EXHIBIT C(1)
GOVERNANCE AGREEMENT
between
United Water Resources Inc.,
a New Jersey corporation
and
Lyonnaise American Holding, Inc.,
a Delaware corporation
Dated as of April 22, 1994
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.1. Definitions III-1
ARTICLE II REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of UWR III-5
Section 2.2. Representations and Warranties of the Stockholder III-5
ARTICLE III STOCKHOLDER AND UWR CONDUCT
Section 3.1. Acquisition of UWR Securities III-6
Section 3.2. Restrictions on Transfer III-7
Section 3.3. Further Restrictions on Stockholder Conduct III-8
Section 3.4. Rights Agreement III-9
Section 3.5. Business of UWR III-9
Section 3.6. Publicity III-10
Section 3.7. Conversion of Preference Stock III-10
ARTICLE IV VOTING AND BOARD REPRESENTATION
Section 4.1. Voting III-11
Section 4.2. Directors Designated by the Stockholder III-11
Section 4.3. Resignation of Stockholder Nominees and Stockholder
Advisory Director III-13
ARTICLE V FUTURE PURCHASE RIGHTS
Section 5.1. UWR Right of First Refusal III-13
Section 5.2. Notice of Future Issuances III-14
Section 5.3. Stockholder Purchase Right III-14
ARTICLE VI RELEASE EVENTS
Section 6.1. Release Events III-15
Section 6.2. Release of Stockholder III-16
ARTICLE VII TERMINATION
Section 7.1. Termination III-17
ARTICLE VIII MISCELLANEOUS
Section 8.1. Entire Agreement; Amendments III-17
Section 8.2. Severability III-17
Section 8.3. Specific Performance III-18
Section 8.4. Counterparts III-18
Section 8.5. Notices and Service of Process III-18
Section 8.6. Waivers III-19
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Page
Section 8.7. Submission to Jurisdiction;
Consent to Service of Process III-19
Section 8.8. Headings III-19
Section 8.9. Successors and Assigns III-19
Section 8.10. Governing Law III-19
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GOVERNANCE AGREEMENT dated as of April 22, 1994 (this "Agreement"), between
United Water Resources Inc., a New Jersey corporation ("UWR"), and Lyonnaise
American Holding, Inc., a Delaware corporation (the "Stockholder").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of UWR and GWC Corporation, a
Delaware corporation ("GWC"), have approved the merger (the "Merger") of GWC
with and into UWR;
WHEREAS, UWR and GWC have entered into a Merger Agreement, dated as of September
15, 1993 (the "Merger Agreement"), pursuant to which the Stockholder will
acquire in the Merger Beneficial Ownership (as defined in Article I hereof) of
up to 7,645,944 shares of Common Stock, without par value, of UWR and up to
3,263,976 shares of 5% Cumulative Convertible Preference Stock, without par
value, of UWR, in exchange for all of the common stock, par value $.01 per
share, of GWC (the "GWC Common Stock") owned by the Stockholder;
WHEREAS, Lyonnaise des Eaux-▇▇▇▇▇ ("Lyonnaise"), the parent company of the
Stockholder, is one of the largest water companies in France and has pursued a
policy of strategic investment in water companies throughout the world, and in
particular in its investment in GWC;
WHEREAS, UWR is one of the largest water companies in the United States and,
after the Merger, the combined company would be the second largest investor
owned water company in the United States based on market capitalization;
WHEREAS, Lyonnaise supports the Merger and desires to preserve its investment
in UWR after the consummation of the Merger; and
WHEREAS, UWR and the Stockholder desire, and Lyonnaise desires the Stockholder,
to establish in this Agreement certain terms and conditions concerning the
acquisition and disposition of securities of UWR by the Stockholder, and related
provisions concerning the Stockholder's relationship with and investment in UWR.
NOW, THEREFORE, in consideration of the premises representations, warranties
and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
"Beneficially Own" or "Beneficial Ownership" with respect to any securities
shall mean having "beneficial ownership" of such securities, (as determined
pursuant to Rule 13d-3 under the Exchange Act).
"Clearly Credible Tender Offer" shall mean any offer, tender offer or exchange
offer that is subject to Section 14 of the Exchange Act, other than any such
offer, tender offer or exchange offer with respect to which (i) the Board of
Directors of UWR is advised in writing by outside counsel of recognized standing
that the consummation of such offer, tender offer or exchange offer would be in
violation of
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applicable United States law, or (ii) the Board of Directors of UWR is advised
in writing by an independent investment banking firm of national standing that
the offeror does not have the financial capacity (including without limitation
the financial capacity to borrow) to consummate such offer, tender offer or
exchange offer.
"Closing" shall have the meaning specified in the Merger Agreement.
"Commission" shall mean the United States Securities and Exchange Commission.
"Common Stock" shall mean the Common Stock, without par value, of UWR, or any
successor thereof.
"Common Stock Equivalent" shall mean (a) shares of any class of capital stock,
other than Common Stock, of UWR which are then entitled to vote generally in the
election of directors and (b) any warrant, option, convertible security or other
similar right to acquire the Common Stock or shares of any other class of
capital stock of UWR which are then entitled to vote generally in the election
of directors.
"Compliance Certificate" shall have the meaning set forth in Section 3.5(b) of
this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" for the Common Stock or any Common Stock Equivalent (other
than the Preference Stock), as the case may be, shall mean the average of the
daily closing prices per share of such security for the 30 Trading Days
immediately prior to the date on which such value is being determined;
provided,however, that in the event that the current per share market price of
such security is determined during a period following the announcement by UWR of
(a) a dividend or distribution on such security payable in shares of such
security or securities convertible into such shares, or (b) any subdivision,
combination or reclassification of such security and prior to the expiration of
30 Trading Days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the current per share market price shall be appropriately
adjusted to take into account ex-dividend trading. The closing price for each
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if such security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such security is listed or admitted to trading or,
if such security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System or
such other system then in use, or, if on any such date such security is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in such security
selected by a majority of the Board of Directors of UWR or, if on any such date
no market maker is making a market in such security, the fair value as
determined in good faith by a majority of the Board of Directors of UWR based
upon the opinion of an independent investment banking firm of recognized
standing.
"GWC Common Stock" shall have the meaning set forth in the second recital of
this Agreement.
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"Independent Director" shall mean any person who is not a Stockholder Nominee
and is independent of and otherwise unaffiliated with any member of the
Stockholder Group, and shall not be an officer, employee, consultant or advisor
(financial, legal or other) of any member of the Stockholder Group or have
served in any such capacity in the previous five (5) years.
"Lyonnaise Affiliate" shall mean any Person (a) more than 50% of any class of
the outstanding voting securities of which is owned, directly or indirectly, by
Lyonnaise and/or one or more Affiliates of Lyonnaise, or (b) over which
Lyonnaise is otherwise able to exert actual control; provided, however, that,
for purposes of clause (b) of this definition, actual control shall be
determined solely based on whether Lyonnaise has in fact the ability to direct
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, but shall
not be presumed based on any level or ownership of assets or securities of the
other Person or from the fact that Lyonnaise has representation on the board of
directors of such Person (unless Lyonnaise has sufficient board representation,
directly or indirectly, to actually control the outcome of any vote of such
board of directors solely as a result of Lyonnaise's representation thereon).
