EXHIBIT C
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
UNITED WATER RESOURCES INC.,
LYONNAISE AMERICAN HOLDING, INC,
LAH ACQUISITION CO.
and
SUEZ LYONNAISE DES EAUX,
dated as of August 20, 1999
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
Section 1.1 The Merger...................................1
Section 1.2 Effective Time of the Merger.................1
Section 1.3 Effects of the Merger........................2
Section 1.4 Certificate of Incorporation and By-laws
of the Surviving Corporation...............2
Section 1.5 Directors and Officers of the Surviving
Corporation.................................2
Section 1.6 Further Actions...............................2
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock.........2
Section 2.2 Exchange of Certificates......................3
ARTICLE III
THE CLOSING
Section 3. Closing.......................................5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1. Organization and Qualification................6
Section 4.2 Subsidiaries..................................6
Section 4.3 Capitalization................................7
Section 4.4 Authority; Non-Contravention; Statutory
Approvals; Compliance.......................8
Section 4.5 Reports and Financial Statements.............10
Section 4.6 Absence of Certain Changes or Events.........11
Section 4.7 Litigation...................................11
Section 4.8 Proxy Statement Etc..........................11
Section 4.9 Tax Matters..................................11
Section 4.10 Employee Matters; ERISA......................14
Section 4.11 Environmental Protection.....................16
Section 4.12 Regulation as a Utility......................19
Section 4.13 Water Quality................................19
- i -
Section 4.14 Vote Required................................19
Section 4.15 Opinion of Financial Advisor.................19
Section 4.16 The Company Rights Agreement.................20
Section 4.17 Real Property................................20
Section 4.18 Property Franchises..........................21
Section 4.19 Insurance....................................21
Section 4.20 Trademarks, Patents and Copyrights...........21
Section 4.21 Year 2000....................................21
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.1 Organization and Qualification...............22
Section 5.2 Authority; Non-Contravention; Statutory
Approvals..................................22
Section 5.3 Reports and Financial Statements.............23
Section 5.4 Proxy Statement..............................23
Section 5.5 Ownership of Company Capital Stock...........24
Section 5.6 Financing....................................24
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of Company.........................24
Section 6.2 Alternative Proposal.........................30
Section 6.3 Covenants of Parent..........................31
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information........................32
Section 7.2 Proxy Statement..............................32
Section 7.3 Regulatory Matters...........................33
Section 7.4 Stockholder Approval.........................33
Section 7.5 Directors' and Officers' Indemnification.....34
Section 7.6 Disclosure Schedules.........................35
Section 7.7 Public Announcements.........................36
Section 7.8 Certain Employee Agreements..................36
Section 7.9 Employee Benefit Plans.......................36
Section 7.10 The Company Stock Plans......................37
Section 7.11 Expenses.....................................37
Section 7.12 Further Assurances...........................37
- ii-
Section 7.13 Governance Agreement.........................38
Section 7.14 North American Rights Agreement..............39
Section 7.15 Notice and Cure..............................42
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation
to Effect the Merger.......................42
Section 8.2 Conditions to Obligation of Parent to
Effect the Merger..........................43
Section 8.3 Conditions to Obligation of The Company
to Effect the Merger.......................44
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination..................................45
Section 9.2 Effect of Termination........................47
Section 9.3 Termination Fee; Expenses....................47
Section 9.4 Amendment....................................48
Section 9.5 Waiver.......................................48
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations
and Warranties............................49
Section 10.2 Brokers.....................................49
Section 10.3 Notices.....................................49
Section 10.4 Miscellaneous...............................51
Section 10.5 Interpretation..............................51
Section 10.6 Counterparts; Effect........................51
Section 10.7 Parties in Interest.........................52
Section 10.8 Waiver of Jury Trial and Certain Damages....52
Section 10.9 Enforcement.................................52
Section 10.10 Severability................................52
ARTICLE XI
ROVISIONS RELATING TO SLDE
Section 11.1 Organization and Authority..................53
Section 11.2 Obligations of SLDE.........................53
- iii-
This AGREEMENT AND PLAN OF MERGER dated as of August 20, 1999 (this
"Agreement") is made and entered into by and among United Water Resources Inc.,
a New Jersey corporation (the "Company"), Lyonnaise American Holding, Inc., a
Delaware corporation ("Parent"), LAH Acquisition Co., a New Jersey corporation
and a wholly owned subsidiary of Parent ("Merger Sub"), and, solely with respect
to the provisions of Article XI, Suez Lyonnaise des Eaux, a French societe
anonyme ("SLDE");
WHEREAS, the boards of directors of the Company, Parent and Merger
Sub have approved and deemed it advisable and in the best interests of their
respective stockholders to consummate the transactions contemplated herein under
which the business of the Company and Parent would be combined by means of the
merger of Merger Sub with and into the Company, as a result of which the Company
will become a wholly owned subsidiary of Parent (the "Merger");
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties and agreements in connection with the Merger and to
prescribe various conditions to the Merger; and
WHEREAS, SLDE has agreed to the obligations contained in Article XI
of this Agreement.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time of the Merger (as defined in Section
1.2) Merger Sub shall be merged with and into the Company in accordance with the
Business Corporation Act of the State of New Jersey (the "NJBCA"). Following the
Merger, the separate corporate existence of Merger Sub shall cease and the
Company shall be the surviving corporation (the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State of New
Jersey.
Section 1.2 Effective Time of the Merger. A certificate of merger
(the "Certificate of Merger") shall be duly prepared and executed by the
Surviving Corporation and thereafter delivered to the office of the Secretary of
State of the State of New Jersey (the "Secretary of State") for filing, as
provided in Section 14A:10-4.1 of the NJBCA, on the Closing Date. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Secretary of State or at such subsequent time as Parent and the Company
shall agree and specify in the Certificate of Merger (the date and time the
Merger becomes effective being the "Effective Time").
-1-
Section 1.3 Effects of the Merger. Subject to the foregoing, the
effects of the Merger shall be as provided in the applicable provisions of the
NJBCA.
Section 1.4 Certificate of Incorporation and By-laws of the Surviving
Corporation. At the Effective Time, (i) the certificate of incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall become
the certificate of incorporation of the Surviving Corporation until thereafter
amended as provided by law and such certificate of incorporation and (ii) the
by-laws of Merger Sub as in effect immediately prior to the Effective Time shall
be the by-laws of the Surviving Corporation until thereafter amended as provided
by law, the certificate of incorporation of the Surviving Corporation and such
by-laws.
Section 1.5 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub and the officers of the Company immediately prior to the
Effective Time shall, from and after the Effective Time, be the directors and
officers, respectively, of the Surviving Corporation until their successors
shall have been duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
certificate of incorporation and by-laws.
Section 1.6 Further Actions. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock. At the Effective
Time by virtue of the Merger and without any action on the part of any holder of
any capital stock of the Company or Merger Sub:
(a) Conversion of Merger Sub Stock. Each issued and outstanding share
of common stock, par value $1.00 per share, of Merger Sub shall be converted
into one fully paid and non-assessable share of common stock, no par value, of
the Surviving Corporation (the "Surviving Corporation Common Stock").
(b) Cancellation of Certain Company Stock. Each share of common
stock, no par value, of the Company (the "Company Common Stock"), together with
-2-
the associated Right (as defined in Section 4.16) to purchase Company Preferred
Stock pursuant to the Company Rights Agreement (as defined in Section 4.16), and
each share of 5% Series A Cumulative Convertible Preference Stock, no par value,
of the Company ("Series A Preference Stock") that is owned by the Company as
treasury stock and all shares of Company Common Stock (and associated Rights)
and Series A Preference Stock that are owned, directly or indirectly, by the
Company or Parent or any of their respective wholly-owned subsidiaries shall be
canceled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each issued and outstanding
share of Company Common Stock, together with the associated Rights, other than
shares and Rights canceled pursuant to Section 2.1(b) of this Agreement, shall
be converted into the right to receive $35.00 per share, without interest (the
"Per Share Cash Consideration"). Each share of Company Common Stock and each
associated Right converted in accordance with this paragraph 2.1(c) shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist. Each holder of a certificate formerly representing any such
shares of Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Per Share Cash Consideration to be
issued in consideration therefor upon surrender of such certificate in
accordance with Section 2.2 and any dividends declared and unpaid as of the
Effective Time.
(d) Conversion of Series A Preference Stock. Each issued and
outstanding share of Series A Preference Stock, other than shares canceled
pursuant to Section 2.1(b) of this Agreement, shall be converted automatically
into the right to receive an amount in cash equal to the product of the Per
Share Cash Consideration multiplied by the number of shares of Company Common
Stock into which such share of Series A Preference Stock is convertible
immediately prior to the Effective Time. Each share of Series A Preference Stock
converted in accordance with this paragraph 2.1(d) shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist. Each holder of a certificate formerly representing any such shares of
Series A Preference Stock shall cease to have any rights with respect thereto,
except the right to receive the Per Share Cash Consideration to be issued in
consideration therefor upon surrender of such certificate in accordance with
Section 2.2 and any dividends declared and unpaid as of the Effective Time.
Section 2.2 Exchange of Certificates. (a) Exchange Agent. At the
Effective Time, Parent shall deposit with a bank or trust company mutually
agreeable to Parent and the Company (the "Exchange Agent"), pursuant to an
agreement with the Exchange Agent in form and substance reasonably acceptable to
Parent and the Company, an amount in cash equal to the sum of (i) the Per Share
Cash Consideration multiplied by the number of shares of Company Common Stock to
be converted into the right to receive the Per Share Cash Consideration as
determined in Section 2.1(c) plus (ii) the Per Share Cash Consideration
multiplied by the number of shares of Company Common Stock into which the Series
A Preference Stock is convertible as determined in Section 2.1(d) plus (iii) the
amount of any dividends which were declared in respect of Company Common Stock
and the Series A Preference Stock with a record date prior to the Effective Time
and which remain unpaid at the Effective Time (the "Unpaid Company Dividends").
-3-
Any cash deposited with the Exchange Agent shall hereinafter be referred to as
the "Exchange Fund."
(b) Payment of Cash Consideration. Promptly after the Effective Time,
Parent and the Surviving Corporation shall cause the Exchange Agent to mail to
each holder of record as of the Effective Time of a certificate or certificates
which immediately prior to the Effective Time represented outstanding shares of
Company Common Stock or Series A Preference Stock (the "Certificates") that were
converted into the right to receive the Per Share Cash Consideration pursuant to
Section 2.1: (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon actual delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Parent and the Surviving
Corporation may reasonably specify) and (ii) instructions for effecting the
surrender of the Certificates in exchange for the Per Share Cash Consideration.
Upon surrender of a Certificate to the Exchange Agent for cancellation, together
with a duly executed letter of transmittal and such other documents as the
Exchange Agent may require, the holder of such Certificate shall be entitled to
receive in exchange therefor a bank check for an amount equal to the sum of (x)
the Per Share Cash Consideration multiplied by (A) if such Certificate evidenced
one or more shares of Company Common Stock, the number of shares of Company
Common Stock evidenced thereby or (B) if such Certificate evidenced one or more
shares of Series A Preference Stock, the number of shares of Company Common
Stock into which the shares of Series A Preference Stock evidenced thereby were
convertible immediately prior to the Effective Time plus, in either case, (y)
any Unpaid Company Dividends payable in respect of such shares (such sum being
referred to as the "Cash Consideration"). In no event shall the holder of any
such surrendered Certificates be entitled to receive interest on any cash to be
received in the Merger. If such check is to be issued in the name of a person
other than the person in whose name the Certificates surrendered for exchange
therefor are registered, it shall be a condition of the exchange that the person
requesting such exchange shall pay to the Exchange Agent any transfer or other
taxes required by reason of issuance of such check to a person other than the
registered holder of the Certificates surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Cash Consideration as
contemplated by this Section 2.2. If for any reason (including losses) the
Exchange Agent is unable to pay the cash amounts to which holders of the
Certificates shall be entitled, Parent shall in any event remain liable, and
shall make available to the Surviving Corporation additional funds, for the
payment thereof.
(c) Closing of Transfer Books. From and after the Effective Time the
stock transfer books of the Company shall be closed and no transfer of any
capital stock of the Company shall thereafter be made. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged for the Cash Consideration as provided in Section 2.1 and
in this Section 2.2.
-4-
(d) Termination of Exchange Agent. All funds held by the Exchange
Agent in the Exchange Fund for payment to the holders of Certificates unclaimed
at the end of one year from the Effective Time shall be returned to the
Surviving Corporation, after which time any holder of Certificates who has not
theretofore complied with this Article II shall thereafter look as a general
creditor only to Parent for payment of the Cash Consideration to which such
holder may be due, subject to applicable law.
(e) Investment of the Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund only in one or more of the following
investments as directed by the Surviving Corporation from time to time: (i)
obligations of the United States government maturing not more than 90 days after
the date of purchase; (ii) certificates of deposit maturing not more than 90
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 surplus of at
least $500,000,000; (iii) a money market fund having assets of at least
$3,000,000,000; or (iv) tax-exempt or corporate debt obligations maturing not
more than 90 days after the date of purchase given the highest investment grade
rating by Standard & Poor's and Xxxxx'x Investor Service. Any interest and other
income resulting from such investments shall promptly be paid to the Surviving
Corporation.
(f) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
stockholder claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such stockholder 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 Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Cash Consideration with respect to the shares of
Company Common Stock or Series A Preference Stock formerly represented thereby.
(g) Escheat. The Surviving Corporation shall not be liable to any
person for funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing") shall
take place at the offices of Piper & Marbury L.L.P., 1251 Avenue of the
Americas, New York, New York, at 10:00 A.M., New York time, on the second
business day immediately following the date on which the last of the conditions
set forth in Article VIII hereof is fulfilled or waived (other than conditions
that by their nature are required to be performed on the Closing Date, but
- 5 -
subject to satisfaction of such conditions), or at such other time and date and
place as the Company and Parent shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
Section 4.1 Organization and Qualification. Except as set forth in
Section 4.1 of the Company Disclosure Schedule (as defined in Section 7.6(ii)),
the Company and each subsidiary (as defined below) of the Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has all requisite
corporate power and authority, and has been duly authorized by all necessary
approvals and orders, to own, lease and operate its assets and properties to the
extent owned, leased and operated and to carry on its business as it is now
being conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its assets and properties makes such qualification necessary, other
than in such jurisdictions where the failure to be so qualified and in good
standing will not, when taken together with all other such failures, have a
Company Material Adverse Effect. As used in this Agreement, "Company Material
Adverse Effect" means any change, effect, condition or circumstance that is
reasonably likely to be materially adverse to the business, properties,
condition (financial or otherwise) or results of operations of the Company and
its subsidiaries, taken as a whole, or the consummation of the transactions
contemplated by this Agreement, excluding (i) any occurrence affecting the
United States water supply and waste water services industry as a whole, (ii)
any adverse effect to the extent caused by an acquisition made by the Company in
accordance with Section 6.1(d) and (iii) any adverse effect to the extent caused
by an acquisition made by Parent in accordance with Section 7.14. As used in
this Agreement, the term "subsidiary" of a person shall mean any corporation or
other entity (including partnerships and other business associations) of which a
majority of the outstanding capital stock or other voting securities having
voting power under ordinary circumstances to elect directors or similar members
of the governing body of such corporation or entity shall at the time be held,
directly or indirectly, by such person. True, accurate and complete copies of
the certificate of incorporation and by-laws of the Company (including any
amendments thereto) as in effect on the date hereof have been made available to
Parent.
