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HomeMy WebLinkAboutRVWC ASSET PURCHASE AGREEMENT BETWEEN THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION AND THE RANCHO VISTOSO WATER COMPANY FOR THE PURCHASE AND SALE OF THE ASSETS OF RANCHO VISTOSO WATER COMPANY THIS ASSET PURCHASE AGREEMENT (this "Agreement" ) is entered into this &ha. day of , 19%, by and between RANCHO ' VISTOSO WATER COMPANY, an Arizona corporation, ( "Seller" ) , and the TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION, a non-profit corporation organized and existing under the laws of the State of Arizona ( "Buyer" ) . WITNESSETH: WHEREAS, Seller is the owner of a water works plant and distribution system known as RANCHO VISTOSO WATER COMPANY, situated in the Town of Oro Valley, Arizona; and WHEREAS, Seller is the holder of franchises from the Pima County Board of Supervisors and Certificates of Convenience and Necessity issued by the Arizona Corporation Commission, which franchises and certificates authorize Seller to engage as a public service corporation in the sale of water for domestic, commercial and other uses in its Certificated Area; and WHEREAS, the Town of Oro Valley desires to own and operate water utility systems within and without its Town limits and to provide its residents with direct control over the rates, quality, water resources management , service and other policies and practices relating to the provision of water utility service to its residents ; and WHEREAS, the Town of Oro Valley is duly authorized by virtue of (i) the laws of the State of Arizona and (ii) an election held in March , 1993 , pursuant to Arizona Revised Statutes Section 9-514, to purchase or lease any plant or property or portion thereof devoted or which may be devoted to the business of providing public utility water service within and without the Town limits ; and WHEREAS, the Town of Oro Valley was previously party to an action in condemnation against Seller which action was subsequently dismissed by virtue of a settlement agreement entered into between the Town of Oro Valley and Seller; and Town of Oro Valley continues, the to have the legal authority under Arizona law to acquire water utility systems through the power of condemnation; and WHEREAS, in lieu of condemnation the Town of Oro Valley and Seller entered intonegotiations ne otiations for the sale and purchase of Seller' s s water utility system assets in orderto avoid the expenses of a condemnation action; and Buyer is a non-profit corporation WHEREAS, organized and P existing which was formed to under the laws of the State of Arizona assist the Town of Oro Valley in financing the costs of acquisition water utilitysystems which serve residents of of privately owned aforesaid oals and the Town of Oro Valley in furtherance of the g objectives of the Town of Oro Valley; and WHEREAS, Buyer (i) desires toacquire ownership of the Rancho the town Vistoso Water Company water utility system assets within limits of the Town of Oro Valley, and (ii) will simultaneously lease such assets to the Town of Oro Valley upon closing of the sale of such assets to Buyer; and in negotiations for the sale of WHEREAS, Seller participated recognition of Seller' s water utility system assets to Buyer in reco g Buyer' s interest in assisting the Town of Oro Valley in its desire to provide public water utility service to its residents ; and WHEREAS, the parties have voluntarily bargained and negotiated determine theprice, terms and conditions of such in good faith to a sale, which is to be consummated through Buyer' s exercise of its borrowing power; and Seller recognizes and hereby acknowledges that the WHEREAS, g bargained for sale of its water utility system assets is to be financed through the sale aid issuance of water company acquisition bonds issued by Buyer; and WHEREAS, Seller is desirous of selling its water utility assets to Buyer, but excluding therefrom cash and Accounts Receivableand certain enumerated liabilities , under the price, , terms and conditions set forth herein; and the Board of Directors of the Town of Oro Valley WHEREAS, Property Corporation have by Resolution No. (R) 96- MunicipalP Y authorized the execution of this Agreement, to which Resolution this Agreement is an exhibit; and WHEREAS , the My Mayor and Council of the Town of Oro Valley have approved the execution and delivery of this Areement, to which Resolution this Agree by Resolution No. (R) 96- Agreement is exhibit . g 2 NOW THEREFORE, IN CONSIDERATION of the foregoing Recitals , and the mutualpromises,romises, covenants and agreements hereinafter contained, and each act of the parties hereto, the parties agree as follows : Section 1 . Definitions . Unless the context clearly indicates the contrary, the capitalized followingitalized words used in the Recitals and used below P shall have the meanings set forth below: Accounts Receivable : Any right for the payment to Seller for servicesor goods oods provided or rendered, whether or not evidenced by an instrument or chattel paper, arising out of or in any way related to the Business prior to Closing. Aid in Construction Agreements : Those line extension agreements between Seller and third parties, as set forth on Exhibit "A" attached hereto. Agreement : This Asset Purchase Agreement for Purchase and Sale of the Assets . Assets :: Collectively, the Property, Improvements, Equipment, g Inventory, Contract Rights and Records owned and used by Seller in connection with the Business and to be purchased by Buyer pursuant hereto. The Assets to be sold by Seller and purchased by Buyer g pursuant to this Agreement are set forth, on Exhibit "B" . Those tangible personalproperty erty assets not to be included within this P sale transaction are set forth on Exhibit "C" . Assignments : Those certain documents to be given by Seller to Buyer conveying all of its interest in the Contract Rights . y g Bill of Sale : That certain document to be given by Seller to Buyer conveying all of its interest in and to the Equipment and y g Records . Business : That certain business known as Rancho Vistoso Water currently owned by Seller and engaged as a public service Company cial and other water for domestic, commercial corporation in the sale of � of uses in its Certificated Area pursuant to Certif icates Convenience and Necessity issued by the Arizona Corporation Commission (Commission) , and other related services in connection therewith. Buyer: TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION, a non-profit corporation organized and existing under the laws of the p State of Arizona. Buyer' s s Address : c/o Town Manager, Town of Oro Valley, 11000 N. La Canada, Oro Valley, Arizona 85737 . 3 Certificates of Convenience and Necessity: Those certain Certificates of Convenience and Necessity issued by the Commission in the Decisions listed in Exhibit "D" , authorizing Seller to a as engage e public service corporation in the sale of water for g domestic, commercial and other uses in its Certificated Area. Certificated Area : The areas set forth in Exhibit "E" in which Seller conducts its Business, which areas are more particularly shown on the map of the existing service area attached hereto as Exhibit "F" , which map is for the purposes of showing the boundaries of the Certificated Area, size and extent of water mains and pipes ,i easements, and any other areas served by the Business . Closing; Date of Closing: That point in time when (a) all of Seller' s obligations and Buyer' s obligations hereunder have been fulfilled;• b) the Escrow Agent has received all funds , is prepared to disburse the same in accordance with this Agreement and has recorded all of the Transfer Instruments ; and (c) the Escrow Agent has disbursed all of the sale' s proceeds as required by this Agreement . Contract Rights : The right to have services or goods provided to the Business by third persons . Creditors : Any and all persons or entities to whom Seller owes money, goods or services . Equipment : Tangible personal property, whether affixed or not to the Property, which has been acquired or is under assumable lease (s) to Seller for use primarily in the Business , including but not limited to all equipment used in the operation of wells and tanks , the water distribution system, office equipment and motor vehicles, as listed in Exhibit "G" . Escrow Agent : To be determined by Buyer. Improvements : Wells, tanks , water lines and distribution s and anyother structures or tangible property used in Y systems,connection with the water production and distribution system. Inventory: Goods which are held by Seller for the treatment of water or otherwise used or consumed in connection with the Business, in the ordinary course of operating its Business . Non-Terminated Aid in Construction Agreements : Those Aid in Construction Agreements which have not been released by Seller on or before Closing. Permitted Encumbrances : Those matters of record set forth on Schedule B of the Preliminary Title Report which Buyer accepts in purposes rP for u oses of closing, and such other matters approved in writing by Buyer. 