EXHIBIT 10.28
Execution Copy
ASSET PURCHASE AGREEMENT
among
the Town of Barnstable,
Connecticut Water Service, Inc.
the Barnstable Holding Company,
the Barnstable Water Company
and
BARLACO, Inc.
March 10, 2005
TABLE OF CONTENTS
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Page
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SECTION
1
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- SALE AND
PURCHASE OF ASSETS
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1
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1.1
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Sale of
Assets
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1
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1.2
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Satisfaction of
Note
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2
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1.3
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Excluded
Liabilities
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2
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1.4
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Purchase Price
and Payment
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3
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1.5
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Transfer of
Purchased Assets
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3
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1.6
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Delivery of
Records and Contracts
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3
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1.7
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Closing
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3
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SECTION
2
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REPRESENTATIONS AND WARRANTIES OF THE SELLER, PARENT, AND
BHC
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4
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2.1
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Organization
and Qualification
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4
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2.2
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Authority to
Execute and Perform Agreements
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4
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2.3
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Capitalization
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4
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2.4
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Financial
Statements
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4
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2.5
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No Material
Adverse Change
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5
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2.6
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Tax
Matters
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5
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2.7
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Compliance with
Laws
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6
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2.8
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Consents; No
Breach
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7
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2.9
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Actions and
Proceedings
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7
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2.10
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Contracts and
Other Agreements
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7
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2.11
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Real
Property
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8
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2.12
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Tangible
Property
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8
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2.13
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Title to
Assets; Liens
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8
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2.14
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Absence of
Undisclosed Liabilities
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9
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2.15
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Insurance
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9
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2.16
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Brokerage
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9
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2.17
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Hazardous
Materials
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9
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SECTION
3
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-
REPRESENTATIONS AND WARRANTIES OF THE BUYER
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10
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3.1
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Authority to
Execute and Perform Agreements
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10
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3.2
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Brokerage
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10
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-i-
TABLE OF CONTENTS
(continued)
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Page
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3.3
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Actions and
Proceedings
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11
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3.4
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No
Breach
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11
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SECTION
4
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- COVENANTS AND
AGREEMENTS
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11
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4.1
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Conduct of
Business
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11
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4.2
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Continued
Effectiveness of Representations and Warranties
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12
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4.3
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Taxes
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12
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4.4
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Corporate
Examinations and Investigations
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13
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4.5
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Expenses
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13
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4.6
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Authorization
from Others
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13
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4.7
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Consummation of
Agreement
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14
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4.8
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Collection of
Assets
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14
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4.9
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Use of
Name
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14
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4.10
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Further
Assurances
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14
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4.11
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Related
Agreements
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14
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4.12
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Insurance
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14
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SECTION
5
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- CONDITIONS
PRECEDENT TO THE OBLIGATION OF THE BUYER TO CLOSE
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15
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5.1
