Exhibit 2
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FIRST AMENDED AND RESTATED
UTILITY SYSTEM
ASSET ACQUISITION AGREEMENT
By and Among
HERNANDO COUNTY,
THE CITY OF MARCO ISLAND,
THE CITY OF PALM COAST,
OSCEOLA COUNTY,
FLORIDA GOVERNMENTAL UTILITY AUTHORITY,
THE CITY OF DELTONA
and
FLORIDA WATER SERVICES CORPORATION
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND CONSTRUCTION
SECTION 1.01. DEFINITIONS.....................................................3
SECTION 1.02. CONSTRUCTION AND INTERPRETATION................................10
SECTION 1.03. INCORPORATION..................................................10
SECTION 1.04. SECTION HEADINGS...............................................10
SECTION 1.05. APPENDICES.....................................................10
ARTICLE II
PURCHASE AND SALE OF ASSETS
SECTION 2.01. PURCHASE AND SALE COVENANT.....................................11
SECTION 2.02. PURCHASED ASSETS...............................................11
SECTION 2.03. EXCLUDED ASSETS................................................13
SECTION 2.04. PURCHASE PRICE.................................................13
SECTION 2.05. THIS SECTION INTENTIONALLY LEFT BLANK..........................13
SECTION 2.06. ASSUMED LIABILITIES............................................13
SECTION 2.07. VOLUSIA COUNTY CONTINGENCY.....................................15
SECTION 2.08. LEASED VEHICLES................................................16
SECTION 2.09. AS IS PURCHASE.................................................16
ARTICLE III
DUE DILIGENCE ISSUES
SECTION 3.01. PROVISION OF INFORMATION BY FLORIDA WATER......................17
SECTION 3.02. FINANCIAL DUE DILIGENCE........................................17
SECTION 3.03. ENGINEERING AND ENVIRONMENTAL DUE DILIGENCE....................17
SECTION 3.04. LEGAL DUE DILIGENCE............................................18
SECTION 3.05. DUE DILIGENCE DETERMINATIONS...................................18
SECTION 3.06. CURRENT EVIDENCE OF TITLE......................................18
SECTION 3.07. ENVIRONMENTAL PROVISIONS.......................................21
ARTICLE IV
OTHER PRECLOSING MATTERS
SECTION 4.01. ISSUANCE OF BONDS..............................................22
SECTION 4.02. TRANSITION SERVICES............................................23
SECTION 4.03. PRE-CLOSING APPROVALS..........................................23
SECTION 4.04. DISMISSAL OF LEGAL PROCEEDINGS.................................26
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ARTICLE V
CONDITIONS PRECEDENT TO THE BUYERS' OBLIGATION TO CLOSE
SECTION 5.01. FLORIDA WATER'S PERFORMANCE....................................28
SECTION 5.02. ADDITIONAL DOCUMENTS...........................................28
SECTION 5.03. NO CONFLICT....................................................28
ARTICLE VI
CONDITIONS PRECEDENT TO FLORIDA WATER'S OBLIGATION TO CLOSE
SECTION 6.01. THE BUYERS' PERFORMANCE........................................29
SECTION 6.02. ADDITIONAL DOCUMENTS...........................................29
SECTION 6.03. NO INJUNCTION..................................................29
ARTICLE VII
COVENANTS OF FLORIDA WATER PRIOR TO CLOSING
SECTION 7.01. ACCESS AND INVESTIGATION.......................................30
SECTION 7.02. OPERATION OF THE BUSINESS OF FLORIDA WATER.....................31
SECTION 7.03. NEGATIVE COVENANT..............................................32
SECTION 7.04. REQUIRED APPROVALS.............................................32
SECTION 7.05. NOTIFICATION...................................................32
SECTION 7.06. PAYMENT OF LIABILITIES.........................................33
ARTICLE VIII
COVENANTS OF THE BUYERS
SECTION 8.01. REQUIRED APPROVALS..............................................33
SECTION 8.02. CERTAIN REGULATORY PROCEEDINGS..................................33
SECTION 8.03. LEGAL OPINIONS..................................................33
SECTION 8.04. HERNANDO OBLIGATIONS............................................34
SECTION 8.05. FLORIDA WATER EMPLOYEES.........................................34
ARTICLE IX
CLOSING PROCEDURES AND ADJUSTMENTS
SECTION 9.01. CLOSING DATE AND PLACE.........................................36
SECTION 9.02. DOCUMENTS AFTER THE CLOSING....................................37
SECTION 9.03. RECORDING FEES AND DOCUMENTARY TAXES...........................38
SECTION 9.04. ACCOUNTS RECEIVABLE; UNBILLED REVENUES;
CUSTOMER DEPOSITS; ACCOUNTS PAYABLE............................38
SECTION 9.05. CONNECTION CHARGES.............................................40
SECTION 9.06. COSTS AND PROFESSIONAL FEES....................................41
SECTION 9.07. RISK OF LOSS...................................................41
SECTION 9.08. PROCEEDS OF SALE; CLOSING PROCEDURE............................41
SECTION 9.09. TRANSFER OF PERMITS............................................44
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SECTION 9.10. REGULATORY MATTERS.............................................44
SECTION 9.11. REGULATORY TRANSFER FILINGS....................................44
SECTION 9.12. ASSUMPTION BY THE BUYERS OF RESPONSIBILITY FOR SERVICE.........45
SECTION 9.13. PURCHASE PRICE ALLOCATION......................................45
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. RADON.........................................................45
SECTION 10.02. TIME IS OF THE ESSENCE........................................45
SECTION 10.03. ENFORCEMENT OF AGREEMENT......................................46
SECTION 10.04. APPLICABLE LAW; JURISDICTION AND VENUE........................46
SECTION 10.05. NOTICE........................................................46
SECTION 10.06. ASSIGNMENT AND JOINDER........................................48
SECTION 10.07. AMENDMENTS AND WAIVERS........................................49
SECTION 10.08. ENTIRE AGREEMENT..............................................50
SECTION 10.09. TERMINATION EVENTS............................................50
SECTION 10.10. EFFECT OF TERMINATION.........................................51
SECTION 10.11. BUYERS' REPRESENTATIVE........................................52
SECTION 10.12. SURVIVAL......................................................52
SECTION 10.13. JOINT AND SEVERAL LIABILITY...................................52
SECTION 10.14. COUNTERPARTS..................................................53
APPENDICES
Appendix A Florida Water Service Areas
Appendix B Easements
Appendix C Excluded Assets
Appendix D Fee Parcels
Appendix E Florida Water Contracts with Affiliates
Appendix F Stranded Contracts
Appendix G Form of Florida Water and Buyers' Legal Opinions
Appendix H Governmental Authorizations
Appendix I Proceedings
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FIRST AMENDED AND RESTATED
UTILITY SYSTEM
ASSET ACQUISITION AGREEMENT
THIS FIRST AMENDED AND RESTATED UTILITY SYSTEM ASSET ACQUISITION AGREEMENT
(THE "AGREEMENT") is made and entered into as of the 25th day of August, 2003,
by and among, Hernando County, a political subdivision of the State of Florida
("Hernando"); the City of Marco Island, Florida, a municipal corporation
organized under the laws of the State of Florida ("Marco Island"); the City of
Palm Coast, a municipal corporation organized under the laws of the State of
Florida ("Palm Coast"); Osceola County ("Osceola"); and the Florida Governmental
Utility Authority (the "GUA"), a legal entity and public body created by
Interlocal Agreement pursuant to section 163.01(7)(g), Florida Statutes; the
City of Deltona, Florida, a municipal corporation organized under the laws of
the State of Florida ("Deltona") (Hernando, Marco Island, Palm Coast, Osceola,
GUA, and Deltona collectively referred to as the "Buyers") and Florida Water
Services Corporation ("Florida Water"), a Florida corporation.
