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HomeMy WebLinkAbout168-99 RESOLUTION168-99 RESOLUTION NO t 67 12 • A RESOLUTION APPROVING AN AGREEMENT BETWEEN THE CITY OF FAYETTEVILLE, WASHINGTON COUNTY AND WHEELER WATER ASSOCIATION TO PURCHASE THE WHEELER WATER SYSTEM ASSETS AND TO PROVIDE FUNDING FOR AN AMOUNT NOT TO EXCEED $145,000; AND APPROVAL OF A BUDGET ADJUSTMENT. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1 That the City Council hereby approves an agreement between the City of Fayetteville, Washington County and Wheeler Water Association to purchase the Wheeler Water System assets and to provide funding for an amount not to exceed $145,000. A copy of the agreement is attached hereto marked Exhibit "A" and made a part hereof. Section 2 The City Council hereby approves a budget adjustment in the amount of $145,000 increasing Water Line Improvements, Acct. No. 5400 5600 5808 00, Project No. 99084 1 by decreasing Use of Fund Balance, Acct. No. 5400 0940 4999 99. A copy of the budget adjustment is attached hereto marked Exhibit "B" and made a part hereof. • It tf • PASSED AND APPROVED this 21st day of December , 1999. _ "f ATTEST: / By: /441 Heather Woodruff, City Cllc APPROVED: By. Fred Hanna, Mayor • • AGREEMENT THIS AGREEMENT is made and entered into this day of 1999, by and between the City of Fayetteville, ("City"), Wheeler Water Association, Inc., ("WWA"), and Washington County, Arkansas, ("County"), WITNESSETH: WHEREAS, on the 6th day of February, 1990, the parties entered into Interlocal Agreement between Washington County, City of Fayetteville, and Wheeler Water Association, Inc., as amended March 20, 1990, ("Interlocal Agreement"), for the construction and operation of a water supply distribution system; and, WHEREAS, on the 22nd day of May, 1990, WWA entered into a Lease -Purchase Agreement with Arkansas Soil and Water Conservation Commission for the purchase and installation of three-way fire hydrants with valve and tee; and, WHEREAS, on the 176 day of January, 1991, WWA executed a Promissory Note and Mortgage in favor of the U.S. Department of Agriculture, Farmers Home Administration, for the construction of water facilities for WWA; and, WHEREAS, there are outstanding balances on both the Lease -Purchase with Arkansas Soil and Water Conservation Commission and the Promissory Note with Farmers Home Administration; and, WHEREAS, the Interlocal Agreement provides that upon retirement of the loan with the Farmers Home Administration the system shall be vested in the City; and, WHEREAS, the growth and changes in the areas being served by WWA make it advantageous to all parties for the City to retire the loans with Farmers Home Administration and Arkansas Soil and Water Commission, and have the water system vest in the City; and, WHEREAS, the City, WWA and County desire to enter into this Agreement in order to promote the welfare of WWA's members and City's growth and planning area. 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: SECTION 1. WWA WATER SYSTEM. The WWA Water System includes all personalty, tangible and intangible; cash and cash equivalent; accounts; real property and improvements to which legal title is vested in WWA; and interests in real property and improvements associated with the water system in an area of the county known as "Wheeler" to which legal title is vested in County as set forth in the Exhibits hereto.. • Subject to the terms and conditions hereof, WWA and County covenant and agree to assign, transfer and convey all of their right, title and interest in and to the WWA Water System to City, and City covenants and agrees to accept from WWA and County the WWA Water System . SECTION 2. EXHIBITS. The following Exhibits are attached hereto and incorporated into this agreement by reference and deemed to be a part hereof: Exhibit 1 Exhibit 2 Exhibit 3 Exhibit 4 Exhibit 5 Exhibit 6 Exhibit 7 Exhibit 8 Exhibit 9 Exhibit 10 Exhibit 11 Exhibit 12 Exhibit 13 Exhibit 14 W WA Financial Statements Articles of Incorporation, as amended, of WWA Resolution of WWA's Board of Directors Resolution of Fayetteville City Council Promissory Note from WWA to Farmers Home Administration Mortgage from WWA to Fanners Home Administration Lease -Purchase Agreement with Arkansas Soil and Water Conservation Commission Assignments of property interests (including one for real estate interests, one for receivables, and one for bank accounts) Description of the Real Property Copies of Deeds and Easements Receivables out for collection Bank accounts, signing officers and powers of attomey List of Customers Map of water line and plotting the users SECTION 3. CONSIDERATION. For and in consideration of the assignment, transfer and conveyance of all of WWA's and County's right, title and interest in and to the WWA Water System, City shall satisfy and retire the Promissory Note from WWA to Farmers Home Administration and the Lease -Purchase Agreement with Arkansas Soil and Water Conservation Commission, in an amount not to exceed