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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 21, 1997
WESTERN WATER COMPANY
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
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0-18756 33-0085833
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(Commission File Number) (I.R.S. Employer Identification No.)
4660 LA JOLLA VILLAGE DRIVE, SUITE 825, SAN DIEGO, CALIFORNIA 92122
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(Address of Principal Executive Offices) (Zip Code)
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(619) 535-9282
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Registrant's Telephone Number, Including Area Code
NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 9, 1997, Western Water Company (the "Corporation")
entered into that certain Purchase and Sale Agreement (the "Agreement") with
Global Equity Corporation, an Ontario, Canada corporation ("Global"), and
Western Land Joint Venture, a Delaware general partnership ("Western Land JV"),
to sell to Global the Corporation's entire interest and Western Land JV's
entire interest in Nevada Land and Resource Company, LLC, a Delaware limited
liability company ("Nevada LLC"). The Nevada LLC is the limited liability
company that was formed by the Corporation and Western Land JV (a joint venture
comprised of The Morgan Stanley Real Estate Fund II, L.P. and two affiliates of
that real estate partnership) to own approximately 1.38 million acres of land
and related water interests in Nevada (the "Nevada Property"). The Corporation
acquired its interest in the Nevada LLC in October 1995 for $12,000,000. The
sale of the Corporation's interest pursuant to the Agreement was consummated on
April 23, 1997. The Corporation's portion of the purchase price was
$13,360,000, of which $12,024,000 was paid in cash and $1,336,000 was paid by
the delivery to the Corporation of a convertible note from Global due on
December 31, 1997. The note bears interest at a rate of 6% per annum and is
convertible by the Corporation into publicly traded stock of Global at any time
prior to maturity.
In addition to the sale effected pursuant to the Agreement, the Nevada
LLC entered into a consulting agreement with Western Agua, L.P. (the
"Consulting Agreement"). Western Agua, L.P. is a Delaware limited partnership
formed by the Corporation and Western Land JV. The Corporation owns a 70%
interest in Western Agua, L.P. and is the sole general partner of the
partnership. In exchange for providing consulting services to Nevada LLC in
the development of water and mineral, gas and oil resources on the Nevada
Property, Western Agua, L.P. will receive 50% of the net proceeds, if any,
derived from the Nevada Property after Global both recoups its investment in
the Nevada LLC and earns a 20% cumulative return compounded annually on its
investment. The Consulting Agreement expires on December 31, 2020 unless
terminated sooner upon, among other things, a sale of the Nevada Property and
full payment of all amounts outstanding under the Consulting Agreement.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
On April 21, 1997, Western Water Company, a Delaware corporation (the
"Corporation"), completed a private offering of Series C Convertible Redeemable
Preferred Stock, $.001 par value per share ("Series C Preferred Stock"),
pursuant to Rule 506 of Regulation D promulgated under the Securities Act of
1933, as amended. The Corporation sold 9,000 shares of Series C Preferred
Stock to 25 accredited investors at a price of $1,000 per share for an
aggregate offering of $9,000,000.
The following is a summary of certain of the terms of the Series C
Preferred Stock:
Dividends. The holders of the outstanding Series C Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of funds legally available therefor, dividends at the annual
rate of 7.25% of the stated value per share of Series C Preferred Stock ($1,000
per share). Such dividends shall be payable semi-annually. The first four
semi-annual dividend payments may be made, at the discretion of the Board of
Directors, in cash or, in full or in part, by issuing fully paid and
nonassessable shares of Series C Preferred Stock of equal value.
Voting Rights. The holders of Series C Preferred Stock shall be
entitled to vote upon all matters, together with the holders of Common Stock as
one class, except as otherwise required by law. Each share of Series C
Preferred Stock entitles the holder thereof to the number of votes equal to the
number of shares of Common Stock into which the share of Series C Preferred
Stock could have been converted on the record date or date of consent of
stockholders if action is taken
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by written consent. If the Corporation fails to pay in whole or in part two or
more semi-annual dividends on the Series C Preferred Stock, the holders of the
Series C Preferred Stock shall have the right to elect the smallest number of
directors constituting a majority of the Board of Directors.
Conversion. The holders of Series C Preferred Stock shall have the
right to convert any shares of Series C Preferred Stock into fully paid and
nonassessable shares of Common Stock of the Corporation. Each share of Series
C Preferred Stock shall be initially convertible at a conversion price of
$16.62 per share, such conversion price to be subject to adjustment under
certain circumstances to prevent dilution.
Redemption. Commencing on April 1, 1999, the Board of Directors of
the Corporation may redeem, in whole or in part, shares of Series C Preferred
Stock for cash at $1,000 per share, plus any unpaid dividends thereon.
