<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-K/A
(Mark One)
AMENDMENT NO. 1 TO
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 0-18786
PICO HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
California 94-2723335
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
875 Prospect Street, Suite 301
La Jolla, California 92037
(Address of principal executive offices)
Registrant's telephone number, including area code (619) 456-6022
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III or this Form 10-K or any amendment to
this Form 10-K. [ ]
Approximate aggregate market value of the registrant's Common Stock held by
nonaffiliates of the registrant (based on the closing sales price of such stock
as reported in the Nasdaq National Market) on March 24, 1997 was $74,222,080.
Excludes shares of Common Stock held by directors, officers and each person who
holds 5% or more of the Registrant's Common Stock.
Number of shares of Common Stock, $.001 par value, outstanding as of March 24,
1997 was 32,486,718. As of such date, 4,572,015 shares of Common Stock were
held by a subsidiary and an affiliate of the Registrant.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders scheduled for June 5, 1997 are incorporated by reference
in Part III herein.
<PAGE> 2
FORM 10-K/A
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items of its
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 as set
forth in the pages attached hereto:
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT, SCHEDULE AND REPORTS ON FORM 10-K
(a) FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS.
1. Financial Statements.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Consolidated Balance Sheets as of December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Consolidated Statements of Operations for the Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . *
Consolidated Statement of Changes in Shareholders' Equity for the Years Ended December 31, 1996, 1995 and 1994 . . . *
Consolidated Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . *
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
- ------------------------
* Filed with original Form 10-K on April 15, 1997
2. Financial Statement Schedules.
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Schedule II - Condensed Financial Information of Registrant . . . . . . . . . . . . . . . . 6-7
Schedule III - Supplementary Insurance Information . . . . . . . . . . . . . . . . . . . . 8-10
Schedule V - Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
3. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description
<S> <C>
+ 2.2 Agreement and Plan of Reorganization, dated as of May 1, 1996 among PICO,
Citation Holdings, Inc., and Physicians and amendment thereto dated August 14,
1996 and related Merger Agreement.
+++++ 2.3 Second Amendment to Agreement and Plan of Reorganization dated November 12, 1996.
# 2.4 Agreement and Debenture, dated November 14, 1996 and November 27, 1996,
respectively, by and between Physicians and PC Quote, Inc.
2.5 Purchase and Sale Agreement by, between and among Nevada Land and Resource
Company, LLC, GEC, Western Water Company and Western Land Joint Venture dated
April 9, 1997.
+++++ 3.1 Amended and Restated Articles of Incorporation of PICO.
+ 3.2.2 Amended and Restated Bylaws of PICO.
++++ 4.2 First Amendment to Rights Agreement dated April 30, 1996.
+++++ 4.3 Second Amendment to Rights Agreement dated November 20, 1996.
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
Exhibit Number Description
<S> <C>
-* 10.7 Key Officer Performance Recognition Plan.
* 10.8 Flexible Benefit Plan.
-* 10.9 Amended and Restated 1983 Employee Stock Option Plan.
-**** 10.10 Salary Reduction Profit Sharing Plan as amended and restated effective January 1,
1994 and Amendments Nos. 1 and 2 thereto dated March 13, 1995 and March 15, 1995,
respectively.
-* 10.11 Employee Stock Ownership Plan and Trust Agreement.
-*** 10.11.1 Amended Employee Stock Ownership Plan and Trust Agreement.
-***** 10.11.2 Amendment to Employee Stock Ownership Plan dated October 1, 1992.
-**** 10.11.3 Amendment to Employee Stock Ownership Plan dated March 15, 1995.
* 10.16 Office Lease between CIC and North Block Partnership dated July, 1990.
*** 10.16.1 Amendments Nos. 1 and 2 to Office Lease between CIC and North Block Partnership
dated January 6, 1992 and February 5, 1992, respectively.
**** 10.16.2 Amendments Nos. 3 and 4 to Office Lease between CIC and North Block Partnership
dated December 6, 1993 and October 4, 1994, respectively.
-* 10.22 1991 Employee Stock Option Plan.
-***** 10.23 PICO Severance Plan for Certain Executive Officers, Senior Management and Key
Employees of the Company and its Subsidiaries, including form of agreement.
-# 10.55 Consulting Agreements, effective January 1, 1997, regarding retention of Ronald
Langley and John R. Hart as consultants by Physicians and GEC.
++ 10.57 PICO 1995 Stock Option Plan.
-+++ 10.58 Key Employee Severance Agreement and Amendment No. 1 thereto, each made as of
November 1, 1992, between PICO and Richard H. Sharpe and Schedule A identifying
other substantially identical Key Employee Severance Agreements between PICO and
certain of the executive officers of PICO.
+++ 10.59 Agreement for Purchase and Sale of Shares, dated May 9, 1996, among Physicians,
GPG and GEC.
++ 10.60 Agreement for Purchase and Sale of Certain Assets, dated July 14, 1995 between
Physicians, PRO and Mutual Assurance, Inc.
++ 10.61 Stock Purchase Agreement dated March 7, 1995 between Sydney Reinsurance
Corporation and Physicians.
++ 10.62 Letter Agreement, dated September 5, 1995 between Physicians, Christopher
Ondaatje and the South East Asia Plantation Corporation Limited.
++++ 10.63 Amendment No. 1 to Agreement for Purchase and Sale of Certain Assets, dated
July 30, 1996 between Physicians, PRO and Mutual Assurance, Inc.
+++++ 16.1 Letter regarding change in Certifying Accountant from Deloitte & Touche, LLP,
independent auditors.
# 21. Subsidiaries of PICO.
# 27. Financial Data Schedule.
_____________
* Incorporated by reference to exhibit of same number filed with Registration Statement
on Form S-1 (File No. 33-36383).
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
Exhibit Number Description
<S> <C>
*** Incorporated by reference to exhibit of same number filed with 1992 Form 10-K.
**** Incorporated by reference to exhibit of same number filed with 1994 Form 10-K.
***** Incorporated by reference to exhibit bearing the same number filed with
Registration Statement on Form S-4 (File No. 33-64328).
+ Filed as Appendix to the prospectus in Part I of Registration Statement on
Form S-4 (File No. 333-06671).
++ Incorporated by reference to exhibit filed with Physicians' Registration
Statement No. 33-99352 on Form S-1 filed with the SEC on November 4, 1995.
+++ Incorporated by reference to exhibit filed with Registration Statement on
Form S-4 (File No. 333-06671).
++++ Incorporated by reference to exhibit filed with Amendment No. 1 to Registration
Statement No. 333-06671 on Form S-4.
+++++ Incorporated by reference to exhibit of same number filed with Form 8-K dated
December 4, 1996.
# Incorporated by reference to exhibit of same number filed with Form 10-K dated
April 15, 1997.
- Executive Compensation Plans and Agreements.
</TABLE>
(b) REPORTS ON FORM 8-K.
On December 4, 1996 and December 30, 1996, PICO filed a Form
8-K and a Form 8-K/A, respectively, with the Securities and
Exchange Commission. The Form 8-K reported the consummation
of the Merger, the amendment of PICO's Articles of
Incorporation and Bylaws and a change in the Company's
accountants. The Form 8-K/A provided the pro forma financial
information of PICO for the quarter ended and as of September
30, 1996 with respect to the Merger.
4
<PAGE> 5
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Shareholders and Board of Directors of
PICO Holdings, Inc.
Our report on the consolidated financial statements of PICO Holdings, Inc. and
subsidiaries (the "Company") as of December 31, 1996 and 1995 and for each of
the three years in the period ended December 31, 1996 is included on page 46 of
the Company's previously filed Form 10-K. In connection with our audits of such
financial statements, we have also audited the financial statement schedules
listed in the index on page 2 of this Form 10-K/A.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand L.L.P.
San Diego, California
April 7, 1997
5
<PAGE> 6
SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY)
On November 20, 1996, Physicians Insurance Company of Ohio ("Physicians")
consummated a transaction (the "Merger") pursuant to which Citation Holdings,
Inc. ("Holdings"), a wholly owned subsidiary of Citation Insurance Group
("CIG"), merged with and into Physicians pursuant to an Agreement and Plan of
Reorganization dated as of May 1, 1996 with Physicians being the accounting
acquiror. Pursuant to the Merger, each outstanding share of the common stock of
Physicians was converted into the right to receive 5.0099 shares of CIG's common
stock. Upon the consummation of the merger, CIG changed its name to PICO
Holdings, Inc., which is the continuing registrant. The Merger was accounted for
under the purchase method of accounting. Financial results for the year ended
December 31, 1996 include the operations of CIG as if the Merger had occurred on
November 1, 1996. Financial activity for the period November 1, 1996 through
November 20, 1996 was not significant.
Due to the structure of this reverse merger transaction as described above,
there was no holding company for the accounting acquiror prior to the November
20, 1996 merger date. Accordingly the only condensed financial statements
presented herein are the condensed balance sheet as of December 31, 1996 and
the condensed statements of operations and cash flows for the two month period
ended December 31, 1996.
<TABLE>
<CAPTION>
CONDENSED BALANCE SHEET
December 31,
1996
------------
<S> <C>
ASSETS
Cash and cash equivalents $12,658,537
Investments in subsidiaries 96,629,262
Deferred income taxes 3,627,667
Other assets 818,836
------------
Total assets 113,734,302
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued expense and other liabilities 3,530,722
------------
Preferred stock, $.01 par value, authorized 2,000,000
shares in 1996; none issued
Common stock, $.001 par value; authorized 100,000,000
shares in 1996, issued 32,488,718 32,487
Additional paid-in capital 42,965,063
Net unrealized appreciation (depreciation) on investments 11,837,511
Cumulative foreign currency translation adjustment (27,159)
Equity changes of investee company (986,361)
Retained earnings 64,226,714
------------
118,048,255
Less treasury stock, at cost (1,940,315 shares in 1996) 7,844,675
------------
Total shareholders' equity 110,203,580
------------
Total liabilities and shareholders' equity $113,734,302
============
</TABLE>
This statement should be read in conjunction with the notes to the consolidated
financial statements included in the Company's 1996 Form 10-K.
6
<PAGE> 7
SCHEDULE II
CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY)
CONDENSED STATEMENT OF OPERATIONS
For the Two
Month period
ended
December 31,
1996
-----------
Equity in earnings of subsidiary $22,693,381
Expenses 928,288
-----------
Income before income taxes 21,765,093
Provision for income taxes --
-----------
Net income $21,765,073
===========
CONDENSED STATEMENT OF CASH FLOWS
Operating activities
Net income $21,765,093
Adjustments to reconcile net income to
net cash used by operating activities:
Equity in earnings of subsidiary (22,693,381)
Changes in assets and liabilities
Accrued expenses and other liabilities 811,638
Other assets (437,405)
-----------
Net cash used by operating activities (554,055)
-----------
Investing activities
Dividends from subsidiary 13,212,592
-----------
Net cash provided by investing activities 13,212,592
-----------
Increase in cash and cash equivalents 12,658,537
Cash and cash equivalents at beginning of period 0
-----------
Cash and cash equivalents at end of period $12,658,537
===========
This statement should be read in conjunction with the notes to the consolidated
financial statements included with the Company's 1996 Form 10-K.
7
<PAGE> 8
SCHEDULE III
PICO HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED SUPPLEMENTARY INSURANCE INFORMATION
(In thousands)
December 31, 1994
<TABLE>
<CAPTION>
Other
Deferred Future Policy Policy Benefits
Policy Benefits Claims & Net Losses and
Acquisition Losses, Claims Unearned Benefits Premium Investment Loss
Segment Costs Loss Expenses Premiums Payable Revenue Income Expenses
------- ------------ ------------- -------- ------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Medical professional liability $ 305 $180,691 $15,919 -- $20,026 $10,413 $11,639
Life and health 2,508 45,874 194 -- 3,922 3,691 79
------- ---------- ---------- --- -------- --------- --------
Total medical professional liability
and life and health 2,813 226,565 16,113 -- 23,948 14,104 11,718
Other operations -- -- -- 1,537 1,272 --
------- ---------- ---------- --- -------- --------- --------
Total $2,813 $226,565 $16,113 -- $25,485 $15,376 $11,718
======= ========== ========== === ======== ========= ========
</TABLE>
<TABLE>
<CAPTION>
Amortization
of Deferred
Policy Other
Acquisition Operating Premiums
Segment Costs Expenses Written
------- ----- -------- -------
<S> <C> <C> <C>
Medical professional liability $ 817 $1,721 $12,092
Life and health 318 2,569
------- ----------
Total medical professional liability
and life and health 1,135 4,290
Other operations -- 3,634
------- ----------
Total $1,135 $7,924
------- ----------
</TABLE>
8
<PAGE> 9
SCHEDULE III
PICO HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED SUPPLEMENTARY INSURANCE INFORMATION
(In thousands)
December 31, 1995
<TABLE>
<CAPTION>
Other
Deferred Future Policy Policy Benefits
Policy Benefits Claims & Net Losses and
Acquisition Losses, Claims Unearned Benefits Premium Investment Loss
Segment Costs Loss Expenses Premiums Payable Revenue Income Expenses
------- ------------ ------------- -------- ------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Medical professional liability $ 272 $168,485 $12,985 -- $17,120 $ 5,928 $21,247
Life and health 2,113 47,553 171 1,870 4,007 701
Other Property and Casualty 510 61,312 17,702 2,421 170 1,925
------- ---------- -------- ---- -------- --------- ----------
Total medical professional liability,
life and health, and other
property casualty 2,895 277,350 30,858 -- 21,411 10,105 23,873
Other operations -- -- -- -- 5,979 5,110 --
------- ---------- -------- ---- -------- --------- ----------
Total $2,895 $277,350 $30,858 -- $27,390 $15,215 $23,873
======= ========== ======== ==== ======== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Amortization
of Deferred
Policy Other
Acquisition Operating Premiums
Segment Costs Expenses Written
------- ----- -------- -------
<S> <C> <C> <C>
Medical professional liability $ 723 $1,053 $13,079
Life and health 368 2,390
Other Property and Casualty 4,282 10,755
----------- ------- --------
Total medical professional liability,
life and health, and other
property casualty 1,091 7,725 23,834
Other operations -- 9,916 --
----------- ------- --------
Total $1,091 $17,641 $23,834
=========== ======= ========
</TABLE>
9
<PAGE> 10
SCHEDULE III
PICO HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED SUPPLEMENTARY INSURANCE INFORMATION
(In thousands)
December 31, 1996
<TABLE>
<CAPTION>
Other
Deferred Future Policy Policy Benefits
Policy Benefits Claims & Net Losses and
Acquisition Losses, Claims Unearned Benefits Premium Investment Loss
Segment Costs Loss Expenses Premiums Payable Revenue Income Expenses
------- ------------ ------------- -------- ------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Medical professional liability $ -- $142,965 $ -- -- $ 7,362 $ 4,881 $ 2,605
Life and health 2,501 45,516 489 1,471 3,397 3,612
Other Property and Casualty 5,421 109,058 34,808 31,399 2,540 20,328
------ -------- ------- -- ------- ------- -------
Total medical professional liability,
life and health, and other
property casualty 7,922 297,539 35,297 -- 40,232 10,818 26,545
Other operations -- -- -- 665 --
------ -------- ------- -- ------- ------- -------
Total $7,922 $297,539 $35,297 -- $40,232 $11,483 $26,545
====== ======== ======= == ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Amortization
of Deferred
Policy Other
Acquisition Operating Premiums
Segment Costs Expenses Written
------- ----- -------- -------
<S> <C> <C>
Medical professional liability $ 272 $1,010 $ 28
Life and health 330 1,229 1,471
Other Property and Casualty 1,604 10,100 37,529
------ ------- -------
Total medical professional liability,
life and health, and other
property casualty 2,206 12,339 $39,028
Other operations -- 7,713 --
------ ------- -------
Total $2,206 $20,052 $39,028
====== ======= =======
</TABLE>
10
<PAGE> 11
SCHEDULE V
PICO HOLDINGS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Additions
(1) (2)
Balance at Charged to Charged to Balance
Beginning Costs Other at End
Description of Period Expenses Accounts Deductions of Period
----------- --------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Year-end December 31, 1996
Allowance for Doubtful Accounts, net $ 78,000 $ (117,470) $ -- $(156,387) $ 116,917
Valuation Allowance for
Deferred Federal Income Taxes -- -- 6,664,000 -- 6,664,000
Year-ended December 31, 1995
Allowance for Doubtful Accounts, net $ 196,000 $ (11,385) -- $(106,615) $ 78,000
Valuation Allowance for
Deferred Federal Income Taxes 10,772,320 (8,922,371) (1,849,949) -- --
Year-ended December 31, 1994
Allowance for Doubtful Accounts, net 285,000 (45,796) -- (43,204) 196,000
Valuation Allowance for
Deferred Federal Income Taxes 13,834,298 (5,317,367) 2,255,389 -- 10,772,320
</TABLE>
11
<PAGE> 12
FORM 10-K/A
AMENDMENT NO. 1
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant duly caused this amendment to be signed on its behalf by
the undersigned, thereunto duly authorized.