SECTION 4. PRE-CLOSING. On the Pre-closing Date, , or as agreed otherwise by the parties, WWA and County shall make available, as it exists, to the City and their officers, auditors, counsel and other authorized representatives, all of its records and documents as well as computer media containing such records, including but not limited to, all accounting and financial records, accounts receivables, customer lists, leases, contracts, evidence of contracts, pending purchase order, correspondence, as -built plans and specifications of all facilities, deeds, easements, nght of way grants, warranty documents relating to any personalty, bank account information and records, records of any investments records of certificate of deposits, records of membership dues and deposits, and other documents in its possession or under its control of • • which it might obtain relating to the WWA Water System. WWA and County shall afford the City and their said authorized representatives every reasonable opportunity to have access to and to inspect the property and affairs of WWA, it being agreed that the exercise of any rights of access of inspection by or on behalf of the City shall not affect or mitigate the covenants, representations and warranties of WWA hereunder which shall continue in full force and effect. The City shall be permitted to copy any such records or otherwise submit such records to an examination or evaluation of any professional or professionals of their choosing. City, having contracted with WWA to perform certain functions, shall provide for inspection and copy any documents and information regarding the WWA Water System including but not limited to billing and collecting of accounts, maintenance of system, and bookkeeping and accounting services in making note payments to Farmers Home Administration and Arkansas Soil and Water Conservation Commission. SECTION 5. CLOSING. The date of closing shall be January 1, 2000, or such other day as may be agreed to by the parties. SECTION 6. DISSOLUTION OF WWA. The parties agree that, as soon as practical after closing, Wheeler Water Association shall be dissolved and WWA shall provide copies bearing the file mark of the Secretary of the State of Arkansas reflecting the action taken. SECTION 7. COVENANTS, REPRESENTATIONS AND WARRANTIES OF WWA. WWA covenants, represents and warrants as follows and acknowledges that City is relying upon such covenants, representations and warranties in connection with the transfer and conveyance of the WWA Water System: 7.1 WWA has been duly incorporated and organized and is validly existing and in good standing under the laws of the State of Arkansas; it has the corporate power to own or lease their property and to carry on the business of WWA as now being conducted by it. 7.2 The records and minute books of WWA contain complete and accurate minutes of all meetings of the directors and members held since incorporation, all such meetings were duly called and held. The member certificate books, register of members, and register of directors are complete and accurate 7.3 The business of WWA has been carried on in the ordinary and normal course of business since t 1✓u,, rt snip, MO and will be carried on in the ordinary course of business up to the date of closing. • • • 1 • 7.4 There are no actions, suits or proceedings (whether or not purportedly on behalf of WWA), pending or threatened against or affecting WWA or the Shareholders, at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, there are no existing grounds on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success. 7.5 WWA is not in default or breach of any contracts, agreements, written or oral, indentures or other instruments of any kind to which it is a party and there exists no state of facts which after notice or lapse of time or both would constitute such a default or breach, and all such contracts, agreements, indentures or other instruments are now in good standing and WWA is entitled to all benefits thereunder. 7.6 WWA does not have any outstanding agreement (including employment agreements), contract or commitment, whether wntten or oral, or any nature or kind whatsoever, except as described in the Exhibits hereto. 7.7 WWA has no information or knowledge of any facts relating to the business of WWA which, if known to the City, might reasonably be expected to deter the City from completing the transaction herein contemplated. 7.8 No representation or warranty by WWA in this agreement, nor any statement or certificate furnished to the City pursuant hereto or in connection with the transactions contemplated hereby, contain any untrue statement of a material fact, or omit to state a material fact necessary to make the statements contained therein not misleading. 7.9 All land, together with improvements thereon, and all real property interests, which are included within the Exhibits hereto are in compliance with all federal, state, and local laws, ordinances, regulations and statutes imposing environmental or ecological protection restrictions on the site, and no such property has been used by the WWA for the storage or disposal of any toxic or hazardous substance. 