclosure to the Company's
stockholders if, in the good faith judgment of the Board of Directors of
the Company, after consultation with outside counsel, failure to make
such disclosure would be inconsistent with applicable law; provided,
however, that in no event shall the Company or its Board of Directors or
any committee thereof take, agree or resolve to take any action
prohibited by Section 4.02(b)(i) (subject to the last clause of Section
4.02(b)(i)) or Section 4.02(b)(ii).
37
SECTION 4.03. Certain Conduct of the Parties. (a) During the period
from the date of this Agreement to the Effective Time, except as consented to
in writing by the Company (which consent shall not be unreasonably withheld or
delayed and which consent shall be deemed given if Parent has not received
written notice otherwise from the Company within eight business days after
requesting such consent of the Company), Guarantor and Parent shall not, and
shall cause their subsidiaries not to, directly or indirectly (a) acquire or
agree to acquire or, except as required by Applicable Law, the rules and
regulations of the Frankfurt Stock Exchange or, with respect to any disclosure
by any subsidiary, the rules and regulations of the principal stock exchange
on which such subsidiary's securities are listed, publicly disclose any
acquisition, in one transaction or a series of transactions, including by way
of any merger, consolidation, tender offer, exchange offer, binding share
exchange, business combination, recapitalization, liquidation, dissolution,
joint venture or similar transaction, of (i) any United States water services
or wastewater services business that is regulated by a PUC or is owned or
operated by a municipality or local Governmental Entity (other than any such
acquisition which does not involve aggregate payments (including debt
assumption) by Guarantor, Parent or their subsidiaries in excess of $20
million) or (ii) (A) any business that would, upon the consummation of such
acquisition, (x) cause Guarantor, Parent or any of their respective
subsidiaries to be required to register as a holding company under the Holding
Company Act or (y) subject Guarantor, Parent, Sub or any of their respective
subsidiaries to regulation under the Holding Company Act in a manner that
would raise substantive questions with respect to the ownership by any of them
of any water or wastewater business or (B) any business (x) that would, upon
the consummation of such acquisition, subject Guarantor, Parent or any of
their respective subsidiaries to regulation under the Holding Company Act in a
manner other than that described in clause (A) above or (y) that is a United
States gas or electric utility, if in the case of clause (B), such business is
subject to regulation as a gas or electric utility (or similar designation) by
a PUC in any state which the parties agree is material or (b) take any other
action that would reasonably be expected to (i) materially impede or delay
obtaining any Parent Required Consent or Company Required Consent or the
satisfaction of the conditions set forth in Section 6.01(c) (to the extent
relating to the Holding Company Act), 6.01(d) or 6.02(d) or (ii) otherwise
materially impede or delay the consummation of the Merger. In the event that
Guarantor or Parent shall seek the consent of the Company to make an
acquisition of the type described in Section 4.03(a)(a)(ii)(B), the sole basis
on which the Company may withhold its consent shall be a determination by the
Company that such acquisition would reasonably be expected to (x) materially
impede or delay obtaining any Parent Required Consent or Company Required
Consent or the satisfaction of the conditions set forth in Section 6.01(c) (to
the extent relating to the Holding Company Act), 6.01(d) or 6.02(d) or (y)
otherwise materially impede or delay the consummation of the Merger.
(b) Prior to the obtaining of the Stockholder Approval, Guarantor
and Parent shall not, and shall cause their respective subsidiaries not to,
acquire "beneficial ownership" (as such term is defined for purposes of
Section 13(d) of the Exchange Act) of any shares of Company Common Stock.
After the obtaining of the Stockholder Approval, Guarantor and Parent shall
not, and shall cause their respective subsidiaries not to, acquire shares of
Company Common Stock if such acquisition would result in Guarantor, Parent and
their subsidiaries acquiring "beneficial ownership" (as so defined) of more
than 4.9% of the shares of Company Common Stock outstanding at the time of
such acquisition.
38
(c) During the period from the date of this Agreement to the
Effective Time, except as consented to in writing by Parent (which consent
shall not be unreasonably withheld or delayed and which consent shall be
deemed given if the Company has not received written notice otherwise from
Parent within eight business days after requesting such consent of Parent),
the Company shall not, and shall cause its subsidiaries not to, directly or
indirectly, take any action that would reasonably be expected to (i)
materially impede or delay obtaining any Parent Required Consent or Company
Required Consent or the satisfaction of the conditions set forth in Section
6.01(c) (to the extent relating to the Holding Company Act), 6.01(d) or
6.02(d) or (ii) otherwise materially impede or delay the consummation of the
Merger.
ARTICLE V
Additional Agreements
---------------------
SECTION 5.01. Preparation of the Proxy Statement; Stockholders
Meeting. (a) As promptly as reasonably practicable following the date of this
Agreement, the Company shall prepare and file with the SEC the Proxy Statement
in preliminary form and the Company shall use its reasonable best efforts to
respond as promptly as practicable to any comments of the SEC with respect
thereto and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable following the date of this Agreement.
The Company shall promptly notify Parent upon the receipt of any comments from
the SEC or its staff or any request from the SEC or its staff for amendments
or supplements to the Proxy Statement and shall provide Parent with copies of
all correspondence between the Company and its representatives, on the one
hand, and the SEC and its staff, on the other hand. Parent shall promptly
provide any information or responses to comments, or other assistance,
reasonably requested in connection with the foregoing. Prior to filing or
mailing the Proxy Statement (or any amendment or supplement thereto) or
responding to any comments of the SEC with respect thereto, the Company (i)
shall provide Parent an opportunity to review and comment on such document or
response and (ii) shall give reasonable consideration to all comments proposed
by Parent.
(b) The Company shall, as promptly as reasonably practicable
following the date of this Agreement, establish a record date for, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of obtaining the Stockholder
Approval, regardless of whether an Adverse Recommendation Change has
occurred at any time after the date of this Agreement. The Company shall,
through its Board of Directors, recommend to its stockholders that they
adopt this Agreement, and shall include such recommendation in the Proxy
Statement, in each case subject to its rights under Section 4.02(b)(i).
Without limiting the generality of the foregoing, the Company agrees that
its obligations pursuant to this Section 5.01(b) shall not be affected by
the commencement, public proposal, public disclosure or communication to
the Company or any other person of any Takeover Proposal.