W I T N E S S E T H:
WHEREAS, Florida Water owns utility assets which consist generally of
potable water supply, treatment, storage, and distribution systems and
wastewater collection, transmission, treatment, disposal and reuse systems which
provide services to the service areas identified on APPENDIX A to this
Agreement; and
WHEREAS, Florida Water had no intention of selling its utility assets, but
received the threat of condemnation or was served with lawsuits initiating
condemnation actions against certain of its utility assets by various local
governments throughout Florida with eminent domain
power, which threats and lawsuits Florida Water determined were inadvisable to
resist and would result in unreasonable and extensive time and expense to
defend; and
WHEREAS, in lieu of condemnation, Florida Water has agreed to negotiate an
amicable resolution of the condemnation threats and lawsuits with respect to
certain of its utility systems by entering into this Agreement; and
WHEREAS, Buyers each agree that the Purchase Price set forth in this
Agreement is intended to fulfill the requirement under Article X, Section 6,
Eminent Domain, of the Florida Constitution to pay full compensation to Florida
Water for the Facilities being acquired by the Buyers under the terms of this
Agreement in lieu of the Buyers and members of GUA filing formal eminent domain
proceedings, and accordingly each Buyer agrees (1) that Florida Water is
entitled to retain all of the Purchase Price and all of the gain to Florida
Water arising out of or resulting from the sale of the Purchased Assets,
customers and customer revenue streams without sharing, allocation or refund of
such gain to any third party , including but not limited to, the past, present
or future customers of the Florida Water Facilities being transferred to Buyers
under this Agreement and the past, present or future customers of the Florida
Water Facilities retained by Florida Water (collectively "Florida Water
Customers"), (2) with the principle that the Florida Water Customers have no
claims to the Purchase Price and that no party, other than Florida Water, has
any rights with respect to the Purchase Price and (3) that the Buyers would have
to pay a higher Purchase Price if provisions related to Gain On Sale (defined
herein)were not included in this Agreement; and
WHEREAS, Florida Water is entering into this Agreement expressly and solely
in reliance upon the Buyers' agreement and representations set forth in the
preceding WHEREAS
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clause, absent which, Florida Water would not have agreed to the amount of the
Purchase Price set forth in this Agreement; and
WHEREAS, Hernando desires to acquire the Facilities located in the service
area identified on APPENDIX A-1 (the "Hernando System"); Marco Island desires to
acquire the Facilities located in the service area identified on APPENDIX A-2
(the "Marco Island System"); Palm Coast desires to acquire the Facilities
located in the service area identified on APPENDIX A-3 (the "Palm Coast System";
Osceola desires to acquire the Facilities located in the service area identified
on APPENDIX A-4 (the "Osceola System"); the GUA desires to acquire the
Facilities located in the service areas identified on APPENDIX A-5 (the "GUA
Systems"); and Deltona desires to acquire the Facilities located in the service
areas identified on APPENDIX A-6 (the "Deltona System"); and Florida Water has
consented to sell those Facilities to the Buyers in lieu of condemnation of such
assets.
NOW, THEREFORE, in consideration of the foregoing recitals and the benefits
to be derived from mutual promises, covenants, representations and agreements
contained herein, and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties to this Agreement do
undertake, promise and agree for themselves, their permitted successors and
assigns as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
SECTION 1.01. DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings as defined herein unless the context requires otherwise:
"AFFILIATE" means (a) any Person that directly or indirectly controls, is
directly or indirectly controlled by or is directly or indirectly under common
control with Florida Water; or
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(b) any Person that holds a material interest in, or serves as a director,
officer, partner, executor or trustee of Florida Water.
"AGREEMENT" means this Utility System Asset Acquisition Agreement,
including any amendments, supplements and appendices hereto executed and
delivered in accordance with the terms hereof.
"APPURTENANCES" means all privileges, rights, easements, hereditaments, and
appurtenances owned by Florida Water for the benefit of the Fee Parcels,
including all easements appurtenant to and for the benefit of any Fee Parcel (a
"Dominant Parcel") for, and as the primary means of access between, the Dominant
Parcel and a public way, or for any other use upon which lawful use of the
Dominant Parcel for the purposes for which it is presently being used is
dependent, and all rights existing in and to any streets, alleys, passages and
other rights-of-way included thereon or adjacent thereto (before or after
vacation thereof) and vaults beneath any such streets.
"ASSUMED LIABILITIES" means those obligations assumed by Buyers or Buyers'
Contractors at Closing and upon taking ownership of the Purchased Assets as set
forth in Section 2.06 of this Agreement.
"BEST EFFORTS" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to achieve that result as
expeditiously as possible, provided, however, that a Person required to use Best
Efforts under this Agreement will not be thereby required to take actions that
would result in a material adverse change in the benefits to such Person of this
Agreement and the Contemplated Transactions or to dispose of or make any change
to its business, expend any material funds or incur any other material burden.
"BONDS" has the meaning set forth in Section 4.01 of this Agreement.
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"BUSINESS DAY" means any day other than a Saturday, Sunday, or a day on
which banking institutions in the State of Florida are authorized or obligated
by law to close.
"CLOSING" or "CLOSING DATE" has the meaning set forth in Section 9.01 of
this Agreement. Where the context requires, Closing and Closing Date shall
include Early Closing Date(s).
"CONNECTION CHARGES" means the funds collected from new customers of the
Utility System at or prior to initial connection as authorized by the Florida
Water Tariffs to defray the cost of making utility services available.
Connection Charges include capacity, main extension, allowance for funds
prudently invested, guaranteed revenues or other charges paid for the
availability of utility services.
"CONTEMPLATED TRANSACTIONS" means all of the transactions contemplated by
this Agreement.
"EASEMENTS" means the easements listed on APPENDIX B-1 for the Hernando
System; APPENDIX B-2 for the Marco Island System; APPENDIX B-3 for the Palm
Coast System; APPENDIX B-4 for the Osceola System; APPENDIX B-5 for the GUA
Systems; and APPENDIX B-6 for the Deltona System.
"EFFECTIVE TIME" means 12:01 am. on the Closing Date.
"ENCUMBRANCE" means any charge, claim, condition, equitable interest, lien,
option, pledge, security interest, mortgage, right of way, easement,
encroachment, servitude, right of first option, right of first refusal or
similar restriction, including any restriction on use, voting (in the case of
any security or equity interest), transfer, receipt of income or exercise of any
other attribute of ownership.