4 Property: All well sites , easements , licenses and other real interestsin the Town of Oro Valley and described property located Improvements, inattached hereto, including all p , Exhibit H fixtures and any otherrights ri hts and appurtenances pertaining thereto which are used by Seller in the Business . Purchase Price : The sum of TEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($ 10 , 500, 000) which is the total purchase price for the Assets, as set forth at and subject to the provisions of Section 3 of this Agreement . Records : All of Seller' s service agreements, service and repair records, water treatment records, hydrology and assured water supply studies and reports, Department of Water Resources Groundwater filings and correspondence, Central Arizona customer data District filings and correspondence, Replenishmentbilling base information (including master file information, ` meter reading information, and other histories , complaints) , relatin to the related i documents arising out of or n any way g Business and/or the Assets . Seller: RANCHO VISTOSO WATER COMPANY, an Arizona corporation. Seller' s Address : c/o Dick Maes , 5861 N. Kyrene, Suite 1, Tempe, Arizona 85283 . Title Insurer: To be determined by Buyer. Transfer Instruments . • Those instruments customarily required for the transfer of the Assets, including, but not limited to : P (i) Special Warranty Deed to the Property; (ii) Affidavit of Value : (iii) Foreign Investment in Real Property Tax Act Affidavit; (iv) Bill of Sale to all personal property. (v) Assignments as to all Contract Rights, franchise rights and certificates which are transferable. Section 2 . Conveyance of Business Assets . conditions and limitations set forth herein, Subject to the agreespurchase hereby agrees to sella Seller he Y to nd Buyer hereby gprovidewith good and to Buyer the Assets . Seller agreesto conve such marketable title to the Assets , and, at Closing, Y withSeller that the Assets are not subject to title a warranty by any security except Permitted interests , liens or encumbrances Encumbrances . 5 2 . 1 Equipment,menti Inventory and Records . � ent Inventory and Records shall be conveyed at The Equipment, � deliverybySeller of the Bill of Closing by the execution and Sale . The Bill of Sale shall include a list identifying all Equipment and shall be in the form of Exhibit " I" attached hereto. 2 .2 Contract Rights . To the extent that any person shall be required to consent to the transfer er of Contract Rights, then Seller shall obtain that consent in writing as a condition of Closing. 2 .3 Property. Conveyance of the Property shall be by Special Warranty Deed, P subject only to Permitted Encumbrances . The conveyance shall subject to the standard exceptions be contained in the final title policy to be given by Seller to Buyer and free and clear of all other liens and encumbrances . . 1 Title Insurance . Seller shall furnish Buyer at 2 '3 Closing with a standard owner' s title insurance policy in the amount of the Purchase Price insuring Buyer' s interest in the Property, subject only to those exceptions described in Section 2 .3 above . Title Defects . In the event the Title Insurer is 2 '3 ' 2 unable or otherwise refuses to issue said title insurance Y policy to Buyer as of the Date of Closing, subject only to the matters described and approved, then and in such g event, Escrow Agent shall withhold from the Closing proceeds such amounts of money up to but not exceeding $1, 000 . 00 as are sufficient to remove any impediment to If the policystill cannot the issuance of such policy. be issued application bythe a plication of Closing proceeds to Buyer shall have the remove a lien or impediment, then Bu y right, aY t Buyer' s sole election, to terminate this Agreement and receive a full refund of all money on deposit, with any accrued interest thereon, and Buyer shall have no further obligation hereunder. In the alternative, Buyer may elect to close this transaction andobjectionable the item, provided Buyer closes within fifteen days of the original Closing Date . 2 .3 . 3 Condition of Title . Seller shall preserve title to the Property and at the time of closing shall deliver P Y the Property in substantially as good condition P Y p with respect to title as of the date of the Preliminary Title Report, except to remove an objectionable item. 6 2 .4 Limitations . Thepurchase urchase of the Assets pursuant hereto shall not constitute a purchase of Seller by Buyer nor render Buyer a successor in interest to Seller. This Agreement is limited to theurchase and sale of the Assets only and Buyer is not p• liabilities of Seller with respect to the Assets assuming any or the Business which may exist at any time prior to their transfer hereunder. Section 3 . Purchase Price. 3 . 1 Total Purchase Price . Subject to Subsections 3 . 1 . 1 and 3 . 1.2 below, Buyer agrees to pay Seller as the total Purchase Price for Seller' s interest in the Assets, the sum of TEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($ 10 , 500 , 000) payable as follows : 3 . 1 . 1 Buyer' s Right of Verification. Buyer shall have seven (7) days from the date of execution of this Agreement to verify by independent means of Buyer' s choosing that the condition and value of the Assets are as Seller has represented during the course of the P negotiations,otiations, or, alternatively, that the condition and value of the Assets are acceptable to Buyer and warrant its proceeding to consummate the purchase contemplated by this Agreement . In the event that p s are not verified and Buyer i Seller' s representations not otherwise satisfied as to the condition and value of the Assets as determined by Buyer or its designee, Buyer maycancel this Agreement by promptly providing Seller with written notice to that effect . 3 . 1 . 2 Cash at Closing. Contingent upon Buyer' s having sold the water company acquisition bonds contemplated by this Agreement, Buyer shall deposit the sum of TEN g MILLION FIVE HUNDRED THOUSAND DOLLARS ($10 , 500 , 000) , in cash or other certified funds, at Closing (subject to adjustment for costs and prorations as set forth herein) . 3 . 2 Allocation. Pursuant to Section 1060 of the Internal Revenue Code, the consideration for the Assets shall be allocated in accordance with the form of Exhibit "J" . 7 Section 4 . Regulatory Contingency. 4 . 1 Contingencies . Buyer' s obligations under this Agreement are not contingent upon Seller obtaining the approval of the Commission for the sale of Seller' s Assets . However, closing under this Agreement shall not occur until such approval (s) as are legally required have been obtained and placed in Escrow. g Y Seller shall assume all risks and liabilities associated with compliance with the regulatory authority of the Commission regarding this Agreement . Section 5 . Representations and Warranties By Seller. 5 . 1 Seller' s Representations . Except as otherwise set forth in this Agreement, and in addition to all other covenants, warranties and representations of Seller herein, Seller hereby represents and warrants to Buyer the following: 5 . 1. 1 Seisin. Seller is the owner of and has good and marketable title to the Assets to be conveyed hereunder. 5 . 1 .2 . Disclosed Agreements . Except for this Agreement, Seller has entered into no agreement currently in effect to sell the Assets . 5 .1 . 3 Liabilities . Seller has no actual knowledge of any judgments, liens, actions or proceedings pending against Seller, the Business or the Assets which would adversely affect this transaction or the title which Buyer will receive, other than as set forth in the Preliminary Title Report . 5 .1.4 Liens . No judgments, liens, security interests or other monetary obligations against the Assets will be outstanding at the time of Closing, except Permitted Encumbrances and current real estate taxes which are not yet due and payable . 5 . 1 . 5 Labor, Materials . All bills and invoices for labor and materials furnished to or on behalf of the Business or the Assets which have been incurred by Seller prior to the time of conveyance and transfer to Buyer, if any, will be paid by Seller and acknowledged in writing or supplier,paid by the laborer as the case may be. 5 .1 . 6 Proceedings . Seller does not have actual knowledge of any actions or proceedings by any person or governmental entity or any other facts or circumstances, 8 including anycauses of action, lawsuits or claims, whether existing or threatened, which might materially and adversely affect the Business or the Assets, except as set forth in Exhibit "K" . 5 . 1 . 7 No Breach. Neither the execution and delivery of this Agreement nor the consummation mmation of the transaction contemplated by this Agreement will result (either immediatelyor after the passage of time and/or the givingof notice) in a breach or default by Seller under any agreement reement or understanding to whichSeller is a party or bywhich Seller may be bound or which would haveits P effect upon Seller' s ability to fully perform obligations under this Agreement . 5 . 1 . 8 .. No Bankruptcy. Seller has not (a) made a general assignment for the benefit of creditors , (b) filed any voluntarypetition or suffered the filing of an involuntary petition� by Seller' s creditors, (c) suffered the appointment of a receiver to take all, or substantially all, of Seller' s er' s assets, (d) suffered the attachment or other judicial seizure of all, or substantiallyall, of Seller' s assets, or (e) admitted in writing its inability to pay its debts as they fall due, and no such action is threatened or contemplated. 