EXHIBIT 2.5
SALE AND PURCHASE AND PARTIAL FUNDING AGREEMENT
THIS SALE AND PURCHASE AND PARTIAL
FUNDING AGREEMENT (the “ Agreement ”) is made
this 30 th day of
December, 2006, by and between CHI CONSTRUCTION COMPANY, an Arizona
corporation (“ CHI ”), and GLOBAL WATER, INC., a
Delaware corporation (“ Global Inc .”). In this
Agreement, CHI and Global Inc. are sometimes referred to
individually as a “ Party ” and collectively as
the “ Parties. ”
RECITALS
A. Global Inc.’s parent,
Global Water Resources, LLC, a Delaware limited liability company
(“ Global Water Resources ”), is engaged in the
business of, among other things, providing services or benefits to
landowners, such as: (i) providing construction services for
water and wastewater treatment facilities; and (ii) providing
financing for the provision of infrastructure in advance of and
with no guarantee of customer connections.
B. Global Water Resources is the
sole member of Santa Cruz Water Company, LLC, an Arizona limited
liability company (“ SCW ”), and Palo Verde
Utilities Company, LLC, an Arizona limited liability company
(“ PVU ”), and provides equity for the capital
improvements of SCW and PVU.
C. SCW and PVU are regulated by
the Arizona Corporation Commission (“ ACC ”).
SCW and PVU hold Certificates of Convenience and Necessity (“
CC&Ns ”) issued by the ACC to provide water and
wastewater services, respectively, (collectively, “
Utility Services ”) in designated geographic areas
within the State of Arizona. An application filed with the ACC is
pending to transfer the CC&N’s of SCW and PVU to
corporate entities owned by Global Inc.
D. CHI is the owner of certain
real property located in Pinal County, Arizona, which CHI is
planning and developing as a master-planned community known as
“ Legends .”
E. CP Water Company (“
CP ”) is an Arizona public service corporation
authorized to provide water service within the geographic area
covered by its CC&N in Pinal County, Arizona, (the “
CP CC&N Area ”) pursuant to ACC Decision 54089
(June 25, 1984). The CP CC&N Area comprises between 2 and
3 square miles. A map depicting the geographic boundaries of the CP
CC&N Area is attached hereto as Exhibit A .
F. CP is a wholly-owned
subsidiary of CHI. CHI acquired all of the issued shares of stock
of CP (collectively, the “ CP Shares ‘”)
pursuant to a Stock Assignment dated October 29, 2004, a copy
of which is attached hereto as Exhibit B . Pursuant to
an Agreement for Operation of Water System (the “
Operation Agreement ”) between Arizona Water Company
(“ AWC ”) and CP dated October 22, 1985,
and a subsequent letter amending the Operation Agreement dated
December 15, 1988 (the “ Letter Amendment ”),
AWC operates the water distribution system that provides water
service to CP’s customers. A copy of the Operation Agreement
and Letter Amendment are attached hereto as Exhibit C .
In addition, AWC has a CC&N to provide water service to a
portion of Legends (the “ AWC CC&N Area
”).
1
G. Francisco Grande Utilities
Company (“ FG ”) is an Arizona public service
corporation authorized to provide water and wastewater services
within the geographic areas covered by its CC&Ns in Pinal
County, Arizona, (the “ FG CC&N Area ”)
pursuant to ACC Decision 47711 (March 3, 1977) and subsequent ACC
orders. The FG CC&N Area for water service comprises
approximately 14 square miles and for wastewater service comprises
approximately 18 square miles. A map depicting the geographic
boundaries of the FG CC&N Area is attached hereto as
Exhibit D .
H. Global Inc. and Michael
Saunders, the sole shareholder of FG, have entered into that
certain Stock Purchase Agreement of even date herewith (the “
FG Stock Purchase Agreement ”) whereby Global Inc.
will acquire control of the water and wastewater CC&Ns of FG by
purchasing all of the issued shares of stock of FG (collectively,
the “ FG Shares ”). Pursuant to the FG Stock
Purchase Agreement, and subject to adjustment as provided therein,
Global Inc. will pay $8,000,000 (the “ FG Purchase
Price ”) to acquire the FG Shares. The acquisition of the
FG Shares will close (the “ FG Closing ”) on the
date of execution of the FG Stock Purchase Agreement (the “
FG Closing Date ”), and the FG Purchase Price will be
paid after the FG Closing in accordance with the schedule set forth
in Section 2.3 of the FG Stock Purchase Agreement.