7.10 Subsequent to the execution of this Agreement, WWA shall: continue its operations in substantially the same manner as before, not enter into any contract, agreement, or lease, nor shall it issue any purchase order or otherwise extend its credit, not effect any major purchases of supplies, equipment or rolling stock, not make any major expenditure of funds except for any loan payment as it become due, payment of existing, legitimate accounts payable as due, or payment of invoices to suppliers of water, not engage any professional for any purpose except its attorney for counsel services relating to this agreement, not discard any record, document or correspondence. • • 1ro• SECTION 8. COVENANTS, REPRESENTATIONS AND WARRANTIES OF CITY. The City covenants and agrees with and represents and warrants as follows to WWA and acknowledges and confirms that WWA is relying on such representations and warranties m connection with the transfer, assignment and conveyance of the WWA Water Systems: 8.1 City is a municipal corporation duly organized and validly subsisting under the laws of the State of Arkansas and has full power and authority to purchase and own the WWA Water System and to enter into, execute and deliver and perform its obligations under this agreement and the documents contemplated hereunder. 8.2 City has full power and authority to enter into and perform its obligations under this Agreement and each agreement, instrument and document required to be executed by City in accordance herewith. This agreement has been duly authorized, executed and delivered by City and is a valid and binding obligation of the City enforceable in accordance with its terms, except as enforcement may be limited by general equitable principles. 8.3 To the best of City's knowledge, no representation or warranty by City in this Agreement, nor any statement or certificate furnished to WWA pursuant hereto or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein not misleading. 8.4 The surcharge to present customers of WWA of $9.50 per month will be reduced to $3.50 per month for a period of ten (10) years. After ten years, the rates charged will be only those rates charged for customers outside the city limits of Fayetteville. 8.5 All future customers tying to the WWA line, defined by a "yellow" line in the Exhibits hereto, will pay a $3.50 surcharge per month for the balance of the ten year period mentioned above. 8.6 Any area annexed into City's boundaries will not be charged the $3.50 surcharge. SECTION 9 . COVENANTS, REPRESENTATIONS AND WARRANTIES OF COUNTY. The County covenants and agrees with and represents and warrants as follows to WWA and City and acknowledges and confirms that WWA and City are relying on such representations and warranties in connection with the transfer, assignment and conveyance of the WWA Water System: 9.1 County is duly organized and validly subsisting under the laws of the State of Arkansas and has full power and authority to hold title to interests in real property and improvements of the WWA Water System and to enter into, execute and • • • • deliver and perform its obligations under this Agreement and the documents contemplated hereunder. 9.2 This agreement has been duly authorized, executed and delivered by County and is a valid and binding obligation of County enforceable in accordance with its terms, except as enforcement may be limited by general equitable principles. 9.3 To the best of County's knowledge, no representation or warranty by County in this Agreement, nor any statement or certificate furnished pursuant hereto or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein not misleading. 9.4 County will execute and provide to the City instruments and documents required or considered necessary to convey, assign or transfer the interests in real property or improvements regarding the WWA Water System. SECTION 10. 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. SECTION 11. ADDITIONAL DOCUMENTS AND ACTIONS. WWA, City and County agree, on the request 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 12. HEADINGS. The headings of this agreement are for convenience of reference only and shall not define or limit any of the provisions hereof. SECTION 13. EXECUTION OF COUNTERPART. This agreement maybe executed in one or more counterparts, each of which so executed shall constitute an original and all of which together shall constitute one and the same Agreement. • • • SECTION 14. PROPERTY LAW OF CONTRACT. This Agreement shall be construed and enforced in accordance with, and the nght 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 theses parties due to any dispute arising out of this Agreement. SECTION 15. 