5 .1 . 9 Best Actual Knowledge . All information prepared provided Seller and or to be provided by Seller to Buyer and all representations by Seller are accurate to the best of Seller' s actual knowledge without Seller having an made specific investigation thereof ; as to all Y other information provided or to be provided by Seller to Buyer, Seller knows of no inaccuracies . 5 . 1q . 10 Regulations . To the best of Seller' s actual there are currently no violations of any knowledge, applicable zoning regulation or ordinance or other law, r ordinance, rule, regulation or requirement, or of order, any covenant, condition or restriction affecting or relating to the use or occupancy of the Assets from any governmental agency having jurisdiction over the Assets or from any other person entitled to enforce the same. 5 . 1 . 11 Permits . Seller has all permits, licenses, authorization and approvals required by law or any governmental agency to conduct the Business . 5 . 1 . 12 Condemnation. To the best of Seller' s knowledge, there are no pending or threatened condemnation or eminent domain proceedings which would affect the Assets . 9 5 . 1 . 13 Disclosure . None of the representations or in this Agreement, nor any warranties made by Seller g document, statement, certificate, schedule or other information furnished or to be furnished to Buyer pursuant to this Agreement or in connection with the transaction contemplated hereunder contains, or will as of the Closing Date contain, any untrue statement or a material fact, or omits, or will as of the Closing Date to state a material fact necessary to make the omit, statements of facts contained therein not misleading. 5 . 1 . 14 Creditors . As of the Closing, except as set forth in Section 7, all bills and invoices for goods and services related to or which are a part of the Business any, or the Assets, ifshall be paid; all Creditors shall and salaries, wages, be paid; all employees (if any) g uses vacation pay and� benefits accrued up to the date s, payroll all withholdings,of Closing shall be paid; g taxes , unemployment insurance, worker' s compensation s and all other similar payments ents shall be paid current to the date of Closing; and no claims by Creditors shall exist which may encumber the Assets . q 5 .1 . 15 Organization. Seller has been duly formed and presently exists as an Arizona corporation, and has the full right and authority to enter into this Agreement, to consummate the sale contemplated herein and to observe andperform all of its covenants and obligations executing The person this Agreement and any other document required hereby has full authority to act on behalf of and to bind the Seller in and to the obligations imposed on it by this Agreement . 5 . 1 . 16 Commissions . Seller has made no agreements respecting commissions or brokerage fees in connection P g herewith. 5 . 1 . 1P 7 Department of Water Resources ( "DWR" ) . Seller' s current status with DWR is as summarized on Exhibit "L" . Buyer shall have no responsibility for any liability of Seller assessed byDWR under the First or Second Management Plans . Environmental Regulations . In addition to all 5 1 . and representations of Seller other covenants, warranties P the herein, Seller hereby represents and warrants to Buyer that the Assets to be conveyed hereunder are, to the knowledge e and belief of Seller, in compliance with all current applicable environmental, health and safety laws and regulations . 10 5 . 2 Buyer' s Representations . Buyer hereby represents to Seller as follows : 5 .2 . 1 Authority. Buyer has been duly formed and presently exists as a non-profit corporation under the laws of the State of Arizona, and the entering into of this Agreement and the performance of Buyer' s obligations hereunder have been duly authorized by all proper and necessary actions, and do not violate any applicable governmental statute, rule, regulation, ordinance, contract or other restriction. The person executing this Agreement and any other documents required hereby has full authority to act on behalf of and to bind the Buyer in and to the obligations imposed on it by this Agreement . 5 . 2 . 2 Commissions . Buyer has made no agreements respecting Commissions or brokerage fees in connection herewith. Section 6 . Indemnification. 6 . 1 Seller. Seller shall indemnify, defend and hold Buyer harmless against and in respect of : 6 .1 . 1 All liabilities and obligations of, or claims against, the Assets not expressly assumed by the Buyer herein; 6 . 1 . 2 Any damage or deficiency prior to Closing resulting from any misrepresentation, breach of warranty or nonfulfillment of any agreement on the part of the Seller hereunder or from any misrepresentation in or omission from any certificate or other instrument furnished or to be furnished to the Buyer under this Agreement; and 6 .1 . 3 All actions, suits, proceedings, demands , claims, assessments, judgments , costs and expenses incident to any of the foregoing or any obligations or liabilities of Seller in .connection with the Assets transferred hereunder arising out of the Business prior to the date of Closing. promptly Buyer shall notifySeller in writing of any y claim, act or notice which could give rise to a claim of indemnification under this Agreement . If Seller desires to contest the claim, it shall do so at its sole cost and expense without reimbursement from Buyer and shall keep 11 Buyer advised as to the status of the defense as reasonably required byBuyer. If Seller shall fail to � � for above; pay successfully contest a claim as provided a claim or final judgment rendered against it; or remove any lien or attachment within ten (10) days after • then Buyer may, but shall not be obligated imposition, y, or lien. In the event to, pay any such claim, judgment byBuyer, Buyer shall be entitled to an of such payment offset in the amount so paid by Buyer, plus costs, actual attorneys' fees and costs, and interest at the legal rate in connection therewith. In the event Buyer claims any such offset hereunder, Buyer shall so notify Seller in writing. Any amount due Buyer not paid by such offset shall be immediatelydue and payable by Seller. This provision shall survive Closing. 6 . 2 Buyer. mnif defend and hold Seller harmless against Buyer shall i nde y, and in respect of : 6 .2 . 1 Any costs, expenses, damages or deficiencies resulting an from misrepresentation, breach of warranty Y or nonfulfillment illment of any agreement onthe part of Buyer hereunder or from any misrepresentation in or omission from any certificate icate or other instrument furnished or to be furnished to Seller by Buyer under this Agreement : Seller shallpromptly notify Buyer in writing ofany p y give act or notice which could rise to a claim of indemnification' ion under this Agreement . Seller shall not settle, pay orjudgment confess with regard to such claim fifteen (15) days if Seller receives from Buyer within after the aforesaid notice of such claim a statement in Buyer that Buyer will diligently defend the writing by Y claim. If Buyer desires to contest the claim, it shall do so at its sole cost and expense without reimbursement shall keep Seller advised as to the from Seller and status of the defense as reasonably required by Seller. If Buyer shall fail to successfully contest a claim as provided for above; pay a claim or final judgment rendered against it; or remove any lien' or attachment may, days after imposition, then Seller within ten (10) but shall not be obligated to, pay any such claim, judgment or lien. In the event of such payment by Seller, the amount of such payment plus costs, and actual yinterest fees together with thereon at the legal rate per annum shall be paid by Buyer to Seller within thirty (30) days . This provision shall survive ) Y Closing. 12 Section 7 . Aid in Construction Agreements . 7 . 1 Seller' s Responsibility. be responsible for satisfying and 7 . 1. 1 Seller shall p obtaining the release of all Aid in Construction obta g Agreements prior to Closing, in accordance with any requirements established by the Commission. At Closing, Seller shall provide Buyer a 7 .1. 2 certificate listing those Aid in Construction Agreements which have been released. 7 . 1 .3 In the event there are any Non-terminated Aid in Construction Agreements which have not been satisfied and released, it shall be Seller' s sole responsibility, in accordance with requirements anyre irements established by the Commission, to make any annual refund payments due to the holders of such Non-terminated Aid in Construction Agreements from the proceeds paid by Buyer to Seller. At Closing, Seller shall establish a Non-terminated Aid in Construction Agreement Escrow Account for such purpose sufficient to satisfy deposit funds the estimated annual payments on for all such Non-terminated Aid in Construction Agreements . provide Seller shall all documentation of the status of terminated and Non-terminated Aid in Agreements, at the sole cost and expense of Construction Agre Seller, as may be required by the Commission. 7 . 2 Buyer' s Responsibility. g 7 . 2 . 