EXHIBIT 2.2
AQUASOURCE, INC.
March 4, 2003
Philadelphia Suburban Corporation
762 West Lancaster Avenue
Bryn Mawr, PA 19010
Attn: Nicholas DeBenedictis
Aqua Acquisition Corporation
762 West Lancaster Avenue
Bryn Mawr, PA 19010
Attn: Nicholas DeBenedictis
Re: Amendment No. 1 to the Purchase Agreement
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Dear Mr. DeBenedictis:
Reference is made to that certain Purchase Agreement, dated July 29,
2002, by and between AquaSource, Inc. (the "Seller") and DQE, Inc. ("DQE"), on
the one hand, and Philadelphia Suburban Corporation ("PSC") and Aqua Acquisition
Corporation ("Acquisition" and, together with PSC, the "Buyer"), on the other
hand (the "Purchase Agreement"). Capitalized terms that are used but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Purchase Agreement.
As a means of simplifying the process of transferring certain of the
Integrated Assets to the Buyer, the parties have agreed that (i) the Seller
would cause to be incorporated AquaSource Operations, Inc., a Delaware
corporation ("Operations"), (ii) the Seller would transfer certain of the
Integrated Assets to Operations prior to the Closing, and (iii) at the Closing,
PSC would acquire from the Seller all of the outstanding shares of capital stock
of Operations. In furtherance of the foregoing, the parties to the Purchase
Agreement, hereby amend the Purchase Agreement as follows:
1. The following recital is added to the Purchase Agreement as the
fourth recital:
WHEREAS, the Seller owns all of the issued and outstanding shares
of common stock (the "Operations Shares") of AquaSource
Operations, Inc., a Delaware corporation ("Operations");
2. The last recital of the Purchase Agreement is hereby amended by
restating clause (i) of said recital in its entirety to read as
follows:
(i) the Utility Shares, the Utility Preferred Shares, the
Development Shares, the Reynolds Shares and the Operations Shares
(collectively, the "Shares") by PSC, or, with respect to the
Operations Shares only, by Acquisition, and
3. Section 1.1(a) of the Purchase Agreement is hereby amended by (i)
replacing the word "purchases" in clause (iii) thereof with the
words "purchases or owns" and (ii) by adding three new sentences
at the end of said section, which three sentences shall read in
their entirety as follows:
Notwithstanding the foregoing, (i) the Seller will have
performed its obligations under this Section 1.1(a) with
respect to any particular Integrated Asset set forth on
Section 1.1(a) of the Seller Disclosure Schedule if, prior to
the Closing, the Seller shall have transferred, or caused to
be transferred, such Integrated Asset to Operations, and (ii)
the Buyer will have performed its obligations under this
Section 1.1(a) with respect to any Integrated Asset so
transferred to Operations if, at the Closing, PSC or
Acquisition shall purchase and accept from the Seller the
Operations Shares (as defined in Section 3.3). In addition,
the Parties expressly agree that at the Closing, the Seller
shall sell, convey, assign, transfer and deliver to PSC or
Acquisition, and PSC or Acquisition shall purchase and accept
from the Seller, the Operations Shares, provided, however,
that the Operations Shares shall be treated as an Integrated
Asset for all purposes whatsoever under this Purchase
Agreement, including, without limitation, for purposes of any
indemnity obligations in respect of Integrated Assets and
Integrated Liabilities contained herein. For the avoidance of
doubt, the Parties agree that the transfer of certain
Integrated Assets to Operations and the purchase of the
Operations Shares by PSC or Acquisition, as contemplated
above, is for the convenience of the Seller and is not
intended to affect any Party's rights, obligations or
interests with respect to such Integrated Assets as originally
set forth in the Purchase Agreement.
4. Section 1.1(b) of the Purchase Agreement is hereby amended by
restating said section in its entirety to read as follows:
The "Integrated Assets" shall mean all of those assets set
forth in Section 1.1 of the Seller Disclosure Schedule (as
defined in Section 3.1) and the Operations Shares (as defined
in Section 3.3).
5. Section 1.1(c) of the Purchase Agreement is hereby amended by
restating said section in its entirety to read as follows:
The "Integrated Liabilities" shall mean (i) all of the
performance obligations of the Seller and any Subsidiary of
the Seller (including Operations) which relate to the
Contracts included among the Integrated Assets (including any
Contracts assigned to Operations as contemplated by Section
1.1(a) hereof), and (ii) all of the liabilities of the Seller
and any Subsidiary of the Seller (including Operations),
direct or indirect, known or unknown, absolute or contingent,
which relate to the Contracts included among the Integrated
Assets (including any Contracts assigned to Operations as
contemplated by Section 1.1(a) hereof) and which arise on or
after the Closing Date (as defined in Section 2.1).
