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HomeMy WebLinkAbout16-96 RESOLUTION• • • • RESOLUTION NO. 16-96 • A RESOLUTION APPROVING A JOINT TERRITORIAL AGREEMENT BETWEEN FAYETTEVILLE AND SPRINGDALE, APPROVAL OF A JOINT MASTER PURCHASE AGREEMENT WITH THE WHITE RIVER RURAL WATER ASSOCIATION, AND AUTHORIZING THE MAYOR AND CITY ATTORNEY TO REPRESENT THE CITY IN THE PURCHASE NEGOTIATIONS. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council hereby approves the joint territonai agreement between the City of Fayetteville and the City of Springdale (attached hereto as Exhibit A and made a part hereof) which, subject to its terms and conditions agrees to extend an offer to purchase the assets of the White River Rural Water Association (WRRWA) and the Mayor and City Clerk are authorized to execute such agreement. Section 2. That the present form of the proposed Master Purchase Agreement between the City of Fayetteville, the City of Springdale and the WRRWA is hereby approved; that the Mayor and City Attorney are hereby authorized to negotiate any changes in the proposed agreement with the final draft to be approved by the City Council before becoming effective; that m the event no material changes are necessary to the present draft, it be approved and executed in its present form. PASSED AND APPROVED this 6th day of February , 1996. APPROVED, - By: red Hanna, Mayor :. .V • j• ler • • AGREEMENT • • • THIS AGREEMENT is made and entered into this 14 day of February , 1996, by and between the City of Fayetteville ("Fayetteville") and the City of Springdale acting by and through its Water and Sewer Commission ("Springdale"). WITNESSETH: WHEREAS, the parties each operate water distribution systems within the territories as delineated in a certain memorandum of understanding between the Beaver Water District and its respective member cities; WHEREAS, White River Rural Water Association (WRRWA) operates a water system providing water to its members, which customers are generally located east of the respective water systems operated by Fayetteville and Springdale; WHEREAS, WRRWA and its members have expressed a desire to improve the quality and quantity of water to its customers and thereby increase the effectiveness of the water delivery system being operated for the welfare of its members; WHEREAS, the growth and changes in the areas being served by WRRWA make it advantageous for these parties to agree to jointly approach WRRWA to sell to Fayetteville and Springdale its facilities and prior to doing so have decided the terms under which they will seek to accomplish the transaction and also decide the territory and customers to be served by each as well as the allocation of the assets being purchased; WHEREAS, these parties desire to agree as to the appropriate division of the assets and facilities being purchased and territories to be served by each in order to maximize the cost effectiveness and efficiency of integrating the WRRWA facilities into their respective water delivery systems; WHEREAS, these parties also recognize that an adjustment of the territorial boundaries created by the certain memorandum of understanding with the Beaver Water District and its respective member cities is appropriate given the existing watercourse of the White River; WHEREAS, these parties desire to enter into this Agreement to promote the welfare of their citizenry, their respective planning and growth areas and the members of WRRWA. NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the adequacy and receipt of which is acknowledged, it is mutually understood and agreed by and between the parties hereto as follows: Territorial Agreement -1- Fayetteville and Springdale • • SECTION 1. DEFINED TERMS Where used herein or in any amendments hereto, the terms shall have meaning as provided in the Master Purchase Agreement attached hereto as Exhibit 1. SECTION 2. EXHIBITS AND SCHEDULES The following are the Exhibits and Schedules attached to and incorporated in this agreement by reference and deemed to be part hereof : Exhibit 1 Exhibit 2 Master Purchase Agreement Map Depicting Service Territories of Fayetteville and Springdale SECTION 3. OFFER TO PURCHASE ASSETS Subject to the terms and conditions hereof, the parties agree to extend an offer to purchase WRRWA assets pursuant to the terms as proposed in the Master Purchase Agreement attached hereto as Exhibit 1. Either party reserves the right to withdraw the offer, if and only if, in the course of performing the due diligence inquiry necessary to compile the various exhibits and schedules contemplated by the Master Purchase Agreement, any material fact is discovered which, in and of itself, or several facts taken in combination, would justify such a withdrawal. To exercise this right of withdrawal, a party shall provide written notice to the other identifying the fact or facts which justify withdrawal. SECTION 4. DESIGNATION OF TERRITORY AND ASSIGNMENT OF CUSTOMERS The parties hereto agree that, if and only if, the Master Purchase Agreement is executed and ultimately closed, the territory to be served by Fayetteville and Springdale, respectively, shall be as depicted in Exhibit 2. The parties acknowledge and agree