I. CHI is in the process of
entitling and/or developing Legends. Portions of Legends are
presently included in the CC&Ns of FG, CP and AWC. The
remaining portions of Legends are not included in any existing
utility CC&N for water or sewer service (the “
Uncertificated Area ”). In connection with the
development of Legends, CHI desires that integrated water and
wastewater service be provided within the FG CC&N Area, the CP
CC&N Area and the Uncertificated Area. Accordingly, CHI is
willing to (i) sell and transfer all of CHI’s interest
in the CP Shares to Global Inc.; and (ii) provide funds to
Global Inc. to pay a portion of the FG Purchase Price, subject to
the terms and conditions of this Agreement. Upon completion of
Global Inc.’s acquisition of the FG Shares pursuant to the FG
Stock Purchase Agreement and Global Inc.’s acquisition of the
CP Shares pursuant to this Agreement, Global Inc., through its
parent Global Water Resources, shall facilitate and arrange for
SCW, PVU, FG and/or CP (collectively, the “ Utilities
”) to provide Utility Services to those portions of Legends
that are within the FG CC&N Area and the CP CC&N Area, and
to apply for extensions of one or more of the Utilities’
respective CC&Ns to include the Uncertificated Area in order
that the Utilities may provide Utility Services within the
Uncertificated Area, subject to the terms and conditions of tariffs
approved by and on file with the ACC.
NOW, THEREFORE, in consideration of
the mutual conditions and covenants set forth herein, and other
good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
AGREEMENT
1. Incorporation of
Recitals . The recitals stated above are true and correct and
are incorporated herein by this reference.
2
2. Acquisition of FG Shares by
Global Inc.; Funds Provided by CHI for a Portion of the FG Purchase
Price .
2.1
Performance of FG Stock Purchase Agreement . Global Inc.
shall consummate the acquisition of the FG Shares in accordance
with the terms of the FG Stock Purchase Agreement.
2.2
Funds Provided by CHI for Acquisition of the FG Shares . CHI
shall provide funds to Global Inc., subject to reimbursement
pursuant to Section 4.1 of this Agreement, in the total
amount of $4,800,000 (the “ CHI-Provided Funds
”) to be used by Global Inc. together with additional funds
provided by Global Inc. to acquire the FG Shares. The CHI- Provided
Funds shall be paid in installments and secured by a letter of
credit as provided in this Section 2.2 .
(a)
CHI Letter of Credit . To secure CHI’s payment of the
CHI- Provided Funds in accordance with the schedule set forth in
Section 2.2(b) of this Agreement, CHI shall deposit a
letter of credit in the amount of $4,800,000 (the “ CHI
Letter of Credit ”) with First American Title Insurance
Company, attention Carol Peterson, (the “ Escrow Agent
”) in Escrow No. NCS-272416-PHX1 (the “ Escrow
Account ”) within fourteen (14) days after the FG
Closing Date pursuant to Section 2.3.2 of the FG Stock
Purchase Agreement; provided, however, that CHI’s obligation
to deposit the CHI Letter of Credit is contingent upon (i) all
parties to the FG Stock Purchase Agreement executing that
agreement; and (ii) Global Inc. depositing with Escrow Agent a
letter of credit (the “ Global Inc. Letter of Credit
”) on or before the date CHI deposits its letter of credit in
the amount of $3,200,000 pursuant to Section 2.3.2 of the FG
Stock Purchase Agreement. CHI shall submit to Escrow Agent with the
CHI Letter of Credit escrow instructions which are reasonably
acceptable to Global Inc.