1 Buyer acknowledges that Seller will need access to informationconcerningthose Non-terminated Aid in sed as Construction Agreements which have not been relea sed of Closing in order for Seller to be able to service its thereunder, financial obligationsand agrees to provide Seller with such access as may reasonably be requested. to notify 7 .2 . 2 Seller agreesBuyer when it has satisfied, compromised or otherwise been• released from any Non-terminated Aid in Construction Agreement after Closing. 7 .2 . 3 The parties agree to cooperate after Closing in the monitoring of Non-terminated Aid in Construction Agreements . specifically provide lessee) will 7 . 2 .4 Buyer (or its Seller with total water revenues data regarding each Non- terminated Aid in Construction Agreement for the period 13 July through throu h June 30 of each year in which a continuing obligation for refund exists , such data to be providedto Seller no later than July 31 of each year. Seller will provide the necessary lot and development information. Buyer shall track and maintain new meter revenues for meters added to subdivisions for which Non-terminated Aid in Construction Agreements exist . Section 8 . Escrow Agent. 8 .1 Closing Agent . g The Escrow Agent shall serve as the Closing agent for this transaction. 8 . 2 Delivery of Transfer Instruments . The Transfer Instruments and any other documents required by g this Agreement or applicable laws shall be placed by the parties into escrow with the Escrow Agent and shall be delivered to the appropriate party upon Closing. 8 .3 Other. The EscrowAgentagrees a rees to do all things reasonably required by the terms of this Agreement to close this transaction. Section 9 . Closing Date. The Closingof this sale shall take place on or about the 1st day of April, 1996 . In the event the parties wish to extend the may Closing Date, theydo so provided a written instrument is Y parties by the and delivered to the Escrow Agent setting a new date for Closing. The new Closing date shall also be the new date for proration. Section 10 . Closing Documents . 10 . 1 Seller' s Deposits . g Prior to Closing, Seller shall deposit in escrow for delivery to Buyer, the following: 10 . 1 . 1 The Transfer Instruments required by this Agreement . 10 . 1 . 2 Anyother documents or instruments required by this Agreement . 10 . 1 . 3 . Anyother instruments necessary to or reasonably required byBuyer to effectuate the transaction � contemplated herein. 14 10 . 2 Buyer' s Deposits . y Prior to Closing, Buyer shall deposit in escrow for delivery to Seller the following: � 10 .2 . 1 All sums required of Buyer to close this transaction. 10 .2 .2 Such Transfer Instruments as are required of Buyer. 10 . 2 .3 Any other instruments necessary to or reasonably required bySeller to effectuate the transaction contemplated herein. Section ii. Costs. expenses connected Costs of Closing and/or with the transfer P � between Buyer the sale thereof shall be divided y of the Assets and and Seller, and paid through escrow, as follows : 11 . 1 Attorneys' Fees . allpayits own attorneys' fees and costs . Each party sh 11 .2 Escrow Fees . all filingand recording fees shall be The escrow fee and divided equally e all between Buyer and Seller, to the extent that or filing f ees are for the Transfer such recording fees Instruments . If any recording fees or filing f ees are necessary as a result of recordings required to clear title, they shall be paid by Seller. 11 . 3 Title Insurance . title insurance policies premium for the standard required equally provided bythis Agreement shall be dividedqu y to be pay the Parties . Buyer shall p Y the difference between the standard premium and an extended premium, if any. Section 12 . Prorations . All of the following in 12 . 1 and 12 .2 shall be prorated as of 12 : 01 a.m.on the Date of Closing. 12 . 1 Taxes . taxes against current real estate the Property. Any est delinquent taxes , penalties and inter thereon for the Property, and taxesand currently due and owing for the sec half of 1995 , shall paidby be Seller on or before Closing. 15 12 .2 Assessments . All current assessments ,, both principal and interest, against the Property. Any delinquent delin ent amounts shall be paid by Seller on or before Closing. 12 . 3 Other. 12 .3 . 1 Insurance shall be canceled by Seller as of Closing. 12 .3 . 2 Telephone hone bills and listings shall be prorated. 12 .3 . 3 Utilityservice shall be transferred by Seller to Buyer as of Closing. 12 .3 . 4 Utility deposits , any, if shall be returned to Seller, Y � and Buyer shall make its own utility deposit osit arrangements . 12 .3 . 5 Assumable maintenance contracts for services, supplies or Equipment as listed on Exhibit "M" , as as of be approved by Buyer in writing, shall prorated Closing. 6 Assumable leases for Equipment (including 12 3 vehicles, if any) , as approved by Buyer in writing, shall be prorated as of Closing. 12 . 3 . 7 Pers property onaltax shall be prorated as of Closing. 12 . 3 . 8 Billing and collections shall be prorated in accordance with Section 19 . 12 .4 Buyer' s Tax Exempt Status . With reference to Subsections 12 . 1 and 12 . 3 . 7 above, nothing herein shall be deemed to create a tax liability for Buyer which would otherwise not exist . Section 13 . Risk of Loss . 13 . 1 Prior to Closing. The risk of lossby g for damage fire or other casualty, or the taking by eminent domain, until Closing, shall be assumed by P and shall be the res onsibility of Seller. Upon the happening of any material loss and within ten (10) business days after notification thereof, Buyer may elect in writing to terminate this Agreement or close the sale . If any election to terminate the Agreement is made, any money on deposit shall be 16 Y returned to Buyer with accrued interest thereon and this Agreement shall thereupon become null and void. In the alternative, if an election to proceed with Closing is made by anyinsurance proceeds and/or condemnation award in Buyer, connection with the loss shall be given to Buyer, but there shall be no adjustment to the Purchase Price unless otherwise agreed to by Seller and Buyer in writing. 13 .2 After Closing. The risk of loss or damage by fire or other casualty, or the taking byeminent domain, shall be assumed by Buyer after the Closing date . Section 14 . Insurance. Buyer shallplace lace its own insurance coverage on the Assets and Seller shall terminate anyinsurance coverage it may have as of Closing. Escrow Agent shall not be responsible for monitoring this change . Section 15 . Assignment of Agreement. rights of any party under this Agreement are not The g � assignable without the prior written consent of the other party, which shall not be unreasonably withheld. It is expressly understood and agreed upon by Seller that P Y Buyer will simultaneously upon Closing lease the Assets to the Town of Oro Valley, an Arizona municipal corporation, which shall assume the responsibilities and obligations of providing municipal water service to the water utility customers of Seller, effective upon Closing. Section 16 . Default. 16 . 1 . 1. 1 Non-Monetar Default . For the purposes of this Section a "Non-Monetary 16 , Default" shall mean the failure of Seller to close this transaction after Buyer tendered full performance when that failure is the has result of any bona fide action by a third party encumbering the Assets by creating a cloud on the title of Seller' s ownershipstatus which is not practicably susceptible to financial satisfaction prior to Closing and which did not exist when the Preliminary Title Report was received by Buyer. Monetary Default . For the purpose of , this 16 1 2 � '� Y 16 , a "Monetary Default" shall mean the failure SectionY, of Seller to close this transaction after Buyer has tenderedperformance,full erformance, when that failure is a result of a monetarylien or encumbrance upon the Assets , which 17 lien or encumbrance was not disclosed in the Preliminary Title Report when received by Buyer and which can be cured by the application of a portion of the Closing proceeds . 16 . 1 . 3 Seller' s Willful Refusal . For the purpose of this Section 16 , "Seller' s Willful Refusal" shall mean the failure of Seller to close this transaction, without cause, after Buyer has tendered full performance . 16 . 1 . 4 Remedies . In the event of a Default by Seller, Buyer' s exclusive remedies shall be as follows : 16 . 1 .4 . 1 In the event of a Non-Monetary Default, Buyer shall have ten (10) business days following such default in which to elect in writing to terminate this Agreement or waive the Non-Monetary Default and close this transaction. In the event Buyer elects to terminate this Agreement, this Agreement shall thereupon be null and void. If Buyer elects to waive the Non-Monetary Default and close the transaction, then the sale shall close within ten (10) business days after Buyer' s written notice to close . There shall be no adjustment in the Purchase Price and Buyer shall accept whatever title Seller may be able to convey. If Seller still refuses or is unable to close, then Buyer may elect to pursue Buyer' s legal and equitable remedies as they may be available at law, including the right of specific performance . 16 . 1 . 4 . 2 In the event of a Monetary Default, the Escrow Agent is hereby instructed to withhold from Seller' s proceeds from the Closing a sufficient amount to cure the Monetary Default . 