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"EXCLUDED ASSETS" means those Florida Water assets, properties and rights,
both tangible and intangible, real and personal, which are not sold, conveyed or
transferred to Buyers pursuant to this Agreement, including, but not limited to
the Florida Water headquarters in Apopka, Florida and all billing systems,
customer service systems, engineering systems, operations and maintenance
systems, computer and other information systems located at the Apopka
headquarters. The Excluded Assets shall also include the proceeds from any
condemnation action filed against Florida Water prior to Closing. The Excluded
Assets are listed on APPENDIX C.
"FACILITIES" means (1) the Fee Parcels, (2) the Easements and
Appurtenances, and (3) the Personal Property, but excluding the Excluded Assets.
"FISCAL YEAR" means a fiscal year which begins on October 1 and ends on
September 30.
"FEE PARCELS" means those parcels of real property more particularly
described in ▇▇▇▇▇▇▇▇ ▇-▇ for the Hernando System; ▇▇▇▇▇▇▇▇ ▇-▇ for the Marco
Island System; ▇▇▇▇▇▇▇▇ ▇-▇ for the Palm Coast System; ▇▇▇▇▇▇▇▇ ▇-▇ for the
Osceola System; ▇▇▇▇▇▇▇▇ ▇-▇ for the GUA Systems; and ▇▇▇▇▇▇▇▇ ▇-▇ for the
Deltona System.
"FLORIDA WATER CONTRACT" means any contract, promise, or undertaking with
respect to the Utility System that is capable of being segregated to each or any
of the Buyers: (a) under which Florida Water has or may acquire any rights or
benefits; (b) under which Florida Water has or may become subject to any
obligation or liability; or (c) by which Florida Water or any of the assets
owned or used by Florida Water is or may become bound or are encumbered.
"FLORIDA WATER TARIFFS" means all water and wastewater tariffs filed by
Florida Water and approved by the Florida Public Service Commission or by a
county regulatory authority and in effect on the Closing Date.
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"GAIN ON SALE" means the sharing, allocation or refund of Florida Water's
economic gain on any utility system transfer.
"GOVERNING DOCUMENTS" means the articles or certificate of incorporation
and the bylaws of Florida Water.
"GOVERNMENTAL AUTHORIZATION" means any consent, license, certificate of
authorization, registration or permit issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" means any:
(a) federal, state, local, municipal, or other government;
(b) governmental authority of any nature (including any agency, branch,
department, board, commission, court, tribunal or other entity exercising
governmental powers ); or
(c) body exercising any administrative, executive, judicial, quasi-
judicial, legislative, police, regulatory or taxing authority or power.
"GUA SYSTEM" means the systems included in the Utility Systems as shown on
APPENDIX A-5 to include the ▇▇▇ County System, Citrus County System and
Charlotte County System. This term may be used to refer to these systems
individually or collectively in this Agreement.
"KNOWLEDGE" means (1) as to Florida Water, the actual knowledge of Florida
Water's directors and officers, without the requirement of diligent inquiry and
subsequent investigation, or (2) as to Buyers, the actual knowledge of Buyers'
individual governing board members, administrative heads and contractors,
engineers and advisors, without the requirement of diligent inquiry and
subsequent investigation.
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"LEGAL REQUIREMENT" means any federal, state, local, municipal, or other
constitution, law, ordinance, principle of common law, code, regulation, or
statute.
"ORDER" means any order, injunction, judgment, decree, ruling, assessment
or arbitration award of any Governmental Body or arbitrator.
"ORDINARY COURSE OF BUSINESS" means an action taken by a Person will be
deemed to have been taken in the Ordinary Course of Business only if that action
is consistent in nature, scope and magnitude with the past practices of such
Person and is taken in the ordinary course of the normal, day-to-day operations
of such Person.
"PERMITTED REAL ESTATE ENCUMBRANCES" has its meaning defined in Section
3.06 in this Agreement.
"PERSON" means an individual, a statutorily authorized customer(s)
representative, partnership, corporation, business trust, limited liability
company, limited liability partnership, joint stock company, trust,
unincorporated association, joint venture or other entity or a Governmental
Body.
"PERSONAL PROPERTY" means the personal property assets that are both (1)
owned and used by Florida Water in the operation of the Utility System, and (2)
located within the service areas identified in APPENDIX A.
"PROCEEDING" means any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private) commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"PSC" means the Florida Public Service Commission.
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"PURCHASED ASSETS" means the asset being acquired by Buyers as defined in
Section 2.02 below.
"PURCHASE PRICE" means the payment to be made at Closing by Buyers to
Florida Water for the Purchased Assets.
"REAL PROPERTY" means the Fee Parcels.
"SIGNATURE DATE" means July 24, 2003.
"THIRD PARTY" means a Person that is not a party to this Agreement.
"TITLE COMMITMENT" means one or more title insurance commitments with
respect to the Fee Parcels in the aggregate amount not to exceed the Purchase
Price, as provided herein, issued by Florida Water's attorney committing the
Title Company to issue and deliver the Title Policies to Buyers upon compliance
with the requirements stated in Schedule B, Section 1 thereof, subject to the
terms and conditions contained therein.
"TITLE COMPANY" means Commonwealth Land Title Insurance Company, a
Pennsylvania corporation.
"TITLE POLICY" or "TITLE POLICIES" means one or more ALTA owner's policies
of title insurance (10/17/92) (with Florida modifications) as provided in this
Agreement, issued by the Title Company in accordance with the Title Commitment
and which meets the requirements of Section 3.06 of this Agreement.
"TRANSACTION COSTS" means the costs, fees and expenses incurred by the
Buyers in connection with this transaction.
"TRANSFER DOCUMENTS" has the meaning set forth in Section 9.08 of this
Agreement.
"UTILITY SYSTEM" means the Facilities located in the service areas
identified on APPENDIX A, other than Excluded Assets.
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SECTION 1.02. CONSTRUCTION AND INTERPRETATION.
(A) Words that indicate a singular number shall include the plural in each
case and vice versa, and words that import a person shall include legal
entities, firms and corporations.
(B) The terms "herein," "hereunder," "hereby," "hereof," and any similar
terms, shall refer to this Agreement; the term "heretofore" shall mean before
the Signature Date; and the term "hereafter" shall mean on or after the
Signature Date.
(C) Words that reference only one gender shall include all genders.
(D) This Agreement shall be construed as resulting from joint negotiation
and authorship. No part of this Agreement shall be construed as the product of
any one of the parties hereto.
SECTION 1.03. INCORPORATION. Each party represents that the recitals set
forth in this Agreement are true and correct as they pertain to each party and
are incorporated herein and made a part of this Agreement. The Appendices hereto
and each of the documents referred to therein are incorporated and made a part
hereof in their entirety.
SECTION 1.04. SECTION HEADINGS. Any headings preceding the texts of the
several Articles, Sections or Appendices in this Agreement and any table of
contents or marginal notes appended to copies hereof, shall be solely for the
convenience of reference and shall neither constitute a part of this Agreement
nor affect its meaning, construction or effect.