PICO HOLDINGS, INC.
By: /s/ Gary W. Burchfield
-------------------------------------
Gary W. Burchfield, Chief Financial
Officer and Treasurer
Date: April 30, 1997
12
<PAGE> 1
EXHIBIT 2.5
PURCHASE AND SALE AGREEMENT
BY, BETWEEN AND AMONG
NEVADA LAND AND RESOURCE COMPANY, LLC,
A DELAWARE LIMITED LIABILITY COMPANY (THE "COMPANY"),
GLOBAL EQUITY CORPORATION,
AN ONTARIO, CANADA CORPORATION ("GLOBAL"),
WESTERN WATER COMPANY,
A DELAWARE CORPORATION ("WESTERN WATER"),
AND
WESTERN LAND JOINT VENTURE,
A DELAWARE GENERAL PARTNERSHIP ("WESTERN LAND JV").
EFFECTIVE AS OF
APRIL 9, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II PURCHASE AND SALE AND CONSULTING AGREEMENT . . . . . . . . . . . . . . . . . . . . 7
------------------------------------------
2.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Consulting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------------
3.1 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV AS-IS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-----
4.1 "AS IS" Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V INTERIM OPERATING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
---------------------------
5.1 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Sales, Leases and Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Additional Covenants Pending Closing . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------------------------
6.1 Joint Representations and Warranties of Western Water and Western Land JV . . . . . 16
6.2 Representations and Warranties of Western Land JV . . . . . . . . . . . . . . . . . 17
6.3 Representations and Warranties of Western Water . . . . . . . . . . . . . . . . . . 19
6.4 Representations and Warranties of Global . . . . . . . . . . . . . . . . . . . . . 20
6.5 Knowledge and Limitation of Warranties . . . . . . . . . . . . . . . . . . . . . . 21
6.6 Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
--------
7.1 Western Land JV's and Western Water's Remedies . . . . . . . . . . . . . . . . . . 23
7.2 Global's Remedies Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . 25
7.3 Global's Remedies After Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.4 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.5 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VIII CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-------
8.1 Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.2 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3 Closing Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.4 Delivery of Promissory Note as Partial Payment to Western Water . . . . . . . . . . 36
8.5 Closing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.6 Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.7 No Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.8 Access to Documents and Property . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IX CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
------------
9.1 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE X RISK OF LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
------------
10.1 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-------------
11.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.2 Agreement Binding on Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.3 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.5 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.6 Place of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.7 Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.8 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.9 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.10 Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.11 No Recordation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.12 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.14 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.15 Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
EXHIBIT A - INVENTORY OF REAL PROPERTY
EXHIBIT B - CONSULTING AGREEMENT
EXHIBIT C - PROMISSORY NOTE
EXHIBIT D - WESTERN LAND JV ASSIGNMENT OF LLC MEMBER INTEREST
EXHIBIT E - WESTERN WATER ASSIGNMENT OF LLC MEMBER INTEREST
<PAGE> 4
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is entered into
effective for all purposes as of the 9th day of April, 1997 (the "Effective
Date"), by, between and among Nevada Land and Resource Company, LLC, a Delaware
limited liability company (the "Company"), Global Equity Corporation, an
Ontario, Canada corporation ("Global"), Western Water Company, a Delaware
corporation ("Western Water"), and Western Land Joint Venture, a Delaware
general partnership ("Western Land JV").
W I T N E S E T H:
WHEREAS, the Company owns an interest in the Property, as hereinafter
defined;
WHEREAS, Global desires to purchase from Western Water and Western
Water desires to sell to Global the interests of Western Water in the Company,
on the terms and conditions hereinafter set forth;
WHEREAS, Global desires to purchase from Western Land JV and Western
Land JV desires to sell to Global the interests of Western Land JV in the
Company, on the terms and conditions hereinafter set forth;
WHEREAS, in connection with its purchase of the interests in the
Company, Global desires to make a capital contribution to the Company in order
to enable the Company to pay in full the Existing Indebtedness, as hereinafter
defined;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
<PAGE> 5
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. For purposes of this Agreement, the following
capitalized terms used herein shall have the meanings ascribed to such terms
in this Section 1.1:
AFFILIATE. The term "Affiliate" shall mean any Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person, as the case may be.
For purposes of this definition, "control" shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled by" shall
have the meanings correlative to the foregoing.
BUSINESS DAY. The term "Business Day" shall mean any day
other than a Saturday, Sunday or a day on which national banking associations
are authorized or required to close.
CLOSING. The term "Closing" shall have the meaning ascribed
to it in Section 3.1.
CLOSING DATE. The term "Closing Date" shall have the meaning
ascribed to it in Section 8.2.
COMPANY. The term "Company" shall have the meaning ascribed
to it in the opening paragraph of this Agreement.
CONSIDERATION. The term "Consideration" shall have the
meaning ascribed to it in Section 3.1.
2
<PAGE> 6
CONSULTING AGREEMENT. The term "Consulting Agreement" shall
mean the agreement attached hereto as Exhibit "B" to be entered into by and
between the Western Affiliate and the Company as of the Closing for the
purposes set forth in Section 2.2 hereof.
CONTRACTS. The term "Contracts" shall mean any and all
exploration, licensing, leasing, servicing, supply, maintenance, employment and
consultant contracts to which the Company is a party, or the rights and
obligations to which the Company has succeeded.
DEFERRED AMOUNT. The term "Deferred Amount" shall mean a
portion of the Western Water Purchase Price equal to the sum of One Million
Three Hundred Thirty-Six Thousand Dollars ($1,336,000).
DEPOSIT. The term "Deposit" shall mean, collectively, the
Western Water Deposit and the Western Land JV Deposit, together with any
interest earned thereon while in Escrow.
DOCUMENTS. the term "Documents" shall have the meaning
ascribed to such term in Section 8.8 hereof.
EFFECTIVE DATE. The term "Effective Date" shall have the
meaning ascribed to such term in the first paragraph of this Agreement.
EXCLUDED DOCUMENTS. The term "Excluded Documents" shall have
the meaning ascribed to such term in Section 8.8.
ESCROW. The term "Escrow" shall have the meaning ascribed to
such term in Section 3.1.
ESCROW AGENT. The term "Escrow Agent" shall have the meaning
ascribed to such term in Section 3.1.
3
<PAGE> 7
EXISTING INDEBTEDNESS PAYOFF. The term "Existing Indebtedness
Payoff" shall mean the amount necessary to pay the Existing Indebtedness in
full at Closing and obtain a release of the Existing Mortgage.
EXISTING MORTGAGE. The term "Existing Mortgage" shall mean,
collectively, the mortgage and security agreement, assignment of rents and
leases and/or similar documents, encumbering the Land, executed by the Company
for the benefit of Morgan Stanley Mortgage Capital, Inc. ("Lender") securing
indebtedness ("Existing Indebtedness") in the original principal amount of
Twelve Million Dollars ($12,000,000), and certain UCC filings executed by the
Company in connection therewith, showing the Company as debtor and the Lender
as the secured party.
GLOBAL. The term "Global" shall have the meaning ascribed to
it in the opening paragraph of this Agreement.
GOVERNMENTAL AUTHORITIES. The term "Governmental Authorities"
shall mean the various governmental and quasi-governmental bodies or agencies
having jurisdiction over the Company or the Land or any portion thereof.
LAND. The term "Land" shall mean all of the real property
owned by the Company in the State of Nevada as of the Effective Date, as more
particularly described in Exhibit "A" attached hereto, except for any
permissible sale of the Land that may occur prior to the Closing as provided in
Section 5.2A., together with all of the Company's interests, if any, in and to
any appurtenances pertaining thereto, including without limitation all easement
rights, air rights, right of ways, water rights, and oil, gas or mineral
rights.
4
<PAGE> 8
NLRC LLC AGREEMENT. The term "NLRC LLC Agreement" shall mean
that certain Limited Liability Company Agreement of the Company, dated as of
September 28, 1995, by and between Western Water and Western Land JV, the
Company having been originally formed under the name of Silver State Land
Company, LLC and such name having been changed to Nevada Land and Resource
Company, LLC by filing of an Amended and Restated Certificate of Formation with
the Secretary of State of Delaware on November 21, 1995.
NOTICE. The term "Notice" shall have the meaning ascribed to
it in Section 11.4.
PERSON. The term "Person" shall mean any individual,
partnership, limited partnership, joint venture, trust, estate, corporation,
joint stock company, association, limited liability company or other legal
entity.
PROMISSORY NOTE. The term Promissory Note" shall mean the
Promissory Note in form attached hereto as Exhibit "C".
PROPERTY. The term "Property" shall mean all of the Company's
interests as of the Effective Date with respect to Land, the Contracts, and all
certificates, permits, entitlements, plans, renderings, reports, studies and
other documents pertaining to the Land, except for the Excluded Documents, in
possession of the Company.
PURCHASE AND SALE. The term "Purchase and Sale" shall have
the meaning ascribed to it in Section 2.2.
SECURITIES ACT. The term "Securities Act" shall have the
meaning ascribed to it in Section 6.5.
5
<PAGE> 9
SECURITIES LAWS. The term "Securities Laws" shall have the
meaning ascribed to it in Section 6.5.
WESTERN AFFILIATE. The term "Western Affiliate" shall have
the meaning ascribed to it in Section 2.1.
WESTERN LAND JV. The term "Western Land JV" shall have the
meaning ascribed to it in the opening paragraph of this Agreement.
WESTERN LAND JV ASSIGNMENT OF LLC INTEREST. The term "Western
Land JV Assignment of LLC Interest" shall mean the Assignment of LLC Interest,
in the form of Exhibit "D" attached hereto, to be executed and delivered at the
Closing by Western Land JV and accepted by Global.
WESTERN LAND JV DEPOSIT. The term "Western Land JV Deposit"
shall have the meaning ascribed to it in Section 3.2.
WESTERN LAND JV INTEREST. The term "Western Land JV Interest"
shall mean the entire interest of Western Land JV in the Company.
WESTERN LAND JV PURCHASE PRICE. The term "Western Land JV
Purchase Price" shall mean an amount equal to Twenty-Four Million Five Hundred
Thousand Dollars ($24,500,000).
WESTERN WATER. The term "Western Water" shall have the
meaning ascribed to it in the opening paragraph of this Agreement.
WESTERN WATER ASSIGNMENT OF LLC INTEREST. The term "Western
Water Assignment of LLC Interest" shall mean the Assignment of LLC Interest, in
the form of Exhibit "E" hereto, to be executed and delivered at Closing by
Western Water and accepted by Global.
6
<PAGE> 10
WESTERN WATER DEPOSIT. The term "Western Water Deposit" shall
have the meaning ascribed to it in Section 3.2.
WESTERN WATER INTEREST. The term "Western Water Interest"
shall mean the entire interest of Western Water in the Company.
WESTERN WATER PURCHASE PRICE. The term "Western Water
Purchase Price" shall mean an amount equal to Thirteen Million Three Hundred
Sixty Thousand Dollars ($13,360,000).
ARTICLE II
PURCHASE AND SALE AND CONSULTING AGREEMENT
2.1 PURCHASE AND SALE. At Closing, upon the payment of the
Consideration, Western Land JV shall assign to Global and Global shall assume
from Western Land JV the Western Land JV Interest and Western Water shall
assign to Global and Global shall assume from Western Water the Western Water
Interest (the "Purchase and Sale"). A portion of the Western Water Purchase
Price in the Deferred Amount shall be paid by Global to Western Water by
Global's execution and delivery of the Promissory Note to Western Water at the
Closing as provided in Section 8.4 hereof. The portion of the Consideration
attributable to the Existing Indebtedness Payoff shall be paid by Global to the
Lender at Closing, but shall be deemed to be a capital contribution by Global
to the Company in connection with its acquisition of the Western Land JV
Interest and the Western Water Interest.
2.2 CONSULTING AGREEMENT. On or prior to the Closing, Western
Land JV or its affiliate and Western Water shall form a joint venture (the
"Western Affiliate") to serve as a consultant to the Company as hereinafter
provided. At Closing, upon payment of the Consideration, Global and the
Western Affiliate shall execute the
7
<PAGE> 11
Consulting Agreement. At the Closing, the NLRC Agreement shall be amended and
restated upon the terms and conditions acceptable to Global, in its sole and
absolute discretion, except that it shall commit the Company to enter into the
Consulting Agreement with the Western Affiliate and provide that management of
the Company shall be vested in a five (5) member board, three (3) of whom shall
be selected by Global and two (2) of whom shall be selected by Western Water,
with all decisions subject to majority approval of all members of the board, in
their sole and absolute discretion. In no event shall the Western Affiliate
have any interest in the Company or be required to contribute any capital or
other property to the Company for any reason whatsoever.