39
SECTION 5.02. Access to Information; Confidentiality; Transition
Planning. (a) The Company shall, and shall cause each of its subsidiaries to,
afford to Parent, and to Parent's officers, employees, investment bankers,
attorneys, accountants and other advisors and representatives, reasonable
access at reasonable times and during normal business hours during the period
prior to the Effective Time or the termination of this Agreement, in a manner
which does not unreasonably interfere with the business and operations of the
Company, to all their respective properties, assets, books, contracts,
commitments, directors, officers, employees, attorneys, accountants, auditors,
other advisors and representatives and records and, during such period, the
Company shall, and shall cause each of its subsidiaries to, make available to
Parent on a prompt basis (a) access to each material report, schedule, form,
statement and other document filed or received by it during such period to or
from any PUC or pursuant to the requirements of applicable securities laws and
(b) all other information concerning its business, properties and personnel as
Parent may reasonably request; provided that such right of access shall not
include sampling, testing or Phase II environmental site assessment
activities. For the purposes of this Section 5.02, all communications,
including requests for information or access, pursuant to this Section 5.02,
shall only be made by and between a representative of each of Parent, on the
one hand, and of the Company, on the other hand, which representative (a)
shall initially be Xxx XxXxxxxx for Parent and Xxxxx Xxxx for the Company and
(b) may be replaced with a substitute representative by either party from time
to time upon reasonable written notice to the other party. The Company will
promptly advise Parent of any material developments in its business.
Notwithstanding the foregoing, (i) the Company and its subsidiaries shall not
be required to provide any information to the extent that the Company or any
of its subsidiaries is legally obligated to keep such information confidential
or otherwise not to provide such information or to the extent that such access
would constitute a waiver of the attorney-client privilege and (ii) the
Company shall provide access to those properties, assets, books, contracts,
commitments, directors, officers, employees, attorneys, accountants, auditors,
other advisors and representatives and records described above of its
subsidiaries that are not wholly-owned subsidiaries only to the extent that
the Company has or is reasonably able to obtain such access. Parent will hold,
and will direct its officers, employees, investment bankers, attorneys,
accountants and other advisors and representatives to hold, any and all
information received from the Company, directly or indirectly, in confidence
in accordance with the Confidentiality Agreement dated June 26, 2001, among
Guarantor, Thames and the Company (as it may be amended from time to time, the
"Confidentiality Agreement").
(b) The Company and Parent shall, and shall cause each of their
respective subsidiaries to, reasonably cooperate to obtain an orderly
transition and integration process in connection with the Merger in order
to minimize the disruption to, and preserve the value of, the business of
the Surviving Corporation and its subsidiaries during the period from and
after the Effective Time. The Company and Parent agree that such
cooperation shall include the development as soon as reasonably
practicable following the date hereof of a mutually acceptable
integration plan on a business-by-business and region-by-region basis
with reasonable provisions for visitation by employees.
SECTION 5.03. Reasonable Best Efforts; Notification. Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use its
40
reasonable best efforts to take, or cause to be taken, all actions that are
necessary, proper and advisable to consummate and make effective the Merger
and the other transactions contemplated by this Agreement and the Company
Voting Agreement, including using its reasonable best efforts to accomplish
the following as promptly as reasonably practicable following the date of this
Agreement: (a) the taking of all acts necessary to cause the conditions
precedent set forth in Article VI to be satisfied, (b) the obtaining of all
necessary actions or nonactions, waivers, consents, approvals, orders and
authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings and the taking of all steps as may be
necessary to obtain an approval (including the Company Required Consents and
the Parent Required Consents) or waiver from, or, to the extent any approval
or waiver cannot be obtained, to avoid the need to obtain an approval
(including the Company Required Consents and the Parent Required Consents) or
waiver from, or to avoid an action or proceeding by, any Governmental Entity
and (c) the obtaining of all necessary consents, approvals or waivers from
third parties. In connection with and without limiting the foregoing, the
Company shall, if any state takeover statute or similar statute or regulation
is or becomes applicable to this Agreement, the Company Voting Agreement, the
Merger or any of the other transactions contemplated hereby or thereby, use
its reasonable best efforts to allow the Merger and the other transactions
contemplated by this Agreement and the Company Voting Agreement to be
consummated as promptly as practicable on the terms contemplated by this
Agreement and the Company Voting Agreement and otherwise to minimize the
effect of such statute or regulation on this Agreement, the Company Voting
Agreement, the Merger and the other transactions contemplated hereby and
thereby. The Company, Guarantor and Parent shall provide such assistance,
information and cooperation to each other as is reasonably requested in
connection with the foregoing and, in connection therewith, shall notify the
other person promptly following the receipt of any comments from any
Governmental Entity and of any request by any Governmental Entity for
amendments, supplements or additional information in respect of any
registration, declaration or filing with such Governmental Entity and shall
supply the other person with copies of all correspondence between such person
or any of its representatives, on the one hand, and any Governmental Entity,
on the other hand. In addition, the Company, Guarantor and Parent shall
cooperate to promptly develop a mutually acceptable plan to obtain the Company
Required Consents and the Parent Required Consents as expeditiously as
reasonably practicable and without undue expense. To the extent that either
party or any of its subsidiaries is required to make any registration,
declaration or filing with any PUC in connection with obtaining the Company
Required Consents or the Parent Required Consents, such party shall use its
reasonable best efforts to (i) provide the other party an opportunity to
review and comment on such registration, declaration or filing reasonably in
advance of making any such registration, declaration or filing, (ii) give
reasonable consideration to all comments proposed by the other party and (iii)
if applicable, coordinate the submission of such registration, declaration or
filing with the other party. Neither the Company nor any of its subsidiaries
shall enter into or agree to any terms or conditions in connection with
obtaining the Company Required Consents without the prior written consent of
Parent (which consent shall not be unreasonably withheld or delayed). None of
Guarantor, Parent, Sub or any of their respective subsidiaries shall enter
into or agree to any terms or conditions in connection with obtaining the
Parent Required Consents without the prior written consent of the Company
(which consent shall not be unreasonably withheld or delayed).
