SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 9, 1998
- -------------------------------------------------------------------------------
(Date of Earliest Event Reported)
Pennichuck Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Hampshire 0-18552 02-0177370
- ---------------------------- ------------------------ ----------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
Four Water Street, Nashua, New Hampshire 03060
- -------------------------------------------------------------------------------
(Address of principal executive offices, including Zip Code)
(603) 882-5191
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
FORM 8-K REPORT
Item 2. Acquisition or Disposition of Assets.
- ---------------------------------------------
On April 9, 1998, Pennichuck Corporation (the "Registrant") acquired certain
water utility assets from the Town of Hudson, New Hampshire (the "Town") for
$7.5 million pursuant to an Agreement of Purchase and Sale of Assets dated
November 5, 1997. This purchase immediately followed the Town's acquisition of
those assets (in addition to certain water utility assets located within the
Town) from an investor-owned water utility which previously served the Town and
surrounding communities. The Registrant acquired these water utility assets
through a new, wholly-owned subsidiary, Pennichuck East Utility, Inc.
("Pennichuck East") which will be a regulated water utility. As a result of
this purchase, the Registrant expects to add approximately 3,600 new customers
to its existing customer base and annual revenues from these added customers is
estimated to be $2.3 million.
The water utility assets acquired by the Registrant / Pennichuck East consist
principally of water transmission and distribution mains, hydrants, wells, pump
stations and pumping equipment, water services and meters, vehicles and a
certain tract of land and building serving as the previous utility's
administrative office. The assets are located in the New Hampshire towns of
Litchfield, Pelham, Windham, Londonderry, Derry, Raymond and Hooksett, an area
adjacent to the service franchise served by the Registrant's principal
operating subsidiary, Pennichuck Water Works, Inc.
In order to finance this purchase from the Town, the Registrant and Pennichuck
East obtained bank loans from the Registrant's bank, Fleet Bank-NH. Under a
separate swap agreement between the Registrant, Pennichuck East, Fleet Bank-NH
and Fleet National Bank, the $7.5 million financing has been structured as two
separate notes, in the principal amounts of $3 million and $4.5 million, with
maturities of 2 and 7 years and fixed interest rates of 6.20% and 6.50%,
respectively. These notes are secured by, among other things, the operating
assets of Pennichuck East.
The Agreement of Purchase and Sale of Assets is attached hereto as Exhibit
28.3.
Item 7. Financial Statements and Exhibits.
- ------------------------------------------
Pursuant to Item 7(b)(2), the pro forma financial information relating to this
transaction is not included with this initial report on Form 8-K and such pro
forma financial information will be filed no later than 60 days from the date
of this report.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on behalf by the
undersigned hereunto duly authorized.
Pennichuck Corporation
---------------------------------------
(Registrant)
April 24, 1998 /s/ Charles J. Staab
- ------------------------------- ---------------------------------------
Date Charles J. Staab, Vice President,
Treasurer and Chief Financial Officer
LIST OF EXHIBITS
----------------
28.3 Agreement of Purchase and Sale of Assets dated November 5,
1997 between Pennichuck Corporation and the Town of Hudson,
New Hampshire
AGREEMENT OF PURCHASE AND SALE OF ASSETS
This AGREEMENT OF PURCHASE AND SALE OF ASSETS (this "Agreement") is dated
as of November ___, 1997 by and between the TOWN OF HUDSON, New Hampshire, a
municipal corporation existing under the laws of the State of New Hampshire,
with its principal place of business at 12 School Street, Hudson, New Hampshire
03051 ("Seller"); and PENNICHUCK CORPORATION, a New Hampshire corporation with
its principal office at 4 Water Street, Nashua, New Hampshire 03061, or its
assigns (hereinafter referred to as "Purchaser");
W I T N E S S E T H T H A T:
WHEREAS, Seller has entered into an agreement of purchase and sale of
assets with Consumers New Hampshire Water Company (hereinafter referred to as
"CNHWC") which contemplates Seller's purchase of substantially all of CNHWC's
properties and assets, constituting water service territories which provide
water service to residents within a number of different municipalities in the
State of New Hampshire ("CNHWC Agreement"); and
WHEREAS, Purchaser desires to purchase a portion of Seller's water
service properties and assets to be acquired under the CNHWC Agreement (as
hereinafter more specifically defined, the "Non-Hudson Assets"); and
WHEREAS, Seller and Purchaser have engaged in extensive negotiations to
effectuate this Agreement; and
WHEREAS, Purchaser desires to purchase the Non-Hudson Assets from Seller,
and Seller desires to sell the same to Purchaser, on the terms and conditions
herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereby agree as follows:
1. PURCHASE AND SALE OF BUSINESS AND ASSETS.
1.1 "Hudson Property" is all of the former CNHWC real property and
fixtures located in the Town of Hudson, New Hampshire, together with the
Litchfield wells, water transmission rights to the transmission main linking
the wells to Hudson, all personalty located in Hudson and such personalty
located at the Litchfield wells necessary for well operation and maintenance,
and that portion of the Old Derry Road transmission main located in Litchfield,
but connecting portions of the Hudson Property. The Hudson Property is more
specifically identified on Exhibit 1.1 attached hereto. Included within the
term Hudson Property are the nine parcels of land identified in Exhibit 1.1.1
which are either not presently or not fully dedicated to water utility service
by CNHWC. Seller acknowledges that Purchaser shall have the right, within
ninety (90) days of the execution of this Agreement, to inspect and examine the
nine parcels of property identified in Exhibit 1.1.1 for the purpose of
determining in good faith whether any of the Exhibit 1.1.1 parcels can be
dedicated to water utility use by Purchaser. If Purchaser determines that any
of the parcels can be put to such use, the parcel(s) identified shall be
deleted from Exhibit 1.1.1 and thereafter shall be deemed by Purchaser and
Seller for purposes of this Agreement to be "Non-Hudson Property." Any change
from Exhibit 1.1.1 land to "Non-Hudson Property" shall be at no additional cost
to the Purchaser. Notice of such change in designation shall be given in
writing to Seller no later than ninety (90) days from the date of this
Agreement.
1.2 "Non-Hudson Property" is all real property and fixtures of CNHWC
acquired by Seller pursuant to the CNHWC Agreement, other than "Hudson
Property" as defined at 1.1 above.
1.3 "Non-Hudson Business" shall refer to the CNHWC business that was
formerly conducted by CNHWC in and with respect to that portion of its water
service territory where "Non-Hudson Property" is situated.
1.4 Purchase of Seller's Non-Hudson Assets. Subject to and upon the
terms and conditions set forth in this Agreement, Seller will sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser will purchase, at the
Closing hereunder (as defined herein), that portion of the business, assets,
properties, goodwill and rights of Seller as of the Closing Date (as
hereinafter defined), of every nature, kind and description, tangible and
intangible, wheresoever located and whether or not carried or reflected on the
books and records of CNHWC and/or Seller, related to the "Non-Hudson Property"
and "Non-Hudson Business" (collectively, the "Non-Hudson Assets"), including,
without limitation, (i) such real estate assets located in New Hampshire and
specifically identified on Exhibit "1.4" attached hereto (the "Non-Hudson Real
Estate Assets"), (ii) the personalty, fixtures and other assets of Seller
referred to in Schedule 5.11 attached hereto as updated as of the Closing Date
pursuant to a form of Bill of Sale mutually acceptable to the parties, (iii)
CNHWC and/or Seller's pertinent accounts receivable related to "Non-Hudson
Assets" as of the Closing Date, (iv) certain books, records and computer data
in Seller's possession or which shall come into Seller's possession relating to
or arising out of the conduct of "Non-Hudson Business", including but not
limited to all plans, diagrams, blueprints, as-built plans, specifications,
inventories, capital improvement schedules and progress reports, environmental
surveys and legal notices relating to the Non-Hudson Business (the "Records"),
(v) all rights and causes in action of Seller, whether arising by contract or
otherwise, arising out of CNHWC's conduct of the Non-Hudson Business, (vi) all
deposits and deposit accounts held by Seller which were paid to CNHWC or Seller
by CNHWC's or Seller's customers and others relative to the Non-Hudson
Business, and (vii) such other assets of CNHWC or Seller not specifically
referred to herein as are necessary or appropriate for the conduct of the
Non-Hudson Business, with only such dispositions of such assets and write-offs
of accounts as shall have occurred in the ordinary course of CNHWC's or
Seller's Non-Hudson Business between the date hereof and the Closing Date and
which are permitted by the terms hereof. The transfer of Seller's Non-Hudson
Assets to Purchaser shall exclude (a) CNHWC or Seller's Non-Hudson Business
cash on hand, bank account balances and bank accounts, (b) CNHWC or Seller's
Non-Hudson insurance policies, and (c) Seller's rights arising under or related
to this Agreement or any related agreements.