However, the Corporation may not redeem any shares of Series C Preferred Stock
unless the average trading price of the Common Stock for 20 consecutive days
prior to the Corporation giving notice of such redemption is not less than 150%
of the conversion price then in effect. Also, between April 1, 2006 and March
31, 2007, each holder of Series C Preferred Stock may cause the Corporation to
redeem for cash at $1,000 per share, out of funds legally available therefor,
up to one-half of all shares of Series C Preferred Stock owned by such holder
on April 1, 2006. Commencing April 1, 2007, each holder of Series C Preferred
Stock may cause the Corporation to redeem for cash at $1,000 per share, out of
funds legally available therefor, any or all shares of Series C Preferred
Shares owned by such holder.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired:
Not applicable.
(b) Pro forma financial information:
Not applicable.
(c) Exhibits:
4. Certificate of Designations of Series C
Convertible Redeemable Preferred Stock.
10. Purchase and Sale Agreement effective as of April
9, 1997 by and among Nevada Land and Resource
Company, LLC, Global Equity Corporation, Western
Water Company and Western Land Joint Venture.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTERN WATER COMPANY
(Registrant)
Date: April 30, 1997 By: /s/ Edward A. Beeman
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Edward A. Beeman
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Page No.
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4 Certificate of Designations of Series C Convertible Redeemable Preferred Stock. 6
10 Purchase and Sale Agreement effective as of April 9, 1997 by and among Nevada Land and
Resource Company, LLC, Global Equity Corporation, Western Water Company and Western Land 19
Joint Venture.
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5
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EXHIBIT 4
WESTERN WATER COMPANY
CERTIFICATE OF DESIGNATIONS
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Pursuant to Section 151
of the General Corporation Law of the State of Delaware
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Western Water Company (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware does hereby
certify that pursuant to the provisions Section 151 of the General Corporation
Law of the State of Delaware, its Board of Directors, by unanimous written
consent dated April 10, 1997 adopted the following resolution, which resolution
remains in full force and effect as of the date hereof:
WHEREAS, the Board of Directors of the Corporation (the "Board of
Directors") is authorized, within the limitations and restrictions stated in
the Corporation's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), to fix by resolution or resolutions the designation, powers,
preferences, voting rights and other rights of each series of preferred stock,
and the qualifications, limitations or restrictions thereof, and such other
subjects or matters as may be fixed by resolution or resolutions of the Board
of Directors under the General Corporation Law of Delaware;
WHEREAS, the Corporation has previously designated a series of
preferred stock called Series B Convertible Redeemable Preferred Stock ("Series
B Preferred Stock") and authorized 15,000 shares with a value of $1,000 per
share of such Series B Preferred Stock; and
WHEREAS, it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to authorize and fix the terms of a new series of
preferred stock and the number of shares constituting such series:
NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized such
series of preferred stock on the terms and with the provisions herein set
forth:
1. DESIGNATION OF SERIES. The designation of such series of preferred
stock is Series C Convertible Redeemable Preferred Stock ("Series C Preferred
Stock"). The number of shares constituting such series is 15,000, with a value
of $1,000 per share for the purpose of calculating dividends and amounts
payable upon liquidation, dissolution or winding up ("stated value"). Shares
of Series C Preferred Stock redeemed or purchased by the Corporation shall be
canceled and shall revert to authorized but unissued shares of preferred stock
undesignated as to series.
2. DIVIDENDS. The holders of the outstanding Series C Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of funds legally available therefor, dividends at the annual
rate of 7.25% of the stated value per share of Series C Preferred Stock. Such
dividends shall be payable semi-annually, on the
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fifteenth day of January and July (each of such dates being a "Dividend Payment
Date"). The first four semi-annual payments made with respect to Series C
Preferred Stock may be made, subject to the terms hereof, at the option of and
in the sole discretion of, the Board of Directors, in cash or, in full or in
part, by issuing fully paid and nonassessable shares of Series C Preferred
Stock such that the stated value of the shares of Series C Preferred Stock plus
the amount of cash dividend paid in part, if any, is equal to the amount of the
cash dividend which would otherwise be paid on such Dividend Payment Date if
such dividend were paid entirely in cash, after which all payments made with
respect to the Series C Preferred Stock shall be in cash. The issuance of such
shares of Series C Preferred Stock (plus the amount of cash dividends, if any,
paid together therewith) shall constitute full payment of such dividend. In no
event shall an election by the Board of Directors to pay dividends, in full or
in part, in cash on any of the first four semi-annual Dividend Payment Dates
preclude the Board of Directors from electing either such alternative in
respect of all or any portion of any subsequent dividend in the first four
semi-annual payments. Declared but unpaid dividends shall not bear interest.