41
SECTION 5.04. Company Stock Options. (a) As soon as practicable
following the date of this Agreement, the Company shall ensure that the Board
of Directors of the Company (or, if appropriate, any committee administering
the Company Stock Plans) shall adopt such resolutions or take such other
actions (if any) as may be required to provide that:
(i) each Company Stock Option outstanding immediately prior to
the Effective Time (whether vested or unvested) shall be converted
at the Effective Time into the right to receive an amount of cash
equal to (A) the excess, if any, of (1) the Merger Consideration
over (2) the exercise price per share of Company Common Stock
subject to such Company Stock Option, multiplied by (B) the number
of shares of Company Common Stock for which such Company Stock
Option shall not theretofore have been exercised;
(ii) each Company Stock Issuance Right outstanding immediately
prior to the Effective Time (whether vested or unvested) shall be
converted at the Effective Time into the right to receive an amount
of cash equal to the product of (A) the Merger Consideration and (B)
the number of shares of Company Common Stock subject to such Company
Stock Issuance Right; and
(iii) make such other changes to the Company Stock Plans as the
Company and Parent may agree are appropriate to give effect to the
Merger.
(b) All amounts payable pursuant to Section 5.04(a) shall be subject
to any required withholding of taxes or proof of eligibility of exemption
therefrom, and shall be paid as soon as practicable following the
Effective Time, without interest.
(c) The Company shall take all actions determined to be necessary to
effectuate the provisions of this Section 5.04 as mutually agreed by
Parent and the Company. Prior to the Effective Time, the Company shall
ensure that the Board of Directors of the Company (or, if appropriate,
any committee administering the Company Stock Plans) shall take or cause
to be taken such actions as are required to cause (i) the Company Stock
Plans to terminate as of the Effective Time and (ii) the provisions in
any other Company Benefit Plan providing for the issuance, transfer or
grant of any capital stock of the Company or any interest on or following
the Effective Time in respect of any capital stock of the Company to be
deleted as of the Effective Time.
SECTION 5.05. Indemnification, Exculpation and Insurance. (a) To the
extent, if any, not provided by an existing right of indemnification or other
agreement or policy, from and after the Effective Time, Guarantor and Parent
shall, to the fullest extent permitted by applicable law, indemnify, defend
and hold harmless each person who is now, or has been at any time prior to the
date hereof, or who becomes prior to the Effective Time, an officer or
director of the Company or any of its subsidiaries (each an "Indemnified
Party" and, collectively, the "Indemnified Parties") against (i) all losses,
expenses (including reasonable attorney's fees and expenses), claims, damages
or liabilities or, subject to the proviso of the next succeeding sentence,
amounts paid in settlement, arising out of actions or omissions occurring at
or prior to
42
the Effective Time (and whether asserted or claimed prior to, at or after the
Effective Time) that are, in whole or in part, based on or arising out of the
fact that such person is or was a director or officer of the Company or any of
its subsidiaries ("Indemnified Liabilities"), and (ii) all Indemnified
Liabilities to the extent they are based in whole or in part on or arise in
whole or in part out of or pertain to this Agreement or the transactions
contemplated hereby. In the event of any such loss, expense, claim, damage or
liability (whether or not arising before the Effective Time), Guarantor and
Parent shall pay or cause to be paid the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to Parent, promptly after statements therefor are received and
otherwise advance to such Indemnified Party upon request reimbursement of
documented expenses reasonably incurred; provided, however, that Guarantor and
Parent shall not be liable for any settlement effected without its written
prior consent (which consent shall not be unreasonably withheld or delayed).
In the event any Indemnified Party is required to bring any action against
Guarantor or Parent to enforce rights or to collect money due under this
Agreement and such action results in a final, non-appealable judgment in favor
of such Indemnified Party, Guarantor and Parent shall reimburse such
Indemnified Party for all of its reasonable expenses in bringing and pursuing
such action. Each Indemnified Party shall be entitled to the advancement of
expenses to the full extent contemplated in this Section 5.05(a) in connection
with any such action; provided, however, that any person to whom expenses are
advanced provides an undertaking, if and to the extent required by the DGCL,
to repay such advances if it is ultimately determined that such person is not
entitled to indemnification.
(b) For six years after the Effective Time, Guarantor and Parent
shall maintain in effect (i) the Company's current directors' and
officers' liability insurance covering each person currently covered by
the Company's directors' and officers' liability insurance policy for
acts or omissions occurring prior to the Effective Time on terms with
respect to such coverage and amounts no less favorable in the aggregate
to such directors and officers than those of such policy as in effect on
the date of this Agreement; provided that Guarantor or Parent may
substitute therefor policies of a reputable insurance company the terms
of which, including coverage and amount, are no less favorable in the
aggregate to such directors and officers than the insurance coverage
otherwise required under this Section 5.05(b); provided however, that in
no event shall Guarantor and Parent be required to pay aggregate annual
premiums for insurance under this Section 5.05(b) in excess of 200% of
the amount of the aggregate premiums paid by the Company for the year
from July 22, 2001 through July 22, 2002 for such purpose (which premiums
for the year from July 22, 2001 through July 22, 2002 are hereby
represented and warranted by the Company to be $327,500), provided that
Guarantor and Parent shall nevertheless be obligated to provide a policy
with the best coverage available as may be obtained for such 200% amount
and (ii) in the Restated Certificate of Incorporation and By-Laws of the
Surviving Corporation the provisions regarding elimination of liability
of directors and indemnification of, and advancement of expenses to,
officers or directors contained in the Restated Certificate of
Incorporation attached as Exhibit A and the current By-Laws of the
Company.
(c) In the event that Guarantor or Parent or any of their successors
or assigns (i) consolidates with or merges into any other person and is
not the continuing or
43
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all its properties and assets
to any person, then, and in each such case, Guarantor and Parent shall
cause proper provision to be made so that the successors and assigns of
Guarantor or Parent, as the case may be, assume the obligations set forth
in this Section 5.05.
(d) To the fullest extent permitted by law, from and after the
Effective Time, all rights to indemnification as of the date hereof in
favor of the directors and officers of the Company and its subsidiaries
with respect to their activities as such prior to the Effective Time, as
provided in, with respect to the Company, the Restated Certificate of
Incorporation attached as Exhibit A and the current By-Laws of the
Company, or, with respect to the Company's subsidiaries, their respective
certificates of incorporation and by-laws (or similar organizational
documents) in effect on the date hereof, or otherwise in effect on the
date hereof, shall survive the Merger and shall continue in full force
and effect for a period of not less than six years from the Effective
Time; provided, however, that in the event any claim or claims are
asserted or made within such six-year period, all such rights to
indemnification in respect of such claim or claims shall continue until
the final disposition thereof.
(e) The provisions of this Section 5.05 are intended to be for the
benefit of, and will be enforceable by, each Indemnified Party, his or
her heirs and his or her representatives.
SECTION 5.06. Fees and Expenses. (a) Except as provided below, all
fees and expenses incurred in connection with this Agreement, the Company
Voting Agreement, the Merger and the other transactions contemplated hereby
and thereby shall be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated.