Section 4.2 Subsidiaries. Section 4.2 of the Company Disclosure
Schedule sets forth a description as of the date hereof, of (x) all "material
subsidiaries" of the Company as defined in Regulation S-X promulgated under the
Securities Act (as defined herein) and (y) all other subsidiaries and joint
ventures of the Company, including (i) the name of each such entity, (ii) the
state or jurisdiction of its incorporation or organization, (iii) the Company's
interest therein, and (iv) if known by the Company, the name of any other person
holding an interest therein and the interest held by any and all such persons,
- 6 -
and a brief description of the principal line or lines of business conducted by
each such entity. Except as set forth in Section 4.2 of Company Disclosure
Schedule, neither the Company nor any of the Company's subsidiaries is a "public
utility company" or a "holding company" within the meaning of Section 2(a)(5) or
2(a)(7) of the Public Utility Holding Company Act of 1935, as amended (the "1935
Act") or a "subsidiary company" or an "affiliate" within the meaning of Section
2(a)(8) or 2(a)( 11) of the 1935 Act of any holding company which is required to
register as a holding company under the 1935 Act. Except as set forth in Section
4.2 of the Company Disclosure Schedule, all of the issued and outstanding shares
of capital stock of each subsidiary of the Company and, to the knowledge of the
Company, each Company Joint Venture (as defined below) are validly issued, fully
paid, nonassessable and free of preemptive rights, and are owned, directly or
indirectly, by the Company free and clear of any liens, claims, encumbrances,
security interests, equities, charges and options of any nature whatsoever and
there are no outstanding subscriptions, options, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement, obligating any
such subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of its capital stock or obligating it to grant, extend
or enter into any such agreement or commitment, except for any of the foregoing
that could not reasonably be expected to have a Company Material Adverse Effect.
As used in this Agreement, the term "joint venture" of a person shall mean any
corporation or other entity (including partnerships and other business
associations) that is not a subsidiary of such person, in which such person or
one or more of its subsidiaries owns an equity interest, other than equity
interests held for passive investment purposes which are less than 10% of any
class of the outstanding voting securities or equity of any such entity, and the
term "Company Joint Venture" shall mean each joint venture in which the Company
holds an equity interest and in which neither Parent nor any of Parent's
affiliates holds a direct or indirect equity interest apart from their interest
in the Company.
Section 4.3 Capitalization. (a) Company Capitalization. The
authorized capital stock of the Company consists of (i) 100,000,000 shares of
Company Common Stock, (ii) 1,000,000 shares of preferred stock, no par value, of
the Company (the "Company Preferred Stock"), and (iii) 5,000,000 shares of
preference stock, no par value, of the Company (the "Company Preference Stock")
of which 3,983,976 shares are designated as Series A Preference Stock and no
shares are designated as 7 5/8% Series B Cumulative Preferred Stock, no par
value, of the Company ("Series B Preferred Stock"). As of the close of business
on July 17, 1999, there were issued and outstanding 38,810,209 shares of Company
Common Stock, 1,956,596 shares of Series A Preference Stock and no shares of
Series B Preferred Stock. All of the issued and outstanding shares of the
capital stock of the Company are validly issued, fully paid, nonassessable and
free of preemptive rights.
(b) Options, etc. Except as set forth in Section 4.3(b) of the
Company Disclosure Schedule, as of the date hereof, there are no outstanding
subscriptions, options (including employee stock options), calls, contracts,
voting trusts, proxies or other commitments, understandings, restrictions,
- 7 -
arrangements, rights (including the Rights) or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating the Company or any of the subsidiaries of the Company or,
to the knowledge of the Company, any Company Joint Venture to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the capital
stock of such person, or obligating such person to grant, extend or enter into
any such agreement or commitment. The total number of outstanding options to
purchase shares of Company's capital stock (whether granted pursuant to Company
Stock Plans or otherwise) and the exercise price of each such option is set
forth on Section 4.3(b) of the Company Disclosure Schedule.
(c) Certain Contractual Obligations. There are no outstanding
contractual obligations of the Company, any of its subsidiaries or, to the
knowledge of the Company, any Company Joint Venture to repurchase, redeem or
otherwise acquire any shares of such person's capital stock or to provide funds
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any person other than to subsidiaries of the Company in the
ordinary course of business consistent with past practice or as disclosed in
Section 4.3(c) of the Company Disclosure Schedule.
Section 4.4 Authority; Non-Contravention; Statutory Approvals;
Compliance. (a) Authority. The Company has all requisite corporate power and
authority (including approval of the Company's Board of Directors) to enter into
this Agreement, to perform its obligations hereunder and, subject to obtaining
the Company Stockholders' Approval (as defined in Section 4.14) and the Company
Required Statutory Approvals (as defined in Section 4.4(c)), to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement 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, subject to obtaining the Company Stockholders'
Approval with respect to consummation of the Merger. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by the other signatories hereto,
constitutes the valid and binding obligation of the Company enforceable against
it in accordance with its terms.
(b) Non-Contravention. Except as set forth in Section 4.4(b) of the
Company Disclosure Schedule, the execution and delivery of this Agreement by the
Company does not, and the performance by the Company of its obligations
hereunder and the consummation of the transactions contemplated hereby will not,
violate, conflict with, or result in a breach of any provision of, or constitute
a default (with or without notice or lapse of time or both) under, or result in
the termination or modification of, or accelerate the performance required by,
or result in a right of termination, cancellation, or acceleration of any
obligation or the loss of a benefit under, or result in the creation of any
lien, security interest, charge or encumbrance ("Liens") upon any of the
properties or assets of the Company or any of the subsidiaries of the Company
or, to the knowledge of the Company, any of the Company Joint Ventures (any such
violation, conflict, breach, default, right of termination, modification,
cancellation or acceleration, loss or creation, a "Violation" with respect to
- 8 -
the Company (such term when used in Article V having a correlative meaning with
respect to Parent)) pursuant to any terms, conditions or provisions of (i) the
certificate of incorporation, by-laws or similar governing documents of the
Company or any of its subsidiaries or, to the knowledge of the Company, any of
the Company Joint Ventures, (ii) subject to obtaining the Company Required
Statutory Approvals and the receipt of the Company Stockholders' Approval, any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any Governmental Authority (as defined in Section
4.4(c)) applicable to the Company or any of its subsidiaries or, to the
knowledge of the Company, any of the Company Joint Ventures, or any of their
respective properties or assets or (iii) subject to obtaining the third-party
consents or other approvals set forth in Section 4.4(b) of the Company
Disclosure Schedule (the "Company Required Consents") any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which the
Company or any of its subsidiaries or, to the knowledge of the Company, any of
the Company Joint Ventures is a party or by which the Company or any of the
Company's, its subsidiaries' or any Company Joint Venture's properties or assets
may be bound or affected, excluding from the foregoing clauses (ii) and (iii)
such Violations as would not reasonably be likely to have, individually or in
the aggregate, a Company Material Adverse Effect.
(c) Statutory Approvals. No declaration, filing or registration with,
or notice to or authorization, consent or approval of, any court, federal,
state, local or foreign governmental or regulatory body (including a stock
exchange or other self-regulatory body) or authority, including state public
utility control or public service commissions and similar state regulatory
bodies (each, a "Governmental Authority") is necessary for the execution and
delivery of this Agreement by the Company, the performance of the Company of its
obligations hereunder or the consummation by the Company of the transactions
contemplated hereby, except as described in Section 4.4(c) of the Company
Disclosure Schedule, the failure to obtain, make or give which would reasonably
be likely to have, individually or in the aggregate, a Company Material Adverse
Effect (the "Company Required Statutory Approvals"), it being understood that
references in this Agreement to "obtaining" such Company Required Statutory
Approvals shall mean making such declarations, filings or registrations, giving
such notices, obtaining such authorizations, consents or approvals and having
such waiting periods expire as are necessary to avoid a violation of law.
(d) Compliance. Except as set forth in Section 4.4(d) or Section 4.11
of the Company Disclosure Schedule, or as disclosed in the Company SEC Reports
(as defined in Section 4.5) filed prior to the date hereof, neither the Company
nor any of its subsidiaries nor, to the knowledge of the Company, any Company
Joint Venture is in violation of, is under investigation with respect to any
violation of, or has been given notice or been charged with any violation of,
any law, statute, order, rule, regulation, ordinance or judgment of any
Governmental Authority except for violations that, individually or in the
aggregate, do not have, and to the knowledge of the Company, are not reasonably
likely to have, a Company Material Adverse Effect. Except as set forth in
Section 4.4(d) of the Company Disclosure Schedule or in Section 4.11 of the
Company Disclosure Schedule, the Company and its subsidiaries and, to the
knowledge of the Company, the Company Joint Ventures have all permits, licenses,
- 9 -
franchises and other governmental authorizations, consents and approvals
necessary to conduct their respective businesses as currently conducted in all
respects, except those which the failure to obtain would, in the aggregate, not
have a Company Material Adverse Effect. Except as set forth in Section 4.4(d) of
the Company Disclosure Schedule, the Company, each of its subsidiaries and, to
the knowledge of the Company, each Company Joint Venture is not in breach or
violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party, could result in a default under, (i) its certificate of
incorporation or by-laws or similar organizational documents or (ii) any
material contract, commitment, agreement, indenture, mortgage, loan agreement,
note, lease, bond, license, approval or other instrument to which it is a party
or by which it is bound or to which any of its property is subject, except for
breaches, violations or defaults of any of the foregoing items in clause (ii)
that, individually or in the aggregate, do not have, and are not reasonably
likely to have, a Company Material Adverse Effect.
Section 4.5 Reports and Financial Statements. The filings required to
be made by the Company and its subsidiaries under the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and applicable state public utility laws and regulations
have been filed with the Securities and Exchange Commission (the "SEC"), or the
appropriate state public utilities commission or health agency, as the case may
be, including all forms, statements, reports, agreements (oral or written) and
all documents, exhibits, amendments and supplements appertaining thereto, and
complied, as of their respective dates, in all material respects with all
applicable requirements of the appropriate statute and the rules and regulations
thereunder. The Company has made available to Parent a true and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by the Company with the SEC since June 30, 1996 (as such documents have
since the time of their filing been amended, the "Company SEC Reports"). As of
their respective dates, the Company SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements of
the Company included in the Company SEC Reports (collectively, the "Company
Financial Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis ("GAAP") (except as may be
indicated therein or in the notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q of the SEC) and fairly present the
consolidated financial position of the Company as of the dates thereof and the
consolidated results of operations and cash flows for the periods then ended.
Except as and to the extent set forth in the Company Financial Statements,
neither the Company nor any subsidiary of the Company or, to the knowledge of
the Company, any Company Joint Venture has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) which would be
required to be reflected on a balance sheet prepared in accordance with
generally accepted accounting principles, except for liabilities and obligations
that would not reasonably be likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
- 10 -
Section 4.6 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports filed prior to the date hereof or as set forth in
Section 4.6 of the Company Disclosure Schedule, from June 30, 1999, the Company
and each of its subsidiaries have conducted their business only in the ordinary
course of business consistent with past practice and there has not been, and no
fact or condition exists which would, individually or in the aggregate, have a
Company Material Adverse Effect. Without limiting the foregoing, from June 30,
1999 through the date of this Agreement, and except as which individually or in
the aggregate, does not have or, insofar as reasonably can be foreseen, is not
reasonably likely to have a Company Material Adverse Effect, there has not been
(i) any revaluation by the Company or any of its subsidiaries or, to the
knowledge of the Company, any Company Joint Venture of any of their respective
assets, including, but not limited to, write-offs of accounts receivable, other
than in the ordinary course of businesses consistent with historical practices,
(ii) any material change by the Company, any of its subsidiaries or, to the
knowledge of the Company, any Company Joint Venture in its accounting methods,
principles or practices, or (iii) any declaration, setting aside or payment of
any dividend or distribution in respect of any capital stock of the Company or
any redemption, repurchase or other acquisition of any of its securities (other
than regular quarterly dividends on the shares of Company Common Stock and
regular dividends on the shares of Series A Preference Stock).
Section 4.7 Litigation. Except as disclosed in the Company SEC
Reports filed prior to the date hereof or as set forth in Section 4.7, Section
4.9 or Section 4.11 of the Company Disclosure Schedule, (i) there are no claims,
suits, actions or proceedings, pending or, to the knowledge of the Company,
threatened, nor are there, to the knowledge of the Company, any investigations
or reviews pending or threatened against, relating to or affecting the Company
or any of its subsidiaries or any Company Joint Venture and (ii) there are no
judgments, decrees, injunctions, rules or orders of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
applicable to the Company, any of its subsidiaries or, to the knowledge of the
Company, any Company Joint Venture, except for any of the foregoing under
clauses (i) and (ii) that individually or in the aggregate would not reasonably
be expected to have a Company Material Adverse Effect.
Section 4.8 Proxy Statement Etc. The proxy statement, in definitive
form, relating to the Company Special Meeting (the "Proxy Statement") shall not,
at the dates mailed to stockholders and at the time of the Company Special
Meeting, 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. The Proxy Statement, insofar as it relates to the Company or any
subsidiary of the Company, shall comply as to form in all material respects with
the applicable provisions of the Securities Act and the Exchange Act and the
rules and regulations thereunder.
Section 4.9 Tax Matters. "Taxes", as used in this Agreement, means
any federal, state, county, local or foreign taxes, charges, fees, levies or
other assessments, including all net income, gross income, sales and use, ad
valorem, transfer, gains, profits, excise, franchise, real and personal
- 11 -
property, gross receipts, capital stock, production, business and occupation,
disability, employment, alternative minimum, payroll, license, estimated, stamp,
custom duties, severance or withholding taxes or charges imposed by any
governmental entity, and includes any interest and penalties (civil or criminal)
on or additions to any such taxes and any expenses incurred in connection with
the determination, settlement or litigation of any tax liability. "Tax Return",
as used in this Agreement, means a report or similar statement, return or other
information required to be supplied to a governmental entity with respect to
Taxes including, where permitted or required, combined or consolidated returns
for any group of entities that includes the Company or any of its subsidiaries,
or Parent or any of its subsidiaries, as the case may be.
Except as set forth in Section 4.9 of the Company Disclosure
Schedule:
(a) Timely Filing of Tax Returns. The Company and each of its
subsidiaries and, to the Company's knowledge, each Company Joint Venture have
filed (or there has been filed on its behalf) all material Tax Returns required
to be filed by each of them under applicable law. All such Tax Returns were and
are in all material respects true, complete and correct and filed on a timely
basis.
(b) Payment of Taxes. The Company and each of its subsidiaries and,
to the Company's knowledge, each Company Joint Venture have, within the time and
in the manner prescribed by law, paid all Taxes that are currently due and
payable except for those contested in good faith and for which adequate reserves
have been taken.
(c) Deferred Taxes. The Company and each of its subsidiaries and, to
the Company's knowledge, each Company Joint Venture have accounted for deferred
income taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the assets of the Company
or any of its subsidiaries or, to the Company's knowledge, any Company Joint
Venture except liens for Taxes not yet due.
(e) Withholding Taxes. The Company and each of its subsidiaries and,
to the Company's knowledge, each Company Joint Venture have complied in all
material respects with the provisions of the Code relating to the withholding of
Taxes, as well as similar provisions under any other laws, and have, within the
time and in the manner prescribed by law, withheld from employee wages and paid
over to the proper governmental authorities all amounts required.