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Representations, Warranties and
Covenants
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15
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5.2
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Third Party
Consents
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15
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5.3
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Management
Agreement
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15
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5.4
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BARLACO
Purchase and Sale Agreement
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15
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5.5
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Opinion of
Counsel to the Seller
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15
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5.6
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Litigation
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15
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5.7
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Delivery of
Instruments of Transfer
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16
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5.8
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No Material
Change
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16
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5.9
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Seller Name
Change and Discharge of Liabilities; Insurance
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16
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5.10
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Massachusetts
Tax Waivers
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16
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5.11
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Financing
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16
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5.12
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Barnstable Town
Council Approval
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16
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5.13
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Payment of
Discharge Amount
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16
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-ii-
TABLE OF CONTENTS
(continued)
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Page
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5.14
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DEP
Approval
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16
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SECTION
6
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- CONDITIONS
PRECEDENT TO THE OBLIGATION OF SELLER TO CLOSE
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16
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6.1
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Representations, Warranties and
Covenants
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17
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6.2
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Litigation
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17
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6.3
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Delivery of the
Purchase Price
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17
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6.4
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Required
Approvals
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17
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6.5
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Opinion of
Counsel to the Buyer
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17
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6.6
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DEP
Approval
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17
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SECTION
7
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INDEMNIFICATION
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17
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7.1
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Survival
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17
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7.2
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Obligation of
the Seller, Parent and BHC to Indemnify
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19
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7.3
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Obligation of
the Buyer to Indemnify
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19
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7.4
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Release by
Buyer
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19
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7.5
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Third-Party
Claims
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19
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7.6
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Other
Claims
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20
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SECTION
8
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- TERMINATION
OF AGREEMENT
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20
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8.1
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Termination
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20
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8.2
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Effect of
Termination
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21
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SECTION
9
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MISCELLANEOUS
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21
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9.1
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Publicity
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21
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9.2
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Notices
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21
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9.3
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Entire
Agreement
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22
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9.4
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Waivers and
Amendments; Noncontractual Remedies; Preservation of
Remedies
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22
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9.5
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Governing
Law
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22
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9.6
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Enforceability
in Jurisdictions; Consent
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22
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9.7
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Binding Effect;
No Assignment
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23
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9.8
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Variations in
Pronouns
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23
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9.9
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Counterparts
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23
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-iii-
TABLE OF CONTENTS
(continued)
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Page
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9.10
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Exhibits and
Schedules
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23
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9.11
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Headings
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23
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-iv-
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EXHIBITS
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-
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Owned Real
Property
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-
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Other Interests
in Real Property
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-
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Assigned
Agreements