(b) In the event that (i) (A) a Takeover Proposal shall have been
made to the Company or its stockholders or any person has publicly
announced an intention (which has not been withdrawn) to make a Takeover
Proposal, (B) thereafter this Agreement is terminated by either Parent or
the Company pursuant to Section 7.01(b)(i) (but only if the Stockholders
Meeting has not been held by the date that is five business days prior to
the date of such termination due to a breach of Section 5.01 by the
Company) or 7.01(b)(iii) and (C) within 12 months after such termination,
the Company or any of its subsidiaries enters into a definitive agreement
to consummate, or consummates, any Takeover Proposal (solely for purposes
of this Section 5.06(b)(i)(C), the term "Takeover Proposal" shall have
the meaning set forth in the definition of Takeover Proposal contained in
Section 4.02(a) except that all references to 20% shall be deemed
references to 50%), (ii) this Agreement is terminated by the Company
pursuant to Section 7.01(f) or (iii) this Agreement is terminated by
Parent pursuant to Section 7.01(c), then the Company shall pay Parent a
fee equal to $138 million (the "Termination Fee") by wire transfer of
same day funds to an account in the United States designated by Parent
(x) in the case of a termination by the Company pursuant to Section
7.01(f), concurrently with such termination, (y) in the case of a
termination by Parent pursuant to Section 7.01(c), within
44
two business days after such termination and (z) in the case of a payment
as a result of any event referred to in Section 5.06(b)(i)(C), upon the
first to occur of such events. The Company acknowledges that the
agreements contained in this Section 5.06(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, Parent would not enter into this Agreement; accordingly, if
the Company fails promptly to pay the amounts due pursuant to this
Section 5.06(b), and, in order to obtain such payment, Parent commences a
suit that results in a final, non-appealable judgment against the Company
for the amounts set forth in this Section 5.06(b), the Company shall pay
to Parent interest on the amounts set forth in this Section 5.06(b) from
and including the date payment of such amount was due to but excluding
the date of actual payment at the prime rate of The Chase Manhattan Bank
in effect on the date such payment was required to be made, together with
reasonable legal fees and expenses incurred in connection with such suit.
(c) If this Agreement is terminated (i) by the Company pursuant to
Section 7.01(e) (other than on account of a breach of Section 3.02(d),
Section 4.03 or Section 5.03) or (ii) by Parent pursuant to Section
7.01(d), then the non-terminating party shall promptly (but not later
than five business days after receipt of notice of the amount due from
the other party) pay to the terminating party an amount equal to all
documented out-of-pocket expenses and fees incurred by such terminating
party or its affiliates (including fees and expenses payable to all
legal, accounting, financial, public relations and other professional
advisors) arising out of, in connection with or related to the Merger or
the other transactions contemplated by this Agreement ("Out-of-Pocket
Expenses") not to exceed $20 million in the aggregate; provided, however,
that if this Agreement is terminated under the circumstances described in
clauses (i) or (ii) above by a party as a result of a willful breach by
the non-terminating party, the terminating party may pursue any remedies
available to it at law or in equity and such party's Out-of-Pocket
Expenses shall not be limited to $20 million.
SECTION 5.07. [Intentionally omitted].
SECTION 5.08. Collective Bargaining Agreements. From and after the
Effective Time, Parent shall cause the Surviving Corporation and its
subsidiaries to honor and continue to be bound by the terms of all collective
bargaining agreements to which the Company or any of its subsidiaries is a
party (the "Collective Bargaining Agreements").
SECTION 5.09. Benefits Matters. (a) For purposes hereof, "Company
Employees" shall mean those individuals who are employees of the Company and
its subsidiaries (including those employees who are on vacation, leave of
absence, disability or maternity leave) as of the Effective Time.
(b) Subject to Applicable Law and Judgments and obligations under
Collective Bargaining Agreements, Parent shall, and shall cause the
Surviving Corporation to, give the Company Employees full credit, for all
purposes, under any employee benefit plans or arrangements maintained by
Parent's (or one of its
45
subsidiaries') water business in the United States, the Surviving
Corporation and their respective subsidiaries, and in which Company
Employees may become eligible to participate for the Company Employees'
service with the Company and its subsidiaries to the same extent
recognized by the Company and its subsidiaries immediately prior to the
Effective Time, except for purposes of benefit accrual under defined
benefit pension plans in which the Company Employees do not participate
immediately prior to the Effective Time, so long as credit for past
service under any such pension plan is also not given to other employees
employed in Parent's (or one of its subsidiaries') water businesses in
the United States or to the extent giving such credit would result in a
duplication of benefits (including in respect of benefit accrual under
defined benefit pension plans) for the same period of service.
(c) Subject to Applicable Law and Judgments and obligations under
Collective Bargaining Agreements, Parent shall, and shall cause the
Surviving Corporation to, (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation
and coverage requirements applicable to the Company Employees and, to the
extent applicable, any retired employee constituting a member of the
Retiree Group (as defined below) (any such employee a "Retired Employee")
under any welfare benefit plans in which such employees may be eligible
to participate after the Effective Time to the extent waived under the
applicable Company Benefit Plan immediately prior to the Effective Time
and (ii) provide each Company Employee (and each Retired Employee) with
credit for any co-payments and deductibles paid prior to the Effective
Time in the calendar year in which the Effective Time occurs (or, if
later, the year in which such Company Employee (and each Retired
Employee) commences participation) in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans in which
such Company Employee (and each Retired Employee) is eligible to
participate after the Effective Time.
(d) Parent agrees to honor, and shall cause the Surviving
Corporation to honor, the Company Benefit Plans disclosed in the Filed
SEC Documents or Section 3.01(k)(i) of the Company Disclosure Schedule in
accordance with their current terms. Subject to Applicable Law and
Judgments and obligations under Collective Bargaining Agreements, for a
period of 18 months immediately following the Effective Time, Parent
shall, or shall cause the Surviving Corporation to, provide to the
Company Employees compensation (including base pay and annual and long
term incentive opportunities) and employee benefits (including health,
welfare, pension, vacation, savings and severance) that are no less
favorable in the aggregate than those provided to the Company Employees
immediately prior to the Effective Time; provided, that for a period of
12 months immediately following the Effective Time, Parent shall, or
shall cause the Surviving Corporation to, maintain the Company Benefit
Plans in accordance with their terms as in effect immediately prior to
the Effective Time (other than equity or equity-based plans) without any
adverse amendment thereto or termination thereof (except as required by
Applicable Law and Judgments or any Collective Bargaining Agreement).