(b)
Payment of CHI-Provided Funds . The CHI-Provided Funds shall
be paid to Global Inc., in installments, according to the schedule
set forth in this Section 2.2(b) . Global Inc. shall
reimburse CHI for the CHI-Provided Funds via credits applied
against fees payable by CHI to Global Water Resources pursuant to
that certain Infrastructure Coordination Finance Agreement (the
“ ICFA ”) of even date herewith as described in
Section 4 of this Agreement. The CHI-Provided Funds
shall be paid in accordance with the following schedule:
(i)
First CHI Payment . Three Million Dollars ($3,000,000) of
the CHI-Provided Funds (the “ First CHI Payment
”) shall be due not later than three (3) business days
following CHI’s receipt of written notice from Global Inc.
that Global Inc.’s obligation to make the $5,000,000 payment
required under Section 2.3.3 or the $8,000,000 payment
required under Section 2.3.1 of the FG Stock Purchase
Agreement has accrued. CHI shall wire the Initial CHI Payment in
immediately available funds to the Escrow Agent for deposit in the
Escrow Account. CHI shall have no obligation to make the First CHI
Payment unless and until each of the following are true:
(i) Global Inc. has fully complied with all accrued
obligations of Global Inc. under the FG Stock Purchase Agreement
and Global is required to make a payment of either $5,000,000 or
$8,000,000 under the FG Stock Purchase Agreement; and
(ii) Global Inc. has fully complied with all accrued
obligations of Global Inc. under this Agreement. Once CHI has
3
deposited the First CHI Payment with the Escrow Agent, the CHI
Letter of Credit shall be reduced by the amount of the First CHI
Payment.
(ii)
Second CHI Payment . Nine-Hundred Thousand Dollars
($900,000) of the CHI-Provided Funds (the “ Second CHI
Payment ”) shall be due not later than three
(3) business days following CHI’s receipt of written
notice from Global Inc. that Global Inc.’s obligation to make
the payment required under either Section 2.3.1 or 2.3.3(a) of
the FG Stock Purchase Agreement has accrued. CHI shall wire the
Second CHI Payment in immediately available funds to the Escrow
Agent for deposit in the Escrow Account. CHI shall have no
obligation to make the Second CHI Payment unless and until each of
the following are true: (i) Global Inc. has fully complied
with all accrued obligations of Global Inc. under the FG Stock
Purchase Agreement, including compliance with Sections 2.3.1
or 2.3.3(a) of the FG Stock Purchase Agreement; and
(ii) Global Inc. has fully complied with all accrued
obligations of Global Inc. under this Agreement. Once CHI has
deposited the Second CHI Payment with the Escrow Agent, the CHI
Letter of Credit shall be reduced by the amount of the Second CHI
Payment.
(iii)
Third CHI Payment . Nine-Hundred Thousand Dollars ($900,000)
of the CHI-Provided Funds (the “ Third CHI Payment
”) shall be due not later than three (3) business days
following CHI’s receipt of written notice from Global Inc.
that Global Inc.’s obligation to make the payment required
under either Section 2.3.1 or 2.3.3(b) of the FG Stock
Purchase Agreement has accrued. CHI shall wire the Third CHI
Payment in immediately available funds to the Escrow Agent for
deposit in the Escrow Account. CHI shall have no obligation to make
the Third CHI Payment unless and until each of the following are
true: (i) Global Inc. has fully complied with all accrued
obligations of Global Inc. under the FG Stock Purchase Agreement,
including compliance with Sections 2.3.1 or 2.3.3(b) of the FG
Stock Purchase Agreement; and (ii) Global Inc. has fully
complied with all accrued obligations of Global Inc. under this
Agreement. Once CHI has deposited the Third CHI Payment with the
Escrow Agent, the CHI Letter of Credit shall be released and
returned to CHI.
2.3
Reduction of CHI Le t ter of Cred it. Global
Inc.’s obligation to pay the FG Purchase Price is contingent
upon certain ACC approvals as provided in Section 2.3.1 and/or
2.3.3 of the FG Stock Purchase Agreement (the “ ACC
Approvals ”). In the event that the ACC Approvals have
not been obtained on or before June 1, 2008, then Global Inc.
agrees that the CHI Letter of Credit may be reduced by the
following after CHI has paid the ICFA Fees (as defined in
Section 4.1 of this Agreement) for the first 2,000 EDUs
(as defined in Section 4.1) : for EDUs 2,001 through 8,050,
for each ICFA Fee that CHI pays to Global Inc., the Letter of
Credit may be reduced on a periodic basis from time to time in the
reasonable discretion of CHI based on $800 per EDU. Notwithstanding
the possible reduction of the CHI Letter of Credit, CHI shall
continue to be obligated to make installment payments to Global
Inc. of the CHI-Provided Funds as required in Se ction
2.2(b) of this Agreement.