ARTICLE III
CONSIDERATION
3.1 CONSIDERATION. Promptly upon execution hereof, the parties
shall open an escrow (the "Escrow") at First American Title Guaranty Company
(the "Escrow Agent") at 1737 North First Street, San Jose, California, Attn:
Bill Perry, Escrow No. 512782. Global agrees to deliver into Escrow in cash or
by wire transfer the Western Land JV Purchase Price, the Western Water Purchase
Price, except for the Deferred Amount, the Existing Indebtedness Payoff and the
Promissory Note in the Deferred Amount (collectively, the "Consideration"), by
12:00 p.m. Pacific Time on the Closing Date. The close of escrow (the
"Closing") shall occur on the Closing Date at such time as Global has delivered
the Consideration to the Escrow Agent and the parties have deposited into
Escrow all other instruments and documents necessary to close the Escrow as
provided in Section 8.3 hereof.
8
<PAGE> 12
3.2 DEPOSIT. Global has deposited the sum of Five Hundred
Thousand Dollars ($500,000) (the "Western Land JV Deposit") with the Escrow
Agent for payment to Western Land JV at the Closing and the sum of Two Hundred
Seventy Five Thousand Dollars ($275,000) (the "Western Water Deposit") with the
Escrow Agent for payment to Western Water at the Closing. In the event that
the transaction contemplated hereby is consummated, the Western Land JV Deposit
shall be applied against the Western Land JV Purchase Price, and the Western
Water Deposit shall be applied against the Western Water Purchase Price. In
the event that the transaction contemplated hereby is not consummated, the
Deposit shall be retained by Western Land JV and Western Water or returned to
Global as set forth in Article VII, or Section 8.1D., as applicable.
ARTICLE IV
AS-IS
4.1 "AS IS" TRANSACTION.
A. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES.
Notwithstanding anything contained herein to the contrary, it is understood and
agreed that except as provided in this Agreement, neither the Company, nor
Western Water or Western Land JV, have made and none of the foregoing are now
making, and they specifically disclaim, any warranties, representations or
guaranties of any kind or character, express or implied, oral or written, past,
present or future, with respect to the Company, the Western Land JV Interest,
the Western Water Interest or the Property, including, but not limited to,
warranties, representations or guaranties as to (i) matters of title, or water
or other mineral rights, (ii) environmental matters relating to the Land or any
portion thereof, (iii) geological conditions, including, without
9
<PAGE> 13
limitation, subsidence, subsurface conditions, water table, underground water
reservoirs, limitations regarding the withdrawal of water and earthquake faults
and the resulting damage of past and/or future earthquakes, (iv) whether, and
to the extent to which the Land or any portion thereof is affected by any
stream (surface or underground), body of water, flood prone area, flood plain,
floodway or special flood hazard, (v) drainage, (vi) soil conditions, including
the existence of instability, past soil repairs, soil additions or conditions
of soil fill, or susceptibility to landslides, or the sufficiency of any
undershoring, (vii) zoning to which the Land or any portion thereof may be
subject, (viii) the availability of any utilities to the Land or any portion
thereof including, without limitation, water, sewage, gas and electric, (ix)
usages of adjoining property, (x) access to the Land or any portion thereof,
(xi) the value, size, location, quality, description, suitability, title or
rights to, or physical condition of the Land or any portion thereof, (xii) any
income, expenses, charges, liens, encumbrances, liabilities, easements,
licenses, options, rights or claims on or affecting or pertaining to the Land
or any portion thereof or the Company, (xiii) the presence of Hazardous
Substances (hereinafter defined) in or on, under or in the vicinity of the
Land, (xiv) the condition or use of the Land or compliance of the Land with any
or all past, present or future federal, state or local ordinances, rules,
regulations or laws, building, fire or zoning ordinances, codes or other
similar laws, (xv) the existence or non-existence of underground storage tanks,
(xvi) any other matter affecting the stability or integrity of the Land, (xvii)
the potential for development of the Land, (xviii) the existence of vested land
use, zoning or building entitlements affecting the Land, (xix) the
merchantability of the Land or fitness of the Land for any particular purpose
(Global affirming that Global has not relied on the
10
<PAGE> 14
Company's, Western Land JV's or Western Water's skill or judgment to select the
Land for any particular purpose, and that neither the Company, nor Western
Water or Western Land JV makes any warranty that the Land is fit for any
particular purpose), (xx) tax consequences, or (xxi) the existence or
non-existence of any default or any event, occurrence, condition or act which,
with the giving of notice, the lapse of time, or both, is or would become a
default under any Contract or any lease, license, easement, option, permit,
certificate or agreement which comprises any part of, or relate to, the
Property. SUBJECT TO THE WARRANTIES AND REPRESENTATIONS OF WESTERN WATER AND
WESTERN LAND JV PROVIDED IN THIS AGREEMENT, GLOBAL ACKNOWLEDGES AND AGREES THAT
UPON THE CLOSING, GLOBAL SHALL ACCEPT THE WESTERN WATER INTEREST AND THE
WESTERN LAND JV INTEREST AND ITS INVESTMENT IN THE PROPERTY THROUGH THE COMPANY
"AS IS, WHERE IS," WITH ALL FAULTS. GLOBAL ACKNOWLEDGES THAT IT HAS FULLY
REVIEWED ALL OF THE "DOCUMENTS" (AS THAT TERM IS DEFINED IN SECTION 8.8) TO
WHICH GLOBAL HAS BEEN GIVEN ACCESS AND WHICH ARE LOCATED AS OF THE EFFECTIVE
DATE IN THE SAN DIEGO OFFICE OF WESTERN WATER AND IN THE RENO OFFICE OF THE
COMPANY, AND GLOBAL ACKNOWLEDGES AND AGREES THAT WHETHER OR NOT IT HAS REVIEWED
SUCH DOCUMENTS GLOBAL SHALL ACQUIRE THE WESTERN WATER INTEREST AND THE WESTERN
LAND JV INTEREST AND ITS INTEREST IN THE COMPANY SUBJECT TO ALL MATTERS
DISCLOSED IN SUCH DOCUMENTS. GLOBAL ACKNOWLEDGES THAT IT HAS HAD THROUGH THE
EFFECTIVE DATE TO CONDUCT ITS DUE DILIGENCE ON THE PROPERTY. FURTHER, GLOBAL
11
<PAGE> 15
ACKNOWLEDGES THAT EXHIBIT "A" CONSTITUTES THE COMPANY'S GOOD FAITH EFFORT AT
DEVELOPING AN INVENTORY OF THE REAL PROPERTY OWNED BY THE COMPANY, BUT THE
COMPANY, WESTERN WATER AND WESTERN LAND JV ARE MAKING NO WARRANTY CONCERNING
THE ACCURACY OF SUCH INVENTORY, INCLUDING BUT NOT LIMITED TO ANY AND ALL
MINERAL, WATER, OIL AND GAS RIGHTS OR AS TO THE STATE OF TITLE OF SUCH REAL
PROPERTY.
_______ _______ _______
Western Water Western Land JV Global
Initials Initials Initials
B. "HAZARDOUS SUBSTANCES" DEFINED. For purposes hereof,
"Hazardous Substances" means any hazardous, toxic or dangerous waste, substance
or material, pollutant or contaminant, as defined for purposes of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. Sections 9601 et seq.), as amended ("CERCLA"), or the Resource
Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), as amended
("RCRA"), or any other federal, state or local law, ordinance, rule or
regulation applicable to the Land, or any substance which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous, or any substance which contains gasoline, diesel fuel or
other petroleum hydrocarbons, polychlorinated biphenyls (pcbs), radon gas, urea
formaldehyde, asbestos, lead or electromagnetic waves.
C. GLOBAL REPRESENTED BY COUNSEL. Global hereby
represents and warrants to the Company, Western Water and Western Land JV that:
1. Global is represented by legal counsel in connection with the transactions
contemplated by this Agreement; and 2. Global is acquiring the Western Land JV
Interest and the Western
12
<PAGE> 16
Water Interest and therefore an indirect interest in the Property for business,
commercial, investment or other similar purpose.
_______ _______ _______
Western Water Western Land JV Global
Initials Initials Initials
ARTICLE V
INTERIM OPERATING COVENANTS
5.1 OPERATIONS. Pending the Closing, the Company agrees to
continue to operate, manage and maintain the Property in the ordinary course of
the Company's business and substantially in accordance with the Company's
present practices, subject to ordinary wear and tear and further subject to
Section 5.2.
5.2 SALES, LEASES AND ENCUMBRANCES.
A. Prior to the Closing, the Company shall not sell,
lease or otherwise encumber any portion of the Property, except for any pending
sale pursuant to a purchase and sale agreement entered into prior to the
Effective Date with a third party bidder or bidders in connection with the
sixty-four thousand (64,000) acres of the Land subject to the pending "Nevada
Land Rush" auction.
B. Prior to the Closing the Company will not modify any
existing financing secured by the Property, incur any indebtedness for borrowed
money, enter into any lease or modify or renew any existing lease concerning
any portion of the Land.
C. Prior to the Closing, the Company shall not enter
into any Contract or modify, extend or renew any existing Contract.
13
<PAGE> 17
D. Prior to the Closing, neither Western Water nor
Western Land JV shall sell, assign, hypothecate, encumber or otherwise transfer
any portion of the Western Land JV Interest or the Western Water Interest.
E. In the event any sale of Land permitted pursuant to
the terms of this Agreement is closed prior to the Closing Date, the
Consideration paid by Global shall be reduced by the net amount of proceeds
received by the Company, if any, which has been distributed to Western Land JV
and Western Water in connection with such sale (the calculation of such net
sale proceeds to include a deduction for all selling expenses and capital
expenditures made by the Company in connection with such sale). Prior to the
Closing Date, the Company shall provide an accounting to Global of all pending
sales and all sales proceeds which have been received after March 11, 1997.
F. Prior to the Closing, Western Water and Western Land
JV shall consult with Global and cooperate with Global concerning any changes
that Global may request to any purchase agreement which the Company proposes to
enter into in connection with the Nevada Land Rush, and Western Water and
Western Land JV shall keep Global fully apprised of the status of all material
matters in connection with the Nevada Land Rush, including but not limited to
bids received.
5.3 ADDITIONAL COVENANTS PENDING CLOSING. Prior to the Closing,
Western Water and Western Land JV shall do or refrain from doing the following:
A. Western Water and Western Land JV shall cause to be
filed on a timely basis all income tax returns that are or have been required
to be filed with respect to the Western Water Interest and the Western Land JV
Interest, Western Water and Western Land JV shall each pay all income taxes
that may become due
14
<PAGE> 18
with respect to their respective interests in the Company prior to the Closing
(this covenant shall survive the Closing with respect to any income taxes that
might be payable for the period prior to the Closing);
B. Western Water and Western Land JV shall cause the
Company to file on a timely basis all employment tax returns and reports that
are required to be filed with respect to the Company and shall cause the
Company to pay all employment taxes that may become due with respect to the
Company's operations prior to the Closing.
C. The Company shall not make any distributions of cash
or other property to Western Water, Western Land JV or their Affiliates;
D. The Company shall pay normal and customary expenses
of the Company as and when due, including payments, if any, as they become due
on the Existing Indebtedness;
E. The Company shall not commence any litigation or
other proceeding or enter into any settlement agreement;
F. The Company shall not acquire or agree to acquire by
merging or consolidating with, or by purchasing the assets of, or by any other
manner, any business or assets of any corporation, partnership, limited
liability company or other business organization or division thereof; and
G. The Company shall not adopt or amend any employee
benefit or company share or option plan, or hire any new employees or
consultants, modify the terms of any existing employee or consultant agreement,
pay any special bonus or special renumeration or increase the salaries, wage
rates or fees paid to its employees
15
<PAGE> 19
or consultants or grant any severance or termination pay to any employee,
manager or officer.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 JOINT REPRESENTATIONS AND WARRANTIES OF WESTERN WATER AND
WESTERN LAND JV. The following constitute the sole representations and
warranties made jointly by Western Water and Western Land JV.
A. The Company is a limited liability company, duly
organized and validly existing pursuant to the laws of the State of Delaware,
and pursuant to that certain Limited Liability Company Agreement dated as of
September 28, 1995, and that certain Certificate of Formation, filed with the
Secretary of State of Delaware on September 28, 1995, as amended and restated
pursuant to that certain Amended and Restated Certificate of Formation, filed
with the Secretary of State of Delaware on November 21, 1995, counsel for
Global having been previously provided by the Company with a true and correct
copy of the foregoing organizational documents of the Company.
B. The execution and delivery of this Agreement and the
performance by the Company of its obligations hereunder have been duly
authorized by all necessary action on the part of the Company. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Company, subject to equitable
principles and principles governing creditors' rights generally.
16
<PAGE> 20
C. No consent, waiver, approval or authorization is
required from any person or entity (that has not already been obtained) in
connection with the execution and delivery of this Agreement by the Company or
the performance by the Company of the transactions contemplated hereby.
D. The Company is not a "foreign person" or "foreign
corporation" as those terms are defined in the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder.
E. To the best of Western Water's and Western Land JV's
actual knowledge, except as disclosed in the Documents with respect to the
pending mechanic's lien claims (i) recorded against a portion of the Property
on July 20, 1993 by TIC - The Industrial Company, and (ii) filed November 4,
1996, as document number 209621 by Bose Industries, Inc., there is no pending
or threatened litigation (including without limitation, environmental
litigation, or eminent domain, condemnation or similar proceedings) affecting
the Property or against the Company, and neither the Company nor Western Water
or Western Land JV has any actual knowledge that any proceedings are
contemplated.
F. To the best of Western Water's and Western Land JV's
actual knowledge, Western Water and Western Land JV are the only members of the
Company.
6.2 REPRESENTATIONS AND WARRANTIES OF WESTERN LAND JV. The
following constitute the sole representations and warranties of Western Land JV
to Global.
A. Western Land JV is a Delaware general partnership,
duly organized and existing pursuant to the laws of the State of Delaware.
17
<PAGE> 21
B. Western Land JV is the sole owner of the entire
Western Land JV Interest and no portion of such interest has been previously
sold, assigned, hypothecated, encumbered or otherwise transferred to any other
Person. Western Land JV has the full right, power and authority to enter into
this Agreement and to convey the entire Western Land JV Interest to Global in
accordance with the terms of this Agreement.