(f) Extensions of Time for Filing Tax Returns. Neither the Company
nor any of its subsidiaries nor, to the Company's knowledge, any Company Joint
Venture has requested any extension of time within which to file any Tax Return
which Tax Return has not since been filed.
- 12 -
(g) Waivers of Statute of Limitations. Neither the Company nor any of
its subsidiaries nor, to the Company's knowledge, any Company Joint Venture has
executed any outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns.
(h) Expiration of Statute of Limitations. The statute of limitations
for the assessment of all Taxes has expired for all applicable Tax Returns of
the Company and each of its subsidiaries and, to the Company's knowledge, each
Company Joint Venture, or those Tax Returns have been examined by the
appropriate taxing authorities for all periods through the date hereof, and no
deficiency for any Taxes has been proposed, asserted or assessed against the
Company or any of its subsidiaries or, to the Company's knowledge, any Company
Joint Venture that has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. No audits or other
administrative proceedings or court proceedings are presently pending, proposed
or threatened with regard to any Taxes or Tax Returns of the Company or any of
its subsidiaries or, to the Company's knowledge, any Company Joint Venture.
(j) Powers of Attorney. No power of attorney currently in force has
been granted by the Company or any of its subsidiaries or, to the Company's
knowledge, any Company Joint Venture concerning any Tax matter.
(k) Tax Rulings. Neither the Company nor any of its subsidiaries nor,
to the Company's knowledge, any Company Joint Venture has received a Tax Ruling
(as defined below) or entered into a Closing Agreement (as defined below) with
any taxing authority that would have a continuing adverse effect after the
Closing Date. "Tax Ruling", as used in this Agreement, shall mean a written
ruling of a taxing authority relating to Taxes. "Closing Agreement", as used in
this Agreement, shall mean a written and legally binding agreement with a taxing
authority relating to Taxes.
(l) Availability of Tax Returns. The Company has made or has used its
best efforts in making available to Parent complete and accurate copies of (i)
all Tax Returns, and any amendments thereto, filed by the Company or any of its
subsidiaries since December 31, 1997, (ii) all audit reports received from any
taxing authority relating to any Tax Return filed by the Company or any of its
subsidiaries or, to the Company's knowledge, any Company Joint Venture and (iii)
any Closing Agreements entered into by the Company or any of its subsidiaries
or, to the Company's knowledge, any Company Joint Venture with any taxing
authority.
(m) Tax Sharing Agreements. Neither the Company nor any of
its subsidiaries nor, to the Company's knowledge, any Company Joint
Venture is a party to any agreement relating to allocating or sharing
of Taxes.
- 13 -
(n) Code Section 280G. Section 4.9 of the Company Disclosure Schedule
contains a true and complete list of any agreement, contract or arrangement to
which the Company or any of its subsidiaries or, to Company's knowledge, any
Company Joint Venture, is a party that could result, on account of the
transactions contemplated hereunder, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section 280G of
the Code.
(o) Liability for Others. Neither the Company nor any of its
subsidiaries nor, to the Company's knowledge, any Company Joint Venture has any
liability for Taxes of any person other than the Company, its subsidiaries and,
to the Company's knowledge, such Company Joint Ventures (i) under Treasury
Regulations Section 1.1502-6 (or any similar provision of state, local or
foreign law) as a transferee or successor, (ii) by contract or (iii) otherwise.
(p) Code Section 897. To the Company's knowledge after due inquiry,
no foreign person owns or has owned, for purposes of Section 897 of the Code,
more than five percent of the total fair market value of the Company Common
Stock during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code, and, at all times during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code, the Company Common Stock has been regularly traded
in an established securities market within the meaning of Treasury Regulation
Section 1.897-1(m).
Section 4.10 Employee Matters; ERISA. Except as set forth
in Section 4.10 of the Company Disclosure Schedule:
(a) Benefit Plans. Section 4.10(a) of the Company Disclosure Schedule
contains a true and complete list of each material employee benefit plan
sponsored, contributed to or maintained by the Company or any of its
subsidiaries covering employees, former employees, directors or former directors
of the Company or any of its subsidiaries or their beneficiaries, or providing
benefits to such persons in respect of services provided to any such entity,
including, but not limited to, any employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any severance or change in control agreement between the Company
or any of its subsidiaries and any current or former employee or director
thereof pursuant to which benefits may become payable (collectively, the
"Company Benefit Plans"). No Company Benefit Plan is a "multiemployer plan" as
defined in Section 3(37) of ERISA. There are no trades or businesses which,
together with the Company and its subsidiaries, would be treated as a "single
employer" within the meaning of Section 414 of the Code or Section 4001(a)(14)
of ERISA ("ERISA Affiliates"), except as set forth on Section 4.10(a) of the
Company Disclosure Schedule. Except as disclosed in Section 4.10(a) of the
Company Disclosure Schedule, no ERISA Affiliates sponsor, maintain or contribute
to any employee benefit plan subject to Title IV of ERISA or Section 412 of the
Code.
(b) Contributions. All material contributions and other payments
required to be made for any period through the date to which this representation
speaks, by the Company or any of its subsidiaries to any Company Benefit Plan
(or to any person pursuant to the terms thereof) have been timely made or paid
- 14 -
in full or, to the extent not required to be made or paid on or before the date
to which this representation speaks have been reflected in the Company Financial
Statements.
(c) Qualification: Compliance. Each of the Company Benefit Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code has
received from the Internal Revenue Service (the "IRS") a determination letter
that the plan is qualified with respect to all applicable provisions of the Code
for which the applicable remedial amendment period has expired or an application
for such a determination, which was filed before the expiration of the
applicable remedial amendment period, is pending, and, to the knowledge of the
Company, no circumstances exist that could reasonably be expected to result in
the revocation of any such determination, and each trust forming a part of any
such plan is exempt from federal income tax pursuant to Section 501(a) of the
Code. The Company and each of its subsidiaries is in compliance with, and each
of the Company Benefit Plans is and has been operated in compliance with, the
terms of such plans and all applicable laws, rules and regulations governing
such plan, including, without limitation, ERISA and the Code, except where
failure to so comply would not reasonably be likely to have, individually or in
the aggregate, a Company Material Adverse Effect. There are no pending or, to
the knowledge of the Company, threatened claims under or in respect of any
Company Benefit Plan by or on behalf of any employee, former employee, director,
former director, or beneficiary thereof, or otherwise involving any Company
Benefit Plan (other than routine claims for benefits).
(d) Title IV Liabilities. No event has occurred and, to the knowledge
of the Company, there exists no condition or set of circumstances, that could
subject or potentially subject the Company or any of its subsidiaries to any
liability arising under or based upon any provision of Title IV of ERISA
(whether to a governmental agency, a multiemployer plan or to any other person
or entity) which could reasonably be expected to have a Company Material Adverse
Effect.
(e) Documents Made Available. The Company has made available to
Parent a true and correct copy of each collective bargaining agreement to which
the Company or any of its subsidiaries is a party or under which the Company or
any of its subsidiaries has obligations and, with respect to each Company
Benefit Plan, where applicable, (i) such plan and the most recent summary plan
description, (ii) the most recent annual report filed with the IRS, (iii) each
related trust agreement or insurance contract, (iv) the most recent
determination of the IRS with respect to the qualified status of such Company
Benefit Plan, and (v) the most recent actuarial report or valuation.
(f) Labor Agreements. Except as disclosed in Section 4.10(f) of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries are
a party to any collective bargaining agreement or other labor agreement with any
union or labor organization. To the best knowledge of the Company, there is no
current union representation question involving employees of the Company or any
of its subsidiaries, nor does the Company know of any activity or proceeding of
- 15 -
any labor organization (or representative thereof) or employee group to organize
any such employees. Except as disclosed in the Company SEC Reports filed prior
to the date hereof or in Section 4.10(f) of the Company Disclosure Schedule, (i)
there is no unfair labor practice, employment discrimination or other material
complaint against the Company or any of its subsidiaries pending or, to the best
knowledge of the Company, threatened, (ii) there is no strike or lockout or
material dispute, slowdown or work stoppage pending, or to the best knowledge of
the Company, threatened, against or involving the Company, and (iii) there is no
proceeding, claim, suit, action or governmental investigation pending or, to the
best knowledge of the Company, threatened, in respect of which any director,
officer, employee or agent (or, except as disclosed in Section 4.10(f) of the
Company Disclosure Schedule, any former director, officer, employee or agent) of
the Company or any of its subsidiaries are or may be entitled to claim
indemnification from the Company or such subsidiary pursuant to their respective
certificates of incorporation or by-laws or as provided in the indemnification
agreements listed in Section 4.10(f) of the Company Disclosure Schedule.
(g) Except as required by law or as would not reasonably be likely to
have, individually or in the aggregate, a Company Material Adverse Effect, no
Company Benefit Plan provides retiree medical or retiree life insurance benefits
to any person except as disclosed in Section 4.10(g) of the Company Disclosure
Schedule. The accumulated post-retirement benefit obligation of the Company and
its subsidiaries (as determined under FASB Statement No. 106) as of December 31,
1998 does not exceed $6,400,000.
(h) Except as disclosed in Section 4.10(h) of the Company Disclosure
Schedule, no director or officer or other employee of the Company or its
subsidiaries will become entitled to any retirement, severance or similar
benefit or enhanced or accelerated benefit solely as a result of the
transactions contemplated hereby. Except as disclosed on Schedule 4.10(h) of the
Company Disclosure Schedule, such benefit would not be an "excess parachute
payment" to a "disqualified individual" as those terms are defined in Code
Section 280G.
(i) Except as disclosed on Section 4.10(i) of the Company Disclosure
Schedule, since June 30, 1999, there has been no change in the terms and
conditions of employment of any director or any of the fifteen most senior
officers of the Company.
(j) There has been no amendment to, written interpretation of or
announcement (whether or not written) by the Company or any of its subsidiaries
relating to, or change in employee participation or coverage under, any Company
Benefit Plan which would increase materially the expense of maintaining such
plan above the level of expense incurred in respect thereto for the most recent
12 month period updated on the Company Financial Statements except as set forth
in Section 4.10(i) of the Company Disclosure Schedule.
Section 4.11 Environmental Protection. Except as set forth in Section
4.11 of the Company Disclosure Schedule or in the Company SEC Reports filed
prior to the date hereof:
- 16 -
(a) Compliance. The Company and to the Company's knowledge each of
its subsidiaries are in compliance with all Environmental Laws and the Company
has not received any communication from any Governmental Authority or third
party that alleges that the Company or any of its subsidiaries is not in
compliance with applicable Environmental Laws, except where the failure to be in
such compliance would not reasonably be likely to have, individually or in the
aggregate, a Company Material Adverse Effect. The Company has made available to
Parent copies of any and all material environmental assessment or audit reports
or other similar studies or analyses generated within the last three years and
in Company's possession, that relate to the Company or any of its subsidiaries
or the Company Joint Ventures.
(b) Environmental Permits. The Company and to the Company's knowledge
each of its subsidiaries have obtained all applicable environmental, health and
safety permits, licenses, approvals and governmental authorizations
(collectively, the "Environmental Permits") which are required, pursuant to
Environmental Laws, for the construction of their facilities and the conduct of
their operations; all such Environmental Permits are in current effect and in
good standing; all required renewal applications have been timely filed and are
pending agency approval; the Company reasonably believes that such renewals will
be accomplished in the ordinary course of business without material delay or
expense (except where failure to accomplish such renewals would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect); and the Company has received no information that when
renewed such permit(s) will impose material restrictions or obligations not
required in the current permit; no capital expense will be required to meet the
requirements of any permit or Environmental Law existing as of the date hereof
except for such capital expenditure as would not reasonably be likely to have,
individually or in the aggregate, a Company Material Adverse Effect; the Company
and its subsidiaries are in compliance with all terms and conditions of the
Environmental Permits, except for such noncompliance as would not reasonably be
likely to have, individually or in the aggregate, a Company Material Adverse
Effect; the Company reasonably believes that any transfer or renewal of or
reapplication for any Environmental Permit required as a result of the Merger
can be accomplished in the ordinary course of business without material delay or
expense (except where failure to accomplish such transfer or renewal will not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect).
(c) Environmental Claims. There is no Environmental Claim pending or,
to the best knowledge of the Company, threatened against the Company or any of
its subsidiaries that, if adversely determined, would have, individually or in
the aggregate, a Company Material Adverse Effect. There are no circumstances
existing, to the knowledge of the Company, that would form a reasonable basis
for an Environmental Claim against the Company or any of its subsidiaries which,
if adversely determined, would have, individually or in the aggregate, a Company
Material Adverse Effect. To the Company's knowledge, no real property currently
or formerly owned or operated by the Company or any subsidiary is listed on the
National Priorities List, the CERCLIS or any state or local list of sites with
known or suspected Release.
- 17 -
(d) Releases. The Company has no knowledge of any Releases that would
be reasonably likely to form the basis of any Environmental Claim against the
Company or any of its subsidiaries, except for Releases the liability for which
would not reasonably be likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
(e) Predecessors. The Company has no knowledge of any Environmental
Claim pending or of any Release that would be reasonably likely to form the
basis of any Environmental Claim, in each case against any predecessor of the
Company or any of its subsidiaries or any other party whose liability the
Company or any of its subsidiaries has or may have retained or assumed either
contractually or by operation of law, except for such Releases the liability for
which would not, individually or in the aggregate, have a Company Material
Adverse Effect.
(f) As used in this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation by any person or by any Governmental
Authority with jurisdiction under Environmental Laws alleging
potential responsibility or liability for enforcement costs,
investigatory costs, cleanup costs, governmental response costs,
removal costs, remedial costs, natural-resources damages, property
damages, personal injuries, fines or penalties, or other liabilities
pursuant to Environmental Laws including, but not limited to those
arising out of, based on or resulting from (A) the presence of any
Hazardous Materials or (B) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Laws" means any applicable statute,
regulation, rule, code, common law, order or judgment of any federal,
state, local or foreign jurisdiction where the Company or any of its
subsidiaries operates concerning protection or preservation of the
environment, human health or natural resources, including but not
limited to statues, regulations, rules, codes, common law, orders or
judgments relating to (i) any discharges, releases or emissions to
air, water (including surface water, ground water and wetlands), soil
or sediment, (ii) the quality of any environmental medium, (iii) the
generation, treatment, recycling, storage, disposal, transportation
or other management of waste, (iv) the manufacture, distribution,
disposal, or recycling of chemical substances and mixtures, or (v)
responsibility or liability for environmental conditions.
(iii)"Hazardous Materials" means (a) any substance, material or
waste (in any relevant physical form or concentration) regulated,
listed or identified under any Environmental Law and any other
substance, material or waste (in any form or concentration) which is
hazardous, dangerous, or toxic to living things or the environment.
- 18 -
(iv) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the environment of any Hazardous Materials.
Section 4.12 Regulation as a Utility. The Company and/or its
subsidiaries are regulated as a public utility in the states set forth on
Section 4.12 of the Company Disclosure Schedule. Except as set forth on Section
4.12 of Company Disclosure Schedule, neither the Company nor any "subsidiary
company" or "affiliate" of the Company is subject to regulation as a public
utility or public service company (or similar designation) by the United States
or any other state of the United States. All filings required to be made by the
Company or any of its subsidiaries since December 31, 1998, under any applicable
laws or orders relating to the regulation of public utilities, have been filed
with the appropriate public utility commission, health agency or other
appropriate governmental entity (including, without limitation, to the extent
required, the state public utility regulatory agencies in the states identified
in Section 4.12 of the Company Disclosure Schedule), 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 the appropriate laws or orders, except for
such filings or such failure to comply that would not reasonably be likely to
have, individually or in the aggregate, a Company Material Adverse Effect.