SECTION 1.05 APPENDICES. Florida Water shall provide copies of Appendices
to Buyers within twenty (20) days after the Signature Date. Within fifteen (15)
days of Buyers' receipt of the Exhibits, Buyers shall each provide Florida Water
with written notice of objection to an Exhibit, or part thereof. In the event of
a timely objection by a Buyer, the parties shall have five (5) days to resolve
the objection of that Buyer or, the Buyer giving
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timely notice may elect to terminate its participation in the Agreement, and the
Agreement shall terminate as to that Buyer, or at the option of Florida Water,
Florida Water may terminate the Agreement in its entirety. Upon a termination
per the above, Florida Water and the affected Buyer(s) shall have no liability
and no further obligation to each other under this Agreement. In the event that
no timely objection is received, the Appendices delivered to Buyers shall be
deemed to have been accepted by the parties as the Appendices to this Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS
SECTION 2.01. PURCHASE AND SALE COVENANT. At Closing, each of the Buyers
shall purchase from Florida Water and Florida Water shall sell and convey to
each of the Buyers the part of the Utility System being acquired by such Buyer
upon the terms and subject to the conditions set forth in this Agreement.
SECTION 2.02. PURCHASED ASSETS.
The Purchased Assets consist of any ownership interest which Florida Water
has on the Signature Date or hereafter acquires until the Closing Date in the
Utility Systems subject to the Closing, but do not include the Excluded Assets.
Purchased Assets include, but are not limited to, any of the following that are
part of the Utility System subject to the Closing:
(1) All water and wastewater treatment plants, including reuse and
reclaimed water ▇▇▇▇▇, water supplies, ▇▇▇▇▇, collection, transmission, and
distribution system piping, pumping, and effluent and disposal facilities of
every kind and description whatsoever including without limitation, all trade
fixtures, leasehold improvements, licenses, lift stations, pumps, generators,
controls, tanks, distribution, collection or transmission pipes or facilities,
valves, meters, service connections, and all other physical facilities,
appurtenances and property
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installations used in the operation of the Utility System, together with an
assignment of all existing and assignable options to purchase real property and
third party warranties that relate to completed or in progress construction, all
as described in the Appendices hereto.
(2) The Fee Parcels.
(3) The Easements, together with any other easement rights possessed by
Florida Water at Closing, whether identified prior to or after Closing.
(4) The Governmental Authorizations.
(5) The equipment, parts, tools, chemicals, office buildings, computer
hardware and associated SCADA software located at the Fee Parcels (to the extent
transferable without cost), office fixtures and other personal property owned by
Florida Water and used exclusively in connection with the operation of the
Utility System.
(6) Customer deposits and interest earned thereon received by Florida
Water up to and including the Closing Date.
(7) Utility service fees due and payable on and subsequent to the
Closing Date pursuant to lot installment sales contracts payable by third
parties for the benefit of Florida Water.
Florida Water will provide Buyers copies of current customer records,
as-built surveys and water and wastewater plans, plats, engineering and other
drawings, designs, blueprints, plans and specifications, maintenance and
operating manuals, engineering reports, calculations, studies, non-corporate
accounting, and non-corporate business records, in each case, controlled by or
in the possession of Florida Water that relate exclusively to the description
and operation of the Utility System.
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SECTION 2.03. EXCLUDED ASSETS. Notwithstanding any other provision of this
Agreement, Purchased Assets do not include the Excluded Assets.
SECTION 2.04. PURCHASE PRICE.
The Purchase Price for the Purchased Assets comprises the aggregate of the
following individual purchase prices for each identified utility system:
1. Palm Coast System $82,772,934
2. Marco Island System $85,313,143
3. Osceola System $38,070,835
4. Hernando System $35,574,025
5. GUA Systems
a. Citrus System $16,058,337
▇. ▇▇▇ System $34,503,538
c. Charlotte System $3,753,122
6. Deltona System $59,478,752
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The Purchase Price shall be due and payable by the respective Buyers to
Florida Water in immediately available funds at Closing by wire transfer
pursuant to wire instructions to be provided by Florida Water at or prior to
Closing.
SECTION 2.05. THIS SECTION INTENTIONALLY LEFT BLANK.
SECTION 2.06. ASSUMED LIABILITIES.
(A) On the Closing Date, but effective as of the Effective Time, each of
the Buyers shall assume and agree to discharge only the following liabilities of
Florida Water related to such part of the Utility System being acquired by such
Buyer (the "Assumed Liabilities"):
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(1) any liability to Florida Water's customers (other than (a) accounts
payable and (b) any liability arising out of or relating to a breach of contract
that occurred prior to the Effective Time) incurred by Florida Water in the
Ordinary Course of Business;
(2) any liability arising after the Effective Time under the Florida
Water Contracts (other than any liability arising out of or relating to a breach
that occurred prior to the Effective Time); any liability of Florida Water
arising after the Effective Time under any Florida Water Contract that is
entered into by Florida Water after the Signature Date in the Ordinary Course of
Business (or, as to any Florida Water Affiliate, subject to Buyer approval,
which approval shall not be unreasonably withheld,) or in accordance with the
provisions of this Agreement (other than any liability (excluding the
liabilities referenced in Section 8.04 hereof) arising out of or relating to a
breach that occurred prior to the Effective Time). Florida Water represents
that, to the best of its Knowledge, APPENDIX "E" is an accurate and complete
listing of material Florida Water Contracts with its Affiliates;
(3) any liability of Buyers under this Agreement or any other document
executed in connection with the Contemplated Transactions;
(4) any liability of Buyers based upon Buyers' acts or omissions
occurring after the Effective Time; and
(5) any liability arising from or related to the operation of the
Utility System after the Closing (other than any liability arising out of or
relating to a breach of this Agreement that occurred prior to the Effective
Time), whether entered into prior to the Closing Date by Florida Water or after
the Closing Date by Buyers.
Notwithstanding the foregoing, even if included in the foregoing, the
following shall not constitute Liabilities assumed by Buyers and, therefore, not
be included in the term
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"Assumed Liabilities": (1) any liability arising out of or relating to any
employee grievance whether or not the affected employees are hired by Buyers
based on actual or alleged acts or omissions of Florida Water prior to the
Effective Time, (2) any liability of Florida Water arising out of or resulting
from any Proceeding pending as of the Effective Time that is not required to be
dismissed under Section 4.04, (3) any liability of Florida Water arising out of
any Proceeding commenced after the Effective Time and arising out of or relating
to any occurrence or event happening prior to the Effective Time to the extent
that the such Proceeding relates to Florida Water's actions or inactions prior
thereto, (4) any liability for Florida Water's performance of its obligations
hereunder, (5) any liability of Florida Water based upon Florida Water's acts or
omissions occurring after the Effective Time, and (6) (i) liabilities under
system-wide contracts the obligations of which cannot be allocated to the
separated Utility Systems (Stranded Contracts) sold hereunder as set forth in
APPENDIX F, (ii) any refundable advances between Florida Water and Florida Water
Affiliates; and (iii) any refundable advances with third parties which
accelerate and are due upon a sale of any Utility System.
(B) By assuming any agreement or liability hereunder, the Buyers do not
waive rights of sovereign immunity, the right to exercise its police powers in
the operation of each Utility System, the right to adjust rates and charges,
including Connection Charges, in such amounts as may from time to time be
established by the Buyers, and the Buyers' obligations to apply ordinances,
policies and practices in a non-discriminatory manner for each Utility System.
