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R2007-039 2007-03-12 Tabled TABLED 03/12/2007 RESOLUTION NO. R2007-39 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, CONSENTING TO THE MERGER OF WALKER WATER WORKS, INC. INTO TEXAS AMERICAN WATER COMPANY. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That the merger of Walker Water Works, Inc., into Texas American Water Company, is hereby authorized and approved. PASSED, APPROVED and ADOPTED this the day of A.D., 2007. TOM REID MAYOR ATTEST: YOUNG LORFING, TRMC CITY SECRETARY APPROVED AS TO FORM: DARRIN M. COKER CITY ATTORNEY KELLY HART & HALLMAN LLP © © �y ATTORNEYS AT LAW 301 CONGRESS, SUITE 2000 AUSTIN, TEXAS 78701-2944 TELEPHONE(5I 2)495.45400 201 MAIN STREET, SUITE 2500 TELECOPY(5 12)495-6401 FORT WORTH,TEXAS 76 1 02-3 1 94 WRITER'S DIRECT DIAL NUMBER TELEPHONE(8 1 7) 332-2500 TELECOPY(8I 7) 878-9280 (512)495-6412 May 11,2006 Via Fax at 281-652-1679 and Regular U.S.Postal Service Mr. Danin M. Coker City Attorney's Office City of Pearland,City Hall 3519 Liberty Drive Pearland,TX 77581 Re: Proposed Merger of Walker Water Works,Inc. into Texas-American Water Company Dear Mr. Coker: As you may know,my client Walker Water Works, Inc. ("Walker")provides retail water service under Certificate of Convenience and Necessity No. 11862 to about 70 residents of the Sharondale and Sterling Estates subdivisions within the City of Pearland. Walker's parent company,American Water Works,Inc. ("American Water"),is proposing to merge Walker along with its other Texas subsidiaries into a newly-formed American Water subsidiary named Texas-American Water Company. This merger is merely an internal corporate reorganization and consolidation of American Water's Texas subsidiaries into a single new corporate subsidiary. The merger will not result in a transfer of Walker to a new or unknown party as American Water has owned and operated Walker for the past five years and will continue to do so after the merger through Texas-American Water Company. The merger application does not request any changes in the current water rates nor will quality of service be affected in any way. Enclosed for your reference is a copy of the Agreement and Plan of Merger. Section 13.301 of the Texas Water Code requires that the merger be investigated and approved by the Texas Commission on Environmental Quality("TCEQ"). As part of that approval process,TCEQ requires that a franchise or consent letter by obtained from any city within which a regulated utility such as Walker provides service. Accordingly, this letter is to request consent from the City of Pearland to the merger of Walker into Texas-American Water Company. For that purpose, I am requesting that an authorized city representative sign this letter in the space provided below and return it to me at your earliest convenience so that I may file it with TCEQ as part of Walker's request for approval of the merger. 778747-1 • Mr.Darrin M. Coker May 11,2006 Page 2 Please feel free to contact me to discuss any questions or concerns the City may have concerning this matter. Thank you for your assistance and cooperation in this matter. Very truly yours, A &I Stephen C. Dickman SCD:ow Enclosures Approved as requested above: City of Pearland By: Title: 778747-1 AGREEMENT AND PLAN OF MERGER This Agreement and Plan of Merger(the"Agreement"), dated as of April 13,20061 is by and among Texas-American Water Company, a Texas corporation ("TWC"), Dittman-Merka Enterprises, Inc., a Texas corporation ("DME"), Southwest Utilities, Inc., a Texas corporation ("SUP') and Walker Water Works, Inc., a Texas corporation ("WWW"). TWC, DME, SUI and WWW are sometimes referred to herein as the"Constituent Corporations." RECITALS A. TWC is a corporation duly organized and existing under the laws of the State of Texas with 1,000 shares of authorized capital stock,consisting of 1,000 shares of Common Stock, $1.00 par value per share(the"TWC Common Stock").As of the date hereof,One Hundred(100) shares of TWC Common Stock are issued and outstanding. B. DME is a corporation duly organized and existing under the laws of the State of Texas with 10,000 shares of authorized capital stock,consisting of 10,000 shares of Common Stock, $1.00 par value per share(the"DME Common Stock").As of the date hereof,Two Thousand Two Hundred Five(2,205) shares of DME Common Stock are issued and outstanding. C. SUI is a corporation duly organized and existing under the laws of the State of Texas with 1,000,000 shares of authorized capital stock,consisting of 1,000,000 shares of Common Stock, no par value per share(the"SUI Common Stock"). As of the date hereof, One Thousand(1,000) shares of SUI Common Stock are issued and outstanding. D. WWW is a corporation duly organized and existing under the laws of the State of Texas with 1,000,000 shares of authorized capital stock,consisting of 1,000,000 shares of Common Stock,no par value per share(the"WWW Common Stock").As of the date hereof,Two Thousand (2,000)shares of WWW Common Stock are issued and outstanding. E. The Board of Directors of each of TWC,DME,SUI and WWW has determined that, it is advisable and in the best interests of TWC,DME,SUI and