Notwithstanding the foregoing, following the Effective Time, there shall
be no obligation to provide Company Employees with awards of capital
stock of any entity or awards of options or other rights of any kind to
acquire capital stock of any entity); provided,
46
however, that the value of any equity-based compensation provided to
Company Employees immediately prior to the Effective Time shall be taken
into account in determining whether compensation and benefits provided
during the 18 months after the Effective Time are no less favorable in
the aggregate than those provided to Company Employees immediately prior
to the Effective Time.
(e) Subject to Applicable Law and Judgments and obligations under
Collective Bargaining Agreements, Parent shall, or shall cause the
Surviving Corporation to, provide to the Retiree Group (as defined
below), without adverse amendment, the post-retirement medical and life
insurance benefits as in effect immediately prior to the Closing Date (at
the same levels, and at the same cost (if any), as in effect immediately
prior to the Closing Date), provided to Company Employees who are not
covered by a Collective Bargaining Agreement and their dependents as set
forth in the retiree medical plan listed in Section 3.01(k)(i) of the
Company Disclosure Schedule (the "Retiree Medical Plan"). The "Retiree
Group" means each Company Employee who is not (or was not while employed)
covered by a Collective Bargaining Agreement and who, as of the Closing
Date, (i) is either retired under the terms of the Retiree Medical Plan
as in effect on the date hereof or (ii) has satisfied all applicable
eligibility requirements (under the terms of the Retiree Medical Plan as
in effect on the date hereof) necessary to commence receiving benefits if
his or her employment were terminated at the Effective Time.
(f) Subject to Applicable Law and Judgments and obligations under
Collective Bargaining Agreements, in the event and to the extent that
Guarantor or one of its subsidiaries maintains a qualified employer stock
ownership plan for the benefit of employees employed in Parent's or one
of its subsidiaries' (or one of their respective successors') water
business in the United States (a "Guarantor ESOP"), Guarantor shall allow
all current non-union Company Employees to participate in such Guarantor
ESOP as soon as practicable after the Effective Time.
(g) Between the date of this Agreement and the Closing Date, the
Company shall provide Parent commercially reasonable access to the
Company Employees for purposes of implementing this Agreement.
(h) The Company shall use its reasonable best efforts to cause the
Board of Directors of the Company not to exercise any discretion it
possesses solely in respect of the transactions contemplated by this
Agreement, to expressly set the date when a "change in control" occurs
for the purposes of any applicable individual agreement covering a
Participant (other than to deem such "change in control" to occur no
earlier than the Effective Time).
(i) The Company shall take all action necessary (i) to provide that
the component of the Company's Dividend Reinvestment and Stock Purchase
Plan permitting independent monthly purchases of Company Common Stock
(other than purchases of Company Common Stock funded solely by
reinvestment of Company
47
dividends) (the "DRSPP Stock Purchase Component") shall be indefinitely
suspended as promptly as reasonably practicable following the date of
this Agreement (but in no event later than immediately following the
second stock purchase effected following the date of this Agreement under
the DRSPP Stock Purchase Component) and (ii) to cause all amounts not yet
applied as of the date of termination of the DRSPP Stock Purchase
Component to purchase Company Common Stock under the DRSPP Stock Purchase
Component to be returned as promptly as practicable following such
suspension.
SECTION 5.10. Public Announcements. Subject to each party's
disclosure obligations imposed by law or any applicable securities exchange,
and except with respect to any Adverse Recommendation Change, Parent and Sub,
on the one hand, and the Company, on the other hand, shall, to the extent
reasonably practicable, consult and cooperate with each other before issuing,
and give each other a reasonable opportunity to review and comment upon, any
press release or other public statements (other than routine employee
communications) with respect to this Agreement, the Company Voting Agreement,
the Merger and the other transactions contemplated hereby and thereby. The
parties agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
SECTION 5.11. Rights Agreement. The Board of Directors of the
Company shall take all action necessary in order to render the Company Rights
inapplicable to the Merger, the Company Voting Agreement and the performance
of this Agreement.
SECTION 5.12. Stockholder Litigation. The Company agrees that it
shall not settle or offer to settle any litigation commenced prior to or after
the date hereof against the Company or any of its directors by any stockholder
of the Company relating to this Agreement, the Company Voting Agreement, the
Merger, any other transaction contemplated hereby or thereby, without the
prior written consent of Parent (not to be unreasonably withheld or delayed).
SECTION 5.13. Director Resignations. On the Closing Date, the
Company shall cause to be delivered to Parent duly executed resignations,
effective as of the Effective Time, of each member of the Board of Directors
of the Company and shall take such other action as is necessary to accomplish
the foregoing.
ARTICLE VI
Conditions Precedent
--------------------
SECTION 6.01. Conditions to Each Party's Obligation to Effect the
Merger. The obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
48
(a) Stockholder Approval. The Stockholder Approval shall have been
obtained.
(b) Antitrust. Any waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired and any other required approval or waiting period
under any other similar competition, merger control, antitrust or similar
law or regulation or the Investment Canada Act, if applicable, the
failure of which to obtain or comply with which would be reasonably
expected to have a material adverse effect, shall have been obtained or
terminated or shall have expired.
(c) No Injunctions or Legal Restraints. No temporary restraining
order, preliminary or permanent injunction or other order or decree
issued by any court of competent jurisdiction or other legal restraint or
prohibition that has the effect of preventing the consummation of the
Merger shall be in effect (collectively, "Legal Restraints").
(d) Required Consents. The Company Required Consents and the Parent
Required Consents shall have been obtained prior to the Effective Time
and shall have become Final Orders. Any reference in this Agreement to
the "obtaining" of any such Company Required Consents or Parent Required
Consents shall mean making such declarations, filings, registrations,
giving such notice, obtaining such authorizations, orders, consents or
approvals and having such waiting periods expire as are, in each case,
necessary to avoid a violation of law. A "Final Order" for purposes of
this Agreement means action by the relevant regulatory authority (i)
which has not been reversed, stayed, enjoined, set aside, annulled or
suspended and (ii) with respect to which any waiting period prescribed by
Applicable Law or Judgment before the Merger and the other transactions
contemplated hereby may be consummated has expired, and as to which all
conditions to be satisfied before the consummation of such transactions
prescribed by Applicable Law or Judgment have been satisfied.