16 . 1 .4 . 3 In the event of Seller' s Willful Refusal, then Buyer shall be entitled to pursue its legal and equitable remedies as they may be available at law, including the right of specific performance . 16 . 2 Buyer' s Default . Y In the event Buyer fails to close this transaction, Seller shall be entitled to pursue all its rights and remedies at law and in equity, including the right of specific performance. The parties sifically agree that the provisions of A.R.S . Lpec Section 33 -741, et seq. shall not apply to this Agreement . 18 Section 17 . Customer Deposits. 17 . 1 Seller' s Responsibility. 17 . 1 . 1 Seller shall retain all customer deposits and meter deposits and Buyer shall not receive any credit against the Purchase Price therefor. Seller shall be responsible for refunding all 17 . 1 . 2deposits, and shall do so in de customer deposits and meter p accordance with any requirements established by the Commission. Seller shall be entitled to offset customer deposits and meter deposits against amounts due from customers, in accordance with any requirements established bythe Commission. Seller shall refund the remaining balance of customer deposits and meter deposits as a credit to the final re g month' s water service billing rendered bySeller, and shall provide documentation of same to Buyer and to the Commission. Section 18 . Employees . 18 . 1 Seller' s Responsibilities . 18 . 1 . 1 Seller shall be responsible ible for paying all FICA, existing benefits and accrued vacation pay to all employees employed by Seller as of Closing. 1 2 Seller shall terminate the employment of all 18 . ht on the date of remaining employees as of midnight Closing. 18 . 1 . 3 Seller shall not make any salary adjustments , nor hire additionalemployees em to ees or promote any employees after the date og f this Agreement without the written consent of Buyer. independent contract employees (if any) will 18 . 1 . 4 All P be canceled upon the effective date of transfer of the Assets to Buyer. 18 . 2 Buyer' s Responsibilities . Buyer shall take reasonable steps to provide that its lessee (the Town of Oro Valley) will offer employment to the employees ees of Seller effective the next day after Closing, accordingto the Town of Oro Valley' s then existing personnel guidelines . 19 Section 19 . Meter readings and Billings . 19 . 1 Meter Readings . 19 . 1 . 1 The parties agree that it would be impractical to read all of the customer meters on the date of Closing. Therefore, meter readings shall continue in the usual course of business during the month of Closing and for the month after Closing. 19 . 1 . 2 Seller shall continue to bill in its usual sequence during the month immediately prior to Closing. 19 . 1 . 3 Buyer (or its lessee) shall begin billing after Closing. However, as the initial billings will be for service rendered by Seller, Buyer shall render such billings at the same rate as charged by Seller for any water use that occurred while Seller was still the owner of the Assets . Buyer shall collect for Seller' s sale of water and remit those collections to Seller within thirty (3 0) days of receipt of payments . The remittance shall be based on the amount collected for the billing period, but prorated based on the number of days of service rendered in the billing period prior to Closing covered by the bill . Buyer' s (or its lessee' s) rates and charges for water service shall become effective for billings representing a full month of water service after Closing. Section 20 . Miscellaneous Provisions . 20 . 1 Notices . All notices and communications hereunder shall be in writing and shall be given by personal delivery or mailed first class, registered or certified mail, postage prepaid, and shall be deemed received upon the earlier of actual delivery or one hundred twenty (12 0) hours after deposit in the United States Mail as aforesaid. Notices to Seller or Buyer as the case may be shall be delivered or mailed to the addresses set forth in Section 1 of this Agreement . In addition, a copy of the notice shall be mailed or delivered to the Escrow Agent in care of the address set forth in Section 1, and a copy shall also be sent to: For Rancho Vistoso Water For Town of Oro Valley Company : Municipal Property Corporation: Dick Maes Chuck Sweet Rancho Vistoso Water Company Town Manager 5861 N. Kyrene, Suite 1 Town of Oro Valley Tempe, Arizona 85283 11000 N. La Canada Oro Valley, Az 85737 20 20 . 2 Nature of Agreement . 20 .2 . 1 Agreement Negotiated. The terms and provisions the this Agreement representhe results of negotiations between Seller and Buyer, each of which has been represented bycounsel or representation of its own choosing osin and none of which have acted under duress or compulsion, whether legal, economic orotherwise. Consequently, the terms and provisions of this Agreement shall bP e interpreted and construed in accordance with � and Seller and Buyer their usual and customary meanings, Y PP hereby waive the application of any rule of law which otherwise be applicable in connection with the would interpretation and construction of the Agreement, inte rp anyrule of law including (without limitation) to the effect that ambiguous or conflicting terms or provisions contained in this Agreement shall be interpreted or construed against the party whose attorney prepared the executed draft or any earlier draft thereof . 20 . g 2 .2 Integration. All understandings and agreements heretofore e had between the parties are merged into this Agreement which alone fully and completely expresses their agreement;ement ' the same is entered into after full investigation ation and neither party is relying upon any p statements or representations by the other not embodied in this Agreement . 20 .2 .3 Other Inducements . The parties agree that there are noP romises, inducements , representations or agreements in connection with this Agreement except those specificallyset forth herein in writing. 20 . 2 . 4 Modification.. This Agreement may not be changed by orally, but onlyan amendment in writing, signed by the parties . 20 . 2 . 5 Other Agreements . Seller shall not enter into tracts leases , agreements or amendments to any contracts , affecting the Assets encumbrances existing agreements or while this Agreement remains in force or subsequent to Closing of this transaction without the express written Buyer, other than to remove consent of a matter which the Title Insurer requires be removed in order to Close . 20 . 3 Relation of Parties . 20 . 3 . 1 No Agency. It is expressly agreed and understood by the parties hereto that neither party is the agent, partner, norjoint venture partner of the other. It is that neither Seller agreed and understood also expressly g nor Buyer has any obligations or duties to the other except as specifically provided for in this Agreement . p Y 21 20 .4 Attorneys' Fees . defaults hereunder, the defaulting party shall I f any party pay the other party' s reasonable attorneys' fees , expe rt witness fees , travel and accommodation expenses , deposition and trial transcript t costs, costs of court and other similar paid or incurred by the non-defaulting party by costs or fees reason of or in connection with the default (whether or not legal or otherproceedings roceedings are instituted) . In the event any party hereto finds it necessary to bring an action at law or against the other party to enforce any of the other proceeding g terms, covenants or conditions hereof or any instrument executed in pursuance of this Agreement, or by reason of any breach hereunder, the partyprevailing in any such action or other proceedings shall be paid all costs and reasonable attorneys' fees by the defaulting party and in the event any secured bysuch pr judgment is evailing party, all such costs in any attorneys' fees shall beincluded such judgment, with attorneys' fees to be set by the court and not by the event the parties elect to arbitrate a dispute, jury. In the shall also apply to arbitration, except that then this section pp the provisions referring to a court shall refer to the arbitrator. 20 . 5 Construction. 20 . 5 . 1 Time . Time is of the essence of this agreement. any action is required to be taken on a Y However, legal holiday, the action shall be Saturday, Sunday or deemed re timelytaken if it is taken on the next regular business day. 20 . 5 . 2 Headings .s . The headings of this Agreement have been inserted for convenience of reference only and are g to be ignored in any construction of the provisions hereof . Whenever a personal pronoun is used in any one gender, it shall be deemed to include all other genders as the case may require, and the singular shall include the plural, and vice versa, unless the context indicates to the contrary. 20 . 5 . 3 Adverbs . Whenever the terms "herein" , "hereof" ,, "therefore" , "thereover" , or hereunder" they terms are used, shall refer to this entire Agreement as a whole and shall not refer solely to any particular section. 20 . 5 . 4 Exhibits . All recitals , schedules and exhibits to this Agreement are fullyincorporated herein as though set forth at length herein. 22 20 . 5 . 5 State Law. This Agreement and the conveyance provided for herein shall be governed by the laws of the State of Arizona. 