EXHIBIT 99.1
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PURCHASE AGREEMENT
among
PHILADELPHIA SUBURBAN CORPORATION
and
BIRMINGHAM UTILITIES, INC.
and
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ SERVICES INC.
Dated as of May 19, 2003
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TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF SHARES AND INTEGRATED ASSETS...............2
Section 1.1 Sale and Transfer of Shares and Integrated Assets.........2
Section 1.2 The Purchase Price........................................3
Section 1.3 Purchase Price Adjustment.................................3
ARTICLE II THE CLOSING.....................................................5
Section 2.1 Closing...................................................5
Section 2.2 Closing Transactions......................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER....................6
Section 3.1 Organization and Qualification............................6
Section 3.2 Subsidiaries..............................................8
Section 3.3 Ownership and Possession of Shares; Capitalization;
Ownership and Possession of Integrated Assets.............8
Section 3.4 Authority; Non-Contravention; Statutory Approvals;
Compliance................................................9
Section 3.5 Financial Statements......................................11
Section 3.6 Absence of Certain Changes or Events......................12
Section 3.7 Litigation................................................12
Section 3.8 Tax Matters...............................................12
Section 3.9 Employee Benefits; ERISA..................................13
Section 3.10 Labor and Employee Relations..............................15
Section 3.11 Environmental Matters.....................................15
Section 3.12 No Breaches or Defaults...................................18
Section 3.13 Insurance.................................................19
Section 3.14 Brokers or Finders........................................19
Section 3.15 Intellectual Property.....................................19
Section 3.16 Change in Business Relationships..........................20
Section 3.17 Title to Property; Tangible Assets........................20
Section 3.18 Other Obligations.........................................20
Section 3.19 Water Quality.............................................21
Section 3.20 Limitation on Representations and Warranties..............21
ARTICLE IV INDEMNIFICATION.................................................21
Section 4.1 Indemnification Obligations...............................21
Section 4.2 Certain Definitions.......................................21
Section 4.3 Limitations on Indemnification............................23
Section 4.4 Defense of Claims.........................................25
Section 4.5 Tax Indemnity.............................................27
Section 4.6 Certain Indemnification in Respect of Environmental Law...29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER.....................31
Section 5.1 Organization and Qualification............................31
Section 5.2 Authority; Non-Contravention; Statutory Approvals;
Compliance................................................31
Section 5.3 Litigation................................................33
Section 5.4 Investigation by the Buyer; the Seller's Liability........33
Section 5.5 Acquisition of Shares; Ability to Evaluate and Bear Risk..34
Section 5.6 Financing.................................................34
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Section 5.7 Brokers or Finders........................................34
ARTICLE VI CONDUCT OF BUSINESS PENDING THE CLOSING.........................34
Section 6.1 Covenants of the Seller...................................34
Section 6.2 Covenants of the Buyer....................................37
ARTICLE VII ADDITIONAL AGREEMENTS...........................................38
Section 7.1 Access to Company Information and Cooperation.............38
Section 7.2 Regulatory Approvals......................................39
Section 7.3 Consents..................................................39
Section 7.4 Directors' and Officers' Indemnification..................39
Section 7.5 Public Announcements......................................40
Section 7.6 Workforce Matters.........................................40
Section 7.7 Employee Benefit Plans....................................41
Section 7.8 Tax Treatment.............................................42
Section 7.9 Allocation of Consideration...............................42
Section 7.10 Tax Returns...............................................43
Section 7.11 Transfer Taxes............................................43
Section 7.12 Financial Information.....................................44
Section 7.13 Transition Services.......................................44
Section 7.14 Update of the Seller Disclosure Schedule..................44
Section 7.15 Governmental Taking.......................................45
Section 7.16 General and Automobile Liability Insurance................45
Section 7.17 Further Assurances........................................46
Section 7.18 Exclusivity...............................................46
Section 7.19 Surety Bonds..............................................46
ARTICLE VIII CONDITIONS......................................................46
Section 8.1 Conditions to Each Party's Obligation to Effect the
Closing...................................................46
Section 8.2 Conditions to Obligation of the Buyer to Effect the
Closing...................................................47
Section 8.3 Conditions to Obligation of the Seller to Effect the
Closing...................................................48
ARTICLE IX TERMINATION.....................................................49
Section 9.1 Termination...............................................49
Section 9.2 Effect of Termination.....................................50
ARTICLE X GENERAL PROVISIONS..............................................50
Section 10.1 Survival of Obligations...................................50
Section 10.2 Amendment and Modification................................50
Section 10.3 Extension; Waiver.........................................50
Section 10.4 Expenses..................................................51
Section 10.5 Notices...................................................51
Section 10.6 Entire Agreement; No Third Party Beneficiaries............52
Section 10.7 Severability..............................................53
Section 10.8 Governing Law.............................................53
Section 10.9 Venue.....................................................53
Section 10.10 Waiver of Jury Trial and Certain Damages..................53
Section 10.11 Assignment................................................53
Section 10.12 Interpretation............................................54
Section 10.13 No Specific Enforcement...................................54
Section 10.14 Counterparts; Effect......................................54
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INDEX OF PRINCIPAL TERMS
Term Page
Adjustment Schedule...........................................................42
Affected Employees............................................................40
Affiliate.....................................................................13
Agreement......................................................................1
Allocation Dispute Notice.....................................................42
AquaSource Purchase Agreement..................................................9
Assignment Agreement...........................................................2
Assignment and Assumption Agreement............................................5
Audit.........................................................................29
▇▇▇▇ of Sale...................................................................5
Birmingham.....................................................................1
Birmingham SEC Reports........................................................33
Budget........................................................................35
Business Employees............................................................13
Buyer..........................................................................1
Buyer Disclosure Schedule.....................................................31
Buyer Indemnifiable Loss......................................................21
Buyer Indemnitee..............................................................21
Buyer Material Adverse Effect.................................................31
Buyer Required Consents.......................................................32
Buyer Required Statutory Approvals............................................32
Buyer Transition Services.....................................................44
Cambridge......................................................................1
Cambridge Shares...............................................................1
CERCLA........................................................................17
CERCLIS.......................................................................17
Closing........................................................................5
Closing Date...................................................................5
CN Regulated Assets............................................................2
CN Unregulated Assets..........................................................2
CN Unregulated Assets Purchase Price...........................................3
COBRA.........................................................................41
Code..........................................................................13
Company........................................................................7
Company Financial Statements..................................................11
Company Indemnified Parties...................................................39
Company Indemnified Party.....................................................39
Company Material Adverse Effect................................................7
Company Plans.................................................................13
Condemnation Proceeding.......................................................45
Confidentiality Agreements....................................................38
Connecticut Operations.........................................................2
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Term Page
Connecticut Operations Purchase Price..........................................3
Contracts.....................................................................19
Control.......................................................................14
December 31, 2001 Balance Sheets..............................................11
Direct Claim..................................................................27
Dykeer.........................................................................1
Dykeer Shares..................................................................1
ECRWC..........................................................................1
ECRWC Shares...................................................................1
Encumbrances...................................................................5
Environmental Laws............................................................17
Environmental Whitepaper......................................................15
ERISA.........................................................................13
ERISA Affiliate...............................................................13
Estimated Purchase Price Adjustment............................................4
Excepted Liabilities..........................................................22
Exchange Act..................................................................11
Final Order...................................................................47
Final Purchase Price Closing Statement.........................................4
First Party Environmental Claim...............................................30
GAAP..........................................................................11
Governmental Authority........................................................10
H2O............................................................................1
Hazardous Substances..........................................................18
Indemnifiable Loss............................................................22
Indemnified Liabilities.......................................................22
Indemnity Basket..............................................................23
Indemnity Cap.................................................................23
Indemnity Period..............................................................21
Initial Termination Date......................................................49
Integrated Assets..............................................................2
Integrated Liabilities.........................................................2
Intellectual Property Rights..................................................19
June 30, 2002 Balance Sheets..................................................11
Kingsvale......................................................................1
Kingsvale Shares...............................................................1
knowledge......................................................................7
New York Operations............................................................2
New York Operations Purchase Price.............................................3
NPL...........................................................................17
Operations.....................................................................1
Parties........................................................................1
Party..........................................................................1
Permitted Encumbrances.........................................................5
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Term Page
Person.........................................................................7
Pre-Closing Environmental Liability...........................................30
Pre-Closing Violation or Contamination........................................29
Pre-Existing Actions..........................................................30
Pre-Existing Release..........................................................30
Pre-Existing Violation........................................................30
Properties....................................................................30
PSC............................................................................1
PSC SEC Reports...............................................................11
Purchase Price.................................................................3
Purchase Price Deficiency......................................................5
Purchase Price Excess..........................................................5
Rate Base......................................................................4
Rate Base Adjustment...........................................................4
Release.......................................................................18
Representatives...............................................................33
SEC...........................................................................11
Section 7.7(b) Agreement......................................................42
Securities Act.................................................................5
Seller......................................................................1, 7
Seller Disclosure Schedule.....................................................6
Seller Indemnifiable Loss.....................................................21
Seller Indemnitee.............................................................21
Seller Required Consents......................................................10
Seller Required Statutory Approvals...........................................10
Seller Transition Services....................................................44
Shares.........................................................................2
Straddle Period...............................................................28
Subsidiary.....................................................................8
Tax...........................................................................13
Tax Claim.....................................................................28
Tax Return....................................................................13
Third Party Claim.............................................................25
Utility........................................................................1
Violation.....................................................................10
Waccabuc.......................................................................1
Waccabuc Shares................................................................1
WARN Act......................................................................40
Wild Oaks......................................................................1
Wild Oaks Shares...............................................................1
Working Capital Adjustment.....................................................3
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PURCHASE AGREEMENT
This Purchase Agreement, dated as of May 19, 2003 (this "Agreement"), is
entered into among Philadelphia Suburban Corporation, a Pennsylvania corporation
("PSC" or "Seller"), Birmingham Utilities, Inc., a Connecticut corporation
("Birmingham"), and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ Services Inc., a Connecticut corporation
("H2O") (Birmingham and H2O are collectively referred to as the "Buyer")
(Seller, Birmingham and H2O are each a "Party", and collectively, the
"Parties").
WHEREAS, the Seller shall own, directly or indirectly, effective as of the
Closing Date (as defined in Section 2.1), all of the issued and outstanding
shares of common stock (the "Dykeer Shares") of Dykeer Water Company, Inc., a
New York corporation ("Dykeer"); and
WHEREAS, the Seller shall own, directly or indirectly, effective as of the
Closing Date, all of the issued and outstanding shares of common stock (the
"Cambridge Shares") of Cambridge Water Works, Inc., a New York corporation
("Cambridge"); and
WHEREAS, the Seller shall own, directly or indirectly, effective as of the
Closing Date, all of the issued and outstanding shares of common stock (the
"Kingsvale Shares") of Kingsvale Water Company, Inc., a New York corporation
("Kingsvale"); and
WHEREAS, the Seller shall own, directly or indirectly, effective as of the
Closing Date, all of the issued and outstanding shares of common stock (the
"Waccabuc Shares") of Waccabuc Water Works, Inc., a New York corporation
("Waccabuc"); and
WHEREAS, the Seller shall own, directly or indirectly, effective as of the
Closing Date, all of the issued and outstanding shares of common stock (the
"Wild Oaks Shares") of Wild Oaks Water Company, Inc., a New York corporation
("Wild Oaks"); and
WHEREAS, the Seller shall own, directly or indirectly, effective as of the
Closing Date, all of the issued and outstanding shares of common stock (the
"ECRWC Shares") of the Eastern Connecticut Regional Water Company, Inc., a
Connecticut corporation ("ECRWC"); and
WHEREAS, the Seller shall own, directly or indirectly, effective as of the
Closing Date, all of the issued and outstanding shares of common stock of
AquaSource Utility, Inc., a Texas corporation ("Utility "), and Utility shall
own, effective as of the Closing Date, those assets specifically listed on
Section 1.1 of the Seller Disclosure Schedule (as defined in Section 3.1); and
WHEREAS, the Seller shall own, directly or indirectly, effective as of the
Closing Date, all of the issued and outstanding shares of common stock of
AquaSource Operations, Inc., a Delaware corporation ("Operations"), and
Operations shall own, effective as of the Closing Date, those assets
specifically listed on Section 1.1 of the Seller Disclosure Schedule; and
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WHEREAS, the assets listed on Section 1.1 of the Seller Disclosure Schedule
consist of the following two (2) types of assets: (1) assets that do not support
regulated business operations of the Company (as defined in Section 3.1(c)) or
that are not subject to regulation by a public utility authority in the State of
Connecticut (the "CN Unregulated Assets"); and (2) assets that do support
regulated business operations of the Company or that are subject to regulation
by a public utility authority in the State of Connecticut (the "CN Regulated
Assets"). The CN Unregulated Assets and the CN Regulated Assets (as well as the
three FCC licenses listed on Section 1.1 of the Seller Disclosure Schedule)
shall be herein collectively referred to as the "Integrated Assets" ; and
WHEREAS, the ECRWC Shares, the CN Unregulated Assets, and the CN Regulated
Assets shall be collectively referred to as the "Connecticut Operations"; and
WHEREAS, the Dykeer Shares, Cambridge Shares, Kingsvale Shares, Waccabuc
Shares, and Wild Oaks Shares shall be collectively referred to as the "New York
Operations"; and
WHEREAS, each of the Boards of Directors of the Buyer and PSC has approved
(and PSC shall cause Utility and Operations to approve), and deems it advisable
and in the best interests of its respective shareholders to consummate, the
acquisition of the Connecticut Operations and the New York Operations which
acquisition is to be effected by (i) the purchase by Birmingham of the Dykeer
Shares, Cambridge Shares, Kingsvale Shares, Waccabuc Shares, Wild Oaks Shares,
and ECRWC Shares (collectively, the "Shares") and the CN Regulated Assets from
the Seller or Utility, and (ii) the purchase by H20 of the CN Unregulated Assets
from Operations and Utility, upon the terms and subject to the conditions set
forth herein; and
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the Parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES AND INTEGRATED ASSETS
Section 1.1 Sale and Transfer of Shares and Integrated Assets.
(a) Subject to the terms and conditions of this Agreement, on the
Closing Date (as defined in Section 2.1), the Seller agrees to sell, convey,
assign, transfer and deliver, or cause Utility and Operations to sell, convey,
assign, transfer and deliver, to the Buyer, and the Buyer agrees to purchase and
accept (i) from the Seller or Utility, all of the Seller's or Utility's rights,
title and interest in and to the Shares and (ii) from Operations and Utility,
all of Operations' and Utility's rights, title and interest in and to the
Integrated Assets.
(b) The "Integrated Liabilities" shall mean (i) all of the performance
obligations of Operations and Utility which relate to the Integrated Assets, and
(ii) all of the liabilities, direct or indirect, known or unknown, absolute or
contingent, which relate to the Integrated Assets and which arise on or after
the Closing Date (as defined in Section 2.1).
Section 1.2 The Purchase Price. Subject to the terms and conditions of this
Agreement, on the Closing Date, in consideration of the aforesaid sale,
conveyance, assignment, transfer and delivery to the Buyer of the Shares and the
Integrated Assets, the Buyer shall pay to the Seller the following:
(a) For the New York Operations, (i) the amount listed on the Line 1
Subtotal of Exhibit 1.2(a), plus or minus (ii) the Working Capital Adjustment as
provided for in Section 1.3(a), plus (iii) the Rate Base Adjustment as provided
for in Section 1.3(b)(i), plus (iv) the assumption by the Buyer of $756,200 in
third-party debt owed by the New York Operations as specifically set forth in
Section 1.2 of the Seller Disclosure Schedule (collectively, the "New York
Operations Purchase Price"). The calculation of the New York Operations Purchase
Price is outlined on Exhibit 1.2(a).
(b) For the Connecticut Operations (excluding the CN Unregulated
Assets), (i) the amount listed on the Line 1 Subtotal of Exhibit 1.2(b), plus or
minus (ii) the Working Capital Adjustment as provided for in Section 1.3(a),
plus (iii) the Rate Base Adjustment as provided for in Section 1.3(b)(ii)
(collectively, the "Connecticut Operations Purchase Price"). The calculation of
the Connecticut Operations Purchase Price is outlined on Exhibit 1.2(b).
(c) For the CN Unregulated Assets, Five Hundred Thousand Dollars
($500,000) (the "CN Unregulated Assets Purchase Price").
(d) The amounts specified in clauses (a) through (c) above shall be
collectively referred to as the "Purchase Price".
(e) The Purchase Price payments applicable to clauses (a) and (b)
above shall be paid to PSC by Birmingham, and the Purchase Price payment
applicable to clause (c) above shall be paid to PSC by H2O.
Section 1.3 Purchase Price Adjustment.
(a) Working Capital Adjustment. The New York Operations Purchase Price
and the Connecticut Operations Purchase Price shall be adjusted, on a
dollar-for-dollar basis, positive or negative, as the case may be, equal to the
net amount of (i) the aggregate amount of the current liabilities (incurred in
the ordinary course of business consistent with past practice) of Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks and ECRWC, respectively, including,
but not limited to, accounts payable owed by the Company to any unaffiliated
third party as of the Closing Date, excluding any accrued Taxes that are to be
paid by the Seller pursuant to this Agreement, and (ii) the aggregate amount of
current assets (incurred in the ordinary course of business consistent with past
practice) of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks and ECRWC,
respectively, including, but not limited to, accounts receivable (net of all
reserves therefor reflected in the Company Financial Statements consistent with
past practice) owed by any unaffiliated third party as of the Closing Date (such
net amount, the "Working Capital Adjustment"). The Working Capital Adjustment
shall, in no event, increase the Purchase Price by more than $300,000 for the
New York Operations and $300,000 for the Connecticut Operations.
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(b) Rate Base Adjustment. (i) The New York Operations Purchase Price
shall be adjusted, on a dollar-for-dollar basis, positive or negative, as the
case may be, equal to the increase in the Rate Base (as defined below) for the
New York Operations from December 31, 2002 to the Closing Date. (ii) The
Connecticut Operations Purchase Price shall be adjusted, on a dollar-for-dollar
basis, positive or negative, as the case may be, equal to the increase in the
Rate Base for the Connecticut Operations from December 31, 2002 to the Closing
Date. The net amount of Section 1.3(b)(i) and Section 1.3(b)(ii) shall be
collectively referred to as the "Rate Base Adjustment". The Rate Base Adjustment
shall, in no event, increase the Purchase Price by more than $150,000 for the
New York Operations and $450,000 for the Connecticut Operations. For purposes of
calculating the Rate Base Adjustment for the Connecticut Operations, the Rate
Base for the Connecticut Operations shall not include the Rate Base of the
Durham and Middlefield systems in Connecticut.
(c) As used in this Agreement, the term "Rate Base" shall mean gross
utility plant in service plus, other property plant and equipment, plus
construction work in progress, minus accumulated depreciation, minus
contributions in aid of construction and minus customer advances for
construction.
(d) The Working Capital Adjustment and the Rate Base Adjustment shall
be collectively referred to as the Purchase Price Adjustment. At least seven (7)
calendar days prior to the Closing Date, the Seller shall prepare and deliver to
the Buyer in good faith its estimate of the Purchase Price Adjustment, if any
(the "Estimated Purchase Price Adjustment") showing the individual and
cumulative effect of all adjustments contemplated by this Section 1.3 for the
Buyer's review and comment.
(e) At the Closing, the Purchase Price shall be adjusted to reflect
the Purchase Price Adjustment, subject to further adjustment post-Closing as
contemplated herein. Within forty (40) calendar days following the Closing Date,
the Seller shall prepare and deliver to the Buyer in good faith a final closing
statement setting forth the Purchase Price Adjustment in accordance with this
Section 1.3 (the "Final Purchase Price Closing Statement").