1.5 Liabilities and Encumbrances. Seller's Non-Hudson Assets shall be
conveyed to the Purchaser free and clear of all liabilities, obligations, liens
and encumbrances excepting only those liabilities and obligations which are
expressly to be assumed by Purchaser hereunder and those liens and encumbrances
securing the same which are expressly permitted by the terms hereof.
1.6 Accounts Payable. Seller shall retain responsibility for all
accounts payable and other bills related to the Non-Hudson Business arising
prior to Closing.
2. PURCHASE PRICE.
2.1 Non-Hudson Assets Purchase Price. In consideration of the sale,
transfer, conveyance, assignment and delivery of Seller's Non-Hudson Assets as
existing as of the Closing Date by Seller to Purchaser, and in reliance upon
the representations and warranties made herein by Seller and the delivery of a
Bill of Sale, Purchaser will, in full payment thereof, pay to Seller at the
Closing a total purchase price of Seven Million Five Hundred Thousand Dollars
($7,500,000.00) (the "Non-Hudson Assets Purchase Price"). The Seven Million
Five Hundred Thousand Dollars ($7,500,000.00) Non-Hudson Assets Purchase Price
referenced herein reflects the amount of monies to be paid by the Purchaser for
the assets of Seller acquired hereunder as of the Date of Closing.
2.2 Additional Non-Hudson Assets Purchase Price. To the extent that
CNHWC and/or Seller adds additional physical plant and property to the
Non-Hudson Assets through either scheduled service additions, budgeted capital
outlays, repairs and maintenance or contributions in aid to construction
between January 1, 1998 and the Date of Closing, the Purchaser shall pay to
Seller the book value of these additions, said price shall not exceed
$300,000.00 (the "Additional Non-Hudson Assets Purchase Price").
2.3 Aggregate Purchase Price. The Non-Hudson Assets Purchase Price and
the Additional Non-Hudson Assets Purchase Price are collectively referred to
herein as the "Aggregate Purchase Price". The Aggregate Purchase Price shall be
payable by Purchaser to Seller as of the Closing by the wire transfer of
immediately available funds to bank accounts as per written instructions of
Seller given to Purchaser at least 24 hours prior to the Closing.
2.4 Assumed Liabilities. In partial consideration for the transfer of
the Seller's Non-Hudson Assets, Purchaser hereby agrees to assume the
obligations of Seller after the Closing Date arising under (a) the contracts
for performance of obligations arising in whole or in part (but only as to that
part arising) after the Closing Date and payments due after the Closing Date
under the contracts for services rendered and/or work performed in whole or in
part prior to and after the Closing Date identified in Schedule 2.4; and (b)
any liabilities under Customer Advance Contracts and/or the developer
agreements identified in Schedule 2.4 attached hereto. All liabilities and
obligations to be assumed by Purchaser pursuant to this Section 2.4 are
hereinafter referred to collectively as the "Assumed Liabilities."
2.5 Liabilities Undertaking. In addition to the foregoing, Purchaser
and Seller will execute at the Closing an agreement ("Liabilities Undertaking")
in a form acceptable to the parties relating to the contractual obligations of
Seller to be assumed by Purchaser. The parties shall also execute as a
condition to closing a pro-ration of the $280,000 developer reimbursement cap
which Seller will enjoy with CNHWC.
2.6 Allocation of Purchase Price Among the Purchased Assets. The
Purchaser shall allocate the Aggregate Purchase Price among the Non-Hudson
Assets in its discretion in accordance with applicable regulatory and/or
accounting principles and restraints under which it operates.
3. CLOSING AND PRECLOSING.
3.1 Closing. The purchase and sale and other transactions contemplated
by this Agreement shall be consummated at a Closing (the "Closing") which shall
take place at 9:00 a.m., on April 1, 1998, at the offices of Donahue, Tucker &
Ciandella, 225 Water Street, Exeter, New Hampshire 03833, or at such other time
and place as the parties may agree. The day on which the Closing shall occur is
herein sometimes referred to as the "Closing Date". If any party is entitled
not to close on the Closing Date because a condition to the Closing set forth
in Section 9 or 10 hereof has not been met (or waived by the party or parties
entitled to waive it), such party may postpone the Closing from time to time,
by giving at least five days prior notice to the other party, until the
condition has been met (which all parties will use their best efforts to cause
to happen), but in no event to a date later than July 31, 1998. The Closing
shall be contemporaneous with the closing between CNHWC and the Town of Hudson
to purchase substantially all of CNHWC's property and assets in the State of
New Hampshire.
3.2 Preclosing. On a date no later than ten business days prior to the
date on which the parties expect the Closing to occur, the parties shall hold a
preclosing relating to the transactions contemplated by this Agreement (the
"Preclosing"), at the offices of Donahue, Tucker & Ciandella, 225 Water Street,
Exeter, New Hampshire 03833, or at such other time and place as the parties may
agree. At the Preclosing, the parties shall review and agree upon the forms of
all documents to be delivered at the Closing pursuant to Article 4 and Sections
9 and 10 of this Agreement, and shall execute a Preclosing Agreement in a form
mutually acceptable to the parties to the effect that the specific conditions
to Closing referenced therein have been satisfied or waived to the satisfaction
of the parties, and that the only conditions remaining to be satisfied as of
the Closing Date are those specifically referenced therein.
4. SELLER'S OBLIGATIONS AT CLOSING: FURTHER ASSURANCES.
4.1 Deliveries at Closing. At the Closing, Seller will deliver to
Purchaser:
4.1.1 A Bill of Sale duly executed by Seller conveying all of
Seller's Non-Hudson Assets to Purchaser (other than the Non-Hudson Real
Estate Assets);
4.1.2 Deeds conveying all of the Non-Hudson Real Estate Assets to
Purchaser, in each case the type of deed to be of the same type given to
Seller in connection with the conveyance of such Non-Hudson Real Estate
Assets to Seller, in form and substance reasonably satisfactory to
Purchaser, duly executed by Seller, together with the Policy (as defined
in Section 7.4.1 hereof), the surveys contemplated by Section 7.4.4
hereof, and the affidavits contemplated by Section 7.4.3 hereof, with
real estate taxes on the Non-Hudson Real Estate Assets to be prorated
between Purchaser and Seller through the Closing Date, and with Seller to
pay (or pro-rate) all charges for gas, electricity, telephone, water,
sewer, trash removal, paving obligation and street cleaning through the
Closing Date (it being understood that Seller shall have paid any
delinquent real estate taxes and assessments);
4.1.3 Such other good and sufficient instruments of conveyance,
assignment and transfer, such as Bills of Sale (including certificates of
title for all motor vehicle transfers), in form and substance
satisfactory to Purchaser's counsel, as shall be effective to vest in
Purchaser good and marketable title to all of the remaining of Seller's
Non-Hudson Assets;
4.1.4 All Records, contracts, current files and other data, all
state and local permits (correct through the Closing Date) and documents
pertaining to the Non-Hudson Business (which may be delivered at the
Hudson, New Hampshire offices of Seller), except Seller may elect to
retain originals of any such records if true and correct copies thereof
certified by the Town Clerk are delivered to Purchaser at the Closing;
and
4.1.5 All updated Schedules, closing certificates and other
documents required to be delivered to Purchaser under the provisions of
this Agreement.
4.2 At the Closing, Purchaser will deliver purchase money in the amount
of the Aggregate Purchase Price and will execute and deliver the Liabilities
Undertaking in a form mutually agreeable to the parties.