SECTION 2.07. VOLUSIA COUNTY CONTINGENCY.
In the event Volusia County breaches the so-called "stand-down" Agreement
dated August 18, 2003 between Volusia County and Florida Water ("Stand-Down
Agreement"), Florida Water may elect to terminate this Agreement with regard to
the Deltona System only. In
15
that event, Deltona and Florida Water shall have no liabilities and no further
obligations to each other under this Agreement.
SECTION 2.08. LEASED VEHICLES. The Buyers acknowledge that certain rolling
stock utilized by Florida Water in the operation of the Utility System are
leased from entities that will not consent to assignment of such leases to the
Buyers, and that such rolling stock is therefore not included in the Purchased
Assets. Accordingly, the Buyers shall have thirty (30) days after the Signature
Date to identify which, if any, of such leased vehicles the Buyers requests be
acquired by Florida Water from the leasing entities and transferred to the
Buyers at Closing. For each such leased vehicle so identified by the Buyers,
Florida Water will provide Buyers with a buy-out cost from the leasing entities
for approval by the Buyers. For each leased vehicle buy-out approved by the
Buyers, such leased vehicle shall be acquired by Florida Water at Closing and
transferred to the Buyers. The Buyers shall reimburse Florida Water at Closing
for the acquisition cost of each leased vehicle approved by the Buyers.
SECTION 2.09. AS IS PURCHASE
Except as expressly provided herein, the purchase of assets under this
Agreement is "AS IS" and there are no representations, covenants, warranties or
retention and assumption of liabilities other than those specifically set forth
in this Agreement, including but not limited to, any representations, covenants,
warranties or retention and assumption of liabilities in respect to environment
matters.
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ARTICLE III
DUE DILIGENCE ISSUES
SECTION 3.01. PROVISION OF INFORMATION BY FLORIDA WATER.
(A) Florida Water has provided or will provide to the Buyers within thirty
(30) days of the Signature Date (1) an inventory updated through at least March
1, 2003, of equipment, parts, computer equipment and other personal property
used by Florida Water in connection with the operation of the Utility System to
be conveyed to the Buyers; and (2) copies of current tariffs applicable to the
Utility System setting forth the most current schedule of rates, fees and
charges that Florida Water is authorized to impose by appropriate regulatory
authorities.
(B) Florida Water shall cooperate with the Buyers in providing updated
information and access to the Utility System to Buyers' Contractors, engineers
and advisors as necessary to complete financial, engineering, environmental and
legal due diligence.
(C) Florida Water shall make any existing plats, surveys, plans or
specifications for the Utility System in Florida Water's possession available to
the Buyers, or its representatives, for inspection during normal business hours
upon reasonable notice.
(D) Florida Water shall cooperate with the Buyers' Contractors, engineers
and advisors in providing information requested which is reasonably necessary to
issue and sell the Bonds, including any information required by applicable
securities laws.
SECTION 3.02. FINANCIAL DUE DILIGENCE. The Buyers are relying upon their
own financial due diligence investigation in entering into this Agreement.
SECTION 3.03. ENGINEERING AND ENVIRONMENTAL DUE DILIGENCE. Buyers are
relying upon their own engineering and environmental compliance due diligence
investigation in entering into this Agreement.
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SECTION 3.04. LEGAL DUE DILIGENCE. Buyers are relying upon their own legal
due diligence investigation in entering into this Agreement.
SECTION 3.05. DUE DILIGENCE DETERMINATIONS.
(A) Based upon the results of the due diligence investigations conducted
pursuant to Sections 3.02, 3.03, and 3.04 of this Agreement, the Buyers have
waived any defects that were revealed or should have been revealed through the
due diligence investigations.
(B) Except as otherwise specified herein, no payment shall be due from
Florida Water and no reductions in the Purchase Price will be made for
deficiencies of the Purchased Assets. Except as otherwise specified herein,
Florida Water shall have no obligations or liabilities to the Buyers with
respect to the condition of the Purchased Assets after Closing.
SECTION 3.06. CURRENT EVIDENCE OF TITLE.
(A) Florida Water will furnish to each Buyer within forty-five (45) days
after the Signature Date, at Florida Water's expense, from Commonwealth Land
Title Insurance Company (the "Title Insurer"):
(1) a title commitment or title commitments issued by the Title Insurer
to insure title to each parcel listed therein in the aggregate amount of the
Purchase Price naming Buyers as the proposed insureds and having the effective
dates as set forth therein, wherein the Title Insurer will have agreed to issue
an ALTA form owner's title insurance policy 1992 (10-17-92) with Florida
modifications (collectively the "Title Commitment"); and
(2) copies of all recorded documents listed as special Schedule B-2
exceptions thereunder (the "Recorded Documents").
(B) The Title Commitment shall include the Title Insurer's requirements for
issuing its title policy, which requirements shall be met by Florida Water as
provided in Section 3.06(E)
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on or before the Closing Date (including those requirements that must be met by
releasing or satisfying monetary Encumbrances, but excluding Encumbrances that
will remain after Closing as agreed to by the Buyers and those requirements that
are to be met solely by the Buyers).
(C) If any of the following shall occur (collectively, a "Title
Objection"):
(1) The Title Commitment or other evidence of title or search of the
appropriate real estate records discloses that any party other than Florida
Water has title to the insured estate covered by the Title Commitment;
(2) any title exception is disclosed in Schedule B to any Title
Commitment that is not one of the Permitted Real Estate Encumbrances; or
(3) any current survey discloses any matter that Buyers reasonably
believe could materially and adversely affect Buyers' material use and enjoyment
of the Fee Parcels described therein; then Buyers shall notify Florida Water in
writing ("Buyers' Notice") of such matters within thirty (30) days prior to the
Closing Date.
(D) Florida Water shall use its Best Efforts to cure each Title Objection
and take all steps required by the Title Insurer to eliminate each Title
Objection as an exception to the Title Commitment. Any Title Objection that the
Title Company is willing to insure over on terms acceptable to Florida Water and
the Buyers is herein referred to as an "Insured Exception." The Insured
Exceptions, together with any title exception or matters disclosed by any survey
and not objected to by the Buyers in the manner aforesaid shall be deemed to be
acceptable to Buyers.
(E) Florida Water shall use its Best Efforts to comply with the
requirements of Schedule B Section 1 of the Title Commitment. At the Closing,
Florida Water shall identify any Schedule B Section 1 requirements that cannot
be satisfied as of the Closing. Florida Water and the Buyers shall agree on a
post-Closing process to satisfy these requirements (the "Post-Closing
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Schedule B Requirements"). Florida Water shall indemnify the Buyers as to all
Post-Closing Schedule B requirements that are not satisfied in accordance with
the agreed upon post-Closing process. The Buyers shall cooperate with Florida
Water in satisfying the Post-Closing Schedule B requirements, including, but not
limited to, exercise of eminent domain powers if requested by Florida Water
(with Florida Water to bear the expense of any such eminent domain action).
(F) The Buyers shall have the right, but not the obligation, to do such
surveys on the Real Property as Buyers desire. Surveys done pursuant to this
Section shall be at the sole cost and expense of the Buyers.