Except as specified on Section 4.12 of the Company Disclosure Schedule, no
approval of any public utilities regulatory authority (including all public
utility control or public service commissions and similar state regulatory
bodies) is required for the Company's execution and delivery of this Agreement
by the Company or the performance of its obligations under this Agreement or the
consummation of the transactions contemplated by this Agreement.
Section 4.13 Water Quality. Except as set forth on Section 4.13 of
the Company Disclosure Schedule, the quality of water supplied by the Company
and its subsidiaries meets or exceeds all standards for quality and safety of
water in all material respects in accordance with all applicable federal, state,
local or foreign statutes, laws, ordinances, rules and regulations.
Section 4.14 Vote Required. The approval of (i) two-thirds of the
outstanding shares of Company Common Stock not owned by Parent or any affiliate
of Parent which is an "interested shareholder" as defined in NJBCA ss. 14A:10A-3
and (ii) two-thirds of the outstanding shares of the Series A Preference Stock
at the Company Special Meeting (collectively, the "Company Stockholders'
Approval") are the only votes of the holders of any class or series of the
capital stock of the Company or any of its subsidiaries required to approve this
Agreement, the Merger and the other transactions contemplated hereby.
Section 4.15 Opinion of Financial Advisor. The Company has received
the opinion of Xxxxxx Xxxxxxx & Co. Incorporated to the effect that, as of the
- 19 -
date hereof, the Per Share Cash Consideration is fair from a financial point of
view to the holders of Company Common Stock.
Section 4.16 The Company Rights Agreement. The Company has taken all
necessary action with respect to all of the outstanding stock purchase rights of
the Company (the "Rights") issued pursuant to the Rights Agreement, dated as of
July 12, 1989, as amended by Amendment No. 1 thereto dated as of September 15,
1993, Amendment No. 2 thereto dated as of July 30, 1999 and Amendment No. 3
thereto dated as of August 20, 1999 (the "Rights Agreement"), between the
Company and ChaseMellon Shareholder Services, LLC, as Rights Agent, so that the
Company, as of the time immediately prior to the Effective Time, will have no
obligations under the Rights or the Rights Agreement and so that the holders of
the Rights will have no rights under the Rights or the Rights Agreement. The
Board of Directors of the Company has taken all necessary action to amend the
Rights Agreement so that neither the execution and delivery of this Agreement,
the performance of the parties' obligations hereunder nor the consummation of
the Merger will (a) cause the Rights issued pursuant to the Rights Agreement to
become exercisable, (b) cause Parent or Merger Sub to become an Acquiring Person
(as such term is defined in the Rights Agreement) or (c) give rise to a
Distribution Date (as such term is defined in the Rights Agreement). The
execution, delivery and performance of this Agreement will not result in a
distribution of, or otherwise trigger, the Rights under the Rights Agreement.
Section 4.17 Real Property. The Company and each of its subsidiaries
and, to the Company's knowledge, each of the Company Joint Ventures has good
title or valid leases with respect to all of their real property free and clear
of any and all liens, claims and encumbrances other than (i) as set forth in
Section 4.17 of the Company Disclosure Schedule, (ii) those reflected or
reserved against in the Company Financial Statements and the notes thereto,
(iii) imperfections of title, easements, pledges, charges, restrictions and
encumbrances, including, without limitation, survey matters and mechanics'
liens, if any, that do not materially detract from the value of the property
subject thereto, or materially interfere with the manner in which it is
currently being used, (iv) taxes and general and special assessments not in
default and payable without penalty or interest, and (v) such other liens,
claims and encumbrances as would not reasonably be likely to have, individually
or in the aggregate, a Company Material Adverse Effect. Except, in each case, as
would not, individually or in the aggregate, have a Company Material Adverse
Effect, (A) neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any of the Company Joint Ventures has received any notice
for assessments for public improvements against the real property and, to the
knowledge of the Company and its subsidiaries, no such assessment has been
proposed; and (B) neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any of the Company Joint Ventures has received any notice
or order by any governmental or other public authority, any insurance company
which has issued a policy with respect to any of such properties or any board of
fire underwriters or other body exercising similar functions which (i) relates
to violations of building, safety, fire or other ordinances or regulations, (ii)
claims any defect or deficiency with respect to any of such properties or (iii)
requests the performance of any repairs, alterations or other work to or in any
of such properties or in the streets bounding the same. Except as set forth in
- 20 -
Section 4.17 of the Company Disclosure Schedule or as would not reasonably be
likely to have, individually or in the aggregate, a Company Material Adverse
Effect, there is no pending condemnation, expropriation, eminent domain or
similar proceeding affecting all or any portion of any of such properties and,
to the Company's knowledge, no such proceeding is threatened.
Section 4.18 Property Franchises. The Company and each of its
subsidiaries owns or has sufficient rights and consents to use under existing
franchises, easements, leases, and license agreements all properties, rights and
assets necessary for the conduct of their business and operations as currently
conducted, except where the failure to own or have sufficient rights and
consents to use such properties, rights and assets would not reasonably be
likely to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 4.19 Insurance. The Company and each of its subsidiaries is,
and has been continuously since at least January 1, 1995, insured with
financially responsible insurers in such amounts and against such risks and
losses as are customary for companies conducting the business as conducted by
the Company and its subsidiaries during such time period. Neither the Company
nor any of its subsidiaries has received any notice of cancellation or
termination with respect to any material insurance policy of the Company or any
of its subsidiaries. All material insurance policies of the Company and each of
its subsidiaries are valid and enforceable policies.
Section 4.20 Trademarks, Patents and Copyrights. Except where a
failure is not reasonably likely, individually or in the aggregate, to have a
Company Material Adverse Effect, the Company and its subsidiaries and, to the
Company's knowledge, the Company Joint Ventures own, or possess licenses or
other valid rights to use, all patents, patent rights, trademarks, trademark
rights, trade names, trade name rights, copyrights, service marks, trade
secrets, applications for trademarks and for service marks, know-how and other
proprietary rights and information that are material to the business of the
Company and its subsidiaries and, to the Company's knowledge, Company Joint
Ventures as currently conducted, and the Company is unaware of any assertion or
claim challenging the validity of any of the foregoing, other than any
assertions or claims which, individually or in the aggregate, are not reasonably
likely to have a Company Material Adverse Effect. The conduct of the business of
the Company and its subsidiaries and, to the Company's knowledge, the Company
Joint Ventures as currently conducted does not conflict with any patent, patent
right, license, trademark, trademark right, trade name, trade name right,
service xxxx or copyright of any third party, other than conflicts that,
individually or in the aggregate, would not reasonably be likely to have a
Company Material Adverse Effect. To the knowledge of the Company, there are no
infringements by any third party of any proprietary rights owned or licensed by
or to the Company or any subsidiary which are reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 4.21 Year 2000. Except as would not reasonably be likely to
have, individually or in the aggregate, a Company Material Adverse Effect, to
the knowledge of the Company, all internal computer systems, computer software,
equipment or technology that are material to the business, finances or
- 21 -
operations of the Company and its subsidiaries or were sold or licensed to
customers of the Company and its subsidiaries are (i) able to receive, record,
store, process, calculate, manipulate and output dates from and after January 1,
2000, time periods that include January 1, 2000 and information that is
dependent on or relates to such dates or time periods, in the same manner and
with the same accuracy, functionality, data integrity and performance as when
dates or time periods prior to January 1, 2000 are involved, (ii) able to store
and output date information in a manner that is unambiguous as to century and
(iii) to recognize Year 2000 as a leap year.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.1 Organization and Qualification. Except as set forth in
Section 5.1 of the Parent Disclosure Schedule (as defined in Section 7.6(ii)),
Parent, Merger Sub and each of Parent's other subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite corporate power
and authority, and has been duly authorized by all necessary approvals and
orders, to own, lease and operate its assets and properties to the extent owned,
leased and operated and to carry on its business as it is now being conducted
and is duly qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of its assets
and properties makes such qualification necessary, other than in such
jurisdictions where the failure to be so qualified and in good standing will
not, when taken together with all other such failures, have a Parent Material
Adverse Effect. As used in this Agreement, "Parent Material Adverse Effect"
means any change, effect, condition or circumstance that will, or is reasonably
likely to, have a material adverse effect on Parent's or Merger Sub's ability to
consummate the transactions contemplated by this Agreement.
Section 5.2 Authority; Non-Contravention; Statutory Approvals. (a)
Authority. Each of Parent and Merger Sub has all requisite corporate power and
authority to enter into this Agreement and, subject to the applicable Parent
Required Statutory Approvals (as defined in Section 5.2(c)), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Merger Sub, the performance by Parent and Merger Sub of their
respective obligations hereunder and the consummation by Parent and Merger Sub
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Merger Sub, respectively.
This Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and, assuming the due authorization, execution and delivery hereof by
the other signatories hereto, constitutes the valid and binding obligation of
each of Parent and Merger Sub enforceable against each in accordance with its
terms.
(b) Non-Contravention. Except as set forth in Section 5.2(b) of the
Parent Disclosure Schedule, the execution and delivery of this Agreement by
Parent and Merger Sub do not, and the consummation of the transactions
contemplated hereby will not, result in a Violation pursuant to any provisions
of (i) the certificate of incorporation, by-laws or similar governing documents
of Parent or Merger Sub, respectively, or any of Parent's other subsidiaries or,
to Parent's knowledge, any of its joint ventures, (ii) subject to obtaining the
Parent Required Statutory Approvals, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
Governmental Authority applicable to Parent, Merger Sub or any of Parent's other
subsidiaries or, to Parent's knowledge, any of its joint ventures or any of
their respective properties or assets or (iii) subject to obtaining the
third-party consents or other approvals set forth in Section 5.2(b) of the
Parent Disclosure Schedule (the "Parent Required Consents"), any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which Parent, Merger Sub or any of Parent's other subsidiaries or, to Parent's
knowledge, any of its joint ventures is a party or by which it or any of their
respective properties or assets may be bound or affected, excluding from the
foregoing clauses (ii) and (iii) such violations as would not have, in the
aggregate, a Parent Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section 5.2(c) of the
Parent Disclosure Schedule, no declaration, filing or registration with, or
notice to or authorization, consent or approval of, any Governmental Authority
is necessary for the execution and delivery of this Agreement by Parent or
Merger Sub, the performance by Parent or Merger Sub of their respective
obligations hereunder or the consummation by Parent or Merger Sub of the
transactions contemplated hereby, the failure to obtain, make or give which
would reasonably be likely to have, individually and in the aggregate, a Parent
Material Adverse Effect (the "Parent Required Statutory Approvals"), it being
understood that references in this Agreement to "obtaining" such Parent Required
Statutory Approvals shall mean making such declarations, filings or
registrations; giving such notices; obtaining such authorizations, consents or
approvals; and having such waiting periods expire as are necessary to avoid a
violation of law.
- 22 -
Section 5.3 Reports and Financial Statements. The audited
consolidated financial statements and unaudited interim financial statements of
Parent since December 31, 1995 (collectively, the "Parent Financial Statements")
have been prepared in accordance with generally accepted accounting principles
(except as may be indicated therein or in the notes thereto) and fairly present
the consolidated financial position of Parent as of the dates thereof and the
consolidated results of its operations and cash flows for the periods then
ended. True, accurate and complete copies of the certificate of incorporation
and by-laws of Parent (including all amendments thereto) as in effect on the
date hereof, have been made available to the Company.
Section 5.4 Proxy Statement. None of the information supplied or to
be supplied by or on behalf of Parent or Merger Sub for inclusion or
incorporation by reference in the Proxy Statement shall, at the dates mailed to
the Company stockholders and at the times of the meeting of the Company
stockholders to be held in connection with the Merger, contain any untrue
- 23 -
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. The Proxy
Statement, insofar as it relates to Parent, Merger Sub or any other Parent
subsidiary, shall comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act and the rules and
regulations thereunder.
Section 5.5 Ownership of Company Capital Stock. Except as set forth
in Section 5.5 of the Parent Disclosure Schedule, Parent does not "beneficially
own" (as such term is defined for purposes of Section 13(d) of the Exchange Act)
any shares of Company Common Stock or Series A Preference Stock.
Section 5.6 Financing. Parent has or will have available, prior to
the Effective Time, sufficient cash in immediately available funds to pay all
Cash Consideration required to be paid pursuant to Article II hereof and to
consummate the Merger and other transactions contemplated hereby.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of Company. After the date hereof and prior to
the Effective Time or earlier termination of this Agreement, the Company agrees
as to itself and to its subsidiaries, as follows, except as expressly
contemplated or permitted in this Agreement, or to the extent Parent shall
otherwise consent in writing:
(a) Ordinary Course of Business. The Company shall, and shall cause
its subsidiaries to, carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted. In
addition, the Company shall, and shall cause its subsidiaries to, use all
commercially reasonable efforts to (i) preserve intact its present business
organization and goodwill, preserve the goodwill and relationships with
customers, suppliers and others having business dealings with it, (ii) subject
to prudent management of workforce needs and ongoing programs currently in
force, keep available the services of its present officers and employees as a
group, and (iii) maintain and keep material properties and assets in as good
repair and condition as at present, subject to ordinary wear and tear, and
maintain supplies and inventories in quantities consistent with past practice.
(b) Dividends. The Company shall not nor shall it permit any of its
subsidiaries to: (i) declare or pay any dividends on or make other distributions
in respect of any of their capital stock other than (A) dividends by a
wholly-owned subsidiary to the Company or another wholly-owned subsidiary, (B)
dividends by a less than wholly-owned subsidiary consistent with past practice,
(C) stated dividends on Company Preferred Stock, (D) regular dividends on
Company Common Stock with usual record and payment dates that, in any fiscal
quarter, do not exceed 100% of the dividends for the same quarter of the prior
- 24 -
fiscal year, (E) if the Effective Time occurs on a date other than a usual
record date for dividends on Company Common Stock, a "stub period" dividend
equal to an amount not to exceed 100% of the dividends for the same quarter of
the prior fiscal year as the quarter 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, (F) an additional dividend on Company Common Stock in
each of the first three fiscal quarters following the date of this Agreement in
an amount not to exceed $0.06 per share per quarter, and (G) a special dividend
payable to each holder of record of Company Common Stock immediately prior to
the Effective Time in an amount per share equal to the difference between $0.48
and the amount of the aggregate dividends per share payable pursuant to clause
(F) of this Section 6.1(b) (ii) split, combine or reclassify any capital stock
or the capital stock of any subsidiary or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of, or in substitution
for, shares of capital stock or the capital stock of any subsidiary; or (iii)
redeem, repurchase or otherwise acquire any shares of capital stock or the
capital stock of any subsidiary (or any option with respect thereto) other than
(A) redemptions, repurchases and other acquisitions of shares of capital stock
in connection with the administration of employee benefit and dividend
reinvestment plans as in effect on the date hereof in the ordinary course of the
operation of such plans consistent with past practice, or (B) the intercompany
acquisitions of capital stock described in Section 6.1(b) of the Company
Disclosure Schedule.