20 . 5 . 6 Counterparts . This Agreement may be executed in counterparts,arts, and the signature of any person required by this Ag reement shall be effective if signed on any and/or P all counterparts . All counterparts together shall be considered one and the same Agreement . 20 . 6 Foreign Investment . Seller shall comply fullywith all applicable state and P y federal laws governing foreign investment, including the Foreign Investment in Real Property Tax Act and Section 1445 of the Internal Revenue Code, as amended from time to time, and shall hold Buyer harmless from any claim or action arising therefrom. 20 . 7 Forms . Buyer and Seller agree that the forms described hereinbelow shall be the forms, with attached exhibits to those forms as exhibits, to be used reference by the parties to complete the transaction contemplated by this Agreement, together with such other forms as may be required to effectuate the Closing: 20 . 7 . 1 Form of Special Warranty Deed as shown on Exhibit "N" attached hereto and made a part hereof . 20 . 7 . 1 Form of Assignment of Easements and Property Rights as shown on Exhibit "0" attached hereto and made a part hereof . 20 . 7 . 3 Form of Bill of Sale as shown on Exhibit "P" attached hereto and made a part hereof . 20 . 7 . 4 Form of Certificate of Excluded Property as shown on Exhibit "Q" attached hereto and made a part hereof . 20 . 7 . 5 Form of Certificate RE RUCO and ACC Assessments as shown on Exhibit "R" attached hereto and made a part hereof . 20 . 7 . 6 Form of Assignment and Assumption of Maintenance Agreements, Service Contracts and Warranties as shown on Agree hereto and made a part hereof . Exhibit "S" attached 20 . 7 . 7 Form of System Acceptance as shown on Exhibit "T" attached hereto and made a part hereof . 23 • Form of Assignment of Water Rights and Well Rights 2 a ' 7 ' S g �� �� hereto and made a part as shown of Exhibit U attached hereof . Section 21. Bulk Sale Requirements . P In lieu of compliance with Article 6 (Bulk Transfers) of the Arizona Commercial Code, A.R.S . Section 47-6101, et seq. , the parties agree, as follows : 21 . 1 Indemnification. As set forth above, Seller has agreed to conveythe Assets free of the claims of any creditors . Therefore, in the event that any creditorsan make claim against the proceeds of this Y � transaction and/or seek to set aside this transaction and/or attach or impose a lien on the Assets, then Seller shall indemnify,, def end and hold Buyer harmless from any such claims, as set forth under Section 6 . 1, above . 21 . 2 Buyer Not Liable for Seller' s Debts or Obligations . agree that Buyer shall not be The parties hereto specifically liable or obligated for any of Seller' s debts or obligations. . Accordingly, all such debts or obligations must be paid in they full as of Closingif arose as a result of the purchase hereunder. or use of the Assets to be transferred Section 22 . Inspection, Acceptance and Maintenance of Assets. 22 . 1 Buyer. Buyer acknowledges that as of the date of this Agreement, it will have inspected ected the condition of such of the Assets as it the Assets in such necessary, and accepts deems reasonably Y condition, subject to Section 5 of this Agreement . 22 . 2 Seller. Seller agrees to maintain the condition of the Assets in their current condition, ordinarywear excepted, to the date of Closing. Section 23 . Northwest Area Agreement. this Agreement understand and acknowledge that The parties to g agreement with the City of Seller is a party to that certain 1979 a g Area Ag Tucson, known as the NorthwestAgreement , whereby Seller had agreed to purchase wholesale Central Arizona Project Water from the City of Tucson. 24 The Northwest Area Agreement provides at Article III, Section 3 that . . . "the"the Northwest Area Water Plan may be modified as set out in the Northwest Area Water Plan. " The 1979 Northwest Area Water provides , at Page 3 6, that " Changes to the location or sizing. Planupon the Northwest Water Supply System shall be based design criteria established in this plan or modified by mutual consent of the City participating and private water companies . Such changes effectuated bythe City, subject to unanimous approval of will be participating private water companies . " [Empbasis added] Seller represents and warrants to Buyer that it has not PP consented to nor approved any changes in the location or sizing of the Northwest Water Supply System since the original 1979 Northwest P Area Water Plan was adopted in May, 1979 , and specifically, Seller has not consented to nor approved the 1989 modifications proposed by the City of Tucson to the Northwest Area Water Plan and the Northwest Area Water Supply System. presently Seller is resentl withholding transfer of funds to the City of Tucson collected by Seller pursuant to the Northwest Area and tariffs approved by the Commission, and is in the Agreement PP process of pursuing a claim against the City of Tucson regarding the ultimate e dis osition of these funds . These funds, commonly referred to as Northwest Area Development Fees, are not the property of Seller at this time, and may be subject to the right of disposition bythe Commission in the event the City of Tucson agrees to allow the Seller to retain the disputed funds . Therefore such funds that Seller is withholding from the City of Tucson are not subject to transfer and assignment to Buyer pursuant to this Agreement . At ClosingSeller will deposit said funds being withheld City from the of Tucson in a separate escrow account, the disposition of which will be subject to the result of the claim process between Seller and the City of Tucson, and in the event obtains the right to retain these funds, the final Seller g approval disposition of these funds will be subject to the pp roval by the Commission. Section 24 . Central Arizona Groundwater Replenishment District. Buyer understands and acknowledges that Seller is a service area member of the Central Arizona Groundwater Replenishment Bu er and Seller agree that Sellr' s membership District (CAGRD) . Buyer in the CAGRD is to be assumed by the Town of Oro Valley after g Closing of this Agreement . It shall be the sole cost and responsibility of the Town of Oro Valley to make such arrangements as are necessary with the CAGRD to effect the assumption of Seller' s membershipin the CAGRD by the Town of Oro Valley. Seller shall execute anyand all documents necessary to effect the assumption of membershipin the CAGRD by the Town of Oro Valley and otherwise cooperate with the Town of Oro Valley to complete the assumption. This provision shall survive Closing. 25 Section 25 . Construction Work In Progress . and acknowledges that Seller has entered Buyer understands ' ncluded payment certain line extension agreements which 1 P yment of facilityimprovements,funds for off-site hereinafter referred to P s in "off-site-site facility funds" . At Closing certain of the as of facility funds have been collected improvements for which off-sites under construction expected to be under construction. Project are P utilizing off-site facilityfunds are hereinafter referred to as"construction work in progress" . A list of the construction work in progress is provided in Exhibit "V" attached hereto and made a part hereof . At Closing, subject to the approval of the Commission, the remaining unexpended off-site facility funds collected by the Seller will be turned over to the Town of Oro Valley, and such off-site facility funds shall be usedby the Town ose of completing the construction work in solely for the pure p progress . Section 26 . 26 . 1 Receivables . Buyer acknowledges owled that the records to be transferred to Buyer , willinformation which may be needed by Seller from contain time to time. Buyer therefore agrees that Seller will have the right to reasonable information to such during regular business hours after Closing. 26 . 2 Confidentiality. protect party agrees to the proprietary information of the other to which it mayhave access and to maintain the confidentiality thereof . IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date set forth above . BUYER: SELLER: TOWN OF ORO VALLEY RANCHO VISTOSO WATER COMPANY an N[LTN I C I PAL PROPERTYArizona corporation CORPORATION, an Arizona non-profit corporation - 744e-g- Its : By: By•1�P(eicl���-� Its : i ATTEST: ; 26 • APPROVAL: TOWN OFa:AIIIY By Its , Attest : / 1aLe4j-a - � Tow: Clerk as to form: Ey• Counsel ApprovedSpecial Water 27 RESOLUTION NO. _CR) 96- }:2 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF ORO VALLEY,ARIZONA, AUTHORIZING AND APPROVING THE EXECUTION OF AN ASSET PURCHASE AGREEMENT BETWEEN THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION AND THE RANCHO VISTOSO WATER COMPANY, AND DECLARING AN EMERGENCY. WHEREAS, the Town of Oro Valleyhas the responsibility of caring for the welfare of its citizens; and WHEREAS, it has determined that it is in the best interests of the Town and its citizens to enter into the water service business pursuant to ARS 9-511 et. seq.; and WWHEREAS, the Town believes that it is in the best interests of the Town to lease as � domestic water system now serving customers within or without the Town lessee a y boundaries known as the Rancho Vistoso Water Company system; said lease to preserve to the Town the purchase of the system; and p WHEREAS, it is impracticable to issue bonds as provided by A.R.S. 9-512 to purchase the system; and approval of an asset purchase agreement will further Town goals by WHEREAS, the pp allowing for the purchase of the Rancho Vistoso Water Company by the Oro Valley ' Corporation and is herebydetermined to be in furtherance of the Municipal Property p public health, safety and welfare of the citizens of the Town; NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND TOWN COUNCIL OF THE TOWN OF ORO VALLEY, ARIZONA AS FOLLOWS: 1. That the attached Asset Purchase agreement (Exhibit 1) is hereby approved, subject to final legal changes and the buyers right of verification. 