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-
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Management
Agreement
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-
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BARLACO
Purchase and Sale Agreement
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-
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Form of Opinion
of Seller’s Counsel
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-
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Form of Opinion
of Town Attorney
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SCHEDULES
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Excluded
Assets
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Material
Adverse Change
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Taxes
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Compliance with
Laws; Permits
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Consents
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Actions and
Proceedings
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Real Property;
Repairs and Replacements
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Title to
Assets
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Insurance
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE
AGREEMENT dated as of March 10, 2005 among the Town of
Barnstable, Massachusetts (the “ Buyer ”), the
Connecticut Water Service, Inc., a Connecticut corporation (“
Parent ”), the Barnstable Holding Company, a
Connecticut corporation and wholly owned subsidiary of Parent
(“ BHC ”), the Barnstable Water Company, a
corporation chartered under Chapter 286 of the Massachusetts
Acts of 1911 and wholly owned subsidiary of BHC (the “
Seller ”) and BARLACO, Inc., a Massachusetts
corporation and wholly owned subsidiary of BHC (“
BARLACO ”).
SECTION 1 — SALE AND PURCHASE OF
ASSETS
1.1
Sale of Assets . Subject to the provisions of this
Agreement, at the Closing (as defined in Section 1.7 hereof),
the Seller agrees to sell and the Buyer agrees to purchase all of
the properties, assets and business of the Seller used or usable in
its business as a water company of every kind and description,
tangible and intangible, real, personal or mixed, and wherever
located, including without limitation:
(a) all
of the Seller’s land as set forth in Exhibit A to
this Agreement, together with the buildings, structures, pipes,
fixtures and other improvements located thereon, together with
construction in progress;
(b) all
of the Seller’s other interests in real property as set forth
in Exhibit B to this Agreement, including easements,
rights of way, leaseholds, and all other rights representing less
than fee ownership;
(c) all
personal property constituting Seller’s distribution system,
including pumping facilities, purification equipment, mains, pipes,
fire cisterns, basins, fountains, troughs, meters and
hydrants;
(d) all
office, shop, stores, transportation, laboratory and other
equipment, including computers, computer programs and related
software, but excluding certain essential software that is not
owned by or licensed to the Seller but rather is used under a
license granted to affiliates of Seller;
(e) all
materials, supplies and equipment;
(f) to
the extent that a sale by contract operates to transfer franchises,
water and distribution rights under Massachusetts law, all of the
Seller’s rights, franchises, and privileges, including
without limitation the water and distribution rights conferred by
the Seller’s charter;
(g) the
Seller’s rights and obligations under the contracts and
agreements described in Exhibit C to this Agreement
(the “ Assigned Agreements ”) that relate to its
operation of a water utility;
1
(h) intellectual
property rights;
(i) copyrights;
(j) all
of Seller’s goodwill;
(k) all
information, whether or not proprietary, that relates to the
Company’s operation of a water utility, including but not
limited to accounts, billing, customer service, meter reading, and
other records, computer programs (to the extent permitted by the
licenses for such programs), and systems, however described,
necessary or useful to the operation of the water utility as a
going concern, including any information, documents and data stored
in any medium in the possession of any affiliate of or contractor
to the Seller;
(l) all
of the Seller’s books and records relating to its business as
a water company and all of its engineering and other reports and
surveys relating to its water system;
provided
, however , that there shall
be excluded from such purchase and sale Seller’s tax returns,
stock record books, corporate record books containing minutes of
meetings of directors and stockholders and such other records as
have to do exclusively with Seller’s organization or stock
capitalization and other assets listed on Schedule 1.1
(the “ Excluded Assets ”). The Seller shall have
access to such other books and records of the Seller at reasonable
times for purposes of winding up the Seller, handling tax matters
and dealing with liabilities and claims. The assets, property and
business of Seller to be sold to and purchased by the Buyer or its
designee) under this Agreement are hereinafter sometimes referred
to as the “ Purchased Assets .” The parties
hereto acknowledge that in accordance with Section 4.8 hereof
Seller is entitled to all accounts receivable for services rendered
prior to the Closing Date, and Buyer is entitled to all accounts
receivable for services rendered on or after the Closing
Date.
1.2
Satisfaction of Note . At the time of the sale and purchase
of the Purchased Assets, the Buyer shall take the steps necessary
to enable Seller to discharge $1.525 million of the
Seller’s obligation under the Seller’s long-term note
to Indianapolis Life Insurance Company dated February 15, 1991
(the “Indianapolis Note”), or such other amount as the
Seller may then be obligated to pay in order to obtain a complete
discharge of that note.
1.3
Excluded Liabilities . Except as otherwise specifically
provided in this Section 1.3, (a) Buyer shall not assume or be
liable for any obligation or liability of Seller, of any kind or
nature, known, unknown, contingent or otherwise (collectively, the
“ Excluded Liabilities ”), including without
limitation:
(i) any
liability of Seller incurred in connection with this Agreement and
the transactions provided for herein, including brokerage,
accounting and counsel fees, transfer and other taxes, and expenses
pertaining to its liquidation or the performance by Seller of its
obligations hereunder;
(ii) any
liability or obligation of Seller arising out of any contract or
agreement;
(iii) any
obligations to Seller’s employees, including without
limitation, any obligations arising under any employee
program;
2
(iv) any
litigation, proceeding, claim by any person or entity or other
obligation of Seller relating to the business or operations of or
otherwise relating to the Purchased Assets prior to the Closing
Date, whether or not such litigation, proceeding, claim or
obligation is pending, threatened, or asserted before, on, or after
the Closing Date;
(v) Taxes (as
defined in Section 2.6) whether relating to periods before or
after the Closing Date; and
(vi) any
obligations under any law, including but not limited to antitrust,
civil rights, health, safety, labor, and discrimination
laws.
(b) Seller
shall be solely responsible for, and shall discharge, any and all
liabilities and obligations of Seller, including all accounts
payable in connection with purchases made or services received on
or prior to the Closing Date.
1.4
Purchase Price and Payment . In consideration of the sale of
the Purchased Assets to Buyer, at the Closing, the Buyer
shall:
(a) deliver
to the Seller an amount equal to $10 million less the amount
delivered to Seller pursuant to Section 1.4(b) hereof in cash,
by certified or bank check, or by wire transfer of immediately
available funds (the “ Purchase Price ”);
and
(b) deliver
to the Seller in cash, by certified or bank check, or by wire
transfer of immediately available funds an amount sufficient to
enable Seller to discharge the Indianapolis Note (the
“Discharge Amount”).
1.5
Transfer of Purchased Assets . At the Closing, Seller shall
deliver or cause to be delivered to the Buyer good and sufficient
instruments of assignment or transfer transferring to the Buyer
title to all the Purchased Assets. Such instruments of transfer
(a) shall be in the form and will contain the warranties,
covenants and other provisions (not inconsistent with the
provisions hereof) which are usual and customary for transferring
the type of property involved under the laws of the jurisdictions
applicable to such transfers, (b) shall be in form and
substance satisfactory to the Buyer and its counsel, and
(c) with the exceptions provided for in Section 2.13 of
this Agreement, shall effectively vest in the Buyer good record and
marketable title to all the Purchased Assets free and clear of all
liens, restrictions and encumbrances.