"Maximum Stockholder Investment Percentage" shall mean the greater of (i)
Stockholder Investment Percentage at the time immediately succeeding the
Closing, or (ii) 33%, subject to adjustment upward pursuant to Section 3.1(c),
provided, however, if at any time the Stockholder Investment Percentage shall be
decreased by reason of (a) any Transfer by any member of the Stockholder Group
of Common Stock Beneficially Owned by any member of the Stockholder Group or (b)
any failure of the Stockholder to purchase Common Stock or a Common Stock
Equivalent pursuant to Section 5.3 (a) or (b) of this Agreement, then the
Maximum Stockholder Investment Percentage shall be reduced by an amount equal to
the amount the Stockholder Investment Percentage is reduced as a result of such
Transfer or failure of the Stockholder to purchase Common Stock or a Common
Stock Equivalent pursuant to Section 5.3(a) or (b) of this Agreement.
"Merger" shall have the meaning set forth in the first recital of this
Agreement.
"Merger Agreement" shall have the meaning set forth in the second recital of
this Agreement.
"Person" shall mean any individual, partnership, joint venture, corporation,
trust, unincorporated organization, government or department or agency of a
government.
"Preference Stock" shall mean the 5.0% Cumulative Convertible Preference Stock,
without par value, of UWR.
"Registration Rights" shall mean the rights and obligations of the Stockholder
Group and the corresponding rights and obligations of UWR set forth in Exhibit A
to this Agreement.
"Release Event" shall have the meaning set forth in Section 6.1 of this
Agreement.
"Rights Agreement" shall mean the Rights Agreement, dated as of July 12, 1989,
as amended as of September 15, 1993, and as such agreement may be further
amended from time to time, between UWR and First Interstate Bank, Ltd., as
Rights Agent.
"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Standstill Termination Date" shall mean the date specified by the Stockholder
in its notice to UWR pursuant to Section 6.2(c) of this Agreement or the date
fixed by operation of Section 6.2(e) of this Agreement.
"Stockholder Affiliate" shall mean any Person (a) more than 50% of any class of
the outstanding voting securities of which is owned, directly or indirectly, by
the Stockholder and/or one or more Stockholder Affiliates, or (b) over which the
Stockholder is otherwise able to exert actual control; provided, however, that,
for purposes of clause (b) of this definition, actual control shall be
determined solely based on whether the Stockholder has in fact the ability to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
but shall not be presumed based on any level of ownership of assets or
securities of the other Person or from the fact that the Stockholder has
representation on the board of directors of such Person (unless the Stockholder
has sufficient board representation, directly or indirectly, to actually control
the outcome of any vote of such board of directors solely as a result of the
Stockholder's representation thereon).
"Stockholder Group" shall mean Lyonnaise, the Stockholder, any Stockholder
Affiliate and any Lyonnaise Affiliate.
"Stockholder Investment Percentage" shall refer to the holdings of the
Stockholder Group and shall mean, calculated at a given point in time, the ratio
of (i) the sum of (a) the shares of Common Stock Beneficially Owned by the
Stockholder Group and (b) the shares of Common Stock into which the Common Stock
Equivalents Beneficially Owned by the Stockholder Group would then be
convertible or exchangeable, assuming all such Common Stock Equivalents were
immediately convertible or exchangeable, to (ii) the sum of (a) all shares of
Common Stock then outstanding and (b) the shares of Common Stock into which all
Common Stock Equivalents then outstanding would then be convertible or
exchangeable, assuming all such Common Stock Equivalents were immediately
convertible or exchangeable, expressed as a percentage.
"Stockholder Nominee" shall have the meaning set forth in Section 4.2(b) of this
Agreement.
"Third Party Offer" shall have the meaning set forth in Section 3.1 of this
Agreement.
"13D Group" shall mean any group of Persons acquiring, holding, voting or
disposing of any Common Stock or Common Stock Equivalent which would be required
under Section 13(d) of the Exchange Act and the rules and regulations thereunder
to file a statement on Schedule 13D with the Commission as a "person" within the
meaning of Section 13(d)(3) of the Exchange Act.
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Common Stock or any Common Stock Equivalent, as the case
may be, is listed or admitted to trading is open for the transaction of business
or, if such security is not listed or admitted to trading on any national
securities exchange, any day other than a Saturday, Sunday or a day on which
banking institutions in New York or New Jersey are authorized or obligated to
close.
"Transfer" shall mean any sale, transfer, pledge, encumbrance or other
disposition to any Person other than any member of the Stockholder Group, and to
"Transfer" shall mean to sell, transfer, pledge, encumber or otherwise dispose
of to any Person other than any member of the Stockholder Group.
"Unrelated Business" shall have the meaning set forth in Section 3.5(a) of this
Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of UWR. UWR represents and warrants
to the Stockholder as of the date hereof as follows:
(a) UWR has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of New Jersey and has corporate power
and authority to enter into this Agreement and to carry out its obligations
hereunder.
(b) This Agreement has been duly and validly authorized by UWR and all necessary
and appropriate action has been taken by UWR to execute and deliver this
Agreement and to perform its obligations hereunder.
(c) This Agreement has been duly executed and delivered by UWR and assuming due
authorization and valid execution and delivery by the Stockholder, this
Agreement is a valid and binding obligation of UWR, enforceable in accordance
with its terms.
Section 2.2. Representations and Warranties of the Stockholder. The Stockholder
represents and warrants to UWR as of the date hereof as follows:
(a) The Stockholder has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and has
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder.
(b) This Agreement has been duly and validly authorized by the Stockholder and
all necessary and appropriate action has been taken by the Stockholder to
execute and deliver this Agreement and to perform its obligations hereunder.
(c) This Agreement has been duly executed and delivered by the Stockholder and
assuming due authorization and valid execution and delivery by UWR, this
Agreement is a valid and binding obligation of the Stockholder, enforceable in
accordance with its terms.
(d) As of the date of this Agreement, the Stockholder Group Beneficially Owns *
shares of GWC Common Stock and does not Beneficially Own any warrant, option,
convertible security or other similar right to acquire GWC Common Stock or
shares of any other class of capital stock of GWC which are then entitled to
vote generally in the election of directors.
(e) As of the date of this Agreement, the Stockholder Group does not
Beneficially Own any shares of Common Stock or Common Stock Equivalents (other
than shares of Common Stock or Common Stock Equivalents that were acquired by
the Stockholder in the Merger).
* To insert number of shares owned by the Stockholder Group as of the date of
execution of this Agreement.