(c) Issuance of Securities. The Company shall not, nor shall it
permit any of its subsidiaries to, issue, agree to issue, deliver, sell, award,
pledge, dispose of or otherwise encumber or authorize or propose the issuance,
delivery, sale, award, pledge, disposal or other encumbrance of, any shares of
their capital stock of any class or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire, any such shares
or convertible or exchangeable securities, other than as provided for in the
Company Benefit Plans consistent with past practice or as set forth in Section
6.1(c) of the Company Disclosure Schedule. The Company shall promptly furnish to
Parent such information as may be reasonably requested including financial
information. Without limiting the foregoing, as soon as practicable following
the date of this Agreement, the Company shall exercise and shall cause any
applicable administrator to exercise all discretion to (i) purchase Company
Common Stock for participants under its Dividend Reinvestment and Stock Purchase
Plan (the "DRIP Program") on the open market for all dividend payment dates
following the date of this Agreement and terminate the issuance or distribution
of shares under the DRIP Program at the earliest possible date; (ii) purchase
Company Common Stock for distribution to participants under its Management
Incentive Plan and other Company Stock Plans on the open market for all
distributions following the date of this Agreement; and (iii) make any and all
purchases of Company Common Stock for its 401(k) plan (or other retirement plan)
on the open market.
(d) Acquisitions. Except as disclosed in Section 6.1(d) of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any of
its subsidiaries to, acquire or agree to acquire, by merging or consolidating
- 25 -
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or their business organization or division thereof, or
otherwise acquire or agree to acquire any material amount of assets other than
in the ordinary course of business; provided, however, that notwithstanding the
foregoing, the Company may acquire solely for cash or agree to acquire solely
for cash equity interests or the business or assets of businesses that (i) are
water or wastewater utilities, (ii) have a value not in excess of $5 million
individually and $25 million in the aggregate (in each case, including the
assumption of debt and other liabilities), and (iii) would not reasonably be
expected to prevent or materially delay the receipt of the Company Required
Statutory Approvals. The Company shall inform Parent reasonably in advance of
taking, or permitting any of its subsidiaries to take, action relating to any
such direct or indirect acquisition.
(e) Capital Expenditures. Except as set forth in Section 6.1(e) of
the Company Disclosure Schedule or as required by law, the Company shall not,
nor shall it permit any of its subsidiaries to, make aggregate capital
expenditures that exceed 110% of the cumulative amount budgeted by the Company
or its subsidiaries for capital expenditures as set forth in Section 6.1(e) of
the Company Disclosure Schedule.
(f) No Dispositions. Except as set forth in Section 6.1(f) of the
Company Disclosure Schedule, and other than in the ordinary course of business
or consistent with past practice, the Company shall not, nor shall it permit any
of its subsidiaries to, sell, lease, license, encumber or otherwise dispose of,
any of its assets, other than encumbrances or dispositions in the ordinary
course of its business consistent with past practice.
(g) Indebtedness. Except as set forth in Section 6.1(g) of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any of
its subsidiaries to, incur or guarantee any indebtedness (including any debt
borrowed or guaranteed or otherwise assumed including, without limitation, the
issuance of debt securities or warrants or rights to acquire debt) or 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 other than (i) a net increase in short-term indebtedness in
the ordinary course of business consistent with past practice in amounts not
exceeding $65 million; (ii) arrangements between the Company and its
wholly-owned subsidiaries or among its wholly-owned subsidiaries; (iii) net
increase in total indebtedness in an amount not to exceed in the aggregate $35
million; or (iv) indebtedness in connection with acquisitions permitted by
Section 6.1(d) hereof or long-term indebtedness in connection with the refunding
of existing indebtedness either at its stated maturity or at a lower cost of
funds.
(h) Compensation, Benefits. Except as set forth in Section 6.1(h) of
the Company Disclosure Schedule, as may be required by applicable law, as may be
required to facilitate or obtain a determination from the IRS that a plan is
"qualified" within the meaning of Section 401(a) of the Code or as contemplated
- 26 -
by this Agreement, the Company shall not, nor shall it permit any of its
subsidiaries to, (i) enter into, adopt or amend or increase the amount or
accelerate the payment or vesting of any benefit or amount payable under, any
employee benefit plan or other contract, agreement, commitment, arrangement,
plan or policy covering employees, former employees, directors or former
directors or their beneficiaries or providing benefits to such persons that is
maintained by, contributed to or entered into by such party or any of its
subsidiaries, or increase or enter into any contract, agreement commitment or
arrangement to increase in any manner, the compensation or fringe benefits, or
otherwise to extend expand or enhance the engagement employment or any related
rights of, or take any other action or grant any benefit (including, without
limitation, any stock options or stock option plan) not required under the terms
of any existing employee benefit plan or other contract, agreement, commitment,
arrangement, plan or policy to or with any current or former director, officer
or other employee of such party or any of its subsidiaries, except for normal
increases or grants or actions in the ordinary course of business consistent
with past practice that, in the aggregate, do not result in a material increase
in benefits or compensation expense to the Company or any of its subsidiaries or
(ii) enter into or amend any employment, severance or special pay arrangement
with respect to the termination of employment or other similar contract,
agreement or arrangement with any current or former director or officer or other
employee other than in the ordinary course of business consistent with current
industry practice.
(i) Accounting. Except as set forth in Section 6.1(i) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
subsidiaries to, make any changes in their accounting methods, policies or
procedures, except as required by law, rule, regulation or GAAP, nor shall the
Company or any of its subsidiaries file any Tax Return inconsistent with past
practice, or, on any such Tax Return, take any position or method that is
inconsistent with positions taken, elections made or methods used in preparing
or filing similar Tax Returns in prior periods, or settle or compromise any Tax
liability that is subject to an audit, claim for delinquent Taxes, examination,
suit or proceeding.
(j) Cooperation, Notification. The Company shall, and shall cause its
subsidiaries to, (i) confer on a regular and frequent basis with one or more
representatives of Parent to discuss, subject to applicable law, material
operational matters and the general status of its ongoing operations and other
matters relating to the Merger; (ii) promptly notify Parent of any significant
changes in its business, properties, assets, condition (financial or other),
results of operations or prospects or of the receipt of any written complaint or
notice of the commencement of any investigation or proceeding which alleges the
occurrence of any event or the existence of any fact which is reasonably likely
to result in a Company Material Adverse Effect or the institution or, to the
actual knowledge of the Company, threat of any material litigation; (iii) advise
Parent of any change or event which has had or, insofar as reasonably can be
foreseen, is reasonably likely to result in a Company Material Adverse Effect;
and (iv) promptly provide Parent with copies of all filings made by the Company
or any of its subsidiaries with any state or federal court, administrative
agency, commission or other Governmental Authority in connection with this
Agreement and the transactions contemplated hereby.
- 27 -
(k) Third-Party Consents. The Company shall, and shall cause its
subsidiaries to, use all commercially reasonable efforts to obtain all the
Company Required Consents. The Company shall promptly notify Parent of any
failure or prospective failure to obtain any such consents and, if requested by
Parent shall provide copies of all the Company Required Consents obtained by the
Company to Parent.
(l) No Breach, Etc. The Company shall not, nor shall it permit any of
its subsidiaries to, willfully take any action that would or is reasonably
likely to result in a material breach of any provision of this Agreement or in
any of its representations and warranties set forth in this Agreement being
untrue on and as of the Closing Date.
(m) Discharge of Liabilities. The Company shall not, nor shall it
permit any of its subsidiaries to, pay, discharge or satisfy any material
claims, liabilities or obligations (absolute accrued, asserted or unasserted
contingent or otherwise), or settle any material claim or litigation, other than
the payment, discharge, satisfaction or settlement, in the ordinary course of
business consistent with past practice (which includes the payment of final and
non-appealable judgments) or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of the Company included
in the Company SEC Reports or incurred in the ordinary course of business
consistent with past practice.
(n) Contracts. The Company shall not, nor shall it permit any of its
subsidiaries to, except in the ordinary course of business consistent with past
practice, modify, amend, terminate, renew or fail to use reasonable business
efforts to renew any material contract or agreement to which the Company or any
subsidiary of the Company is a party, or, except in connection with an
acquisition permitted under Section 6.1(d) hereof, enter into any new material
contract, or waive, release or assign any material rights or claims, or enter
into any material contracts or arrangements other than on terms that are arm's
length.
(o) Insurance. The Company shall, and shall cause its subsidiaries
to, maintain with financially responsible insurance companies insurance in such
amounts and against such risks and losses as are customary for companies engaged
in the water utility industry.
(p) Permits. The Company shall, and shall cause its subsidiaries to,
use reasonable efforts to maintain in effect all existing governmental permits
pursuant to which such party or its subsidiaries operate.
(q) Charter Amendments. The Company shall not, nor shall it permit
any of its subsidiaries, to amend or otherwise change its certificate of
incorporation or bylaws or equivalent organizational documents or to take or
fail to take any other action, which in any case would reasonably be expected to
prevent or materially impede or interfere with the Merger (except as permitted
in Section 6.2).
- 28 -
(r) Tax Elections. Except as set forth in Section 6.1(r) of the
Company Disclosure Schedule, the Company shall not nor shall it permit any of
its subsidiaries to make, change or rescind any material Tax election, other
than (i) recurring elections that customarily are made in connection with the
filing of any Tax Return; provided that any such elections are consistent with
the past practices of the Company or its subsidiaries, as the case may be; (ii)
gain recognition agreements under Section 367 of the Code and Treasury
regulations thereunder with respect to transactions occurring in the 1998 fiscal
year of the Company; (iii) elections with respect to subsidiaries purchased by
the Company under Section 338(h)(10) of the Code or, solely in the case of
non-U.S. subsidiaries purchased by the Company, Section 338(g) of the Code); and
(iv) election with respect to partnership interests purchased by the Company
under Section 754 of the Code, or settle or compromise any material Tax
liability that is the subject of an audit, claim for delinquent Taxes,
examination, action, suit, proceeding or investigation by any taxing authority.
(s) Non-Competition Agreements. Except as set forth in Section 6.1(s)
of the Company Disclosure Schedule, the Company shall not nor shall it permit
any of its subsidiaries to enter into any agreement, understanding or commitment
that restrains, limits or impedes the Company's or any of its subsidiaries'
ability to compete with or conduct any business or line of business, including,
but not limited to, geographic limitations on the Company's or any of its
subsidiaries' activities, other than in the ordinary course of business
consistent with past practice.
(t) Regulatory Matters. The Company shall, and shall cause its
subsidiaries to (i) timely file, in the ordinary course of business consistent
with past practice, rate applications and other required filings with state
public utility control or public service commissions and similar state
regulatory bodies and (ii) except with respect to filings in the ordinary course
of business consistent with past practice that would not reasonably be likely to
have, individually or in the aggregate, a Company Material Adverse Effect,
consult with Parent reasonably in advance of making any filing to implement
changes in any of its or its subsidiaries' rates or surcharges for water
service, standards of service or accounting or executing any agreement with
respect thereto that is otherwise permitted under this Agreement. The Company
shall, and shall cause its subsidiaries to, deliver to Parent a copy of each
such filing or agreement.
(u) Other Agreements. The Company shall not nor shall it permit any
of its subsidiaries to agree or enter into, in writing or otherwise, or amend
any written contract or agreement that would be in violation of the covenants
set forth in this Section 6.1.
(v) Company Joint Ventures. The Company shall use reasonable efforts
to cause the Company Joint Ventures to operate their respective businesses only
in the ordinary course consistent with past practice and, except as contemplated
by Section 7.14, not to expand the scope of their respective businesses.
- 29 -
Section 6.2 Alternative Proposal.
(a) The Company shall, and shall direct and use reasonable efforts to
cause its subsidiaries and any of its or its subsidiaries' directors, officers,
employees, investment bankers, attorneys or other agents or representatives
immediately to cease any discussions or negotiations with any parties that may
be ongoing with respect to any Alternative Proposal (as defined below). The
Company agrees that, prior to the Effective Time, it shall not, and shall not
authorize or permit any of its subsidiaries or any of its or its subsidiaries'
directors, officers, employees, investment bankers, attorneys or other agents or
representatives, (x) directly or indirectly, to initiate, solicit or encourage,
or take any action to facilitate the making of any offer or proposal that
constitutes or is reasonably likely to lead to any Alternative Proposal or (y)
directly or indirectly, engage in negotiations or provide any confidential
information or data to any person relating to any Alternative Proposal. The
Company shall notify Parent orally and in writing of any such inquiries, offers
or proposals (including, without limitation, the terms and conditions of any
such proposal. Notwithstanding anything in this Section 6.2 to the contrary, in
response to an unsolicited Alternative Proposal which did not result from a
breach of this Section 6.2, unless the Company Shareholders Approval has been
obtained, the Company may furnish information to, and afford access to the
properties, books and records of the Company and its subsidiaries to the person
making the Alternative Proposal (i) not earlier than 24 hours after providing
written notice to Parent regarding such Alternative Proposal, including the
terms and conditions thereof, and the identity of the person or group making the
Alternative Proposal and (ii) participate in discussions with such person or
group regarding the Alternative Proposal if, but only to the extent that (A) the
Board of Directors of the Company has reasonably concluded in good faith (after
consultation with its financial advisors) that the person or group making the
Alternative Proposal will have adequate sources of financing to consummate the
Alternative Proposal and that the Alternative Proposal is more favorable to the
Company's shareholders than the Merger (taking into account, without limitation
the likelihood that all required regulatory approvals for such Alternative
Proposal will be obtained in a prompt and timely manner), (B) the Board of
Directors of the Company has determined in good faith, based on advice of
outside counsel with respect to such Board's fiduciary duties under applicable
law with respect to the proposed Alternative Proposal and such other matters as
such Board deems relevant, that it is necessary to do so in order to act in a
manner consistent with its fiduciary duties to its shareholders, and (C) such
person or group has entered into a confidentiality agreement with the person or
group making the Alternative Proposal (the "Alternative Proposal Confidentiality
Agreement") containing terms and conditions no less favorable to the Company
than the Parent Confidentiality Agreement (as defined in Section 7.1) and the
other agreements and arrangements governing the Company's relationship with
Parent, it being understood that nothing herein to the contrary shall restrict
the Board of Directors of the Company from exercising its authority under the
Alternative Proposal Confidentiality Agreement as it may deem appropriate and
(iii) not terminate this Agreement in respect of an Alternative Proposal except
as provided in Section 9.1(h). The Company will keep Parent informed on a timely
and current basis on the status and details (including amendments or proposed
amendments) of any request for information or Alternative Proposal. The Company
will immediately provide to Parent any non-public information concerning the
Company provided to any other person in connection with an Alternative Proposal
which was not previously provided to Parent. As used in this Agreement,
"Alternative Proposal" shall mean any inquiry, proposal or offer from any person
- 30 -
relating to any direct or indirect acquisition or purchase of a business that
constitutes 20% or more of the net revenues, net income or the assets of the
Company and its subsidiaries, taken as a whole, or 20% or more of any class of
equity securities of the Company, or any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company, other than the transactions contemplated by this
Agreement.
(b) The Board of Directors of the Company shall not withdraw or
modify, or propose to withdraw or modify, in any manner adverse to Parent or
Merger Sub or both, the approval or recommendation of the Board of Directors of
the Company of this Agreement unless the Board of Directors of the Company shall
have (i) determined in good faith as a result of changed circumstances and based
on the advice of outside counsel with respect to the Board of Directors of the
Company's fiduciary duties under applicable law that such fiduciary duties
require the directors to withdraw or modify such approval or recommendation, and
(ii) provided to Parent a statement in writing in reasonable detail stating the
reasons therefor. Notwithstanding the foregoing, nothing contained in this
Section 6.2(b) shall prohibit the Company from taking and disclosing to
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the Company's stockholders if, in
the good faith judgment of the Board of Directors of the Company, after
consultation without outside counsel, failure to so disclose would be
inconsistent with its obligations under applicable law.