(G) In the event that the Buyers would like to have any standard survey
exceptions deleted or modified in the Title Policy, the Buyers shall deliver to
Florida Water's attorneys, not later than thirty (30) days prior to the Closing
Date, properly certified and current original surveys of the specified fee
parcels which comply with Section 627.7842(1)(a), Florida Statutes. As to each
such survey timely delivered by Buyers, Florida Water shall include in the title
policy a "blanket exception" as to the applicable fee parcel/survey (i.e, As to
parcel _______, all matters which appear on the survey by ______, P.L.S. dated
__________.")
(H) "Permitted Real Estate Encumbrances" shall include, in addition to the
other matters provided herein, any Notices of Commencement which pertain to
ongoing construction projects of Florida Water, provided Florida Water agrees to
indemnify Buyers from same at Closing.
(I) Notwithstanding anything in this Agreement to the contrary, Title
Commitments or title insurance with respect to Fee Parcels for extraterritorial
properties located outside the corporate limits of Palm Coast and Marco Island
may require evidence from Buyers satisfactory to the Title Insurer of such
Buyer's authority to acquire said Fee Parcels, and Buyers shall accept
20
any exception from coverage for any claim based on a failure of such authority
as determined by the Title Insurer.
SECTION 3.07. ENVIRONMENTAL PROVISIONS
(A) For purposes of this Section: (1) "Hazardous Materials" shall mean any
substance or material regulated by any federal, state or local governmental
entity under any Environmental Law as a hazardous material, hazardous substance,
hazardous waste, pollutant, contaminant, toxic waste, toxic substance or words
of similar import, including petroleum and petroleum products, by-products or
breakdown products, but excluding mold and other biological contaminants,
asbestos, asbestos containing materials, lead paint, insulating materials,
paints and coatings applied to building surfaces and equipment, and other
building and construction materials, whether or not toxic (collectively,
"Building Substances"); (2) "Environmental Laws" shall mean any statute, law,
regulation, ordinance, injunction, judgment, order, or other decree of any
governmental authority pertaining to the protection of the environment,
including the Comprehensive Environmental Response, Compensation and Liability
Act, the Resource Conservation and Recovery Act, the Federal Water Pollution
Control Act, the Oil Pollution Act of 1990, Toxic Substances Control Act, and
any comparable state statute, law, regulation, ordinance, injunction, judgment,
order, or other decree, but excluding any statute, law, regulation, ordinance,
injunction, judgment, order, or other decree of any governmental authority
pertaining to Building Substances.
(B) Florida Water has no Knowledge of any material non-compliance with any
Environmental Law or material liability under any Environmental Law. For
purposes of this Section, "material" shall mean any matter reasonably expected
to result in the expenditure of
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over one hundred thousand dollars ($100,000) to correct the non-compliance or
satisfy the liability.
(C) Buyers have performed assessments as they have deemed appropriate,
including Phase I Environmental Assessments pursuant to applicable ASTM
standards and Phase II Environmental Assessments for recognized environmental
concerns identified in the Phase I Environmental Assessments. Buyers shall be
responsible for the costs to remediate environmental concerns that are or should
have been identified in the Phase I and Phase II Assessments.
ARTICLE IV
OTHER PRECLOSING MATTERS
SECTION 4.01. ISSUANCE OF BONDS.
Each Buyer intends to individually issue revenue Bonds (the "Bonds") to pay
the Transaction Costs and the Purchase Price for such Buyer's Utility System as
set forth in Section 2.04 of this Agreement. The Buyers' obligation to close the
Contemplated Transactions in this Agreement shall be and is expressly
conditioned upon the issuance of such Bonds. In the event any of the Buyers in
good faith determine that its Bonds cannot be delivered on a date that permits
the Closing to occur on or prior to December 8, 2003, such Buyer shall
immediately notify Florida Water in writing of such determination, with such
notice setting forth in reasonable detail the bases upon which such
determination was made. Upon receipt of such notice, Florida Water shall have
the option of canceling this Agreement as to: (1) any of the Utility Systems for
which Bonds cannot be delivered; or (2) all Utility Systems; provided, however,
that Florida Water shall have the right to elect to proceed to Closing on the
sale of such Utility Systems for which Bonds can be delivered. As to any Utility
System for which Florida
22
Water has exercised its right to terminate this Agreement, such Buyer and
Florida Water shall have no liabilities and no further obligations to each other
under this Agreement.
SECTION 4.02. TRANSITION SERVICES. On or before forty-five (45) days after
the Signature Date, the Buyers and Florida Water will enter into a contract
delineating cooperation for certain services to be provided by Buyers to assist
Florida Water in the operation of its systems not sold under this Agreement, and
ownership transition and the transition services, if any, to be provided by
Florida Water following the Closing (the "Transition Agreement"). It is
understood and agreed between the parties that immediately upon the signing of
this Agreement by Florida Water, Florida Water shall give the Buyers access to
Florida Water's Facilities, records and computer systems and Florida Water
employees shall cooperate with the Buyers to facilitate the transition to the
Buyers' ownership and operation of the Purchased Assets.
SECTION 4.03. PRE-CLOSING APPROVALS
(A) Within ninety (90) days from the date of approval of this Agreement by
Palm Coast, Palm Coast shall obtain the written consent of the governing
regulatory body in Flagler County to Florida Water's application for transfer of
the Utility System in Flagler County (the "Flagler County Consent"), which
consent must remain in effect through the Closing Date. In the event that Palm
Coast has not timely obtained the Flagler County Consent, Florida Water may (1)
terminate this Agreement in total, (2) terminate this Agreement as to Palm Coast
only; or (3) waive this requirement and proceed to Closing.
(B) Within forty-five (45) days from the Signature Date, the GUA shall
obtain the written consent of each Governmental Body within which the GUA
Systems are located to the GUA's acquisition of the GUA Systems (the "GUA System
Consents"), which consents must
23
remain in effect through the Closing Date. In the event that the GUA has not
timely obtained all of the GUA County Consents, Florida Water may (1) terminate
this Agreement in total, (2) terminate this Agreement as to the GUA only; (3)
delete any or all of the GUA Systems for which the GUA has not obtained consent
from the Purchased Assets to be acquired by the GUA under this Agreement; or (3)
waive this requirement and proceed to Closing.
(C) In the event that any of the Governmental Bodies within which the GUA
Systems are located determine not to consent to the GUA acquisition of such part
of the GUA Systems, and requests to join in on this Agreement as a direct
purchaser of such part of the GUA Systems from Florida Water, the Buyers shall
consent to such joinder. Florida Water shall have the sole discretion to
determine whether to permit such a joinder, and shall have the sole right to
negotiate the purchase price for such part of the GUA Systems with the
requesting government.
(D) Within ninety (90) days from the date of approval of this Agreement by
Marco Island, Marco Island shall obtain the written consent of the governing
body in ▇▇▇▇▇▇▇ County to Florida Water's application for transfer of the
Utility System in ▇▇▇▇▇▇▇ County (the "▇▇▇▇▇▇▇ County Consent"), which consents
must remain in effect through the Closing Date. In the event that Marco Island
has not timely obtained the ▇▇▇▇▇▇▇ County Consent, Florida Water may (1)
terminate this Agreement in total, (2) terminate this Agreement as to Marco
Island only; or (3) waive this requirement and proceed to Closing.