that this territorial boundary is a modification of the boundary established by the certain memorandum of understanding between and among the Beaver Water District and its member cities. This adjustment of the boundary is deemed appropriate and expedient in view of the natural watercourse of the White River near the original boundary. The customers of WRRWA will be assigned in accordance with the territorial boundaries established hereby. At present the engineer's estimate is that the percentage of customers being assigned to Springdale will be 77%. Conversely, the percentage of customers to be assigned to Fayetteville will be 23%. The parties agree that the precise number shall be adjusted within 15 days of the Pre-closing Date. If no agreement is reached with WRRWA, this provision is rendered a nullity. SECTION 5. ASSUMPTION OF LIABILITIES On the Closing Date of the Master Purchase Agreement, the parties hereto shall assume and agree to perform and discharge only those liabilities and continuing obligations Territorial Agreement Fayetteville and Springdale • • of WRRWA as listed in Exhibits 11 and 12 thereto. These parties agree that the assumption of those liabilities shall be prorated using the percentages of customers assigned to each, i.e. Springdale shall assume 77% of the liabilities of WRRWA jointly agreed to, with Fayetteville assuming the remaining 23%. If the percentages are revised after the Pre-closing Date, the adjusted percentages shall be used. SECTION 6. PAYMENT OF THE PURCHASE PRICE If the Master Purchase Agreement is executed and subsequently closed, the' Purchase Price shall be paid on a prorated basis using percentages of customers assigned to each. SECTION 7. ALLOCATION OF ASSETS The parties agree to the following allocation of the assets of WRRWA between them: (i) any fixtures permanently attached to real estate such as pipelines shall simply be considered part of the assigned territory without any effort to establish value or otherwise adjust against the total value of the assets; (ii) the office of WRRWA and the real estate upon which it is located shall be appraised by an appraiser to be chosen by the parties and the cost of which to be allocated by the same percentages hereinabove established; and that asset shall be assigned to Springdale whereupon its portion of the remaining assets shall be reduced accordingly; (iii) account receivables shall be assigned in accordance with customer assignment and delineation of territory as provided in Section 15.2 of the Master Purchase Agreement irrespective of value, i.e. if the account of a customer is delinquent, that account shall belong to the entity to whom that customer is assigned and if the account is a former customer, it shall be assigned based upon geographic territory; (iv) all supplies and inventory shall be valued on the basis of the cost as shown on the books of Seller and shall be prorated on the basis of customer percentages; (v) cash and other bank accounts shall be allocated based upon customer percentages; and (vi) all other assets not affixed to real estate shall be valued by utilizing their book value (defined as cost less depreciation as shown on the books of the Seller) and shall be prorated on the basis of customer percentages; and the parties recognize and agree that if geographic considerations suggest assigning an asset to one city that shall reduce the portion to be received by that city under proration. SECTION 8. INDEMNIFICATION 8.1. If, but only if, the transactions contemplated by this agreement and the Master Purchase Agreement are consummated, then Fayetteville agrees to indemnify and hold harmless Springdale against and in respect of any loss, damage, claim, action, suit, proceeding, deficiency or expense relating to, arising from or in connection with the following matters: (a) any misrepresentation, breach of any representation, warranty or obligation, covenant or agreement or default on the part of Fayetteville under this agreement and the Master Purchase Agreement or under any closing document delivered in Territorial Agreement -3- Fayetteville and Springdale • • • connection therewith; • (b) any and all out-of-pocket costs including without limitation, reasonable legal and accounting fees, resulting from or attributable or incidental to any matter or thing mentioned or described in clause (a). 8.2. If, but only if, the transactions contemplated by this agreement and the Master Purchase Agreement are consummated, then Springdale agrees to indemnify and hold harmless Fayetteville against and in respect of any loss, damage, claim, action, suit, proceeding, deficiency or expense relating to, arising from or in connection with the following matters: (a) any misrepresentation, breach of any representation, warranty or obligation, covenant or agreement or default on the part of Springdale under this agreement and the Master Purchase Agreement or under any closing document delivered in connection therewith; (b) any and all out -of pocket costs including without limitation, reasonable legal and accounting fees, resulting from or attributable or incidental to any matter or thing mentioned or described in clause (a). 