Section 6.3 Covenants of Parent. After the date hereof and prior to
the Effective Time or earlier termination of their Agreement, Parent agrees, as
to itself and to its subsidiaries, as follows, except as expressly contemplated
or permitted in this Agreement, or to the extent the other parties hereto shall
otherwise consent in writing:
(a) Third-Party Consents. Parent shall, and shall cause its
subsidiaries to, use all commercially reasonable efforts to obtain all Parent
Required Consents. Parent shall promptly notify the Company of any failure or
prospective failure to obtain any such consents and, if requested by the
Company, shall provide copies of all Parent Required Consents obtained by Parent
to the Company
(b) No Breach, Etc. Parent shall not, nor shall it permit any of its
subsidiaries to, willfully take any action that would or is reasonably likely to
result in a material breach of any provision of this Agreement or in any of its
representations and warranties set forth in this Agreement being untrue on and
as of the Closing Date.
- 31 -
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. Upon reasonable notice and during
normal business hours the Company shall, and shall cause its subsidiaries and
shall use reasonable efforts to cause the Company Joint Ventures to, afford to
the officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives of Parent (collectively,
"Representatives") reasonable access, during normal business hours through-out
the period prior to the Effective Time, to all of its properties, books,
contracts, commitments and records (including, but not limited to, Tax Returns)
and, during such period, the Company shall, and shall cause its subsidiaries to,
furnish promptly to Parent (i) access to each report, schedule and other
document filed or received by it or any of its subsidiaries pursuant to the
requirements of federal or state securities laws or filed with or sent to the
SEC, the Department of Justice, the Federal Trade Commission, and any other
Governmental Authority, and (ii) access to all information concerning the
Company, its subsidiaries, directors, officers and stockholders and such other
matters as may be reasonably requested by Parent, including in connection with
any filings, applications or approvals required or contemplated by this
Agreement; provided that no investigation pursuant to this Section 7.1 shall
affect any representation or warranty made herein or any condition to the
obligations of the respective parties to consummate the Merger. Parent shall, in
accordance with the Confidentiality Agreement dated as of July 26, 1999 between
the Company and Parent (the "Confidentiality Agreement"), and shall cause its
subsidiaries and Representatives to, hold in strict confidence all information
concerning the Company furnished to it in connection with the transactions
contemplated by this Agreement.
Section 7.2 Proxy Statement.
(a) The Company will prepare and file the Proxy Statement with the
SEC as soon as reasonably practicable after the date hereof and shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC at the
earliest practicable time. Parent, Merger Sub and the Company shall cooperate
with each other in the preparation of the Proxy Statement, and the Company shall
notify Parent of the receipt of any comments of the SEC with respect to the
Proxy Statement and of any requests by the SEC for any amendment or supplement
thereto or for additional information and shall provide to Parent promptly
copies of all correspondence between the Company, or any representative of the
Company, and the SEC or its staff. The Company shall give Parent and their
counsel the opportunity to review the Proxy Statement prior to its being filed
with the SEC and shall give Parent and their counsel the opportunity to review
all amendments and supplements to the Proxy Statement and all responses to
requests for additional information and replies to comments prior to their being
filed with, or sent to, the SEC. Each of the Company, Parent and Merger Sub
agrees to use all reasonable efforts, after consultation with the other parties
hereto, to respond promptly to all such comments of and requests by the SEC and
to cause the Proxy Statement and all required amendments and supplements thereto
to be mailed to the holders of Shares entitled to vote at the Company Special
Meeting at the earliest practicable time. Parent shall furnish all information
- 32 -
concerning itself which is required or customary for inclusion in such Proxy
Statement. The information provided by Parent for use in the Proxy Statement
shall be true and correct in all material respects without omission of any
material fact which is required to make such information not false or
misleading. No representation, covenant or agreement is made by or on behalf of
the Company with respect to information supplied by Parent for inclusion in the
Proxy Statement.
(b) If, at any time prior to the Effective Time, any event with
respect to the Company, its officers and directors or any of its subsidiaries
should occur which is required to be described in an amendment of, or a
supplement to, the Proxy Statement, such event shall be so described, and such
amendment or supplement shall be promptly filed with the SEC and, as required by
law, disseminated to the Company's stockholders. Prior to the filing of such
amendment or supplement with the SEC, a copy thereof will be delivered to Parent
and their counsel, who shall, to the extent practicable under the circumstances
and applicable law, have the opportunity to comment on such amendment or
supplement.
Section 7.3 Regulatory Matters. Each party hereto shall cooperate and
use its best efforts to promptly prepare and file all necessary documentation to
effect all necessary applications, notices, petitions, filings and other
documents, and to use all commercially reasonable efforts to obtain as soon as
reasonably practicable following the date hereof all necessary permits,
consents, approvals and authorizations of all Governmental Authorities necessary
or advisable to consummate the transactions contemplated by this Agreement,
including, but not limited to, (a) all notifications required to be filed under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder, (b) the other Company Required Statutory
Approvals and (c) the other Parent Required Statutory Approvals. The parties
agree that they will consult with each other with respect to obtaining Company
Required Statutory Approvals and the Parent Required Statutory Approvals;
provided, however, that it is agreed that the Company shall have primary
responsibility for the preparation and filing of any applications, filings or
other material with state utility commissions required to be filed or submitted
in connection with obtaining the Company Required Statutory Approvals. Parent
shall have the right to review and approve in advance drafts of and final
applications, filings and other material submitted to or filed with state
utility commissions, which approval shall not be unreasonably conditioned,
withheld or delayed.
Section 7.4 Stockholder Approval.
(a) The Company Stockholders. Subject to the provisions of Section
7.4(b) and the NJBCA, the Company shall, as soon as reasonably practicable after
the date hereof (i) take all steps necessary to duly call, give notice of,
convene and hold a meeting of its stockholders (the "Company Special Meeting")
for the purpose of securing Company Stockholders' Approval, (ii) distribute to
its stockholders the Proxy Statement in accordance with applicable federal and
state law and with its certificate of incorporation and by-laws, (iii) subject
to Section 6.2(b), recommend to its stockholders the approval of this Agreement
and the transactions contemplated hereby, (iv) subject to Section 6.2(b), use
- 33 -
its reasonable best efforts to obtain the Company Stockholders' Approval at the
Company Special Meeting, and (v) cooperate and consult with Parent with respect
to each of the foregoing matters.
(b) Meeting Date. Subject to Section 7.4(a), the Company Special
Meeting for the purpose of securing the Company Stockholders' Approval shall be
held on such date as the Company shall determine.
Section 7.5 Directors' and Officers' Indemnification.
(a) Indemnification. To the extent, if any, not provided by an
existing right of indemnification or other agreement or policy, after the
Effective Time, Parent, the Surviving Corporation and the Company 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 any of the
parties hereto or any subsidiary (each, an "Indemnified Party" and collectively,
the "Indemnified Parties") against (i) all losses, expenses (including
reasonable attorneys' fees and expenses), claims, damages or liabilities or,
subject to the proviso of the next sentence, amounts paid in settlement, arising
out of actions or omissions occurring at or prior to 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 such party or a subsidiary of such party (the
"Indemnified Liabilities"), and (ii) all Indemnified Liabilities to the extent
they are based on or arise out of or pertain to the transactions contemplated by
this Agreement. In the event of any such loss, expense, claim, damage or
liability (whether or not arising before the Effective Time), (i) Parent shall
pay 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,
(ii) Parent and the Company will cooperate in the defense of any such matter and
(iii) any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under New
Jersey law and other applicable law, and the certificate of incorporation or
by-laws shall be made by independent counsel mutually acceptable to Parent and
the Indemnified Party; provided, however, that Parent shall not be liable for
any settlement effected without its written consent (which consent shall not be
unreasonably withheld). The Indemnified Parties as a group may retain only one
law firm with respect to each related matter except to the extent there is, in
the written opinion of counsel to an Indemnified Party, under applicable
standards of professional conduct, a conflict on any significant issue between
positions of such Indemnified Party and any other Indemnified Party or
Indemnified Parties. Any Indemnified Party wishing to claim indemnification
under this Section 7.5, upon learning of any such claim, action, suit or
proceeding eligible for indemnification under this Section 7.5, shall notify the
Indemnifying Parties, but the failure so to notify an Indemnifying Party shall
not relieve it from any liability which it may have under this Section 7.5,
- 34 -
except to the extent that such failure results in the forfeiture of substantive
rights or defenses.
(b) Insurance. For a period of six years after the Effective Time,
Parent shall cause to be maintained in effect policies of directors' and
officers' liability insurance for the benefit of those persons who are currently
covered by such policies of the Company or its Subsidiaries on terms no less
favorable than the terms of such current insurance coverage; provided, however,
that Parent shall not be required to expend in any year an amount in excess of
two hundred percent (200%) of the annual aggregate premiums currently paid by
the Company, for such insurance; and provided, further, that if the annual
premiums of such insurance coverage exceed such amount, Parent shall be
obligated to obtain a policy with the best coverage available, in the reasonable
judgment of the Board of Directors of Parent, for a cost not exceeding such
amount.
(c) Successors. In the event Parent or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets,
then and in either such case, proper provisions shall be made so that the
successors and assigns of Parent shall assume the obligations set forth in this
Section 7.5.
(d) Survival of Indemnification. 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 its respective certificate of incorporation and by-laws 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.
(e) Benefit. The provisions of this Section 7.5 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and his or her representatives.
Section 7.6 Disclosure Schedules. On the date hereof, (i) Parent has
delivered to the Company a schedule (the "Parent Disclosure Schedule"),
accompanied by a certificate signed by the chief financial officer of Parent
stating the Parent Disclosure Schedule is being delivered pursuant to this
Section 7.6(i) and (ii) the Company has delivered to Parent a schedule (the
"Company Disclosure Schedule"), accompanied by a certificate signed by the chief
financial officer of the Company stating the Company Disclosure Schedule is
being delivered pursuant to this Section 7.6(ii). The Company Disclosure
Schedule and the Parent Disclosure Schedule are collectively referred to herein
as the "Disclosure Schedules". The Disclosure Schedules constitute an integral
part of this Agreement and modify the respective representations, warranties,
covenants or agreements of the parties hereto contained herein to the extent
that such representations, warranties, covenants or agreements expressly refer
to the Disclosure Schedules. Anything to the contrary contained herein or in the
Disclosure Schedules notwithstanding, any and all statements, representations,
- 35 -
warranties or disclosures set forth in the Disclosure Schedules shall be deemed
to have been made on and as of the date hereof.
Section 7.7 Public Announcements. Subject to each party's disclosure
obligations imposed by law, the Company and Parent will cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby and, except as may be required by law or the
rules of any applicable stock exchange, shall not issue any public announcement
or statement with respect hereto without the consent of the other party (which
consent shall not be unreasonably withheld).
Section 7.8 Certain Employee Agreements. Subject to Section 7.9,
Parent and the Company and its subsidiaries shall honor, without modification,
all contracts, agreements, collective bargaining agreements and commitments of
the parties prior to the date hereof which apply to any current or former
employee or current or former director of the parties hereto; provided, however,
that this undertaking is not intended to prevent Parent or the Company from
enforcing or complying with such contracts, agreements, collective bargaining
agreements and commitments in accordance with their terms, including, without
limitation, exercising any right to amend, modify, suspend, revoke or terminate
any such contract, agreement, collective bargaining agreement or commitment
under any such contract, agreement, collective bargaining agreement or
commitment or under applicable law. Any workforce reductions carried out
following the Effective Time by Parent or the Company and their subsidiaries
shall be done in accordance with all applicable collective bargaining
agreements, and all laws and regulations governing the employment relationship
and termination thereof, including, without limitation, the Worker Adjustment
and Retraining Notification Act and regulations promulgated thereunder, and any
comparable state or local law.
Section 7.9 Employee Benefit Plans.
(a) Maintenance of the Company Benefit Plans. Each of the Company
Benefit Plans (other than Company Stock Plans) in effect at the date hereof
shall be maintained in effect with respect to the employees or former employees
of the Company and any of its subsidiaries, who are covered by any such benefit
plan immediately prior to the Closing Date (the "Affiliated Employees") until
Parent or the Company otherwise determine after the Effective Time; provided,
however, that nothing herein contained shall limit any right contained in any
such Company Benefit Plan or under applicable law to amend, modify, suspend,
revoke or terminate any such plan; provided further, however, that Parent or the
Company or their subsidiaries shall provide benefits to the Affiliated Employees
for a period of not less than one year following the Effective Time which are no
less favorable in the aggregate than those provided under the Company Benefit
Plans (with respect to employees and former employees of the Company and its
subsidiaries). Without limitation of the foregoing, each participant in any such
the Company Benefit Plan shall receive credit for purposes of eligibility to
participate, vesting, and eligibility to receive benefits under any benefit plan
of the Company or any of its subsidiaries or affiliates for service credited for
the corresponding purpose under such benefit plan; provided, however, that such
- 36 -
crediting of service shall not operate to duplicate any benefit to any such
participant or the funding for any such benefit or cause any such Company
Benefit Plan to fail to comply with the applicable provisions of the Code or
ERISA.
(b) Welfare Benefits Plans. With respect to any welfare benefit plan
established to replace any Company Benefit Plan which is a welfare benefit plan
in which Affiliated Employees may be eligible to participate after the Closing
Date, other than limitations, exclusions or waiting periods that are already in
effect with respect to such Affiliated Employees and that have not been
satisfied as of the Closing Date, such replacement plans shall waive all
limitations to pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements and provide each Affiliated
Employee with credit for other co-payments and deductibles paid prior to the
Closing Date in satisfying any applicable deductible or out-of-pocket
requirements applicable to the same calendar year under any welfare plans that
such Affiliated Employees are eligible to participate in after the Closing Date.
Section 7.10 The Company Stock Plans. With respect to each Company
Benefit Plan or other plan, agreement or arrangement that provides for benefits
in the form of Company Common Stock or options to purchase Company Common Stock
(the "Company Stock Plans"), the Company and its subsidiaries and Parent and its
subsidiaries, including the Surviving Corporation and its subsidiaries, shall
take all actions necessary to provide that upon the Effective Time, (i) each
outstanding option to purchase Company Common Stock under any Company Stock
Plan, whether or not then vested and exercisable, shall be canceled in exchange
for a cash payment equal to (A) the excess of the Per Share Cash Consideration
over the exercise price thereof times (B) the number of shares of Company Common
Stock subject thereto, less applicable tax withholding, and (ii) each
outstanding restricted share of Company Common Stock granted under any Company
Stock Plans shall become fully vested as provided in the applicable Company
Stock Plan and shall be simultaneously converted into the right to receive the
Per Share Cash Consideration as provided in Section 2.1. The Company and its
subsidiaries shall take all actions needed to terminate all Company Stock Plans,
subject, however, to the payments required under the preceding sentence.
Section 7.11 Expenses. Subject to Section 9.3, all costs, and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
Section 7.12 Further Assurances. Each party will, and will cause its
subsidiaries to, (i) execute such further documents and instruments and use
their reasonable best efforts to take such further actions as may be necessary
or appropriate or as may reasonably be requested by any other party in order to
consummate the Merger in accordance with the terms hereof, and (ii) not take
action (including effecting or agreeing to effect or announcing an intention or
proposal to effect any acquisition, business combination or other transaction)
which could reasonably be expected to impede, interfere with, prevent, impair or
delay the ability of the parties to consummate the Merger. In case at any time
- 37 -
any further action is necessary or desirable to carry out the terms and
provisions of this Agreement, the proper officers and directors of each party to
this Agreement shall use their reasonable best efforts to take all such action.