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ARTICLE III
STOCKHOLDER AND UWR CONDUCT
Section 3.1. Acquisition of UWR Securities. (a) Subject to the provisions of
this Section 3.1(a) and Sections 3.1(b) and (c), prior to the Standstill
Termination Date the Stockholder agrees with UWR that, without the prior
approval of a majority of the Board of Directors of UWR at a duly convened
meeting thereof or of all of UWR's directors by written consent thereto, the
Stockholder will not, and will cause each Stockholder Affiliate not to, singly
or as part of a partnership, limited partnership, syndicate or other 13D Group,
directly or indirectly, (i) acquire Beneficial Ownership of any Common Stock or
Common Stock Equivalent (other than pursuant to (A) the Merger Agreement, (B)
the conversion of the Preference Stock into Common Stock, (C) the acquisition of
Common Stock pursuant to Section 5.3 hereof or (D) the receipt of any dividends
payable in Common Stock or Common Stock Equivalents) or (ii) commence an
unsolicited offer, tender offer or exchange offer for all or any portion of the
Common Stock or any class of Common Stock Equivalent not owned by the
Stockholder Group or any portion or all of the assets of UWR; provided, however,
that if (A) an offer, tender offer or exchange offer is made by any Person
(other than UWR, any member of the Stockholder Group, or any Person acting in
concert with any member of the Stockholder Group) to purchase outstanding shares
of Common Stock or any Common Stock Equivalent representing 25% or more of the
Common Stock or any class of Common Stock Equivalent, as the case may be, or 25%
or more of the consolidated assets of UWR (a "Third Party Offer") and such Third
Party Offer is not withdrawn or terminated prior to the time any member of the
Stockholder Group seeks to acquire the Beneficial Ownership of additional Common
Stock or any Common Stock Equivalent or commence an unsolicited offer, tender
offer or exchange offer for all or any portion of the Common Stock or any class
of Common Stock Equivalent not owned by the Stockholder Group or all or any
portion of the assets of UWR and (B) such member of the Stockholder Group shall
make a written request to the Board of Directors to waive the prohibitions
contained in this Section 3.1, then UWR may not agree to such Third Party Offer
without first waiving the prohibitions contained in this Section 3.1 at least 30
days prior to the date of any agreement by UWR to such Third Party Offer.
(b) If any such Third Party Offer is a Clearly Credible Tender Offer, then the
prohibitions contained in subsections (i) and (ii) of Section 3.1(a) shall not
apply from and after the 120th day following the date on which the Clearly
Credible Tender Offer is commenced (the "Initial 120-day Period"), if and only
if such Clearly Credible Tender Offer is not withdrawn within the Initial
120-day Period (the "Standstill Exception"). If such Clearly Credible Tender
Offer is not withdrawn within the Initial 120-day Period, then any member of the
Stockholder Group may commence an offer, tender offer or exchange offer for
Common Stock within 120 days after the Initial 120-day Period (the "Second
120-day Period") (a "Stockholder Offer"), and/or acquire Beneficial Ownership of
any Common Stock or Common Stock Equivalent if such member of the Stockholder
Group has a good faith intention to commence a Stockholder Offer within the
Second 120-day Period for such number of shares of Common Stock which, when
added together with any shares of Common Stock owned by the Stockholder Group,
would at least equal the minimum number of shares of Common Stock required to be
tendered into such Clearly Credible Tender Offer. If no member of the
Stockholder Group has commenced a Stockholder Offer by the end of the Second
120-day Period, then the Standstill Exception shall thereafter cease to be
applicable and any Common Stock or Common Stock Equivalents acquired by any
member of the Stockholder Group pursuant to the Standstill Exception shall be
subject to the provisions of Section 3.1(c). If any member of the Stockholder
Group commences a Stockholder Offer within the Second 120-day Period, then (i)
if the Clearly Credible Tender Offer is withdrawn within the Second 120-day
Period, the Stockholder Offer shall be withdrawn, the Standstill Exception shall
thereafter cease to be applicable and any Common Stock or Common Stock
Equivalents acquired by any member of the Stockholder Group pursuant to the
Standstill Exception shall be subject to the provisions of Section 3.1(c) and
UWR promptly shall reimburse the members of the Stockholder Group for any and
all costs and/or expenses of the members of the Stockholder
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Group incurred in commencing, pursuing and withdrawing the Stockholder Offer,
and (ii) if the Clearly Credible Tender Offer is not withdrawn within the Second
120-day Period, from and after the date on which the Stockholder Offer has been
outstanding for at least 120 days the Standstill Exception shall thereafter
apply to all members of the Stockholder Group for all purposes.
(c) If any member of the Stockholder Group has acquired Common Stock or Common
Stock Equivalents in accordance with Section 3.1(a) or (b) and the Standstill
Exception thereafter ceases to apply, then, only upon written notification by
UWR that is received by the Stockholder within thirty (30) days after the date
on which the Standstill Exception ceases to apply, the Maximum Stockholder
Investment Percentage shall be the Maximum Stockholder Investment Percentage in
effect at the close of business on the day before the first public announcement
of the Clearly Credible Tender Offer and the Stockholder shall, after
consultation with UWR, take any action consistent with subsection (d) below;
provided, however, that UWR hereby agrees that, upon any such notification, UWR
shall indemnify and hold harmless each member of the Stockholder Group from any
and all costs, damages, losses, liabilities and expenses incurred by such member
of the Stockholder Group as a result of taking the actions permitted by Section
3.1(a) or 3.1(b) (including without limitation any loss on the sale of the
Common Stock or Common Stock Equivalents and any liabilities incurred as a
result of the timing of such sale and/or the indemnification or reimbursement by
UWR pursuant to this Section 3.1). In the event UWR does not so notify the
Stockholder pursuant to the preceding sentence, the members of the Stockholder
Group shall be permitted to retain any Common Stock or Common Stock Equivalents
acquired in accordance with Section 3.1(a) or 3.1(b), the Maximum Stockholder
Investment Percentage shall be increased in order to reflect the ownership by
the Stockholder Group of such Common Stock and Common Stock Equivalents, and
such Common Stock and Common Stock Equivalents shall be subject to the terms of
this Agreement (including without limitation Section 3.2 and 5.1), and UWR shall
have no obligation to any member of the Stockholder Group for any costs,
damages, losses, liabilities and expenses incurred by such member of the
Stockholder Group as a result of taking the actions permitted by Section 3.1(a)
or 3.1(b) (including without limitation any loss on the sale of the Common Stock
or Common Stock Equivalents and any liabilities incurred as a result of the
timing of such sale and/or the indemnification or reimbursement by UWR pursuant
to this Section 3.1), other than to the extent provided in Section 3.1(b) above.
(d) If at any time the Stockholder becomes aware that the Stockholder Investment
Percentage exceeds the Maximum Stockholder Investment Percentage other than as
permitted pursuant to the terms of this Agreement, then the Stockholder shall,
or shall cause the Stockholder Affiliates to, consistent with the provisions of
Section 3.2 of this Agreement, promptly take all action necessary to reduce the
amount of Common Stock Beneficially Owned by the Stockholder Group to an amount
yielding a Stockholder Investment Percentage not greater than the Maximum
Stockholder Investment Percentage.