C. The execution and delivery of this Agreement and the
performance by Western Land JV of its obligations hereunder have been duly
authorized by all necessary action on the part of Western Land JV, this
Agreement has been duly authorized, executed and delivered by Western Land JV
and constitutes the legal, valid and binding obligation of Western Land JV,
subject to equitable principles and principles governing creditors' rights
generally.
D. No consent, waiver, approval or authorization is
required from any person or entity (that has not already been obtained) in
connection with the execution and delivery of this Agreement by Western Land JV
or the performance by Western Land JV of the transactions contemplated hereby,
except as provided in Section 8.1.A.4.
E. Western Land JV is not a "foreign person" or "foreign
corporation" as those terms are defined in the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder.
F. To the best of Western Land JV's actual knowledge,
Global has been provided with access to or the Company has caused to be
delivered to Global a copy of all Documents.
18
<PAGE> 22
G. Western Land JV has no actual knowledge of any matter
which is material to the use, ownership, operation or value of the Property
that is not disclosed in the Documents (except for matters concerning the
Property which may be discussed in the Excluded Documents); provided, however,
that Western Land JV makes absolutely no representation or warranty whatsoever,
express or implied, as to the completeness or accuracy of the Documents or as
to the current, past or future value of the Property or market or industry
conditions.
6.3 REPRESENTATIONS AND WARRANTIES OF WESTERN WATER. The
following constitute the sole representations and warranties of Western Water
to Global.
A. Western Water is a corporation, duly organized and
validly existing pursuant to the laws of the State of Delaware.
B. Western Water is the sole owner of the entire Western
Water Interest and no portion of such interest has been previously sold,
assigned, hypothecated, encumbered or otherwise transferred to any other
Person. Western Water has the full right, power and authority to enter into
this Agreement and to convey the entire Western Water Interest to Global in
accordance with this Agreement.
C. The execution and delivery of this Agreement and the
performance by Western Water of its obligations hereunder have been duly
authorized by all necessary action on the part of Western Water, this Agreement
has been duly authorized, executed and delivered by Western Water and
constitutes the legal, valid and binding obligation of Western Water, subject
to equitable principles and principles governing creditors' rights generally.
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D. No consent, waiver, approval or authorization is
required from any person or entity (that has not already been obtained) in
connection with the execution and delivery of this Agreement by Western Water
or the performance by Western Water of the transactions contemplated hereby,
except as provided in Section 8.1.A.4.
E. Western Water is not a "foreign person" or "foreign
corporation" as those terms are defined in the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder.
F. To the best of Western Water's actual knowledge
Global has been provided with access to or the Company has caused to be
delivered to Global a copy of all Documents.
G. Western Water has no actual knowledge of any matter
which is material to the use, ownership, operation or value of the Property
that is not disclosed in the Documents (except for matters concerning the
Property which may be discussed in the Excluded Documents); provided, however,
that Western Water makes absolutely no representation or warranty whatsoever,
express or implied, as to the completeness or accuracy of the Documents or as
to the current, past or future value of the Property or market or industry
conditions.
6.4 REPRESENTATIONS AND WARRANTIES OF GLOBAL. Global represents
and warrants to the Company, Western Land JV and Western Water as follows:
A. Global is a corporation duly organized, validly
existing and in good standing under the laws of Ontario, Canada, with all
requisite power and authority to enter into this Agreement and to conduct the
business of the Company as contemplated by this Agreement.
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B. Global has the full right, power and authority to
enter into this Agreement and to carry out all of the terms of the transaction
contemplated hereby.
C. The execution and delivery of this Agreement and the
performance by Global of its obligations hereunder have been duly authorized by
all necessary action on the part of Global. This Agreement has been duly
authorized, executed and delivered by Global and constitutes the legal, valid
and binding obligation of Global, subject to equitable principles and
principles governing creditors' rights generally.
D. No consent, waiver, approval or authorization is
required for any person or entity (that has not already been obtained) in
connection with the execution and delivery of this Agreement by Global or the
performance by Global of the transactions contemplated hereby.
E. Global has legally binding financial commitments or
readily available funds sufficient to enable it to perform its obligations
under this Agreement.
6.5 KNOWLEDGE AND LIMITATION OF WARRANTIES.
A. Global acknowledges and agrees that all references in
this Agreement and in any Exhibits attached hereto to the phrases "within
actual knowledge," "to the actual knowledge of," "known to," or similar phrases
(1) shall mean the current actual (not constructive or imputed) personal
knowledge of Larry D. Kelley and Jeffrey A. Dritley, in the case of Western
Land JV, and of Peter Jensen, Arik Prawer and John Huston, in the case of
Western Water; (2) shall not in any case mean or refer to the actual,
constructive or imputed knowledge of any other employee, trustee, partner,
agent, officer, director or other representative of either
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Western Land JV or Western Water; and (3) shall in no event impose upon Western
Land JV or Western Water or any of their respective officers, directors, agents
or employees or any of the above-named individuals any duty or obligation to
verify, inquire or make any independent inquiry or investigation of any such
representation, warranty or statement or to inspect or review any of the
Documents.
B. The warranties, representations and covenants made by
each party to this Agreement shall survive the Closing and shall expire one (1)
year thereafter. Accordingly, any party which may desire to bring a claim with
respect to any breach of warranty, representation or covenant hereunder shall
provide written notice of such claim to all other parties prior to the
expiration of one (1) year from the Closing.
6.6 SECURITIES LAWS. Global is acquiring its interest in the
Company for investment, solely for its own account, with the intention of
holding such interest for investment and not with a view to, or for resale in
connection with, any distribution or public offering or resale of any portion
of such interest within the meaning of the Securities Act of 1933 (the
"Securities Act") or any other applicable federal or state security law, rule
or regulation ("Security Laws"). Global acknowledges that it is aware that its
interest in the Company has not been registered under the Securities Act or
under any other Security Laws in reliance upon exemptions contained therein.
Global understands and acknowledges that its representations and warranties
contained herein are being relied upon by the Company, Western Water, Western
Land JV and the constituent owners of such persons as the basis for exemption
of the transfer of interests in the Company from the registration requirements
of the Securities Act and other Security Laws. Global acknowledges that the
Company will
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not and has no obligation to register any interest in the Company under the
Securities Act or other Security Laws. Global acknowledges that prior to the
execution of this Agreement, it has had an opportunity to review the NLRC LLC
Agreement, and any and all other information regarding the Company which has
been provided by Western Water and Western Land JV to Global. Global hereby
acknowledges that it understands that the acquisition of its interest in the
Company is a speculative investment involving a high degree of risk and does
hereby represent that it has net worth sufficient to bear the economic risk of
its investment in the Company and to justify its investing in a highly
speculative venture of this type. Each of the representations, warranties and
acknowledgements of Global set forth above shall be deemed for purposes of this
Section 6.5 to also have been made by the persons making the decisions on
behalf of Global to acquire its interest in the Company.
ARTICLE VII
REMEDIES
7.1 WESTERN LAND JV'S AND WESTERN WATER'S REMEDIES. IN THE EVENT
THAT CLOSING AND THE CONSUMMATION OF THE TRANSACTION CONTEMPLATED HEREBY DOES
NOT OCCUR AS A RESULT OF A DEFAULT BY GLOBAL IN THE PERFORMANCE OF ITS
OBLIGATIONS PURSUANT TO THIS AGREEMENT AND SUCH DEFAULT IS NOT THE RESULT OF A
FAILURE BY WESTERN WATER OR WESTERN LAND JV TO PERFORM HEREUNDER, WESTERN LAND
JV AND WESTERN WATER SHALL BE ENTITLED, AS ITS SOLE AND EXCLUSIVE REMEDY, IN
LAW OR IN EQUITY, TO TERMINATE THIS AGREEMENT AND RETAIN THE DEPOSIT AS
LIQUIDATED DAMAGES AND
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NOT AS A PENALTY, IN FULL SATISFACTION OF CLAIMS AGAINST GLOBAL HEREUNDER. IN
THE EVENT THE CLOSING AND THE CONSUMMATION OF THE TRANSACTION HEREIN
CONTEMPLATED DOES NOT OCCUR AS HEREIN PROVIDED BY REASON OF ANY DEFAULT OF
GLOBAL, GLOBAL AND WESTERN LAND JV AND WESTERN WATER AGREE THAT IT WOULD BE
IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES SUFFERED BY WESTERN
WATER AND WESTERN LAND JV AS A RESULT OF GLOBAL'S FAILURE TO CONSUMMATE THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT, AND THAT UNDER THE CIRCUMSTANCES
EXISTING AS OF THE DATE OF THIS AGREEMENT, THE LIQUIDATED DAMAGES PROVIDED FOR
IN THIS SECTION REPRESENT A REASONABLE ESTIMATE OF THE DAMAGES WHICH WESTERN
WATER AND WESTERN LAND JV WILL INCUR AS A RESULT OF SUCH FAILURE; PROVIDED,
HOWEVER, THAT THIS PROVISION WILL NOT WAIVE OR AFFECT ANY INDEMNITY OBLIGATION
OF GLOBAL HEREUNDER OR WESTERN LAND JV'S OR WESTERN WATER'S RIGHTS WITH RESPECT
THERETO. THEREFORE, GLOBAL AND WESTERN WATER AND WESTERN LAND JV DO HEREBY
AGREE THAT A REASONABLE ESTIMATE OF THE TOTAL NET DETRIMENT THAT WESTERN WATER
AND WESTERN LAND JV WOULD SUFFER IN THE EVENT THAT GLOBAL DEFAULTS AND FAILS TO
CONSUMMATE THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT IS AN AMOUNT EQUAL TO
THE DEPOSIT. SAID AMOUNT WILL BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR
THE BREACH OF THIS AGREEMENT BY GLOBAL. THE PAYMENT OF SUCH AMOUNT AS
LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY
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WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS
INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO WESTERN LAND JV AND WESTERN WATER
PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677. UPON DEFAULT
BY GLOBAL, THIS AGREEMENT WILL BE TERMINATED AND, EXCEPT FOR ANY INDEMNITY
OBLIGATIONS OF GLOBAL HEREUNDER WHICH MAY BE ENFORCED BY WESTERN LAND JV AND/OR
WESTERN WATER IN ADDITION TO RETENTION BY WESTERN LAND JV AND WESTERN WATER OF
THE DEPOSIT, NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS
HEREUNDER.
_______ _______ _______
Global Western Land JV Western Water
Initials Initials Initials
7.2 GLOBAL'S REMEDIES PRIOR TO CLOSING. IN THE EVENT THAT PRIOR
TO THE CLOSING THE COMPANY, WESTERN LAND JV OR WESTERN WATER FAILS TO PERFORM
ANY MATERIAL OBLIGATION UNDER THIS AGREEMENT FOR ANY REASON EXCEPT THE FAILURE
BY GLOBAL TO PERFORM A MATERIAL OBLIGATION, GLOBAL SHALL HAVE THE RIGHT TO (I)
BRING AN ACTION FOR SPECIFIC PERFORMANCE UNDER THIS AGREEMENT, (II) PROCEED
WITH THE PURCHASE OF THE PROPERTY, OR (III) TERMINATE THIS AGREEMENT BY
DELIVERING WRITTEN NOTICE TO THE COMPANY, WESTERN LAND JV AND WESTERN WATER
PRIOR TO THE CLOSING. IN THE EVENT THAT GLOBAL ELECTS TO TERMINATE THIS
AGREEMENT, THE DEPOSIT SHALL BE RETURNED TO GLOBAL, WESTERN WATER AND WESTERN
LAND JV SHALL PAY ALL ESCROW CANCELLATION FEES AND CHARGES, AND GLOBAL SHALL
HAVE THE RIGHT TO COLLECT FROM THE
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COMPANY, WESTERN LAND JV AND/OR WESTERN WATER, JOINTLY AND SEVERALLY TO THE
EXTENT EACH SUCH PARTY IS IN DEFAULT OF ANY OF ITS MATERIAL OBLIGATIONS
HEREUNDER, AS COMPENSATION FOR ANY AND ALL DAMAGES (ACTUAL, CONSEQUENTIAL,
PUNITIVE OR OTHERWISE) ASSOCIATED WITH THIS AGREEMENT AND THE DUE DILIGENCE
CONDUCTED BY GLOBAL ACTUAL OUT-OF POCKET COSTS INCURRED BY GLOBAL UP TO A
MAXIMUM AMOUNT OF TWO HUNDRED THOUSAND DOLLARS ($200,000.00). GLOBAL HEREBY
WAIVES ALL OTHER REMEDIES AGAINST THE COMPANY, WESTERN LAND JV AND/OR WESTERN
WATER WHICH GLOBAL MIGHT OTHERWISE HAVE AT LAW OR IN EQUITY BY REASON OF SUCH
MATERIAL DEFAULT BY ANY OF THEM. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT, IN THE EVENT THAT PRIOR TO CLOSING, GLOBAL HAS
ACTUAL KNOWLEDGE (NOT CONSTRUCTIVE KNOWLEDGE) OF ANY MATERIAL MISREPRESENTATION
BY WESTERN WATER OR WESTERN LAND JV OR ANY MATERIAL BREACH OF THEIR MATERIAL
WARRANTIES OR COVENANTS CONTAINED HEREIN, AND GLOBAL ELECTS TO AFFIRM THIS
AGREEMENT AND PROCEED WITH THE CLOSING, SUCH ELECTION SHALL, UPON THE CLOSING,
CONSTITUTE A WAIVER BY GLOBAL OF ANY AND ALL CLAIMS RELATING TO SUCH MATERIAL
MISREPRESENTATION OR MATERIAL BREACH OF MATERIAL WARRANTY OR COVENANT.