(f) Within thirty (30) calendar days following the Buyer's receipt of
the Final Purchase Price Closing Statement, the Buyer may object in good faith
to the Purchase Price Adjustment in writing. In the event of any such objection,
the Buyer and the Seller shall attempt to resolve their differences by
negotiation. If such Parties are unable to do so within thirty (30) calendar
days following the Seller's receipt of the Buyer's objection, the Seller and the
Buyer shall appoint a nationally recognized accounting firm mutually acceptable
to each of the Seller and the Buyer, which shall, at the Seller's and the
Buyer's joint expense, review the Final Purchase Price Closing Statement and
determine the Purchase Price Adjustment, if any, within thirty (30) calendar
days of such appointment. The Seller and the Buyer agree to cooperate with such
accounting firm and provide it with such information as it reasonably requests
to enable it to make such determination. The finding of such accounting firm
shall be binding on the Parties hereto.
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(g) Upon determination by agreement of the Seller and the Buyer or by
binding determination of said accounting firm of the Purchase Price Adjustment,
(i) if the Purchase Price Adjustment exceeds the Estimated Purchase Price
Adjustment (such excess amount, the "Purchase Price Deficiency"), the Seller
shall pay to the Buyer the Purchase Price Deficiency, or (ii) if the Estimated
Purchase Price Adjustment exceeds the Purchase Price Adjustment (such excess
amount, the "Purchase Price Excess"), the Buyer shall pay to the Seller the
Purchase Price Excess. Any portion of any Purchase Price Deficiency or Purchase
Price Excess owed hereunder shall be paid to the Party or Parties owed the same
by the Party or Parties owing the same by wire transfer in immediately available
funds to an account designated by the Party or Parties owed the same no later
than five (5) business days following the determination by agreement of the
Seller and the Buyer or by binding determination of said accounting firm of the
Purchase Price Adjustment, and such payment shall be accompanied by an
additional payment of interest, calculated with a 4% annual interest rate from
the Closing Date to the date of payment under this Section 1.3.
ARTICLE II
THE CLOSING
Section 2.1 Closing. The consummation of the sale and transfer of the
Shares and the Integrated Assets as contemplated by Section 1.1 (the "Closing")
shall take place at the Philadelphia, Pennsylvania office of ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
at 10:00 a.m., local time, on the fifth (5th) business day immediately following
the date on which the last of the conditions set forth in Article VIII hereof is
fulfilled or waived in writing, or at such other time, date and place as the
Seller and the Buyer shall mutually agree in writing (the "Closing Date").
Section 2.2 Closing Transactions. (a) At the Closing:
(i) The Seller shall deliver, or cause Utility to deliver, to the
Buyer (i) free and clear of any liens, claims, security interests and
other encumbrances of any nature whatsoever (collectively,
"Encumbrances"), except for those Encumbrances arising under the
Securities Act of 1933, as amended (the "Securities Act") or any
applicable state securities laws and those Encumbrances created by
this Agreement or the Buyer (collectively, "Permitted Encumbrances"),
certificates representing the Shares, each such certificate to be duly
and validly endorsed in favor of the Buyer or accompanied by a
separate stock power duly and validly executed by the Seller and
otherwise sufficient to vest in the Buyer good title to the Shares.
(ii) The Seller shall cause Operations and Utility to deliver to
the Buyer: (A) one or more bills of sale duly executed by Operations,
and Utility, as applicable, in the form attached hereto as Exhibit
2.2(a)(ii)(A) (each a "▇▇▇▇ of Sale") selling, assigning, conveying,
transferring and delivering to the Buyer, free and clear of any
Encumbrances (except for Permitted Encumbrances), the Integrated
Assets, and (B) an assignment and assumption agreement, in the form
attached hereto as Exhibit 2.2(a)(ii)(B) (the "Assignment and
Assumption Agreement"), duly executed by Operations.
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(iii) The Seller shall or shall cause Operations and Utility to
deliver to the Buyer such other documents as are required to be
delivered by the Seller, Operations and/or Utility to the Buyer
pursuant hereto.
(b) The Buyer shall deliver, or cause to be delivered to the Seller:
(i) the Connecticut Operations Purchase Price, by wire transfer in immediately
available funds to an account designated by the Seller prior to Closing, (ii)
the New York Operations Purchase Price, by wire transfer in immediately
available funds to an account designated by the Seller prior to Closing, (iii)
the CN Unregulated Assets Purchase Price, by wire transfer in immediately
available funds to an account designated by the Seller prior to Closing, (iv)
Assignment and Assumption Agreements, duly executed by the Buyer or H20, as
applicable, assuming and agreeing to discharge when due, without recourse to
Operations, Utility, or the Seller, in accordance with the respective terms and
subject to the respective conditions thereof, all of the Integrated Liabilities,
and (v) such other documents as are required to be delivered by the Buyer to the
Seller, Operations, or Utility pursuant hereto.
(c) Timing of the Closing Concerning the New York Operations and the
Connecticut Operations. The Parties agree that they may consummate on different
dates the acquisition of: (i) the New York Operations, and (ii) the Connecticut
Operations. Such acquisition or acquisitions shall be consummated as soon as the
applicable Seller Required Statutory Approvals (as defined in Section 3.4(c))
and the Buyer Required Statutory Approvals (as defined in Section 5.2(c)) have
been obtained in the applicable state and the other conditions to consummation
of the transaction as set forth in this Agreement have been satisfied; provided,
however, that the Closing under (i) above shall not take place until on or after
the Closing under (ii) above, and provided further, that, in the event that the
Closing of the transactions contemplated under (ii) occurs but the Closing of
the transactions contemplated under (i) is unable to be concluded due to the
inability of the Parties to satisfy the conditions to consummation of such
transactions as set forth in this Agreement, provided, however, that such
inability does not result from an uncured, material breach of this Agreement by
any such Party, including, but not limited to, Section 8.1(b), then the Parties
agree that the Buyer shall have no further obligation to consummate the
transaction contemplated under (i) above and this Agreement, as it relates to
the purchase and sale of the New York Operations, shall be null and void and of
no further force and effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
PSC represents and warrants to the Buyer as follows:
Section 3.1 Organization and Qualification.
(a) Except as set forth in Section 3.1(a) of the schedule delivered by
PSC to the Buyer on the date hereof and attached to this Agreement (the "Seller
Disclosure Schedule"): (i) PSC is a corporation duly organized, validly existing
and in good standing under the laws of Pennsylvania, (ii) each of Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, Utility, and Operations is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, (iii) each of Dykeer, Cambridge,
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Kingsvale, Waccabuc, Wild Oaks, ERWC, Utility, and Operations has all requisite
power and authority 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 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 in good standing or be so qualified is not reasonably
likely to have a Company Material Adverse Effect (as defined below), and (iv)
each of PSC, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, Utility,
and Operations has received from its respective state or county regulatory
authority the requisite authorization to own utility assets or stock and to
provide water or wastewater utility service in the area in which such
corporation is currently providing water or wastewater utility service, except
for such failures to have such authorizations as are not reasonably likely,
individually or in the aggregate, to have a Company Material Adverse Effect.
(b) As used in this Agreement, the term "Company Material Adverse
Effect" shall mean any material adverse effect on the business, assets,
financial condition or results of operations of the Company (as defined below),
taken as a whole, totaling in each instance $200,000 for all purposes hereunder
except for Sections 3.11 and 3.19, and $100,000 for purposes of Sections 3.11
and 3.19; provided, however, that for all purposes hereunder the term "Company
Material Adverse Effect" shall not include (i) any such effect resulting from
any change in law, rule, or regulation of any Governmental Authority (as defined
in Section 3.4(c)) that applies generally to similarly situated Persons (as
defined below), or (ii) effects relating to or resulting from general changes in
the industries in which the Company operates its assets or conducts its
businesses.
(c) As used in this Agreement the term "Company" shall mean,
collectively, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, and,
with respect to the Integrated Assets, Operations and Utility.
(d) As used in this Agreement the term "knowledge" when referring to
the knowledge of the Seller shall mean the knowledge of an officer of PSC.
(e) As used in this Agreement the term "Person" shall mean any natural
person, corporation, general or limited partnership, limited liability company,
joint venture, trust, association or entity of any kind.
(f) For the purposes of this Article III, the term "Seller" shall
include, with respect to the Integrated Assets and Integrated Liabilities, the
Seller, Operations, Utility, and any Subsidiary that owns all of the outstanding
shares of Operations or Utility. In addition, for purposes of this Article III,
all references to the Seller shall be read as if qualified by the phrase "(in
respect of the Company)" unless the Seller is specifically referred to as "PSC".
7
Section 3.2 Subsidiaries. As of the date hereof, none of Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, ECRWC, or Operations has any Subsidiaries. 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 at least a majority of the voting power represented by
the outstanding capital stock or other voting securities or interests having
voting power under ordinary circumstances to elect directors or similar members
of the governing body of such corporation or entity (or, if there are no such
voting interests, 50% or more of the equity interests in such corporation or
entity) shall at the time be held, directly or indirectly, by such Person.
Section 3.3 Ownership and Possession of Shares; Capitalization; Ownership
and Possession of Integrated Assets.
(a) As of the date hereof, (i) the authorized capital stock of Dykeer
consists of 200 shares of common stock, (ii) 100 shares of such common stock are
issued and outstanding, and (iii) all such issued and outstanding shares of
common stock are validly issued, fully paid and nonassessable.
(b) As of the date hereof, (i) the authorized capital stock of
Cambridge consists of 400 shares of common stock, (ii) 400 shares of such common
stock are issued and outstanding, and (iii) all such issued and outstanding
shares of common stock are validly issued, fully paid and nonassessable.
(c) As of the date hereof, (i) the authorized capital stock of
Kingsvale consists of 1,500 shares of common stock, (ii) 1,000 shares of such
common stock are issued and outstanding, and (iii) all such issued and
outstanding shares of such common stock are validly issued, fully paid and
nonassessable.
(d) As of the date hereof, (i) the authorized capital stock of
Waccabuc consists of 200 shares of common stock, (ii) 200 shares of such common
stock are issued and outstanding, and (iii) all such issued and outstanding
shares of such common stock are validly issued, fully paid and nonassessable.
(e) As of the date hereof, (i) the authorized capital stock of Wild
Oaks consists of 200 shares of common stock, (ii) .7672 shares of such common
stock are issued and outstanding, and (iii) all such issued and outstanding
shares of such common stock are validly issued, fully paid and nonassessable.
(f) As of the date hereof, (i) the authorized capital stock of ECRWC
consists of 5,000 shares of common stock, (ii) 200 shares of such common stock
are issued and outstanding, and (iii) all such issued and outstanding shares of
such common stock are validly issued, fully paid and nonassessable.
8
(g) (i) Prior to the Closing, all of the Shares will be owned,
directly or indirectly, by PSC free and clear of any Encumbrances, except for
Permitted Encumbrances. Except as set forth in Section 3.3(g) of the Seller
Disclosure Schedule, there are no options, warrants, calls, rights, commitments
or agreements of any character to which PSC, Dykeer, Cambridge, Kingsvale,
Waccabuc, Wild Oaks, or ECRWC is a party or by which it is bound obligating PSC,
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks or ECRWC, or
obligating PSC, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC to
grant, extend or enter into any such option, warrant, call, right, commitment or
agreement. The Shares will constitute all of the shares of the capital stock of
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, and ECRWC that will be owned
prior to the Closing by PSC, directly or indirectly, or will be acquired prior
to the Closing by PSC, directly or indirectly, pursuant to that certain Purchase
Agreement by and among AquaSource, Inc., DQE, Inc., PSC, and Aqua Acquisition
Corporation, dated as of July 29, 2002, as amended, (the "AquaSource Purchase
Agreement"). (ii) Prior to the Closing, all of the Integrated Assets will be
owned, directly or indirectly, by Operations and Utility free and clear of any
Encumbrances, except for Permitted Encumbrances. The Integrated Assets
constitute all of the Integrated Assets relating to the Company and its
operations that are owned by Operations and Utility or were acquired, directly
or indirectly, by PSC pursuant to the AquaSource Purchase Agreement. (iii) PSC
represents and warrants that, prior to the Closing, it will have the power,
authority and requisite Control (as defined in Section 3.9(a)) to direct that
all of the Shares and Integrated Assets be transferred to the Buyer pursuant and
subject to the terms and conditions contained in this Agreement.
(h) As of the date hereof, the authorized capital stock and the number
of issued and outstanding shares of capital stock for each of Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks and ECRWC is listed on Section 3.3(h) of the
Seller Disclosure Schedule.
Section 3.4 Authority; Non-Contravention; Statutory Approvals; Compliance.
(a) Authority. PSC has all requisite corporate power and authority to
(i) enter into this Agreement and (ii) subject to the receipt of the applicable
Seller Required Statutory Approvals (as defined in Section 3.4(c)) and the
applicable Seller Required Consents (as defined in Section 3.4(b)), to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation by PSC of the transactions contemplated
hereby have been, and with respect to Operations and Utility as of the Closing
Date will be, duly authorized by all necessary corporate action on the part of
PSC, Utility and Operations, respectively. No vote of, or consent by, the
holders of any class or series of stock issued by PSC, any Subsidiary of PSC,
Utility or Operations that has not already been obtained is necessary to
authorize the execution and delivery by PSC of this Agreement or the
consummation by it, Operations, and Utility of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by PSC and, assuming
the due authorization, execution and delivery hereof by the Buyer, constitutes
the valid and binding obligation of PSC enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
9
(b) Non-Contravention. Except as set forth in Section 3.4(b)(i) of the
Seller Disclosure Schedule, the execution and delivery of this Agreement by PSC
does not, and the consummation of the transactions contemplated hereby will not,
violate or result in a material breach of any provision of, constitute a
material default (with or without notice or lapse of time or both) under, result
in the termination or modification of, accelerate the performance required by,
result in a right of termination, cancellation or acceleration of any obligation
or the loss of a material benefit under, or result in the creation of any
material Encumbrance, except for Permitted Encumbrances, upon any of the
properties or assets of the Company or the Seller (any such violation, breach,
default, right of termination, modification, cancellation or acceleration, loss
or creation, is referred to herein as a "Violation" with respect to PSC and the
Company and such term when used in Article V has a correlative meaning with
respect to the Buyer) pursuant to any provisions of (i) the articles of
incorporation, by-laws or similar governing documents of PSC, Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, ECRWC, Utility, or Operations, (ii) subject to
obtaining the Seller Required Statutory Approvals (as defined in Section
3.4(c)), any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Authority applicable to
PSC, or Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, Utility, or
Operations or any of their respective properties or assets, or (iii) subject to
obtaining the third-party consents set forth in Section 3.4(b)(iii) of the
Seller Disclosure Schedule (the "Seller 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 any of PSC, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC,
Utility, or Operations is a party or by which they or any of their respective
properties or assets may be bound or affected, except in the case of clause (ii)
or (iii) for any such Violation which is not reasonably likely to have a Company
Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section 3.4(c) of the
Seller Disclosure Schedule (the "Seller Required 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 national securities exchange or other
self-regulatory body) or authority (each, a "Governmental Authority") is
necessary for the execution and delivery of this Agreement by PSC or the
consummation by PSC of the transactions contemplated hereby, except those which
the failure to obtain is not reasonably likely to result in a Company Material
Adverse Effect (it being understood that references in this Agreement to
"obtaining" such Seller Required Statutory Approvals shall mean (i) making such
declarations, filings or registrations; (ii) giving such notices; (iii)
obtaining such authorizations, consents or approvals; (iv) having such waiting
periods expire as are necessary to avoid a violation of law; and (v) having any
applicable appeals period expire without any appeal being filed, or if such an
appeal is filed, such appeal is fully and finally dismissed without the
opportunity for further appeal).
10
(d) Compliance. (i) Except as set forth in Section 3.4(d)(i), Section
3.7, Section 3.10 or Section 3.11 of the Seller Disclosure Schedule, neither the
Seller, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, nor, with
respect to the Integrated Assets, Operations or Utility, is in violation of, is
currently being charged with any violation of, or to the knowledge of the
Seller, is under investigation with respect to any violation of, any law,
statute, order, rule, regulation, ordinance, tariff, rate or judgment of any
Governmental Authority, except for possible violations which are not reasonably
likely to have a Company Material Adverse Effect or to prevent, materially delay
or materially impair the ability of the Seller or PSC to consummate the
transactions contemplated by this Agreement. (ii) Except as set forth in Section
3.4(d)(ii) or Section 3.12 of the Seller Disclosure Schedule or as disclosed in
the PSC SEC Reports (as defined below) filed prior to the date hereof, the
Seller, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, and, with
respect to the Integrated Assets, Operations and Utility, have all permits,
licenses, franchises and other governmental authorizations, consents and
approvals necessary to conduct their businesses as presently conducted except
those that the absence of which are not reasonably likely to have a Company
Material Adverse Effect or to prevent, materially delay or materially impair the
ability of the Seller or PSC to consummate the transactions contemplated by this
Agreement. (iii) Except as set forth in Section 3.4(d)(iii) of the Seller
Disclosure Schedule, neither PSC, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild
Oaks, ECRWC, Utility, nor Operations is in breach or violation of any term or
provision of their respective articles of incorporation or by-laws. (iv) As used
in this Agreement, the term "PSC SEC Reports" shall mean each report, schedule,
registration statement and definitive proxy statement filed with the Securities
and Exchange Commission (the "SEC") by PSC since December 31, 1999, pursuant to
the requirements of the Securities Act, or the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
Section 3.5 Financial Statements. True and complete copies of the Company
Financial Statements (as defined below) are set forth in Section 3.5 of the
Seller Disclosure Schedule. The Company Financial Statements have been prepared
from, are in accordance with, and accurately reflect the books and records of
the Company, comply in all material respects with applicable accounting
requirements, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
period involved (except as may be stated in the notes thereto) and are true and
correct in all material respects and fairly present the consolidated financial
position and the consolidated results of operations and cash flows (and changes
in financial position, if any) of the Company as of the time and for the period
referred to therein. As of the dates of the statements of assets, liabilities
and stockholders' equity included in the Company Financial Statements, the
Company has no liabilities or obligations of any nature whatsoever (whether
known, unknown, absolute, accrued, contingent or otherwise) which are not fully
reflected or reserved against in such Company Financial Statements or which were
not incurred in the ordinary course consistent with past practice and this
Agreement and are, therefore, not required by GAAP to be so reflected or
reserved against in such Company Financial Statements. As used in this
Agreement, the term "Company Financial Statements" shall mean the unaudited
balance sheets of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, and ECRWC
as at December 31, 2001 (the "December 31, 2001 Balance Sheets") and as at June
30, 2002 (the "June 30, 2002 Balance Sheets"), in each case together with the
consolidated statements of income, shareholders' equity and cash flows for the
periods then ended. The Company Financial Statements are not audited and reflect
only the Company, including the related assets and liabilities, contemplated to
be
11
transferred to the Buyer pursuant to this Agreement. No balance sheets or other
financial statements, whether audited or unaudited, have been prepared, with
respect to the Integrated Assets, for Operations or Utility.
Section 3.6 Absence of Certain Changes or Events. Except as set forth in
Section 3.6 of the Seller Disclosure Schedule, since December 31, 2001, each of
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, and, with respect to
the Integrated Assets, Operations and Utility, has conducted its business only
in the ordinary course of business consistent with past practice and there has
not been any development or combination of developments affecting Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with respect to the
Integrated Assets, Operations or Utility, of which the Seller has knowledge,
that is reasonably likely to have a Company Material Adverse Effect.