4.3 Further Assurances. At any time and from time to time after the
Closing, at Purchaser's request without further consideration, Seller will
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such action as Purchaser may reasonably
deem necessary or desirable in order to more effectively transfer, convey and
assign to Purchaser, and to confirm Purchaser's title to, all of the Non-Hudson
Assets, to put Purchaser in actual possession and operating control thereof and
to assist Purchaser in exercising all rights with respect thereto, all at no
additional cost or expense to Seller. With respect to any original records
retained by Seller pursuant to Section 4.1.4 of this Agreement, at reasonable
times and on reasonable notice Seller shall make such original records
available to Purchaser for any proper purpose after the Closing.
4.4 Collection of Accounts and Other Items. Beginning on the Closing
Date, Purchaser shall have the right and authority to collect for its own
account all customer accounts corresponding to the Non-Hudson Business which
shall be transferred to Purchaser as provided herein and to endorse with the
name of Seller or CNHWC on any checks received on account of any such accounts.
Seller will promptly transfer and deliver to Purchaser any cash or other
property which Seller may receive after the Closing in respect of any such
accounts or other items relative to the Non-Hudson Business other than any
amounts due and owing to Seller hereunder.
5. REPRESENTATIONS AND WARRANTIES BY SELLER.
Seller represents and warrants to Purchaser, which representations and
warranties shall be true and correct as of the date hereof, as follows:
5.1 Organization. Seller is a municipal corporation and political
subdivision in and of the State of New Hampshire, duly organized and validly
existing under the laws of the State of New Hampshire and has full municipal
power and authority to enter into this Agreement and the related agreements
referred to herein and to carry out the transactions contemplated by this
Agreement.
5.2 Authorization and Approval of Agreement. The Board of Selectmen of
the Seller is authorized to enter into this Agreement and will seek
ratification of this sale by vote of town meeting. This Agreement is a valid
and binding obligation of the Seller subject to ratification as is set forth in
Sections 8 and 9 hereof.
5.3 Execution, Delivery and Performance of Agreement. Neither the
execution, delivery nor performance of this Agreement by Seller will, with or
without the giving of notice or the passage of time, or both, conflict with,
result in a default, right to accelerate or loss of rights under, or result in
the creation of any lien, charge or encumbrance pursuant to, any franchise,
mortgage, deed of trust, lease, license, agreement, understanding, law,
ordinance, rule or regulation or any order, judgment or decree to which Seller
is a party or by which it may be bound. Seller has full municipal power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby, all municipal governmental proceedings required to be
taken by Seller to authorize the execution, delivery and performance of this
Agreement and the agreements relating hereto have been properly taken and this
Agreement constitutes a valid and binding obligation of Seller enforceable
against it in accordance with its terms.
5.4 Finder's Fees. Neither Seller nor any person acting on behalf of
Seller is a party to any contract, arrangement or understanding pursuant to
which any third person or entity is entitled to any brokerage commission,
finder's fee or similar compensation from any party in connection with the
execution and delivery of this Agreement or the consummation of the
transactions herein contemplated.
5.5 Taxes. All taxes relating to operating the Non-Hudson Business
prior to the Closing which could become a lien upon Purchaser's acquisition of
the Non-Hudson Assets or result in any liability to the Purchaser, including,
without limitation, income, property, sales, use, franchise, added value,
employees' income withholding and social security taxes, imposed by the United
States or by any foreign country or by any state, municipality, subdivision or
instrumentality of the United States or of any foreign country, or by any other
taxing authority, which are or will be due and payable by Seller, and all
interest and penalties thereon, whether disputed or not, have been or will be
paid in full, all tax returns required to be filed in connection therewith have
been or will be accurately prepared and duly and timely filed and all deposits
required by law to be made by Seller with respect to employees' withholding
taxes have been or will be duly made.
5.6 Absence of Changes or Events. Except as set forth in Schedule 5.6
attached hereto, Seller, as of the date of execution of this Agreement,
represents that Seller, and to the best of its knowledge CNHWC, has conducted
the Non-Hudson Business only in the ordinary course and has not:
5.6.1 incurred any obligation or liability related to the
Non-Hudson Assets, absolute, accrued, contingent or otherwise, whether
due or to become due, except current liabilities for trade or business
obligations incurred in connection with the purchase of goods and
services in the ordinary course of business and consistent with its prior
practice, none of which liabilities, in any case or in the aggregate,
materially and adversely affects the business, liabilities or financial
condition of the Non-Hudson Assets;
5.6.2 discharged or satisfied any lien, charge or encumbrance
related to the Non-Hudson Assets, other than those then required to be
discharged or satisfied, or paid any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, other
than current liabilities shown on the CNHWC Balance Sheet (for purposes
hereof, the term "CNHWC Balance Sheet" shall mean the audited balance
sheet of CNHWC as of December 31, 1996 (the "CNHWC Balance Sheet Date")
and December 31, 1995, and audited statements of income, shareholders'
investment and cash flows for the years then ended, and the reports
thereon of Arthur Andersen Co., Certified Public Accounts) and current
liabilities incurred since the CNHWC Balance Sheet Date in the ordinary
course of business and consistent with its prior practice in conducting
the Non-Hudson Business;
5.6.3 mortgaged, pledged or subjected to lien, charge, security
interest or any other encumbrance or restriction of any of Non-Hudson
Assets, tangible or intangible;
5.6.4 sold, transferred, leased to others or otherwise disposed
of any of Non-Hudson Assets, except for inventory sold in the ordinary
course of business, or canceled or compromised any material debt or
claim, or waived or released any right of substantial value;
5.6.5 received any notice of termination of any contract, lease
or other agreement or suffered any damage, destruction or loss (whether
or not covered by insurance) related to the Non-Hudson Assets which, in
any case or in the aggregate, has had a materially adverse effect on the
assets, operations or prospects of the Non-Hudson Business;
5.6.6 in connection with or affecting the Non-Hudson Business,
encountered any labor union organizing activity, had any actual or
threatened employee strikes, work stoppages, slow-downs or lock-outs, or
had any material change in its relations with its employees, agents,
customers or suppliers;
5.6.7 made any material change in the rate of compensation,
commission, bonus or other direct or indirect remuneration payable, or
paid or agreed or orally promised to pay, conditionally or otherwise, any
bonus, extra compensation, pension or severance or vacation pay, to any
employee or agent of Seller related to the Non-Hudson Business;
5.6.8 instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body relating to
Seller or its properties, other than Seller's condemnation proceeding
before the New Hampshire Public Utilities Commission entitled: In re
Consumers New Hampshire Water Company, Docket No. DE 96-227;
5.6.9 failed to replenish its inventories and supplies relative
to the Non-Hudson Business in a normal and customary manner consistent
with its prior practice and prudent business practices prevailing in the
industry, or made any purchase commitment affecting the Non-Hudson
Business in excess of the normal, ordinary and usual requirements of its
business or at any price in excess of the then current market price or
upon terms and conditions more onerous than those usual and customary in
the industry, or made any change in its service, selling, pricing,
advertising or personnel practices inconsistent with its prior practice
and prudent business practices prevailing in the industry;
5.6.10 suffered any change, event or condition which, in any case
or in the aggregate, has had a materially adverse effect on Non-Hudson
Assets (financial or otherwise), or the operations or prospects of the
Non-Hudson Business, including, without limitation, any material change
in the Non-Hudson Business revenues, costs or relations with its
employees, agents, customers or suppliers;
5.6.11 entered into any transaction, contract or commitment
affecting the Non-Hudson Business other than in the ordinary course of
business or paid or agreed to pay any brokerage or finder's fee, taxes or
other expenses in connection with, or incurred any severance pay
obligations by reason of, this Agreement or the transactions contemplated
hereby; or
5.6.12 entered into any agreement or made any commitment to take
any of the types of action described in subparagraphs 5.6.1 through
5.6.11 above.
5.7 If, prior to Closing, it comes to the attention of the Seller that
any of the representations and warranties which have been made to Seller in its
capacity as "Purchaser" by CNHWC in the CNHWC Agreement) are no longer true and
accurate, Seller will promptly notify Purchasers of the information, and will
cooperate with Purchaser's inquiries with respect to such inaccuracies.