_______ _______ _______
Global Western Land JV Western Water
Initials Initials Initials
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7.3 GLOBAL'S REMEDIES AFTER CLOSING. IN THE EVENT THAT AFTER THE
CLOSING BUT DURING THE PERIOD SET FORTH IN SECTION 6.5(B) GLOBAL DISCOVERS ANY
MATERIAL BREACH OF A MATERIAL WARRANTY OR COVENANT OR MATERIAL
MISREPRESENTATION BY WESTERN LAND JV OR WESTERN WATER, EXCLUDING ANY BREACH OF
WARRANTY OR MISREPRESENTATION AMOUNTING TO FRAUD, GLOBAL'S SOLE AND EXCLUSIVE
REMEDY, IN LAW OR IN EQUITY, SHALL BE TO COLLECT EXCLUSIVELY FROM THE PARTY
RESPONSIBLE FOR SUCH BREACH OF WARRANTY OR COVENANT OR MISREPRESENTATION ALL
DAMAGE DIRECTLY INCURRED BY GLOBAL AND REASONABLY FORESEEABLE, INCLUDING
ATTORNEYS' FEES AND COSTS PURSUANT TO SECTION 7.5 HEREOF, PROVIDED HOWEVER,
THAT (I) GLOBAL SHALL HAVE NO CLAIM OR CAUSE OF ACTION HEREUNDER UNLESS AND
ONLY TO THE EXTENT THAT THE TOTAL DOLLAR AMOUNT OF SUCH DAMAGES (INCLUDING
UNDER THE ASSIGNMENTS OF LLC INTERESTS) INCURRED BY GLOBAL IN THE AGGREGATE
EXCEEDS THE SUM OF FOUR HUNDRED FIFTY THOUSAND DOLLARS ($450,000) AND (II) THE
TOTAL DOLLAR AMOUNT WHICH MAY BE COLLECTED BY GLOBAL HEREUNDER FOR ALL DAMAGES
INCURRED BY GLOBAL (INCLUDING UNDER THE ASSIGNMENTS OF LLC INTERESTS) SHALL IN
NO EVENT EXCEED THE SUM OF TEN MILLION DOLLARS ($10,000,000) REGARDLESS OF THE
AMOUNT OF DAMAGES INCURRED BY GLOBAL. AFTER THE EXPIRATION OF THE PERIOD SET
FORTH IN SECTION 6.5(B), GLOBAL SHALL HAVE NO RIGHT TO MAKE ANY SUCH CLAIM. IN
THE EVENT OF FRAUD BY EITHER WESTERN WATER OR WESTERN LAND JV,
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GLOBAL AGREES TO ASSERT ANY CLAIM WITH RESPECT THERETO EXCLUSIVELY AGAINST THE
PARTY RESPONSIBLE THEREFOR.
_______ _______ _______
Global Western Land JV Western Water
Initials Initials Initials
7.4 EXCULPATION. EXCEPT IN THE EVENT OF FRAUD, IN NO EVENT SHALL
WESTERN LAND JV, WESTERN WATER OR ANY OF THEIR RESPECTIVE DIRECT OR INDIRECT
PARTNERS, MEMBERS, SHAREHOLDERS, OWNERS OR AFFILIATES, OR ANY OFFICER,
DIRECTOR, EMPLOYEE OR AGENT OF THE FOREGOING, OR ANY CONTROLLING PERSON THEREOF
HAVE ANY LIABILITY FOR ANY CLAIM, CAUSE OF ACTION OR OTHER LIABILITY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE COMPANY, THE WESTERN LAND JV
INTEREST, THE WESTERN WATER INTEREST OR THE PROPERTY IN EXCESS OF THE AMOUNTS
SET FORTH IN SECTIONS 7.2 AND 7.3 HEREOF, WHETHER SUCH CLAIM, CAUSE OF ACTION
OR LIABILITY IS BASED UPON CONTRACT, COMMON LAW, STATUTE, EQUITY OR OTHERWISE.
_______ _______ _______
Global Western Land JV Western Water
Initials Initials Initials
7.5 ATTORNEYS' FEES. In the event any party hereto is required to
employ an attorney because any litigation arises out of this Agreement between
the parties hereto, the nonprevailing party shall pay the prevailing party all
reasonable fees and expenses, including attorneys' fees and expenses, incurred
in connection with such litigation.
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ARTICLE VIII
CLOSING
8.1 CONDITIONS TO CLOSING.
A. The obligations of the Company, Western Water and
Western Land JV under this Agreement to consummate the transactions
contemplated hereby shall be subject to the satisfaction of the following
conditions on or before the Closing Date, except to the extent any of such
conditions may have been waived by the Company, Western Water and Western Land
JV in writing at Closing, in their sole and absolute discretion:
1. All material representations and warranties
of Global in this Agreement shall be true and correct in all material respects
as of the Effective Date and at all times through the Closing Date and Global
shall have performed and complied with all covenants and agreements required by
this Agreement to be performed or complied with by Global in a timely manner as
and when required prior to the Closing Date or at the Closing.
2. No order, writ, injunction or decree shall
have been entered or be in effect by any court of competent jurisdiction or any
Governmental Authority, and no statute, rule, regulation or other requirement
shall have been promulgated or enacted and be in effect, that restrains,
enjoins or invalidates the transactions contemplated hereby.
3. No suit or other proceeding or claims shall
be pending or threatened by any third party before any court or Governmental
Authority or otherwise asserted against the Company (except as allowed by
Section 9.1 hereof) which involves a claim in excess of Four Hundred Fifty
Thousand Dollars ($450,000)
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in value (a) concerning any portion of the Property, the Western Water Interest
or the Western Land JV Interest, or (b) seeking to restrain or prohibit or
declare illegal, or seeking substantial damages against the Company, Western
Water, Western Land JV or any of their Affiliates in connection with, the
transactions contemplated by this Agreement.
4. If Global is unable to conclude that
consummation of the transaction is exempt from the filing and waiting period
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, such waiting period shall have expired or been terminated, and no
action by the Federal Trade Commission or the Antitrust Division of The
Department of Justice challenging or seeking to enjoin such consummation shall
have been instituted or be pending.
B. The obligations of Global under this Agreement to
consummate the transactions contemplated herein shall be subject to the
satisfaction of the following conditions on or before the Closing Date, except
to the extent any such conditions may have been waived by Global in writing at
Closing, in its sole and absolute discretion:
1. All material representations and warranties
of Western Water and Western Land JV in this Agreement shall be true and
correct in all material respects as of the Effective Date and at all times
through the Closing Date, and the Company, Western Water and Western Land JV
shall have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied with by
the Company, Western Water or
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Western Land JV in a timely manner as and when required prior to the Closing
Date or at the Closing.
2. No order, writ, injunction or decree shall
have been entered and be in effect by any court of competent jurisdiction or
any Governmental Authority, and no statute, rule, regulation or other
requirement shall have been promulgated or enacted and be in effect, that
restrains, enjoins or invalidates the transactions contemplated hereby.
3. No suit or other proceeding shall be pending
or threatened by any third party before any court or Governmental Authority
which involves a claim in excess of Four Hundred Fifty Thousand Dollars
($450,000) in value (a) concerning any portion of the Property, the Western
Water Interest or the Western Land JV Interest or (b) seeking to restrain or
prohibit or declare illegal, or seeking substantial damages against Global in
connection with, the transactions contemplated by this Agreement.
4. There shall have been no material adverse
change in the business or operations with respect to the Company since the
Effective Date and no event shall have occurred or circumstances exist that is
reasonably likely to result in such a material adverse change.
5. Unless the Company shall have provided Global
with reliable information based on which it can reasonably be concluded that
the consummation of the transaction is exempt from the filing and waiting
period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations promulgated by the Federal Trade
Commission pursuant thereto, such waiting period shall have expired or been
terminated, and no
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action by the Federal Trade Commission or the Antitrust Division of the
Department of Justice challenging or seeking to enjoin such consummation shall
have been instituted or be pending.
C. In the event any of the conditions set forth in
Section 8.1.A.1, 8.2.A.2 or 8.1.A.3 or 8.1.A.4 hereof is not satisfied or
waived in writing by Western Water and Western Land JV prior to the Closing,
this Agreement and the Escrow established hereunder shall terminate upon
written notice to Global and the Deposit shall be promptly returned to Global,
except in the event this Agreement is terminated pursuant to Section 8.A.1, in
which event the Deposit shall be promptly released to Western Land JV and
Western Water, as they shall direct to the Escrow Agent, and the parties shall
have no further rights or obligations hereunder.
D. In the event any of the conditions set forth in
Section 8.1.B.1, 8.1.B.2, 8.1.B.3, 8.1.B.4 or 8.1.B.5 is not satisfied or
waived in writing by Global prior to the Closing, this Agreement and the Escrow
established hereunder shall terminate upon written notice by Global to Western
Land JV and Western Water, in which event the Deposit shall be promptly
returned to Global and, if applicable, Global shall have the specific rights
and remedies set forth Section 7 hereof.
8.2 CLOSING DATE. The Closing shall be held through the Escrow
Agent on April 23, 1997 or such earlier or later date as Western Land JV,
Western Water and Global shall mutually agree, in each parties' sole and
absolute discretion ("Closing Date").
8.3 CLOSING MATTERS.
A. Prior to the Closing Date, Western Land JV shall
deliver to the Escrow Agent the following:
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1. Four (4) duly executed counterparts of the
Western Land JV Assignment of LLC Interest;
2. A certified LP-1 for Western Affiliate;
3. A duly executed non-foreign entity
certification, certifying, in compliance with Section 1445 of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated thereunder,
that neither the Company nor Western Land JV is not a "foreign person";
4. Escrow instructions sufficient to enable the
Escrow Agent to close the Escrow in accordance with the terms of this
Agreement;
5. A certified copy of a resolution of the
general partner(s) of Western Land JV authorizing them to consummate this
transaction on behalf of Western Land JV in accordance with this Agreement; and
6. Such other documents and instruments as may
be reasonably required to consummate this transaction in accordance with this
Agreement.
B. Prior to the Closing Date, Western Water shall
deliver to the Escrow Agent the following:
1. Four (4) counterparts of the Western Water
Assignment of LLC Interest;
2. A duly executed non-foreign entity
certification, certifying, in compliance with Section 1445 of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated thereunder,
that Western Water is not a "foreign person";
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3. Escrow instructions sufficient to enable the
Escrow Agent to close the Escrow in accordance with the terms of this
Agreement;
4. A certified copy of a resolution of the Board
of Directors of Western Water authorizing Western Water to consummate this
transaction in accordance with this Agreement; and
5. Such other documents and instruments as may
be reasonably required to consummate this transaction in accordance with this
Agreement.
C. Prior to the Closing Date, Western Land JV and
Western Water shall cause the Western Affiliate to deliver to the Escrow Agent
the following:
1. Four (4) duly executed counterparts of
Consulting Agreement;
2. Escrow instructions sufficient to enable the
Escrow Agent to close the Escrow in accordance with the terms of this
Agreement; and
3. Such other documents and instruments as may
reasonably be required to consummate this transaction in accordance with this
Agreement.
D. Prior to the Closing Date, Western Land JV and
Western Water shall cause the Lender to deliver to the Escrow Agent the
following:
1. The original promissory note pertaining to
the Existing Indebtedness to be marked "paid" at the Closing upon payment of
the Existing Indebtedness to Lender by Global;
2. A payoff demand and a duly executed and full
reconveyance of the Existing Mortgage for each county in Nevada in which the
Existing Mortgage is recorded;
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3. A duly executed and notarized termination of
assignment of leases and rents for each county in Nevada in which the
Assignment of Leases and Rents pertaining to the Existing Indebtedness has been
recorded; and
4. A UCC-2 duly executed by Lender with respect
to each UCC-1 filed in connection with the Existing Indebtedness to be filed
with the appropriate office in the State of Nevada by the Escrow Agent promptly
after the Closing.
E. Prior to the Closing Date (except as noted in Section
8.3E.1 below), Global shall deliver to the Escrow Agent the following:
1. The Consideration in cash or by wire
transfer, less the Deposit and the Deferred Amount, (all monies Global is
required to deliver shall be available for disbursement by wire transfer to the
Company, the Lender, Western Water and Western Land JV, as applicable, no later
than 12:00 noon, Pacific Time, on the Closing Date provided that all parties
have made all deposits into Escrow required of them on or prior to the Closing
Date);
2. The Promissory Note in the Deferred Amount
duly executed by Global;
3. Global' share of the closing costs to be paid
by it hereunder;
4. Four (4) duly executed counterparts of the
Western Land JV Assignment of LLC Interest;
5. Four (4) duly executed counterparts of the
Western Water Assignment of LLC Interest;
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6. Four (4) duly executed counterparts of the
Consulting Agreement;
7. Escrow instructions sufficient to enable the
Escrow Agent to close the Escrow in accordance with the terms of this
Agreement;
8. A certified copy of a resolution of the Board
of Directors of Global authorizing Global to consummate this transaction in
accordance with this Agreement and to execute the Promissory Note; and
9. Such other documents and instruments as may
be reasonably required to consummate this transaction in accordance with this
Agreement.
8.4 DELIVERY OF PROMISSORY NOTE AS PARTIAL PAYMENT TO WESTERN
WATER. Western Water and Global agree that the Deferred Amount portion of the
Western Water Purchase Price shall be paid with the Promissory Note executed by
Global at the Closing and delivered to Western Water.
8.5 CLOSING COSTS. Global shall pay for all costs and expenses
incurred in connection with any and all inspections, investigations, reviews,
studies and reports undertaken by or at the request of Global and all other
costs and expenses incurred by it in connection with the acquisition of its
interest in the Company. Escrow fees shall be paid one-half by Western Water
and Western Land JV and one-half by Global. Each party shall be responsible
for the payment of its own attorneys' fees incurred in connection with the
transaction that is the subject of this Agreement and such expenses incurred by
Western Water and Western Land JV shall not be paid by the Company.
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8.6 COMMISSIONS. Western Water, Western Land JV, the Company and
Global each represents and warrants to the others that no brokerage commission
or finders' or other similar fee is payable to any person or entity in
connection with the transaction contemplated hereby, and each agrees to and
does hereby indemnify and hold the others harmless against the payment of any
commission to any other person or entity claiming by, through or under Western
Land JV, Western Water, the Company or Global, as applicable. This
indemnification shall extend to any and all claims, liabilities, costs and
expenses (including reasonable attorneys' fees and litigation costs) arising as
a result of such claims and shall survive the Closing. This Section 8.6 shall
expressly survive any Closing or any termination of this Agreement.
8.7 NO PRORATIONS. There shall be no prorations, or credits to
the Consideration to be paid by Global at the closing. Subject to the terms
and conditions of the Western Land JV Assignment of LLC Interest and the
Western Water Assignment of LLC Interest, the Company will continue to pay all
expenses and liabilities of the Company whether incurred prior to or after the
Closing and whether or not such expenses and liabilities are customarily
prorated items.
8.8 ACCESS TO DOCUMENTS AND PROPERTY.
A. Pending the Closing, except for internal market studies,
appraisals, business plans, sensitivity studies or similar subjective
evaluations of the Property (collectively, the "Excluded Documents"), Western
Water and Western Land JV will continue to provide access to and make available
for review and copying between the hours of 8:00 a.m. and 6:00 p.m., all
reports, studies, analyses, plans, charts, schedules and other background
information pertaining to the Company or the Property in the possession or
control of the Company, Western Water or Western
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Land, including without limitation any title policies, title documents, loan
documents, leases, licenses, rights of way, environmental and engineering
reports, minutes, employment and consultant agreements, and any material
correspondence, agreements, memoranda and documentation relating to the Company
or the Property in the possession or control of the Company, Western Water or
Western Land (collectively, all such material in the possession or control of
the Company, Western Water or Western Land shall be referred to as the
"Documents").