Section 3.7 Litigation. Except as set forth in Section 3.7, Section 3.8(a),
Section 3.8(b), Section 3.9(i), Section 3.10 or Section 3.11 of the Seller
Disclosure Schedule, (a) there are no claims, suits, actions or proceedings
before any court, governmental department, commission, agency, instrumentality
or authority or any arbitrator pending or, to the knowledge of the Seller,
threatened, nor are there, to the knowledge of the Seller, any investigations or
reviews by any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator pending or threatened against,
relating to or affecting the Seller, Dykeer, Cambridge, Kingsvale, Waccabuc,
Wild Oaks, ECRWC, or, with respect to the Integrated Assets, Operations or
Utility, and (b) 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 Seller, Dykeer, Kingsvale,
Waccabuc, Wild Oaks, ECRWC, or, with respect to the Integrated Assets,
Operations or Utility, except, in the case of both clause (a) and clause (b),
for such that are not reasonably likely to have a Company Material Adverse
Effect or reasonably likely to prevent, materially delay or materially impair
the ability of the Seller or PSC to consummate the transactions contemplated by
this Agreement.
Section 3.8 Tax Matters.
(a) Except as set forth in Section 3.8(a) of the Seller Disclosure
Schedule: (i) each of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC,
Utility, and Operations, has timely filed (or has had filed on its behalf) with
appropriate taxing authorities all Tax Returns (as defined in Section 3.8(c))
required to be filed by it on or prior to the date hereof, and such Tax Returns
are correct, complete and accurate in all material respects; (ii) all Taxes (as
defined in Section 3.8(c)) of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks,
ECRWC, Utility, and Operations, have been timely paid; (iii) all Tax withholding
and deposit requirements imposed on or with respect to Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, ECRWC, Utility, and Operations (including any
withholding with respect to wages or other amounts paid to employees) have been
satisfied in full in all material respects; (iv) there are no liens for Taxes
upon any property or assets of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild
Oaks, ECRWC, Utility, or Operations, except for liens for Taxes not yet due and
payable, and for which adequate reserves to pay such Taxes have been set aside
by Dykeer, Cambridge, Kingsvale, Wild Oaks, ECRWC, Utility, or Operations, as
the case may be; (v) there are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment or collection of any Taxes or deficiencies against
12
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, Utility, or
Operations; (vi) neither Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks,
ECRWC, Utility, nor Operations has made the election under Section 341(f) of the
Internal Revenue Code of 1986, as amended (the "Code"); and (vii) neither
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, Utility, nor
Operations is currently subject to an adjustment described in Section 481 of the
Code.
(b) Except as set forth in Section 3.8(b) of the Seller Disclosure
Schedule: (i) the Seller, Operations, and Utility have timely filed (or has had
filed on its or their behalf) with appropriate taxing authorities all Tax
Returns with respect to the Integrated Assets required to be filed by it on or
prior to the date hereof, and such Tax Returns are correct, complete and
accurate in all material respects; (ii) all Taxes on or in respect to the
Integrated Assets have been timely paid; (iii) all Tax withholding and deposit
requirements imposed on or with respect to the Integrated Assets (including any
withholding with respect to wages or other amounts paid to employees) have been
satisfied in full and in all material respects; (iv) there are no liens for
Taxes upon any of the Integrated Assets, except for liens for Taxes not yet due
and payable, and for which adequate reserves to pay such Taxes have been set
aside by the Seller; and (v) there are no outstanding requests, agreements,
consents or waivers to extend the statutory period of limitations applicable to
the assessment or collection of any Taxes or deficiencies attributable to the
Integrated Assets.
(c) As used in this Agreement: (i) the term "Tax" includes all
federal, state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect thereto; and (ii) the term "Tax Return" includes all returns and
reports (including elections, declarations, disclosures, schedules, estimates
and information returns) required to be supplied to a Tax authority relating to
Taxes.
Section 3.9 Employee Benefits; ERISA.
(a) Company Plans. Section 3.9(a) of the Seller Disclosure Schedule
contains a list of each employee benefit plan, program, agreement or arrangement
(including without limitation any employee benefit plan within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), in each case, that is sponsored, maintained or contributed to or
required to be contributed to by the Company, the Seller, or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), that together with
the Company or the Seller would be deemed a "single employer" within the meaning
of Section 4001(a)(14) or Section 4001(b) of ERISA or Section 414 of the Code or
to which the Company, the Seller, or an ERISA Affiliate is a party, for the
benefit of any employee or former employee of the Seller, the Company or any
Affiliate (as defined below) of the Seller or the Company whose employment is
(in the case of current employees) or was (in the case of former employees)
principally attributable to the businesses carried on by or in respect of the
Company (such individuals, the "Business Employees," and such plans, programs,
agreements or arrangements, collectively, the "Company Plans"). For purposes of
this Agreement, "Affiliate" means any Person that directly or indirectly
controls, is controlled by, or is under common
13
control with a Party. "Control" means the possession, directly or indirectly, of
the power to cause the direction of the management and policies of a Party,
whether through ownership of securities, by contract, or otherwise.
(b) Deliveries. With respect to each Company Plan, PSC has heretofore
delivered or made available to the Buyer true and complete copies of (i) all
group medical insurance policies maintained by the Company, and (ii) if such
Company Plan is funded through a trust or any third party funding vehicle, a
copy of the trust or other funding agreement.
(c) Absence of Liability. Except as set forth in Section 3.9(c) of the
Seller Disclosure Schedule, no liability under Title IV of ERISA has been
incurred by the Seller, the Company or any ERISA Affiliate (i) with respect to a
Company Plan, or (ii) with respect to any defined benefit plan currently or
previously maintained or contributed to or required to be contributed to by the
Seller, the Company or any ERISA Affiliate, or (iii) with respect to any Company
Plan that has not been satisfied in full, and, to the knowledge of the Seller,
no condition exists that presents a material risk to the Company of incurring
any such liability, other than liability for premiums due the Pension Benefit
Guaranty Corporation (which premiums have been paid when due) and no Company
Plan or plan of the Seller, or any ERISA Affiliate which is subject to the
minimum funding requirements of Part III of Subtitle B of Title I of ERISA or of
Section 412 of the Code, has incurred any "accumulated funding deficiency"
within the meaning of Section 302 of ERISA or Section 412 of the Code.
(d) Multiemployer Plan. No Company Plan is a "multiemployer plan," as
defined in Section 4001(a)(3) of ERISA or is a plan described in Section 4063(a)
of ERISA. The Company and the ERISA Affiliates have never withdrawn from any
plan which is a multiemployer plan or which is a plan described in Section
4063(a) of ERISA with respect to which there is any outstanding withdrawal
liability.
(e) No Violations. Except as set forth in Section 3.9(e) of the Seller
Disclosure Schedule, each Company Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including
without limitation ERISA and the Code.
(f) Section 401(a) Qualification. Each Company Plan intended to be
"qualified" within the meaning of Section 401(a) of the Code has received or
timely applied for a determination letter from the Internal Revenue Service to
the effect that it is so qualified.
(g) Post-Employment Benefits. Except as set forth in Section 3.9(g) of
the Seller Disclosure Schedule, no Company Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for Business
Employees for periods extending beyond their respective dates of retirement or
other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits under any "pension plan," or (iii) benefits the full
cost of which is borne by the Business Employee (or his beneficiary).
14
(h) Effect of Change of Control. Except as set forth in Section 3.9(h)
of the Seller Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not, alone or together with any other event,
(i) entitle any Business Employee to severance pay, unemployment compensation or
any other payment, except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such Business Employee.
(i) Claims. Except as set forth in Section 3.9(i) of the Seller
Disclosure Schedule, there are no pending, or to the knowledge of the Seller
threatened, material claims by or on behalf of any Company Plan, by any
employee, former employee or beneficiary covered under any such Company Plan, or
otherwise involving any such Company Plan (other than routine claims for
benefits).
Section 3.10 Labor and Employee Relations. As of the date hereof, except as
disclosed in Section 3.10 of the Seller Disclosure Schedule, neither Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, Utility, nor Operations, is a
party to any collective bargaining agreement or other labor agreement with any
union or labor organization. Except as disclosed in Section 3.10 of the Seller
Disclosure Schedule or except to the extent not reasonably likely to have a
Company Material Adverse Effect, (i) there is no strike, lockout, slowdown or
work stoppage pending or, to the knowledge of the Seller, threatened against or
involving the Company, and (ii) there is no proceeding, claim, suit, action or
governmental investigation pending or, to the knowledge of the Seller,
threatened in respect of which any director, officer, employee or agent of the
Company is or may be entitled to claim indemnification from the Seller, Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, Utility, or Operations
pursuant to their respective articles of incorporation, by-laws or any
indemnification agreement.
Section 3.11 Environmental Matters.
(a) Except as set forth in Section 3.11 of the Seller Disclosure
Schedule and except for those matters disclosed in that certain environmental
disclosure documentation which was delivered by PSC to the Buyer on April 25,
2003 (such documentation, collectively, the "Environmental Whitepaper"):
(i) Each of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks,
ECRWC, and, with respect to the Integrated Assets, Operations and
Utility, is in compliance with all applicable Environmental Laws (as
defined in Section 3.11(b)(i)), including, but not limited to,
possessing all permits and other governmental authorizations required
for their operations under applicable Environmental Laws, except for
such noncompliance that is not having as of the date hereof, and would
not be reasonably likely to have, a Company Material Adverse Effect.
To the extent that any of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild
Oaks, ECRWC, or, with respect to the Integrated Assets, Operations or
Utility, had or has any outstanding violations of any applicable
Environmental Law that is having as of the date hereof, or is
reasonably likely to have a Company Material Adverse Effect, each such
violation has been set forth either in the Environmental Whitepaper or
in Section 3.11 of the Seller Disclosure Schedule, and each of Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks,
15
ECRWC, and, with respect to the Integrated Assets, Operations and
Utility, having such violation has completed or is, as of the date
hereof, in the process of addressing in accordance with any applicable
deadline, all actions required by any applicable Environmental Law or
appropriate Governmental Authority to correct or otherwise respond to
such violation, or is otherwise implementing such actions as are
appropriate and consistent with the policies and programs identified
in the Environmental Whitepaper.
(ii) (A) There is no pending or threatened written claim,
lawsuit, or administrative proceeding against Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with respect to the
Integrated Assets, Operations or Utility, under or pursuant to any
Environmental Law, and there is no claim, lawsuit, or administrative
proceeding threatened in writing against Dykeer, Cambridge, Kingsvale,
Waccabuc, Wild Oaks, ECRWC, or, with respect to the Integrated Assets,
Operations or Utility, under or pursuant to any Environmental Law, in
any case that is reasonably likely to have a Company Material Adverse
Effect; (B) neither Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks,
ECRWC, nor, with respect to the Integrated Assets, Operations or
Utility is subject to, or is proposed by any Governmental Authority to
be subject to, any administrative or judicial consent order, decree or
unilateral administrative or judicial order in connection with any
Environmental Laws or Release (as defined in Section 3.11(b)(iii)) or
threatened Release of Hazardous Substances (as defined in Section
3.11(b)(ii)) that is having as of the date hereof, or is reasonably
likely to have, a Company Material Adverse Effect; and (C) neither
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, nor, with
respect to the Integrated Assets, Operations or Utility, has received
written notice from any Person, including but not limited to any
Governmental Authority, alleging that Dykeer, Cambridge, Kingsvale,
Waccabuc, Wild Oaks, ECRWC, or, with respect to the Integrated Assets,
Operations or Utility, is in violation or potentially in violation of
any applicable Environmental Law or otherwise may be liable under any
applicable Environmental Law, which violation or liability is
unresolved or unlikely to be resolved in the ordinary course of
business and the failure to resolve such violation in the ordinary
course of business is having as of the date hereof, or is reasonably
likely to have, a Company Material Adverse Effect.
(iii) With respect to the real property that was formerly or is
currently owned, occupied or leased by Dykeer, Cambridge, Kingsvale,
Waccabuc, Wild Oaks, ECRWC, or, with respect to the Integrated Assets,
Operations or Utility, there have been no Releases of Hazardous
Substances on or underneath any of such real property during the
ownership, occupation or lease of such property by Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with respect to the
Integrated Assets, Operations or Utility, as the case may be, (and to
the Seller's knowledge, during any other period of time) in violation
of any applicable Environmental Law and that is having as of the date
hereof, or is reasonably likely to have, a Company Material Adverse
Effect.
16
(iv) Where applicable, Dykeer, Cambridge, Kingsvale, Waccabuc,
Wild Oaks, ECRWC, or, with respect to the Integrated Assets,
Operations or Utility, holding any permit or authorization required
under any applicable Environmental Laws has timely filed any renewal
application or request necessary to continue performing, in accordance
with such applicable Environmental Laws, the permitted or otherwise
authorized activity, and no such renewal application or request is
expected by the Company to be denied, except for such failures to so
file or request or for such denials which are not having as of the
date hereof, and are not reasonably likely to have, a Company Material
Adverse Effect.
(v) None of the real property currently owned, occupied, or
leased by Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC,
or, with respect to the Integrated Assets, Operations or Utility, and,
to the Seller's knowledge, none of the real property formerly owned,
occupied or leased by Dykeer, Cambridge, Kingsvale, Waccabuc, Wild
Oaks, ECRWC, or, with respect to the Integrated Assets, Operations or
Utility, is listed or is proposed for listing on the National
Priorities List ("NPL") established by the federal Comprehensive
Environmental Response, Compensation and Liability Act, as amended
("CERCLA"), 42 U.S.C.ss.9601 et seq., or any state analog to the NPL
maintained or created under the Environmental Laws of any state. In
addition, to the Seller's knowledge, none of the real property
currently or formerly owned, occupied or leased by Dykeer, Cambridge,
Waccabuc, Wild Oaks, ECRWC, or, with respect to the Integrated Assets,
Operations or Utility, is listed or is proposed for listing on the
Comprehensive Environmental Response, Compensation and Liability
Information System ("CERCLIS") established by CERCLA or any state
analog to CERCLIS maintained or created under the Environmental Laws
of any state.
(vi) To the Seller's knowledge, there are no asbestos-containing
materials in, on, or under any of the real property currently owned,
occupied or leased by Dykeer, Cambridge, Waccabuc, Wild Oaks, ECRWC,
or, with respect to the Integrated Assets, Operations or Utility,
except for those materials which are appropriate to be used in, and
are used in, the ordinary course of business in substantial compliance
with applicable Environmental Laws, including roofing material,
flooring material, transite pipe and other insulating materials.
(b) For purposes of this Agreement:
(i) "Environmental Laws" shall mean all federal, state and local
laws, regulations, rules and ordinances relating to pollution or the
protection of human health and safety or the environment, including,
without limitation, laws relating to releases or threatened releases
of Hazardous Substances into the environment (including, without
limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata), in effect and applicable to the Company's
operations as of the Closing Date, unless a less stringent requirement
17
goes into effect thereafter. Such laws include the common law to the
extent relating to injuries caused by the release or presence of
Hazardous Substances.
(ii) "Hazardous Substances" shall mean any chemicals, materials
or substances defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "hazardous
constituents", "restricted hazardous materials", "extremely hazardous
substances", "toxic substances", "contaminants", "pollutants", "toxic
pollutants", or words of similar meaning and regulatory effect under
any applicable Environmental Law including, without limitation,
petroleum and asbestos.
(iii) "Release" shall mean any spill, leaking, pumping, pouring,
emitting, emptying, dumping, injection, deposit, disposal, discharge,
dispersal, leaching, or allowing the escape of any Hazardous
Substances into the environment at or from any property.
(c) The amount of capital expenditures contained in the Budget (as
defined in Section 6.1) is adequate and sufficient to resolve completely any
obligations in respect of any non-compliance with Environmental Laws that is
addressed in any of those consent agreements with Governmental Authorities
disclosed in the Environmental Whitepaper.
(d) None of the real property currently owned, occupied or leased by
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with respect to
the Integrated Assets, Operations or Utility, and, to the Seller's knowledge,
none of the real property formerly owned, occupied or leased by Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with respect to the
Integrated Assets, Operations or Utility, is subject to any investigation,
sampling, remediation, or other response action under CERCLA or any state
statute analogous thereto.
(e) The policies and programs described in the Environmental
Whitepaper result from the exercise of the skill, diligence, prudence and
foresight which would reasonably and ordinarily be expected from a Person
experienced in owning or operating the sort of business Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with respect to the Integrated
Assets, Operations or Utility, own or operate and do not, to the Seller's
knowledge, violate any Environmental Laws.
(f) The representations and warranties set forth in this Section 3.11
are the sole and exclusive representations and warranties relating to
environmental matters made by the Seller in this Agreement.
Section 3.12 No Breaches or Defaults. Except as disclosed on Section 3.7 or
Section 3.12 of the Seller Disclosure Schedule, neither Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, ECRWC, nor, with respect to the Integrated
Assets, Operations or Utility, is 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 the lapse of time or action by a third party, could result in a
default by Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with
respect to the Integrated Assets, Operations or Utility, under, nor, to the
knowledge of the
18
Seller, is any third party in breach or default in any material respect under,
any Contract (as defined below), except (i) in any such case, for such breaches
and defaults as to which requisite waivers or consents have been or will be
obtained prior to the Closing Date and (ii) for such breaches and defaults that
are not reasonably likely to have a Company Material Adverse Effect. The term
"Contracts" means all written notes, bonds, mortgages, indentures, deeds of
trust, licenses, franchises, permits, contracts, leases or other instruments,
obligations or agreements of any kind, including the Integrated Assets, to which
Dykeer, Cambridge, Waccabuc, Wild Oaks, ECRWC, Utility, or Operations is a party
or by which any of the Company's properties or assets may be bound; provided,
however, that for purposes of this Section 3.12, Contracts shall not include
Company Plans or any agreement with any Governmental Authority regarding
compliance with Environmental Laws.
Section 3.13 Insurance. Section 3.13 of the Seller Disclosure Schedule
describes the material fire and casualty, general liability, business
interruption, product liability, pollution and sprinkler and water damage
insurance policies maintained by PSC on behalf of the Company as well as a
description of any self-insurance arrangement by or affecting the Company,
including any reserves thereunder. All of such policies are in full force and
effect, all premiums with respect thereto are currently paid and the Seller has
not received any notice of nonrenewal, cancellation or termination with respect
to any such insurance policy or denial of coverage or reservation of rights with
respect to any claim arising from occurrences prior to the Closing Date
involving contamination of drinking water provided by the Company or involving
environmental impairment, subject to the deductible and loss limits under such
policies.
Section 3.14 Brokers or Finders. PSC has not entered into any agreement or
arrangement entitling any agent, broker, investment banker, financial advisor or
other firm or Person to any broker's or finder's fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement.
Section 3.15 Intellectual Property. Except as set forth in Section 3.15 of
the Seller Disclosure Schedule, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild
Oaks, ECRWC, or, with respect to the Integrated Assets, Operations or Utility,
(a) owns, leases or licenses all Intellectual Property Rights (as defined below)
necessary to conduct the business of the Company, except when the failure to
own, lease or license would not have a Company Material Adverse Effect and (b)
has the right to transfer all such Intellectual Property Rights to the Buyer.