5.8 Litigation. Except as set forth in Schedule 5.8 attached hereto,
there is no claim, legal action, suit, arbitration, governmental investigation
or other legal or administrative proceeding, nor any order, decree or judgment
in progress, pending or in effect, or to the knowledge of Seller threatened,
against or relating to either of Seller, or CNHWC, its officers, directors or
employees, the Non-Hudson Business, Non-Hudson Property, or the transactions
contemplated by this Agreement, and Seller does not know or have reason to be
aware of any basis for the same. Schedule 5.8 also identifies each civil,
criminal or administrative proceeding or investigation to which CNHWC or Seller
has been a party during the three year period prior to the date hereof which
sought (i) payment of any criminal or administrative fines or penalties by
CNHWC in connection with the operation of its business, (ii) civil damages in
excess of $5,000.00 in connection with the operations of the CNHWC business, or
(iii) injunctive relief of any type or nature against Seller or CNHWC as a
result of or connected with the CNHWC business.
5.9 Title to Properties; Encumbrances.
5.9.1 All Non-Hudson Real Estate Assets of Seller are listed on
Exhibit 1.4 attached hereto. All Non-Hudson personal property of Seller
included in Seller's Non-Hudson Assets, including inventory and supplies,
is listed in Schedule 5.9 attached hereto.
5.9.2 None of the Non-Hudson Assets are subject to any mortgage,
pledge, lien, charge, security interest, encumbrance, restriction, lease,
license, easement, liability or adverse claim of any nature whatsoever,
direct or indirect, whether accrued, absolute, contingent or otherwise,
except (i) as disclosed in Schedule 5.9 attached hereto, (ii) as
expressly set forth in the CNHWC Balance Sheet (including the notes
thereto) as securing specific liabilities or as otherwise expressly
permitted by the terms hereof, or (iii) those imperfections of title and
encumbrances, if any, which (A) are not substantial in character, amount
or extent and do not materially detract from the value of the properties
for use in connection with the operation of the Non-Hudson Business
subject thereto, (B) do not interfere with either the present and
continued use of such property or the conduct of the normal operations of
the Non-Hudson Business, and (C) have arisen only in the ordinary course
of business.
5.9.3 With respect to each of the buildings, structures or
appurtenances included within the Non-Hudson Real Estate Assets, Seller
or CNHWC has adequate rights of ingress and egress thereto for operation
of the Non-Hudson Business, and none of such buildings, structures or
appurtenances (or any equipment therein), nor the operation or
maintenance thereof, violates any restrictive covenant binding upon CNHWC
or Seller. To the knowledge of the Seller, all of the Non-Hudson Assets
owned, leased or used by Seller and/or CNHWC and required for the
ordinary operation of Seller's Non-Hudson Business are in good operating
condition and repair, are suitable for the purposes used, are adequate
and sufficient for all current operations of CNHWC and/or Seller and are
directly related to the Non-Hudson Business. Seller has provided to
Purchaser complete copies of the most recent owner's title insurance
policies, binders and certificates or opinions of title heretofore issued
to CNHWC with respect to each parcel of owned Non-Hudson Real Estate
Assets.
5.10 Schedules. Attached hereto as Schedule 5.10 is a separate
schedule containing, to the knowledge of the Seller, an accurate and complete
list and description of:
5.10.1 Other than the fee simple Non-Hudson Real Estate Assets,
all real property material to the operation of Non-Hudson Business owned
by CNHWC and/or Seller or in which CNHWC or Seller has a leasehold or
other interest which is used by CNHWC and/or Seller in connection with
the operation of the Non-Hudson Business, together with a description of
each lease, sublease, license, or any other instrument under which Seller
claims or holds such leasehold or other interest or right to the use
thereof or pursuant to which CNHWC and/or Seller has assigned, sublet or
granted any rights therein, identifying the parties thereto, the rental
or other payment terms, expiration date and cancellation and renewal
terms thereof;
5.10.2 All of Seller's or CNHWC's receivables related to the
Non-Hudson Business (which shall include all accounts receivable as the
end of the most recent calendar month, all loans receivable and any
customer advances made by CNHWC and/or Seller);
5.10.3 Such items of personal property owned by Seller or CNHWC
and listed in Schedule 5.10, including machinery, tools, equipment, motor
vehicles, rolling stock and other tangible personal property (other than
inventory and supplies), leased or used by Seller or CNHWC, except for
individual items having a value of less than $1,000.00 which do not, in
the aggregate, have a total value of more than $10,000.00, setting forth
with respect to all such listed property a summary description of all
leases, liens, claims, encumbrances, charges, restrictions, covenants and
conditions relating thereto, identifying the parties thereto, the rental
or other payment terms, expiration date and cancellation and renewal
terms thereof;
5.10.4 All agreements or arrangements providing for the services
of any independent contractor performing services for CNHWC and/or Seller
with respect to the Non-Hudson Assets and to which Seller or CNHWC is a
party or by which it is bound;
5.10.5 All individual contracts, agreements and commitments or
other understandings or arrangements to which CNHWC and/or Seller is or
has been a party since January 1, 1997, which relate to the Non-Hudson
Business and which call for (i) payments or receipts of more than
$10,000, and (ii) all water treatment chemical purchases aggregating more
than $10,000;
5.10.6 The names and current annual or hourly salary rates of all
persons formerly employed by CNHWC in any way relating to the Non-Hudson
Business (including independent agents) and showing separately for each
such person the amounts paid or payable as salary, bonus payments and any
indirect compensation for the year ended December 31, 1996, and as of
June 30, 1997 for calendar 1997 (year to date) to be updated through the
month end prior to Closing; and
5.10.7 A list of all of CNHWC and/or Seller's property relating
to the Hudson or Non-Hudson Business acquired by CNHWC and/or Seller
since December 31, 1996.
All of the contracts, agreements, leases, licenses and commitments required to
be listed in Schedule 5.10 (other than those which have been fully
performed)are valid and binding, enforceable in accordance with their
respective terms, in full force and effect and, except as otherwise specified
in Schedule 5.10, are validly assignable to Purchaser without the consent of
any other party so that, after the assignment thereof to Purchaser pursuant
hereto, Purchaser will be entitled to the full benefits thereof; provided that
the obligations of Seller thereunder shall, after the Closing Date, constitute
Assumed Liabilities hereunder. Except as disclosed in Schedule 5.10, none of
the payments required to be made under any such contract, agreement, lease,
license and commitment has been prepaid more than 30 days prior to the due date
of such payment thereunder, and there is not thereunder any existing default,
or event which, after notice or lapse of time, or both, would constitute a
default or result in a right to accelerate or loss of rights. None of CNHWC
and/or Seller's existing or completed contracts relating to or affecting the
Non-Hudson Business is subject to renegotiation with any governmental body.
True and complete copies of all such contracts, agreements, leases, licenses
and other documents listed in Schedule 5.10 (together with any and all
amendments thereto) have been delivered to Purchaser and identified with a
reference to this Section of this Agreement.
5.11 No Guaranties. Except as set forth in Schedule 5.11 attached
hereto, none of the obligations or liabilities of Seller relating to the
Non-Hudson Business is guaranteed by any other person, firm or corporation.
5.12 Inventory. To the knowledge of Seller, the Non-Hudson Assets
include a sufficient quantity of each type of inventory and supplies necessary
to meet the normal requirements of the Non-Hudson Business and its operations.
All such inventory and supplies are readily useable in the current operations
of the Non-Hudson Business.
5.13 Records. The books of account relative to the Non-Hudson Business
are complete and correct in all material respects, and there have been no
transactions involving the Non-Hudson Business which properly should have been
set forth therein and which have not been accurately so set forth.
5.14 Employee Benefit Plans. Schedule 5.14 attached hereto contains a
true and complete list of all CNHWC employee benefit plans ("Employee Benefit
Plans") within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), whether or not any such plans are
otherwise exempt from the provisions of ERISA, established, maintained,
sponsored or contributed to by CNHWC and all other employers, whether or not
incorporated, which by reason of a control group, a group under common control
or an affiliated service group are treated together with CNHWC and/or its sole
Shareholder as a single employer within the meaning of Section 414(b), (c) or
(m) of the Code. No activities of, or failure to act by, Seller or CNHWC in
connection with any CNHWC Employee Benefit Plan shall result in any liability
to Purchaser following the Closing, and Purchaser shall not be obligated to
assume any liabilities of Seller or CNHWC pursuant to any Employee Benefit
Plan. Seller herein has received assurances that there has not been any (i)
termination of any "defined benefit plan" within the meaning of ERISA
maintained by CNHWC or any person, firm or entity ("Affiliate") which is under
"common control" (within the meaning of Section 4001(b) of ERISA) with CNHWC,
or (ii) commencement of any proceeding to terminate any such plan pursuant to
ERISA, or otherwise, or (iii) written notice given to CNHWC or any Affiliate of
the intention to commence or seek the commencement of any such proceeding.