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 representative, successors and assigns. SECTION 16. ENTIRE AGREEMENT. This Agreement, including the Exhibits hereto, once executed, 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. R WATER ASSOCIATION, INC. B Title • Attest: • By: //4,--7 Heather Woodruff, City Cler Attest: By Title CITY OFFA TTEVILLE By: Fr Hanna, Mayor • WASHINGTON COUNTY, ARKANSAS. By: Title • • • , City of Fayetteville, Arkansas Budget Adjustment Form • • Budget Year 1999 Department: Division: Program: Public Works Water & Sewer Maintenance Capital Water Mains Date Requested 12/20/99 Adjustment # Project or Item Requested: $145,000 is requested for water line improvements. Project or Item Deleted: None. Use of Fund Balance is proposed for this adjustment. Justification of this Increase: Purchase of the Wheeler Water District, Project #99084 1. Justification of this Decrease: Sufficient funds exist to fund this request and comply with City policy. Account Name Increase Expen e (Decrease Revenue) Amount Account Number Project Number Water Line Improvements 145,000 5400 5600 5808 00 99084 1 Decrease Expense (Increase Revenue) Account Name Amount Account Number Project Number Use of Fund Balance 145,000 5400 0940 4999 99 Approval Signatures Req ested By ar anal Bu�re r• ger 4 Adis.Y/ Ie? ment Director Dat i Zo p ate Date iAdmin. rvices DD m� Date Ma Date Budget Office Use Only Type: A B C Date of Approval Posted to General Ledger Posted to Project Accounting Entered in Category Log Blue Copy: Budget & Research / Yellow Copy: Requester H:\BU DG EllBARBARA\BUDADJ\1999_ADJ\W H EELER. W K4 E _X— Agenda Request Contract Review Grant Review • • STAFF REVIEW FORM FOR THE FAYETTEVILLE CITY COUNCIL MEETING OF December 21, 1999 • • FROM: John Maguire Water and Sewer Name Division Department ACTION REQUESTED: Approve purchase of Wheeler Water Association assets and provide funding for an amount not to exceed $145,000. COST TO THE CITY: $145,000 (not to exceed) Cost of this request 5400-5600-5808-00 Account Number 99084-1 Project Number $6,840,291 Category/Project Budget $6,840,291 Funds used to date $-0- Remaining Balance Wheeler Water Association Category/Project Name Capital Water Mains. Program Name Water & Sewer Fund BUDGET REVIEW: Budgeted Item BudgAt Coordinator CONTRACT/GRANT/LEASE REVIEW: GRANTING AGENCY. Budget Adjustment Attached A ,uvI�n nistra ervices Director Purchasing Officer /a -zo -99 Date /2- 2/-99 Date ia.at-99 Date V 117/{v lia ji Irytprnal Auditor ADA Coordinator a—ap Date Date STAFF RECOMMENDATION: Date IZ Z1—i% Date Cross Reference New Item: Yes No Prev Ord/Res #. Orig. Contract Date. FAYETTEVILLE THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE Res /62- 99 RECEIVED DEC 1 4 1999 CITY OF FAYETTEVILLE CITY CLERK 8 OFFICE DATE: December 14, 1999 TO: Mayor Hanna and Fayetteville City Council FROM: John Maguire, Administrative Servic ik4rAtd RE• Proposed Purchase of Wheeler Water Association Assets 1. City of Fayetteville purposes to purchase approximately 18 miles of 8 inch line and other assets for approximately $140,000, less cash in bank of approximately $20,000, effective January 1, 2000. 2. Letters of Offer and Acceptance are attached. 3. Contract reflecting the letter of intent will be presented signed by sellers by Monday, December 20, 1999. JM.msm November 29, 1999 Donald H. Johnson, President Wheeler Water Association 2099 North Double Springs Road Fayetteville, AR 72704 Dear Mr. Johnson: This letter will confirm the City of Fayetteville's intent to acquire the assets of Wheeler Water Association effective January 1, 2000. The general conditions of our proposal are as follows: 1. The City will acquire all assets including cash that belongs to the association, assume debts of approximately $140,000, plus any unpaid attorneys' fees will be paid from the cash account at closing. 2. Water rates to present customers of the association of $9.50 per month will be reduced to $3.50 for a period of ten (10) years. After ten years, the rates charged will be those rates charged for customers outside the City limits of Fayetteville. 3 All future customers tying to the association line, that was discussed at our November 29 meeting and defined as "yellow" line, will pay $3.50 surcharge for the balance of the ten year period unless the area is annexed into the City. We will ask this to be ready for approval at the December 14 City Council meeting. We will keep this confidential until you have agreed to the contract and it is ready for City Council approval. We prefer your committee also work in confidence. Upon your direction, we will furnish Curtis Hogue and you a copy of the contract. The contract will need your signatures before it goes to the Council. Sincerely, John Maguire Administrative Services Director JM:msm • • WHEELER WATER ASSOCIATION December 1, 1999 Mr. John Maguire Administrative Services Director City of Fayetteville 113 W. Mountain Fayetteville, AR 72701 Dear Mr. Maguire: The Wheeler Water Board has accepted all conditions of the November 29, 1999 proposed transfer of the Wheeler Water System to the Fayetteville Water System. Your business like