(E) Within one hundred twenty (120) days from the date of approval of this
Agreement by Osceola, Osceola shall obtain an order from the PSC approving
Osceola's acquisition of the Utility System in Osceola County (the "Osceola PSC
Consent"), which consents must remain in effect through the Closing Date. In the
event that Osceola has not timely obtained the Osceola PSC Consent, Florida
Water may (1) terminate this Agreement in
24
total, (2) terminate this Agreement as to Osceola only; or (3) waive this
requirement and proceed to Closing.
(F) Within one hundred twenty (120) days from the date of approval of this
Agreement by GUA, GUA shall obtain an order from the PSC approving GUA's
acquisition of the GUA Systems (the "GUA PSC Consents"), which consents must
remain in effect through the Closing Date. In the event that GUA has not timely
obtained the GUA PSC Consents, Florida Water may (1) terminate this Agreement in
total, (2) terminate this Agreement as to GUA only; or (3) waive this
requirement and proceed to Closing.
(G) Within ninety (90) days from the date of approval of this Agreement by
Hernando, Hernando shall obtain the written consent of the Hernando County
Regulatory body to Hernando's acquisition of the Utility System in Hernando
County (the "Hernando County Consent"), which consent must remain in effect
through the Closing Date. In the event that Hernando has not timely obtained the
Hernando County Consent, Florida Water may (1) terminate this Agreement in
total, (2) terminate this Agreement as to Hernando only; or (3) waive this
requirement and proceed to Closing.
(H) Within ninety (90) days from the date of approval of this Agreement by
GUA, GUA shall deliver to Florida Water a certified statement evidencing that
Citrus County has obtained the written consent of the Citrus County Regulatory
body to Citrus County's acquisition of the Utility System in Citrus County (the
"Citrus County Consent"), which consents must remain in effect through the
Closing Date. In the event that Citrus County has not timely obtained the Citrus
County Consent, Florida Water may (1) terminate this Agreement in total, (2)
terminate this Agreement as to Citrus County only; or (3) waive this requirement
and proceed to Closing.
25
(I) Within one hundred twenty (120) days from the date of approval of this
Agreement by Deltona, Deltona shall obtain an order from the PSC approving
Deltona's acquisition of the Utility System in Volusia County (the "Deltona PSC
Consent"), which consent must remain in effect through the Closing Date. In the
event that Deltona has not timely obtained the Deltona PSC Consent, Florida
Water may (1) terminate this Agreement in total, (2) terminate this Agreement as
to Deltona only; or (3) waive this requirement and proceed to Closing.
(J) Within forty-five (45) days of the Signature Date, the Contemplated
Transactions shall be formally approved by the governing body of each Buyer
following a public hearing conducted pursuant to law; provided that, as to
Deltona, the forty-five (45) day period shall run from the date of the
Stand-Down Agreement (as defined herein). In the event the governing body of a
given Buyer does not approve the transaction, this Agreement will terminate as
to that Buyer and, at the option of Florida Water, may terminate in its
entirety, with no future obligation on the part of the parties affected by such
termination.
SECTION 4.04. DISMISSAL OF LEGAL PROCEEDINGS.
(A) Within 3 days after Closing, each Buyer participating in such Closing
shall: (i) dismiss with prejudice any and all complaints, claims, lawsuits
and/or regulatory proceedings pending against Florida Water and/or the Florida
Water Services Authority; (ii) dismiss with prejudice any and all complaints
claims, lawsuits and/or regulatory proceedings related in any way to the sale of
Florida Water's Assets; and (iii) use Best Efforts to secure written
confirmation from any county regulatory body with jurisdiction over the Florida
Water assets purchased by the Buyer that such county regulatory body has
dismissed or closed any formal or informal investigation or inquiry concerning
such assets or Florida Water's operation thereof.
26
With respect to regulatory proceedings dismissed per the preceding sentence,
dismissal with prejudice means that no future regulatory proceedings can be
initiated which relate to matters addressed in the dismissed proceeding. For the
GUA Closing, the GUA shall provide evidence that each Governmental Body within
which the GUA Systems are located shall comply with the requirements of this
Section. This includes, without limitation, dismissal by Charlotte County of its
litigation against Florida Water.
(B) Within 3 days after each Buyer has secured dismissal all of the legal
proceedings described in Section A related to that Buyer's acquisition, Florida
Water will dismiss with prejudice any and all complaints, claims, lawsuits
and/or regulatory proceedings pending against such Buyer that has secured
dismissal of all legal proceedings described to in Section A. Notwithstanding
the previous sentence, in response to a Person bringing a claim against Florida
Water relating to low pressure issues in Hernando County, Florida Water reserves
the right to maintain current and bring new claims, counter-claims, cross-claims
or lawsuits against Hernando County.
(C) Following execution and delivery of this Agreement by Florida Water,
each party shall agree to hold all proceedings affected by this Section 4.04 in
abeyance until Closing and dismissal.
ARTICLE V
CONDITIONS PRECEDENT TO THE BUYERS' OBLIGATION TO CLOSE
The Buyers' obligation to purchase the Purchased Assets and to take the
other actions required to be taken by the Buyers at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Buyers, in whole or in part).
27
SECTION 5.01. FLORIDA WATER'S PERFORMANCE. All of the covenants and
obligations that Florida Water is required to perform or to comply with pursuant
to this Agreement at or prior to the Closing (considered collectively), and each
of these covenants and obligations (considered individually), shall have been
duly performed and complied with in all material respects.
SECTION 5.02. ADDITIONAL DOCUMENTS. Florida Water shall have caused the
documents and instruments required by this Agreement and the following documents
to be delivered (or made available ) to the Buyers:
(A) The articles of incorporation and all amendments thereto of Florida
Water, duly certified as of a recent date by the Secretary of State;
(B) A legal opinion in substantially the form attached in APPENDIX G; and
(C) Such other documents as the Buyers may reasonably request for the
purpose of:
(1) evidencing the performance by Florida Water of, or the compliance
by Florida Water with, any covenant or obligation required to be performed or
complied with by Florida Water;
(2) evidencing the satisfaction of any condition referred to in this
Article; or
(3) evidence showing the release of all liens, security interests, and
other encumbrances other than Permitted Encumbrances (but excluding any
Permitted Encumbrances that encumber the Purchased Assets held by any entity
which has provided or may provide financing to Florida Water).
SECTION 5.03. NO CONFLICT. Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly, materially
contravene or conflict with or result in a material violation of or cause the
Buyers or any Related Person of the
28
Buyers to suffer any material adverse consequence under (a) any applicable Legal
Requirement or Order, or (b) any valid Legal Requirement or Order that has been
entered by any Governmental Body.
ARTICLE VI
CONDITIONS PRECEDENT TO FLORIDA WATER'S OBLIGATION TO CLOSE
Florida Water's obligation to sell the Purchased Assets and to take the
other actions required to be taken by Florida Water at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Florida Water in whole or in part):
SECTION 6.01. THE BUYERS' PERFORMANCE. All of the covenants and obligations
that the Buyers are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), shall have been
performed and complied with in all material respects.