9 Mayor of the Town of Oro Valleyand all necessary administrative officials 2. That the are hereby directed and authorized to take all necessary steps related to the execution of said agreement; 3. That time e is of the essence and therefore an emergency is declared to exist. 4. That further legalnecessary documentsto the transaction be brought before the Council at their next regular meeting. PASSED AND ADOPTED by the Mayor and Town Council of the Town of Oro Valley, Arizona this /(' day of eb✓may , 1996. TOWN OF ORONALLEY, ARIZONA Cheryl Sk sky, Mayor ATTEST: APPROVED AS TO F M: // Kathryn t Cuvelier, Town Clerk Tobin Sidles, Town Attorney RESOLUTION NO. (R)96-09 RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY OF A LEASE OF A DOMESTIC WATER SYSTEM WITH AN OPTION TO PURCHASE, AN ASSET PURCHASE AGREEMENT BETWEEN THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION AND THE CANADA HILLS WATER COMPANY LIMITED PARTNERSHIP FOR THE PURCHASE AND SALE OF THE BUSINESS ASSETS OF THE CANADA HILLS WATER COMPANY; A TRUST INDENTURE AND A CONTINUING DISCLOSURE AGREEMENT; AUTHORIZING THE PREPARATION AND APPROVAL OF PRELIMINARY AND FINAL OFFICIAL STATEMENTS; APPROVING THE ISSUANCE OF NOT TO EXCEED $16,500,000 TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION MUNICIPAL WATER SYSTEM BONDS, SERIES 1996, EVIDENCING A PROPORTIONATE INTEREST OF THE OWNERS THEREOF IN THE LEASE BETWEEN THE TOWN OF ORO VALLEY, ARIZONA, AND TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION, TO BE ASSIGNED TO A TRUSTEE; AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION; DELEGATING CERTAIN DUTIES; AND DECLARING AN EMERGENCY. WHEREAS, it is in the best interests of the Town for the Town to enter into a lease, as lessee, of a domestic water system now serving customers both within and without the Town and commonly known as the Canada Hills Water System (the "System"), said lease to preserve to the Town the option to purchase the System; and WHEREAS, it is impracticable to issue bonds as provided by A.R.S. § 9-512 to purchase the System; and WHEREAS, the Town desires and deems it necessary to: (1) enter into the Lease to obtain the use, possession and eventual ownership of the System; and (2) finance the acquisition of the System through the issuance and sale by The Town of Oro Valley Municipal Property Corporation (the "Corporation") of not to exceed $16,500,000 Town of Oro Valley Municipal Property Corporation Municipal Water System Bonds, Series 1996 (the "Bonds"), evidencing a proportionate interest of the owners thereof in all the lease payments payable by the Town pursuant to the terms of the lease, as assigned to a financial institution, to be hereafter selected, as trustee (the "Trustee"), pursuant to a Trust Indenture by and between the Trustee and the Corporation (the "Trust Indenture"); and WHEREAS, under the terms of an Asset Purchase Agreement between The Town of Oro Valley Municipal Property Corporation and the Canada Hills Water Company Limited Partnership for the purchase and sale of the business assets of the Canada Hills Water Company (the "Agreement") the Corporation will purchase the System; and WHEREAS, in order to finance the acquisition costs of the System, the Corporation has adopted a resolution that provides for the issuance and sale of the Bonds; and SWR:djs 126693.2 1/30/96 WHEREAS, there have been placed on file with the Town and presented to the Town Clerk at this meeting (i) the proposed form of the Lease-Purchase Agreement (the "Lease"); (ii) the proposed form of the Agreement; (iii) the proposed form of the Trust Indenture; and (iv) a proposed form of Continuing Disclosure Agreement (the "Continuing Disclosure Agreement"); BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF ORO VALLEY, ARIZONA, THAT: Section 1. The Mayor and Council hereby find and determine that the financing the acquisition of the System through the issuance of the Bonds by the Corporation pursuant to the terms of the Trust Indenture, and lease-purchase of the System by the Town, as lessee from the Corporation as lessor. pursuant to the terms of the Lease. are ail in furtherance of the purposes of the Town and in the public interest and will enhance the standard of living P rP within the Town. Section 2. The Town hereby approves the issuance and delivery of the Bonds, as hereinafter described, by the Corporation. The Bonds shall be designated "Town of Oro Valley Municipal Property Corporation Municipal Water System Bonds, Series 1996," and shall be issued in a principal amount of not to exceed $16,500,000. The Bonds shall be in the denomination of $5,000 or any integral multiples thereof, shall be dated such date as set forth in a bond purchase agreement to be considered and approved by the Mayor and Council at the subsequent meeting (the "Bond Purchase Agreement") and shall bear interest from such date payable on January 1 and July 1 of each year, commencing January 1, 1997 or such later date as set forth in the Bond Purchase Agreement, and shall be fully registered Bonds without coupons or shall be in book entry form as provided in the Trust Indenture. The Finance Director is authorized to sign a letter of representation relating to any book entry program and any contract required to implement a book entry program. The Bonds shall bear interest at the rates per annum. and shall mature on July 1 in the years and principal amounts as set forth in the Bond Purchase Agreement to be considered and approved by the Mayor and Council at a subsequent meeting. The forms, terms and provisions of the Bonds and the provisions for the signatures, authentication, payment, registration, transfer, exchange, redemption and number shall be as set forth in the Trust Indenture and are hereby approved. The Finance Director is hereby authorized and directed to assist the Corporation in order to cause the Bonds to be delivered to or upon the order of the initial purchaser upon receipt of payment therefor. Section 3. The form. terms and provisions of the Lease, the Trust Indenture, the Agreement and the Continuing Disclosure Agreement in the form of such documents (including the exhibits thereto) presented at this meeting are hereby approved, with such insertions, deletions and changes as shall be approved by the Mayor or the Finance Director, the execution of such documents being conclusive evidence of such approval, and the Mayor, the Finance Director or the Town Clerk are hereby authorized and directed to execute and SWR:djs 126693.2 1/30/96 -2- deliver the Lease, the Trust Indenture, the Agreement and the Continuing Disclosure Agreement and such other documents and instruments as are necessary to complete the transaction. Section 4. A preliminary official statement by the Town and the Corporation, is authorized to bereP ared and circulated. The Finance Director is authorized and empowered P to deem thepreliminary official statement "final" for all purposes of Section 240.15c2-12, General Rules and Regulations, Securities Exchange Act of 1934 (the "Rule"), and its distribution by the Town and Corporation is hereby ratified and approved. The Town and the Corporation will cause a final official statement (the "Official Statement") in substantially the form of thepreliminary official statement referred to above to be prepared and distributed with the Bonds upon initial issuance. The Mayor and the Finance Director are authorized to approve, execute and deliver the Official Statement on behalf of the Town and the execution by the Mayor or the Finance Director shall be deemed conclusive evidence of approval of the Official Statement. Section 5. The Town hereby requests the Corporation to take any and all actions necessary to cause the issuance, sale and delivery of the Bonds. The Finance Director is hereby authorized to select a Trustee that meets the requirements set forth in the Trust Indenture for employment as a Trustee, paying agent and registrar. The Town hereby requests the Corporation and the Trustee to take any and all action necessary in connection with the execution and delivery of the Lease, the Trust Indenture, the Continuing Disclosure Agreement. Section 6. The Town covenants that it will do all things necessary to assist the Corporation and the Trustee in the issuance, sale and delivery of the Bonds. Section 7. For the payment of the principal of, premium, if any, and interest on the Bonds, the Town shall pay and transfer to the Trustee the lease payments provided for in the Lease and the other amounts required to be paid by the Town pursuant to the provisions