2.4
CHI is not a Party to FG Stock Purchase Agreement . The
Parties acknowledge that CHI is not a party to nor is it bound by
the FG Stock Purchase Agreement, and that this Agreement creates no
duties or obligations of CHI to FG.
4
3. Sale and Purchase of CP
Shares .
3.1
Sale and Purchase of CP Sh a res; Purchase Price .
CHI hereby agrees to sell the CP Shares to Global Inc., and Global
Inc. hereby agrees to purchase the CP Shares from CHI. The purchase
price for the CP Shares shall be $1,250,000 (the “ CP
Purchase Price ”). Global Inc. shall pay the CP Purchase
Price via credits applied against fees payable by CHI to Global
Water Resources pursuant to the ICFA, as described in
Section 4 of this Agreement.
3.2
Place and Date of CP Closing . The closing of the sale and
purchase of the CP Shares (the “ CP Closing ”)
will take place upon the date of this Agreement (the “ CP
Closing Date ”), and shall be deemed to occur
simultaneously with the FG Closing on the FG Closing Date and with
the execution of the ICFA.
3.3
AS-IS WHERE-IS CONDITION . EXCEPT AS EXPRESSLY SET FORTH IN
SECTION 5 OF THIS AGREEMENT, GLOBAL INC. ACKNOWLEDGES THAT
IT IS ACQUIRING CP IN ITS “AS-IS WHERE-IS” CONDITION
AND THAT IT IS RELYING UPON ITS OWN INVESTIGATION AND ANALYSIS AND
SHALL NOT BE ENTITLED TO ANY REDUCTION TO OR SETOFF OF THE CP
PURCHASE PRICE FOR ANY REASON. EXCEPT AS EXPRESSLY SET FORTH IN
SECTION 5 OF THIS AGREEMENT, IT IS UNDERSTOOD AND AGREED
THAT CHI IS NOT MAKING AND SPECIFICALLY DISCLAIMS ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH
RESPECT TO CP AND ANY TANGIBLE OR INTANGIBLE ASSETS OF CP,
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OR REPRESENTATIONS AS TO
TAX CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITIONS, OPERATING
HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS,
GOVERNMENTAL REGULATIONS OR ANY OTHER MATTER OR THING RELATING TO
OR AFFECTING CP, INCLUDING, WITHOUT LIMITATION, THE VALUE,
CONDITION, MERCHANTABILITY, MARKETABILITY, PROFITABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OF CP AND
ITS TANGIBLE AND INTANGIBLE ASSETS. EXCEPT AS EXPRESSLY SET FORTH
IN SECTION 5 OF THIS AGREEMENT, GLOBAL INC. HAS NOT RELIED
UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY
REPRESENTATION OR WARRANTY OF CHI OR ANY AGENT OR EMPLOYEE OF CHI.
GLOBAL INC. REPRESENTS THAT IT IS A KNOWLEDGEABLE BUYER AND THAT IT
IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF ITS CONSULTANTS
IN PURCHASING THE CP SHARES. GLOBAL INC. WILL CONDUCT SUCH
INSPECTIONS AND INVESTIGATIONS REGARDING THE CP SHARES AS GLOBAL
INC. DEEMS NECESSARY AND SHALL RELY UPON SAME (AND NOT ON ANY
REPRESENTATION, INFORMATION OR DOCUMENTATION RECEIVED FROM CHI
EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5 OF THIS
AGREEMENT). UPON THE CP CLOSING, GLOBAL INC. SHALL ASSUME THE RISK
THAT ADVERSE MATTERS MAY NOT HAVE BEEN REVEALED BY GLOBAL
INC.’S INSPECTIONS AND INVESTIGATIONS AND HEREBY ASSUMES ALL
RISK AND LIABILITY (AND AGREES THAT CHI SHALL NOT BE LIABLE FOR ANY
SPECIAL, . DIRECT, INDIRECT, CONSEQUENTIAL, OR OTHER DAMAGES)
RESULTING OR
5
ARISING
FROM OR RELATING TO THE OWNERSHIP OF THE CP SHARES. GLOBAL INC.