1.6
Delivery of Records and Contracts . At the Closing, Seller
shall deliver or cause to be delivered to the Buyer all written
leases, contracts, commitments and rights evidencing Purchased
Assets, with such assignments thereof and consents to assignments
as are necessary to assure the Buyer of the full benefit of the
same. Seller shall also deliver to the Buyer at the Closing all of
Seller’s business records, books and other data relating to
its assets, business and operations (except corporate records and
other property of Seller excluded under Section 1.1) and
Seller shall take all requisite steps to put the Buyer (or its
designee) in actual possession and operating control of the assets
and business of Seller.
1.7
Closing . The closing of the sale and purchase of the
transactions contemplated hereby (the “ Closing
”), shall take place at the offices of Palmer & Dodge LLP
at 10:00 a.m., local time, on May 15, 2005 or within
45 days after satisfaction or waiver of the conditions
and
3
delivery of the items set forth
in Sections 5 and 6, whichever is later, or on such other time
and date and at such place as the Buyer and the Seller agree in
writing (the date of such Closing shall herein be referred to as
the “ Closing Date ”). The parties hereto
acknowledge that in no event shall the Closing take place prior to
the expiration of the 30-day referendum period which begins after
the Barnstable Town Council approves this transaction.
SECTION 2 — REPRESENTATIONS AND WARRANTIES
OF THE
SELLER, PARENT, AND BHC
The
Seller, Parent, and BHC, jointly and severally, represent and
warrant to the Buyer as follows:
2.1
Organization and Qualification . The Seller is a corporation
duly organized, validly existing and in good standing under the
laws of Massachusetts and has full corporate power and lawful
authority to own, lease and operate its assets, properties and
business and to carry on its business as now being and as
heretofore conducted. The Seller is not required to be qualified or
otherwise authorized to transact business as a foreign corporation
in any jurisdiction (in the United States and outside of the United
States). The Seller does not file and is not required to file any
franchise, income or other Tax Returns (as defined in
Section 2.6) in any jurisdiction (in the United States or
outside of the United States), other than Massachusetts, based upon
the ownership or use of property therein or the derivation of
income therefrom. The Seller does not own or lease property in any
jurisdiction (in the United States or outside the United States)
other than Massachusetts.
2.2
Authority to Execute and Perform Agreements . The Seller,
Parent and BHC have the full legal right and power and all
authority and approvals required to enter into, execute and deliver
this Agreement and the Related Agreements (as defined in
Section 4.11) and to perform fully their respective
obligations hereunder and thereunder, and each of this Agreement
and the Related Agreements has been or will be duly executed and
delivered and is or will be the valid and binding obligations of
the Seller, Parent and BHC enforceable in accordance with its
terms.
2.3
Capitalization . BHC is and will be on the Closing Date the
only record and beneficial owner and holder of all of the issued
and outstanding shares of the Seller. There are no agreements
relating to the issuance, sale or transfer of any equity securities
or other securities of the Seller.
2.4
Financial Statements . The unaudited balance sheets of the
Seller as at December 31, 2001, 2002, and 2003 and the related
statements of income for the years then ended, in accordance with
the requirements of the Massachusetts Department of
Telecommunications and Energy, and the unaudited balance sheet of
the Seller as of September 30, 2004 which have previously been
delivered to the Buyer, fairly present the financial condition and
results of operations of the Seller as of the respective date and
for the periods indicated, in each case. The foregoing financial
statements of the Seller are sometimes herein called the “
Financials ,” the balance sheet as of
September 30, 2004 is sometimes herein called the “
Balance Sheet ” and September 30, 2004 is
sometimes herein called the “ Balance Sheet Date
.”