Except as set forth in Section 3.15 of the Seller Disclosure Schedule, (i) there
has been no claim made against Dykeer, Cambridge, Waccabuc, Kingsvale, Wild
Oaks, ECRWC, or, with respect to the Integrated Assets, Operations or Utility,
asserting the invalidity, misuse or unenforceability of any of its Intellectual
Property Rights, (ii) to the knowledge of the Seller, there is no infringement
or misappropriation of any of the Intellectual Property Rights, (iii) to the
knowledge of the Seller, neither Dykeer, Cambridge, Kingsvale, Waccabuc, Wild
Oaks, ECRWC, nor, with respect to the Integrated Assets, Operations or Utility,
has infringed or misappropriated any intellectual property rights of any other
entity, and (iv) Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or,
with respect to the Integrated Assets, Operations or Utility, owns all the
Intellectual Property Rights free and clear of any and all liens, claims or
encumbrances, except in the case of clause (i), (ii), (iii) or (iv) for such
claims, infringements, misappropriations, violations, failures to own, liens or
encumbrances as are not reasonably likely to have a Company Material Adverse
Effect. As used herein, "Intellectual Property Rights"
19
means any trademark, servicemark, registration therefor or application for
registration therefor, trade name, invention, patent, patent application, trade
secret, know-how, copyright, copyright registration, application for copyright
registration, or any other similar type of proprietary rights, in each case
owned, leased or licensed and used or held for use by the Company.
Section 3.16 Change in Business Relationships. Except as set forth in
Section 3.16 of the Seller Disclosure Schedule, neither Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, ECRWC, nor, with respect to the Integrated
Assets, Operations or Utility, has knowledge of any event or circumstance that
indicates that, whether on account of the transactions contemplated by this
Agreement or otherwise, any customer, agent, representative or supplier of
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with respect to
the Integrated Assets, Operations or Utility, intends to discontinue, diminish
or change its relationship with Dykeer, Cambridge, Waccabuc, Wild Oaks, ECRWC,
or, with respect to the Integrated Assets, Operations or Utility, in any way
that would be reasonably likely to have a Company Material Adverse Effect.
Section 3.17 Title to Property; Tangible Assets. Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, ECRWC, and, with respect to the Integrated
Assets, Operations and Utility, have good and marketable title to all of their
properties and assets, free and clear of all liens, except liens for taxes not
yet due and payable and such liens or other imperfections of title, if any, as
do not materially detract from the value of or interfere with the present use of
the property affected thereby or which would not have a Company Material Adverse
Effect; and, to the knowledge of the Seller, all leases pursuant to which
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with respect to
the Integrated Assets, Operations or Utility, lease from others material amounts
of real or personal property are in good standing, valid and effective in
accordance with their respective terms and there is not, to the knowledge of the
Seller, under any of such leases, any existing default or event of default (or
event which with notice or lapse of time, or both, would constitute a default),
except when the lack of such good standing, validity and effectiveness or the
existence of such default would not have a Company Material Adverse Effect.
Section 3.18 Other Obligations.
(a) Except as set forth in Section 3.18(a) of the Seller Disclosure
Schedule, to the Seller's knowledge, neither Dykeer, Cambridge, Kingsvale,
Waccabuc, Wild Oaks, ECRWC, nor, with respect to the Integrated Assets,
Operations or Utility, has indemnified or agreed to indemnify any third party in
connection with any transaction involving any disposition or purchase of the
present or former assets of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks,
ECRWC, or, with respect to the Integrated Assets, Operations or Utility, except
for those indemnities or agreements to indemnify which have been fully performed
or satisfied, have expired or are otherwise no longer in effect and binding and
except for those that are not likely to have a Company Material Adverse Effect.
(b) Except as set forth in Section 3.18(b) of the Seller Disclosure
Schedule, to the Seller's knowledge, neither Dykeer, Cambridge, Kingsvale,
Waccabuc, Wild Oaks, ECRWC, nor, with respect to the Integrated Assets,
Operations or Utility, has agreed to or has become contractually bound to pay
any earn-out, profit-sharing or similar payments, which
20
have not been satisfied as of the date hereof, to any third party in connection
with any transaction involving any disposition or purchase of the present or
former assets of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or,
with respect to the Integrated Assets, Operations or Utility.
Section 3.19 Water Quality. The drinking water supplied by Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with respect to the
Integrated Assets, Operations or Utility, to their customers is and has been in
compliance with all applicable federal and state drinking water standards except
for such failures which are not having as of the date hereof, and are not
reasonably likely to have, a Company Material Adverse Effect.
Section 3.20 Limitation on Representations and Warranties. Except for the
representations and warranties contained in this Article III, neither the Seller
nor any other Person or entity acting on behalf of the Seller makes any
representation or warranty, express or implied, concerning the Shares, the
Integrated Assets, or the business, assets, or liabilities of the Company or any
other matter.
ARTICLE IV
INDEMNIFICATION
Section 4.1 Indemnification Obligations.
(a) Subject to the limitations set forth in Sections 4.3 and 4.4
hereof, the Seller shall indemnify, defend and hold harmless the Buyer, its
officers, directors, employees, shareholders, agents, and their respective
Affiliates (each, a "Buyer Indemnitee") from and against any and all
Indemnifiable Losses (as defined below) asserted against or suffered by any
Buyer Indemnitee (each, a "Buyer Indemnifiable Loss") during the Indemnity
Period (as defined below) in any way relating to, resulting from or arising out
of (i) any breach by the Seller of the representations, and warranties contained
in Article III hereof, and (ii) the Indemnified Liabilities (as defined below).
(b) Subject to the limitations set forth in Sections 4.3 and 4.4
hereof, the Buyer shall indemnify, defend and hold harmless the Seller, its
officers, directors, employees, shareholders, agents, and their respective
Affiliates (each, a "Seller Indemnitee") from and against any and all
Indemnifiable Losses asserted against or suffered by any Seller Indemnitee
(each, a "Seller Indemnifiable Loss") during the Indemnity Period in any way
relating to, resulting from or arising out of (i) any breach by the Buyer of the
representations and warranties contained in Article V hereof, and (ii) the
Indemnified Liabilities.
Section 4.2 Certain Definitions. As used in this Agreement:
(a) the term "Indemnity Period" shall mean the period of time
commencing with the Closing Date and continuing until the second (2nd)
anniversary of the Closing Date; provided, however, that if, prior to the first
(1st) anniversary of the Closing Date, the Buyer identifies additional
liabilities and obligations of the Company that arose prior to the Closing Date
but were not disclosed on the Seller Disclosure Schedule on the Closing Date and
that have an aggregate value of $100,000 or more (excluding additional
liabilities and obligations that should have been disclosed on Sections 3.11 or
3.19 of the Seller Disclosure Schedule,
21
which additional liabilities and obligations are not subject to the $100,000
threshold), then the Indemnity Period shall continue until the third (3rd)
anniversary of the Closing Date, and provided further, that, in any event, (i)
the Indemnity Period shall not limit the indemnity obligations of the Parties in
respect of Taxes, as set forth in Section 4.5, (ii) the Indemnity Period in
respect of the representations or warranties made by the Seller in Section
3.3(g) shall continue indefinitely, (iii) the Indemnity Period in respect of the
indemnity obligations of the Seller as set forth in Section 4.6 (other than in
respect of breaches of any representation or warranty made in Section 3.11 or
Section 3.19) shall continue until the tenth (10th) anniversary of the Closing
Date, and (iv) notwithstanding the foregoing, there shall be no such extension
of the Indemnity Period unless there is a corresponding extension of the
Indemnity Period for the Seller pursuant to the terms of the AquaSource Purchase
Agreement;
(b) the term "Indemnifiable Loss" shall mean any claim, demand, suit,
loss, liability, damage, obligation, payment, fine, penalty, cost or expense
(including, without limitation, the cost and expense of any action, suit,
proceeding, assessment, judgment, settlement or compromise relating thereto and
reasonable attorneys' fees and reasonable disbursements in connection
therewith);
(c) the term "Indemnified Liabilities" shall mean, in determining the
Buyer Indemnifiable Losses: (i) all litigation, existing or threatened, that is
set forth in Section 3.7 of the Seller Disclosure Schedule, and (ii) any
liabilities or obligations of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks,
or ECRWC except for Excepted Liabilities (as defined in Section 4.2(d)), and any
liabilities or obligations that relate to or arise by virtue of Operations' or
Utility's ownership of the Integrated Assets except for Excepted Liabilities, in
any case, whether direct or indirect, known or unknown, absolute or contingent,
that relate to, resulted from, arose during or are attributable to the period of
time prior to the Closing Date; provided, however, that Indemnified Liabilities
shall exclude any liabilities or obligations that are disclosed in any Section
of the Seller Disclosure Schedule and are expressly designated, by written
agreement of the Parties, as Excepted Liabilities on such Seller Disclosure
Schedule; and shall mean in determining the Seller Indemnifiable Losses: (i) any
liabilities or obligations of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks,
or ECRWC and any liabilities that relate to or arise by virtue of the Buyer's
ownership of the Company, the Integrated Assets or Integrated Liabilities, in
any case whether direct or indirect, known or unknown, absolute or contingent,
that relate to, resulted from, arose during, or are attributable to the period
of time on or after the Closing Date, and (ii) any liabilities or obligations
that relate to the Excepted Liabilities;
(d) the term "Excepted Liabilities" shall mean any (i) liabilities or
obligations of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC that
arise out of any of the following liabilities or obligations incurred by Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC, as the case may be, prior
to the Closing Date: (1) any liability or obligation of Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, or ECRWC, that is allocable to the right of
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC, as the case may be,
to receive property, services or other benefits on or after the Closing Date,
(2) any liability or obligation of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild
Oaks, or ECRWC to repay the $756,200 owed to third parties as reflected on the
December 31, 2002 Balance Sheet as well as any indebtedness incurred as
permitted by Section 6.1, and (3) any liability or
22
obligation of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC, to
make any expenditure under any Contract, settlement agreement or consent order,
including, without limitation, those disclosed in the Environmental Whitepaper,
to which Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC, is a
party, pursuant to any order, rule or regulation of any Governmental Authority
by which Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC, or any of
their assets, is bound, as listed in the Seller Disclosure Schedule, or if not
required to be listed in the Seller Disclosure Schedule, entered into in
compliance with Section 6.1, and (ii) with respect to the Integrated Assets, any
liabilities or obligations of Operations or Utility that arise out of any of the
following liabilities or obligations incurred by the Seller prior to the Closing
Date: (1) any liability or obligation that is allocable to the right of the
owner of the Integrated Assets to receive property, services or other benefits
with respect to the Integrated Assets, as well as any indebtedness incurred as
permitted by Section 6.1, and (2) any liability or obligation to make any
expenditure in respect of any Integrated Asset under any Contract, settlement
agreement or consent order relating to the Integrated Assets, pursuant to any
order, rule, or regulation of any Governmental Authority relating to or by which
any of the Integrated Assets is bound, as listed in the Seller Disclosure
Schedule, or if not required to be listed in the Seller Disclosure Schedule,
entered into in compliance with Section 6.1.
Section 4.3 Limitations on Indemnification.
(a) Notwithstanding any other provision of this Agreement to the
contrary, the Parties' obligations pursuant to this Article IV are, and at all
times shall be, subject to the limitations set forth in this Section 4.3. The
Parties shall not be required to indemnify, defend or hold harmless any Buyer
Indemnitee or Seller Indemnitee, as the case may be, until the aggregate amount
of the Buyer Indemnifiable Losses or Seller Indemnifiable Losses, as the case
may be, exceeds the Indemnity Basket (as defined below), following which the
indemnifying Party shall indemnify, defend and hold harmless the Buyer
Indemnitees or the Seller Indemnitees, as the case may be, only to the extent
that the Buyer Indemnifiable Losses or the Seller Indemnifiable Losses, as the
case may be, exceed the Indemnity Basket. In addition, the Seller's liability
for Buyer Indemnifiable Losses and the Buyer's liability for Seller
Indemnifiable Losses, in either case, as contemplated by this Article IV shall
in no event exceed an aggregate amount of dollars equal to the Indemnity Cap (as
defined in Section 4.3(b)).
(b) As used in this Agreement, (i) the term "Indemnity Basket" shall
mean $175,000, and (ii) the term "Indemnity Cap" shall mean $2,750,000.
Notwithstanding any other provision of this Agreement to the contrary, the
Seller's liability for the following Buyer Indemnifiable Losses shall not be
limited by the Indemnity Cap: Buyer Indemnifiable Losses relating to (i) any
litigation, existing or threatened, that is required to be set forth in Sections
3.7, 3.8(a), 3.8(b), 3.9(i) or 3.10 of the Seller Disclosure Schedule, (ii) any
and all liabilities and obligations of PSC other than liabilities and
obligations of PSC (in respect of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild
Oaks, ECRWC, or the Integrated Assets), (iii) indemnity obligations of the
Parties in respect of Taxes, as set forth in Section 4.5, (iv) indemnity
obligations of the Seller in respect of Environmental Law, as set forth in
Section 4.6, and (v) any fraud committed by the Seller, or the Company (provided
that the foregoing reference to the Company refers to fraud committed prior to
the Closing Date). In addition, the Buyer's liability for the following Seller
Indemnifiable Losses shall not be limited by the
23
Indemnity Cap: Seller Indemnifiable Losses relating to (i) indemnity obligations
of the Parties in respect of Taxes, as set forth in Section 4.5, (ii) any breach
or violation of any Environmental Law by the Buyer or the Company on or after
the Closing Date, and (iii) any fraud committed by the Buyer or the Company
(provided that the foregoing reference to the Company refers to fraud committed
on or after the Closing Date).
(c) For the avoidance of doubt, if at any time during the Indemnity
Period, the amount of the Seller's aggregate liability for Buyer Indemnifiable
Losses, taking into account all liability for Buyer Indemnifiable Losses
incurred by the Seller since the Closing Date (other than those Buyer
Indemnifiable Losses that are not limited by the Indemnity Cap as contemplated
by Section 4.3(b)), equals the applicable Indemnity Cap, then the Seller shall
have no further obligation whatsoever to indemnify, defend or hold harmless any
Buyer Indemnitee in respect of any Buyer Indemnifiable Losses that are subject
to the Indemnity Cap; similarly, if at any time during the Indemnity Period, the
amount of the Buyer's aggregate liability for Seller Indemnifiable Losses,
taking into account all liability for Seller Indemnifiable Losses incurred by
the Buyer since the Closing Date (other than those Seller Indemnifiable Losses
that are not limited by the Indemnity Cap as contemplated by Section 4.3(b)),
equals the applicable Indemnity Cap, then the Buyer shall have no further
obligation whatsoever to indemnify, defend or hold harmless any Seller
Indemnitee in respect of any Seller Indemnifiable Losses that are subject to the
Indemnity Cap.
(d) Notwithstanding any other provision of this Agreement to the
contrary, any Buyer Indemnitee or Seller Indemnitee shall use commercially
reasonable efforts to mitigate all losses, damages and the like relating to a
claim under these indemnification provisions, including availing itself of any
defenses, limitations, rights of contribution, claims against third Persons and
other rights at law or equity. The Buyer Indemnitee's or Seller Indemnitee's, as
the case may be, commercially reasonable efforts shall include the reasonable
expenditure of money to mitigate or otherwise reduce or eliminate any loss or
expenses for which indemnification would otherwise be due, and the indemnifying
Party shall, to the extent that Buyer Indemnifiable Losses or Seller
Indemnifiable Losses, as the case may be, exceed the Indemnity Basket, reimburse
the Buyer Indemnitee or Seller Indemnitee, as the case may be, for its
reasonable expenditures (except for any portion of the wages, salary, benefits,
overhead or other costs attributable to Buyer Indemnitee or Seller Indemnitee,
as the case may be, and its officers, directors, employees and agents) in
undertaking the mitigation and shall, to such extent, take such expenses into
account in calculating the aggregate amount of the Seller's liability for the
Buyer Indemnifiable Losses or the Buyer's liability for the Seller Indemnifiable
Losses, as the case may be. Notwithstanding any other provision of this
Agreement to the contrary, any Buyer Indemnifiable Loss or Seller Indemnifiable
Loss shall be net of (i) the dollar amount of any insurance or other proceeds
actually received by the Buyer Indemnitee or any of its Affiliates with respect
to the Buyer Indemnifiable Loss or by the Seller or any of its Affiliates with
respect to the Seller Indemnifiable Loss, and (ii) income tax benefits to the
Buyer Indemnitee, to the extent realized by the Buyer Indemnitee, or to the
Seller Indemnitee, to the extent recognized by the Seller Indemnitee. Any Person
seeking indemnity hereunder shall use commercially reasonable efforts to seek
coverage (including both costs of defense and indemnity) under applicable
insurance policies with respect to any such Buyer Indemnifiable Loss or Seller
Indemnifiable Loss, as the case may be.
24
(e) Notwithstanding any other provision of this Agreement to the
contrary, (i) except to the extent otherwise provided in Article IX, the rights
and remedies of the Parties under this Article IV are exclusive and in lieu of
any and all other rights and remedies which the Parties may have under this
Agreement for monetary relief with respect to (A) any breach by the Parties of
their respective representations, warranties, and covenants and (B) the
Indemnified Liabilities, and (ii) no Party (nor any Buyer Indemnitee or Seller
Indemnitee) shall be entitled to recover from any other Party for any
liabilities, damages, obligations, payments, losses, costs, or expenses under
this Agreement any amount in excess of the actual compensatory damages, court
costs and reasonable attorneys' and other advisor fees suffered by such Party
(or Buyer Indemnitee or Seller Indemnitee, as the case may be). Each Party
waives any right to recover incidental, special, exemplary and consequential
damages arising in connection with or with respect to this Agreement.
Section 4.4 Defense of Claims.
(a) (i) If any Buyer Indemnitee receives notice of the assertion
or commencement of any claim, action or proceeding made or brought by
any Person who is not a Party or an Affiliate of a Party (a "Third
Party Claim") with respect to which indemnification is to be sought
from the Seller, the Buyer Indemnitee shall give the Seller reasonably
prompt written notice thereof, but in any event such notice shall not
be given later than twenty (20) calendar days after the Buyer
Indemnitee's receipt of written notice of such Third Party Claim. Such
written notice shall describe the nature of the Third Party Claim in
reasonable detail and shall indicate the estimated amount, if
practicable, of the Buyer Indemnifiable Loss that has been or may be
sustained by the Buyer Indemnitee. The Seller will have the right to
participate in or, by giving written notice to the Buyer Indemnitee,
to elect to assume the defense of any Third Party Claim by the
Seller's own counsel, the cost for which shall be borne by the Seller
to the extent that Buyer Indemnifiable Losses exceed the Indemnity
Basket and shall, to such extent, be taken into account in calculating
the aggregate amount of the Seller's liability for Buyer Indemnifiable
Losses under the Indemnity Cap. The Buyer Indemnitee shall cooperate
in good faith in such defense at the Buyer Indemnitee's own expense.
If the Seller elects not to assume the defense of any Third Party
Claim, the Buyer Indemnitee may compromise or settle such Third Party
Claim over the objection of the Seller, which compromise or settlement
shall conclusively establish the Seller's liability pursuant to this
Agreement.
(ii) If any Seller Indemnitee receives notice of the assertion or
commencement of a Third Party Claim with respect to which
indemnification is to be sought from the Buyer, the Seller Indemnitee
shall give the Buyer reasonably prompt written notice thereof, but in
any event such notice shall not be given later than twenty (20)
calendar days after the Seller Indemnitee's receipt of written notice
of such Third Party Claim. Such written notice shall describe the
nature of the Third Party Claim in reasonable detail and shall
indicate the estimated amount, if practicable, of the Seller
Indemnifiable Loss that has been or may be sustained by the Seller
Indemnitee. The Buyer will have the right to participate in or, by
giving written notice to the Seller Indemnitee, to elect to assume the
defense of any Third Party Claim by the Buyer's own counsel, the cost
for which shall be borne by the Buyer to the extent that Seller
25
Indemnifiable Losses exceed the Indemnity Basket and shall, to such
extent, be taken into account in calculating the aggregate amount of
the Buyer's liability for Seller Indemnifiable Losses under the
Indemnity Cap. The Seller Indemnitee shall cooperate in good faith in
such defense at the Seller Indemnitee's own expense. If the Buyer
elects not to assume the defense of any Third Party Claim, the Seller
Indemnitee may compromise or settle such Third Party Claim over the
objection of the Buyer, which compromise or settlement shall
conclusively establish the Buyer's liability pursuant to this
Agreement.