FURTHER ACKNOWLEDGES AND AGREES THAT THERE ARE NO ORAL AGREEMENTS,
WARRANTIES OR REPRESENTATIONS, COLLATERAL TO OR AFFECTING THE CP
SHARES BY CHI, ANY AGENT OF SELLER OR ANY THIRD PARTY AND GLOBAL
INC. HEREBY RELEASES CHI FROM ANY AND ALL LIABILITY RELATING TO ANY
WARRANTIES OR REPRESENTATIONS THAT MAY HAVE BEEN PREVIOUSLY
PROVIDED (WHETHER ORAL OR WRITTEN) TO GLOBAL INC. BY AGENTS OF CHI
OR BY THIRD PARTIES. THE TERMS AND CONDITIONS OF THIS SECTION
3.3 SHALL EXPRESSLY SURVIVE THE CP CLOSING, SHALL NOT MERGE
WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS AND SHALL NOT
SUPERSEDE OR REPLACE THE WARRANTIES IN SECTION 5 OF THIS
AGREEMENT WHICH SHALL SURVIVE THE CP CLOSING. CHI IS NOT LIABLE OR
BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS,
REPRESENTATIONS, OR INFORMATION PERTAINING TO CP FURNISHED BY ANY
BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON, UNLESS THE SAME
ARE SPECIFICALLY SET FORTH OR REFERRED TO HEREIN.
3.4
Oper a tion Agreement; Execution of Guarantee by Global
Inc.
(a)
Operation Agreement . Global Inc. acknowledges that AWC
operates the water distribution system used to provide water
service to the customers of CP for and on behalf of CP pursuant to
the Operation Agreement and Letter Amendment. Specifically, AWC
sells water to CP pursuant to the terms and conditions of
AWC’s tariffs for its Casa Grande operating system, reads
meters, prepares and computes monthly water bills according to
CP’s tariff as approved by and filed with the ACC, mails
bills to customers, pays postage, endeavors to collect payments due
from customers, provides labor and materials required to operate
and maintain CP’s water distribution system and repair
damages to it, and designates AWC’s Casa Grande office as the
location where the customers of CP may come regularly to pay their
bills. Global Inc. further acknowledges that AWC serves as the
certified operator for CP.
(b)
Release from Unconditional Guaranty and Performance Indemnity
and Payment . CHI and AWC are parties to an Unconditional
Guarantee of Performance Indemnity and Payment (the “G
uarante e”) whereby CHI unconditionally guaranteed the
performance of the obligations and covenants of CP accruing under
the Operation Agreement as amended by the Letter Amendment. Global
Inc. shall use its best efforts to enter into a substitute
guarantee substantially in the form attached hereto as
Exhibit E , or in such other form as is reasonably
acceptable to AWC, in order that CHI may be released from the
Guarantee by AWC.
3.5
Docket W-01445A-06-0199 . Global Inc. acknowledges that AWC
has filed an application to extend its CC&N (the “ AWC
CC&N Extension Case ”) to include the CP CC&N
Area in ACC Docket No. W-01445A-06-0199. CP was granted
intervenor status in the AWC CC&N Extension Case and filed a
motion to exclude (the “ Motion to Exclude ”)
the CP CC&N Area from the extension area requested by AWC. In a
Procedural Order dated December 18, 2006, the administrative
law judge granted CP’s Motion to Exclude, which decision,
unless
6
successfully appealed by AWC, excludes the CP CC&N Area from
consideration in the case. Notwithstanding the foregoing, the
outcome of the case is not known at this time, and cannot be
predicted with any degree of reasonableness.
4. Reimbursement for
CHI-Provided Funds and Payment of CP Purchase Price .
4.1
Pursuant to the ICFA, CHI must pay to Global Water Resources a fee
(an “ ICFA Fee ”) for each equivalent dwelling
unit (“ EDU ”) constructed within Legends
(Legends is as depicted on Exhibit F attached hereto).
