EXHIBIT 2.1
CONTRIBUTION AGREEMENT
This Contribution Agreement (this
“Agreement”), dated as of _________ ___, 2008, is made
by and among Global Water Resources, Inc., a Delaware corporation
(“GWR, Inc.”), Global Water Resources, LLC, a Delaware
limited liability company (“GWR LLC”), Global Water
Management, LLC, a Delaware limited liability company (“GWM
LLC”), the members of GWR LLC (the “GWR
Members”), and the members of GWM LLC (the “GWM
Members”, and together with the GWR Members, the
“Members”).
WITNESSETH:
WHEREAS, in connection with a
proposed initial public offering it is desirable to convert GWR LLC
into a taxable corporation and toward that end GWR, Inc. has been
formed to be the issuer in the proposed initial public offering and
to succeed to the business of GWR LLC; and
WHEREAS, in order to
accomplish the foregoing it is desirable to effect a reorganization
by which the GWR Members will contribute their common limited
liability company interests in GWR LLC (“GWR Common
Interests”) to GWR, Inc. in exchange for shares of common
stock, $.01 par value, of GWR, Inc. (“Shares”);
and
WHEREAS , it is also
desirable to cause GWM LLC to become a wholly-owned subsidiary of
GWR, Inc. following the initial public offering of Shares by GWR,
Inc. (the “IPO”); and
WHEREAS, in order to cause
GWM LLC to become a wholly-owned subsidiary of GWR, Inc., the GWM
Members have agreed to contribute their common limited liability
company interests in GWM LLC (“GWM Common Interests”)
to GWR LLC. for no consideration; and
WHEREAS, the Members also own
preferred limited liability company interests in GWR LLC (the
“GWR Preferred Interests”) and in GWM LLC (the
“GWM Preferred Interests” and together with the GWR
Preferred Interests, the “Preferred LLC Interests”)
that entitle the Members to a preferred return (the
“Preferred Return”) of eight percent (8%) per annum
compounded annually, but calculated monthly, on the total capital
contributions in the aggregate made by the Members to GWR LLC and
GWM LLC, less the cumulative distributions previously made to the
Members pursuant to Section 11.1(b) of each of the limited
liability company agreements of GWR LLC and GWM LLC, as amended
(the “Unrecovered Capital Contributions”); and
WHEREAS, it is desirable that
GWR LLC and GWM LLC redeem and retire the GWR Preferred Interests
and the GWM Preferred Interests, respectively, so that none of the
Preferred LLC Interests is outstanding following the IPO;
NOW, THEREFORE, in
consideration of the foregoing premises and of the mutual
agreements and other good and valuable consideration hereinafter
set forth, the parties hereto, intending to be legally bound, do
hereby agree as follows:
ARTICLE FIRST
CLOSING
1.1 The Closing . The closing
(the “Closing”) of the transactions contemplated by
this Agreement shall take place at [time] , on the ___ day
of ______, 2008, or at such time and on such date as the parties
may hereafter agree, at the offices of GWR LLC, 91410 N. 19
th
Avenue, Suite 201, Phoenix Arizona 85027 (such date referred
to herein as the “Closing Date” and such time on the
Closing Date referred to herein as the “Closing
Time”).
1.2 Contribution of GWM Common
Interests . Subject to the terms and conditions of this
Agreement, at the Closing, the GWM Members shall contribute and
assign to GWR LLC, for no consideration, and GWR LLC agrees to
accept from the GWM Members, the GWM Common LLC Interests owned by
each of the GWM Members at the Closing Time, which are shown on
Exhibit 2 hereto.
1.3 Redemption and Retirement of
Preferred LLC Interests. Subject to the terms and conditions of
this Agreement, at the Closing, the Members shall assign and convey
to GWR LLC and GWM LLC, respectively, their GWR Preferred Interests
and their GWM Preferred Interests in exchange for the payment by
GWR LLC and GWM LLC, respectively, to each Member of amounts equal
to the Unrecovered Capital Contribution and unpaid Preferred Return
as of the Closing Date, which are shown on Exhibit 1 with
respect to each Member as of the Closing Time set forth in
Section 1.1, which amount shall be appropriately adjusted if
the Closing occurs on another date. Upon such assignment and
payment the Preferred LLC Interests shall be cancelled by GWR LLC
and GWM LLC, respectively.
1.4 Contribution of GWR Common
Interests . Subject to the terms and conditions of this
Agreement, at the Closing, the GWR Members shall contribute and
assign to GWR, Inc., and GWR, Inc. agrees to accept from the GWR
Members, the GWR Common LLC Interests GWM owned by each of the GWR
Members at the Closing Time, which are shown on Exhibit 2
hereto.
1.5 Issuance of Shares . In
exchange for the contribution and assignment by the Members of
their GWR Common LLC Interests to GWR, Inc., GWR, Inc. shall issue
to to the respective Members the number of Shares set forth on
Exhibit 2 opposite each Member’s name.
1.6 Non-Recognition
Transaction . It is the intent of the parties and the parties
shall treat the contribution and assignment by the Members of their
GWR Common LLC Interests to GWR, Inc. as a non-recognition
transaction pursuant to Section 351(a) of the Internal Revenue Code
of 1986, as amended (the “Code”). The Members and GWR,
Inc. shall execute any and all documents and take all such further
actions as may be reasonably necessary to cause the transactions
contemplated by this Agreement to comply with such
Section 351(a).
ARTICLE SECOND
REPRESENTATIONS AND WARRANTIES OF GWR LLC
-2-
GWR LLC hereby represents and
warrants to GWR, Inc., GWM LLC and the Members that:
2.1 Organization; Good
Standing . GWR LLC is a limited liability company duly
organized, validly existing and in good standing under the laws of
the State of Delaware. GWR LLC has the requisite corporate power
and authority to conduct its business in the manner now
conducted.
2.2 Authorization and
Enforceability . GWR LLC has all requisite limited liability
company power and authority to execute, deliver and perform its
obligations under this Agreement. All necessary proceedings of GWR
LLC have been taken to authorize its execution, delivery and
performance of this Agreement and the consummation of its
obligations hereunder. This Agreement has been duly authorized,
executed and delivered by GWR LLC and constitutes the legal, valid
and binding obligation of GWR LLC enforceable as to it in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance and other similar laws of general application
relating to or affecting the rights of creditors.
2.3 Ability to Pay . At the
Closing GWR LLC will have adequate immediately available funds to
pay the amounts due to be paid by it to the Members pursuant to
Section 1.3 hereof.
2.4 No Conflict . The
execution, delivery and performance of this Agreement does not
conflict with or result in any breach of any of the terms,
conditions or provisions of, or (with or without the giving of
notice or the passage of time or both) constitute a default under
the organizational documents of GWR LLC or violate any provision of
any law or regulation applicable to GWR LLC.
2.5 Approvals and Consents .
No consent, approval, order, license, certificate or permit of or
from, or declaration or filing with, any federal, state, local or
other governmental authority or any court or other tribunal,
domestic or foreign, is required by GWR LLC in connection with the
execution, delivery and performance of this Agreement by it except
for the approval of the Arizona Corporation Commission (the
“ACC”).
ARTICLE THIRD
REPRESENTATIONS AND WARRANTIES OF GWM LLC
GWM LLC hereby represents and
warrants to GWR, Inc., GWR LLC and the Members that:
3.1 Organization; Good
Standing . GWM LLC is a limited liability company duly
organized, validly existing and in good standing under the laws of
the State of Delaware. GWM LLC has the requi
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