3. VOTING
a. Voting Rights. The holders of Series C Preferred Stock shall
be entitled to vote upon all matters presented to the stockholders, together
with the holders of Common Stock as one class, except as otherwise required by
law. Each share of Series C Preferred Stock shall entitle the holder thereof
to that number of votes equal to the number of shares of Common Stock into
which one share of Series C Preferred Stock would have been convertible, if
such conversion had taken place on the record date set for determining
stockholders entitled to vote at a meeting or the date of the consent of
stockholders if action is being taken by written consent.
b. Voting Rights on Default. If the Corporation fails to pay in
whole or in part two or more semi-annual dividends on the Series C Preferred
Stock as provided for in Paragraph 2 hereof, the Series C Preferred Stock shall
have the right to elect the smallest number of directors constituting a
majority of the authorized number of directors of the Corporation, and the
holders of the Common Stock shall have the right to elect the remaining
directors. Such right in the Series C Preferred Stock shall continue until
dividends shall have been declared and paid or set apart for at least two
consecutive semi-annual periods, after which the exclusive right to elect
directors shall revert to the Common Stock and the Series C Preferred Stock
voting as a single class, subject to renewal of the voting right of the Series
C Preferred Stock from time to time in the event of the nonpayment of dividends
as described above. At any time after the right to elect directors is vested
in the Series C Preferred Stock, and at any time after the exclusive right to
elect directors shall revert to the Common Stock and the Series C Preferred
Stock, the holders of 5% or more of the outstanding shares of Series C
Preferred Stock or Common Stock, as the case may be, have a right to call a
special meeting of stockholders for the purpose of electing all of the members
of the board of directors, such right to be exercisable by delivering a request
in writing for the calling of the special meeting to the President or
Secretary, or to the Chairman of the Board or a Vice President if there be
2.
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such. The officer receiving the request shall forthwith cause notice to be
given to the stockholders entitled to vote that a meeting will be held at a
time requested by the person or persons calling the meeting, not less than 35
or more than 90 days after the receipt of the request. Upon the election of
directors by the Series C Preferred Stock at a special meeting, the terms of
all persons who were directors immediately prior thereto shall terminate and
the directors elected by the Series C Preferred Stock together with those
elected at the special meeting by the Common Stock shall constitute the
directors of the Corporation until the next annual meeting. Upon the election
of directors by the Common Stock and the Series C Preferred Stock at a special
meeting after the exclusive right to elect directors has reverted to the Common
Stock and the Series C Preferred Stock, the terms of all persons who were
directors immediately prior thereto shall terminate and the directors elected
by the Common Stock and Series C Preferred Stock, at the special meeting shall
constitute the directors of the Corporation until the next annual meeting.
4. LIQUIDATION, DISSOLUTION OR WINDING UP. In the event of a voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, the
holders of Series C Preferred Stock shall be entitled to receive out of the
assets of the Corporation, whether such assets are capital or surplus of any
nature, an amount per share of Series C Preferred Stock equal to the stated
value of such share of Series C Preferred Stock and a further amount equal to
any dividends declared and unpaid thereon, if any, as provided in Paragraph 2
hereof, to the date that payment is made available to the holders of Series C
Preferred Stock, and no more, before any payment shall be made or any assets
distributed to the holders of shares of Common Stock.
If upon such liquidation, dissolution or winding up, the assets thus
distributed among the holders of the Series C Preferred Stock shall be
insufficient to permit the payment to such stockholders of the full
preferential amounts aforesaid, then the entire assets of the Corporation to be
distributed shall be distributed ratably among the holders of Series C
Preferred Stock.
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, subject to the provisions of the
Corporation's Certificate of Incorporation, as amended, and to all of the
preferential rights of the holders of Series C Preferred Stock on distribution
or otherwise, the holders of Common Stock shall be entitled to receive,
ratably, all remaining assets of the Corporation.
A consolidation or merger of the Corporation with or into any other
corporation or corporations, or a sale of all or substantially all of the
assets of the Corporation, shall not be deemed to be a liquidation, dissolution
or winding up within the meaning of this Paragraph 4.
5. CONVERSION RIGHTS. The holder of any shares of Series C Preferred
Stock shall have the right at any time commencing from the date of issuance to
convert any of his or her shares of Series C Preferred Stock into duly
authorized, validly issued, fully
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paid and nonassessable shares of Common Stock of the Corporation at the
Conversion Price, as defined herein, and upon the terms set forth herein.
6. CONVERSION PRICE. Each share of Series C Preferred Stock shall be
converted into a number of shares of Common Stock determined by dividing (i)
$1,000 by (ii) the Conversion Price in effect on the Conversion Date. The
Conversion Price at which shares of Common Stock shall initially be issuable
upon conversion of the shares of Series C Preferred Stock shall be $16.62 per
share. The Conversion Price shall be subject to further adjustment as set
forth in Paragraph 8 hereof. No payment or adjustment shall be made for any
dividend or other distribution that is payable on the Common Stock issued upon
such conversion.
7. CONVERSION PROCEDURE. The holder of any shares of the Series C
Preferred Stock may exercise his or her right to convert such shares into
shares of Common Stock by surrendering for such purpose to the Corporation, at
its principal office or at such other office or agency maintained by the
Corporation for that purpose, a certificate or certificates representing the
shares of Series C Preferred Stock to be converted, accompanied by a written
notice stating that such holder elects to convert all or a specified whole
number of such shares in accordance with the provisions of this Paragraph 7 and
specifying the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case such notice
shall specify a name or names other than that of such holder, such notice shall
be accompanied by payment of all transfer taxes payable upon the issuance of
shares of Common Stock in such name or names. As promptly as practicable, and
in any event within ten business days after the surrender of such certificates
and the receipt of such notice relating thereto and, if applicable, payment of
all transfer taxes, the Corporation shall deliver or cause to be delivered (i)
certificates representing the number of validly issued, fully paid and
nonassessable shares of Common Stock to which the holder of the Series C
Preferred Stock so converted shall be entitled and (ii) if less than the full
number of shares of the Series C Preferred Stock evidenced by the surrendered
certificate or certificates are being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificate or certificates less the number of shares converted.