Section 3.2. Restrictions on Transfer. The Stockholder shall not Transfer, and
shall cause each Stockholder Affiliate not to Transfer, any Common Stock or
Common Stock Equivalent except for:
(a) Transfers of Common Stock or any Common Stock Equivalents in an underwritten
public offering where the member of the Stockholder Group and the representative
or representatives of the underwriters previously agree in writing with UWR that
all reasonable efforts to achieve a wide distribution of the Common Stock or
Common Stock Equivalents offered will be made.
(b) Transfers of Common Stock or any Common Stock Equivalent pursuant to Rule
144 or Rule 144A made to Persons from whom a certificate executed by an
executive officer of each such Person that such Person will not own or be part
of a 13D Group that will own 5% or more of the Common Stock or any class of
Common Stock Equivalent following such sale is obtained or, where in the
reasonable judgment of the member of the Stockholder Group or the underwriters
or placement agents it is impracticable to obtain such a certificate prior to
each of such Transfers from such a Person, obtaining a
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certificate from an executive officer of the member of the Stockholder Group or
the underwriters or placement agents that, to the best of its knowledge, such
sales will not be made to any 13D Group that will own 5% or more of the Common
Stock or any class of Common Stock Equivalent following such sale.
(c) Transfers of Common Stock or any Common Stock Equivalents to Persons from
whom a certificate executed by an executive officer of such Person is obtained
prior to each such Transfer that each such Person will not own, or be part of a
13D Group that will own, 5% or more of the Common Stock or any class of Common
Stock Equivalent following such sale.
(d) Transfers of Common Stock or any Common Stock Equivalent pursuant to (i) any
offer made by any member of the Stockholder Group that is permitted under
Section 3.1(a) of this Agreement, (ii) any offer made by UWR or any of its
affiliates, or (iii) any Clearly Credible Tender Offer to acquire shares of
Common Stock or any Common Stock Equivalent; provided, however, that members of
the Stockholder Group may only Transfer Common Stock or Common Stock Equivalents
pursuant to clause (iii) of this subsection (d) from and after the time that the
regulatory and shareholder approvals and other similar principal conditions to
such Clearly Credible Tender Offer are reasonably likely to be satisfied in the
near future.
(e) Transfers of Common Stock or any Common Stock Equivalent to members of the
Stockholder Group; provided, however, that any such transferee shall agree with
UWR in writing prior to each such Transfer to be bound by the terms of this
Agreement as if such transferee were a Stockholder Affiliate for the rest of its
duration.
(f) Transfers pursuant to the exercise by any member of the Stockholder Group of
the Registration Rights as set forth in Exhibit A to this Agreement; provided,
however, each of such Transfers shall be made either, (i) in an underwritten
public offering where the member of the Stockholder Group and the representative
or representatives of the underwriters previously agree in writing with UWR that
all reasonable efforts to receive a wide distribution of the Common Stock or
Common Stock Equivalents offered will be made or (ii) to Persons from whom a
certificate executed by an executive officer of each such Person that such
Person will not own or be part of a 13D Group that will own 5% or more of the
Common Stock or any class of Common Stock Equivalent following such sale is
obtained or, where in the reasonable judgment of the member of the Stockholder
Group or the underwriters or placement agents it is impracticable to obtain such
a certificate prior to each of such Transfers, from such a Person, obtaining a
certificate from an executive officer of the member of the Stockholder Group or
the underwriters or placement agents that, to the best of its knowledge, such
sales will not be made to any 13D Group that will own 5% or more of the Common
Stock or any class of Common Stock Equivalent following such sale.
(g) Any other Transfers of Common Stock or any Common Stock Equivalent after a
refusal by UWR to purchase such Common Stock or Common Stock Equivalent (by
either lapse of time or written notice) in accordance with Section 5.1 of this
Agreement.
Section 3.3. Further Restrictions on Stockholder Conduct. Prior to the
Standstill Termination Date, the Stockholder agrees that it shall not, and it
shall cause each Stockholder Affiliate not to:
(a) in any manner acquire, agree to acquire or make any proposal to acquire,
directly or indirectly, any securities or property of UWR or any of its
subsidiaries other than in a manner consistent with the terms of this Agreement;
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(b) deposit (either before or after the date of the execution of this Agreement)
any Common Stock or Common Stock Equivalent in a voting trust or subject any
Common Stock or Common Stock Equivalent to any similar arrangement or proxy with
respect to the voting of such Common Stock or Common Stock Equivalent if the
effect of any such arrangement or proxy would result in a violation by the
Stockholder of the terms of this Agreement;
(c) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies", or become a "Participant" in a "solicitation" (as
such terms are used in Regulation 14A under the Exchange Act) to vote, or to
seek to advise or influence any person to vote against any proposal or director
nominee recommended to the stockholders of UWR or any of its subsidiaries by at
least a majority of the Board of Directors; provided, however, that the
restriction of this Section 3.3(c) shall not apply: (i) (A) during any proxy
solicitation from a Person other than UWR pursuant to which such person seeks to
take any action which, if successful, and when combined with all other actions
previously taken by such Person, would result in a change in control of UWR
(including without limitation by means of electing or replacing directors of
UWR), (B) during any offer, tender offer or exchange offer that is a Clearly
Credible Tender Offer for 25% or more of the Common Stock or any class of Common
Stock Equivalents or 25% or more of the consolidated assets of UWR, and (C) with
respect to any proposal by UWR which would result in any other Person or 13D
Group Beneficially Owning 25% or more of the Common Stock or any class of Common
Stock Equivalent or 25% or more of the consolidated assets of UWR; and (ii)
regarding any matter with respect to which the Stockholder or any Stockholder
Affiliate is not bound by the terms of this Agreement to vote in accordance with
the recommendation of UWR's Board of Directors;
(d) form, join or in any way participate in a 13D Group with respect to any
Common Stock or Common Stock Equivalent of UWR or any securities of its
subsidiaries other than in a manner consistent with the terms of this Agreement;
(e) otherwise act, alone or in concert with others, to seek to control or
influence the management, Board of Directors or policies of UWR other than in a
manner consistent with the terms of Section 3.1 hereof and other than pursuant
to the Stockholder's representation on the Board of Directors of UWR pursuant to
Section 4.2;
(f) fail to disclose promptly to UWR the name of any third party who has
contacted the Stockholder or, to the Stockholder's knowledge, any Stockholder
Affiliate in connection with any of the foregoing, and any intention, plan or
arrangement communicated to the Stockholder or, to the Stockholder's knowledge,
any Stockholder Affiliate by such third party, in either case unless the
Stockholder or the Stockholder Affiliate is prohibited by any statute, law or
governmental regulation from disclosing such to the Company.