CNHWC maintains that it has not incurred any withdrawal liability within the
meaning of Section 420l and 4204 of ERISA to any pension plan which is a
Multiemployer Plan (as defined in Section 4001 of ERISA), and no event has
occurred, and there exists no condition or set of circumstances (as a result of
the execution, delivery and performance of this Agreement or otherwise) which
presents any risk of the occurrence of any withdrawal from or the partition,
termination, reorganization or insolvency of any Multiemployer plan which could
result in any liability to either Seller or Purchaser herein.
5.15 Environmental Matters.
5.15.1 Except as set forth in Schedule 5.15 attached hereto, to
the knowledge of Seller, and as represented to Seller by CNHWC in the
CNHWC Agreement, (i) no "Hazardous Substance" (as hereinafter defined)
has been disposed of on, generated on, treated on, buried beneath, or
percolated beneath, (ii) no such disposal, generation, treatment, burial
or percolation has been threatened, and (iii) there has been no "Release"
(as hereafter defined) thereof on or near, any real estate owned or
leased by CNHWC and/or Seller in connection with the Non-Hudson Business,
or the Non-Hudson Real Estate Assets. Except as set forth in Schedule
5.15, to the knowledge of Seller, CNHWC and/or Seller are and have been
in compliance with all applicable federal, state and local laws,
administrative rulings and regulations of any court, administrative
agency or other governmental or quasi-governmental authority, relating to
the protection of the environment (including but not limited to laws
prohibiting the creation of a public nuisance), the non-compliance with
which would have a material adverse effect on the Non-Hudson Property or
the Non-Hudson Business. Attached to Schedule 5.15 are copies of all
correspondence between CNHWC and either the United States Environmental
Protection Agency or the New Hampshire Environmental Protection Agency
relating to the Non-Hudson Property or the Non-Hudson Business since
January 1, 1989. To the knowledge of Seller, neither Seller nor CNHWC is
a potentially responsible party under Section 107 of the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
("CERCLA"), or is or has been subject to an action under Section 7003 of
the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"),
and has not received notification from any federal, state or local
government, agency or regulatory body, of a violation under any federal,
state or local law regulating the Release (as hereinafter defined),
disposal or discharge of any toxic, explosive or other Hazardous
Substance. To the knowledge of Seller, no Environmental Condition (as
hereafter defined) exists in the Non-Hudson Property.
5.15.2 Except as disclosed in Schedule 5.15, the Non-Hudson
Property is free from the harmful effects of asbestos or
asbestos-containing materials.
5.15.3 Except as disclosed in Schedule 5.15, no Underground
Storage Tanks (as hereafter defined) are now present on or beneath the
premises of the Non-Hudson Property.
5.15.4 For purposes of this Agreement: (i) "Hazardous Substance"
means any one or more of (A) any substance defined as a hazardous
substance under Section 101(14) of CERCLA, (B) any other substance deemed
hazardous by the United States Environmental Protection Agency pursuant
to Section 102(a) of CERCLA, (C) petroleum (including crude oil or any
fraction thereof), (D) any substance deemed hazardous pursuant to Section
1004(5) of RCRA, (E) any substance regulated under the Toxic Substance
Control Act, as amended, or (F) any other hazardous or toxic substance,
materials, compound, mixture, solution, element, pollutant or waste
regulated under any federal, state or local statute, ordinance or
regulation; (ii) "Release" shall have the meaning given to such term in
Section 101(22) of CERCLA; (iii) "Underground Storage Tanks" shall be as
defined in applicable New Hampshire regulations or statutes and shall
further include all other underground storage tanks not included in the
foregoing definition because of size, content or purpose thereof; and
(iv) "Environmental Condition" shall mean conditions of the environment,
including natural resources (including flora and fauna), soil, surface
water, groundwater, any present or potential drinking water supply,
subsurface strata or the ambient air, relating to or arising out of the
use, handling, storage, treatment, recycling, generation, transportation,
spilling, leaking, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, disposal, dumping, Release or threatened Release of
Hazardous Substances upon or near the Non-Hudson Property by CNHWC and/or
Seller or Seller's agents, lessees, representatives, employees,
independent contractors or (to the best of Seller's knowledge)
predecessors in interest.
5.16 Mechanics and Other Liens. Seller will pay for all labor,
services and material which was made or furnished to Seller or CNHWC by any
person or entity, including, without limitation, contractors, subcontractors,
mechanics or materialmen, which could give rise to any lien upon the Non-Hudson
Property as provided under the laws of the State of New Hampshire and will
provide an affidavit to that effect at Closing for title insurance purposes.
5.17 Permits, Franchises, Certificates and Licenses. Schedule 5.17
attached hereto sets forth all licenses, franchises, certificates and permits
issued by applicable governmental authorities held by CNHWC with respect to the
Non-Hudson Business, including all licenses and certificates of authority or
public convenience and necessity issued by the Public Utilities Commission of
New Hampshire or various New Hampshire municipalities relating to the
Non-Hudson Business. To the best knowledge of Seller, such licenses and permits
constitute all of the licenses and permits necessary or appropriate to operate
the Non-Hudson Business in the manner in which the same is operated as of the
date hereof.
5.18 Data Processing Matters.
5.18.1 Except as set forth in Schedule 5.18 attached hereto,
CNHWC and/or Seller does not have any of its respective records, systems,
controls, data or information relating to the Non-Hudson Business
recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic, mechanical
or photographic process, whether computerized or not) which (including
all means of access thereto and therefrom) are not under the exclusive
ownership and control of CNHWC and/or Seller.
5.18.2 The portion of the Data Processing Systems assets which
will be transferred to Purchaser by the Seller as part of the Non-Hudson
Assets are listed in Schedule 5.18, and all agreements and licenses
relating to leased or licensed Data Processing Systems which are being
transferred are identified in Schedule 5.18 and are freely assignable or
transferable to Purchaser by Seller on the same terms as leased or
licensed by Seller and/or CNHWC and without requiring the payment of any
additional fee by Purchaser.
5.19 Disclosure. No representation or warranty by Seller contained in
this Agreement nor any statement or certificate furnished or to be furnished by
Seller to Purchaser or its representatives in connection herewith or pursuant
hereto contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to make the statements
herein or therein contained not misleading. The representations and warranties
contained in this Section 5 or elsewhere in this Agreement or any document
delivered pursuant hereto shall not be affected or deemed waived by reason of
the fact that Purchaser and/or its representatives knew or should have known
that any such representation or warranty is or might be inaccurate in any
respect.
6. REPRESENTATIONS AND WARRANTIES BY PURCHASER.
Purchaser hereby represents and warrants to Seller, which representations
and warranties shall be true and correct as of the date hereof, as follows:
6.1 Corporate Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Hampshire. The Purchaser has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary.
6.2 Authority; Execution, Delivery and Performance of Agreement; No
Violation.
(a) The Purchaser has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Purchaser and the consummation by the Purchaser of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of the Purchaser; no other corporate proceedings on the part of
the Purchaser are necessary to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered
by the Purchaser and constitutes a valid and binding obligation of
Purchaser, enforceable against the Purchaser in accordance with its
terms.
(b) Neither the execution and delivery of this Agreement by the
Purchaser, nor the consummation by the Purchaser of the transactions
contemplated hereby, nor compliance by the Purchaser with any of the
terms or provisions hereof, will (i) violate, conflict with or result in
a breach of any provision of the Articles of Incorporation or Bylaws of
the Purchaser, or (ii) assuming that the consents and approvals of the
NHPUC referred to in Section 9.8 are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree
or injunction applicable to the Purchaser or its intended assignee, or
(y) violate, conflict with, result in a breach of any provisions of or
the loss of any benefit under, constitute a default (or any event which,
with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation
of any lien, pledge, security interest, charge or other encumbrance upon
any of the respective properties or assets of the Purchaser under any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument
or obligation to which the Purchaser or any of its subsidiaries is a
party, or by which they or any of their respective properties or assets
may be bound or affected.