of the Lease. In addition to other security provided for in the Trust Indenture, to secure the payment of the lease payments provided for in the Lease and the other amounts required to be paid bythe Town pursuant to the provisions of the Lease, the Town hereby pledges its Excise Taxes as such term is defined in Section 3.01 of the Lease. The obligation to make lease payments will not constitute an obligation of the Town for which the Town is obligated to levy or pledge any form of ad valorem taxation nor does the obligation to make lease payments under the Lease constitute an indebtedness of the Town or of the State of Arizona or any of its political subdivisions within the meaning of the Constitution of the State of Arizona or otherwise. Section S. After any of the Bonds are delivered by the Trustee to the purchaser thereof upon receipt of payment therefor, this resolution shall be and remain irrepealable until P the Bonds and the interest thereon shall have been fully paid, cancelled and discharged. SWR:djs 126693.2 1/30/96 -3- Section 9. All actions of the officers and agents of the Town or the Mayor and Town Council which conform to the purposes and intent of this resolution and which further the issuance and sale of the Bonds as contemplated by this resolution whether heretofore or hereafter taken are hereby ratified, confirmed and approved. The proper officers and agents of the Town are hereby authorized and directed to do all such acts and things and to execute and deliver all such documents on behalf of the Town as may be necessary to carry out the terms and intent of this resolution. Section 10. The Finance Director may expend Bond proceeds to purchase bond insurance or other credit enhancements for all or part of the Bonds. The Finance Director and the Trustee are authorized and directed to pay or cause to be paid such premiums, fees or costs, together with all other fees, costs and expenses of issuance, from Bond proceeds. Section 11. The Finance Director and other employees, agents and contractors of the Town are authorized to comply with the terms and provisions of the Continuing Disclosure Agreement. The Continuing Disclosure Agreement shall be for the benefit of the beneficial holders of the Bonds. To the extent now or hereafter permitted by law, the cost of compliance with the Rule and other terms and provisions of the Continuing Disclosure Agreement shall be paid from Town water revenues. Section 12. If any section, paragraph, clause or phrase of this resolution shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or phrase shall not affect any of the remaining provisions of this resolution. Section 13. All orders, resolutions and ordinances or parts thereof inconsistent herewith are hereby waived to the extent only of such inconsistency. This waiver shall not be construed as reviving any order, resolution or ordinance or any part thereof. Section 14. The immediate operation of the provisions of this resolution is necessary for the preservation of the public peace, health, life and property of the Town of Oro Valley, an emergency is hereby declared to exist, to wit: the seller of the System will not hold its offer to sell at the agreed upon price, and this resolution shall be in full force and effect from and after its passage, adoption and approval by the Mayor and Council of the Town of Oro SWR:djs 126693.2 1/30/96 -4- Valley, and it is hereby exempt from the referendum provisions of the Constitution and laws of the State of Arizona. PASSED, ADOPTED AND APPROVED on February 7, 1996. I CI' :1/43 Mayor, Town oft o Valley, Ariz. : ATTEST: ,, Ccw.,,tc,L Clerk, To e of Oro Valley, Arizona APPROVED AS TO FORM: GUST ROSENFELD Special Counsel CERTIFICATION I, Kathy Cuvelier, the duly appointed and acting Town Clerk of the Town of Oro Valley, Arizona, do hereby certify that the above and foregoing Resolution No 96-o9 was duly passed by the Town Council of the Town of Oro Valley, Arizona, at a regular meeting held on February 7, 1996, and the vote was 4 aye's and 1 nay's and that the Mayor and 4 Council Members were present thereat. DATED: February 7 , 1996 / C4. C-c.-44,,,t-egj Clerk, I'own of Oro Valley, Arizona SWR:djs 126693.2 1/30/96 -5- RESOLUTION NO. . (fl) MPC 96-02 A RESOLUTION OF THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION, AUTHORIZING AND APPROVING THE EXECUTION OF AN ASSET PURCHASE AGREEMENT BETWEENH T E TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION AND THE RANCHO VISTOSO WATER COMPANY. WHEREAS, it has been determined by the Town Council that it is in the best interests of the Town and its citizens to enter into the water service business; and WHEREAS, the Town of Oro Valley Municipal Property Corporation P Y p was formed to transact any or all lawful business for which nonprofit corporations maybe incorporated parated under the laws of the State of Arizona, including, without limitingthe generality g ne rality of the foregoing, any civic or charitable purpose such as financingthe costs is of acquiring, constructing and equipping the water facilities for use by and leasing to the Town n of Oro Valley, Arizona, and WHEREAS, the Town believes it is in the best interests of the Town to lease as lessee a domestic water system now serving customers both within and without theTown and commonly known as the Rancho Vistoso Water System; said lease tores p erne to the Town to purchase the system; and WHEREAS, it is impracticable to issue bonds asprovided byA.R.S. - 1 the system; and 9 5 2 to purchase WHEREAS, the approval of an asset purchase agreement for the sale of the t e Rancho Vistoso Water Company system by the Oro Valley Municipal Property Corporation p y Ca paragon will further Town goals by allowing for the purchase of the Rancho Vistoso Water Company system; and WHEREAS, there have been placed on file with the Town andrese p nted to the Town Clerk at this meeting the proposed form of the Asset Purchase Agreement, subject to further legal changes and a right of verification; and WHEREAS, under the terms of the Asset Purchase Agreement between n the Town of Oro Valley Municipal Property Corporation and the Rancho Vistoso Water Company, the Corporation will purchase the system and lease, as lessor, said system y to the Town under a Lease-Purchase Agreement NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION • As FOLLOWS: RESOLUTION NO. (R) 96- A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF ORO VALLEY,ARIZONA, AUTHORIZING AND APPROVING THE EXECUTION OF AN ASSET PURCHASE AGREEMENT BETWEEN THE TOWN OF • ORO VALLEY MUNICIPAL PROPERTY CORPORATION AND THE RANCHO VISTOSO WATER COMPANY, AND DECLARING AN EMERGENCY_ WHEREAS, the Town of Oro Valley has the responsibility of caringfor the welfare of its . citizens; and WHEREAS, it has determined that it is in the best interests of the Town and its citizens to enter into the water service business pursuant to ARS 9-511 et_ seq.; and WHEREAS, the Town believes that it is in the best interests of the Town to lease as lessee a domestic water system now serving customers within or without the Town boundaries known as the Rancho Vistoso Water Company system;said lease topreserve to the Town the purchase of the system; and WHEREAS, it is impracticable to issue bonds as provided by A.R.S. 9-512 top urchase the system; and WHEREAS, the approval of an asset purchase agreement will further Townoals g by allowing for the purchase of the Rancho Vistoso Water Company by the Oro Valley Municipal Property Corporation and is hereby determined to be in furtherance of the public health, safety and welfare of the citizens of the Town; NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND TOWN COUNCIL OF THE TOWN OF ORO VALLEY, ARIZONA AS FOLLOWS: 1. That the attached Asset Purchase agreement (Exhibit 1) is hereby approved, roved subject to final legal changes and the buyers right of verification. 2. That the Mayor of the Town of Oro Valley and all necessary administrative officials are hereby directed and authorized to take all necessary steps related to the execution of said agreement; 3. That time is of the essence and therefore an emergency is declared to exist. 4. That further legal documents necessary to the transaction be brought before the Council at their next regular meeting. EXHIBIT INDEX A - AID IN CONSTRUCTION AGREEMENTS B - BUSINESS ASSETS - (TO BE PURCHASED) Real Property Personal Property Water Rights C - BUSINESS ASSETS - (NOT TO BE PURCHASED) D - CERTIFICATE OF CONVENIENCE AND NECESSITY E - MAPS OF CERTIFICATED SERVICE AREA F - MAPS OF SERVICE AREA SHOWING LOCATION OF WATER MAINS -. AND PIPES, ETC G - LIST OF TANGIBLE PERSONAL PROPERTY H - LEGAL DESCRIPTIONS OF REAL PROPERTY I - BILL OF SALE OF PERSONAL PROPERTY J - SECTION 1060 ALLOCATION K - LIST' OF CAUSES OF ACTIONS, LAWSUITS OR CLAIMS L, - DEPARTMENT OF WATER RESOURCES STATUS M - LIST OF MAINTENANCE CONTRACTS N - FORM OF SPECIAL WARRANTY DEED—De e a s O - FORM OF ASSIGNMENT OF EASEMENTS AND PROPERTY RIGHTS P - FORM OF BILL OF SALE o - FORM OF CERTIFICATE OF EXCLUDED PROPERTY R - FORM OF CERTIFICATE RE RUCO AND ACC ASSESSMENTS S -- FORM OF ASSIGNMENT AND ASSUMPTION OF MAINTENANCE AGREEMENTS, SERVICE CONTRACTS AND W. RRANTIES T -- FORM OF CERTIFICATE OF SYSTEM ACCEPTANCE U FOAM OF ASSIGNMENT OF WATER RIGHTS AND WELL RIGHTS