Section 3.4. Rights Agreement. The Stockholder shall support, and shall cause
each Stockholder Affiliate to support, any proposal of UWR during the term
hereof to extend or renew the current Rights Agreement to a date not later than
the date on which this Agreement terminates in accordance with its terms;
provided, however, that the proposed extension or renewal is otherwise in form
and substance substantially the same as the Rights Agreement in effect on the
date hereof.
Section 3.5. Business of UWR. (a) Prior to the date of termination of this
Agreement, UWR agrees that it shall limit its investments in any business other
than the public water or waste water utility business or a water or waste water
services-related business (such other business being hereinafter referred to as
"Unrelated Business") to 25% of UWR's consolidated assets all as provided in
subsections (b) and (c) of this Section 3.5.
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(b) Prior to any investment in an Unrelated Business in excess of $10 million in
any one instance or if such investment when cumulated with other such
investments since either (A) the Closing or, thereafter, (B) the date of the
last Compliance Certificate (as defined below), as the case may be, the Chief
Financial Officer of UWR shall prepare a certificate of compliance ("Compliance
Certificate") showing that the aggregate of such investments to the date of such
Compliance Certificate, plus the new proposed investment do not exceed 25% of
consolidated assets of UWR as of the most recent quarterly balance sheet. An
investment in an Unrelated Business shall equal (i) the amount of any
consideration paid by UWR for any interest in any such business, plus (ii) any
other amount for which UWR agrees to be liable, less (iii) any investment made
through an exchange of Unrelated Business property for other property
(including, without limitation, like kind exchanges for tax deferral purposes),
but only to the value of such property exchanged, with any additional investment
being treated as a new investment. The amount of any investment will be
calculated as of the time such investment is made or agreed to.
(c) Such Compliance Certificate shall be provided to the Stockholder not less
than 10 days prior to the making of any investment in an Unrelated Business.
Section 3.6. Publicity. UWR and the Stockholder shall, and the Stockholder shall
cause each Stockholder Affiliate to, prior to the issuance of any press release
or other public announcement or communication relating to the execution or
performance of this Agreement or to the transactions contemplated hereby,
consult with each other and use their best efforts to coordinate the issuance of
such press release, public announcement or communication.
Section 3.7. Conversion of Preference Stock. (a) Prior to the termination of
this Agreement pursuant to and in accordance with Section 7.1 and subject to the
provisions of Section 3.7(b), the Stockholder agrees, and agrees to cause the
Stockholder Affiliates, to convert into Common Stock only that number of shares
of Preference Stock Beneficially Owned by the Stockholder Group which, when
added to all shares of Preference Stock previously converted by the Stockholder
Group, does not exceed the sum of the Conversion Allowance plus the Bonus
Shares. The "Conversion Allowance" for each twelve month period during the term
of this Agreement, beginning on the date of this Agreement, shall be calculated
by multiplying (i) the number of shares of Preference Stock Beneficially Owned
by the Stockholder Group immediately following the Closing by (ii) the
applicable percentage (expressed as a decimal) during such twelve-month period
indicated below:
Commencing Applicable
(April 22)* Percentage
1996 10%
1997 20%
1998 30%
1999 40%
2000 50%
2001 60%
2002 70%
2003 100%
The "Bonus Shares" shall be equal to that number of shares of Preference Stock
previously converted by all holders thereof other than the Stockholder Group.
* Insert month and day of closing of Merger.
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(b) The limitations on conversion of Preference Stock contained in Section
3.7(a) do not limit the right of the holders of Preference Stock set forth in
Section 8(c) of the Certificate of Amendment of the Certificate of Incorporation
of UWR establishing the terms of the Preference Stock (the "Certificate of
Amendment"), and such Preference Stock remains subject to all other provisions
set forth in the Certificate of Amendment.
ARTICLE IV
VOTING AND BOARD REPRESENTATION
Section 4.1. Voting. Until the Standstill Termination Date, the Stockholder,
as a holder of shares of Common Stock and Common Stock Equivalents, agrees
that:
(a) The Stockholder shall, and shall cause each Stockholder Affiliate to, be
present, in person or by proxy, at all meetings of shareholders of UWR so that
all Common Stock and Common Stock Equivalents having voting rights directly or
indirectly owned by the Stockholder and the Stockholder Affiliates may be
counted for the purpose of determining the presence of a quorum at such
meetings.
(b) The Stockholder shall, and shall cause each Stockholder Affiliate to, on any
matter submitted to a vote of UWR's stockholders, vote all Common Stock and
Common Stock Equivalents having voting rights with respect to such matter
directly or indirectly owned by the Stockholder and the Stockholder Affiliates
as recommended by a majority of UWR's Board of Directors if (i) 75% of the votes
cast by all other holders of Common Stock and Common Stock Equivalents having
voting rights with respect to such matter are in favor of the recommendation of
UWR's Board of Directors and (ii) the Common Stock and Common Stock Equivalents
having voting rights with respect to such matter directly or indirectly owned by
the Stockholder Group are required for the approval of the actions recommended
by UWR's Board of Directors; provided, however, that the Stockholder Group shall
not be obligated to vote: (A) against the Stockholder Nominees (as defined in
Section 4.2 hereof) in any election of directors of UWR; (B) for any proposal to
increase the authorized maximum number of directors of UWR, other than pursuant
to any merger or consolidation of UWR with, or acquisition by UWR of, any other
Person, provided, however, that, in the case of any such merger, consolidation
or acquisition in which the authorized number of directors of UWR is increased,
UWR shall increase the number of Stockholder Nominees pursuant to this Agreement
to the extent UWR determines in good faith, after discussions with the
Stockholder, that it is reasonably necessary for Stockholder to protect
its interests under this Agreement; (C) for any proposal that would adversely
alter or change the powers, preferences or rights of any outstanding Preference
Stock; or (D) for any other proposal which would, in the opinion of an
independent investment banking firm of recognized standing agreed upon by UWR
and the Stockholder, be reasonably likely to have a material adverse effect on
the fair market value of the Common Stock or the Preference Stock.
(c) The Stockholder shall, and shall cause each Stockholder Affiliate to, vote
all Common Stock and Common Stock Equivalents having voting rights directly or
indirectly owned by the Stockholder or the Stockholder Affiliates, as the case
may be, for the Stockholder Nominees.
Section 4.2. Directors Designated by the Stockholder. For the duration of
this Agreement:
(a) The Board of Directors of UWR shall elect as directors of UWR (to serve
until the immediately succeeding annual meeting of stockholders of UWR) on the
date of the Closing, the following four persons, who shall be the initial
Stockholder Nominees: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and two officers of any
member of the Stockholder Group designated by the Stockholder in
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writing to UWR at least seven days prior to the date of the Closing. In the
event of a vacancy caused by the disqualification, removal, resignation or other
cessation of service of any Stockholder Nominee from the Board of Directors, the
Board of Directors shall elect as a director of UWR (to serve until UWR's
immediately succeeding annual meeting of stockholders) a new Stockholder Nominee
designated by the Stockholder in writing to UWR at least seven days prior to the
date of a regular meeting of the Board of Directors.