WWW that DME, SUI and WWW merge with and into TWC upon the terms and conditions herein provided. NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein,TWC,DME, SUI and WWW hereby agree,subject to the terms and conditions hereinafter set forth,as follows: 1. MERGER 1.1 Merger. In accordance with the provisions of this Agreement and the Texas Business Corporation Act, DME, SUI and WWW shall be merged with and into TWC (the "Merger"),the separate existence of DME, SUI and WWW shall cease and TWC shall be,and is herein sometimes referred to as, the "Surviving Corporation," and the name of the Surviving Corporation shall be Texas-American Water Company. TAWC_Agreement and Plan of Merger 042106 PL 1.2 Filing and Effectiveness. The Merger shall become effective when the following actions shall have been completed: (a) This Agreement and Plan of Merger shall have been adopted and approved by the shareholders of each Constituent Corporation in accordance with the requirements of the Texas Business Corporation Act; (b) All of the conditions to the consummation of the Merger specified in this Agreement shall have been satisfied or duly waived by the party entitled to satisfaction thereof;and (c) The executed Articles of Merger meeting the requirements of the Texas Business Corporation Act shall have been filed with the Secretary of State of the State of Texas. The date and time when the Merger shall become effective,as aforesaid,is herein called the "Effective Date of the Merger." 1.3 Effect of the Merger. Upon the Effective Date of the Merger, the separate existence of DME,SUI and WWW shall cease and TWC shall be the Surviving Corporation,and the Merger shall have the effects as provided under the applicable provisions of the Texas Business Corporation Act,including Article 5.06 thereof. 2. CHARTER DOCUMENTS,DIRECTORS AND OFFICERS 2.1 Articles of Incorporation. The Articles of Incorporation of TWC as in effect immediately prior to the Effective Date of the Merger,in the form attached hereto as Exhibit A,shall continue in full force and effect as the Articles of Incorporation of the Surviving Corporation until duly amended in accordance with the provisions thereof and applicable law. 2.2 Bylaws. The Bylaws of TWC as in effect immediately prior to the Effective Date of the Merger shall continue in full force and effect as the Bylaws of the Surviving Corporation until duly amended in accordance with the provisions thereof and applicable law. 2.3 Directors and Officers. The directors and officers of TWC immediately prior to the Effective Date of the Merger shall be the directors and officers of the Surviving Corporation until their successors shall have been duly elected and qualified or until as otherwise provided by law, the Articles of Incorporation of the Surviving Corporation or the Bylaws of the Surviving Corporation. 3. MANNER OF CONVERSION OF STOCK 3.1 DME Common Stock. Upon the Effective Date of the Merger, all DME Common Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist,and each owner of any DME Common Stock shall cease to have any rights with respect thereto. 3.2 SUI Common Stock. Upon the Effective Date of the Merger, all SUI Common Stock shall no longer be outstanding and shall automatically be canceled and retired and TAWC_Agreement and Plan of Merger 2 shall cease to exist, and each owner of any SUI Common Stock shall cease to have any rights with • respect thereto. 3.3 WWW Common Stock. Upon the Effective Date of the Merger,all WWW Common Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each owner of any WWW Common Stock shall cease to have any rights with respect thereto. 3.4 TWC Common Stock. Upon the Effective Date of the Merger, each one(1) share of TWC Common Stock,issued and outstanding immediately prior thereto shall by virtue of the Merger and without any action by the Constituent Corporations,the holder of such share or any other person,be converted into and exchanged for one(1) fully paid and nonassessable share of Common Stock, $1.00 par value, of the Surviving Corporation (the "Surviving Corporation Common Stock"). • 3.5 Exchange of Certificates. Each holder of record of a stock certificate that immediately prior to the Effective Date of the Merger represented an issued and outstanding share of TWC Common Stock (the"Certificates")whose interests were converted into the right to receive Surviving Corporation Common Stock pursuant to Section 3.4 shall surrender such Certificate for cancellation to the Surviving Corporation,duly executed,and immediately following the Effective Date. The Surviving Corporation shall issue to such holder in exchange therefor a certificate representing the number of shares of the Surviving Corporation Common Stock that such holder has the right to receive pursuant to the provisions of Section 3.4. 