Exhibit 2.1
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 3.1 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
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Page
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
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Page
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......43
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..........................................................49
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............................................52
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
PROVISIONS RELATING TO SLDE
Section 11.1 Organization and Authority......................................53
Section 11.2 Obligations of SLDE.............................................53
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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").
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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 the
associated Right (as
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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
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Dividends"). 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.
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(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 ▇▇▇▇▇'▇ 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 subject to
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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
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therein and the interest held by any and all such persons, 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,
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understandings, restrictions, 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
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"Violation" with respect to 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, franchises and
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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.
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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,
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real and personal 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.
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(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.
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(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)
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have been timely made or paid 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 is 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
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or proceeding of 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:
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(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.
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(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 statutes, 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 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.
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(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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated to the effect that, as of the date
hereof, the Per
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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
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streets bounding the same. Except as set forth in 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 ▇▇▇▇
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
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material to the business, finances or 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) able 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.
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(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.
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
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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 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
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100% of the dividends for the same quarter of the prior 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
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or agree to acquire, by merging or consolidating 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
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
by this Agreement, the Company shall not, nor
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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.
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(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 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).
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(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)
elections 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.
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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 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
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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 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.
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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 throughout
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
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practicable time. Parent shall furnish all information 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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),
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recommend to its stockholders the approval of this Agreement and the
transactions contemplated hereby, (iv) subject to Section 6.2(b), use 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
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which it may have under this Section 7.5, 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
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and all statements, representations, 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
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
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for the corresponding purpose under such benefit plan; provided, however, that
such 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
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parties to consummate the Merger. In case at any time 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 on
which the Company's
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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:
(i) 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
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have the right and option, on not less that 15 days' notice to
Parent, to purchase up to 50% of any interests in 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
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the conditions set forth in this Section 7.14(b)(ii) all but not
less than all of 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.
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(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 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 the Agreement to be breached or that renders
or will render untrue in any material respect any representation or warranty of
the Company contained in the Agreement. No notice given pursuant to this
paragraph shall have any effect on the representations, warranties, covenants or
agreements
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contained in the Agreement for purposes of determining satisfaction of any
condition contained in the Agreement.
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:
(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
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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
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.
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(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 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;
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(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 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
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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
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 a 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),
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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.
(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
announced 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 relating 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
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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.
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
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & 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
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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.
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Parent or Merger Sub, to:
Lyonnaise American Holding, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. Jean ▇▇▇▇▇▇ ▇▇▇▇▇▇,
Executive Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Piper & Marbury L.L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to SLDE, to:
Suez ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, Directeur
Telephone: ▇▇ ▇.▇▇.▇▇.▇▇.▇▇
Telecopy: ▇▇ ▇.▇▇.▇▇.▇▇.▇▇
with a copy to:
Piper & Marbury L.L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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
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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.
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
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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.
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]
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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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attest: /s/ ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇ Title: Chairman and
Chief Executive Officer
LYONNAISE AMERICAN HOLDING, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: President
LAH ACQUISITION CO.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: President
SUEZ LYONNAISE DES EAUX
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Attest: /s/ ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇ Title: Executive Vice President
- Water
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