8.3. Notice of Third Party Claim Against Springdale: Defense of Action In the event any third party makes a claim or commences any action or proceeding against Springdale with respect to any matter as to which the Springdale intends to seek indemnification under Section 8.1, Springdale shall notify Fayetteville of the existence of such claim or the commencement of such action or proceeding. Fayetteville shall be entitled at any time to participate in (but not direct) the defense of any such claim, action or proceeding with counsel of its own choice, and the parties agree to co-operate fully with one another in connection with the defense and/or settlement thereof. Fayetteville shall have the right, upon receipt of notice from Springdale of the existence of such claim or the commencement of any such third party action or proceeding, to undertake and direct the defense of such claim, action or proceeding at any time by delivering to Springdale: (a) written notice of such undertaking; (b) written admission of complete liability for indemnification with respect to any such claim, action or proceeding, and (c) written consent to be joined as a party to any such action or proceeding or in any action or proceeding resulting from such claim. In the event Fayetteville declines to undertake the defense of any such claim, action or proceeding when first notified thereof, Springdale shall keep Fayetteville advised as to the current status and progress thereof, and Fayetteville shall retain said right to undertake the Territorial Agreement Fayetteville and Springdale • • • defense thereof until such matter is fully resolved. Unless and until Fayetteville so undertakes the defense thereof, Springdale agrees not to make any offer of settlement without first having provided ten (10) days' advance written notice thereof to Fayetteville and obtained the written approval of Fayetteville. In the event Fayetteville so undertakes the defense of any such claim, action or proceeding, Springdale shall nevertheless be entitled to participate in (but not direct) the defense thereof with counsel of its own choice, and the parties agree to co-operate fully with one another in connection with the defense and/or settlement thereof; provided, however, that any decision to settle any such claim, action or proceeding shall be at Fayetteville's sole discretion. From and after delivery of the items referred to in Section 8.3(a), (b) and (c), Fayetteville shall be relieved of the obligation to reimburse Springdale for any out-of-pocket costs and expenses thereafter incurred by Springdale with respect to the defense of such claim, action or proceeding notwithstanding any participation by Springdale therein. 8.4. Notice of Third Party Claim Against Fayetteville: Defense of Action In the event any third party makes a claim or commences any action or proceeding against Fayetteville with respect to any matter as to which the Fayetteville intends to seek indemnification under Section 8.1, Fayetteville shall notify Springdale of the existence of such claim or the commencement of such action or proceeding. Springdale shall be entitled at any time to participate in (but not direct) the defense of any such claim, action or proceeding with counsel of its own choice, and the parties agree to co-operate fully with one another in connection with the defense and/or settlement thereof. Springdale shall have the right, upon receipt of notice from Fayetteville of the existence of such claim or the commencement of any such third party action or proceeding, to undertake and direct the defense of such claim, action or proceeding at any time by delivering to Fayetteville: (a) written notice of such undertaking; (b) written admission of complete liability for indemnification with respect to any such claim, action or proceeding, and (c) written consent to be joined as a party to any such action or proceeding or in any action or proceeding resulting from such claim. In the event Springdale declines to undertake the defense of any such claim, action or proceeding when first notified thereof, Fayetteville shall keep Springdale advised as to the current status and progress thereof, and Springdale shall retain said right to undertake the defense thereof until such matter is fully resolved. Unless and until Springdale so undertakes the defense thereof, Fayetteville agrees not to make any offer of settlement without first having provided ten (10) days' advance written notice thereof to Springdale and obtained the written approval of Fayetteville. In the event Springdale so undertakes the defense of any such claim, action or proceeding, Fayetteville shall nevertheless be entitled to participate in (but not direct) the defense thereof with counsel of its own choice, and the Territorial Agreement -5- Fayetteville and Springdale • 1 • • parties agree to co-operate fully with one another in connection with the defense and/or settlement thereof; provided, however, that any decision to settle any such claim, action or proceeding shall be at Springdale's sole discretion. From and after delivery of the items referred to in Section 8 3(a), (b) and (c), Springdale shall be relieved of the obligation to reimburse Fayetteville for any out-of-pocket costs