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2.5
No Material Adverse Change . Since the Balance Sheet Date,
except as described on Schedule 2.5 , there have been
no changes in the assets, properties, business, operations or
condition (financial or otherwise) of the Seller which either
individually or in the aggregate materially and adversely affect
the Seller, nor does the Seller, Parent or BHC know of any such
change that is threatened, nor has there been any damage,
destruction or loss materially and adversely affecting the assets,
properties, business, operations or condition (financial or
otherwise) of the Seller, whether or not covered by
insurance.
2.6
Tax Matters .
(a) The
Seller has paid or caused to be paid all federal, state, county,
local, foreign and other taxes, including, without limitation,
income taxes, net worth taxes, estimated taxes, alternative minimum
taxes, excise taxes, sales taxes, use taxes, import duties,
value-added taxes, gross receipts taxes, franchise taxes, capital
stock taxes, employment, unemployment and payroll-related taxes,
withholding taxes, excise taxes, ad valorem taxes, stamp taxes,
transfer taxes, windfall profit taxes, license taxes, environmental
taxes and property taxes, whether or not measured in whole or in
part by net income and all deficiencies, or other additions to such
taxes and interest, fines and penalties thereon (hereinafter,
“ Taxes ” or, individually, a “ Tax
”) required to be paid by the Seller through the date hereof
whether disputed or not and whether shown on a Tax Return (as
defined below) or not. Seller shall pay all accrued and unpaid
Taxes owed by or with respect to Seller. No Tax deficiency or claim
for additional Taxes or interest thereon or penalties in connection
therewith, has been asserted or threatened to be asserted against
the Seller by any taxing authority and the Seller does not know of
any basis for the assertion of a tax deficiency against
it.
(b) The
Seller has in accordance with applicable law timely filed all Tax
returns, declarations, reports, claims for refund, or information
returns or statements relating to Taxes, including any schedule or
amendment thereto, and including any amendment thereof (as used
herein, “ Tax Return ” or “ Tax
Returns ”) required to be filed by it through the date
hereof. Each of the Tax Returns filed by the Seller correctly and
accurately reflects the amount of its Tax liability for such period
and other required information. There has not been any audit of any
Tax Return filed by the Seller and no audit of any Tax return of
the Seller is in progress and the Seller has not been notified by
any Tax authority that any such audit is contemplated or pending.
No claim has ever been made by an authority in a jurisdiction where
Seller does not file Tax Returns that Seller is or may be subject
to taxation by that jurisdiction. No issue relating to Seller or
involving any Tax for which Seller might be liable has been
resolved in favor of any taxing authority in any audit or
examination which, by application of the same principles, could
reasonably be expected to result in a deficiency for Taxes of
Seller for any other period. Seller has not been nor is currently
in violation (or, with or without notice or lapse of time or both,
would be in violation) of any applicable law or regulation relating
to payment, collection, or withholding of Taxes, or the remittance
thereof, and all withholding and payroll Tax requirements required
to be complied with by Seller. There are no security interests on
any of the assets of Seller that arose in connection with any
failure (or alleged failure) to pay any Taxes. Seller has never
entered into a closing agreement pursuant to Section 7121 of
the Code.
(c) Except
as set forth in Schedule 2.6 , since January 1,
2001, Seller has not been a member of an affiliated group filing or
required to file a consolidated, combined, or
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unitary Tax Return. Seller is not
a party to or bound by, nor does it have or has it ever had any
obligation under, any Tax sharing agreement, or similar contract or
arrangement. Seller has no liability for the Taxes of any other
person.
(d) For
purposes of this Agreement, all references to Sections of the Code
shall include any predecessor provisions to such Sections and any
similar provisions of federal, state, local or foreign
law.
2.7
Compliance with Laws .