(b) (i) If, after a Buyer Indemnitee provides written notice to
the Seller of any Third Party Claims, the Buyer Indemnitee receives
written notice from the Seller that the Seller has elected to assume
the defense of such Third Party Claim, the Seller will not be liable
for any legal expenses subsequently incurred by the Buyer Indemnitee
in connection with the defense thereof. Without the prior written
consent of the Buyer Indemnitee, the Seller shall not enter into any
settlement of any Third Party Claim that would lead to liability or
create any financial or other obligation on the part of the Buyer
Indemnitee for which the Buyer Indemnitee is not entitled to
indemnification hereunder. If a firm offer is made to settle a Third
Party Claim without leading to liability or the creation of a
financial or other obligation on the part of the Buyer Indemnitee for
which the Buyer Indemnitee is not entitled to indemnification
hereunder and the Seller desires to accept and agree to such offer,
the Seller shall give written notice to the Buyer Indemnitee to that
effect. If the Buyer Indemnitee fails to consent to such firm offer
within ten (10) calendar days after its receipt of such notice, the
Seller shall be relieved of its obligations to defend such Third Party
Claim and the Buyer Indemnitee may contest or defend such Third Party
Claim. In such event, the maximum liability of the Seller as to such
Third Party Claim will be the amount of such settlement offer plus
reasonable costs and expenses paid or incurred by the Buyer Indemnitee
up to the date of said notice, at all time subject to the additional
limitations on the Seller's liability contained in this Article IV.
(ii) If, after a Seller Indemnitee provides written notice to the
Buyer of any Third Party Claims, the Seller Indemnitee receives
written notice from the Buyer that the Buyer has elected to assume the
defense of such Third Party Claim, the Buyer will not be liable for
any legal expenses subsequently incurred by the Seller Indemnitee in
connection with the defense thereof. Without the prior written consent
of the Seller Indemnitee, the Buyer shall not enter into any
settlement of any Third Party Claim that would lead to liability or
create any financial or other obligation on the part of the Seller
Indemnitee for which the Seller Indemnitee is not entitled to
indemnification hereunder. If a firm offer is made to settle a Third
Party Claim without leading to liability or the creation of a
financial or other obligation on the part of the Seller Indemnitee for
which the Seller Indemnitee is not entitled to indemnification
hereunder and the Buyer desires to accept and agree to such offer, the
Buyer shall give written notice to the Seller Indemnitee to that
effect. If the Seller Indemnitee fails to consent to such firm offer
within ten (10) calendar days after its receipt of such notice, the
Buyer shall be relieved of its obligation to defend such Third Party
Claim and the Seller Indemnitee may contest or defend such Third Party
Claim. In such event, the maximum liability of the Buyer as to such
Third Party Claim will be the amount of such settlement
26
offer plus reasonable costs and expenses paid or incurred by the
Seller Indemnitee up to the date of said notice, at all time subject
to the additional limitations on the Buyer's liability contained in
this Article IV.
(c) (i) Any claim that does not result from a Third Party Claim
(a "Direct Claim") by a Buyer Indemnitee on account of a Buyer
Indemnifiable Loss shall be asserted by giving the Seller reasonably
prompt written notice thereof, stating the nature of such claim in
reasonable detail and indicating the estimated amount, if practicable,
but in any event such notice shall not be given later than twenty (20)
calendar days after the Buyer Indemnitee becomes aware of such Direct
Claim, and the Seller shall have a period of thirty (30) calendar days
from receipt of such notice within which to respond to such Direct
Claim. If the Seller does not respond within such thirty (30) calendar
day period, the Seller shall be deemed to have accepted such claim. If
the Seller rejects such claim, the Buyer Indemnitee will be free to
seek enforcement of its right to indemnification under this Agreement.
(ii) Any Direct Claim by a Seller Indemnitee on account of a
Seller Indemnifiable Loss shall be asserted by giving the Buyer
reasonably prompt written notice thereof, stating the nature of such
claim in reasonable detail and indicating the estimated amount, if
practicable, but in any event such notice shall not be given later
than twenty (20) calendar days after the Seller Indemnitee becomes
aware of such Direct Claim, and the Buyer shall have a period of
thirty (30) calendar days from receipt of such notice within which to
respond to such Direct Claim. If the Buyer does not respond within
such thirty (30) calendar day period, the Buyer shall be deemed to
have accepted such claim. If the Buyer rejects such claim, the Seller
Indemnitee will be free to seek enforcement of its right to
indemnification under this Agreement.
(d) If the amount of any Buyer Indemnifiable Loss or Seller
Indemnifiable Loss, as the case may be, at any time subsequent to the making of
an indemnity payment in respect thereof, is reduced by recovery, settlement or
otherwise under or pursuant to any insurance coverage, or pursuant to any claim,
recovery, settlement or payment by, from or against any other entity, the amount
of such reduction, less any costs, expenses or premiums incurred in connection
therewith (together with interest thereon from the date of payment thereof at
the publicly announced prime rate then in effect of The Chase Manhattan Bank)
shall promptly be repaid by the Buyer Indemnitee to the Seller or by the Seller
Indemnitee to the Buyer, as the case may be.
Section 4.5 Tax Indemnity. Notwithstanding any other provision of this
Agreement to the contrary, the Seller shall indemnify, defend and hold harmless
each Buyer Indemnitee, and the Buyer shall indemnify, defend and hold harmless
each Seller Indemnitee from and against any and all of the liabilities of the
Seller and the Buyer, respectively, as set forth below:
27
(a) The Seller shall be liable for, shall pay to the appropriate Tax
authorities (or shall pay to Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks,
or ECRWC, as the case may be, as a reimbursement of Taxes paid to the
appropriate Tax authorities for a Straddle Period (as defined below) Tax
Return), and shall indemnify and hold the Buyer and the Company harmless
against, all Taxes of the Company that relate to (i) the taxable periods that
end before or on the Closing Date (other than Taxes attributable to transactions
not in the ordinary course of business occurring after the Closing which are
effectuated or initiated by the Buyer), (ii) any taxable period that includes
but does not end on the Closing Date (a "Straddle Period"), but only to the
extent that such Taxes relate to the portion of such Straddle Period up to and
including the Closing Date, and (iii) any liability for Taxes of the
consolidated group of which the Seller is the common parent arising under
Treasury Regulation section 1.1502-6 (or similar provision of state, local or
foreign law). The Seller shall be entitled to all Tax refunds (including
interest) attributable to the taxable periods for which it is liable; provided,
that the Buyer shall elect under Treasury Regulation section 1.1502-21(b)(3)(ii)
(or similar provision of state, local or foreign law) to relinquish, with
respect to any net operating losses attributable to Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, or ECRWC, the portion of the carryback period
for which any such corporation was a member of the consolidated group of which
the Seller is the common parent.
(b) The Buyer shall be liable for, shall pay to the appropriate Tax
authorities, and shall indemnify and hold the Seller harmless against all Taxes
of the Company that relate to (i) the taxable periods that begin after the
Closing Date (including, for this purpose, any Taxes attributable to
transactions not in the ordinary course of business occurring after the Closing
which are effectuated or initiated by the Buyer) and (ii) the portion of any
Straddle Period commencing with the first (1st) day after the Closing Date. The
Buyer shall be entitled to all Tax refunds (including interest) attributable to
the taxable periods for which it is liable.
(c) The obligations of the Parties to indemnify each other pursuant to
this Section 4.5 shall continue until the statutory period of limitations
(taking into account any extensions or waivers thereof) for the assessment of
Taxes, covered by this Section 4.5, has expired. Any payment due to an
indemnified Party pursuant to this Section 4.5 shall be promptly paid by the
indemnifying Party upon receipt of written notice.
(d) No Party shall take any action the purpose and intent of which is
to prejudice the defense of any claim subject to indemnification hereunder or to
induce a third party to assert a claim subject to indemnification hereunder.
(e) After the Closing, each of the Seller and the Buyer shall notify
the chief tax officer of the other Party in writing (including by telecopier)
within ten (10) calendar days of the receipt of any written notice of any
pending or threatened Audit (as defined below) which, if determined adversely,
could be grounds for indemnification under this Section 4.5 (a "Tax Claim");
provided, however, that any failure to give such notice shall not affect the
rights of the Parties hereunder unless and to the extent such failure materially
and adversely affects the indemnifying Party's right to participate in and
defend such Tax Claim. The Seller shall have the right at its expense to
participate in and control the conduct of any Tax Claim of or attributable to
the Company relating to taxable periods ending on or before the Closing Date and
to employ counsel of its own choice at its expense; provided, however, that the
Seller shall not
28
settle any such Tax Claim or make or agree to any adjustment in any manner
without the written consent of the Buyer, which consent shall not be
unreasonably withheld, conditioned or delayed; and provided, further, that the
Buyer shall have the right to participate in (but not to control) such Tax
Claim. If the Seller fails to participate in any Tax Claim of the Company
relating to taxable periods ending on or before the Closing Date for which
notice was provided pursuant to this Section 4.5(e), the Buyer may defend and
settle such Tax Claim in such manner as it may deem appropriate in its sole
discretion. In such event, the Seller shall promptly reimburse the Buyer for any
and all costs, fees, and expenses associated with such defense or settlement.
Except as set forth above in the first sentence of this Section 4.5(e), the
Buyer shall control the conduct of any Tax Claim of the Company relating to any
taxable period ending after the Closing Date and may defend and settle such Tax
Claim in such manner as it may deem appropriate in its sole discretion. The term
"Audit" means any audit, assessment of Taxes, reassessment of Taxes, or other
examination by any Governmental Authority or any judicial or administrative
proceedings or appeal of such proceedings.
(f) All indemnity payments made by the Seller to the Buyer, or by the
Buyer to the Seller, pursuant to this Agreement shall, to the maximum extent
permitted under the Code (or other applicable Tax law), be treated for all Tax
purposes as adjustments to the consideration paid with respect to the Shares and
the Integrated Assets.
Section 4.6 Certain Indemnification in Respect of Environmental Law.
(a) Notwithstanding any other provision of this Agreement, the Seller
shall indemnify, defend, reimburse, and hold harmless each Buyer Indemnitee from
and against any and all Indemnifiable Losses arising out of or resulting from
any of the following: (i) any breach of any representation or warranty made by
the Seller in Section 3.11 or Section 3.19 hereof, that is discovered within the
Indemnity Period; (ii) any Third Party Claim (as defined in Section 4.4)
asserted prior to the tenth (10th) anniversary of the Closing Date for any
Pre-Closing Environmental Liability (as defined in Section 4.6(b)(ii)); and
(iii) any First Party Environmental Claim (as defined in Section 4.6(b)(iv))
asserted prior to the tenth (10th) anniversary of the Closing Date for any
Pre-Closing Violation or Contamination (as defined in Section 4.6(b)(i)). Any
and all Indemnifiable Losses arising out of or resulting from clauses (i), (ii),
or (iii) above shall not be limited by the Indemnity Cap (as defined in Section
4.3(b)), but shall be subject to the Indemnity Basket (as defined in Section
4.3(b)).
(b) As used in this Agreement:
(i) the term "Pre-Closing Violation or Contamination" means any
and all cost and liability (other than Excepted Liabilities) arising
out of or related to: (A) any violation of any Environmental Laws by
the Seller, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or
ECRWC, or any presence in the environment, Release, threat of Release
or any exposure of either an individual or the environment, of or to
any Hazardous Substances at or under any of the Properties (as defined
in Section 4.6(b)(iii)), which, for any of the foregoing, occurred on
or before or existed as of the Closing Date, and (B) any post-Closing
Date liabilities arising from any such pre-Closing Date violation,
presence, Release, threat of Release or exposure.
29
(ii) the term "Pre-Closing Environmental Liability" means any and
all cost and liability (other than Excepted Liabilities) arising out
of or related to: (A) any presence in the environment, Release, threat
of Release, or any exposure of either an individual or the
environment, of or to any Hazardous Substances from, at, or under any
of the Properties or otherwise arising in connection with the
Company's current or former operations on or before the Closing Date;
(B) the off-site transportation, storage, treatment, recycling, or
Release of any Hazardous Substances generated or Released, on or
before the Closing Date, by the Seller, Dykeer, Cambridge, Kingsvale,
Waccabuc, Wild Oaks, or ECRWC, or any predecessor of such Persons; (C)
any violation of any Environmental Laws by the Seller, Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC at or under any of
the Properties (as defined below) which, occurred on or before or
existed as of the Closing Date; and (D) any post-Closing Date
liabilities arising from any such pre-Closing Date violation or
presence, Release, threat of Release or exposure.
(iii) the term "Properties" means any property currently or
formerly owned, occupied, or leased by the Seller, Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, or ECRWC or their respective
Affiliates.
(iv) the term "First Party Environmental Claim" means any claim,
action, or proceeding, made or brought by any Buyer Indemnitee
asserting either liability or the potential for liability under any
Environmental Laws.
(c) If, after the Closing Date, the Buyer: (i) exacerbates any Release
or threatened Release of Hazardous Substances disclosed by the Seller to the
Buyer existing on or before the Closing Date (a "Pre-Existing Release") or (ii)
exacerbates any violation by the Seller, Dykeer, Cambridge, Kingsvale, Waccabuc,
Wild Oaks, or ECRWC of any Environmental Laws that existed as of the Closing
Date (a "Pre-Existing Violation"), then the obligation of the Seller for any
Buyer Indemnifiable Losses in respect of any such Pre-Existing Release or
Pre-Existing Violation shall be reduced to the extent that the Buyer exacerbated
such Pre-Existing Release or Pre-Existing Violation. The Buyer shall not be
considered to have exacerbated a Pre-Existing Release or Pre-Existing Violation
by having its employees act, in the ordinary course of business, in the same
manner as the employees of the Seller, Dykeer, Cambridge, Kingsvale, Waccabuc,
Wild Oaks, or ECRWC acted in the ordinary course of business before the Closing
Date (the "Pre-Existing Actions"); provided, however, that the Buyer shall be
considered to have exacerbated a Pre-Existing Release or Pre-Existing Violation
by its inaction or failure to modify any Pre-Existing Actions to the extent
required to comply with any applicable Environmental Laws.
(d) Notwithstanding any other provision of this Agreement to the
contrary, nothing in this Agreement is intended to restrict the Buyer from
fulfilling its obligations to take appropriate actions as may be required by
applicable Environmental Laws.
(e) The right of any Buyer Indemnitee to indemnification under this
Section 4.6 shall be in addition to, and not in lieu of, any statutory rights
which such Buyer Indemnitee has or may obtain under Environmental Laws.
30
(f) For the avoidance of doubt, the Parties agree that the provisions
of Section 4.3(c), Section 4.3(d), and all of Section 4.4 shall apply to the
indemnity obligations set forth in this Section 4.6; provided, however, that for
purposes of applying such provisions to this Section 4.6, (i) all references to
the Indemnity Cap contained in such provisions shall be disregarded, and (ii)
all references to Direct Claims shall be read to include First Party
Environmental Claims.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
Section 5.1 Organization and Qualification.
(a) Except as set forth in Section 5.1 of the schedule delivered by
the Buyer to the Seller on the date hereof and attached to this Agreement (the
"Buyer Disclosure Schedule") the Buyer is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has all requisite power and authority 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 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 in good
standing or be so qualified is not reasonably likely to have a Buyer Material
Adverse Effect (as defined in Section 5.1(b)).
(b) As used in this Agreement, the term "Buyer Material Adverse
Effect" shall mean any material adverse effect on the business, assets,
financial condition or results of operations of the Buyer, taken as a whole,
totaling in each instance $100,000; provided, however, that the term "Buyer
Material Adverse Effect" shall not include (i) any such effect resulting from
any change in law, rule, or regulation of any Governmental Authority that
applies generally to similarly situated Persons, or (ii) effects relating to or
resulting from general changes in the industries in which the Buyer operates its
assets or conducts its business.
Section 5.2 Authority; Non-Contravention; Statutory Approvals; Compliance.
(a) Authority. The Buyer has all requisite corporate power and
authority (i) to enter into this Agreement and (ii) subject to the receipt of
the applicable Buyer Required Statutory Approvals (as defined in Section 5.2(c))
and applicable Buyer Required Consents (as defined in Section 5.2(b)), to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation by the Buyer of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Buyer. No vote of, or consent by, the holders of any class or
series of stock issued by the Buyer is necessary to authorize the execution and
delivery by the Buyer of this Agreement or the consummation by the Buyer of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Buyer and, assuming the due authorization, execution and
delivery hereof by the Seller, constitutes the valid and binding obligation of
the Buyer enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent
31
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(b) Non-Contravention. Except as set forth in Section 5.2(b)(i) of the
Buyer Disclosure Schedule, the execution and delivery of this Agreement by the
Buyer does not, and the consummation of the transactions contemplated hereby
will not, result in a Violation pursuant to any provisions of (i) the articles
of incorporation, by-laws or similar governing documents of the Buyer, (ii)
subject to obtaining the Buyer Required Statutory Approvals, any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any Governmental Authority applicable to the Buyer or any of its
properties or assets, or (iii) subject to obtaining the third-party consents set
forth in Section 5.2(b)(iii) of the Buyer Disclosure Schedule (the "Buyer
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 Buyer is a party or by which it
or any of its properties or assets may be bound or affected, except in the case
of clause (ii) or (iii) for any such Violation which is not reasonably likely to
have a Buyer Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section 5.2(c) of the
Buyer Disclosure Schedule (the "Buyer Required Statutory Approvals"), 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 the Buyer or the consummation by the Buyer of the
transactions contemplated hereby, except those which the failure to obtain is
not reasonably likely to result in a Buyer Material Adverse Effect (it being
understood that references in this Agreement to "obtaining" such Buyer Required
Statutory Approvals shall mean (i) making such declarations, filings or
registrations; (ii) giving such notices; (iii) obtaining such authorizations,
consents or approvals; (iv) having such waiting periods expire as are necessary
to avoid a violation of law; and (v) having any applicable appeals period expire
without any appeal being filed, or if such an appeal is filed, such appeal is
fully and finally dismissed without the opportunity for further appeal).
(d) Compliance. (i) Except as set forth in Section 5.2(d)(i) or
Section 5.3 of the Buyer Disclosure Schedule, or as disclosed in the Birmingham
SEC Reports (as defined below) filed prior to the date hereof, the Buyer is not
in violation of nor has been given notice of or been charged with any violation
of, or to the knowledge of the Buyer is under investigation with respect to any
violation of any law, statute, order, rule, regulation, ordinance, tariff, rate
or judgment of any Governmental Authority, except for possible violations which
are not reasonably likely to have a Buyer Material Adverse Effect or to prevent,
materially delay or materially impair the Buyer's ability to consummate the
transactions contemplated by this Agreement. (ii) Except as set forth in Section
5.2(d)(ii) of the Buyer Disclosure Schedule or as disclosed in the Birmingham
SEC Reports filed prior to the date hereof, the Buyer has all permits, licenses,
franchises and other governmental authorizations, consents and approvals
necessary to conduct its business as presently conducted except those that the
absence of which are not reasonably likely to have a Buyer Material Adverse
Effect or to prevent, materially delay or materially impair the ability of the
Buyer to consummate the transactions contemplated by this Agreement. (iii)
Except as set forth in Section 5.2(d)(iii) of the Buyer Disclosure Schedule, the
Buyer 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,
32
could result in a default by the Buyer under (i) its articles of incorporation
or by-laws or (ii) any contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which it is a party or by which the Buyer is bound or to which any of its
property is subject, except for possible violations, breaches or defaults which
are not reasonably likely to have a Buyer Material Adverse Effect or to prevent,
materially delay or materially impair the Buyer's ability to consummate the
transactions contemplated by this Agreement. (iv) As used in this Agreement, the
term "Birmingham SEC Reports" shall mean each report, schedule, registration
statement and definitive proxy statement filed with the SEC by Birmingham, since
December 31, 1999, pursuant to the requirements of the Securities Act or the
Exchange Act.