Section 7.13 Governance Agreement.
(a) General. Except as set forth herein, the terms and conditions of
the Governance Agreement, dated as of April 22, 1994, as amended, between Parent
and the Company (the "Governance Agreement") shall remain in full force and
effect and the parties shall continue to be fully bound by the provisions
thereof as modified hereby. The Company and Parent agree that the Governance
Agreement is hereby modified (i) as expressly set forth in Section 7.13(b)
hereof, (ii) as long as this Agreement is in effect, to waive any provisions of
the Governance Agreement that are inconsistent with Section 6.2 hereof,
including the "30 day" right granted to Parent under Section 3.1(a) of the
Governance Agreement and Parent's right to acquire the Company Common Stock
during any "Second 120-day Period" as defined in Section 3.1(b) of the
Governance Agreement, and (iii) as may otherwise be required to give effect to
the provisions of this Agreement.
(b) Waivers Upon Acceptance of Alternative Proposal. Upon any
termination of this Agreement by the Company pursuant to Section 9.1(h) hereof,
the Company shall, and it hereby does, waive any and all obligations of or
restrictions on Parent and affiliates contained in Sections 3.7 (Conversion of
Preference Stock).
(c) Waivers Upon Termination of Agreement in Certain Circumstances.
If this Agreement is terminated by the Company pursuant to Section 9.1(h), by
Parent pursuant to Section 9.1(e) or by either the Company or Parent pursuant to
Section 9.1(c) due to the failure to obtain the approval of the Company's
stockholders at the Company Special Meeting and at the time of such failure, any
person shall have made a public announcement or otherwise communicated to the
Company or its stockholders with respect to an Alternative Proposal with respect
to the Company which has not been rejected by the Company and terminated or
withdrawn by the party making the Alternative Proposal, then:
(1) Notwithstanding anything in Sections 3.1(a) or (b) or Sections
3.3(a), (d) or (e) of the Governance Agreement to the contrary,
Parent shall be permitted to make a proposal or proposals to the
Board of Directors of the Company for the acquisition of 100% of
the outstanding equity of the Company or substantially all of
the assets of the Company and its subsidiaries during the period
commencing on the date of termination of this Agreement and
ending on the date 120 days after such date if the Company has
not entered into a definitive agreement with a third party
effecting an Alternative Proposal during such 120 day period, or
if the Company enters into such definitive Agreement with a
third party during such 120 day period, the earlier of the date
- 38 -
on which the Company's stockholders approve such Alternative
Proposal or the date on which such definitive agreement is
terminated. Parent agrees that it shall have no "30 day" right
with respect to any third party Alternative Proposal made during
such period.
(2) Notwithstanding anything in Sections 4.1(a) and (b) of the
Governance Agreement to the contrary, Parent shall not be
required to vote any Company Common Stock in favor of any
Alternative Proposal; provided, however, that if Parent
determines not to vote in favor of any Alternative Proposal, it
shall, at the request of the Company, not be present at the
shareholders meeting at which approval of the Alternative
Proposal is sought for quorum or any other purposes.
Section 7.14 North American Rights Agreement.
(a) General. The Company and Parent agree that, except as otherwise
set forth in this Section 7.14(b), the terms and conditions of the North
American Rights Agreement, dated July 14, 1997, as amended, among the Company,
Parent and other parties (the "NARA") shall remain in full force and effect and
further agree, except as set forth in Section 7.14(b), to continue to be fully
bound by the provisions thereof.
(b) Exceptions for Market Opportunities. In order to permit the
Company and Parent to respond appropriately to market opportunities while this
Agreement is in effect, notwithstanding any contrary provisions of the NARA,
Parent and the Company, on their own behalf and on behalf of their respective
affiliates, agree as follows:
(v) Acquisitions of Rate-Regulated Businesses.
(A) Acquisitions Prior to Termination. From the
date hereof until the termination of this Agreement, (1) the Company and its
subsidiaries may acquire or invest in rate-regulated water and wastewater
utility businesses as permitted by Section 6.1(d) hereof and (2) Parent and its
affiliates may acquire or invest in rate-regulated water and wastewater utility
businesses in the United States, provided that neither Parent nor any of its
affiliates shall make or agree to make any such acquisition or investment if
such acquisition or agreement could reasonably be expected to prevent, or
materially delay the receipt of regulatory approvals necessary to consummate the
Merger.
(B) Rights After Termination.
(1) The Company's Right to Acquire Regulated Company
Interests. Subject to Section 7.14(b)(i)(B)(2), from the date of
termination of this Agreement through the first anniversary of such
termination, the Company shall have the right and option, on not less that
15 days' notice to Parent, to purchase up to 50% of any interests in
- 39 -
regulated water businesses in the United States acquired by Parent or its
affiliates as permitted by Section 7.14(b)(i)(A) (each, a "Regulated
Company Interest"). The price of any portion of a Regulated Company
Interest purchased by the Company under this subsection shall equal the
full cost of the interest to be transferred, including (1) a pro rata
portion of the consideration paid by Parent or such affiliate to acquire
the Regulated Company Interest, (2) a pro rata portion of the actual
out-of-pocket third party transaction costs (including fees and
disbursements of counsel and other advisors) incurred by Parent or such
affiliate in acquiring the Regulated Company Interest, and (3) interest on
the foregoing amounts at the rate of 8.00% per annum from the date the
Regulated Company Interest was acquired by Parent or its affiliate through
the date of transfer to the Company.
(2) Parent Right to Retain Regulated Company
Interests. If (w) the Company shall terminate this Agreement pursuant to
Section 9.1(h), (x) Parent shall terminate this Agreement pursuant to
Section 9.1(e), (y) Parent or the Company shall terminate this Agreement
pursuant to Section 9.1(c) due to the failure to obtain the approval of
the Company' stockholders at the Company Special Meeting and, at the time
of such failure, any person shall have made a public announcement or
otherwise communicated to the Company or its stockholders with respect to
an Alternative Proposal with respect to the Company which has not been
rejected by the Company and terminated or withdrawn by the party making
the Alternative Proposal, or (z) Parent shall terminate this Agreement for
a Terminating the Company Breach pursuant to Section 9.1(g), then,
notwithstanding Section 7.14(b)(i)(B)(1), Parent and its affiliates shall
have the right to own and retain any and all Regulated Company Interests
that (x) they may have acquired prior to such termination or (y) with
respect to which Parent or its affiliates shall have entered into a
binding commitment or agreement prior to such termination, and, in each
case, the right to manage, operate and control the business thereof.
(ii) Acquisitions of Delegated Services Businesses.
(A) UWS Entity Right of First Refusal.
(1) Rights to Acquire Delegated Services
Company Interests. United Water Services LLC, a Delaware limited liability
company ("UWS"), United Water Services Canada L.P., an Ontario, Canada limited
partnership ("UWS Canada"), and United Water Services Mexico LLC, a Delaware
limited liability company ("UWS Mexico"), each of which is owned jointly by
Parent and the Company (each, a "UWS Entity"), shall have the right, at its sole
option (each, a "UWS Option"), to purchase on the terms and subject to the
conditions set forth in this Section 7.14(b)(ii) all but not less than all of
- 40 -
any interests in Delegated Services Providers (as defined in the NARA) in the
United States, Canada or Mexico, respectively (each, a "Delegated Services
Company Interest"), that Parent or any of its affiliates wishes to acquire under
this Section 7.14(b)(ii). From the date hereof until the termination of this
Agreement, Parent and its affiliates shall have the right to acquire any and all
such Delegated Services Company Interests subject only to the UWS Option.
(2) Exercise of UWS Option. Prior to
acquiring any Delegated Services Company Interest, Parent (or its affiliate, as
the case may be) shall first give written notice to the applicable UWS Entity of
such proposed acquisition (a "Notice of Option"). Each such Notice of Option
shall include the identity of the proposed target, the terms of the proposed
acquisition and the price or other consideration proposed to be paid for such
Delegated Services Company Interest. The applicable UWS Entity may exercise any
UWS Option by written notice to Parent given within 15 days after the date of
the applicable Notice of Option. If such UWS Entity fails to exercise any UWS
Option for any reason other than a Parent Veto (defined below), or if such UWS
Entity fails to acquire any Delegated Services Company Interest with respect to
which it has exercised a UWS Option within 90 days of such exercise, Parent (or
its affiliate) shall have the right to purchase such Delegated Services Company
Interest at the price and on substantially the terms set forth in the applicable
Notice of Option.
(3) If the acquisition of any Delegated
Services Company Interest by either a UWS Entity or Parent and/or any of its
affiliates could reasonably be expected to prevent or materially delay the
receipt of regulatory approvals necessary to consummate the Merger, then,
notwithstanding anything to the contrary set forth in this Section 7.14(b)(i),
Parent and its affiliates shall not have the right to acquire such Delegated
Services Company Interest without first obtaining the prior written consent of
the Company.
(4) As used in this Section 7.14(b)(ii),
"Parent Veto" means (1) a failure of the Board of Managers of UWS or UWS Mexico,
or the Board of Directors of the general partner of UWS Canada, to approve the
exercise of the UWS Option with respect to any Delegated Services Company
Interest solely due to one or more Managers or Directors appointed by Parent to
such Board voting against the exercise of such UWS Option or (2) a failure of
the members or partners of such UWS Entity to approve the exercise of the UWS
Option with respect to such Delegated Services Company Interest solely due to
Parent voting against the exercise of such UWS Option, if a vote of the members
or partners is required for such approval.
(B) Rights After Termination.
(1) Subject to Section 7.14(b)(ii)(B)(2),
from the date of termination of this Agreement through the first anniversary of
such termination, the UWS Entities shall have the right and option, without
regard to any Parent Veto, on not less than 15 days' notice to Parent, to
purchase all but not less than all of any Delegated Services Company Interests
acquired by Parent or any affiliate thereof in accordance with this Section
7.14(b). The price of any Delegated Services Company Interest purchased by a UWS
Entity under this subsection shall equal the full cost of such Delegated
Services Company Interest, including (1) the consideration paid by Parent or
such affiliate to acquire the Delegated Services Company Interest, (2) the
- 41 -
actual out-of-pocket third party transaction costs (including fees and
disbursements of counsel and other advisors) incurred by Parent or such
affiliate in acquiring the Delegated Services Company Interest, and (3) interest
on the foregoing amounts at the rate of 8% per annum from the date the Delegated
Services Company Interest was acquired by Parent or its affiliate through the
date of transfer to the UWS Entity.
(2) If (w) the Company shall terminate this
Agreement pursuant to Section 9.1(h), (x) Parent shall terminate this Agreement
pursuant to Section 9.1(e), (y) Parent or the Company shall terminate this
Agreement pursuant to Section 9.1(c) due to the failure to obtain the approval
of the Company's stockholders at Company Special Meeting and, at the time of
such failure, any person shall have made a public announcement or otherwise
communicated to the Company or its stockholders with respect to an Alternative
Proposal with respect to the Company which has not been rejected by the Company
and terminated or withdrawn by the party making the Alternative Proposal, or (z)
Parent shall terminate this Agreement for a Terminating Company Breach pursuant
to Section 9.1(g), then, notwithstanding Section 7.14(b)(ii)(B)(1), Parent and
its affiliates shall have the right to own and retain any and all Delegated
Services Company Interests that (x) they may have acquired prior to such
termination or (y) with respect to which Parent or its affiliates shall have
entered into a binding commitment or agreement prior to such termination, and,
in each case, the right to manage, operate and control the business thereof.
Section 7.15 Notice and Cure. The Company will notify Parent in
writing of, and will use all commercially reasonable efforts to cure before the
Closing, any event, transaction or circumstance, as soon as practicable after it
becomes known to the Company, that causes or will or may be likely to cause any
covenant or agreement of the Company under this Agreement to be breached or that
renders or will render untrue in any material respect any representation or
warranty of the Company contained in this Agreement. No notice given pursuant to
this paragraph shall have any effect on the representations, warranties,
covenants or agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of the following
conditions, except that such conditions may be waived in writing pursuant to
Section 9.5 by the joint action of the parties hereto to the extent permitted by
applicable law:
- 42 -
(a) Stockholder Approval. The Company Stockholders'
Approval shall have been obtained.
(b) No Injunction. No temporary restraining order or preliminary or
permanent injunction or other order, decree, ruling or action taken by any
United States or French federal or state court of competent jurisdiction or
other United States or French federal or state or other governmental authority
of competent jurisdiction restraining, enjoining or otherwise prohibiting the
Merger shall have been issued and be continuing in effect, and the Merger and
the other transactions contemplated hereby shall not have been prohibited under
any United States or French federal or state or other applicable law, order,
rule or regulation.
(c) Statutory Approvals. The Company Required Statutory Approvals and
the Parent Required Statutory Approvals shall have been obtained at or prior to
the Effective Time, such approvals shall have become Final Orders (as defined
below) and such Final Orders shall not impose terms or conditions which,
individually or in the aggregate, insofar as reasonably can be foreseen, will
have, a Company Material Adverse Effect. A "Final Order" means action by the
relevant regulatory authority which has not been reversed, stayed, enjoined, set
aside, annulled or suspended, with respect to which any waiting period
prescribed by law before the transactions contemplated hereby may be consummated
has expired, and as to which all conditions to the consummation of such
transactions prescribed by law, regulation or order have been satisfied.
Section 8.2 Conditions to Obligation of Parent to Effect the Merger.
The obligation of Parent and Merger Sub to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions except as may be waived by Parent and Merger Sub in writing pursuant
to Section 9.5:
(a) Performance of Obligations of the Company. The Company (and/or
its appropriate subsidiaries) shall have performed in all material respects its
agreements and covenants contained in or contemplated by this Agreement to be
performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects (i) on and as of the date hereof and (ii) on and as of
the Closing Date with the same effect as if such representations and warranties
had been made on and as of the Closing Date (other than representations and
warranties that expressly speak only as of a specific date or time other than
the date hereof or the Closing Date which need only be true and correct as of
such date or time) except, in the case of representations and warranties other
than those contained in Section 4.2 (but only to the extent that such Section
contains a representation as to the ownership of the Company of its subsidiaries
described in clause (x) of the first sentence thereof and Sections 4.3(a),
4.4(a), 4.15 and 4.16, for such failures of representations and warranties to be
true and correct (determined without regard to any materiality standard
- 43 -
contained therein) which individually or in the aggregate would not be
reasonably likely to result in a Company Material Adverse Effect.
(c) Closing Certificates. Parent shall have received a certificate
signed by the chief financial officer of the Company, dated the Closing Date, to
the effect that, to the best of such officer's knowledge, the conditions set
forth in Section 8.2(a) and Section 8.2(b) have been satisfied.
(d) No Company Material Adverse Effect. No Company Material Adverse
Effect shall have occurred and be continuing and there shall exist no fact or
circumstance which individually or in the aggregate would reasonably be likely
to have a Company Material Adverse Effect.
(e) Company Required Consents. Company Required Consents the failure
of which to obtain would, individually or in the aggregate, reasonably be likely
to have a Company Material Adverse Effect shall have been obtained.
(f) Other Evidence. Parent and Merger sub shall have received from
the Company such further certificates and documents evidencing due action in
accordance with this Agreement, including certified copies of proceedings of the
Board of Directors and stockholders of the Company, as Parent or Merger Sub
reasonably shall request.
Section 8.3 Conditions to Obligation of The Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date of the following
conditions, except as may be waived by the Company in writing pursuant to
Section 9.5.