Such conversions shall be deemed to have been made at the close of business on
the date of giving of such notice and of such surrender of the certificate or
certificates representing the shares of the Series C Preferred Stock to be
converted so that the rights of the holder thereof shall cease except for the
right to receive Common Stock in accordance herewith, and the converting holder
shall be treated for all purposes as having become the record holder of such
Common Stock at such time.
Shares of the Series C Preferred Stock may not be converted after the
close of business of the fifth business day preceding the date fixed for
redemption of such shares pursuant to Paragraph 13 hereof.
Upon conversion of any shares of the Series C Preferred Stock, the
holder thereof shall not be entitled to receive any accumulated, accrued or
unpaid dividends in respect
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of the shares so converted, provided that such holder shall be entitled to
receive any dividends on such shares of the Series C Preferred Stock declared
prior to such conversion if such holder held such shares on the record date
fixed for the determination of holders of the Series C Preferred Stock entitled
to receive payment of such dividend.
8. CONVERSION PRICE ADJUSTMENTS. The Conversion Price shall be subject
to adjustment from time to time upon the occurrence of certain events as
follows:
a. Stock Dividends, Subdivisions, Reclassifications or
Combinations. If the Corporation shall (i) declare a dividend or make a
distribution in shares of Common Stock, (ii) subdivide or reclassify the
outstanding shares of Common Stock into a greater number of shares, or (iii)
combine or reclassify the outstanding Common Stock into a smaller number of
shares, the Conversion Price in effect at the time of the record date of such
dividend or distribution on the effective date of such subdivision, combination
or reclassification shall be proportionately adjusted so that the holder of any
shares of Series C Preferred Stock surrendered for conversion after such date
shall be entitled to receive the number of shares of Common Stock which he or
she would have owned or been entitled to receive had such Series C Preferred
Stock been converted immediately prior to such date. Successive adjustments in
the Conversion Price shall be made whenever any event specified above shall
occur.
b. Other Distributions. In case the Corporation shall fix a
record date for the making of a distribution to all holders of shares of Common
Stock, (i) of shares of any class of capital stock of the Corporation other
than shares of Common Stock, or (ii) of evidences of indebtedness of the
Corporation, or (iii) of assets (excluding cash dividends or distributions, and
dividends or distributions referred to in subparagraph 8(a) hereof), or (iv) of
rights or warrants entitling the holders of Common Stock to subscribe for or
purchase shares of Common Stock at less than the Trading Price, as defined in
Paragraph 13 hereof, on the record date fixed to determine stockholders
entitled to subscribe or purchase; in each such case, the Conversion Price in
effect immediately prior thereto shall be reduced immediately thereafter to the
price determined by dividing (1) an amount equal to the difference resulting
from (A) the number of shares of Common Stock outstanding on such record date
multiplied by the Conversion Price per share on such record date, less (B) the
fair market value (as determined by the Board of Directors in their reasonable
discretion) of said shares or evidences of indebtedness or assets or rights or
warrants to be so distributed by (2) the number of shares of Common Stock
outstanding on such record date. Such adjustment shall be made successively
whenever such a record date is fixed. In the event that such distribution is
not so made, the Conversion Price then in effect shall be readjusted, effective
as of the date when the Board of Directors determines not to distribute such
shares, evidences of indebtedness, assets, rights or warrants, as the case may
be, to the Conversion Price which was in effect prior to the fixing of the
record date (subject to any adjustments made pursuant to this Paragraph 8 since
such record date).
5.
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c. Rounding of Calculations; Minimum Adjustment. All
calculations under this Paragraph 8 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be. No adjustment in the
Conversion Price shall be made if the amount of such adjustment would be less
than $0.05, but any such amount shall be carried forward and an adjustment with
respect thereto shall be made at the time of and together with any subsequent
adjustment which, together with such amount and any other amount or amounts so
carried forward, shall aggregate $0.05 or more.
d. Adjustments for Consolidation, Merger, etc. In case the
Corporation, (i) shall consolidate with or merge into any other person and
shall not be the continuing or surviving corporation of such consolidation or
merger, (ii) shall permit any other person to consolidate with or merge into
the Corporation and the Corporation shall be the continuing or surviving
person, but, in connection with such consolidation or merger, the Common Stock
shall be changed into or exchanged for stock or other securities of any other
person or cash or any other property, (iii) shall transfer all or substantially
all of its properties or its assets to any other person, or (iv) shall effect a
capital reorganization or reclassification of the Common Stock (other than a
capital reorganization or reclassification resulting in the issue of additional
shares of Common stock for which adjustment is provided in this Paragraph 8);
then, and in each such case, proper provision shall be made so that each share
of Series C Preferred Stock then outstanding shall be converted into, or
exchanged for, one share of preferred stock of the acquiring corporation
entitling the holder thereof to all of the rights (including voting rights),
powers, privileges and preferences with respect to the acquiring corporation to
which the holder of a share of Series C Preferred Stock is entitled with
respect to the Corporation, and being subject with respect to the acquiring
corporation to the qualifications, limitations and restrictions to which a
share of Series C Preferred Stock is subject with respect to the Corporation.
e. Issue or Sale of Shares Below Market Price.