Pursuant to infrastructure coordination and finance agreements that
will be executed by Global Water Resources and other developers
within the FG CC&N Area (“ Other ICFAs ”),
Global Water Resources will collect fees for EDUs constructed
within the FG CC&N Area under the Other ICFAs (“ Other
ICFA Fees ”). Until the CHI-Provided Funds have been
fully reimbursed and the CP Purchase Price has been fully paid, CHI
shall be entitled to the following: (i) a credit of $1,000 per
EDU (“ $1,000 EDU Credits ”) within Legends and
outside the AWC CC&N Area applied against the ICFA Fee payable
by CHI for such EDU, commencing with the 2,001 st EDU in Legends;
(ii) a credit of $500 per EDU (“ $500 EDU Credits
”) within Legends and inside the AWC CC&N Area applied
against the ICFA Fee payable by CHI for such EDU, commencing with
the 2,001 st EDU in Legends;
and (iii) a reimbursement payment of $1,000 per EDU (the
“ Reimbursement Payment ”) for EDUs located
outside Legends but within the FG CC&N Areas for which Global
Water Resources has collected Other ICFA Fees under Other ICFAs.
Global Inc. shall make Reimbursement Payments to CHI on a quarterly
basis. The $1,000 EDU Credits and the $500 EDU Credits shall be
applied and/or Reimbursement Payments shall be made until the
CHI-Provided Funds have been fully reimbursed and the CP Purchase
Price fully paid.
4.2
Upon receipt of the credits and reimbursements due CHI under this
Section 4 , such credits and reimbursements are to be
applied 25% toward the payment of the CP Purchase Price and 75%
toward the repayment of the CHI-Provided Funds until the CP
Purchase Price has been fully paid. It is contemplated by the
Parties that the payment of the CP Purchase Price and the repayment
of the CHI-Provided Funds will be complete upon receipt by Global
Water Resources of ICFA Fees described in Section 4.1
above for 8,050 units in Legends. The Parties further agree that
when the CP Purchase Price has been paid in full, if there still
remains an unpaid balance on the CHI-Provided Funds, then upon
receipt of future credits and reimbursements due CHI under this
Section 4, such credits and reimbursements shall be
fully applied to repayment of the CHI-Provided Funds.
5. Representations and
Warranties .
5.1
Representations and Warranties of CHI to Global Inc .. As of
the date hereof and as of the CP Closing Date, and subject to
Section 3.3 of this Agreement, CHI hereby represents
and warrants to Global Inc. as follows:
(a)
Corporate Status of CHI and CP; Authorization . CHI is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Arizona with full corporate power
and authority to execute and deliver this Agreement, to
7
perform
its obligations hereunder, and to consummate the transactions
contemplated hereby. The execution and delivery by CHI of this
Agreement, and the consummation of the transactions contemplated
hereby, have been duly authorized by all requisite corporate action
of CHI. CHI has duly executed and delivered this Agreement and this
Agreement is a valid and legally binding obligation of CHI
enforceable against CHI in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, fraudulent transfer and
conveyance, receivership, moratorium, and similar laws affecting
creditors’ rights generally, and to the availability of
equitable remedies (whether asserted at law or in equity). Based
solely on the certificate of good standing issued by the ACC dated
December 27, 2006, CP is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Arizona. CHI has delivered to Global Inc. copies of CP’s
articles of incorporation, bylaws, minute books and other
organizational documents, as amended, and in its possession on the
CP Closing Date. To the actual knowledge of CHI, as hereinafter
defined, CP is not in violation of any of the provisions of its
articles of incorporation, bylaws or any other organizational
documents. CP has no subsidiaries. For purposes of this Agreement,
the phrase “ actual knowledge of CHI ” means the
current actual knowledge of Roger Pryor during the time CHI has
owned the CP Shares and only with respect to the actions of CHI and
not AWC, without any duty of Mr. Pryor, CHI or its officers,
directors, employees, lawyers, agents and representatives, to
perform any investigation or due diligence.