6.3 Litigation. There is no legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment in progress, pending or in effect, or to the
knowledge of Purchaser threatened, against or relating to Purchaser in
connection with or relating to the transactions contemplated by this Agreement,
and Purchaser does not know or have any reason to be aware of any basis for the
same.
6.4 Finder's Fees. Neither Purchaser nor any person acting on behalf
of Purchaser is a party to any contract, arrangement or understanding pursuant
to which any third person or entity is entitled to any brokerage commission,
finder's fee or similar compensation from any party in connection with the
execution and delivery of this Agreement or the consummation of the
transactions herein contemplated.
6.5 Disclosure. No representation or warranty by Purchaser contained
in this Agreement nor any statement or certificate furnished or to be furnished
by Purchaser to Seller or its representatives in connection herewith or
pursuant hereto contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to make the
statements herein or therein contained not misleading. The representations and
warranties contained in this Section 6 or elsewhere in this Agreement or any
document delivered pursuant hereto shall not be affected or deemed waived by
reason of the fact that Seller and/or its representatives knew or should have
known that any such representation or warranty is or might be inaccurate in any
respect.
7. OTHER OBLIGATIONS OF THE PARTIES.
7.1 Conduct of Business. Prior to the Closing, each of Seller, and
based upon the CNHWC Agreement, CNHWC shall conduct its business and affairs
related to the Non-Hudson Business only in the ordinary course and consistent
with its prior practice and shall maintain, keep and preserve Non-Hudson Assets
required or reasonably convenient for the operation of the Non-Hudson Business
in good condition and repair and maintain insurance thereon in accordance with
present practices, and Seller, and based upon the CNHWC Agreement, CNHWC will
use reasonable efforts (i) to preserve the Non-Hudson Business intact, (ii) to
keep available to Purchaser the services of Seller's or CNHWC's present
employees, agents and independent contractors related to the Non-Hudson
Business, (iii) to preserve for the benefit of Purchaser the goodwill of
Seller's or CNHWC's suppliers, customers, landlords and others having business
relations with the Non-Hudson Business, (iv) to cooperate with Purchaser and
use reasonable efforts to assist Purchaser in obtaining the consent of any
landlord or other party to any lease or contract with Seller or CNHWC related
to the Non-Hudson Business (including but not limited to those identified in
Schedules 5.9 and 5.10) where the consent of such landlord or other party may
be required by reason of the transactions contemplated hereby and (v) to
cooperate with Purchaser (but at no cost or risk to Seller) in its efforts to
obtain the financing necessary to constitute the Aggregate Purchase Price.
Without limiting the generality of the foregoing, prior to the Closing, neither
Seller nor CNHWC will, without Purchaser's prior written approval, which
consent will not be unreasonably withheld, delayed or conditional:
7.1.1 enter into any material contract, agreement, commitment or
other understanding or arrangement related to or affecting the Non-Hudson
Assets or the Non-Hudson Business; or
7.1.2 perform, take any action or incur or permit to exist any of
the acts, transactions, events or occurrences of the type described in
Section 5.6 of the Agreement which would have been inconsistent with the
representations and warranties set forth therein had the same occurred
after the CNHWC Balance Sheet Date and prior to the date hereof.
At or prior to the Closing, Seller shall cause all contracts, licenses and
leases which relate to the Non-Hudson Business to which CNHWC and/or Seller is
a party and which are to be assigned to Purchaser hereunder (including the
advance contracts disclosed on the Schedules attached to this Agreement), which
by their terms will require future payments by Seller (or by Purchaser
following the assignment thereof) to a third party, to be paid in full through
the Closing Date or prorated through the Closing Date. If Seller elects to have
such payment amounts thereunder prorated, Seller shall notify Purchaser in
writing at or prior to the Closing such that the Aggregate Purchase Price may
be adjusted with a credit to Purchaser reflecting the amounts which shall be
owed thereunder through the Closing Date.
7.2 Changes in Information. Seller shall give Purchaser prompt written
notice of any material change in any of the information contained in the
representations and warranties made in Section 5 or elsewhere in this Agreement
or the Schedules referred to herein which occurs prior to the Closing.
7.3 Consultation with Purchaser. Seller shall consult with Purchaser
with respect to (i) the cancellation of contracts, agreements, commitments or
other understandings or arrangements to which CNHWC and/or Seller is a party
and which relate to the Non-Hudson Business, including, without limitation,
purchase orders and commitments for capital expenditures or improvements, (ii)
the discontinuance of any Non-Hudson Business operations, and (iii) purchasing,
pricing or selling policies with respect to the Non-Hudson Business.
7.4 Certain Matters Affecting the Non-Hudson Real Estate.
7.4.1 Seller shall provide to Purchaser within thirty (30) days
of this Agreement a copy of a title insurance policy ("Policy") if one
has previously been secured on the Non-Hudson Real Estate Assets.
7.4.2 The obligation of the Purchaser to consummate the purchase
contemplated by this Agreement is contingent on Purchaser being able to
obtain:
(1) Marketable and insurable title to the Non-Hudson Real Estate
Assets subject to no liens or encumbrances other than current taxes
and assessments not yet due and payable of the utilities of record,
which in the Purchaser's opinion do not materially affect the
operation of the Non-Hudson Business.
(2) Purchaser shall be permitted to enter upon the Non-Hudson
Real Estate Assets at its own risk, upon reasonable notice and
under circumstances so as not to interfere with CNHWC and/or
Seller's Business, to conduct such property surveys as may be
deemed necessary by Purchaser in order to delete the survey
exception on a standard title insurance policy. Seller will use its
best efforts to provide copies of any surveys or plans in its or
CNHWC's files relating to said properties within thirty (30) days
of this Agreement.
7.4.3 At Closing, Seller shall execute and deliver to Purchaser
an affidavit as to each Non-Hudson Real Estate Asset certifying that (i)
there are no mortgages, judgment liens or other encumbrances of record
affecting such property except as set forth in the Policy, (ii) there are
no rights of possession, use or otherwise, outstanding in third parties
by reasons of unrecorded leases, land contracts, sale contracts, options
or other documents, and (iii) no unpaid-for improvements have been made,
or materials, machinery or fuel delivered to such property within the one
hundred twenty (120) days immediately preceding the Closing which might
form the basis for a mechanics' lien thereon.
7.4.4 Seller shall provide Purchaser such surveys and legal
descriptions as it receives from CNHWC and as Seller elects to procure on
its own regarding the Non-Hudson Property. Purchaser may obtain at its
own expense such surveys and legal descriptions of the Non-Hudson Real
Estate as it may require.
7.5 Inventory. Prior to the Closing Purchaser may review and inspect
CNHWC and/or Seller's Non-Hudson Assets to determine whether, in Purchaser's
opinion, such Seller's Non-Hudson Assets will be readily useable by Purchaser
in the operation of the Business following the Closing.
7.6 Resolution of Proceeding Pending Before New Hampshire Public
Utilities Commission and Compliance with Provisions of N.H. RSA 38. It is
understood that this Agreement in conjunction with an agreement between CNHWC
and Seller, when fully performed, shall conclude all issues presently pending
in Docket # DE 96-227, Petition of Town of Hudson (the Proceeding), presently
pending before the New Hampshire Public Utilities Commission (NHPUC). To that
end:
A. The parties shall jointly present to the NHPUC the relevant terms
of this Agreement and shall jointly request an order from the NHPUC approving
this Agreement and price to be paid for the Non-Hudson Assets to be acquired by
the Purchaser. Purchaser shall have obtained an order from the NHPUC accepting
Purchaser's allocation of the Aggregate Purchase Price amongst the Non-Hudson
Assets and a capital structure of Purchaser's intended water utility subsidiary
as follows: 60% debt; 40% equity. The parties shall use their best efforts to
obtain such an order, without revision or condition. In the event the NHPUC
declines to issue such an order, at the option of the Purchaser this Agreement
shall be of no further force or effect.