(i) In the event the Corporation at any time
or from time to time shall issue or sell (or be deemed to have issued or sold)
additional shares of Common Stock, other than as a dividend in Paragraph b.
above and other than upon a subdivision or combination of shares of Common
Stock as provided in Paragraph a. above, without consideration or for a
consideration per share less than the Market Price (as defined below) of the
date of such issuance, then and in each case the then Conversion Price shall be
reduced, as of the opening of business on the date of such issue or sale, to a
price determined by multiplying that Conversion Price by a fraction the
numerator of which shall be (A) the number of shares of Common Stock
outstanding at the close of business on the day next preceding the date of such
issue or sale plus (B) the number of shares of Common Stock which the aggregate
consideration received by the Corporation for the total number of additional
shares of Common Stock so issued would purchase at such Market Price, and the
denominator of which shall be the number of shares of Common Stock outstanding
at the close of business on the date of such issue or sale after giving effect
to the issuance of such additional shares of Common Stock. For the purposes
hereof, the "Market Price" of the Common Stock shall be closing sales price
6.
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of the Common Stock (or the average of the last bid and asked prices of the
Common Stock is the Common Stock is not listed or admitted to trade on and
exchange or system that publishes daily closing prices) on the date immediately
prior to the date of the issuance.
(ii) For the purpose of making any adjustment
in the Conversion Price or number of shares of Common Stock purchasable on
conversion of Series C Preferred Stock as provided in clause (i) of this
Paragraph e., the consideration received by the Corporation for any issue or
sale of securities shall, (A) to the extent it consists of cash, be computed at
the sales price before deduction of any expenses payable by the Corporation and
any underwriting or similar commissions, compensations, or concessions paid or
allowed by the Corporation in connection with such issue or sale, (B) to the
extent it consists of property other than cash, be computed at the fair market
value of that property as determined in good faith by the Board of Directors of
the Corporation, irrespective of any accounting treatment; provided, however,
that the aggregate fair market value of such non-cash and cash consideration
shall not exceed the Market Price of the shares of Common Stock, and (C) if
additional shares of Common Stock, "Convertible Securities" (as hereinafter
defined) or rights or options to purchase either additional shares of Common
Stock or Convertible Securities are issued or sold together with other stock or
securities or other assets of the Corporation for a consideration which covers
both, be computed as the portion of the consideration so received that may be
reasonably determined in good faith by the Board of Directors of the
Corporation to be allocable to such additional shares of Common Stock,
Convertible Securities or rights or options.
(iii) For the purpose of the adjustment
provided for in clause (i) of this Paragraph e., if at any time or from time to
time the Corporation shall issue any rights or options (other than options
granted to the Corporation's officers, directors, employees or agents under the
Corporation's stock option plans or otherwise) for the purchase of, or stock or
other securities convertible into or exchangeable for, additional shares of
Common Stock (such convertible stock or securities being hereinafter referred
to as "Convertible Securities"), then, in each case, if the "Effective Price"
(as hereinafter defined) of such rights, options or Convertible Securities
shall be less than the Market Price, the Corporation shall be deemed to have
issued at the time of the issuance of such rights or options or Convertible
Securities the maximum number of additional shares of Common Stock issuable
upon exercise, conversion or exchange thereof and to have received as
consideration for the issuance of such shares an amount equal to the total
amount of the consideration, if any, received by the Corporation for the
issuance of such rights or options or Convertible Securities, plus, in the case
of such options or rights, the minimum amounts of consideration, if any,
payable to the Corporation upon the exercise of such options or rights, and, in
the case of Convertible Securities, the minimum amounts of consideration, if
any, payable to the Corporation for such Convertible Securities, plus the
minimum amount of consideration, if any, payable to the Corporation upon the
conversion or exchange of such Convertible Securities. "Effective Price" for
this purpose shall mean the quotient determined by dividing the total of all of
such consideration by such maximum number of additional shares of Common Stock.
No further adjustment
7.
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of the Conversion Price adjusted upon the issuance of such rights, options or
Convertible Securities shall be made as a result of the actual issuance of
additional shares of Common Stock on the exercise of any such rights or options
or the conversion or exchange of any such Convertible Securities.