(a) Except
as set forth on Schedule 2.7(a),
(i) the
Seller is not in material violation of any order, judgment,
injunction, award or decree binding upon it;
(ii) the
Seller is not, to the best knowledge of the Seller, Parent, and
BHC, in material violation of any federal, state, local or foreign
law, ordinance, permit or regulation or any other requirement of
any governmental or regulatory body, court or arbitrator applicable
to its business or assets, including, without limitation, laws,
ordinances, regulations and other requirements respecting labor,
employment and employment practices, terms and conditions of
employment and wages and hours, or relating to the uses of its
assets, or zoning; and
(iii) since
January 1, 2001, the Seller has not received notice of any
citation, fine or penalty imposed or asserted against the Seller
for, any such violation or alleged violation, provided however that
the representations in paragraphs 2.7(a)(i) through
(iii) apply only to the period after January 1, 2001 with
respect to regulations and requirements of the United States
Environmental Protection Agency (“EPA”) and any state
or local counterparts, the Occupational Safety and Health
Administration (“OSHA”), and laws, ordinances,
regulations and other requirements respecting pollution or
protection of the environment, including, without limitation, laws
relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment (including,
without limitation, ambient air, surface water, ground water or
land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
(b) Set
forth on Schedule 2.7 are all of the licenses, permits,
franchises, orders or approvals of any federal, state, local or
foreign governmental or regulatory body, including, but not limited
to, licenses issued by EPA and OSHA or otherwise relating to
employment and environmental matters that are material to the
conduct of Seller’s business and the uses of its assets
(collectively, “Permits”). The Seller holds all Permits
necessary to operate its business as presently conducted and as
currently contemplated to be conducted. Such Permits are in full
force and effect and, except as set forth on
Schedule 2.7 , such Permits will be transferred to the
Buyer as part of the Purchased Assets to the maximum extent
possible under the applicable laws related to such Permits. Except
as set forth on Schedule 2.7 , since January 1,
2001, no violations are or have been recorded with any governmental
or regulatory body in respect of any Permit;
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and no proceeding is pending or,
to the best knowledge of the Seller, Parent, BARLACO, and BHC,
threatened to revoke or limit any Permit.
2.8
Consents; No Breach . All consents, permits, authorizations
and approvals from any person pursuant to applicable law or
contracts or other agreements with the Seller, that are required in
connection with the performance of obligations of the Seller,
Parent and BHC under this Agreement, or the assignment of the
Purchased Assets are set forth on Schedule 2.8 hereto.
The execution, delivery and performance of this Agreement and the
Related Agreements and the consummation of the transactions
contemplated hereby and thereby will not (i) violate any
provision of the Articles of Organization or Bylaws of the Seller;
(ii) except as set forth on Schedule 2.8 , violate,
conflict with or result in the breach of any of the terms or
conditions of, result in modification of the effect of, or
otherwise give any other contracting party the right to terminate,
or constitute (or with notice or lapse of time or both constitute)
a default under, any material instrument, contract or other
agreement to which the Seller, Parent or BHC is a party or to which
any of them or their assets or properties may be bound or subject;
(iii) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory body
against, or binding upon, the Seller, Parent or BHC or upon the
securities, properties, assets or business of the Seller, Parent,
or BHC; (iv) violate any statute, law or regulation of any
jurisdiction as such statute, law or regulation relates to the
Seller, Parent, or BHC or to the securities, properties, assets or
business of the Seller, Parent, or BHC; (v) except as set
forth on Schedule 2.8 , violate any Permit;
(vi) except as set forth in Schedule 2.8 , require
the approval or consent of any foreign, federal, state, local or
other governmental or regulatory body or the approval or consent of
any other person; or (vii) result in the creation of any lien
or other encumbrance on the assets or properties of the
Seller.
2.9
Actions and Proceedings . Other than as described in
Section 2.7 hereof, and except as disclosed on
Schedule 2.9 , there are no outstanding orders,
judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or arbitration tribunal against or
involving the Seller or any of its securities, assets, or
properties. There are no actions, suits or claims or legal,
administrative or arbitral proceedings or, to the best knowledge of
the Seller, Parent, BARLACO, or BHC, investigations (whether or not
the defense thereof or liabilities in respect thereof are covered
by insurance) pending or, to the best knowledge of the Seller,
Parent, BARLACO, or BHC, threatened against or involving the Seller
or any of its securities, assets or properties. To the best
knowledge of the Seller, Parent, BARLACO, or BHC, there is no fact,
event or circumstance that may give rise to any suit, action,
claim, investigation or proceeding that individually or in the
aggregate could have a material adverse effect upon the
transactions contemplated hereby or upon the assets, properties,
business, operations or condition (financial or otherwise) of the
Seller.