(b) At the first annual meeting of stockholders of UWR following the Closing and
at each subsequent annual meeting of stockholders of UWR at which (i) the term
of any Stockholder Nominee is to expire or (ii) a vacancy caused by the
disqualification, removal, resignation or other cessation of service of a
Stockholder Nominee of the Board of Directors of UWR is to be filled, UWR shall
cause up to a maximum of four (4) persons designated by the Stockholder (the
"Stockholder Nominees", which initially includes the four directors designated
pursuant to paragraph (a) of this Section 4.2) to be included in the slate of
nominees recommended by the Board of Directors of UWR to UWR's stockholders for
election as directors and shall use all reasonable efforts to cause the election
of each such Stockholder Nominee to the Board of Directors of UWR, including
soliciting proxies in favor of the election of such persons. No more than four
Stockholder Nominees shall serve on the Board of Directors of UWR at any time
and no more than two Stockholder Nominees shall serve on each class of the Board
of Directors of UWR at any time. At any time that UWR has a classified Board of
Directors, the Stockholder Nominees shall be divided as nearly equal as possible
among all the classes.
(c) The Board of Directors of UWR shall appoint at the Closing ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ as a non-voting advisory director (the "Stockholder Advisory
Director") to the Board of Directors of UWR. The Stockholder Advisory Director
shall serve until the earlier of May 8, 1995 or his disqualification, removal,
resignation or other cessation of service. Any disqualification or removal of a
Stockholder Advisory Director must be approved by the Stockholder. The
Stockholder Advisory Director shall be entitled to the same compensation and
perquisites as non-employee directors of UWR and will be furnished with all
information generally provided to UWR's Board of Directors.
(d) The Stockholder shall provide notice in writing at least 60 days prior to
each Company's annual meeting of stockholders indicating the name of each
Stockholder Nominee, if any, and all information required by Regulation 14A and
Schedule 14A under the Exchange Act with respect to such Stockholder Nominee.
(e) Each of the Stockholder Nominees shall be a bona fide holder of one or more
shares of Common Stock at all times during which such Stockholder Nominee is
serving as director of UWR.
(f) The Stockholder shall be entitled to designate annually at least one
Stockholder Nominee to be a member of each committee of the Board of Directors
(including without limitation the Executive Committee, the Audit Committee and
the Compensation Committee), and to fill any vacancy caused by the departure of
a Stockholder Nominee from any such committee when no other Stockholder Nominee
is a member of such committee.
(g) In the event that one or more of the Stockholder Nominees cannot attend any
meeting of UWR's Board of Directors or any Committee thereof, the Stockholder
shall be entitled to designate a non-voting replacement for each Stockholder
Nominee unable to attend such meeting of UWR's Board of Directors at the Board
of Directors' invitation. The Company shall give the Stockholder no less than
seven days' notice of any such meeting; provided, however, that if UWR is
unable, for good cause, to give seven (7) days' notice with respect to any
meeting of its Board of Directors at which the Board considers and/or acts upon
any important corporate action, then UWR may give such lesser notice as is
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reasonably practicable, except that such notice shall in all circumstances be at
least two (2) full business days. Any Stockholder Nominee may participate
telephonically in any meeting of UWR's Board of Directors.
(h) The Stockholder shall consult with UWR in connection with the identity of
any proposed Stockholder Nominee. In the event UWR is advised in writing by its
outside counsel that a proposed Stockholder Nominee would not be qualified under
UWR's Restated Certificate of Incorporation or By-Laws or any applicable
statutory or regulatory standards to serve as a director of UWR, or if UWR
otherwise reasonably objects to a proposed Stockholder Nominee because such
Stockholder Nominee either (i) is a director or officer of a direct competitor
of UWR or (ii) has engaged in any adverse conduct that would require disclosure
under Item 7 of Schedule 14A promulgated under the Exchange Act, the Stockholder
agrees to withdraw such proposed Stockholder Nominee and nominate a replacement
therefor (which replacement would be subject to the requirements of this Section
4.2(h)). Any such objection by UWR must be made no later than one month after
the Stockholder first informs UWR of the identity of the proposed Stockholder
Nominee; provided, however, that UWR shall in all cases notify the Stockholder
of any such objection sufficiently in advance of the date on which proxy
materials are mailed by UWR in connection with such election of directors to
enable the Stockholder to propose an alternate Stockholder Nominee pursuant to
and in accordance with the terms of this Agreement.
Section 4.3. Resignation of Stockholder Nominees and Stockholder Advisory
Director. Upon termination of this Agreement pursuant to and in accordance with
Section 7.1(d) hereof, the Stockholder shall, at the request of UWR, cause each
of the Stockholder Nominees then serving on UWR's Board of Directors and the
Stockholder Advisory Director to resign from UWR's Board of Directors upon the
termination of this Agreement pursuant to and in accordance with Section 7.1(d)
hereof.
ARTICLE V
FUTURE PURCHASE RIGHTS
Section 5.1. UWR Right of First Refusal. In the event that, during the existence
of this Agreement, any member of the Stockholder Group shall desire to Transfer
any Common Stock or Common Stock Equivalent under circumstances other than those
referred to in Section 3.2(a), (b), (c), (d), (e) and (f) of this Agreement:
(a) Such member of the Stockholder Group shall give UWR notice in writing of its
bona fide intent to sell such Common Stock or Common Stock Equivalent,
specifying the number of shares of Common Stock or Common Stock Equivalents to
be sold, the prospective purchasers thereof and the price and terms and
conditions of such sale, and offering to sell such Common Stock or Common Stock
Equivalent to UWR (or its designee) at such price and on like terms and
conditions. No member of the Stockholder Group may submit another notice to UWR
pursuant to this subsection (a) until all the actions to be taken and all
applicable waiting periods contemplated by this Section 5.1 have been taken or
have expired.
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(b) UWR shall have the right to accept or reject any offer pursuant to
subsection (a) as promptly as practicable but in all events within the time
period specified below:
Offer Price Time Period
Up to $25,000,000 30 days
$25,000,001 to $50,000,000 60 days
$50,000,001 to $75,000,000 90 days
$75,000,001 and above 120 days
The time periods set forth above shall run from, and not include, the date of
delivery of the notice of such offer pursuant to subsection (a) above. If UWR
shall accept such offer within the applicable time period specified above, then
UWR shall purchase the Common Stock or Common Stock Equivalents specified in the
notice given pursuant to subsection (a) above as promptly as is reasonably
practicable, but in no event after the later of (i) the 60th day following such
acceptance and (ii) the 10th day following receipt of all required governmental
approvals.
(c) If UWR (i) shall reject such offer in writing, (ii) shall not within the
applicable time period after receipt of the notice given by such member of the
Stockholder Group pursuant to subsection (a) above, accept such offer in writing
with respect to all the Common Stock or Common Stock Equivalents specified in
such notice or (iii) shall fail to purchase such Common Stock or Common Stock
Equivalents within the time period specified in subsection (b) above, then such
member of the Stockholder Group shall be free to enter into any agreement to
sell such Common Stock or Common Stock Equivalents to the prospective purchaser,
at a price equal to or above the minimum price and on the terms and conditions
specified in the notice delivered to UWR pursuant to subsection (a) above.