If any such rights or options or the conversion privilege represented
by any such Convertible Securities shall expire without having been exercised,
the Conversion Price adjusted upon the issuance of such rights, options or
Convertible Securities shall be readjusted to the Conversion Price which would
have been in effect had an adjustment been made on the basis that the only
additional shares of Common Stock so issued were the additional shares of
Common Stock, if any, actually issued or sold on the exercise of such rights or
options or rights of conversion of such Convertible Securities, and such
additional shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Corporation upon such exercise, plus the
consideration, if any, actually received by the Corporation for the granting of
all such rights or options, whether or not exercised, plus the consideration
received for issuing or selling the Convertible Securities actually converted
plus the consideration, if any, actually received by the Corporation (other
than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) on the conversion of such Convertible Securities.
9. VOLUNTARY ADJUSTMENT. The Corporation may make, but shall not be
obligated to make, such decreases in the Conversion Price so as to increase the
number of shares of Common Stock into which the Series C Preferred Stock may be
converted, in addition to those required by Paragraph 8 hereof, as it considers
to be advisable in order to avoid federal income tax treatment as a dividend of
stock or stock rights.
10. RESERVATION OF SHARES OF COMMON STOCK FOR CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized and
unissued shares of Common Stock such number of shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all shares of
Series C Preferred Stock that are then outstanding.
11. NOTICE OF ADJUSTMENT OF CONVERSION PRICE. Whenever the Conversion
Price is adjusted as herein provided, the Corporation shall forthwith file with
any transfer agent or agents for the Series C Preferred Stock, if any, and at
the principal office of the Corporation, a statement signed by the President or
a Vice President and by the Chief Financial Officer or the Secretary of the
Corporation setting forth the adjusted Conversion Price. The statement so
filed shall be open to inspection by any holder of record of shares of Series C
Preferred Stock. The Corporation shall also, at the time of filing any such
statement, mail notice to the same effect to the holders of shares of Series C
Preferred Stock at their addresses appearing on the books of the Corporation or
supplied by such holder to the Corporation for the purpose of notice.
12. FRACTIONAL SHARES IN CONVERSION. The Corporation shall not be
required to issue fractions of shares of Common Stock on the conversion of
Series C
8.
<PAGE> 9
Preferred Stock. If any fraction of a share of Common Stock would be issuable
upon the conversion of a share, except for the provisions hereof, the
Corporation shall purchase such fraction for an amount in cash equal to the
Trading Price (as defined in Paragraph 13 hereof) multiplied by such fraction.
If more than one certificate for shares of Series C Preferred Stock shall be
presented for conversion at any one time by the same registered holder, the
number of shares of Common Stock which shall be issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Common Stock issuable upon conversion of the shares so presented. All
calculations under this Paragraph 12 shall be made to the nearest one-hundredth
of a share.
13. REDEMPTION. Commencing on April 1, 1999, shares of the Series C
Preferred Stock may be redeemed, in whole or in part at any time at the option
of the Corporation by resolution of its Board of Directors, for cash at $1,000
per share; plus, in each case, all declared and unpaid dividends thereon, if
any, to the redemption date. However, the Corporation may not redeem the
Series C Preferred Stock unless the Common Stock has had a Trading Price (as
hereinafter defined in this Paragraph 13) of not less than 150% of the
Conversion Price for 20 consecutive trading days prior to the Corporation
giving notice to the holders thereof. In case of the redemption of a part only
of the outstanding shares of Series C Preferred Stock, the shares so to be
redeemed shall be selected pro rata.
At least 30 days' previous notice by mail, postage prepaid, shall be
given to the holders of record of the shares of Series C Preferred Stock to be
redeemed, such notice to be addressed to each such stockholder at the address
of such holder appearing on the books of the Corporation or given by such
holder to the Corporation for the purpose of notice, or if no such address
appears or is so given, at the place where the principal office of the
Corporation is located. Such notice shall state the date fixed for redemption
and the redemption price and shall call upon such holder to surrender to the
Corporation on said date at the place designated in the notice such holder's
certificate or certificates representing the shares to be redeemed. On or
after the date fixed for redemption and stated in such notice, each holder of
shares of Series C Preferred Stock called for redemption shall surrender the
certificate evidencing such shares to the Corporation at the place designated
in such notice and shall thereupon be entitled to receive payment of the
redemption price, together with declared and unpaid dividends, if any, to the
date fixed for redemption. If less than all the shares represented by any such
surrendered certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. If such notice of redemption shall have
been duly given, and if on the date fixed for redemption funds necessary for
the redemption shall be available therefor, then, notwithstanding that the
certificate evidencing any shares of Series C Preferred Stock so called for
redemption shall not have been surrendered, all rights pertaining to such
shares shall terminate, except only the right of the holders to receive the
redemption price, together with declared and unpaid dividends thereon, if any,
to the date fixed for redemption, without interest, upon surrender of their
certificates therefor.
If, after notice of redemption has been given, the Corporation
deposits, on or prior to any date fixed for redemption of shares of Series C
Preferred Stock, with any bank or
9.