B. Prior to the Closing, Global and its agents,
employees, contractors and consultants shall have the right to enter on the
Property for the purpose of performing any inspection thereof that Global may
desire to make, provided that Global shall not perform any invasive testing of
the Property without the consent of Western Land JV and Western Water, in their
sole and absolute discretion. Prior to any entry on the Property, Global shall
obtain and deliver evidence to the Company of general liability insurance
coverage in a minimum amount of one million dollars ($1,000,000), and Global
shall indemnify, defend and hold the Company, Western Land JV and Western Water
harmless from and against any and all claims, costs, damages, obligations or
liabilities arising in connection with such entry and inspection (including
reasonable attorneys' fees and costs).
ARTICLE IX
CONDEMNATION
9.1 CONDEMNATION. If, prior to Closing, any Governmental
Authority or other entity having condemnation authority shall institute an
eminent domain proceeding or take any steps preliminary thereto (including the
giving of any direct or indirect notice of intent to institute such
proceedings) with regard to any material
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portion of the Land, constituting in excess of Four Hundred Fifty Thousand
Dollars ($450,000) in value of the Property, the Company shall give prompt
notice of same to Global. If such proceedings are not dismissed on or before
the Closing Date, Global shall be entitled, as its sole and exclusive remedy,
to terminate this Agreement upon written notice to the Company on the Closing
Date, in which event the Deposit shall be promptly returned to Global and the
parties shall have no further rights or obligations hereunder except as may be
set forth herein. In the event Global does not terminate this Agreement
pursuant to the preceding sentence, Global shall be conclusively deemed to have
elected to purchase the Western Water Interest and the Western Land JV Interest
subject to such condemnation and waives any right to terminate this Agreement
as a result thereof. If the consideration does not involve a portion of the
Property in excess of Four Hundred Fifty Thousand Dollars ($450,000) in value
or Global waives or is deemed to have waived the right to terminate this
Agreement as a result of such condemnation, the parties hereto shall close this
Agreement in accordance with the terms hereof with no reduction in the
Consideration, and the proceeds of such condemnation shall be paid to the
Company.
ARTICLE X
RISK OF LOSS
10.1 RISK OF LOSS. The parties hereto acknowledge and agree that
any improvements to the Land are not a material element of this transaction,
and therefore, if prior to Closing, any of such improvements to the Land shall
be damaged or destroyed by fire or other casualty, such event shall not affect
the obligations of the parties pursuant to this Agreement and each agrees to
proceed to
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close this Agreement in accordance with the terms hereof, with the proceeds of
any casualty insurance being payable to the Company.
ARTICLE XI
MISCELLANEOUS
11.1 ENTIRE AGREEMENT. This Agreement, together with the Exhibits
and Schedules attached hereto, contains the entire agreement of the parties
hereto. There are no other agreements, oral or written, and this Agreement can
be amended only by written agreement signed by the parties hereto, and by
reference, made a part hereof.
11.2 AGREEMENT BINDING ON PARTIES. Except as hereinafter provided,
this Agreement, and the terms, covenants, and conditions herein contained,
shall inure to the benefit of and be binding upon the heirs, personal
representatives, successors, and assigns of each of the parties hereto. No
party may assign its rights hereunder without the prior written consent of the
other parties, except that Global may assign this Agreement to or designate one
or more wholly owned subsidiaries or other Affiliates to become a member of the
Company. No assignment permitted hereunder shall relieve any party from any of
its obligations under this Agreement. Any assignment in violation of the
provisions of this Section 11.2 shall be void and shall constitute a material
default under this Agreement.
11.3 EFFECTIVE DATE. The "Effective Date" of this Agreement shall
be the date on which this Agreement has been executed by all of the Company,
Western Land JV, Western Water, and Global.
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11.4 NOTICE. Any notice, communication, request, reply or advice
(collectively, "Notice") provided for or permitted by this Agreement to be made
or accepted by either party must be in writing. Notice may, unless otherwise
provided herein, be given or served by A) depositing the same in the United
States mail, postage paid, certified, and addressed to the party to be
notified, with return receipt requested, B) by delivering the same to such
party, or an agent of such party, in person or by commercial courier, C) by
facsimile, or D) by depositing the same into custody of a nationally recognized
overnight delivery service such as Federal Express Corporation, Airborne
Express, Emery or DHL. Notice given in any manner shall be effective only if
and when received by the party to be notified between the hours of 8:00 a.m.
and 5:00 p.m. of any Business Day with delivery made after such hours to be
deemed received the following Business Day. For the purposes of notice, the
addresses of the parties shall, until changed as hereinafter provided, be as
follows:
THE COMPANY: Nevada Land and Resource Company LLC
P.O. Box 1200
Rocklin, California 95677-1200
Attn: Mr. Larry D. Kelley
Fax: (916) 624-0741
AND TO: Morgan Stanley Real Estate Fund
1999 Avenue of the Stars
Suite 2000
Los Angeles, California 90067-6086
Attn: Mr. Jeffrey A. Dritley
Fax: (310) 203-9703
AND TO: Jones, Day, Reavis & Pogue
77 West Wacker Drive
Suite 3500
Chicago, Illinois 60601-1692
Attn: Robert C. Lee, Esq.
Fax: (312) 782-8585
41
<PAGE> 45
AND TO: Western Water Company
4660 La Jolla Village Drive
Suite 680
San Diego, California 92122
Attn: Mr. Peter L. Jensen
Fax: (619) 535-9260
AND TO: Troy & Gould
1801 Century Park East
16th Floor
Los Angeles, California 90067
Attn: William Gould, Esq.
Fax: (310) 201-4746
WESTERN LAND JV: Western Land Joint Venture
1999 Avenue of the Stars
Suite 2000
Los Angeles, California 90067-6086
Attn: Mr. Jeffrey A. Dritley
Fax: (310) 203-9703
WITHA COURTESY COPY TO: Jones, Day, Reavis & Pogue
77 West Wacker Drive
Suite 3500
Chicago, Illinois 60601-1692
Attn: Robert C. Lee, Esq.
Fax: (312) 782-8585
WESTERN WATER: Western Water Company
4660 La Jolla Village Drive
Suite 680
San Diego, California 92122
Attn: Mr. Peter L. Jensen
Fax: (619) 535-9260
WITH A COURTESY COPY TO: Troy & Gould
1801 Century Park East
16th Floor
Los Angeles, California 90067
Attn: William Gould, Esq.
Fax: (310) 201-4746
42
<PAGE> 46
GLOBAL: John R. Hart
President and CEO
Global Equity Corporation
875 Prospect, Suite 301
La Jolla, CA 92037
Fax: (619) 454-1170
AND TO: Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, CA 94301
Attn: Jeffrey A. Trant, Esq.
Fax: (415) 328-3029
The parties hereto shall have the right from time to time to change their
respective addresses, and each shall have the right to specify as its address
any other address within the United States of America upon written notice to
the other party. Any notice which Global desires to send to the Company,
Western Water and Western Land JV may be sent in a single notice delivered to
all parties to receive notices on behalf of the Company.
11.5 TIME OF THE ESSENCE. Time is of the essence in all things
pertaining to the performance of this Agreement.
11.6 PLACE OF PERFORMANCE. This Agreement is made and shall be
performable in La Jolla, California, and shall be construed in accordance with
the laws of the State of California.
11.7 VENUE. Venue shall be in San Diego County.
11.8 CURRENCY. All dollar amounts are expressed in United States
currency.
11.9 SECTION HEADINGS. The section headings contained in this
Agreement are for convenience only and shall in no way enlarge or limit the
scope or meaning of the various and several sections hereof.
11.10 OBLIGATIONS. Subject to Section 6.5.B hereof, to the extent
necessary to carry out the terms and provisions hereof, the terms, conditions,
obligations and
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<PAGE> 47
rights set forth herein shall not be deemed terminated at the time of Closing
nor will they merge into the various documents executed and delivered at the
time of Closing.
11.11 NO RECORDATION. Without the prior written consent of the
Company, there shall be no recordation of either this Agreement or any
memorandum hereof, or any affidavit pertaining hereto and any such recordation
of this Agreement or memorandum hereof, by Global without the prior written
consent of the Company shall constitute a default hereunder by Global,
whereupon this Agreement shall, at the option of the Company, terminate and be
of no further force and effect. Upon termination all Deposit shall be retained
by Western Land JV and Western Water, the parties shall have no further duties
or obligations one to the other, except as may be set forth in Section 7.1.
11.12 MULTIPLE COUNTERPARTS. This Agreement may be executed in
multiple counterparts (each of which is to be deemed original for all
purposes).
11.13 SEVERABILITY. If any provision of this Agreement or
application to any party or circumstance shall be determined by any court of
competent jurisdiction to be invalid and unenforceable to any extent, the
remainder of this Agreement or the application of such provision to such person
or circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall
be valid and shall be enforced to the fullest extent permitted by law.
11.14 COOPERATION. Each party hereto shall cooperate with the other
parties in all respects in implementing the transaction contemplated by this
Agreement. Each
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<PAGE> 48
party shall execute and deliver such instruments and other documents as may be
reasonably requested by the other party to carry out the purpose of this
Agreement.
11.15 POSSESSION. Possession of the Property, including but not
limited to the Land and all bank accounts, funds, records, documents, reports,
studies, equipment, furnishings and other assets of the Company shall remain
with the Company at the Closing (other than the Excluded Documents which shall
remain with Western Water and Western Land JV) and be delivered to the new
members of the Company as directed by Global.
11.16 CONFIDENTIALITY. Each party to this Agreement expressly
acknowledges and agrees that the transactions contemplated by this Agreement
and the terms, conditions and negotiations concerning the same shall be held in
the strictest confidence by each of them and shall not be disclosed by any of
them, except (1) to their respective legal counsel, accountants, consultants,
officers, partners, directors and shareholders, (2) to the extent that such
disclosure may be necessary for their respective performances hereunder, and
(3) to the extent Global and Western Water may be required to publicly announce
this transaction at the time of signing this Agreement pursuant to SEC
regulations and/or Canadian Regulations pertaining to such disclosure
requirements. Global further acknowledges and agrees that, unless and until
the Closing occurs, all information obtained by Global in connection with the
Company or the Land will not be disclosed by Global to any third person without
the prior written consent of the Company. Nothing contained in this Section
11.16 shall preclude or limit any party from disclosing any information
otherwise deemed confidential under this Section 11.16 in connection with such
party's enforcement of its rights following a disagreement hereunder or in
response
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<PAGE> 49
to lawful process or subpoena or other valid or enforceable order of a court of
competent jurisdiction or any filings with Governmental Authorities required by
reason of the transactions provided for herein. The provisions of this Section
11.16 shall survive any termination of this Agreement.
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<PAGE> 50
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
"THE COMPANY"
NEVADA LAND AND RESOURCE
COMPANY, LLC,
a Delaware limited liability company
By: Western Land Joint Venture,
a Delaware general partnership
By: /s/ JEFFREY A. DRITLEY
------------------------------
Name: Jeffrey A. Dritley
----------------------------
Title: President
---------------------------
By: Western Water Company,
a Delaware corporation
By: /s/ PETER JENSEN
-----------------------------
Name: Peter Jensen
---------------------------
Title: Chief Executive Officer
--------------------------
"WESTERN LAND JV"
WESTERN LAND JOINT VENTURE,
a Delaware general partnership
By: /s/ JEFFREY A. DRITLEY
-----------------------------
Name: Jeffrey A. Dritley
---------------------------
Title: President
--------------------------
(SIGNATURES CONTINUE NEXT PAGE)
47
<PAGE> 51
"WESTERN WATER"
WESTERN WATER COMPANY,
a Delaware corporation
By: /s/ PETER JENSEN
-----------------------------
Name: Peter Jensen
---------------------------
Title: Chief Executive Officer
--------------------------
"GLOBAL"
GLOBAL EQUITY CORPORATION,
an Ontario, Canada corporation
By: /s/ JOHN R. HART
-----------------------------
Name: John R. Hart
---------------------------
Title: President and CEO
--------------------------
48
<PAGE> 52
EXHIBIT A
ATTACH ULLMAN INVENTORY DATED MARCH 27, 1997
<PAGE> 53
EXHIBIT B
FORM OF CONSULTING AGREEMENT
<PAGE> 54
EXHIBIT C
PROMISSORY NOTE
<PAGE> 55
EXHIBIT D
WESTERN LAND JV
ASSIGNMENT OF LLC MEMBER INTEREST
THIS ASSIGNMENT OF LLC MEMBER INTEREST (this "Assignment") is made and
entered into as of the 23rd day of April, 1997 (the "Effective Date"), by and
among Western Land Joint Venture, a Delaware general partnership (sometimes
referred to herein as the "Assignor"), Global Equity Corporation, an Ontario,
Canada corporation (sometimes referred to herein as the "Assignee") and Western
Water Company, a Delaware corporation ("Western Water");
W I T N E S E T H:
WHEREAS, Assignor is a member in Nevada Land and Resource Company, a
Delaware limited liability company (hereinafter sometimes referred to as the
"Company") formed pursuant to the Delaware Limited Liability Company Act, 6
Del. C. Section Section 18-101, et seq. by the filing of a Certificate of
Formation with the Secretary of State of Delaware on September 28, 1995 as
amended and restated pursuant to that certain Amended and Restated Certificate
of Formation filed with the Secretary of State of Delaware on November 21, 1995
(the "Certificate of Formation"), to be governed by the terms and subject to
the conditions set forth in that certain Limited Liability Company Agreement
made and entered into as of September 28, 1995 (the "LLC Agreement"), by and
among Assignor and Western Water; and
WHEREAS, Assignor desires to assign and Assignee desires to accept an
assignment of all of Assignor's right, title and interest in and to the Company
as provided in that certain Purchase and Sale Agreement (the "Purchase
Agreement") dated April 9, 1997, by and among the Company, Assignor, Assignee
and Western
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<PAGE> 56
Water; all capitalized terms used herein and not otherwise defined shall have
the meaning ascribed to such terms in such Purchase and Sale Agreement) (herein
such interest is sometimes referred to as the "Assigned Interest"); and
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. ASSIGNMENT OF ASSIGNED INTEREST. Assignor does hereby ASSIGN,
TRANSFER, SET OVER and DELIVER unto Assignee, its successors, legal
representatives and assigns, the Assigned Interest, TO HAVE AND TO HOLD such
Assigned Interest unto Assignee, its successors, legal representatives and
assigns, forever. By signing below, all parties consent to the Assignment of
the Assigned Interest to Assignee and the admission of Assignee as a member of
the Company, and expressly waive any rights they may have under the LLC
Agreement, provided that nothing herein shall constitute a waiver of rights
between Assignor and Western Water. Following this Assignment, Assignor shall
have no further rights or interest in the Company.