2.10 Contracts
and Other Agreements . There have been delivered or made
available to the Buyer true and complete copies of all of the
Assigned Agreements. All of such Assigned Agreements are valid,
subsisting, in full force and effect, binding upon the Seller, and
to the best knowledge of the Seller, Parent, BARLACO, and BHC,
binding upon the other parties thereto in accordance with their
terms, and the Seller has paid in full or accrued all amounts now
due thereunder and has satisfied in full or provided for all of its
liabilities and obligations thereunder which are presently required
to be satisfied or provided for, and is not in default under any of
them, nor, to the best knowledge of the Seller, Parent, BARLACO,
and BHC, is any other party
7
to any Assigned Agreement in
default thereunder, nor does any condition exist that with notice
or lapse of time or both would constitute a default
thereunder.
2.11 Real
Property . (a) Schedule 2.11 contains a correct
legal description, street address and tax parcel identification
number of all tracts, parcels, and subdivided lots in which Seller
has an ownership interest. Schedule 2.11 contains a
complete list of all real property that is currently leased, or has
been leased at any time during the last five years, by Seller. The
real property set forth in Schedule 2.11 shall be
referred to herein as “ Real Property
.”
(b) To
the knowledge of the Seller, Parent, BARLACO, and BHC, there is not
(i) any claim of adverse possession or prescriptive rights
involving any of the Real Property, (ii) any structure located
on any Real Property which encroaches on or over the boundaries of
neighboring or adjacent properties, or (iii) any structure of
any other party which encroaches on or over the boundaries of any
such Real Property.
(c) Except
as set forth on Schedule 2.11 (i) all of the
buildings, plants, pipes, and structures included, relating to, or
connecting to the Real Property are in condition and repair
sufficient to render water utility service to the public and
(ii) Seller has maintained and operated such buildings,
plants, pipes and structures using its water utility engineering
and operating judgment concerning the timing and extent of
maintenance, including the deferral of some maintenance where such
deferral would not jeopardize Seller’s ability to render
water utility service to its customers. Buyer understands that the
Purchased Assets are mostly old water utility assets that require
constant attention and maintenance to continue to deliver water
utility service to customers. Attached as Schedule 2.11
is a list of repairs and replacements performed over the past five
years and a plan of future capital improvements that Seller
anticipates will be required over the next five years.
2.12 Tangible
Property . The Seller’s water distribution system,
including pumping facilities, purification equipment, mains, pipes,
fire cisterns, basins, fountains, troughs, meters, and hydrants,
office, shop, stores, transportation, laboratory, and other
equipment, machinery, furniture, leasehold improvements, fixtures,
structures, any related capitalized items and other tangible
property material to the business of the Seller included in the
Purchased Assets (“ Tangible Property ”) are in
operating condition as described in Section 2.11 of this
Agreement, and except as otherwise set forth in this Agreement, the
Seller has not received notice that any of its Tangible Property is
in violation of any existing law or any building, zoning, health,
safety or other ordinance, code or regulation.
2.13 Title to
Assets; Liens .
(a) With
respect to the Purchased Assets other than those identified in
Section 1.1(a) and Section 1.1(b), the Seller owns
outright and has good marketable title to all of the Purchased
Assets free and clear of any claim, lien or other encumbrance;
provided, however, with respect to Seller’s rights,
franchises, and privileges, including the water and distribution
rights conferred by Seller’s charter included in the
Purchased Assets, Seller is transferring such rights to the maximum
extent possible under applicable laws.
8
(b) With
respect to the Purchased Assets identified in Section 1.1(a),
Seller has or at Closing will have good marketable title to such
assets free and clear of any liens and encumbrances other than
(i) voluntarily created monetary liens or encumbrances which
shall be discharged prior to Closing or (ii) liens and
encumbrances which do not materially and adversely effect the use
of the Purchased Assets in connection with Seller’s business
and the business to be assumed by Buyer.
(c) The
Purchased Assets constitute all of the assets, properties or rights
that are useful or necessary for the conduct of the Seller’s
business as currently conducted on the date hereof and as of the
Closing Date, except to the extent set forth on
Schedule 2.13 .
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