<PAGE> 10
trust company in the State of California that has a combined capital and
surplus of not less than $100 million, as a trust fund, a sum sufficient to
redeem, on the date fixed for redemption thereof, the shares called for
redemption, with irrevocable instructions and authority to the bank or trust
company to give the notice of redemption thereof (or to complete the giving of
such notice if theretofore commenced) and to pay, on or after the date fixed
for redemption or prior thereto, the redemption price of the shares to their
respective holders upon the surrender of their share certificates, then from
and after the date of the deposit (although prior to the date fixed for
redemption), the shares shall no longer be outstanding, and the holders thereof
shall cease to be stockholders with respect to such shares, and shall have no
rights with respect thereto except the right to receive from the bank or trust
company payment of the redemption price of the shares without interest, upon
the surrender of their certificates therefor, and the right to convert said
shares as provided herein at any time up to but not after the close of business
on the fifth day prior to the date fixed for redemption of such shares. The
deposit shall constitute full payment of the shares to the holders thereof.
Any moneys so deposited on account of the redemption price of Series C
Preferred Stock converted subsequent to the making of such deposit shall be
repaid to the Corporation forthwith upon the conversion of such shares of
Series C Preferred Stock. Any interest accrued on any funds so deposited shall
be the property of, and paid to, the Corporation. If the holders of Series C
Preferred Stock so called for redemption shall not, at the end of two years
from the date fixed for redemption thereof, have claimed any funds so
deposited, such bank or trust company shall thereupon pay over to the
Corporation such unclaimed funds, and such bank or trust company shall
thereafter be relieved of all responsibility in respect thereof to such holders
and such holders shall look only to the Corporation for payment of the
redemption price.
The term "Trading Price" shall be the average for the 20 consecutive
trading days immediately prior to the date requiring a determination of the
prices determined as follows: (i) If the Common Stock is listed or admitted to
trade on a national securities exchange, on the Nasdaq National Market System
("NMS"), or on the Nasdaq SmallCap Market ("SmallCap"), the closing price of
the Common Stock on the composite tape of the principal national securities
exchange on which the Common Stock is so listed or admitted to trade or on the
NMS or SmallCap systems, as the case may be; (ii) If the Common Stock is not
listed or admitted to trade on an exchange or a system that publishes daily
closing prices, the average of the last bid and asked prices of the Common
Stock quoted on such other trading system.
14. OPTIONAL REDEMPTION. Commencing on April 1, 2006 and continuing until
March 31, 2007, each holder of shares of the Series C Preferred Stock may, from
time to time, during such period, at such holder's option, cause the
Corporation to redeem for cash, out of funds legally available therefore, up to
an aggregate of one-half of all shares of Series C Preferred Stock owned by
such holder on April 1, 2006. Commencing on April 1, 2007, each holder of
shares of Series C Preferred Stock may, from time to time thereafter, at such
holder's option, cause the Corporation to redeem for cash, out of funds legally
available therefore, some or all of such holder's shares of Series C Preferred
Stock. The redemption price for each share of Series C Preferred Stock shall
be $1,000
10.
<PAGE> 11
per share, plus, in each case, all declared and unpaid dividends, if any, on
such redeemed shares through the date of redemption. Each holder of shares of
Series C Preferred Stock may exercise his rights to have such shares redeemed
pursuant to this Section 14 by surrendering for such purpose to the
Corporation, at its principal office or at such other office or agency
maintained by the Corporation for such purpose, a certificate or certificates
representing the shares to be redeemed accompanied by a written notice stating
that such holder elects to have redeemed the specified whole number of such
shares in accordance with the provisions of this Section 14 and, if less than
the full number of shares evidenced by the surrendered certificates are being
redeemed, specifying the name or names in which such holder wishes the
certificates for the balance of such shares to be issued. Within 10 calendar
days after the surrender of such certificate or certificates and the receipt of
the required written notice relating thereto, the Corporation shall deliver or
cause to be delivered to the holder (a) the redemption price of the shares
being so redeemed and (b) if less than the full number of shares evidenced by
the surrendered certificate or certificates are being redeemed, any certificate
or certificates, of like tenor, for the full number of shares evidenced by the
surrendered certificate or certificates, less the number of shares redeemed.
Any redemption notice delivered pursuant to this Section 14 shall be
irrevocable for 30 days. During such 30-day period, or until the date on which
the redemption price is paid, whichever is earlier, the shares tendered to the
Corporation for redemption shall not be convertible by the holder pursuant to
Section 5, but shall otherwise be entitled to all rights and privileges
contained in this Certificate of Designations.
15. MUTILATED OR MISSING PREFERRED STOCK CERTIFICATES. If any of the
Series C Preferred Stock certificates shall be mutilated, lost, stolen or
destroyed, the Corporation shall issue, in exchange and substitution for and
upon cancellation of the mutilated Series C Preferred Stock certificate, or in
lieu of and in substitution for the Series C Preferred Stock certificate lost,
stolen or destroyed, a new Series C Preferred Stock certificate of like tenor
and representing an equivalent amount of shares of Series C Preferred Stock,
but only upon receipt of evidence of such loss, theft or destruction of such
Series C Preferred Stock certificate and indemnity, if requested.