6. Section 2.2(a)(i) of the Purchase Agreement is hereby amended by
adding a new sentence at the end of said section, which sentence
shall read in its entirety as follows:
Notwithstanding the foregoing, if prior to the Closing PSC
shall have directed the Seller, in writing, to deliver the
Operations Shares to Acquisition instead of PSC, then, at the
Closing, the Seller shall not deliver the Operations Shares to
PSC as contemplated by the immediately preceding sentence, but
instead shall, at the Closing, deliver to Acquisition, free
and clear of any Encumbrances, except for Permitted
Encumbrances, certificates representing the Operations Shares,
each such certificate to be duly and validly endorsed in favor
of Acquisition or accompanied by a separate stock power duly
and validly executed by the Seller and otherwise sufficient to
vest in Acquisition good title to the Operations Shares.
7. Each of Sections 3.1, 3.4, 3.6, 3.7, 3.8, 3.10, 3.11, 3.12, 3.15,
3.16, 3.17 and 3.18 shall be amended by (i) replacing the phrase
"Utility, Development and Reynolds" each time it appears in each
such Section with the phrase "Utility, Development, Reynolds and
Operations", (ii) replacing the phrase "Utility, Development or
Reynolds" each time it appears in each such Section with the
phrase "Utility, Development, Reynolds or Operations", and (iii)
replacing the phrase "Utility, Development nor Reynolds" each time
it appears in each such Section with the phrase "Utility,
Development, Reynolds nor Operations."
8. Section 3.3 of the Purchase Agreement is hereby amended by adding
thereto a new Section 3.3(f), which shall read in its entirety as
follows:
(f) As of the date hereof, (i) the authorized capital stock of
Operations consists of 100 shares of common stock, no par
value (the "Operations Stock"), (ii) all 100 shares of
Operations Stock (the "Operations Shares") have been validly
issued to the Seller and are fully paid and nonassessable,
(iii) the Seller owns all of the Operations Shares free and
clear of any Encumbrances, except for Permitted Encumbrances,
and (iv) there are no options, warrants, calls, rights,
commitments or agreements (other than this Agreement) of any
character to which the Seller or Operations is a party or by
which the Seller or Operations is bound obligating the Seller
or Operations to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock
of Operations, or obligating the Seller or Operations to
grant, extend or enter into any such option, warrant, call,
right, commitment or agreement.
9. Section 5.5 of the Purchase Agreement is hereby amended by adding
thereto a new Section 5.5(c), which shall read in its entirety as
follows:
(c) PSC is acquiring, or is causing Acquisition to acquire,
the Operations Shares for investment and not with a view
toward, or for sale in connection with, any distribution
thereof, nor with any present intention of distributing or
selling the Operations Shares. PSC and Acquisition acknowledge
that the Operations Shares have not been registered under the
Securities Act and agree that the Operations Shares may not be
sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the
Securities Act and any applicable state securities laws,
except pursuant to an exemption from such registration under
the Securities Act and any applicable state securities laws.
Each of PSC and Acquisition is able to bear the economic risk
of holding the Operations Shares for an indefinite period, and
has knowledge and experience in financial and business matters
such that it is capable of evaluating the risks of the
investment in the Operations Shares.
10. Section 6.1 of the Purchase Agreement is hereby amended by adding
to said section a new Section 6.1(o), which shall read in its
entirety as follows:
(o) Operations shall not (i) amend its articles of
incorporation or by-laws, (ii) split, combine or reclassify
its outstanding shares of capital stock, (iii) declare set
aside or pay any dividend payable in cash, stock or property
in respect of any of its capital stock, except for dividends
of Excluded Assets to the Seller as contemplated by Section
6.3, or (iv) issue, pledge, dispose of or encumber any shares
of its capital stock.
11. Section 10.5 of the Purchase Agreement is hereby amended by (i)
restating clause (b) to read in its entirety "(b) upon delivery by
reputable overnight courier service", (ii) replacing both of
AquaSource, Inc.'s and DQE, Inc.'s telephone number and contact
person with Telephone No: 412-393-1140 and Attention: General
Counsel, respectively, and (iii) replacing the counsel who is to
receive a copy of notices for both of PSC and Acquisition with
Piper Rudnick LLP, 3400 Two Logan Square, 18th and Arch Streets,
Philadelphia, PA 19103, Telecopier No.: (215) 656-3301, Telephone
No.: (215) 656-3341, Attention: Peter J. Tucci, Esq.
If the foregoing accurately reflects our agreement, please so indicate
by causing a duly authorized officer of PSC and Acquisition to sign in the
spaces provided below.
Very truly yours,
AQUASOURCE, INC.
By: FRANK A. HOFFMANN
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Frank A. Hoffmann
President
DQE, INC.
By: FRANK A. HOFFMANN
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Frank A. Hoffmann
Executive Vice President
AGREED AS OF THE DATE
FIRST ABOVE WRITTEN:
PHILADELPHIA SUBURBAN CORPORATION
By: ROY H. STAHL
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Roy H. Stahl
Executive Vice President
AQUA ACQUISITION CORPORATION
By: ROY H. STAHL
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Roy H. Stahl
Vice President
cc: Peter J. Tucci, Esq.
Erica Ward, Esq.