2. ASSUMPTION OF OBLIGATIONS. Assignee hereby agrees to assume
and perform all of Assignor's liabilities, obligations and responsibilities as
a member of the Company arising from and after the Effective Date, except as
provided in Paragraphs 3 and 4 below.
3. INDEMNIFICATION BY ASSIGNEE. Subject to the limitations set
forth hereinbelow, Assignee will indemnify and hold harmless the Indemnified
Parties (as defined below) from and against any and all losses, liabilities,
costs (including reasonable fees and disbursements of counsel), expenses,
penalties, judgments, damages, claims and demands of every kind and character
arising out of or in connection with the following regardless of by whom or
when asserted and
2
<PAGE> 57
regardless of whether known or unknown, fixed or contingent, or asserted or
unasserted as of the Effective Date: (1) the business of the Company which is
conducted from and after the Effective Date; (2) any claims or liabilities
concerning the business of the Company from the date of its formation and prior
to the Effective Date, provided that the aggregate amount paid by Assignee or
the Company in connection with all such claims and liabilities together with
damages for breach of warranties, covenants or representations does not exceed
the sum of Four Hundred Fifty Thousand Dollars ($450,000) (the "Threshold
Amount"); and (3) any claims or liabilities concerning the business of the
Company which is conducted prior to the Effective Date, whether or not due to
the negligent act or omission of the Company, to the extent payment by Assignor
pursuant to Paragraph 4 below of all such claims or liabilities together with
damages for breach of warranties, covenants or representations in the aggregate
exceeds the sum of Ten Million Dollars ($10,000,000) (the "Ceiling Amount").
Notwithstanding the foregoing, this indemnification shall exclude (A) any
obligations of or acts to be performed by the Indemnified Parties as a member
of the Company prior to the Effective Date; (B) any claims resulting from the
fraud or willful misconduct of the Indemnified Parties, and (C) any federal or
state income tax liabilities of any Indemnified Party attributable to the
period prior to the Effective Date hereof. For purposes of this Assignment
"Indemnified Parties" shall mean the Assignor, any shareholder, partner, or
other beneficial owner of Assignor, any person who directly or indirectly
controls, is controlled by or is under common control with the Assignor or any
shareholder, partner, director or other beneficial owner of Assignor, and any
shareholder, partner, officer, employee, agent, successor or assign of any of
the foregoing, provided, however, that any person that is an
3
<PAGE> 58
Indemnified Party on the date of this Assignment shall always be an Indemnified
Party. If any action or claim shall be brought or asserted against any
Indemnified Party, in respect of which indemnity may be sought from Assignee,
such Indemnified Party shall promptly notify Assignee in writing and Assignee
shall assume the defense thereof, including the employment of counsel and the
payment of all expenses. Such Indemnified Party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the cost and expense of
such Indemnified Party unless (A) the employment thereof has been specifically
authorized by Assignee in writing, (B) Assignee has failed to assume the
defense and employ counsel or (C) the named parties to any such action
(including any impleaded parties) include both such Indemnified Party and
Assignee, and Assignee shall have been advised by the counsel employed by such
Indemnified Party that there may be one or more legal defenses available to
such Indemnified Party which are different from or in addition to those
available to Assignee (in which case Assignee shall not have the right to
assume the defense of such action on behalf of such Indemnified Party).
4. INDEMNIFICATION BY ASSIGNOR. Subject to the limitations set
forth hereinbelow, Assignor will indemnify and hold harmless the Assignee's
Indemnified Parties from and against any and all losses, liabilities, costs
(including reasonable fees and disbursements of counsel), expenses, penalties,
judgments, damages, claims and demands of every kind and character
(collectively, the "Assignee Indemnity Claims") arising out of or in connection
with the following regardless of how such indemnified liabilities arose or
arise and regardless of by whom or when asserted and regardless of whether
known or unknown, fixed or contingent, or asserted or
4
<PAGE> 59
unasserted as of the Effective Date: (1) any claims or liabilities resulting
from the fraud or willful misconduct of the Indemnified Parties; (2) any
federal or state income tax liabilities of any Indemnified Party and employment
taxes of the Company due prior to the Effective Date; and (3) any claims or
liabilities concerning the business of the Company from the date of its
formation and prior to the Effective Date in the event such claims or
liabilities are due to either employment claims or the negligent act or
omission of the Company; provided that the aggregate amount of all such claims
and liabilities paid by Assignee, together with damages for breach of
warranties, covenants or representations, exceed the Threshold Amount but only
to the extent in excess of the Threshold Amount and the dollar amount of such
claims or liabilities paid by Assignor together with damages for breach of
warranties, covenants or representations does not exceed the Ceiling Amount.
Notwithstanding the foregoing, this indemnification shall exclude (A) any
claims or liabilities attributable to any alleged negligent omission or failure
to act by Assignor or the Company prior to the Effective Date in connection
with any Hazardous Material (as hereinafter defined) contamination of the
Property, (B) any matter concerning the condition of the Property as of the
Effective Date, including but not limited to those matters set forth in
Paragraph 4.1 of the Purchase Agreement, unless specifically related to claims
or liabilities due to the negligent acts or omissions of the Company covered by
subparagraph (3) above, or (C) any matter disclosed in the Documents to which
Assignee has been provided access prior to the Effective Date pursuant to the
Purchase Agreement. In addition, prior to asserting any claim hereunder
Assignee shall submit such claim for payment to its insurance company or title
insurance company if such claim is insured, and Assignee shall assert such
claim against
5
<PAGE> 60
Assignor only to the extent the claim is not covered by such policy. For
purposes of this Paragraph 5 "Assignee's Indemnified Parties" shall mean the
Assignee, any shareholder, partner or other beneficial owner of Assignee, any
person who directly or indirectly controls, is controlled by or is under common
control with Assignee or any shareholder, partner, direct or other beneficial
owner of Assignee, and any shareholder, partner, officer, employee, agent,
successor or assign of any of the foregoing, provided, however, that any person
that is an Assignee's Indemnified Party on the date of this Assignment shall
always be an Assignee's Indemnified Party. If any action or claim shall be
brought or asserted against any Assignee's Indemnified party, in respect of
which indemnity may be sought from Assignor, such Assignee's Indemnified Party
shall promptly notify Assignor in writing and Assignor shall assume the defense
thereof, including the employment of counsel and the payment of all expenses.
Such Assignee's Indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the cost and expense of such
Assignee's Indemnified Party, unless (A) the employment thereof has been
specifically authorized by Assignor in writing, (B) Assignor has failed to
assume the defense and employ counsel or (C) the named parties to any such
action (including any impleaded parties) include both Assignor and such
Assignee's Indemnified Party, and Assignee's Indemnified Party shall have been
advised by the counsel employed by such Assignee's Indemnified Party that there
may be one or more legal defenses available to Assignor which are different
from or in addition to those available to such Assignee's Indemnified Party (in
which case Assignor shall not have the right to assume the defense of such
action on behalf of such Assignee's Indemnified Party).
6
<PAGE> 61
6. HAZARDOUS MATERIALS. The term "Hazardous Materials" as used
in this Agreement shall mean any hazardous, toxic or dangerous waste, substance
or material, pollutant or contaminant, as defined for purposes of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. Sections 9601 et seq.), as amended ("CERCLA"), or the Resource
Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), as amended
("RCRA"), or any other federal, state or local law, ordinance, rule or
regulation applicable to the Land, or any substance which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous, or any substance which contains gasoline, diesel fuel or
other petroleum hydrocarbons, polychlorinated biphenyls (pcbs), radon gas, urea
formaldehyde, asbestos, lead or electromagnetic waves.
7. EFFECTIVE DATE. This Assignment is effective as of the
Effective Date and from and after the Effective Date (A) Assignor shall cease
to be a member of the Company and (B) that portion of the net profits or net
losses and cash flow (including cash flow which has not been distributed) of
the Company allocable to the Assigned Interest shall be credited, distributed
or charged, as the case may be, to Assignee and not to Assignor in accordance
with the terms of the amended and restated NRLC Agreement which Assignee may
adopt.
8. FUTURE COOPERATION ON SUBSEQUENT DOCUMENTS. Assignor and
Assignee mutually agree to cooperate at all times from and after the Effective
Date with respect to the supplying of any information requested by the other
regarding any of the matters described in this Assignment, and each agrees
promptly to execute such further deeds, bills of sale, assignments, amendments
to the Company's organizational documents, releases, indemnifications,
assumptions, estoppel
7
<PAGE> 62
certificates, notifications, or such other documents or instruments and to take
all necessary action and to perform such additional acts as may be reasonably
requested and appropriate for the purpose of giving effect to, evidencing,
performing or giving notice of the terms, provisions and conditions of this
Assignment, all transactions contemplated herein and carrying out the business
of the Company from and after the effective date of this Assignment.
9. DURATION OF INDEMNIFICATION. The indemnifications provided by
the parties contained in this Assignment shall survive the consummation of the
transactions contemplated hereby and shall expire one (1) year from the
Effective Date. Accordingly, any party which may desire to bring a claim with
respect to any indemnification hereunder shall provide written notice of such
claim to all other parties prior to the expiration of one (1) year from the
Effective Date.
10. BINDING EFFECT. Except as herein otherwise provided to the
contrary, this Assignment shall be binding upon and inure to the benefit of the
parties hereto, their heirs, legal and personal representatives, successors and
assigns; provided, however, that neither party shall have any right, power and
authority to assign any rights, powers, duties or obligations hereunder, except
that Assignee may assign its interest in this Assignment to any parent or
subsidiary corporation or to any Affiliate, as such term is defined in the
Purchase Agreement.
11. AMENDMENTS. No amendment, alteration, modification or waiver
of this Assignment, or any part hereof, shall be valid or effective unless in
writing and signed by all the parties hereto.
8
<PAGE> 63
12. APPLICABLE LAWS. This Assignment shall be governed by and
construed in accordance with the laws of the State of California and the
applicable federal laws of the United States.
13. COUNTERPARTS. This Assignment may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
taken together shall constitute but one and the same instrument which may be
sufficiently evidenced by one counterpart, and any of the parties hereto may
execute this Assignment by signing any such counterpart.
14. WAIVER. No consent or waiver, either expressed or implied, by
any party to or of any breach or default by any other party, in the performance
by such other party of the obligations thereof under this Assignment shall be
deemed or construed to be a consent or waiver to or of any other breach or
default in the performance by such other party of the same or any other
obligations of such other party under this Assignment. Failure on the part of
any party to complain or to pursue complaints with respect to any acts or
failure to act of any other party, or failure on the part of any party to
declare any other party in default, irrespective of how long such default
continues, shall not constitute a waiver by such party of the rights and
remedies thereof under this Assignment or otherwise at law or in equity.
15. HEADINGS AND TITLES. The headings and titles of the Articles,
Sections, Subsections and Paragraphs herein have been inserted as a matter of
convenience of reference only and shall not control or affect the meaning or
construction of any of the operative terms or provisions herein, unless the
latter are ambiguous, uncertain or indefinite, in which case, such titles and
headings may be looked to in determining the proper construction and meaning of
this Assignment and the parties' intentions.
9
<PAGE> 64
16. GENDER. Whenever the context shall so require, all words
herein in any gender shall be deemed to include the masculine, feminine, or
neuter gender, and all singular words shall include the plural, and all plural
words shall include the singular.
17. CONSTRUCTION. In case any one or more of the provisions
contained in this Assignment shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalid, illegal or unenforceable
provision or provisions shall be fully severable and shall not affect any other
provision hereof and this Assignment shall be construed and enforced as if such
invalid, illegal or unenforceable provision had never been contained herein.
Furthermore, in lieu of each such illegal, invalid or unenforceable provision
there shall be added automatically as part of this Assignment a provision as
similar in terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.
18. NO THIRD PARTY BENEFICIARY RIGHTS. This Assignment is made
solely and specifically between and for the benefit of the parties hereto, and
their respective successors and assigns, subject to the express provisions
hereof relating to successors and assigns, and no other person, individual,
corporation or entity, whatsoever, shall have any rights, interests, or claims
hereunder or be entitled to any benefits under or on account of this Assignment
as a third party beneficiary or otherwise.
19. EXHIBITS AND RECITALS. All recital paragraphs and exhibits,
attachments, annexed instruments and addenda referred to herein shall be
considered a part of this Assignment as fully as if and with the same force and
effect as if such recital paragraphs and exhibits, attachments, annexed
instruments or addenda had been included herein in full.
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<PAGE> 65
20. LANGUAGE. The parties hereto acknowledge that each of them
and their counsel have reviewed and revised this Assignment and that the
language used in this Assignment shall be deemed to be the language chosen by
the parties to express their mutual intent, and the parties hereby agree that
the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Assignment or any amendments or exhibits hereto and that no rule of
strict construction shall be applied against any party.
21. ATTORNEYS' FEES. In the event any party hereto is required to
employ an attorney because any litigation arises out of this Agreement between
the parties hereto, the nonprevailing party shall pay the prevailing party all
reasonable fees and expenses, including attorneys' fees and expenses, incurred
in connection with such litigation.
IN WITNESS WHEREOF, this Assignment is executed as of the day and year
first above written.
ASSIGNOR:
WESTERN LAND JOINT VENTURE,
a Delaware general partnership
By:______________________________
Name:_________________________
Title:________________________
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<PAGE> 66
ASSIGNEE:
GLOBAL EQUITY CORPORATION
an Ontario, Canada corporation
By:______________________________
Name:_________________________
Title:________________________
WESTERN WATER:
WESTERN WATER COMPANY,
a Delaware corporation
By:______________________________
Name:_________________________
Title:________________________
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EXHIBIT E
WESTERN WATER
ASSIGNMENT OF LLC MEMBER INTEREST
THIS ASSIGNMENT OF LLC MEMBER INTEREST (this "Assignment") is made and
entered into as of the 9th day of April, 1997 (the "Effective Date"), by and
among Western Water Company, a Delaware corporation (sometimes referred to
herein as the "Assignor") and Global Equity Corporation, Inc., an Ontario,
Canada corporation (sometimes referred to herein as the "Assignee") and Western
Land Joint Venture, a Delaware general partnership ("Western Land");
W I T N E S E T H:
WHEREAS, Assignor is a member in Nevada Land and Resource Company, a
Delaware limited liability company (hereinafter sometimes referred to as the
"Company") formed pursuant to the Delaware Limited Liability Company Act, 6
Del. C. Section Section 18-101, et seq. by the filing of a Certificate of
Formation with the Secretary of State of Delaware on September 28, 1995 as
amended and restated pursuant to that certain Amended and Restated Certificate
of Formation filed with the Secretary of State of Delaware on November 21, 1995
(the "Certificate of Formation"), to be governed by the terms and subject to
the conditions set forth in that certain Limited Liability Company Agreement
made and entered into as of September 28, 1995 (the "LLC Agreement"), by and
among Assignor and Western Land; and
WHEREAS, Assignor desires to assign and Assignee desires to accept an
assignment of all of Assignor's right, title and interest in and to the Company
as
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provided in that certain Purchase and Sale Agreement (the "Purchase Agreement")
dated April 9, 1997 by and among the Company, Assignor, Assignee and Western
Land; all capitalized terms used herein and not otherwise defined shall have
the meaning ascribed to such terms in such Purchase and Sale Agreement) (herein
such interest is sometimes referred to as the "Assigned Interest"); and
WHEREAS, as of the execution of this Assignment, Assignor and Western
Land are the only members of the Company; and
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. ASSIGNMENT OF ASSIGNED INTEREST. Assignor does hereby ASSIGN,
TRANSFER, SET OVER and DELIVER unto Assignee, its successors, legal
representatives and assigns, the Assigned Interest, TO HAVE AND TO HOLD such
Assigned Interest unto Assignee, its successors, legal representatives and
assigns, forever. By signing below, all parties consent to the assignment of
the Assigned Interest to Assignee and the admission of Assignee as a member of
the Company, and expressly waive any rights they may have under the LLC
Agreement, provided that nothing herein shall constitute a waiver of rights
between Assignor and Western Land JV. Following this Assignment, Assignor
shall have no further rights or interest in the Company.