(b)
No Conflicts . The execution, delivery, and performance by
CHI of this Agreement and the consummation of the transactions
contemplated hereby do not and will not conflict with or result in
a violation of or under (with or without the giving of notice or
the lapse of time or both): (i) the articles of incorporation or
bylaws of CHI; (ii) any law applicable to CHI or any of its
properties or assets; (iii) any contract to which CHI is a
party or by which it or any of its respective properties or assets
may be bound or affected; or (iv) as to the actual knowledge
of CHI, the CC&N issued by the ACC and held by CP.
(c)
Litigation . Except as set forth in Section 3.5
of this Agreement, and to the actual knowledge of CHI:
(i) there is no action, claim, suit or proceeding pending or
threatened by or against or affecting CP in connection with or
relating to the transactions contemplated by this Agreement or of
any action taken or to be taken in connection herewith or the
consummation of the transactions contemplated hereby; and there is
no valid basis for the same; (ii) CP (and the assets of CP)
are not party to, subject to or bound by, any decree, order,
injunction, settlement agreement or arbitration decision or award
(or agreement entered into in any administrative, judicial or
arbitration proceeding with any Governmental Authority, as
hereinafter defined) with respect to or affecting the properties,
assets, personnel or business activities of CP; and (iii) no
citation, fee, or penalty has been levied or asserted against CP by
the ACC or other Governmental Authority within the twelve months
prior to the date of this Agreement and no such citation, fee or
penalty is currently pending or outstanding. For purposes of this
Agreement, the phrase “ Governmental Authority ”
means any nation or government, any state or other political
subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government
authority, agency, department, board, commission or
instrumentality
8
of the
United States, any State of the United States or any political
subdivision thereof, and any tribunal or arbitrator(s) of competent
jurisdiction, and any self-regulatory organization.
(d)
Brokers or Finders . All negotiations relating to this
Agreement and the transactions contemplated hereby have been
carried on without the participation of any person or entity acting
on behalf of CHI who would be entitled to make a valid claim
against Global Inc. for any brokerage commission, finder’s
fee or similar compensation.
(e)
Financial Information . CHI has delivered to Global Inc.
copies of financial information (“ Financial
Information ”) pertaining to CP that CHI has in its
possession as of the Closing Date. To the actual knowledge of CHI,
the Financial Information is correct in all material respects.
However, CHI makes no representations or warranties regarding the
completeness of the Financial Information.
(f)
Taxes . CHI has delivered to Global Inc. a copy of
CP’s federal income tax return for the period October 1,
2004, to September 30, 2005, which was filed as part of a
consolidated federal income tax return for CP and certain other
subsidiaries of CHI’s parent company, D.R. Horton, Inc. The
federal income tax return is correct and complete in all material
respects. Taxes payable, if any, by CP during the time that CHI
owned the CP Shares have been paid, except for taxes accrued, if
any, as of the CP Closing Date but not yet payable.
(g)
Capitalization .
(i) The
authorized capital stock of CP consists often thousand (10,000)
shares of common stock, with no par value, of which ten
(10) shares are issued and outstanding;
(ii) CP
has no other issued or outstanding securities and all of CP’s
outstanding capital stock is owned of record by CHI;
(iii) There
are no stock transfer restrictions or shareholder agreements
operating or in effect relating to the capital stock of CP;
and
(iv) There
are no restrictions or qualifications of any kind on the sale or
transfer of such stock (other than pursuant to applicable federal
and state securities laws).
(h)
Accounts Payable . To the actual knowledge of CHI, CP has
satisfied, paid and discharged its accounts payable and other
current liabilities and obligations accrued as of the CP Closing
Date.
(i)
Employees . CP has no employees.
(j)
Compliance with Applicable Law. To the actual knowledge of
CHI:
9
(i) CP
has been operated in material compliance with all applicable laws
governing, affecting or relating to CP, its assets and its
business; and
(ii) CP
has satisfied all of its obligations regarding the filing of annual
reports with the ACC and the Arizona Department of Water
Resources.
(k)
No Guarantees . To the actual knowledge of CHI:
(i) no
obligations or liabilities of CP have been guaranteed by or subject
to a similar contingent obligation of CHI, except for the
Guarantee, as defined above;
&n
|