B. Following the entry of such an order by the NHPUC, the Seller shall
promptly take all necessary steps to procure votes of ratification and
appropriation in accordance with N.H. RSA 38:11. In the event such votes are in
the affirmative, the parties shall promptly proceed with tender of payment,
conveyance of the subject plant and property and all other steps necessary for
full performance of this Agreement. In the event such affirmative votes are not
obtained, the parties are relieved of their respective obligations under this
Agreement.
7.7 Transferred Employees. The Purchaser shall not be obliged to hire
any former CNHWC employees.
7.8 Special Covenant of Purchaser. Seller shall use its best efforts
to promptly call or take all required actions in connection with securing a
vote from the appropriate governmental bodies of the Town of Hudson relating to
the consummation of the transactions contemplated by this Agreement and the
related financing of the same as contemplated by its Purchase and Sale
Agreement with CNHWC dated on or about 10/24/97, and as that Agreement may be
amended. The vote shall take place no later than 4/1/98, and, if the
acquisition and the related financing contemplated hereunder is approved, the
Seller shall take all action reasonably required in connection with the
effectuation of the financing so as to provide for a Closing Date on or before
July 31, 1998. In addition, the Purchaser shall use its reasonable best efforts
to obtain, and to cooperate with Seller in obtaining all authorizations and
consents, approvals, permits and clearances necessary for the consummation of
the transactions contemplated hereby, including, without limitation, consents
to the assumption of all Contracts relating to the Assumed Liabilities, the
transfer of any and all licenses and permits contemplated hereunder and joining
together in seeking approval from the N.H. PUC to the transfers contemplated
hereunder and the consummation of the transactions contemplated hereby,
including, without limitation, cooperation between Seller and Purchaser with
respect to the legal proceedings contemplated by Section 7.6 hereof.
7.9 Updated Financial Statements. Seller will deliver, promptly upon
receipt, to Purchaser all updated financial statements prepared from the books
and records of CNHWC and furnished to Seller pursuant to the CNHWC Agreement,
such financial statements in accordance with generally accepted accounting
principles consistently applied and maintained throughout the periods indicated
which present the financial condition of the CNHWC at their respective dates
and the results of its operations for the period covered thereby through the
Closing Date.
8. ACCESS TO SELLER'S ASSETS, INFORMATION AND DOCUMENTS.
Upon reasonable notice and during regular business hours, Seller will
utilize its best efforts pursuant to the CNHWC Agreement to give Purchaser's
attorneys, accountants and other representatives full access to CNHWC's
personnel and all properties, documents, contracts, books and records of CNHWC
and Seller and will furnish Purchaser with copies of such documents (certified
by CNHWC's officers if so requested) and with such information with respect to
the affairs of CNHWC as Purchaser may from time to time request, and the
Purchaser will not improperly disclose the same prior to the Closing. Upon
reasonable notice and during regular business hours, Purchaser may conduct or
cause to be conducted inspections of the Non-Hudson Real Estate Assets (and all
improvements thereon) as to insect infestation, engineering, structural,
roofing, heating, plumbing, electrical, mechanical and similar matters at
Purchaser's sole expense, and reasonable inspections of all other CNHWC's
Assets. Any such inspection and furnishing of such information to Purchaser or
any investigation by Purchaser shall not affect Purchaser's right to rely on
any representations and warranties made in this Agreement.
9. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS.
All obligations of Purchaser hereunder are subject, at the option of
Purchaser, to the fulfillment of each of the following conditions at or prior
to the Closing, and Seller shall use best efforts to cause each such condition
to be so fulfilled:
9.1 Representations and Warranties. All representations and warranties
of Seller contained herein or in any document delivered pursuant hereto shall
be true and correct in all material respects when made and shall be deemed to
have been made again at and as of the Closing Date, and shall then be true and
correct in all material respects except for changes in the ordinary course of
business after the date hereof in conformity with the covenants and agreements
contained herein. Updated disclosure schedules which are true and correct shall
be delivered by Seller to Purchaser as of the Closing Date.
9.2 Covenants. All covenants, agreements and obligations required by
the terms of this Agreement to be performed by Seller at or before the Closing
shall have been duly and properly performed in all material respects.
9.3 No Material Adverse Change. Since the date of this Agreement there
shall not have occurred any material adverse change in the condition of the
Non-Hudson Assets.
9.4 Closing Certificate. There shall be delivered to Purchaser a
certificate duly executed by the Hudson Board of Selectmen and Finance Director
dated the Closing Date, certifying that the conditions set forth in Sections
9.1, 9.2 and 9.3 have been fulfilled.
9.5 Schedules and Other Documents. All documents, schedules, reports
and consents required to be delivered to Purchaser at or prior to the Closing
shall have been so delivered, including the schedules referred to in Section 5
which shall have been updated as of the Closing Date.
9.6 Opinion of Counsel. Purchaser shall have received an opinion of
Seller's counsel, Donahue, Tucker & Ciandella, dated the Closing Date, as to
such matters which Seller may reasonably request with respect to the
transaction contemplated hereby.
9.7 Written Consents. Seller shall have obtained at no cost to
Purchaser written consents to the transfer or assignment to Purchaser of all
consignment agreements, licenses, leases and other material contracts of Seller
related to the Non Hudson Assets (other than immaterial purchase and sales
orders in the ordinary course of business) where the consent of any other party
to any such contract may, in the opinion of Purchaser's counsel, be required
for such assignment or transfer.
9.8 NHPUC Approvals. Purchaser shall have obtained all necessary
approvals from NHPUC to consummate the transactions contemplated hereby,
including but not limited to approval of the Aggregate Purchase Price and the
capital structure of its acquisition subsidiary of 60% debt; 40% equity.
9.9 Title Insurance. The Policy with respect to the Non-Hudson Real
Estate Assets, insuring title subject to no other exceptions, liens or
encumbrances other than as permitted by section 7.4 hereof, shall have been
issued at Purchaser's cost by the title insurance company selected by
Purchaser, pursuant to the commitment obtained by Purchaser in accordance with
Section 7.4.1 hereof.
9.10 Evidence of Liens. Seller shall certify to Purchaser that no
financing statements showing Seller and/or CNHWC as "debtor" thereon, and
describing any lien or security interest with respect to Non-Hudson Assets, are
on file with the Town in which any of the Non-Hudson Assets are located, the
County Registry of Deeds of any county in which the Non-Hudson Assets are
located, or the Office of the New Hampshire Secretary of State, as of the
business day immediately prior to the Closing Date, or evidence satisfactory to
Purchaser that such liens and/or security interests shown thereon have been
released by the secured party.
9.11 Water Supply Contract. Purchaser and Seller shall have entered
into a mutually acceptable agreement providing for the purchase by Purchaser
and sale by Seller of a supply of water from the Litchfield wells located
within the Hudson Property.
10. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS.
All obligations of Seller at the Closing are subject, at the option of
Seller, to the fulfillment of each of the following conditions at or prior to
the Closing, and Purchaser shall exert its best efforts to cause each such
condition to be so fulfilled:
10.1 Representations and Warranties. All representations and
warranties of Purchaser contained herein or in any document delivered pursuant
hereto shall be true and correct in all material respects when made and as of
the Closing.
10.2 Covenants. All obligations required by the terms of this
Agreement to be performed by Purchaser at or before the Closing shall have been
duly and properly performed in all material respects.
10.3 Closing Certificate. There shall be delivered to Seller a
certificate executed by the Purchaser's President and Treasurer, dated the
Closing Date, certifying that the conditions set forth in Sections 10.1 and
10.2 have been fulfilled.
10.4 Opinion of Counsel. Seller shall have received opinions of
Gallagher, Callahan & Gartrell, Purchaser's counsel, dated the Closing Date, as
to such matters which Seller may reasonably request with respect to the
transaction contemplated hereby.
10.5 Seller shall have obtained all necessary votes to purchase the
Hudson and Non-Hudson Property from CNHWC and shall have purchased such
Property under the terms of the CNHWC Agreement.