2. ASSUMPTION OF OBLIGATIONS. Assignee hereby agrees to assume
and perform all liabilities, obligations and responsibilities as a member of
the Company arising in from and after the Effective Date except as provided in
Paragraphs 3 and 4 below.
3. INDEMNIFICATION BY ASSIGNEE. Subject to the limitations set
forth hereinbelow, Assignee will indemnify and hold harmless the Indemnified
Parties (as
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defined below) from and against any and all losses, liabilities, costs
(including reasonable fees and disbursements of counsel), expenses, penalties,
judgments, damages, claims and demands of every kind and character arising out
of or in connection with the following regardless of by whom or when asserted
and regardless of whether known or unknown, fixed or contingent, or asserted or
unasserted as of the Effective Date: (1) the business of the Company which is
conducted from and after the Effective Date; (2) any claims or liabilities
concerning the business of the Company from the date of its formation and prior
to the Effective Date, provided that the aggregate amount paid by Assignee or
the Company in connection with all such claims and liabilities, together with
damages for breach of warranties, covenants or representations, does not exceed
the sum of Four Hundred Fifty Thousand Dollars ($450,000) (the "Threshold
Amount"); and (3) any claims or liabilities concerning the business of the
Company which is conducted prior to the Effective Date, whether or not due to
the negligent act or omission of the Company, to the extent payment by Assignor
pursuant to Paragraph 4 below of all such claims or liabilities, together with
damages for breach of warranties, covenants or representations, in the
aggregate exceeds the sum of Ten Million Dollars ($10,000,000) (the "Ceiling
Amount"). Notwithstanding the foregoing, this indemnification shall exclude
(A) any obligations of or acts to be performed by the Indemnified Parties as a
member of the Company prior to the Effective Date, (B) any claims resulting
from the fraud or willful misconduct of the Indemnified Parties, and (C) any
federal or state income tax liabilities of any Indemnified Party and
liabilities arising out of any act or failure to act on the part of any
Indemnified Party attributable to the period prior to the Effective Date
hereof. For purposes of this Assignment, "Indemnified Parties"
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shall mean the Assignor, any shareholder, partner, or other beneficial owner of
Assignor, any person who directly or indirectly controls, is controlled by or
is under common control with the Assignor or any shareholder, partner, director
or other beneficial owner of Assignor, and any shareholder, partner, officer,
employee, agent, successor or assign of any of the foregoing, provided,
however, that any person that is an Indemnified Party on the date of this
Assignment shall always be an Indemnified Party. If any action or claim shall
be brought or asserted against any Indemnified Party, in respect of which
indemnity may be sought from Assignee, such Indemnified Party shall promptly
notify Assignee in writing and Assignee shall assume the defense thereof,
including the employment of counsel and the payment of all expenses. Such
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the cost and expense of such Indemnified Party unless
(a) the employment thereof has been specifically authorized by Assignee in
writing, (b) Assignee has failed to assume the defense and employ counsel or
(c) the named parties to any such action (including any impleaded parties)
include both Assignor and such Indemnified Party and Assignee, and Assignee
shall have been advised by the counsel employed by such Indemnified Party that
there may be one or more legal defenses available to such Indemnified Party
which are different from or in addition to those available to such Indemnified
Party (in which case Assignee shall not have the right to assume the defense of
such action on behalf of such Indemnified Party).
4. INDEMNIFICATION BY ASSIGNOR. Subject to the limitation set
forth hereinbelow, Assignor will indemnify and hold harmless the Assignee's
Indemnified Parties from and against any and all losses, liabilities, costs
(including reasonable fees
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and disbursements of counsel), expenses, penalties, judgments, damages, claims
and demands of every kind and character (collectively, the "Assignee Indemnity
Claims") arising out of or in connection with the following regardless of how
such indemnified liabilities arose or arise and regardless of by whom or when
asserted and regardless of whether known or unknown, fixed or contingent, or
asserted or unasserted as of the Effective Date: (1) any claims or liabilities
resulting from the fraud or willful misconduct of the Indemnified Parties; (2)
any federal or state income tax liabilities of any Indemnified Party and
employment taxes of the Company prior to the Effective Date; and (3) any claims
or liabilities concerning the business of the Company from the date of its
formation and prior to the Effective Date in the event such claims or
liabilities are due to either employment claims or the negligent act of
omission of the Company; provided that the aggregate amount of all such claims
and liabilities paid by Assignee, together with damages for breach of
warranties, covenants or representations, exceed the Threshold Amount but only
to the extent in excess of the Threshold Amount and the dollar amount of such
claims or liabilities paid by Assignor, together with damages for breach of
warranties, covenants or representations, does not exceed the Ceiling Amount.
Notwithstanding the foregoing, this indemnification shall exclude (A) any
claims or liabilities attributable to any alleged negligent omission or failure
to act by Assignor or the Company prior to the Effective Date in connection
with any Hazardous Material (as hereinafter defined) contamination of the
Property, (B) any matter concerning the condition of the Property as of the
Effective Date, including but not limited to those matters set forth in
Paragraph 4.1 of the Purchase Agreement, unless specifically related to claims
or liabilities due to the negligent acts or omissions of the Company
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covered by subparagraph (3) above, or (C) any matter disclosed in the Documents
to which Assignee has been provided access prior to the Effective Date pursuant
to the Purchase Agreement. In addition, prior to asserting any claim hereunder
Assignee shall submit such claim for payment to its insurance company or title
insurance company if such claim is insured, and Assignee shall assert such
claim against Assignor only to the extent the claim is not covered by such
policy. For purposes of this paragraph 5, "Assignee's Indemnified Parties"
shall mean the Assignee, any shareholder, partner or other beneficial owner of
Assignee, any person who directly or indirectly controls, is controlled by or
is under common control with Assignee or any shareholder, partner, director or
other beneficial owner of the Assignee, and any shareholder, partner, officer,
employee, agent, successor or assignor of any of the foregoing, provided,
however, that any person that is an Assignee's Indemnified Party on the date of
this Assignment shall always be an Assignee's Indemnified Party. If any action
or claim shall be brought or asserted against any Assignee's Indemnified Party,
in respect of which indemnity may be sought from Assignor, such Assignee's
Indemnified Party shall promptly notify Assignor in writing and Assignor shall
assume the defense thereof, including the employment of counsel and the payment
of all expenses. Such Assignee's Indemnified Party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the cost and
expense of such Assignee's Indemnified Party, unless (d) the employment thereof
has been specifically authorized by Assignor in writing, (e) Assignor has
failed to assume the defense and employ counsel or (f) the named parties to any
such action (including any impleaded parties) include both Assignor and such
Assignee's Indemnified
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Party, and Assignor shall have been advised by the counsel employed by such
Assignee's Indemnified Party that there may be one or more legal defenses
available to Assignor which are different from or in addition to those
available to such Assignee's Indemnified Party (in which case Assignor shall
not have the right to assume the defense of such action on behalf of such
Assignee's Indemnified Party).
6. HAZARDOUS MATERIALS. The term "Hazardous Materials" as used
in this Agreement shall mean any hazardous, toxic or dangerous waste, substance
or material, pollutant or contaminant, as defined for purposes of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. Sections 9601 et seq.), as amended ("CERCLA"), or the Resource
Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), as amended
("RCRA"), or any other federal, state or local law, ordinance, rule or
regulation applicable to the Land, or any substance which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous, or any substance which contains gasoline, diesel fuel or
other petroleum hydrocarbons, polychlorinated biphenyls (pcbs), radon gas, urea
formaldehyde, asbestos, lead or electromagnetic waves.
7. EFFECTIVE DATE. This Assignment is effective as of the
Effective Date, and from and after the Effective Date (g) Assignor shall cease
to be a member of the Company and (h) that portion of the net profits or net
losses and cash flow (including cash flow which has not been distributed) of
the Company allocable to the Assigned Interest shall be credited, distributed
or charged, as the case may be, to Assignee and not to Assignor in accordance
with the terms of the amended and restated NLRC Agreement which Assignee may
adopt.
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8. FUTURE COOPERATION ON SUBSEQUENT DOCUMENTS. Assignor and
Assignee mutually agree to cooperate at all times from and after the Effective
Date with respect to the supplying of any information requested by the other
regarding any of the matters described in this Assignment, and each agrees
promptly to execute such further deeds, bills of sale, assignments, amendments
to the Company's organizational documents, releases, indemnifications,
assumptions, estoppel certificates, notifications, or such other documents or
instruments and to take all necessary action and to perform such additional
acts as may be reasonably requested and appropriate for the purpose of giving
effect to, evidencing, performing or giving notice of the terms, provisions and
conditions of this Assignment, all transactions contemplated herein and
carrying out the business of the Company from and after the effective date of
the Assignment.
9. DURATION OF INDEMNIFICATION. The indemnifications provided by
the parties contained in this Assignment shall survive the consummation of the
transactions contemplated hereby; and shall expire one (1) year from the
Effective Date. Accordingly, any party which may desire to bring a claim with
respect to any indemnification hereunder shall provide written notice of such
claim to all other parties prior to the expiration of one (1) year from the
Effective Date.
10. BINDING EFFECT. Except as herein otherwise provided to the
contrary, this Assignment shall be binding upon and inure to the benefit of the
parties hereto, their heirs, legal and personal representatives, successors and
assigns; provided, however, that neither party shall have any right, power and
authority to assign any rights, powers, duties or obligations hereunder, except
that Assignee may assign its
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interest in this Assignment to any parent or subsidiary corporation or to any
Affiliate, as such term is defined in the Purchase Agreement.
11. AMENDMENTS. No amendment, alteration, modification or waiver
of this Assignment, or any part hereof, shall be valid or effective unless in
writing and signed by all the parties hereto.
12. APPLICABLE LAWS. This Assignment shall be governed by and
construed in accordance with the laws of the State of California and the
applicable federal laws of the United States.
13. COUNTERPARTS. This Assignment may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
taken together shall constitute but one and the same instrument which may be
sufficiently evidenced by one counterpart, and any of the parties hereto may
execute this Assignment by signing any such counterpart.
14. WAIVER. No consent or waiver, either expressed or implied, by
any party to or of any breach or default by any other party, in the performance
by such other party of the obligations thereof under this Assignment shall be
deemed or construed to be a consent or waiver to or of any other breach or
default in the performance by such other party of the same or any other
obligations of such other party under this Assignment. Failure on the part of
any party to complain or to pursue complaints with respect to any acts or
failure to act of any other party, or failure on the part of any party to
declare any other party in default, irrespective of how long such default
continues, shall not constitute a waiver by such party of the rights and
remedies thereof under this Assignment or otherwise at law or in equity.
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15. HEADINGS AND TITLES. The headings and titles of the Articles,
Sections, Subsections and Paragraphs herein have been inserted as a matter of
convenience of reference only and shall not control or affect the meaning or
construction of any of the operative terms or provisions herein, unless the
latter are ambiguous, uncertain or indefinite, in which case, such titles and
headings may be looked to in determining the proper construction and meaning of
this Assignment and the parties' intentions.
16. GENDER. Whenever the context shall so require, all words
herein in any gender shall be deemed to include the masculine, feminine, or
neuter gender, and all singular words shall include the plural, and all plural
words shall include the singular.
17. CONSTRUCTION. In case any one or more of the provisions
contained in this Assignment shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalid, illegal or unenforceable
provision or provisions shall be fully severable and shall not affect any other
provision hereof and this Assignment shall be construed and enforced as if such
invalid, illegal or unenforceable provision had never been contained herein.
Furthermore, in lieu of each such illegal, invalid or unenforceable provision
there shall be added automatically as part of this Assignment a provision as
similar in terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.
18. NO THIRD PARTY BENEFICIARY RIGHTS. This Assignment is made
solely and specifically between and for the benefit of the parties hereto, and
their respective successors and assigns, subject to the express provisions
hereof relating to successors and assigns, and no other person, individual,
corporation or entity, whatsoever, shall
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have any rights, interests, or claims hereunder or be entitled to any benefits
under or on account of this Assignment as a third party beneficiary or
otherwise.
19. EXHIBITS AND RECITALS. All recital paragraphs and exhibits,
attachments, annexed instruments and addenda referred to herein shall be
considered a part of this Assignment as fully as if and with the same force and
effect as if such recital paragraphs and exhibits, attachments, annexed
instruments or addenda had been included herein in full.
20. LANGUAGE. The parties hereto acknowledge that each of them
and their counsel have reviewed and revised this Assignment and that the
language used in this Assignment shall be deemed to be the language chosen by
the parties to express their mutual intent, and the parties hereby agree that
the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Assignment or any amendments or exhibits hereto and that no rule of
strict construction shall be applied against any party.
21. ATTORNEYS' FEES. In the event any party hereto is required to
employ an attorney because any litigation arises out of this Agreement between
the parties hereto, the nonprevailing party shall pay the prevailing party all
reasonable fees and expenses, including attorneys' fees and expenses, incurred
in connection with such litigation.
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IN WITNESS WHEREOF, this Assignment is executed as of the day and year
first above written.
ASSIGNOR:
WESTERN WATER COMPANY
a Delaware corporation
By:______________________________
Name:_________________________
Title:________________________
ASSIGNEE:
GLOBAL EQUITY CORPORATION, INC.,
an Ontario, Canada corporation
By:______________________________
Name:_________________________
Title:________________________
WESTERN LAND JV:
WESTERN LAND JOINT VENTURE,
a Delaware general partnership
By:______________________________
Name:_________________________
Title:________________________
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