(a) Performance of Obligations of Parent. Parent (and/or its
appropriate subsidiaries) shall have performed in all material respects its
agreements and covenants contained in or contemplated by this Agreement to be
performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement shall be true and correct in
all material respects (i) on and as of the date hereof and (ii) on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (other than representations and
warranties that expressly speak only as of a specific date or time other than
the date hereof or the Closing Date which need only be true and correct as of
such date or time) except for such failures of representations and warranties to
be true and correct (determined without regard to any materiality standard)
which individually or in the aggregate would not be reasonably likely to result
in a Parent Material Adverse Effect.
(c) Closing Certificates. The Company shall have received a
certificate signed by the chief financial officer of Parent, dated the Closing
- 44 -
Date to the effect that, to the best of such officer's knowledge, the conditions
set forth in Section 8.3(a) and Section 8.3(b) have been satisfied.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval by the stockholders
of the respective parties hereto contemplated by this Agreement:
(a) by mutual written consent of the Boards of Directors of
the Company and Parent;
(b) by either Parent or the Company, by written notice to the other
party, if the Effective Time shall not have occurred on or before the twelve
month anniversary of the date hereof (the "Initial Termination Date"); provided,
however, that the right to terminate the Agreement under this Section 9.1(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date; and provided, further, that if
on the Initial Termination Date the conditions to the Closing set forth in
Sections 8.1(c) and/or 8.2(e) shall not have been fulfilled but all other
conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then the Initial Termination Date shall be extended to the eighteen
month anniversary of the date hereof;
(c) by either Parent or the Company, by written notice to the other
party if the Company Stockholders' Approval shall not have been obtained at a
duly held Company Special Meeting, including any adjournments thereof;
(d) by either Parent or the Company, if any, United States or French
federal, state or other law, order, rule or regulation is adopted or issued,
which has the effect, as supported by the written opinion of outside counsel for
such party, of prohibiting the Merger, or by any party hereto if any United
States or French federal, state or other court of competent jurisdiction or
other United States federal or state or French governmental authority of
competent jurisdiction shall have issued an order, decree or ruling, or taken
any other action, restraining, enjoining or otherwise prohibiting the Merger,
and such order, decree or ruling or other action shall have become final and
non-appealable;
(e) by Parent, if (i) the Board of Directors of the Company
withdraws, modifies or changes its approval or recommendation of this Agreement
in a manner adverse to Parent or shall have resolved to do so, (ii) the Board of
Directors of the Company shall have recommended to the stockholders of the
Company an Alternative Proposal or shall have resolved to do so, or (iii) a
- 45 -
tender offer or exchange offer for 20% or more of the outstanding shares of
capital stock of the Company is commenced and the Board of Directors of the
Company fails to recommend against acceptance of such tender offer or exchange
offer by its stockholders (including by taking no position with respect to the
acceptance of such tender offer or exchange offer by its stockholders);
(f) by the Company, by written notice to Parent, if (i) there exist
breaches of the representations and warranties of Parent made herein as of the
date hereof which breaches, individually or in the aggregate, would or would be
reasonably likely to result in a Parent Material Adverse Effect, and such
breaches shall not have been remedied within 20 days after receipt by Parent of
notice in writing from the Company, specifying the nature of such breaches and
requesting that they be remedied, or (ii) Parent (and/or its appropriate
subsidiaries) shall not have performed and complied with, in all material
respects, its agreements and covenants hereunder and such failure to perform or
comply shall not have been remedied within 20 days after receipt by Parent of
notice in writing from the Company, specifying the nature of such failure and
requesting that it be remedied;
(g) by Parent, by written notice to the Company, if (i) there exist
material breaches of the representations and warranties of the Company made
herein as of the date hereof which breaches, individually or in the aggregate,
would or would be reasonably likely to result in a Company Material Adverse
Effect, and such breaches shall not have been remedied within 20 days after
receipt by the Company of notice in writing from Parent, specifying the nature
of such breaches and requesting that they be remedied, (ii) the Company (and/or
its appropriate subsidiaries) shall not have performed and complied with its
agreements and covenants contained in Sections 6.1(b) and 6.1(c) or shall have
failed to perform and comply with, in all material respects, its other
agreements and covenants hereunder, and such failure to perform or comply shall
not have been remedied within 20 days after receipt by the Company.
(h) prior to the Company Shareholders' Approval, by the Company, upon
five (5) Business Days prior written notice to Parent, if, as a result of any
written offer or proposal in respect of an Alternative Proposal, the Board of
Directors of the Company determines that such written offer or proposal be
accepted; provided, however, that (i)(A) the Board of Directors of the Company
shall have reasonably concluded in good faith (after consultation with its
financial advisors) that the person or group making the Alternative Proposal
will have adequate sources of financing to consummate the Alternative Proposal
and that the Alternative Proposal is more favorable to the Company shareholders
than the Merger (taking into account, without limitation, the likelihood that
all required regulatory approvals for such Alternative Proposal will be obtained
in a prompt and timely manner) and (B) the Board of Directors of the Company
shall have determined in good faith, based on advice of outside counsel with
respect to such Board's fiduciary duties under applicable law with respect to
the proposed Alternative Proposal as the Board of Directors deem to be relevant,
that, notwithstanding a binding commitment to consummate an agreement of the
nature of this Agreement entered into in the proper exercise of their applicable
fiduciary duties, and notwithstanding all modifications that may be offered by
- 46 -
Parent in negotiations entered into pursuant to clause (ii) below, such
fiduciary duties would also require the directors to reconsider such commitment
and terminate this Agreement as a result of such written offer or proposal and
(ii) prior to any such termination, the Company shall, and shall cause its
respective financial and legal advisors to, negotiate in good faith with Parent
to make such adjustments in the terms and conditions of this Agreement as would
not require termination of this Agreement;
Section 9.2 Effect of Termination. In the event of termination of
this Agreement pursuant to Section 9.1 there shall be no liability under this
Agreement on the part of Parent, Merger Sub or the Company or any of their
respective representatives, and all rights and obligations of each party hereto
shall cease, except as set forth in Sections 6.2, 7.14 9.3 and 10.1; provided,
however, that nothing in this Agreement shall relieve any party from liability
for the willful breach of any of its representations and warranties or the
breach of any of its covenants or agreements set forth in this Agreement.
Section 9.3 Termination Fee; Expenses.
(a) The Company agrees that, if (i) the Company shall terminate this
Agreement pursuant to Section 9.1(h), (ii) Parent shall terminate this Agreement
pursuant to Section 9.1(e), or (iii) Parent or the Company shall terminate this
Agreement pursuant to Section 9.1(c) due to the failure to obtain the approval
of the Company's stockholders at Company Special Meeting and at the time of such
failure, any person shall have made a public announcement or otherwise
communicated to the Company or its stockholders with respect to an Alternative
Proposal with respect to the Company which has not been rejected by the Company
and terminated or withdrawn by the party making the Alternative Proposal, then
in accordance with Section 9.3(c), immediately prior to such termination in the
case of clause (i), or in the case of clause (ii) or (iii) if, within two years
following the date of termination, the Company enters into a definitive
acquisition, merger or similar agreement to effect an Alternative Proposal upon
execution of such agreement, the Company shall pay to Parent an amount equal to
Parent's documented Expenses (as defined below) not in excess of $3,000,000 in
connection with this Agreement and the transactions contemplated hereby and a
termination fee in an amount equal to $42,000,000(collectively, such Expenses
and such fee, the "Termination Amount").
(b) Each of Parent and the Company agrees that the payments provided
for in Section 9.3(a) shall be the sole and exclusive remedy of the parties upon
a termination of this Agreement pursuant to Section 9.1(c), (e) or (h), as the
case may be, and such remedy shall be limited to the payment stipulated in
Section 9.3(a); provided, however, that nothing in this Agreement shall relieve
any party from liability for the willful breach of any of its representations
and warranties or the willful breach of any of its covenants or agreements set
forth in this Agreement.
- 47 -
(c) Any payment required to be made pursuant to clause (i) of Section
9.3(a) shall be made to Parent by the Company immediately prior to the
termination of this Agreement and shall be made by wire transfer of immediately
available funds to an account designated by Parent.
(d) The parties agree that the agreements contained in this Section
9.3 are an integral part of the transactions contemplated by the Agreement and
constitute liquidated damages and not a penalty. If one party fails to promptly
pay to the other any fee due hereunder, the defaulting party shall pay the costs
and expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee at the publicly
announce prime rate of Citibank, N.A. from the date such fee was required to be
paid.
(e) For purposes of this Agreement, "Expenses" consist of all
out-of-pocket expenses (including, all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf, in connection with or
related to, the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and mailing of
the Proxy Statement and/or any documents relating thereto, the solicitation of
stockholder approvals and all other matters relate to the transactions
contemplated hereby.
Section 9.4 Amendment. This Agreement may be amended by the Boards of
Directors of the parties hereto, at any time before or after approval hereof by
the stockholders of the Company and prior to the Effective Time, but after such
approval, no such amendment shall (i) alter or change the amount or kind of
shares, rights or any of the proceedings of the treatment of shares under
Article II, or (ii) alter or change any of the terms and conditions of this
Agreement if any of the alterations or changes, alone or in the aggregate, would
materially adversely affect the rights of holders of the Company's capital
stock, except for alterations or changes that could otherwise be adopted by the
Board of Directors of the Company 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 9.5 Waiver. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein, to the extent permitted by applicable
law. Any agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed on behalf of such
party.
- 48 -
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations and
Warranties.
(a) All representations, warranties and agreements in this Agreement
shall not survive the Merger, except as otherwise provided in this Agreement and
except for the agreements contained in this Section 10.1 and in Article II,
Section 7.5, Section 7.8, Section 7.9, Section 7.10, Section 7.11, Section 7.12,
Section 7.13, Section 7.14, Section
10.8 and Section 10.9.
(b) No party may assert a claim for breach of any representation or
warranty contained in this Agreement (whether by direct claim or counterclaim)
except in connection with the cancellation of this Agreement pursuant to Section
9.1(f)(i) or Section 9.1(g)(i) (or pursuant to any other subsection of Section
9.l if the terminating party would have been entitled to terminate this
Agreement pursuant to Section 9.1(f)(i) or Section 9.1(g)(i)).
Section 10.2 Brokers. The Company represents and warrants that,
except for Xxxxxx Xxxxxxx & Co. Incorporated whose fees have been disclosed to
Parent prior to the date hereof, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. Parent represents and warrants
that, except for Rothschild Inc., prior to the date hereof no broker finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent.
Section 10.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if (i) delivered personally, (ii)
sent by reputable overnight courier service, (iii) telecopied (receipt of which
is confirmed), or (iv) five days after being mailed by registered or certified
mail (return receipt requested) postage prepaid to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to the Company, to:
United Water Resources Inc.
000 Xxx Xxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
- 49 -
with a copy to:
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) If to Parent or Merger Sub, to:
Lyonnaise American Holding, Inc.
000 Xxx Xxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000
Attention: Mr. Jean Xxxxxx Xxxxxx,
Executive Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Piper & Marbury L.L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx X. XxXxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(c) If to SLDE, to:
Suez Xxxxxxxxx xxx Xxxx
00 Xxxxxx Xxxxxxx XXX
00000 Xxxxx Cedex 09
France
- 50 -
Attention: Xx. Xxxxxx Xxxxx, Directeur
Telephone: 00 0.00.00.00.00
Telecopy: 00 0.00.00.00.00
with a copy to:
Piper & Marbury L.L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx X. XxXxxxxxx, Esq.
Telephone:(000) 000-0000
Telecopy: (000) 000-0000
Section 10.4 Miscellaneous. This Agreement (including the Disclosure
Schedules and the documents and instruments referred to herein) (i) constitutes
the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof other than the Confidentiality Agreement,
the Governance Agreement and the NARA, each of which remains in full force and
effect except as expressly herein modified; (ii) shall not be assigned by
operation of law or otherwise; except that Parent or Merger Sub may assign all
or any of their rights and obligations hereunder to any wholly-owned subsidiary
of Parent; provided that no such assignment shall relieve the assigning party of
its obligations hereunder if such assignee does not perform such obligations;
and (iii) shall be governed by and construed in accordance with the laws of the
State of New Jersey applicable to contracts executed in and to be fully
performed in such State, without giving effect to its conflicts of law, rules or
principles and except to the extent the provisions of this Agreement (including
the documents or instruments referred to herein) are expressly governed by or
derive their authority from the NJBCA.
Section 10.5 Interpretation. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement, respectively, 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 "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
Section 10.6 Counterparts; Effect. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
- 51 -
Section 10.7 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, except for
rights of Indemnified Parties as set forth in Section 7.5, nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 10.8 Waiver of Jury Trial and Certain Damages. Each party to
this Agreement waives, to the fullest extent permitted by applicable law, (i)
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 and (ii) except as
expressly set forth in this Agreement (including, but not limited to, Section
9.3 hereof), any right it may have to receive damages from any other party on
any claim arising out of this Agreement (but not any other agreement the parties
to which include any or all parties to this Agreement) based on any theory of
liability for any special, indirect, consequential (including lost profits) or
punitive damages.
Section 10.9 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 United States federal state
court located in the States of New Jersey, New York or Delaware, 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
exclusive personal jurisdiction of any federal or state court located in any of
the States of New Jersey, New York or Delaware solely with respect to any
dispute arising out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny 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 any of
the transactions contemplated by this Agreement in any court.
Section 10.10 Severability. If any term or other provision of this
Agreement is determined by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced by any rule of 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 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 a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
- 52 -
ARTICLE XI
PROVISIONS RELATING TO SLDE
Section 11.1 Organization and Authority. SLDE is a societe anonyme
duly organized and validly existing under the laws of the Republic of France and
has full power, corporate or otherwise, to execute and deliver and to perform
all of its obligations contained in Section 11.2 of this Agreement. The
execution and delivery of this Agreement by SLDE and the performance by SLDE of
its obligations hereunder have been duly authorized by all necessary action on
behalf of SLDE, and this Agreement has been duly and validly executed and
delivered by SLDE and, assuming the due authorization, execution and delivery
hereof by the other signatories hereto, constitutes the valid and binding
obligation of SLDE enforceable against it in accordance with its terms.
Section 11.2 Obligations of SLDE. SLDE agrees (i) to cause Parent and
Merger Sub to have at the Closing sufficient funds to consummate the
transactions contemplated by this Agreement at the Closing, and (ii) to cause
Parent and Merger Sub to have sufficient funds to meet all of their other
financial obligations under or related to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
- 53 -
IN WITNESS WHEREOF, the Company, Parent, Merger Co. and SLDE have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
UNITED WATER RESOURCES INC.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X Xxxxxxx
Attest: /s/ Xxxxxxx X.X. Xxxxxx Title: Chairman and CEO
LYONNAISE AMERICAN HOLDING, INC.
By: /s/ Xxxx Xxxxxx Xxxxxx
Name: Xxxx Xxxxxx Xxxxxx
Attest: /s/ Xxxxx X. XxXxxxxxx Title: Executive Vice President
LAH ACQUISITION CO.
By: /s/ Xxxx Xxxxxx Xxxxxx
Name: Xxxx Xxxxxx Xxxxxx
Attest: /s/ Xxxxx X. XxXxxxxxx Title: President
SUEZ LYONNAISE DES EAUX
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Attest: /s/ Xxxx-Xxxx Xxxxxxx Title: Executive Vice President-Water
- 54 -