(e) Stock Redemption. The Stock Redemption shall have been
consummated.
SECTION 6.02. Conditions to Obligations of Guarantor, Parent and
Sub. The obligations of Guarantor, Parent and Sub to effect the Merger are
further subject to the satisfaction or waiver on or prior to the Closing Date
of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct as
of the date of this Agreement and as of the Closing Date with the same
effect as though made as of the Closing Date (except that the accuracy of
representations and warranties that by their terms speak as of a
specified date will be determined as of such date), other than for such
failures to be true and correct that individually or in the aggregate
would not reasonably be expected to have a material adverse effect.
Parent shall have received a certificate signed on behalf of the Company
by the chief financial officer of the Company to such effect. For the
49
purposes of determining the satisfaction of this condition, the
representations and warranties of the Company shall be deemed not
qualified by any references therein to materiality generally or to a
material adverse effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company
by the chief financial officer of the Company to such effect.
(c) Material Adverse Effect. No material adverse effect shall have
occurred and there shall be no state of facts, change, development,
effect, condition or occurrence that would reasonably be expected to have
a material adverse effect.
(d) Required Consents. The Final Orders relating to the Company
Required Consents and the Parent Required Consents, together with any
consents, approvals, orders, authorizations and declarations that shall
have been obtained following the date of this Agreement and prior to the
Effective Time in connection with any acquisition of any business or
person by the Company or any of its subsidiaries, shall not individually
or in the aggregate impose any terms or conditions, excluding any terms
and conditions that may be imposed with respect to the acquisitions
contemplated by the agreements dated as of October 15, 1999 between the
Company and certain of its subsidiaries on one hand, and Citizens
Communications Company ("Citizens") and certain of its subsidiaries, on
the other hand, to acquire certain water and wastewater assets of those
Citizens subsidiaries, to the extent reflected or referred to in the
Proposed Decision of ALJ XxXxxxx dated as of September 6, 2001 and
excluding any terms and conditions that may be imposed to the extent
attributable to any acquisition of any business or person by Guarantor or
any of its subsidiaries with respect to which an acquisition agreement is
entered into or that is publicly announced or consummated after the date
of this Agreement, that would reasonably be expected to have a material
adverse effect, or a material adverse effect on the combined business,
assets, properties, condition (financial or otherwise) or results of
operations of the Company and Thames Water Holdings, Inc. and their
respective subsidiaries taken as a whole.
SECTION 6.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Guarantor, Parent and Sub contained herein shall be true
and correct, as of the date of this Agreement and as of the Closing Date
with the same effect as though made as of the Closing Date (except that
the accuracy of representations and warranties that by their terms speak
as of a specified date will be determined as of such date), other than
for such failures to be true and correct that individually or in the
aggregate would not reasonably be expected to impair in any material
respect the ability of Guarantor, Parent or Sub to
50
perform its obligations under this Agreement or prevent or materially
delay the consummation of any of the transactions contemplated by this
Agreement. The Company shall have received a certificate signed on behalf
of Guarantor and Parent by a senior officer of each of Guarantor and
Parent to such effect. For the purposes of determining the satisfaction
of this condition, the representations and warranties of Guarantor,
Parent and Sub shall be deemed not qualified by any references therein to
materiality generally or to a material adverse effect.
(b) Performance of Obligations of Parent and Sub. Guarantor, Parent
and Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on
behalf of Guarantor and Parent by a senior officer of each of Guarantor
and Parent to such effect.
SECTION 6.04. Frustration of Closing Conditions. None of the
Company, Guarantor, Parent or Sub may rely on the failure of any condition set
forth in Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if
such failure was caused by such party's failure to use reasonable best efforts
to consummate the Merger and the other transactions contemplated by this
Agreement, as required by and subject to Section 5.03.
ARTICLE VII
Termination, Amendment and Waiver
---------------------------------
SECTION 7.01. Termination. This Agreement may be terminated, and the
Merger contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after the Stockholder Approval has been
obtained:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by March 16,
2003; provided, however, (A) that the right to terminate this
Agreement pursuant to this Section 7.01(b)(i) shall not be available
to any party whose breach of this Agreement has been the primary
reason the Merger has not been consummated by such date, (B) that
neither Parent nor the Company may terminate pursuant to this clause
(b)(i) if on such date all conditions in Article VI shall have been
satisfied or be capable of being satisfied other than the condition
set forth in Section 6.01(e), and the Company shall have mailed a
notice of redemption to effect the Stock Redemption, and (C) that if
on such date a condition set forth in Section 6.01(d) or 6.02(d)
shall not have been satisfied but all other conditions set forth in
Article VI shall have been satisfied or be capable of being
satisfied, then such
51
date shall be extended to September 16, 2003; and provided, further,
that if on such date (or such extended date pursuant to the
immediately preceding proviso, as applicable), a condition set forth
in Section 6.01(d) or 6.02(d) shall not have been satisfied solely
because the period described in clause (ii) of the definition of
Final Order set forth in Section 6.01(d) shall not have expired, but
all of the other conditions set forth in Article VI shall have been
satisfied or be capable of being satisfied, such date shall be
extended to the date of expiration of such period (up to a maximum
of 60 days for such extension);
(ii) if any Legal Restraint of the type referred to in Section
6.01(c) shall be in effect and shall have become final and
nonappealable (provided that the party seeking to terminate this
Agreement pursuant to this Section 7.01(b)(ii) shall have used its
reasonable best efforts to resist, resolve or lift, as applicable,
such Legal Restraint); or
(iii) if, upon a vote at a duly held meeting to obtain the
Stockholder Approval, the Stockholder Approval shall not have been
obtained;
(c) by Parent in the event an Adverse Recommendation Change has
occurred;
(d) by Parent if the Company shall have breached any of its
representations, warranties or covenants contained in this Agreement,
which breach (A) would give rise to the failure of a condition set forth
in Section 6.02(a) or 6.02(b), and (B) has not been cured by the Company
within twenty business days after its receipt of written notice thereof
from Parent;
(e) by the Company if Parent shall have breached any of its
representations, warranties or covenants contained in this Agreement,
which breach (i) would give rise to the failure of a condition set forth
in Section 6.03(a) or 6.03(b), and (ii) has not been cured by Parent
within twenty business days after its receipt of written notice thereof
from the Company; or
(f) by the Company in accordance with the terms and subject to the
conditions of Section 4.02(b).