Section 5.3 Litigation. Except as set forth in Section 5.3 of the Buyer
Disclosure Schedule, (a) there are no claims, suits, actions or proceedings
before any court, governmental department, commission, agency, instrumentality
or authority or any arbitrator, pending or, to the knowledge of the Buyer,
threatened, nor are there, to the knowledge of the Buyer, any investigations or
reviews by any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator pending or threatened against,
relating to or affecting the Buyer, and (b) 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 Buyer
except, in the case of both clause (a) and clause (b), for such that are not
reasonably likely to have a Buyer Material Adverse Effect or reasonably likely
to prevent, materially delay or materially impair the Buyer's ability to
consummate the transactions contemplated by this Agreement.
Section 5.4 Investigation by the Buyer; the Seller's Liability. The Buyer
has conducted its own independent investigation, review and analysis of the
business, operations, assets, liabilities, results of operations, financial
condition, software, technology and prospects of the Company, which
investigation, review and analysis was done by the Buyer and, to the extent the
Buyer deemed appropriate, by the officers, directors, employees, accountants,
counsel, investment bankers, financial advisors and other representatives
(collectively, "Representatives") of the Buyer. In entering into this Agreement,
the Buyer acknowledges that it has relied solely upon the aforementioned
investigation, review and analysis and not on any factual representations of the
Seller or the Seller's Representatives (except the specific representations and
warranties of the Seller set forth in Article III of this Agreement and the
Seller Disclosure Schedule), and the Buyer:
(a) acknowledges that none of the Seller, Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, or ECRWC or any of their respective directors,
officers, shareholders, employees, Affiliates, agents, advisors or
Representatives makes or has made any representation or warranty, either express
or implied, as to the accuracy or completeness of any of the information
(including in materials furnished in the Seller's data room, in presentations by
the Seller's management, on site visits or otherwise) provided or made available
to the Buyer or its directors, officers, employees, Affiliates, advisors, agents
or Representatives, and
33
(b) agrees, to the fullest extent permitted by law, that none of the
Seller, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC or any of
their respective directors, officers, employees, shareholders, Affiliates,
agents, advisors or Representatives shall have any liability or responsibility
whatsoever to the Buyer or its directors, officers, employees, Affiliates,
agents or Representatives on any basis (including in contract or tort, under
federal or state securities laws or otherwise) based upon any information
provided or made available, or statements made (including in materials furnished
in the Seller's data room, in presentations by the Seller's management, on site
visits or otherwise) to the Buyer or its directors, officers, employees,
Affiliates, advisors, agents or Representatives (or any omissions therefrom),
including in respect of the specific representations and warranties of the
Seller set forth in this Agreement, except that the foregoing limitations shall
not apply to (i) fraud or willful breach of this Agreement by the Seller, or
(ii) the Seller insofar as the Seller makes the specific representations and
warranties set forth in Article III of this Agreement or the Seller Disclosure
Schedule but always subject to the limitations and restrictions contained in
Articles IV and X.
Section 5.5 Acquisition of Shares; Ability to Evaluate and Bear Risk.
(a) The Buyer is acquiring the Shares for investment and not with a
view toward, or for sale in connection with, any distribution thereof, nor with
any present intention of distributing or selling the Shares. The Buyer
acknowledges that the Shares have not been registered under the Securities Act
and agrees that the Shares may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of without registration under the
Securities Act and any applicable state securities laws, except pursuant to an
exemption from such registration under the Securities Act and any applicable
state securities laws.
(b) The Buyer is able to bear the economic risk of holding the Shares
for an indefinite period, and has knowledge and experience in financial and
business matters such that it is capable of evaluating the risks of the
investment in the Shares.
Section 5.6 Financing. The Buyer has or will have available, prior to the
Closing, sufficient cash in immediately available funds to pay the Purchase
Price pursuant to Article I hereof and to consummate the transactions
contemplated hereby.
Section 5.7 Brokers or Finders. The Buyer has not entered into any
agreement or arrangement entitling any agent, broker, investment banker,
financial advisor or other firm or Person to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE CLOSING
Section 6.1 Covenants of the Seller. The Parties acknowledge that, pursuant
to the AquaSource Purchase Agreement, the Seller will acquire from AquaSource,
Inc. and DQE, Inc. the Shares and the Integrated Assets. Pursuant to this
Agreement, the Seller has agreed to sell to the Buyer the Shares and the
Integrated Assets. The Buyer further acknowledges that, as of the date of this
Agreement, the Seller does not own the Shares or the Integrated Assets and that
the covenants contained in this Section 6.1 are the covenants which AquaSource,
Inc. and
34
DQE, Inc. made to the Seller in the AquaSource Purchase Agreement. Based upon
the foregoing, the Seller agrees, after the date hereof and prior to the Closing
Date or earlier termination of this Agreement, that, except as set forth in
Section 6.1 of the Seller Disclosure Schedule and except as expressly
contemplated in or permitted by (i) this Agreement, (ii) the budget for the
Company in the form delivered to the Buyer by the Seller on May 2, 2003 (as the
same may be amended from time to time, but only to the extent that any such
amendments do not result, or are not reasonably likely to result, in a Company
Material Adverse Effect, the "Budget"), or (iii) to the extent the Buyer shall
otherwise consent in advance in writing, which decision regarding consent shall
be made as soon as reasonably practical, and which consent shall not be
unreasonably withheld, conditioned or delayed:
(a) the business of the Company shall be conducted in the ordinary and
usual course in substantially the same manner as heretofore conducted, in
material compliance with all applicable laws, statutes, ordinances and
regulations, and, to the extent consistent therewith, each of the Seller,
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, and, with respect to
the Integrated Assets, Operations and Utility shall use its respective
commercially reasonable efforts to preserve its business organization intact and
maintain its existing Contracts, relations and goodwill with customers,
suppliers, creditors, regulators, lessors, employees and business associates;
(b) each of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or
ECRWC shall not (i) amend its articles of incorporation or by-laws; (ii) split,
combine or reclassify its outstanding shares of capital stock; or (iii) declare,
set aside or pay any dividend payable in cash, stock or property in respect of
any of its capital stock;
(c) neither Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, nor
ECRWC shall (i) issue, sell, pledge, dispose of or encumber any shares of, or
securities convertible into or exchangeable or exercisable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares of its
capital stock of any class or any other property or assets; (ii) transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any
other property or assets or incur or modify any indebtedness or other liability;
or (iii) make any commitments for, make or authorize any capital expenditures
(other than (A) those contemplated by the Budget, (B) capital expenditures not
in excess of $1,000,000 in the aggregate incurred in connection with the repair
or replacement of facilities destroyed or damaged due to casualty or accident
(to the extent not covered by insurance), (C) as required by law or by any
consent agreement with a Governmental Authority by which the Seller, Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC, or its or their assets, is
bound, or (D) in amounts less than $500,000 individually and $1,000,000 in the
aggregate in any calendar year); or (iv) make any acquisition of, or investment
in, assets or stock of any other Person or entity in excess of $500,000 in the
aggregate in any calendar year;
(d) neither the Seller, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild
Oaks, nor ECRWC, shall terminate, establish, adopt, enter into, make any new
grants or awards of stock-based compensation or other benefits under, amend or
otherwise modify any Company Plan or increase the salary, wage, bonus or other
compensation of any directors, officers or employees except (i) for grants or
awards to directors, officers and employees under existing Company Plans in such
amounts and on such terms as are consistent with past practice, (ii) in the
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normal and usual course of business (which shall include normal periodic
performance reviews and related plans and the provision of individual Company
Plans consistent with past practice for newly hired or appointed officers and
employees), or (iii) for actions necessary to satisfy existing contractual
obligations under Company Plans existing as of the date hereof; provided,
however, that the Seller shall have satisfied its obligations with respect to
the Company Plans under this provision if the Seller maintains the Company Plans
in such a manner as to comply with this provision;
(e) the Seller, on behalf of the Company, shall maintain insurance in
such amounts and against such risks and losses as are consistent with the
insurance heretofore maintained by Seller, on behalf of the Company;
(f) the Seller shall promptly provide the Buyer with copies of all
filings (including the PSC SEC Reports) made by the Seller, Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, or ECRWC, with, and inform the Buyer of any
communications received from, any state or federal court, administrative agency,
commission or other Governmental Authority (including, but not limited to, the
SEC), in connection with this Agreement or the transactions contemplated hereby;
(g) the Seller shall, and shall cause Dykeer, Cambridge, Kingsvale,
Waccabuc, Wild Oaks, and ECRWC, to, use all commercially reasonable efforts to
promptly obtain all of the Seller Required Consents and the Seller Required
Statutory Approvals. The Seller shall promptly notify the Buyer of any failure
or prospective failure to obtain any such consents or approvals and shall
promptly provide to the Buyer copies of all of the Seller Required Consents and
the Seller Required Statutory Approvals obtained by the Seller, Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, and ECRWC;
(h) the Seller shall promptly provide the Buyer with copies of all
notices of violation or proposed investigations involving the violation of any
Environmental Laws by the Seller or the Company, and inform the Buyer of any
communications received from, any state or federal court, administrative agency,
commission or other Governmental Authority in connection with any such notice of
violation or investigation;
(i) the Seller shall promptly provide the Buyer with copies of all
pleadings in any lawsuit, administrative action, equity action or other legal
proceeding involving the Seller (in respect of the Company) or the Company with
an amount in controversy in excess of $50,000;
(j) the Seller shall cause the Company to not enter into any contract
or obligation extending beyond December 31, 2003 except for (i) the renewal or
replacement of the Contracts included in the Integrated Assets on substantially
similar or other commercially reasonable terms and conditions and (ii) other
contract or obligations with an annualized value or liability not in excess of
$25,000 unless the Buyer shall have first been provided a copy of such contract
or obligation and a reasonable opportunity to comment on such contract or
obligation prior to it becoming binding on the Company;
36
(k) the Seller shall not, and the Seller shall not permit any of
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks or ECRWC 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, or to
unduly delay the Closing;
(l) the Seller shall cause Dykeer, Cambridge, Kingsvale, Waccabuc,
Wild Oaks, or ECRWC to accrue on their books any accrued and unpaid salary,
bonus, vacation or other amounts due Affected Employees (as defined in Section
7.6(a)) for service up to and including the Closing, except for such salary,
bonus, vacation or other amounts that are, or will be, paid by the Seller no
later than thirty (30) calendar days following the Closing Date;
(m) the Seller shall use all commercially reasonable efforts to remedy
the failures of it or the Company to be duly qualified, validly existing and in
good standing as disclosed in Section 3.1(a) of the Seller Disclosure Schedule;
and
(n) the Seller shall not, and the Seller shall not permit any of
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, Operations or Utility
to remove any of the Integrated Assets from Connecticut or New York in an amount
in excess of $200,000 in the aggregate.
Section 6.2 Covenants of the Buyer. After the date hereof and prior to the
Closing Date or earlier termination of this Agreement, the Buyer agrees as
follows except as expressly contemplated or permitted in this Agreement or to
the extent the Seller shall otherwise consent in writing, which decision
regarding consent shall be made as soon as reasonably practical, and which
consent shall not be unreasonably withheld, conditioned or delayed:
(a) The Buyer shall promptly provide the Seller with copies of all
filings (including the Birmingham SEC Reports) made by the Buyer with, and
inform the Seller of any communications received from, any state or federal
court, administrative agency, commission or other Governmental Authority
(including, but not limited to, the SEC) in connection with this Agreement and
the transactions contemplated hereby;
(b) The Buyer shall use all commercially reasonable efforts to
promptly obtain all of the Buyer Required Consents and the Buyer Required
Statutory Approvals. The Buyer shall promptly notify the Seller of any failure
or prospective failure to obtain any such consents or approvals and shall
provide to the Seller copies of all of the Buyer Required Consents and the Buyer
Required Statutory Approvals obtained by the Buyer to the Seller; and
(c) The Buyer shall not 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 or to unduly delay the
Closing.
37
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Company Information and Cooperation.
(a) The Parties acknowledge that, pursuant to the AquaSource Purchase
Agreement, the Seller has limited rights of access to information concerning the
Company and employees of the Company. Notwithstanding the foregoing, the Seller
shall use all commercially reasonable efforts, upon reasonable notice, to, or
shall cause Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, Utility,
and Operations to, afford to the Representatives of the Buyer reasonable access,
during normal business hours throughout the period prior to the Closing Date, to
all of the Seller's (in respect of the Company), Dykeer's, Cambridge's,
Kingsvale's, Waccabuc's, Wild Oaks', or ECRWC's properties, books, contracts,
commitments and records (including, but not limited to, Tax Returns) and, during
such period, the Seller shall, and shall cause Dykeer, Cambridge, Kingsvale,
Waccabuc, Wild Oaks, and ECRWC, to, promptly furnish to the Buyer and its
Representatives, (i) access to each report, schedule and other document filed or
received by the Seller (in respect of Dykeer, Cambridge, Kingsvale, Waccabuc,
Wild Oaks, or ECRWC), pursuant to the requirements of federal or state
securities laws or filed with or sent to any federal or state regulatory agency
or commission and (ii) access to all information concerning the Seller (in
respect of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC or the
Integrated Assets), and its or their respective directors and officers and such
other matters as may be reasonably requested by the Buyer or its Representatives
in connection with any filings, applications or approvals required or
contemplated by this Agreement or for any other reason related to the
transactions contemplated by this Agreement; provided, however, that (i) any
such access shall be granted only in such a manner as not to unreasonably
interfere with the Seller's business operations in respect of the Company or
otherwise, (ii) upon being granted such access, the Buyer shall not unreasonably
interfere with the Seller's business operations in respect of the Company or
otherwise, (iii) in granting any such access the Seller, Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, and ECRWC, shall not be required to take any
action that would constitute a waiver of any legal privilege, including the
attorney-client privilege, the work product privilege and the self critical
investigation privilege, and (iv) in granting any such access, the Seller,
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, and ECRWC shall not be
required to provide the Buyer with access to any information which the Seller,
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC, is under a legal or
contractual obligation to withhold from disclosure. The Buyer shall hold in
strict confidence all documents and information concerning the Seller or the
Company furnished or made available to it in connection with the transactions
contemplated by this Agreement in accordance with (i) the Confidentiality
Agreement, dated December 30, 2002, entered into by and between PSC and
Birmingham, (ii) the Confidentiality Agreement, dated May 22, 2002, entered into
by and between Birmingham and DQE, Inc., and (iii) the Acknowledgment and
Amendment, dated March 3, 2003, entered into by and between Birmingham and DQE,
Inc. (the foregoing agreements are collectively referred to herein as the
"Confidentiality Agreements").
(b) Between the date hereof and the Closing Date, the Parties shall
reasonably cooperate with one another so as to inform one another of the
condition of the Company and the status of the transactions contemplated by this
Agreement. Toward that end,
38
the Parties shall each appoint an officer-level employee to serve as the head of
their transition team and shall use commercially reasonable efforts to hold
regular meetings and/or conference calls so that the members of the Seller's and
the Buyer's management and transition teams may discuss the Company and the
transactions contemplated by this Agreement.
Section 7.2 Regulatory Approvals. The Seller and the Buyer shall cooperate
and use all commercially reasonable 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 all necessary permits, consents, approvals and authorizations
of all Governmental Authorities necessary or advisable to obtain the Seller
Required Statutory Approvals and the Buyer Required Statutory Approvals;
provided, however, that the Seller and the Buyer shall cooperate and use all
commercially reasonable efforts to prepare and file any such applications,
notices, petitions, filings and other documents within sixty (60) calendar days
after the date hereof and shall thereafter cooperate to diligently prosecute all
such applications, notices, petitions, filings and other documents. To the
extent any such applications, notices, petitions, filings or other documents
require an allocation of the Purchase Price among the assets of the Company, the
Seller and the Buyer shall make any such allocation in a manner that is
consistent with any allocations made pursuant to Section 7.9 hereof. The Buyer
shall be precluded from including in any application for regulatory approval
contingencies relating to rate treatment of acquisition premiums.
Section 7.3 Consents. The Seller and the Buyer agree to use all
commercially reasonable efforts to obtain the Seller Required Consents and the
Buyer Required Consents, respectively, and to cooperate with each other in
connection with the foregoing.
Section 7.4 Directors' and Officers' Indemnification.
(a) Indemnification. To the fullest extent permitted by law, from and
after the Closing Date, all rights to indemnification existing immediately prior
to the Closing in favor of the current and former employees, agents, directors
or officers of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC and,
with respect to the Integrated Assets, Operations and Utility (each, a "Company
Indemnified Party" and, collectively, the "Company Indemnified Parties") with
respect to their activities as such prior to or on the Closing Date, as provided
in the Seller's, Dykeer's, Cambridge's, Kingsvale's, Waccabuc's, Wild Oaks', and
ECRWC's, respective articles of incorporation, by-laws, other organizational
documents or indemnification agreements in effect on the date of such activities
or otherwise in effect on the date hereof, shall survive the Closing and shall
continue in full force and effect for a period of not less than six (6) years
from the Closing Date, provided that, in the event any claim or claims are
asserted or made within such six (6) year period, all such rights to
indemnification in respect of any claim or claims shall continue until final
disposition of such claim or claims and provided further that, the Buyer's
indemnity obligation for a particular claim hereunder shall be reduced in
respect of any Company Indemnified Party asserting such claim to the extent of
any insurance proceeds actually received by such Company Indemnified Party in
respect of such claim.
(b) Successors. In the event that after the Closing Date, the Buyer,
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC, or any of their
successors or assigns (i) consolidates with or merges into any other Person or
entity and shall not be the
39
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person or entity, then and in either such case, proper provisions shall be made
so that the successors and assigns of the Buyer, Dykeer, Cambridge, Kingsvale,
Waccabuc, Wild Oaks, or ECRWC, as the case may be, shall assume the respective
obligations of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC, as
the case may be, set forth in this Section 7.4.
(c) Benefit. The provisions of this Section 7.4 are intended to be for
the benefit of, and shall be enforceable by, each Company Indemnified Party, his
or her heirs and his or her representatives.
Section 7.5 Public Announcements. The Buyer and the Seller shall consult
with each other before issuing any press release with respect to this Agreement
and the transactions contemplated hereby and shall not issue any such press
release or make any such written public statement without the prior written
consent of the other Party, which shall not be unreasonably withheld, delayed or
conditioned, provided, however, that a Party may, without the prior written
consent of the other Party, issue such press release or make such written public
statement as the Party may determine, in good faith after consultation with
counsel, is required by law or by obligations pursuant to any listing agreement
with or rules of any national securities exchange, if it has used all
commercially reasonable efforts to consult with the other Party.
Section 7.6 Workforce Matters.