approach has been an excellent example of the Mayor's "City of Character Program" reflecting fairness to all. Please advise when the next action is required. • • • • SSAFF RRVI®! PORI Description Comments: Budget Coordinator Accounting Manager City Attorney Purchasing Officer ADA Coordinator Internal Auditor Reference Comments: Meeting Date Page 2 • AGREEMENT THIS AGREEMENT is made and entered into this _ day of 1999, by and between the City of Fayetteville, ("City"), Wheeler Water Association, Inc., ("WWA"), and Washington County, Arkansas, ("County"), WITNESSETH: WHEREAS, on the 6th day of February, 1990, the parties entered into Interlocal Agreement between Washington County, City of Fayetteville, and Wheeler Water Association, Inc , as amended March 20, 1990, ("Interlocal Agreement"), for the construction and operation of a water supply distribution system; and, WHEREAS, on the 22nd day of May, 1990, WWA entered into a Lease -Purchase Agreement with Arkansas Soil and Water Conservation Commission for the purchase and installation of three-way fire hydrants with valve and tee; and, WHEREAS, on the 17th day of January, 1991, WWA executed a Promissory Note and Mortgage in favor of the U.S. Department of Agriculture, Fanners Home Administration, for the construction of water facilities for WWA; and, WHEREAS, there are outstanding balances on both the Lease -Purchase with Arkansas Soil and Water Conservation Commission and the Promissory Note with Farmers Home Administration; and, WHEREAS, the Interlocal Agreement provides that upon retirement of the loan with the Farmers Home Administration the system shall be vested in the City; and, WHEREAS, the growth and changes in the areas being served by WWA make it advantageous to all parties for the City to retire the loans with Farmers Home Administration and Arkansas Soil and Water Commission, and have the water system vest in the City; and, WHEREAS, the City, WWA and County desire to enter into this Agreement in order to promote the welfare of WWA's members and City's growth and planning area. 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: SECTION 1. WWA WATER SYSTEM. The WWA Water System includes all personalty, tangible and intangible; cash and cash equivalent; accounts; real property and improvements to which legal title is vested in WWA; and interests in real property and improvements associated with the water system in an area of the county known as "Wheeler" to which legal title is vested in County as set forth in the Exhibits hereto.. • • • • Subject to the terns and conditions hereof, WWA and County covenant and agree to assign, transfer and convey all of their right, title and interest in and to the WWA Water System to City, and City covenants and agrees to accept from WWA and County the WWA Water System . SECTION 2. EXHIBITS. The following Exhibits are attached hereto and incorporated into this agreement by reference and deemed to be a part hereof: Exhibit 1 Exhibit 2 Exhibit 3 Exhibit 4 Exhibits Exhibit 6 Exhibit 7 Exhibit 8 Exhibit 9 Exhibit 10 Exhibit 11 Exhibit 12 Exhibit 13 Exhibit 14 Exhibit 15 WWA Financial Statements Articles of Incorporation, as amended, of WWA Resolution of WWA's Board of Directors Certification of Election Results of vote of WWA's Membership Resolution of Fayetteville City Council Promissory Note from WWA to Farmers Home Administration Mortgage from WWA to Farmers Home Administration Lease -Purchase Agreement with Arkansas Soil and Water Conservation Commission Assignments of property interests (including one for real estate interests, one for receivables, and one for bank accounts) Description of the Real Property Copies of Deeds and Easements Receivables out for collection Bank accounts, signing officers and powers of attorney List of Customers Map of water line and plotting the users SECTION 3. CONSIDERATION. For and in consideration of the assignment, transfer and conveyance of all of WWA's and County's right, title and interest in and to the WWA Water System, City shall satisfy and retire the Promissory Note from WWA to Farmers Home Administration and the Lease -Purchase Agreement with Arkansas Soil and Water Conservation Commission, in an amount not to exceed SECTION 4. PRE-CLOSING. On the Pre-closing Date, , or as agreed otherwise by the parties, WWA and County shall make available to the City and their officers, auditors, counsel and other authorized representatives, all of its records and documents as well as computer media containing such records, including but not limited to, all accounting and financial records, accounts receivables, customer lists, leases, contracts, evidence of contracts, pending purchase order, correspondence, as -built plans and specifications of all facilities, deeds, easements, nght of way grants, warranty documents relating to any personalty, bank account information and records, records of any investments records of certificate of deposits, records of membership • • • dues and deposits, and other documents in its possession