Notwithstanding the foregoing, in no event shall Parent terminate this
Agreement unless prior to the date of such termination Parent shall have
complied with Section 7.03 (including paying to the Company the Reverse Fee)
if applicable.
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other than
the provisions of the last sentence of Section 5.02(a), Section 5.06, this
Section 7.02, Section 7.03 and Article VIII; provided, however, that no such
52
termination shall relieve any party hereto from any liability or damages
resulting from a wilful breach by a party of any of its representations,
warranties or covenants set forth in this Agreement.
SECTION 7.03. Certain Breaches. If (a) this Agreement is terminated
by either party pursuant to Section 7.01 (other than (w) the termination of
this Agreement by either Parent or the Company pursuant to Section 7.01(a) or
(b)(iii), (x) the termination of this Agreement by Parent pursuant to Section
7.01(c) or (y) the termination of this Agreement by the Company pursuant to
Section 7.01(f)) at a time when any of the conditions set forth in Section
6.01(c) (to the extent relating to the Holding Company Act), 6.01(d) or
6.02(d) have not been satisfied and (b) at the time of such termination either
(i) Section 3.02(d)(i) is not true and correct such that Guarantor, Parent,
Sub or any of their respective subsidiaries (A) would be required to register
as a holding company under the Holding Company Act or (B) would be subject to
regulation under the Holding Company Act in a manner that would raise
substantive questions with respect to the ownership by any of them of any
water or wastewater business or Guarantor or Parent is in breach of Section
4.03(a)(a)(i) or 4.03(a)(a)(ii)(A) or (ii) Section 3.02(d)(i) (other than as
set forth above) or 3.02(d)(ii) is not true and correct or Guarantor or Parent
is in breach of Section 4.03(a)(a)(ii)(B), 4.03(a)(b)(i), 5.03(a) (to the
extent relating to Section 6.01(c) (to the extent relating to the Holding
Company Act), 6.01(d) or 6.02(d)) or 5.03(b) (to the extent relating to the
Company Required Consents and the Parent Required Consents) and, in the case
of clause (ii), such failure to be true and correct or such breach is the
primary cause of the failure of the conditions set forth in Section 6.01(c)
(to the extent relating to the Holding Company Act), 6.01(d) or 6.02(d) to be
satisfied, then Parent shall pay the Company an amount equal to $138 million
(the "Reverse Fee") by wire transfer of same day funds in U.S. dollars to an
account in the United States designated by the Company within two business
days after (or, in the case of a termination by Parent, concurrently with)
such termination. Guarantor and Parent acknowledge that the agreements
contained in this Section 7.03 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the
Company would not enter into this Agreement; accordingly, if Parent fails
promptly to pay the amounts due pursuant to this Section 7.03, and, in order
to obtain such payment, the Company commences a suit that results in a final,
non-appealable judgment against Guarantor or Parent for the amounts set forth
in this Section 7.03, Parent and Guarantor shall pay to the Company interest
on the amounts set forth in this Section 7.03 from and including the date
payment of such amount was due to but excluding the date of actual payment at
the prime rate of The Chase Manhattan Bank in effect on the date such payment
was required to be made, together with reasonable legal fees and expenses
incurred in connection with such suit. The parties acknowledge and agree that,
notwithstanding any other provision in this Agreement to the contrary, the
Company's sole and exclusive remedy with respect to any and all claims based
on or with respect to any failure of Section 3.02(d) to be true and correct or
any breach of Section 4.03(a)(a), 4.03(a)(b)(i), 5.03(a) (to the extent set
forth above) or 5.03(b) (to the extent set forth above), in circumstances
where the Company is entitled to payment of the Reverse Fee (other than any
claims resulting from a willful breach by Guarantor or Parent or any of their
respective subsidiaries of Section 3.02(d), 4.03(a)(a), 4.03(a)(b)(i), 5.03(a)
(to the extent set forth above) or 5.03(b) (to the extent set forth above))
shall be the payment of the Reverse Fee pursuant to this Section 7.03.
53
SECTION 7.04. Amendment. This Agreement may be amended by the
parties hereto at any time prior to the Effective Time, whether before or
after the Stockholder Approval has been obtained; provided, however, that
after the Stockholder Approval has been obtained, there shall be made no
amendment that by law requires further approval by stockholders of the parties
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 7.05. Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document
delivered pursuant hereto or (c) waive compliance with any of the agreements
or conditions contained herein; provided, however, that after the Stockholder
Approval has been obtained, there shall be made no waiver that by law requires
further approval by stockholders of the parties without the further approval
of such stockholders. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure or delay by any party to
this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights nor shall any single or partial
exercise by any party to this Agreement of any of its rights under this
Agreement preclude any other or further exercise of such rights or any other
rights under this Agreement.
ARTICLE VIII
General Provisions
------------------
SECTION 8.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed given
if delivered personally or one business day after being sent by overnight
courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to Guarantor, Parent or Sub, to:
Thames Water Plc
Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxx
Xxxxxxx XX0 0XX
Xxxxxx Xxxxxxx
Attention: Xxxx Xxxxxxxxx
54
Xxxxx Xxxxxxxxxxx
with a copy to:
RWE Aktiengesellschaft
Xxxxxxxxxx 0, 00000
Xxxxx, Xxxxxxx
Attention: General Counsel
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Xxxx X. Xxxxxx, Esq.
if to the Company, to:
American Water Works Company, Inc.
0000 Xxxxxx Xxx Xxxx
Xxxxxxxx, XX 00000
Attention: W. Xxxxxxx Xxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxxxx, Esq.