(d) Any sale of Common Stock or Common Stock Equivalents by any member of the
Stockholder Group pursuant to subsection (c) above must be consummated within 30
days of the earlier of receipt of a written rejection from UWR or the expiration
of the applicable time period allotted UWR for the rejection or consummation of
offer to sell such Common Stock or Common Stock Equivalents by such member of
the Stockholder Group.
Section 5.2. Notice of Future Issuances. In the case of any issuance of any
Common Stock or Common Stock Equivalent, other than (a) upon the exercise or
conversion of Preference Stock or any other Common Stock Equivalent, (b)
pursuant to any dividend reinvestment plan of UWR or (c) pursuant to any
employee stock ownership or benefit plan maintained for the benefit of employees
of UWR or its subsidiaries, UWR shall provide prior written notice to the
Stockholder of such issuance except in the case of stock options, notice of the
aggregate exercise of which shall be provided quarterly. Each such prior written
notice shall describe the securities proposed to be issued, the estimated date
of issuance, the proposed terms and conditions thereof and the estimated
purchase price.
Section 5.3. Stockholder Group Purchase Right. (a) In the case of any public
offering of any Common Stock or Common Stock Equivalent registered under the
Securities Act on Form ▇-▇, ▇-▇ or S-3 (or any applicable successor Form under
the Securities Act), any member of the Stockholder Group shall be permitted to
acquire, at the time of issuance of such shares of Common Stock or Common Stock
Equivalents, up to a portion of such issuance equal to the lesser of (x) the
Maximum Stockholder Investment Percentage and (y) the maximum number of shares
of Common Stock or Common Stock Equivalents so that the Stockholder Investment
Percentage shall equal (but not exceed) the Maximum Stockholder Investment
Percentage. Any member of the Stockholder Group shall be entitled to purchase
any shares of Common Stock or Common Stock Equivalents pursuant to this
subsection (a) at a purchase price equal to (1) the cash price per share (less
any applicable underwriters' discounts or commissions,
C(1)-14
based on full discussion and consideration by the Board of Directors of UWR) of
Common Stock or Common Stock Equivalent being issued or (2) the Fair Market
Value of any Common Stock or Common Stock Equivalent (or portion thereof)
delivered in exchange for any non-cash consideration. The member of the
Stockholder Group shall notify UWR in writing of its intent to exercise its
rights pursuant to this subsection (a) as soon as practicable after delivery of
notice by UWR pursuant to Section 5.2 and shall use its best efforts to
facilitate any issuance of shares of Common Stock or Common Stock Equivalents in
which such member of the Stockholder Group intends to participate.
(b) In addition to its rights under subsection (a) above, in the case of any
issuance of any Common Stock or Common Stock Equivalent, other than upon the
exercise or conversion of Preference Stock or any other Common Stock Equivalent,
any member of the Stockholder Group shall be permitted for a period of 180 days
thereafter (or 180 days from the date notice is given by UWR pursuant to Section
5.2, whichever is later) to acquire shares of Common Stock of UWR through
purchases effected in the open market or through any dividend reinvestment plan
of UWR so that the Stockholder Investment Percentage shall equal (but not
exceed) the Maximum Stockholder Investment Percentage. Such member of the
Stockholder Group shall notify UWR in writing of the date, number of shares of
Common Stock and purchase price paid of any such acquisition within 10 days of
such acquisition.
(c) Notwithstanding any other provision of this Agreement, and in addition to
any other right to acquire Common Stock pursuant to any other provision of this
Agreement, any member of the Stockholder Group shall be permitted at any time
during the term of this Agreement to acquire shares of Common Stock through
purchases effected in the open market or otherwise in an aggregate amount equal
to the number of shares of Common Stock represented by the percentage difference
between 33% and, if lower, the Stockholder Investment Percentage immediately
succeeding the Closing. Such member of the Stockholder Group shall notify UWR in
writing of the date and number of shares of Common Stock for any shares so
acquired, as well as the fact that such acquisition is being made pursuant to
this Section 5.3(c), within 10 days of such acquisition.
ARTICLE VI
RELEASE EVENTS
Section 6.1. Release Events. Any one or more of the following shall
constitute a "Release Event" as the term is used herein:
(a) The entry by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of UWR in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or (ii) a decree or order adjudging UWR a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of UWR under any applicable Federal
or State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of UWR or of any substantial
part of UWR's property, or ordering the winding up or liquidation of UWR's
affairs; and the continuance of any such decree or order for relief of any such
other decree or order unstayed and in effect for a period of 60 consecutive
days.
(b) The commencement by UWR of a voluntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by UWR to the entry of a decree or order for relief in
respect of UWR in an involuntary case or proceeding under any applicable Federal
or State bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any
C(1)-15
bankruptcy or insolvency case or proceeding against UWR, or the filing by UWR of
a petition or answer or consent seeking reorganization or relief under any
applicable Federal or State law, or the consent by UWR to the filing of such
petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of UWR or
of any substantial part of UWR's property, or the making by UWR of an assignment
for the benefit of creditors, or the admission by UWR in writing of UWR's
inability to pay its debts generally as they become due, or the taking of
corporate action by UWR in furtherance of any such action.
(c) The dividends payable on the Preference Stock by UWR shall be in arrears for
six or more consecutive quarterly dividend payment periods.
(d) UWR reports a net loss per share of Common Stock in its Annual Report on
Form 10-K (or such successor report as shall be required from UWR by the
Commission) for two or more consecutive fiscal years, except if such net --
losses would not have occurred but for (i) any aspect of GWC's business,
operations, financial condition or prospects which should have been disclosed by
GWC to UWR at the Closing which was not disclosed in writing to UWR at the
Closing or (ii) any event of force majeure, including acts of God, war, public
disorders, insurrection, rebellion, floods, hurricanes, tornadoes, earthquakes,
lightning, other natural calamities or unusually severe weather, explosions or
fires, strikes, boycotts, or lockouts, which could not have reasonably been
anticipated by the management or Board of Directors of UWR.
(e) (i) UWR's Board of Directors fails to include any Stockholder Nominee in the
slate of nominees recommended by the Board to UWR's stockholders for election as
directors or (ii) the stockholders of UWR fail to elect any of the Stockholder
Nominees to UWR's Board of Directors.
(f) The acquisition by any 13D Group of 20% or more of UWR's Common Stock.
(g) The occurrence of any material breach by UWR in performing its obligations
with respect to the Preference Stock or this Agreement, which material breach
has not been cured by UWR within 30 days of receipt of written notice of such
breach from the Stockholder.
(h) A breach by UWR of its obligations set forth in Section 3.5, which breach
has not been cured by UWR within 30 days of receipt of written notice of such
breach from the Stockholder.