or under its control of which it might obtain relating to the WWA Water System. WWA and County shall afford the City and their said authorized representatives every reasonable opportunity to have access to and to inspect the property and affairs of WWA, it being agreed that the exercise of any rights of access of inspection by or on behalf of the City shall not affect or mitigate the covenants, representations and warranties of WWA hereunder which shall continue in full force and effect. The City shall be permitted to copy any such records or otherwise submit such records to an examination or evaluation of any professional or professionals of their choosing. City, having contracted with WWA to perform certain functions, shall provide for inspection and copy any documents and information regarding the WWA Water System including but not limited to billing and collecting of accounts, maintenance of system, and bookkeeping and accounting services in making note payments to Farmers Home Administration and Arkansas Soil and Water Conservation Commission. SECTION 5. CLOSING. The date of closing shall be January 1, 2000, or such other day as may be agreed to by the parties. SECTION 6. DISSOLUTION OF WWA. The parties agree that, as soon as practical after closing, Wheeler Water Association shall be dissolved and WWA shall provide copies bearing the file mark of the Secretary of the State of Arkansas reflecting the action taken. SECTION 7. COVENANTS, REPRESENTATIONS AND WARRANTIES OF WWA. WWA covenants, represents and warrants as follows and acknowledges that City is relying upon such covenants, representations and warranties in connection with the transfer and conveyance of the WWA Water System: 7.1 WWA has been duly incorporated and organized and is validly existing and in good standing under the laws of the State of Arkansas; it has the corporate power to own or lease their property and to carry on the business of WWA as now being conducted by it. 7.2 The records and minute books of WWA contain complete and accurate minutes of all meetings of the directors and members held since incorporation, all such meetings were duly called and held. The member certificate books, register of members, and register of directors are complete and accurate. 7.3 The business of WWA has been carried on in the ordinary and normal course of business since and will be carried on in the ordinary course of business up to the date of closing. • • • • 7.4 There are no actions, suits or proceedings (whether or not purportedly on behalf of WWA), pending or threatened against or affecting WWA or the Shareholders, at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, there are no existing grounds on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success. 7.5 WWA is not in default or breach of any contracts, agreements, written or oral, indentures or other instruments of any kind to which it is a party and there exists no state of facts which after notice or lapse of time or both would constitute such a default or breach, and all such contracts, agreements, indentures or other instruments are now in good standing and WWA is entitled to all benefits thereunder. 7.6 WWA does not have any outstanding agreement (including employment agreements), contract or commitment, whether written or oral, or any nature or kind whatsoever, except as described in the Exhibits hereto. 7.8 WWA has no information or knowledge of any facts relating to the business of WWA which, if known to the City, might reasonably be expected to deter the City from completing the transaction herein contemplated. 7.9 No representation or warranty by WWA in this agreement, nor any statement or certificate furnished to the City pursuant hereto or in connection with the transactions contemplated hereby, contain any untrue statement of a material fact, or omit to state a material fact necessary to make the statements contained therein not misleading. 7.10 All land, together with improvements thereon, and all real property interests, which are included within the Exhibits hereto are in compliance with all federal, state, and local laws, ordinances, regulations and statutes imposing environmental or ecological protection restrictions on the site, and no such property has been used by the WWA for the storage or disposal of any toxic or hazardous substance. 7.11 Subsequent to the execution of this Agreement, WWA shall: continue its operations in substantially the same manner as before, not enter into any contract, agreement, or lease, nor shall it issue any purchase order or otherwise extend its credit, not effect any major purchases of supplies, equipment or rolling stock, not make any major expenditure of funds except for any loan payment as it become due, payment of existing, legitimate accounts payable as due, or payment of invoices to suppliers of water, not engage any professional for any purpose except its attorney for counsel services relating to this agreement, not discard any record, document or correspondence.