16. REISSUANCE OF PREFERRED STOCK. Shares of Series C Preferred Stock
that have been issued and reacquired in any manner, including shares purchased
or redeemed or exchanged, shall (upon compliance with any applicable provisions
of the laws of the State of Delaware) have the status of authorized and
unissued shares of preferred stock undesignated as to series and may be
redesignated and reissued as part of any series of preferred stock other than
the Series C Preferred Stock.
17. BUSINESS DAY. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that banks are not open in the
State of California, such payment, redemption or exchange shall be made on the
immediately succeeding day on which such banks are open.
11.
<PAGE> 12
18. HEADINGS OF SUBDIVISIONS. The headings of various subdivisions hereof
are for convenience of reference only and shall not affect the interpretation
of any of the provisions hereof.
19. SEVERABILITY OF PROVISIONS. If any right, preference or limitation of
the Series C Preferred Stock set forth in these resolutions and the Certificate
of Designations filed pursuant hereto (as such resolution may be amended from
time to time) is invalid, unlawful or incapable of being enforced by reason of
any rule of law or public policy, all other rights, preferences and limitations
set forth in this resolution (as so amended) which can be given effect without
the invalid, unlawful or unenforceable right, preference or limitation shall,
nevertheless, remain in full force and effect, and no right, preference or
limitation herein set forth shall be deemed dependent upon any other such
right, preference or limitation unless so expressed herein.
20. NOTICE TO THE COMPANY.
All notices and other communications required or permitted to be given
to the Corporation hereunder shall be made by courier to the Corporation at its
principal executive offices located at 4660 La Jolla Village Drive, Suite 825,
San Diego, California 92122, Attention: President. Minor imperfections in any
such notice shall not affect the validity thereof.
21. LIMITATIONS.
Except as may otherwise be required by law, the shares of Series C
Preferred Stock shall not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth in this resolution (as such resolution may be amended from time to
time) or otherwise in the Certificate of Incorporation of the Corporation.
12.
<PAGE> 13
IN WITNESS WHEREOF, Western Water Company, has caused this certificate
to be executed by Edward A. Beeman, as Chief Financial Officer, and attested by
Janice I. Sanchez, as Assistant Secretary, this 18th day of April, 1997.
WESTERN WATER COMPANY
By /s/ EDWARD A. BEEMAN
--------------------------------
Name: Edward A. Beeman
Title: Chief Financial Officer
Attest:
/s/ JANICE I. SANCHEZ
- -----------------------------
Name: Janice I. Sanchez
Title: Assistant Secretary
13.
<PAGE> 1
EXHIBIT 10
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 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:
1.
<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.
/s/ PLJ /s/ JAD /s/ JRH
---------- ---------- ----------
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.
/s/ PLJ /s/ JAD /s/ JRH
---------- ---------- ----------
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.
19.
<PAGE> 23
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.
20.
<PAGE> 24
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
21.
<PAGE> 25
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
22.
<PAGE> 26
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
23.
<PAGE> 27
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
24.
<PAGE> 28
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.
/s/ JRH /s/ JAD /s/ PLJ
---------- --------------- --------------
Global Western Land JV Western Walter
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
25.
<PAGE> 29
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.
/s/ JRH /s/ JAD /s/ PLJ
- ---------- --------------- --------------
Global Western Land JV Western Walter
Initials Initials Initials
26.
<PAGE> 30
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 (1) 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,
27.
<PAGE> 31
GLOBAL AGREES TO ASSERT ANY CLAIM WITH RESPECT THERETO EXCLUSIVELY AGAINST THE
PARTY RESPONSIBLE THEREFOR.
/s/ JRH /s/ JAD /s/ PLJ
- -------- --------------- --------------
Global Western Land JV Western Walter
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.
/s/ JRH /s/ JAD /s/ PLJ
- -------- --------------- --------------
Global Western Land JV Western Walter
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.
28.
<PAGE> 32
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)
29.
<PAGE> 33
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
30.
<PAGE> 34
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
31.
<PAGE> 35
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:
32.
<PAGE> 36
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";
33.
<PAGE> 37
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;
34.
<PAGE> 38
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;
35.
<PAGE> 39
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.
36.
<PAGE> 40
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
37.
<PAGE> 41
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
38.
<PAGE> 42
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
39.
<PAGE> 43
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.
40.
<PAGE> 44
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.
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
41.
<PAGE> 45
Chicago, Illinois 60601-1692
Attn: Robert C. Lee, Esq.
Fax: (312) 782-8585
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
WITH A 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
43.
<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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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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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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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 L. JENSEN
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
"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 L. JENSEN
------------------------------
Name: Peter Jensen
----------------------------
Title: CEO
---------------------------
"GLOBAL"
------
GLOBAL EQUITY CORPORATION
an Ontario, Canada corporation
By: /s/ JOHN R. HART
------------------------------
Name: John R. Hart
----------------------------
Title: President & CEO
---------------------------
48.