Section 6.2. Release of Stockholder.
(a) UWR shall give the Stockholder written notice of the occurrence of any
Release Event (other than any Release Event described in Section 6.1(g) or (h))
within 10 days of the occurrence of such Release Event.
(b) Upon the occurrence of any Release Event described in Section 6.1(g) or (h),
the Stockholder shall deliver to UWR written notice of the occurrence of any
such Release Event within 10 days of discovery of such Release Event or receipt
of notice from UWR of the occurrence of such Release Event.
(c) Within 60 days after the occurrence of any Release Event (or, if proper
notice of the Release Event has not been given to the Stockholder pursuant to
Section 6.2(a), within 60 days after either the date on which the Stockholder
receives notice of the Release Event pursuant to and in accordance with either
Section 6.2(a) or the date on which the Stockholder first has actual knowledge
of the occurrence of the Release Event, whichever date is later), the
Stockholder may, by delivering written notice to UWR, declare a Standstill
Termination Date.
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(d) Upon the occurrence of any Release Event described in Section 6.1(g) or (h),
the 60-day period referred to in paragraph (c) of this Section 6.2 shall
commence after the expiration of the period during which UWR may cure any
material breach pursuant to Section 6.1(g) or (h).
(e) The Standstill Termination Date may not be prior to the date of notice to
UWR pursuant to subsection (c) above and in the absence of any date specified in
such notice, the Standstill Termination Date shall be the date such notice is
received by UWR. Failure by the Stockholder to deliver written notice to UWR of
the Standstill Termination Date pursuant to subsection (c) above within the
allotted 60 days shall be deemed a waiver by the Stockholder of any right to
declare the Standstill Termination Date based upon the Release Event which
originally gave rise to the Stockholder's opportunity to declare the Standstill
Termination Date.
ARTICLE VII
TERMINATION
Section 7.1. Termination. This Agreement may terminate in any of the
following manners:
(a) Upon the mutual agreement of UWR and the Stockholder at any time, this
Agreement shall terminate at the time fixed by such agreement. Any approval of
termination of this Agreement upon the part of UWR shall require the approval of
a majority of UWR's Independent Directors at a duly convened meeting thereof or
all of UWR's directors by written consent thereto.
(b) On the twelfth anniversary of the date of the Closing, this Agreement shall
terminate unless it has been earlier terminated in accordance with its terms.
(c) This Agreement shall terminate either (i) on the Standstill Termination Date
following declaration thereof by the Stockholder pursuant to Section 6.2(c) or
(ii) on the Standstill Termination Date as fixed by Section 6.2(e), upon
delivery of written notice to UWR not specifying the Standstill Termination
Date.
(d) This Agreement shall terminate on the date upon which the Stockholder
Investment Percentage falls below 5%. Should the Stockholder so request, UWR
shall deliver written confirmation of such decrease in the Stockholder
Investment percentage below 5%.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Entire Agreement; Amendments. This Agreement contains the entire
understanding of the parties with respect to the matters covered hereby and this
Agreement may be amended only by an agreement in writing executed by the parties
hereto. Any approval of amendment of this Agreement upon the part of UWR shall
require the approval of a majority of the Independent Directors at a duly
convened meeting thereof or all of UWR's directors by written consent thereto.
Section 8.2. Severability. If any term, provision, covenant, restriction,
part or portion of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, or is
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otherwise legally impossible to perform, the remainder of the terms, provisions,
covenants, restrictions, parts and portions of this Agreement shall remain in
full force and effect.
Section 8.3. Specific Performance. UWR and the Stockholder each acknowledges and
agrees that the parties' respective remedies at law for a breach or threatened
breach of any of the provisions of this Agreement would be inadequate and, in
recognition of that fact, agrees that, in the event of a breach or threatened
breach by UWR or the Stockholder of the provisions of this Agreement, in
addition to any remedies at law, the Stockholder and UWR, respectively, without
posting any bond shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.
Section 8.4. Counterparts. This Agreement may be executed by the parties
hereto in counterparts each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 8.5. Notices and Service of Process. All notices and service of
process provided for herein shall be validly given or served, as the case may
be, if in writing and delivered personally, or by facsimile transmission
promptly followed by a copy by registered or certified mail postage prepaid,
return receipt requested, if to
UWR:
United Water Resources Inc.
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
LeBoeuf, Lamb, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
the Stockholder:
Lyonnaise American Holding, Inc.
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
C(1)-18
with a copy to:
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or to such other address or facsimile number as either party may, from time to
time, designate in a written notice given in a like manner.
Section 8.6. Waivers. Either party may waive in whole or in part any benefit or
right provided to it under this Agreement. No waiver by either party of any
default with respect to any provision, condition, requirement, or of any benefit
or right hereof shall be deemed to be a waiver of any other provision,
condition, requirement, benefit or right hereof; nor shall any delay or omission
of either party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter. Any waiver of any benefit
or right provided to UWR under this Agreement shall require the approval of a
majority of the Independent Directors at a duly convened meeting thereof or all
of UWR's directors by written consent thereto.
Section 8.7. Submission to Jurisdiction; Consent to Service of Process. With
respect to any claim arising out of this Agreement including any claim for
specific performance arising under Section 8.3 hereof (a) UWR and the
Stockholder each irrevocably consents and submits to the exclusive jurisdiction
of the courts of the State of New Jersey and the United States District Court
located in New Jersey and (b) UWR and the Stockholder each irrevocably waives
any objection which it may have at any time to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement brought in any
such court, irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum
and further irrevocably waives the right to object, with respect to such suit,
action or proceeding brought in any such court, that such court does not have
jurisdiction over such party. UWR and the Stockholder each consents that service
of process upon it in any such suit, action or proceeding may be made in the
manner set forth in Section 8.5 hereof.
Section 8.8. Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
Section 8.9. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of UWR and the Stockholder and their successors and legal
representatives. Neither UWR nor the Stockholder may assign this Agreement or
any rights hereunder.
Section 8.10. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
New Jersey.
C(1)-19
IN WITNESS WHEREOF, UWR and the Stockholder have caused this Agreement to be
duly executed by their respective authorized officers as of the date set forth
at the head of this Agreement.
United Water Resources Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
Lyonnaise American Holding, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President - Finance
Lyonnaise represents and warrants that the agreement of Lyonnaise set forth
below has been duly executed and delivered by Lyonnaise and, assuming due
authorization and valid execution and delivery of this Agreement by UWR and
the Stockholder, such agreement is a valid and binding obligation of Lyonnaise,
enforceable in accordance with its terms. Lyonnaise agrees, and agrees to cause
each Lyonnaise Affiliate, to be bound by those provisions of this Governance
Agreement binding, or applying to the Stockholder or the Stockholder Affiliates.
Lyonnaise des Eaux ▇▇▇▇▇
By: /s/ Guy de Panajleu
Name: Guy de Panajleu
Title Senior Executive Vice President
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