(a) The Buyer will make offers of employment, effective as of the
Closing, to those employees of the Seller or the Seller's Affiliates identified
by mutual written agreement of the Seller and the Buyer as Affected Employees
(such individuals the "Affected Employees " such that such Affected Employees do
not suffer an "employment loss" under the WARN Act (as defined below) as a
result of such offers. The Buyer and the Seller acknowledge that if the Buyer
makes "appropriate offers" to all Affected Employees, none of such Affected
Employees will suffer an "employment loss" as defined under the WARN Act. As
used in this Agreement, the term "WARN Act" shall mean the Worker Adjustment and
Retraining Notification Act. In connection with the hiring process for Affected
Employees, the Buyer shall comply with applicable laws pertaining to labor and
employment, including, without limitation, Title VII of the Civil Rights Act of
1964, as amended, the Age Discrimination in Employment Act, the Americans With
Disabilities Act, the Rehabilitation Act and comparable state and local laws. If
any Affected Employee is not hired by the Buyer as of the Closing or if the
Buyer terminates such Affected Employee's employment as of or after the Closing
other than for cause, then the Buyer shall be responsible for any and all
severance costs for all such Affected Employees, including payments owing under
those agreements, plans or arrangements listed in Section 3.9(a) of the Seller
Disclosure Schedule; provided, however, that if any Affected Employee fails or
refuses to accept an appropriate offer or voluntarily terminates his or her
employment with the Buyer on or after the Closing, the Buyer shall have no
liability for severance costs, including but not limited to the payments owing
under the agreements, plans, or arrangements listed in Section 3.9(a) of the
Seller Disclosure Schedule. As between the Seller and the Buyer, the Seller
shall not be obligated to provide any severance or separation pay benefits to
any Affected Employee on account of any termination of such Affected Employee's
employment on or after the Closing Date. The Buyer shall not be responsible for
providing any
40
compensation or severance benefits to any employee of the Seller or its
Affiliates other than benefits payable in respect of Affected Employees in
accordance with this Section 7.6(a). The Buyer shall be responsible for
providing any continuation coverage required under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), in respect of Affected
Employees who experience a qualifying event (within the meaning of COBRA)
before, or on the Closing Date. The Seller shall be responsible for any notices
required to be given under, or otherwise comply with, the WARN Act or similar
statutes or regulations of any jurisdiction relating to any "plant closing" or
"mass layoff" or similar triggering event ordered by the Seller with respect to
the Affected Employees prior to the Closing Date. The Buyer shall be responsible
for any notices required to be given under, or otherwise comply with, the WARN
Act or similar statutes or regulations of any jurisdiction relating to any
"plant closing" or "mass layoff" or similar triggering event ordered by the
Buyer with respect to the Affected Employees on and after the Closing Date. For
the avoidance of doubt, for purposes here, the Parties intend for the "effective
date" within the meaning of the WARN Act to refer to and mean the Closing Date.
To the extent possible, the Buyer and the Seller agree to treat the Buyer as a
"successor employer" and the Seller or one or more of its Affiliates as a
"predecessor employer" within the meaning of Sections 3121(a)(1) and 3306(b)(1)
of the Code, with respect to Affected Employees, for purposes of Taxes imposed
under the United States Federal Unemployment Tax or the United States Federal
Insurance Contributions Act.
(b) The Buyer expressly agrees that without the Seller's consent, (i)
from the date hereof until the first (1st) anniversary of the Closing Date, it
will not directly solicit for employment or employ any employees of the Seller
who are not Affected Employees, and (ii) from the Closing Date until the first
(1st) anniversary of the Closing Date, it will cause the Company not to directly
solicit for employment or employ any employees of the Seller who are not
Affected Employees; provided that nothing herein shall prohibit the Buyer or any
of its Affiliates from placing advertisements for employment in any medium. The
Seller expressly agrees that without the Buyer's consent, (i) from the date
hereof until the first (1st) anniversary of the Closing Date, it will not
directly solicit for employment any of the Affected Employees or employ after
the Closing Date any of the Affected Employees actually hired by the Buyer, and
(ii) from the Closing Date until the first (1st) anniversary of the Closing
Date, it will cause its Affiliates to not, and require in any agreement entered
into for the sale of any of its operations that any purchaser of such operations
will not, directly solicit for employment any of the Affected Employees or
employ after the Closing Date any of the Affected Employees actually hired by
the Buyer; provided that nothing herein shall prohibit the Seller or any of its
Affiliates or any purchaser of the Seller's operations from placing
advertisements for employment in any medium.
Section 7.7 Employee Benefit Plans.
(a) Continued Employment; Service Credit. Except as otherwise
expressly provided herein, the Buyer shall not assume any Company Plan, nor
shall there be any transfer of assets or liabilities of any Company Plan to any
plan, program or arrangement maintained by the Buyer or any of its Affiliates.
If any Affected Employee becomes a participant in any employee benefit plan,
practice or policy of the Buyer or any of its Affiliates, such Affected Employee
shall be given credit under such plan for all service prior to the Closing Date
with the Company, any of its Affiliates, any ERISA Affiliate or any predecessor
employer
41
to the extent such credit was given by the Company, any of its Affiliates, any
ERISA Affiliate or any predecessor employer under a Company Plan, and all
service with the Buyer or any of its Affiliates on and after the Closing Date
but prior to the time such Affected Employee becomes such a participant, for
purposes of determining eligibility and vesting and for purposes of severance
and vacation. As of the Closing, the Company and its Affiliates shall cease to
provide coverage and benefits for Affected Employees and their dependents and
beneficiaries under any benefit plan maintained by the Seller or any of its
respective Affiliates, except as required by applicable law.
(b) Continuation of Agreements. Section 7.7(b) of the Seller
Disclosure Schedule lists all contracts, agreements and commitments of the
Seller, Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, or ECRWC in effect as
of the date hereof that apply to any Affected Employee (each, a "Section 7.7(b)
Agreement"). The Buyer shall, and shall cause Dykeer, Cambridge, Kingsvale,
Waccabuc, Wild Oaks, and ECRWC, to assume and honor each Section 7.7(b)
Agreement in accordance with its terms except that Buyer shall have no liability
or obligation with respect to any breach or default by Seller of any Section
7.7(b) Agreement that occurred prior to or at Closing; provided, however, that
this undertaking is not intended to prevent the Seller, Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, or ECRWC, from enforcing a Section 7.7(b)
Agreement in accordance with its terms, including, without limitation, any
reserved right to amend, modify, suspend, revoke or terminate the Section 7.7(b)
Agreement or portion thereof.
Section 7.8 Tax Treatment.
(a) Neither the Seller nor the Buyer shall make or file any election
under Section 338 of the Code or any corresponding provision of state or local
Tax law with respect to the purchase of the Shares.
(b) Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, and ECRWC will
each elect under Section 168(k)(2)(C)(iii) of the Code not to deduct additional
first (1st) year depreciation for any water utility property placed in service
during taxable years that include any period from September 11, 2001 through the
Closing Date.
Section 7.9 Allocation of Consideration.
(a) The consideration attributable to the purchase of the Shares and
the Integrated Assets shall be allocated among the Shares and the Integrated
Assets as set forth in Exhibit 1.2(a) and Exhibit 1.2(b) hereto. Within thirty
(30) calendar days after the determination of the adjustments pursuant to
Article I, the Seller shall deliver to the Buyer a schedule (the "Adjustment
Schedule") allocating said adjustments among the Shares and the Integrated
Assets.
(b) The Buyer may dispute any allocation set forth on the Adjustment
Schedule; provided, however, that (i) the Buyer shall not dispute any of the
original allocations set forth in Exhibit 1.2(a) and Exhibit 1.2(b) and (ii) the
Buyer shall notify the Seller in writing (the "Allocation Dispute Notice") of
each disputed item, specifying the allocation in dispute and setting forth, in
reasonable detail, the basis for such dispute within thirty (30) calendar days
of the Buyer's receipt of the Adjustment Schedule. The Buyer shall submit only
one Allocation
42
Dispute Notice containing all disputed allocations. In the event of such a
dispute, the Buyer and the Seller shall attempt to reconcile their differences
and any resolution by them as to any disputed allocations shall be final,
binding and conclusive. If the Buyer and the Seller are unable to reach a
resolution with such effect within thirty (30) calendar days of the receipt by
the Seller of the Allocation Dispute Notice, the Buyer and the Seller shall
submit the items remaining in dispute for resolution to a nationally recognized
accounting firm, mutually acceptable to both the Seller and the Buyer, which
shall, within thirty (30) calendar days after submission, determine and report
to the Parties upon such remaining disputed allocations, and such report shall
be final, binding and conclusive on the Parties hereto. All costs and expenses
of the nationally recognized accounting firm relating to the disputed
allocations shall be borne equally by the Buyer and the Seller.
Section 7.10 Tax Returns.
(a) The Seller shall prepare and file, or cause to be prepared and
filed, when due all Tax Returns that are required to be filed by or with respect
to all or any portion of the Company for taxable years or periods ending on or
before the Closing Date. The Buyer shall prepare and file, or cause to be
prepared and filed, when due all Tax Returns that are required to be filed by or
with respect to all or any portion of the Company for taxable years or periods
ending after the Closing Date. Any Tax Return required to be filed by the Buyer
relating to any Straddle Period shall be prepared based on past practice and
submitted (with copies of any relevant schedules, work papers and other
documentation then available) to the Seller for the Seller's approval not less
than thirty (30) calendar days prior to the due date for the filing of such Tax
Return, which approval shall not be unreasonably withheld, conditioned or
delayed. The Seller and the Buyer shall make available all books and records and
cooperate with each other as reasonably necessary for the preparation and filing
of any Tax Returns relating to all or any portion of the Company.
(b) There are no Tax sharing agreements or arrangements that exist
between the Company and the Seller or its Affiliates.
Section 7.11 Transfer Taxes. Notwithstanding any other provision of this
Agreement to the contrary, the Buyer and the Seller shall bear equally (a) all
transfer (including real property transfer and documentary transfer) Taxes and
fees imposed with respect to the transactions contemplated hereby and (b) all
sales, use, gains (including state and local transfer gains, but not including
any income, capital gains, or any other Tax imposed on the Seller with respect
to any profits or gains recognized by the Seller as a result of the transactions
contemplated hereby), excise and other transfer or similar Taxes imposed with
respect to the transactions contemplated hereby. The Seller shall execute and
deliver to the Buyer, and the Buyer shall execute and deliver to the Seller at
the Closing any certificates or other documents as the requesting Party may
reasonably request in order to perfect any exemption from any such transfer,
documentary, sales, use, gains, excise or other Taxes, or to otherwise comply
with any applicable reporting requirements with respect to any such Taxes.
43
Section 7.12 Financial Information.
(a) After the Closing, upon reasonable written notice, the Buyer and
the Seller shall furnish or cause to be furnished to each other and their
respective accountants, counsel and other Representatives, during normal
business hours, such information (including records pertinent to the Company) as
is reasonably necessary for financial reporting and accounting matters; provided
however, that all such information shall be subject to the Confidentiality
Agreements.
(b) The Buyer shall retain all of the books and records of Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC and the Integrated Assets, for
a period of ten (10) years after the Closing Date or such longer time as may be
required by law. After the end of such period, before disposing of such books or
records, the Buyer shall give notice to such effect to the Seller and give the
Seller an opportunity to remove and retain all or any part of such books or
records as the Seller may select at Seller's expense.
Section 7.13 Transition Services.
(a) Upon the execution by the Parties of this Agreement, the Seller
shall cooperate with and provide commercially reasonable assistance to the
Buyer, at the sole cost and expense of the Buyer, such that the Buyer can
transition and integrate the services previously utilized by the Company to such
systems and in such a manner as the Buyer reasonably desires, including, but not
limited to: (i) accounting services (specifically the ▇▇▇▇▇▇ System), (ii)
information technology services, and (iii) data processing services
(collectively, the "Seller Transition Services"), provided, however, that in no
event shall the Seller be obligated to provide such Seller Transition Services
for a period of time that exceeds the date that is three (3) months from the
Closing Date.
(b) Upon the execution by the Parties of this Agreement, the Buyer
shall cooperate with and provide commercially reasonable assistance to the
Seller, at the sole cost and expense of the Seller, such that the Seller can
transition and integrate the services previously utilized by the Company to such
systems and in such a manner as the Seller reasonably desires, including, but
not limited to: (i) accounting services (specifically the ▇▇▇▇▇▇ System), (ii)
information technology services, and (iii) data processing services
(collectively, the "Buyer Transition Services"), provided, however, that in no
event shall the Buyer be obligated to provide such Buyer Transition Services for
a period of time that exceeds the date that is three (3) months from the Closing
Date.
Section 7.14 Update of the Seller Disclosure Schedule. The Seller may from
time to time prior to or on the Closing Date by notice in accordance with this
Agreement supplement or amend in writing the Seller Disclosure Schedule,
including one or more supplements or amendments to correct any matter that would
otherwise constitute a breach of any representation, warranty or covenant
contained herein. If the Seller Disclosure Schedule is updated pursuant to this
provision so as to disclose additional liabilities (contingent or otherwise) or
obligations of the Company or understatements of value of assets that, in the
aggregate, exceed $400,000 (except for those liabilities or obligations
resulting from (i) any change in law, rule or regulation of any Governmental
Authority that applies generally to similarly situated
44
Persons, and (ii) general changes in the industries in which the Company
operates its assets or conducts its business), then the Buyer shall have the
right to terminate this Agreement pursuant to Section 9.1(f). Notwithstanding
any other provision hereof to the contrary, the Seller Disclosure Schedule and
the representations and warranties made by the Seller shall be deemed for all
purposes to include and reflect such supplements and amendments as of the date
hereof and at all times thereafter, including the Closing Date.
Section 7.15 Governmental Taking.
(a) Between the date hereof and the Closing Date, the Seller shall
immediately notify the Buyer if a Governmental Authority commences condemnation,
expropriation, eminent domain or similar proceedings affecting all or any
portion of any real property, franchise, service territory or operations of the
Company (a "Condemnation Proceeding"). The Seller shall not enter into any
Condemnation Proceeding settlement with the Governmental Authority that
commences such Condemnation Proceeding without the prior written consent of the
Buyer unless (i) the settlement pays the Seller at least Rate Base as
compensation from the Governmental Authority in connection with the subject
Condemnation Proceeding, (ii) the Seller shall promptly deposit any monies
resulting from any such settlement into a separate escrow account and (iii) the
Seller shall promptly cause such monies to be transferred from the Seller to the
Company immediately prior to the Closing Date.
(b) Between the date hereof and the Closing Date, with respect to any
Condemnation Proceeding that is not resolved pursuant to a settlement and
results in a governmental taking, (i) the Seller shall promptly deposit any
monies resulting from any such governmental taking into a separate escrow
account and (ii) the Seller shall promptly cause such monies to be transferred
from the Seller to the Company immediately prior to the Closing Date.
Section 7.16 General and Automobile Liability Insurance.
(a) The Seller agrees to use commercially reasonable efforts to have
its general and automobile liability insurance policies for the twenty-four (24)
months immediately following the Closing Date endorsed to make the Buyer an
additional insured under such policies with respect to occurrences involving the
Company and the Integrated Assets occurring during the period the Company,
Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with respect to
the Integrated Assets, Operations or Utility, were an Affiliate of the Seller;
provided, however, that the Seller shall have satisfied its obligations under
this provision if the Seller uses commercially reasonable efforts to have its
general and automobile liability insurance policies so endorsed.
(b) The Buyer agrees to use commercially reasonable efforts to have
its general and automobile liability insurance policies for the twenty-four (24)
months immediately following the Closing Date endorsed to make the Seller an
additional insured under such policies with respect to occurrences involving the
Company and the Integrated Assets occurring after the Closing Date.
45
Section 7.17 Further Assurances. Each Party will, and will cause its
Subsidiaries to, execute such further documents or instruments and take such
further actions as may reasonably be requested by any other Party in order to
consummate the transaction contemplated hereby in accordance with the terms
hereof or otherwise perform those obligations required hereunder. In the event
that any Integrated Asset to be conveyed, assigned, transferred and delivered
hereunder to the Buyer shall not have been so conveyed, assigned, transferred
and delivered to the Buyer at the Closing the Parties shall use all commercially
reasonable efforts to so convey, assign, transfer and deliver such Integrated
Asset to the Buyer and to cause the Buyer to assume all Integrated Liabilities
associated therewith as promptly as is practicable following the Closing.
Section 7.18 Exclusivity. Seller will not, nor will it cause or permit any
of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or Operations, to:
(i) solicit, initiate, or encourage the submission of an proposal or offer from
any Person relating to the acquisition of any capital stock, or any substantial
portion of the assets, of Dykeer, Cambridge, Kingsvale, Waccabuc, Wild Oaks,
ECRWC, or Operations (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. Each of Seller, Dykeer, Cambridge,
Kingsvale, Waccabuc, Wild Oaks, ECRWC, and Operations will notify the Buyer
immediately if any person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
Section 7.19 Surety Bonds.
(a) After the Closing, the Buyer shall, and shall cause Dykeer,
Cambridge, Kingsvale, Waccabuc, Wild Oaks, ECRWC, or, with respect to the
Integrated Assets, Operations or Utility, to use all commercially reasonable
efforts to recover and replace those surety bonds listed in Exhibit 7.19(a) and
to have such surety bonds returned to the Seller within ninety (90) calendar
days of the Closing Date.
(b) The Buyer expressly acknowledges that, after the Closing, the
Seller may cancel those surety bonds listed in Exhibit 7.19(b) without notice to
the Buyer, subject to the terms of the applicable bond documents.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Closing.
The respective obligations of each Party to effect the Closing shall be subject
to the satisfaction on or prior to the Closing Date of the following conditions,
except, to the extent permitted by applicable law, that such conditions may be
waived in writing pursuant to Section 10.3 by the joint action of the Parties
hereto:
46
(a) No Injunction. No application for a temporary restraining order or
preliminary or permanent injunction or other order by any federal or state court
preventing consummation of the transactions contemplated hereby shall have been
applied or petitioned for and not dismissed with prejudice, and the transactions
contemplated hereby shall not have been prohibited under any applicable federal
or state law or regulation.
(b) Statutory Approvals. The Seller Required Statutory Approvals and
the Buyer Required Statutory Approvals shall have been obtained at or prior to
the Closing Date, such approvals shall have become Final Orders (as defined
below) and such Final Orders shall not, individually or in the aggregate, impose
terms or conditions (other than the preclusion of recovery of an acquisition
premium) which would have a material adverse effect on the business, operations,
properties, assets, financial condition, or results of operations of the Company
and the Buyer taken as a whole. 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,
as to which all conditions to the consummation of such transactions prescribed
by law, regulation or order have been satisfied and having any applicable
appeals period expire without any appeal being filed, or if such an appeal is
filed, such appeal is fully and finally dismissed without the opportunity for
further appeal.
(c) AquaSource Closing. The closing contemplated by the AquaSource
Purchase Agreement shall have occurred.
Section 8.2 Conditions to Obligation of the Buyer to Effect the Closing.
The obligation of the Buyer to effect the Closing 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 Buyer in writing pursuant to Section 10.3:
(a) Performance of Obligations of the Seller. The Seller and/or the
Company will have performed in all material respects its agreements and
covenants contained in or contemplated by this Agreement which are required to
be performed by it at or prior to the Closing Date.
(b) Representations and Warranties of the Seller. The representations
and warranties of the Seller set forth in this Agreement shall be true and
correct (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 (except for representations and warranties that
expressly speak only as of a specific date or time which need only be true and
correct as of such date or time) except in each of cases (i) and (ii) for such
failures of representations or warranties to be true and correct (without giving
effect to any materiality qualification or standard contained in any such
representations and warranties) which would not result in a Company Material
Adverse Effect.
(c) Closing Certificate of the Seller. The Buyer shall have received a
certificate signed by a duly authorized officer of the Seller, dated as of 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.
47
(d) Material Adverse Effect on the Company. There shall exist no facts
or circumstances that would result in a material adverse effect on the business,
assets, financial condition or results of operations of the Company totaling, in
the aggregate, $450,000 or more other than those facts or circumstances which
result from (i) any change in law, rule, or regulation of any Governmental
Authority that applies generally to similarly situated Persons, or (ii) general
changes in the industries in which the Company operates its assets or conducts
its businesses.