11. INDEMNIFICATION.
11.1 Indemnification by Seller. Seller hereby indemnifies and agrees
to hold Purchaser harmless from, against and in respect of (and shall on demand
reimburse Purchaser for):
11.1.1 any and all loss, liability or damage suffered or incurred
by Purchaser by reason of any breach of representation, breach of
warranty or nonfulfillment of any covenant by Seller contained herein or
in any certificate, document or instrument delivered to Purchaser
pursuant hereto or in connection herewith;
11.1.2 any and all loss, liability or damage suffered or incurred
by Purchaser in respect of or in connection with any liabilities of
Seller not expressly assumed by Purchaser pursuant to the terms of the
Liabilities Undertaking;
11.1.3 any and all debts, liabilities or obligations of Seller,
direct or indirect, fixed, contingent or otherwise, which exist at or as
of the Closing Date or which arise after the Closing Date but which
relate to or specifically arise from operation of the Non-Hudson Business
before the Closing Date, whether or not then known, due or payable,
except to the extent expressly assumed by Purchaser pursuant to the terms
of the Liabilities Undertaking;
11.1.4 any and all loss, liability or damage suffered or incurred
by Purchaser by reason of or in connection with any claim for finder's
fee or brokerage or other commission arising by reason of any services
alleged to have been rendered to or at the instance of Seller with
respect to this Agreement or any of the transactions contemplated hereby;
11.1.5 any and all loss, liability or damage suffered or incurred
by Purchaser by reason of any claim for severance pay accruing or
incurred at any time on or after the date hereof but prior to the
Closing;
11.1.6 any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, legal, accounting and other professional fees and expenses,
incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
11.2 Indemnification by Purchaser. Purchaser hereby indemnifies and
agrees to hold the Seller harmless from, against and in respect of (and shall
on demand reimburse Seller for):
11.2.1 any and all loss, liability or damage suffered or incurred
by Seller by reason of any breach of representation, breach of warranty
or non-fulfillment of any covenant by Purchaser contained herein or in
any certificate, document or instrument delivered to Seller pursuant
hereto, or in connection herewith, or arising from or related to the
terms of the Liabilities Undertaking;
11.2.2 any and all debts, liabilities or obligations of
Purchaser, direct or indirect, fixed, contingent or otherwise, which
arise after or relate to the Non-Hudson Business after the Closing Date;
11.2.3 any and all loss, liability or damage suffered or incurred
by Seller by reason of or in connection with any claim for finder's fee
or brokerage or other commission arising by reason of any services
alleged to have been rendered to or at the instance of Purchaser with
respect to this Agreement or any of the transactions contemplated hereby;
and
11.2.4 any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose
the imposition thereof, or in enforcing this indemnity.
11.3 Certain Limitations on Claims.
(a) Any claim or cause of action arising out of this Agreement
must be instituted within two years of the Closing Date, except for
claims under the representations and warranties set forth in Sections
5.15 hereof (the "Excepted Claims"), as to which any claim or cause of
action must be instituted within five years of the Closing Date. The
failure to institute a claim or cause of action within such period shall
constitute an absolute bar to the institution of any proceedings or
actions based upon, and will constitute a waiver of, all the claims
and/or causes of action not so asserted.
(b) Anything herein to the contrary notwithstanding, neither
party shall be entitled to recover from the other party with respect to
any indemnifiable loss arising under Sections 11.1 or 11.2, or otherwise,
unless and until the amount of such loss suffered, sustained or incurred
by the asserting party, or to which such party becomes subject, shall
exceed $50,000 calculated on a cumulative and not a per item basis, and
then only with respect to the excess over said $50,000 threshold.
12. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All statements, representations, warranties, indemnities, covenants and
agreements made by each party hereto shall survive the Closing.
13. NOTICES.
Any and all notices or other communications required or permitted to be
given under any of the provisions of this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or mailed by
first class mail, return receipt requested, addressed (i) if to Seller, to the
Town of Hudson, 12 School Street, Hudson, New Hampshire 03051, Attention: Paul
D. Sharon, Town Administrator, with a copy to John J. Ratigan, Esq., Donahue,
Tucker & Ciandella, 225 Water Street, Exeter, New Hampshire 03833; and (ii) if
to Purchaser, to Maurice L. Arel, President, Pennichuck Corporation, 4 Water
Street, Nashua, New Hampshire 03061, with a copy to Denis J. Maloney, Esq.,
Gallagher, Callahan & Gartrell, Box 1415, Concord, New Hampshire 03302. If any
party desires to change the address at which it is to receive notice, such
party may change the address at which it is to receive notice under this
Agreement by written notice to each other party set forth herein given as
aforesaid.
14. TERMINATION.
14.1 Termination. Notwithstanding anything to the contrary herein,
this Agreement and the transactions contemplated hereby may be terminated in
the following manner: (a) by Purchaser, if the conditions set forth in Section
9 shall not have been met or waived by the Purchaser at or prior to the Closing
Date; or (b) by Seller if the conditions set forth in Section 10 hereof shall
not have been met or waived by Seller at or prior to the Closing Date; or (c)
by either party if the Closing does not occur by July 31, 1998.
14.2 Effect of Termination. If any party terminates this Agreement
pursuant to this Section 14, all rights and obligations of the parties
hereunder shall terminate without any liability of any party, except for any
liability of a party that is in breach or as otherwise provided herein. Except
as provided in section 14.1 above, if on the Closing Date the Seller or
Purchaser, as applicable, has complied with all of the conditions to Closing
contained for its benefits herein, has notified the other party of its
intention to consummate the transactions contemplated hereby, and is ready and
able to perform its obligations hereunder and furnish evidence to that effect,
if on the Closing Date the Closing does not occur due to the refusal of a party
to consummate the transactions contemplated hereunder, the party that defaults
in its obligations under this Agreement (the "Defaulting Party") and, as a
result thereof, the other party (the "Non-Defaulting Party") seeks to legally
enforce its rights hereunder against the Defaulting Party, then, in addition to
all damages and other remedies to which the Non-Defaulting Party is entitled by
reason of such default, the Defaulting Party shall promptly pay to the
Non-Defaulting Party an amount equal to all costs and expenses (including
reasonable attorneys' fees) paid or incurred by the Non-Defaulting Party in
connection with such enforcement.
14.3 Interest Obligations of Defaulting Party. If the Non-Defaulting
Party is entitled to receive an amount of money by reason of the Defaulting
Party's default hereunder, then, in addition to such amount of money, the
Defaulting Party shall promptly pay to the Non-Defaulting Party a sum equal to
interest on such amount of money accruing at the prime rate charged by Bank
Boston, to its preferred business clients as of the date of the default.
15. MISCELLANEOUS.
15.1 Entire Agreement. This Agreement (including the exhibits hereto
and the schedules, annexes and other documents delivered pursuant hereto, which
are a part hereof) constitutes the entire agreement of the parties with respect
to the subject matter hereof, and supersedes any and all prior understandings
written or oral, among the parties. This Agreement may not be modified, amended
or terminated except by a written agreement specifically referring to this
Agreement signed by all of the parties hereto.
15.2 Waivers. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
15.3 Supplementing of Schedules. Seller shall have the right to
supplement the disclosure schedules attached to this Agreement at any time
prior to the Preclosing, without liability for failing to have provided a
complete disclosure schedule as of the date hereof. If any schedule which is so
updated by Seller after the date hereof but prior to the Preclosing contains
any new information which, in Purchaser's opinion, is materially adverse,
Purchaser may terminate this Agreement without liability as of the Preclosing
by delivery of a writing to Seller referring to this Section.
15.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of each party hereto, its successors and assigns.
15.5 Headings. The paragraph headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said paragraphs.
15.6 Further Actions. Each party hereto shall cooperate, shall take
such further action and shall execute and deliver such further documents as may
be reasonably requested by any other party in order to carry out the provisions
and purposes of this Agreement.
15.7 Transfer Taxes. Purchaser will pay any transfer taxes applicable
to it payable in connection with the sale, conveyance, assignments and
transfers to be made to Purchaser hereunder.
15.8 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
15.9 Governing Law. This Agreement and all amendments hereto shall be
governed by and construed in accordance with the laws of the State of New
Hampshire applicable to contracts made and to be performed therein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
THE TOWN OF HUDSON
BOARD OF SELECTMEN
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
ATTEST:
- ----------------------------------
Town Clerk
PENNICHUCK CORPORATION
By
-----------------------------------
President
ATTEST:
- ----------------------------------
Secretary