and expenses thereafter incurred by Fayetteville with respect to the defense of such claim, action or proceeding notwithstanding any participation by Fayetteville therein. SECTION 9. CONDITIONS OF AGREEMENT The obligation of the parties to consummate the transactions contemplated hereby is subject to the fulfillment of each of the following conditions: (a) The necessary actions by the respective City Councils approving this agreement and the Master Purchase Agreement; and (b) The designation by each entity of the person or persons to whom authority is delegated to present to and negotiate with White River Rural Water Association the terms of the Master Purchase Agreement. Upon satisfaction of these conditions, the parties shall present a copy of Exhibit 1 to the appropriate representatives of WRRWA as soon thereafter as is practical. The parties shall agree to the amount of time in which WRRWA shall have to respond to the Master Purchase Agreement. SECTION 10. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES The covenants, representations and warranties of the parties contained in this agreement and contained in certificates or documents submitted pursuant to or in connection with the transactions herein provided for shall survive the closing of the purchase and sale of the Assets and Inventory of WRRWA. SECTION 11. INVALID PROVISIONS. In the event that any sections, paragraphs, sentences, clauses or phrases of this Agreement shall be found invalid, void or unenforceable for any reason, neither this Agreement generally nor the remainder of this Agreement shall thereby be rendered invalid, void or unenforceable, but instead each such provision and (if necessary) other provisions hereof, shall be reformed by a court of competent jurisdiction so as to effect, insofar as is practicable, the intention of the parties set forth in this Agreement. Notwithstanding the preceding sentence, if such court is unable or unwilling to effect such reformation, the remainder of this Agreement shall be construed and given effect as if such invalid, void or unenforceable provisions had not been a part hereof. Territorial Agreement Fayetteville and Springdale • • SECTION 12. NOTICES Any notice, direction or other instrument required or permitted to be given to the parties hereto shall be in writing and may be given by delivering the same or sending the same registered mail addressed to the parties as follows or to such other addresses as the parties may advise: TO: City of Fayetteville Attn: Kevin Crosson, Director of Public Works 113 W. Mountain Fayetteville, AR 72701 WITH A COPY TO: Jerry Rose City Attorney 113 W. Mountain Fayetteville, AR 72701 TO: Springdale Water & Sewer Commission Attn: Rene Langston, Executive Director P.O. Box 769 Springdale, Arkansas, 72765 WITH A COPY TO: Charles L. Harwell do Cypert, Crouch, Clark & Harwell Attorneys at Law P.O. Box 1400 111 Holcomb Street Springdale, Arkansas 72764 SECTION 13. ADDITIONAL DOCUMENTS AND ACTIONS The parties agree, on the request of the other, to execute and provide to the requesting party from time to time, any and all additional papers, instruments and documents reasonably required or considered necessary by the requesting party or its counsel to complete, record and perfect the transaction effected by this agreement. SECTION 14. HEADINGS The headings of this agreement are for convenience of reference only and shall not define or limit any of the provisions hereof. SECTION 15. EXECUTION OF COUNTERPART This agreement may be executed in one or more counterparts, each of which so Territorial Agreement -7- Fayetteville and Springdale • • executed shall constitute an original and all of which together shall constitute one and the same agreement. SECTION 16. PROPER LAW OF.CONTRACT This agreement shall be construed and enforced in Accordance with, and the rights of the parties shall be governed by the laws of the State of Arkansas. All of the parties hereto hereby agree that the courts of the State of Arkansas shall have jurisdiction over any lawsuit between these parties due to any dispute arising out of this agreement. SECTION 17. BENEFIT AND BINDING NATURE OF THE AGREEMENT This agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal personal representatives, successors and assigns. SECTION 18. TIME OF THE ESSENCE Time shall be of the essence of this agreement. SECTION 19. ENTIRE AGREEMENT This agreement, including the Exhibits hereto, constitutes the entire agreement between the parties hereto. There are not and shall not be any verbal statements, representations, warranties, undertakings or agreements between the parties and this agreement may not be amended or modified in any respect except by written instrument signed by the parties hereto. IN WITNESS WHEREOF this agreement has been executed by the parties hereto the date and year first above written City of Fayetteville By Attest: cgAon Traci Paul, City Clerk Territorial Agreement Fayetteville and Springdale Attest: • • az 440,c) Don L. Gibson, Secretary •r ..-% -N.1\....es 4 • Springdale Water and Sewer Commission • • BY Sat /ai„,22-7-cr Walter L. Turnbow, Chairman MSPW&SFAY.CON 2/13/96 2:30pm Tue Territorial Agreement -9- Fayetteville and Springdale