4. GENERAL 4.1 Covenants of TWC. TWC covenants and agrees that it will,on or before the Effective Date of the Merger: • (a) File any and all documents with the Texas Comptroller necessary for the assumption by TWC of any and all of the franchise tax liabilities of DME, SUI and WWW. (b) Take such other actions as may be required by the Texas Business Corporation Act. 4.2 Further Assurances. From time to time,as and when required by TWC or by its successors or assigns, there shall be executed and delivered on behalf of DME,SUI and WWW such deeds and other instruments, and there shall be taken or caused to be taken by it such further and other actions as shall be appropriate or necessary in order to vest or perfect in or conform of record or otherwise by TWC the title to and possession of all the property, interests,assets,rights, privileges,immunities,powers,franchises and authority of DME,SUI and WWW and otherwise to carry out the purposes of this Agreement,and the officers and directors ofTWC are fully authorized in the name and on behalf of DME,SUI and WWW or otherwise to take any and all such action and to execute and deliver any and all such deeds and other instruments. 4.3 Abandonment. At any time before the Effective Date of the Merger, this Agreement may be terminated and the Merger may be abandoned for any reason whatsoever by the TAWC_Agreement and Plan of Merger 3 Board of Directors of either DME,SUI,WWW or TWC,or all four,notwithstanding the approval of this Agreement by the shareholders of DME, SUI,WWW or TWC, or by all four. 4.4 Amendment. The Board of Directors of TWC may amend this Agreement at any time prior to the filing of the Articles of Merger with the Secretary of State of the State of Texas, provided that an amendment made subsequent to the adoption of this Agreement by the shareholders of any Constituent Corporation shall not: (1) alter or change the amount or kind of shares,securities, cash, property and/or rights to be received in exchange for or on conversion of all or any of the shares of any class or series thereof of such Constituent Corporation,(2) alter or change any term of the Articles of Incorporation of the Surviving Corporation to be effected by the Merger,or(3)alter or change any of the terms and conditions of this Agreement if such alteration or change would adversely affect the holders of any class or series of capital stock of any Constituent Corporation. The Board of Directors of DME, SUI, WWW or TWC may amend this Agreement to the extent permitted by applicable law. 4.5 Registered Office. The registered office of the Surviving Corporation in the State of Texas is 800 Brazos, Suite 1100, Austin, Texas 78701 and the registered agent of the Surviving Corporation at such address is Capitol Services, Inc. 4.6 Agreement. Executed copies of this Agreement will be on file at the principal place of business of the Surviving Corporation at 303 H Street, Suite 250,Chula Vista, California 91910, and copies thereof will be furnished to any shareholder of either Constituent Corporation, • upon request and without cost. 4.7 Governing Law. This Agreement shall in all respects be construed, interpreted and enforced in accordance with and governed by the laws of the State of Texas. [Remainder of page intentionally left blank] TAWC_Agreement and Plan of Merger 4 IN WITNESS WHEREOF,this Agreement having first been approved by the resolutions of the Board of Directors of each of DME,SUI,WWW and TWC is hereby executed on behalf of each of such four corporations. TEXAS-AMERICAN WATER COMPANY, a Texas corporation B . /z Name: P G Townsley Title: President DITTMAN-MERKA ENTERPRISES,INC., a Texas corporation ame: aul G Townsley Title: President • SOUTHWEST UTILITIES,INC., a Texas corporation y: Name: Pa 0.Townsley Title: President WALKER WATER WORKS,INC., a Texas corporation • Name: Pa Townley Title: President SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER UNANIMOUS CONSENT OF DIRECTORS OF WALKER WATER WORKS,INC. (a Texas corporation) The undersigned, being all members of the Board of Directors (the "Board") of Walker Water, Works, Inc., a Texas corporation (the "Company"), acting herein pursuant to the provisions of Article 9.10B of the Texas Business Corporation Act, do hereby consent to, approve of and adopt the following resolutions: Approval of Plan and Agreement of Merger WHEREAS, the Board deems it to be in the best interests of the Company that the Company, Dittman-Merka Enterprises, Inc., a Texas corporation ("DME") and Southwest Utilities, Inc., a Texas corporation("SUP') be merged (the "Merger") with and into Texas-American Water Company, a Texas corporation ("TWC"), (TWC shall be, and is herein sometimes referred to as, the "Surviving Corporation");now,therefore,be it RESOLVED, that the form, terms, and provisions of the Agreement and Plan of Merger(the"Agreement") to be entered into by and among the Company, TWC, DME and SUI, attached.hereto as Exhibit A and incorporated by reference herein, be, and hereby are, authorized, adopted, certified, executed, acknowledged and approved, in all respects and in accordance with the laws of the State of Texas, and any and all actions taken by the officers and employees of the Company in furtherance thereof prior to this date be,and hereby are,adopted,ratified and confirmed; and be it further RESOLVED, that pursuant to such Agreement, the Company, DMF, and SUI merge with and into TWC,with the result that TWC will be the Surviving Corporation; and be it further RESOLVED,that in accordance with the Merger