Xxxxx X. Xxxxxx, Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "knowledge of the Company" means the actual knowledge of those
individuals set forth in Section 8.03(b) of the Company Disclosure
Schedule;
55
(c) "knowledge of Guarantor and Parent" means the actual knowledge
of those individuals set forth in Section 8.03(c) of the Parent
Disclosure Schedule;
(d) "material adverse effect" means any material adverse change or
effect (i) on the business, assets, properties, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole, or (ii) which would reasonably be expected, directly or
indirectly, to prevent or materially impede or delay the consummation of
the Merger or the other transactions contemplated by this Agreement,
except in the case of either (i) or (ii) for any change or effect (w) set
forth in Section 8.03(d) of the Company Disclosure Schedule, (x) relating
to financial markets or the economy in general, (y) affecting the water
services or wastewater services industries generally and not specifically
relating to the Company or its subsidiaries, or (z) to the extent
attributable to or resulting from the public announcement of the
transactions contemplated by this Agreement or the identity of Guarantor
or Parent or their subsidiaries as the acquiring person in the Merger
including any loss of customers or employees or condemnation proceedings
resulting therefrom;
(e) "person" means an individual, corporation, partnership, joint
venture, association, trust, limited liability company, Governmental
Entity, unincorporated organization or other entity;
(f) a "Significant Subsidiary" of any person means any subsidiary of
such person that constitutes a significant subsidiary within the meaning
of Rule 1-02 of Regulation S-X of the SEC;
(g) a "subsidiary" of any person means another person (i) of which
50% or more of the capital stock, voting securities, other voting
ownership or voting partnership interests having voting power under
ordinary circumstances to elect directors or similar members of the
governing body of such corporation or other entity (or, if there are no
such voting interests, 50% or more of the equity interests) are owned or
controlled, directly or indirectly, by such first person or (ii) of which
such first person is a general partner; and
(h) a "wholly owned subsidiary" of any person means a subsidiary of
which 99% or more of the common equity securities having voting power
under ordinary circumstances to elect directors or similar members of the
governing body of such corporation or other entity (or, if there are no
such equity securities having such voting power, 99% or more of the
equity interests) are owned or controlled, directly or indirectly, by
such first person.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to a Section, Subsection or Schedule, such reference shall be to a
Section or Subsection of, or a Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
56
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
The term "or" is not exclusive. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms. Any
agreement or instrument defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement or instrument as
from time to time amended, modified or supplemented. References to a person
are also to its permitted successors and assigns.
SECTION 8.05. Guarantee. In connection with the Merger and the other
transactions contemplated by this Agreement, Guarantor hereby irrevocably,
absolutely and unconditionally guarantees the due, punctual and complete
performance and payment (and not merely collection) in full of all obligations
and liabilities of Parent, Sub and the Surviving Corporation under this
Agreement, and of any other person to whom any of their obligations shall be
assigned in accordance with Section 8.09, as and when due and payable or
required to be performed pursuant to any provisions of this Agreement, subject
to the terms and conditions thereof (the "Guaranteed Obligations") and agrees
that the Company shall be entitled to enforce directly against Guarantor any
of the Guaranteed Obligations. To the fullest extent permitted by Applicable
Law, Guarantor waives presentment to, demand of payment from and protest to
any other person of any of the Guaranteed Obligations, and also waives notice
of acceptance of its guarantee and notice of protest for nonpayment. The
obligations of Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense or setoff, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality or unenforceability of the Guaranteed
Obligations, or otherwise. Notwithstanding any of the foregoing, nothing
herein shall be deemed to waive or limit Guarantor's ability to assert any
claims, defenses or other rights that Parent or Sub may have under this
Agreement.
SECTION 8.06. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.07. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, together with the Company Disclosure Schedules, the Parent
Disclosure Schedules and the Exhibits (a) constitutes the entire agreement,
and supersedes all prior agreements and understandings, both written and oral,
(other than the Confidentiality Agreement), among the parties with respect to
the subject matter hereof and thereof and (b) except for the provisions of
Section 5.05, are not intended to confer upon any person other than the
parties hereto and thereto (and their respective successors and assigns) any
rights or remedies.
SECTION 8.08. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
57
SECTION 8.09. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned or delegated, in
whole or in part (except by operation of law), by any of the parties hereto
without the prior written consent of the other parties hereto, and any attempt
to make any such assignment without such consent shall be null and void.
Notwithstanding the foregoing, Parent or Sub may assign, in its sole
discretion, any of or all its respective rights, interests and obligations
under this Agreement to Guarantor or to any direct or indirect wholly owned
subsidiary of Guarantor with written notice to the Company and upon taking of
any actions required by the DGCL with respect thereto (including amending this
Agreement if necessary), provided that the Company agrees to provide
reasonable assistance to Parent with any such actions and agrees to execute
any such amendments to this Agreement, but no such assignment shall relieve
Parent or Sub of any of their respective obligations hereunder; provided,
however, that Parent and such substitute subsidiary shall represent and
warrant to the Company, on the day such substitution is to be effective, the
representations and warranties set forth in Section 3.02; provided, further,
that no action shall be taken that would require the Company to amend or
supplement in any material respect the Proxy Statement at any time after the
Proxy Statement has first been mailed to the Company's stockholders or
materially delay or impede the consummation of the Merger. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by, the parties hereto and their respective successors
and assigns.
SECTION 8.10. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in any Delaware state court,
this being in addition to any other remedy to which they are entitled at law
or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any court of the United States located
in the State of Delaware or of any Delaware state court in the event any
dispute arises out of this Agreement or the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this Agreement or the
transactions contemplated by this Agreement in any court other than a court of
the United States located in the State of Delaware or a Delaware state court.
By the execution and delivery of this Agreement, each of Guarantor and Parent
appoints CT Corporation System, Corporation Trust Center, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000, as its agent upon which process may be served in any
such legal action or proceeding. Service of process upon such agent, together
with notice of such service given to Guarantor or Parent in the manner
specified in Section 8.02 shall be deemed in every respect effective service
of process upon Guarantor or Parent in any legal action or proceeding.
SECTION 8.11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other
58
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 8.12. Waiver of Jury Trial. Each party waives, to the
fullest extent permitted by law, any right it may have to a trial by jury in
respect of any action, suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, Guarantor, Parent, Sub and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
RWE AKTIENGESELLSCHAFT,
By: / s / Xxxxxxx Xxxxx
----------------------------
Name: Xxxxxxx Xxxxx
Title: Member of the Executive Board
By: / s / Xxxxxxx Xxxx Xxxxxxxxx
----------------------------
Name: Xxxxxxx Xxxx Xxxxxxxxx
Title: Chief Executive
THAMES WATER AQUA HOLDINGS GMBH,
By: / s / Xxxxxxx Xxxxx
----------------------------
Name: Xxxxxxx Xxxxx
Title: Member of the Executive Board
By: / s / Xxxxxxx Xxxx Xxxxxxxxx
----------------------------
Name: Xxxxxxx Xxxx Xxxxxxxxx
Title: Chief Executive
APOLLO ACQUISITION COMPANY,
By: / s / Xxx XxXxxxxx
----------------------------
Name: Xxx XxXxxxxx
Title: Managing Director International
Business Development
AMERICAN WATER WORKS COMPANY, INC.,
By: / s / J. Xxxxx Xxxx
---------------------------
Name: J. Xxxxx Xxxx
Title: President and Chief Executive