(e) Seller Required Consents. The Seller Required Consents, the
failure of which to obtain would have a Company Material Adverse Effect, shall
have been obtained.
(f) Intercompany Debt. There shall be no intercompany indebtedness on
the balance sheet of the Company.
(g) Expenditures. If the aggregate amount of all of the expenditures
listed in Section 6.1(c)(iii)(B), Section 6.1(c)(iii)(D), or Section 6.1(c)(iv)
exceed $250,000. Section 8.3 Conditions to Obligation of the Seller to Effect
the Closing. The obligation of the Seller to effect the Closing 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 Seller in writing pursuant to Section
10.3:
(a) Performance of Obligations of the Buyer. The Buyer will have
performed in all material respects its agreements and covenants contained in or
contemplated by this Agreement which are required to be performed by it at or
prior to the Closing Date.
(b) Representations and Warranties of the Buyer. The representations
and warranties of the Buyer set forth in this Agreement shall be true and
correct (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 (except for representations and warranties that
expressly speak only as of a specific date or time which need only be true and
correct as of such date or time) except in each of cases (i) and (ii) for such
failures of representations or warranties to be true and correct (without giving
effect to any materiality qualification or standard contained in any such
representations and warranties) which would not result in a Buyer Material
Adverse Effect.
(c) Closing Certificates of the Buyer. The Seller shall have received
a certificate signed by a duly authorized officer of the Buyer, dated as of 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.
(d) Buyer Material Adverse Effect. No Buyer Material Adverse Effect
shall have occurred and there shall exist no fact or circumstance that would
result in a material adverse effect on the business, assets, financial condition
or results of operations of the Buyer totaling, in the aggregate, $450,000 or
more other than those facts or circumstances which result from (i) any change in
law, rule, or regulation of any Governmental Authority that applies generally to
similarly situated Persons, or (ii) general changes in the industries in which
the Buyer operates its assets or conducts its business.
48
(e) Buyer Required Consents. The Buyer Required Consents, the failure
of which to obtain would have a Buyer Material Adverse Effect, shall have been
obtained.
ARTICLE IX
TERMINATION
Section 9.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by mutual written consent of the Seller and the Buyer;
(b) by the Buyer or the Seller, if any state or federal 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
Closing, or by the Buyer or the Seller, if any court of competent jurisdiction
in the United States or any state shall have issued an order, judgment or decree
permanently restraining, enjoining or otherwise prohibiting the Closing, and, in
either case, if such order, rule, regulation, judgment or decree shall have
become final and nonappealable;
(c) by the Buyer or the Seller, by written notice to the other Party,
if the Closing Date shall not have occurred on or before December 31, 2003 (the
"Initial Termination Date"); provided, however, that the right to terminate this
Agreement under this Section 9.1 shall not be available to any Party whose
failure (or whose Affiliate's failure) to fulfill any obligation under this
Agreement shall have proximately caused the failure of the Closing Date 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(b),
8.1(c), 8.2(e), and/or 8.3(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 March 31,
2004;
(d) by the Buyer, by written notice to the Seller, if there shall have
been any breach or breaches of any representations or warranties, or any breach
or breaches of any covenants or agreements of the Seller hereunder, which breach
or breaches would, taken together, result in a material adverse effect on the
business, assets, financial condition or results of operations of the Company
totaling, in the aggregate, $450,000 or more except for those breaches resulting
from (i) any change in law, rule, or regulation of any Governmental Authority
that applies generally to similarly situated Persons, or (ii) general changes in
the industries in which the Company operates its assets or conducts its
businesses, and such breach or breaches shall not have been remedied within
thirty (30) calendar days after receipt by the Seller of notice in writing from
the Buyer, specifying the nature of such breach or breaches and requesting that
it or they be remedied, or the Buyer shall not have received adequate assurance
of a cure of such breach or breaches within such thirty (30) calendar day
period;
(e) by the Seller, by written notice to the Buyer, if there shall have
been any breach or breaches of any representations or warranties, or any breach
or breaches of any covenants or agreements of the Buyer hereunder, which breach
or breaches would, taken together, result in a material adverse effect on the
business, assets, financial condition or results of operations of the Buyer
totaling, in the aggregate, $450,000 or more except for those breaches
49
resulting from (i) any change in law, rule, or regulation of any Governmental
Authority that applies generally to similarly situated Persons; or (ii) general
changes in the industries in which the Company operates its assets or conducts
its businesses; and such breach or breaches shall not have been remedied within
thirty (30) calendar days after receipt by the Buyer of notice in writing from
the Seller, specifying the nature of such breach or breaches and requesting that
it or they be remedied, or the Seller shall not have received adequate assurance
of a cure of such breach or breaches within such thirty (30) calendar day
period; or
(f) by the Buyer if the Seller Disclosure Schedule is updated so as to
disclose additional liabilities (contingent or otherwise) or obligations of the
Company or understatements of value of assets that, in the aggregate, exceed
$400,000 (except for those liabilities or obligations resulting from (i) any
change in law, rule, or regulation of any Governmental Authority that applies
generally to similarly situated Persons; or (ii) general changes in the
industries in which the Company operates its assets or conducts its businesses;
or
(g) by the Buyer if the aggregate amount of all expenditures listed in
Section 6.1(c)(iii)(B), Section 6.1(c)(iii)(D), or Section 6.1(c)(iv) exceeds
$250,000.
Section 9.2 Effect of Termination. In the event of termination of this
Agreement by either the Seller or the Buyer pursuant to Section 9.1 there shall
be no liability on the part of either the Seller or the Buyer or their
respective officers or directors hereunder, except (a) for fraud or for willful
breach of this Agreement prior to such termination or abandonment of the
transactions and (b) that Sections 10.2, 10.4, 10.8, 10.9, 10.10, 10.13, and the
agreement contained in the last sentence of Section 7.1(a) shall survive the
termination.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival of Obligations. The representations and warranties of
the Parties contained in this Agreement shall survive the Closing until the
second (2nd) anniversary of the Closing Date. None of the covenants, obligations
or agreements of the Parties contained in this Agreement or in any instrument,
certificate, opinion or other writing provided for herein, shall survive the
Closing; provided, however, that, notwithstanding the foregoing, the covenants
of the Seller and the Buyer contained in Sections 7.4, 7.5, 7.6, 7.7, 7.8, 7.9,
7.10, 7.11, 7.12, 7.13, 7.15, 7.16, 7.17, and 7.19, and the last sentence of
Section 7.1(a) and all of Articles IV and X shall survive the Closing.
Section 10.2 Amendment and Modification. This Agreement may be amended,
modified and supplemented in any and all respects, but only by a written
instrument signed by each of the Parties hereto expressly stating that such
instrument is intended to amend, modify or supplement this Agreement.
Section 10.3 Extension; Waiver. Any failure of any of the Parties to comply
with any obligation, covenant, agreement or condition herein, and any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and any time for the performance of any of
the obligations or other acts of a Party hereto, may be waived or extended, as
the case may be, but only pursuant to a written instrument signed by all
50
Parties entitled to the benefits thereof; provided, however, that any such
waiver or extension of such obligation, covenant, agreement or condition, or
inaccuracy, shall not operate as a waiver of, or estoppel with respect to, any
subsequent failure to comply therewith. The failure of any Party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
Section 10.4 Expenses. 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 10.5 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given (a) when delivered personally, (b) upon
delivery by reputable overnight courier service, or (c) when telecopied (which
is confirmed by copy sent within one (1) business day by a reputable overnight
courier service) to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like notice):
(i) If to the Seller, to
Philadelphia Suburban Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Chairman, President and Chief Executive Officer
with a copy to
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
3400 Two ▇▇▇▇▇ Square
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(ii) if to Buyer, to
Birmingham Utilities, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
51
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
with a copy to
▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(iii) if to H2O, to
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ Services Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
with a copy to
▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Section 10.6 Entire Agreement; No Third Party Beneficiaries. This Agreement,
including the Schedules and Exhibits attached hereto, the Confidentiality
Agreements, and the Environmental Whitepaper (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the Seller and the Buyer with respect to the subject matter hereof and
thereof and (b) are not intended to confer any rights or remedies hereunder upon
any Person other than the Parties hereto and thereto, Seller Indemnitees to the
extent set forth in Section 7.4 and Buyer Indemnitees to the extent set forth in
Article IV.
52
Section 10.7 Severability. Any term or provision of this Agreement that is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the Parties agree that the court
making such determination shall have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
Section 10.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without giving effect to the principles of conflicts of law thereof.
Section 10.9 Venue. EACH OF THE PARTIES HERETO (A) CONSENTS TO SUBMIT
ITSELF TO THE EXCLUSIVE PERSONAL JURISDICTION OF ANY FEDERAL COURT LOCATED IN
AND FOR PHILADELPHIA, PENNSYLVANIA IN THE EVENT ANY DISPUTE ARISES OUT OF THIS
AGREEMENT, (B) AGREES THAT IT SHALL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL
JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT, AND (C)
AGREES THAT IT SHALL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT IN ANY
COURT OTHER THAN A FEDERAL COURT SITTING IN AND FOR PHILADELPHIA, PENNSYLVANIA.
Section 10.10 Waiver of Jury Trial and Certain Damages. EACH PARTY TO THIS
AGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, (A) 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 (B) ANY RIGHT IT MAY
HAVE TO RECEIVE DAMAGES FROM THE OTHER PARTY BASED ON ANY THEORY OF LIABILITY
FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL (INCLUDING LOST PROFITS) DAMAGES.
The Parties agree that the aggregate liability of the Seller arising out of or
relating to this Agreement or the transactions contemplated herein shall in no
event exceed the Purchase Price.
Section 10.11 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any Party hereto
(whether by operation of law or otherwise) without the prior written consent of
the other Party; provided, however, that any Party may assign this Agreement,
without the consent of the assigning Parties, to the assigning Party's successor
as a result of a change in control of the assigning Party, a consolidation of
the assigning Party with or into another entity, a sale of all or substantially
all of the assets of the assigning Party, or a merger of the assigning Party
with or into another entity, in any case whether or not the assigning Party is
the surviving entity; provided that no such assignment shall relieve the
assignor of its obligations or liabilities hereunder.
53
Section 10.12 Interpretation. When a reference is made in this Agreement to
Articles or Sections, such reference shall be to an Article or Section of this
Agreement, respectively, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
Section 10.13 No Specific Enforcement. Except with respect to the
obligations set forth in the last sentence of Section 7.1(a) and all of Sections
2.2(a)(i), 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12, 7.14, 7.15, 7.16,
7.17, 7.18, 9.2, 10.1, 10.4, 10.7, 10.8, 10.9, 10.10, 10.11, and Article IV, the
Parties agree that in the event of a breach of this Agreement, the Parties shall
not be entitled to specific performance of the terms hereof.
Section 10.14 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.
IN WITNESS WHEREOF, each of the Seller and Buyer has caused this
Agreement to be signed by a duly authorized officer as of the date first written
above.
PHILADELPHIA SUBURBAN CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
BIRMINGHAM UTILITIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ SERVICES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
54
Exhibit 1.2(a)
Calculation of New York Operations Purchase Price
-------------------------------------------------
Purchase Price for:
(1) Dykeer Shares [ ] *
------------------
(2) Cambridge Shares [ ] *
------------------
(3) Kingsvale Shares [ ] *
------------------
(4) Waccabuc Shares [ ] *
------------------
(5) Wild Oaks Shares [ ] *
------------------
Line 1 Subtotal $1,000,000
Working Capital Adjustment TBD
Rate Base Adjustment TBD
Assumption of Third-Party Debt $756,200
------------------
TOTAL
* To be determined on or prior to the Closing Date
Exhibit 1.2(b)
Calculation of Connecticut Operations Purchase Price
(Excluding the CN Unregulated Assets Purchase Price)
----------------------------------------------------
Purchase Price for:
(1) ECRWC Shares [ ] *
------------------
(2) CN Regulated Assets** [ ] *
------------------
Line 1 Subtotal $3,500,000
Working Capital Adjustment TBD
Rate Base Adjustment TBD
------------------
TOTAL
* To be determined on or prior to the Closing Date
** Includes the following two (2) systems: (1) Westchester Village Mobile Home
Park in Colchester, and (2) Westchester East Mobile Park in East Hampton.
Exhibit 2.2(a)(ii)(A)
▇▇▇▇ of Sale
------------
THIS ▇▇▇▇ OF SALE, is made as of the __ day of ____, 2003 by
AquaSource Operations, Inc., a Delaware corporation (the "Seller"), for the
benefit of Birmingham Utilities, Inc, a Connecticut corporation (the "Buyer").
W I T N E S S E T H
WHEREAS, pursuant to that certain Purchase Agreement dated May _____,
2003 (as amended, supplemented or otherwise modified from time to time, the
"Purchase Agreement"), by and between Philadelphia Suburban Corporation and the
Buyer, Philadelphia Suburban Corporation has agreed to cause the Seller to
convey all the Integrated Assets (as defined in the Purchase Agreement) listed
on Schedule 1.1 of the Purchase Agreement, and attached hereto as Exhibit A; and
WHEREAS, pursuant to the Purchase Agreement, the Seller is required to
execute and deliver this ▇▇▇▇ of Sale in order to effectuate the assignment,
conveyance, transfer and delivery of the Integrated Assets to the Buyer.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the Parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms which are used but not defined in
this ▇▇▇▇ of Sale shall have the meaning ascribed to such terms in the
Purchase Agreement.
2. Assignment. The Seller does hereby assign, convey, transfer and
deliver to the Buyer, all of the Seller's right, title and interest in
and to all of the Integrated Assets.
3. Binding Effect. This ▇▇▇▇ of Sale and all of the provisions hereof
shall be binding upon the Seller and its successors and permitted
assigns and shall inure to the benefit of the Buyer, and its
successors and permitted assigns.
4. Governing Law. This ▇▇▇▇ of Sale shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania (without
giving effect to conflict of law principles).
5. Construction. This ▇▇▇▇ of Sale is delivered pursuant to and is
subject to the Purchase Agreement. In the event of any conflict
between the terms of the Purchase Agreement and terms of this ▇▇▇▇ of
Sale, the terms of the Purchase Agreement shall prevail.
1
IN WITNESS WHEREOF, this ▇▇▇▇ of Sale has been duly executed and
delivered by the duly authorized officer of the Seller hereto as of the date
first above written.
ATTEST: AQUASOURCE OPERATIONS, INC.
By: By:
--------------------------------- ---------------------------------
Name: Name:
------------------------------- -------------------------------
Title: Title:
------------------------------ ------------------------------
2
Exhibit A
Integrated Assets
3
COMMONWEALTH OF PENNSYLVANIA )
) SS
COUNTY OF ALLEGHENY )
____________________________, being duly sworn, says that he or she is the
___________________________ of Philadelphia Suburban Corporation, a Pennsylvania
corporation, the corporation which has executed the forgoing instrument, and
acknowledged that he or she did sign said instrument on behalf of said
corporation and by authority of its Board of Directors, and that said instrument
is his or her free act and deed as such officer and the free corporate act of
the corporation.
----------------------------
Sworn to before me and subscribed in my presence this ___ day of
___________, 200__.
----------------------------
Notary Public
Exhibit 2.2(a)(ii)(B)
Assignment and Assumption Agreement
-----------------------------------
ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of ______ ___, 2003 (the
"Assignment Agreement") by and between AquaSource Operations, Inc., a Delaware
corporation (the "Seller"), and Birmingham Utilities, Inc., a Connecticut
corporation (the "Buyer"). The Seller and the Buyer are referred to individually
as a "Party," and collectively as the "Parties."
W I T N E S S E T H :
WHEREAS, Philadelphia Suburban Corporation and the Buyer are Parties to
that certain Purchase Agreement, dated as of May ___, 2003 (the "Purchase
Agreement");
WHEREAS, pursuant to the Purchase Agreement, the Buyer has agreed to assume
certain Integrated Liabilities (as defined in the Purchase Agreement); and
WHEREAS, it is the intention of the Parties that by the execution and
delivery of this Assignment Agreement, Philadelphia Suburban Corporation shall
cause the Seller to assign to the Buyer its ownership rights and interests in
and to, and the Buyer will assume and agree to discharge when due, without
recourse to the Seller.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Seller and the Buyer hereby agree as follows:
1. Capitalized terms which are used in this Assignment Agreement but are
not defined herein shall have the meaning ascribed to such terms in
the Purchase Agreement.
2. The Seller hereby assigns, conveys, transfers and sets over to the
Buyer all of the Integrated Liabilities.
3. The Buyer hereby assumes and agrees to discharge when due, without
recourse to the Seller, all liabilities and obligations of the Seller
constituting the Integrated Liabilities.
4. Nothing in this Assignment Agreement, express or implied, is intended
or shall be construed to confer upon or give to any Person, other than
the Buyer or the Seller, as the case may be, their respective
successors and assigns, any remedy or claim under or by reason of this
instrument or any term, covenant or condition hereof, and all of the
terms, covenants, conditions, promises and agreements in this
Assignment Agreement shall be for the sole and exclusive benefit of
the Buyer or the Seller, as the case may be, and their respective
successors and assigns.
5. Neither the making nor the acceptance of this Assignment Agreement
shall enlarge, restrict or otherwise modify the terms of the Purchase
Agreement or constitute a waiver or release by the Seller or the Buyer
of any liabilities, duties or obligations imposed upon either of them
by the terms of the Purchase Agreement, including, without limitation,
the representations
and warranties and other provisions which the Purchase Agreement
provides shall survive the date hereof.
6. In the event that any provision of this Assignment Agreement be
construed to conflict with a provision of the Purchase Agreement, the
provision in the Purchase Agreement shall be deemed controlling.
7. This Assignment Agreement shall bind and shall inure to the benefit of
the respective Parties and their assigns, transferees and successors.
8. This Assignment Agreement shall be construed and enforced in
accordance with the laws (other than the conflict of law rules) of the
Commonwealth of Pennsylvania.
9. This Assignment Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Assignment Agreement
as of the date first above written.
AQUASOURCE OPERATIONS, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
BIRMINGHAM UTILITIES, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Exhibit 7.19(a)
Surety Bonds to be Recovered or Replaced by the Buyer*
------------------------------------------------------
Principal Bond No. Amount Premium Eff. Date Exp. Date Obligee
--------- -------- ------ ------- --------- --------- -------
AquaSource Operations, Inc. 929 256 535 $ 289,500 $1,737 10/11/02 ▇▇/▇▇/▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇
AquaSource Operations, Inc. 929 256 563 $ 5,000 $ 50 02/12/03 ▇▇/▇▇/▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇
AquaSource Services, LP 929 202 412 $ 2,000 $ 50 08/13/01 ▇▇/▇▇/▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇
AquaSource Services, LP 929 238 036 $ 232,500 $ 698 05/28/02 12/28/02 Regional School District No.8, CT
AquaSource Services, LP ▇▇▇ ▇▇▇ ▇▇▇ $ 518,400 $1,555 09/24/02 03/24/03 Town of Colchester Water & Sewer Comm, CT
Associated Water Service 929 118 003 $ 5,000 $ 50 12/17/99 12/17/03 State of Connecticut
---------- ------
TOTAL AQUASOURCE BONDS: $1,052,400 $4,140
Description Type
----------- ----
AquaSource Operations, Inc. Contract Contract
AquaSource Operations, Inc. License/Permit Commercial
AquaSource Services, LP Permit Commercial
AquaSource Services, LP Contract Commercial
AquaSource Services, LP Contract Contract
Associated Water Service Permit Commercial
* Bonds set forth herein are Integrated Liabilities, regardless of the name
in which held.
Exhibit 7.19(b)
Surety Bonds to be Cancelled by the Seller
------------------------------------------
None