and the Agreement, each share of Company Common Stock, no par value per share, that is issued and outstanding immediately prior to the effective date of the Merger shall be canceled,and the holder of such shares shall cease to have any rights with respect thereto;and be it further RESOLVED,that in accordance with the Merger and the Agreement, each share of DME Common Stock, $1.00 par value per share, that is issued and outstanding immediately prior to the effective date of the Merger shall be canceled, and the holder of such shares shall cease to have any rights with respect thereto;and be it further RESOLVED,that in accordance with the Merger and the Agreement, each share of SUI Common Stock, $1.00 par value per share, that is issued and outstanding immediately prior to the effective date of the Merger shall be canceled, and the holder of such shares shall cease to have any rights with respect thereto; and be it further RESOLVED, that in accordance with the Merger and the Agreement, each share of TWC Common Stock, $1.00 par value per share, that is issued and outstanding immediately prior to the effective date of the Merger shall be converted into and t ' exchanged for-one (1) fully paid and nonassessable share of Common Stock, $1.00 par value,of the Surviving Corporation;and be it further RESOLVED, that the Merger and the Agreement be submitted to the shareholders of the Company for their approval; and be it further RESOLVED, that the officers of the Company, or any of them, be, and each hereby is, authorized, empowered and directed for and in the name of and on behalf of the Company to execute and deliver, and perform all acts and all things contemplated by the Agreement, including such changes in the terms and conditions thereof, and such amendments, modifications, and supplementations thereto, as the officer executing the same may, in his or her sole discretion, deem necessary or appropriate, his or her signature thereon being conclusive evidence that he or she did so deem the same to be necessary or appropriate;and be it further RESOLVED, that the proper officers of the Company be, and they hereby are, authorized and directed to make and execute, in the name and on behalf of the Company, and to file in the proper public offices, the Agreement and any related certificate of merger. Further Instructions to Officers RESOLVED, that the officers of the Company be, and the same hereby are, authorized, empowered and directed to execute and deliver all documents, instruments and other agreements,to waive any and all conditions and to do all things necessary and helpful to carry out the purposes of the foregoing resolutions; and all acts and deeds of the officers and agents of the Company which are consistent with the purpose and intent of the above resolutions be, and the same hereby are, in all respects, ratified, approved, and adopted as the acts and deeds of the Company. [Remainder of page intentionally left blank] WALKER WATER_CONSENT OF BOARD RE MERGER 2 IN WITNESS WHEREOF, eac of the undersigned directors has hereunto set his hand,in one or more counterparts,on this at` day of ri I ,2006. aul .T ley Robe o J. u • WALKER WATER_CONSENT OF BOARD RE MERGER 3 • Voting "Aye" Councilmembers Saboe, Beckman, Tetens, Kyle, and Cole. Voting "No" None. Motion Passed 5 to 0. COUNCIL ACTION — RESOLUTION NO. R2007-39 — A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, CONSENTING TO THE MERGER OF WALKER WATER WORKS, INC. INTO TEXAS AMERICAN WATER COMPANY. Mr. Darrin Coker, City Attorney. Councilmember Saboe made the motion, seconded by Councilmember Beckman, to approve Resolution No. R2007-39. Assistant City Manager Mike Hodge stated Walker Water Works currently serves approximately seventy residents in the City of Pearland. The parent company, American Water Company, is currently merging all its Texas subsidiaries. The Texas Commission for Environmental Quality requires the City to consent to the merger. Mayor Reid asked if the merger of this company is something the City will eventually have to buy out and is there any way the City can require this company to install the appropriate fireplugs to be serviced by the City. Deputy City Attorney Nghiem Doan stated the City has reviewed what the cost would be to take over the system. This would require the City to replace much of the line and buying out the Water Company's right to serve the residents. The cost of this was pretty high and he is not sure what the cost would be to install the fire plugs or if the City could require the company to install the plugs. Discussion ensued between Council, Mayor Reid, and Deputy City Attorney Nghiem Doan regarding the Resolution. Councilmember Kyle made the motion, seconded by Councilmember Cole, to table Resolution No. R2007-39 until more information is received. Voting "Aye" Councilmembers Cole, Kyle, Tetens, Beckman, and Saboe. Voting "No" None. Motion Tabled 5 to 0. COUNCIL ACTION = RESOLUTION NO. R2007-38 — A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, AMENDING A CONTRACT FOR ENGINEERING SERVICES ASSOCIATED WITH THE MAGNOLIA ROAD IMPROVEMENTS (SEGMENT #2). Mr. Trent Epperson, Projects Director. Page 8 of 10 — 3/12/2007 •