SECTION 6.02. ADDITIONAL DOCUMENTS. Each of the Buyers shall have caused a
legal opinion in the form set forth in APPENDIX G to be supplied and the
documents and instruments required by this Agreement and the following documents
to be delivered or made available such other documents as Florida Water may
reasonably request for the purpose of:
(A) evidencing the performance by the Buyers of, or the compliance by the
Buyers with, any covenant or obligation required to be performed or complied
with by the Buyers; or
(B) evidencing the satisfaction of any condition referred to in this
Article.
SECTION 6.03. NO INJUNCTION. There shall not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the consummation
of the
29
Contemplated Transactions, and (b) has been adopted or issued, or has otherwise
become effective, since the Signature Date.
ARTICLE VII
COVENANTS OF FLORIDA WATER PRIOR TO CLOSING
SECTION 7.01. ACCESS AND INVESTIGATION. Between the Signature Date and the
Closing Date, and upon reasonable advance notice received from the Buyers and
subject to any applicable confidentiality obligations, Florida Water shall (a)
afford the Buyers and Buyers' representatives and prospective lenders,
underwriters, and their representatives (collectively, "Buyer Group") full and
free access, during regular business hours, to Florida Water's personnel,
properties (including subsurface testing), contracts, Governmental
Authorizations, books and Records and other documents and data, such rights of
access to be exercised in a manner that does not unreasonably interfere with the
operations of Florida Water; (b) furnish the Buyer Group with copies of all such
contracts, Governmental Authorizations, books and Records and other existing
documents and data as the Buyer Group may reasonably request; (c) furnish the
Buyer Group with such additional financial, operating and other relevant data
and information as the Buyer Group may reasonably request; (d) provide access
for conducting environmental site assessments; and (e) otherwise cooperate and
assist, to the extent reasonably requested by the Buyer Group, with the Buyer
Group's investigation of the properties, assets and financial condition related
to Florida Water. In addition, Buyers shall have the right to have the Real
Property and Personal Property inspected by Buyer Group, at the Buyers' sole
cost and expense, for purposes of determining the physical condition and legal
characteristics of the Real Property and Personal Property. In the event
subsurface or other destructive testing is recommended by
30
any of the Buyer Group, the Buyers shall be permitted to have the same performed
with the prior consent of Florida Water, which shall not be unreasonably
withheld.
SECTION 7.02. OPERATION OF THE BUSINESS OF FLORIDA WATER.
Between the Signature Date and the Closing, Florida Water:
(A) shall conduct its business in the Ordinary Course of Business;
(B) shall confer with the Buyers prior to implementing operational
decisions relating to the Utility System of a material nature;
(C) shall maintain the Purchased Assets in a state of repair and condition
that complies with Legal Requirements and is consistent with the requirements
and normal conduct of Florida Water's business;
(D) shall comply with all Legal Requirements and contractual obligations
applicable to the operations of Florida Water's business;
(E) shall cooperate with the Buyers and shall assist the Buyers in
identifying the Governmental Authorizations required by the Buyers to operate
the business from and after the Closing Date and either transferring existing
Governmental Authorizations of Florida Water to the Buyers, where permissible,
or assisting the Buyers in obtaining new Governmental Authorizations for the
Buyers;
(F) upon request from time to time, shall execute and deliver all
documents, shall make all truthful oaths, testify in any Proceedings and do all
other acts that may be reasonably necessary to consummate the Contemplated
Transactions, all without further consideration; and
(G) shall maintain all books and Records of Florida Water relating to
Florida Water's business in the Ordinary Course of Business.
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SECTION 7.03. NEGATIVE COVENANT. Except as otherwise expressly permitted
herein, between the Signature Date and the Closing Date, Florida Water shall not
without the prior written consent of an affected Buyer which shall not be
unreasonably withheld and which shall be promptly acted upon by such Buyer, (a)
make any material modification to any Governmental Authorization that relate to
the Purchased Assets; or (b) allow the levels of raw materials, supplies or
other materials included in the Purchased Assets to vary materially from the
levels customarily maintained.
SECTION 7.04. REQUIRED APPROVALS. Florida Water shall make the reasonably
required filings necessary to be made by it in order to consummate the
Contemplated Transactions. Florida Water also shall cooperate with the Buyers
and their Representatives with respect to all filings that the Buyers elect to
make or, pursuant to Legal Requirements, shall be required to make in connection
with the Contemplated Transactions. Florida Water also shall cooperate with the
Buyers and their Representatives in obtaining all consents.
SECTION 7.05. NOTIFICATION. Between the Signature Date and the Closing,
Florida Water shall promptly notify the Buyers and Buyers shall promptly notify
Florida Water in writing if any of them becomes aware of (a) any fact or
condition that causes or constitutes a Breach of the Agreement or (b) the
occurrence after the Signature Date of any fact or condition that would or be
reasonably likely to (except as expressly contemplated by this Agreement) cause
or constitute a Breach of the Agreement. During the same period, Florida Water
also shall promptly notify the Buyers of the occurrence of any Breach of any
covenant of Florida Water in this Article VII or of the occurrence of any event
that may make the satisfaction of the conditions in Article V impossible or
unlikely.
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SECTION 7.06. PAYMENT OF LIABILITIES. Florida Water shall pay or otherwise
satisfy in the Ordinary Course of Business all of its Liabilities and
obligations as they come due.
ARTICLE VIII
COVENANTS OF THE BUYERS
SECTION 8.01. REQUIRED APPROVALS. As promptly as practicable after the
Signature Date, the Buyers shall make, or cause to be made, all filings required
by Legal Requirements to be made by it to consummate the Contemplated
Transactions. The Buyers also shall cooperate, and cause its Related Persons to
cooperate, with Florida Water with respect to all filings Florida Water shall be
required by Legal Requirements to make.
SECTION 8.02. CERTAIN REGULATORY PROCEEDINGS. In the event that a Person
initiates a docket, investigation, complaint, claim, lawsuit, objection or other
inquiry relating to or arising out of an issue of sharing, allocation or refund
of Florida Water's economic gain on any or all of the Utility System transfers
contemplated by this Agreement ("Gain on Sale Inquiry"), whether initiated
before or after the Closing of the Contemplated Transactions, each Buyer shall
promptly request to intervene in any Gain on Sale Inquiries which relate to
their Utility System and actively oppose the imposition of any such sharing,
allocation or refund of any such economic gains with or to Florida Water's
customers, past, present and future, or the imposition of any similar
liabilities or burdens upon Florida Water, its customers or its affiliates in
connection therewith, based upon the recitals in the fourth "WHEREAS" clause of
this Agreement, which each Buyer hereby represents to be accurate and true, and
based upon such other grounds as may reasonably be advanced.
SECTION 8.03. LEGAL OPINIONS. Within 30 days of the Signature Date of this
Agreement by Florida Water, Marco Island, Deltona and Palm Coast shall each
cause its outside
33
legal counsel acceptable to Florida Water to deliver to Florida Water a legal
opinion acceptable to Florida Water stating that it has extraterritorial power
under the Florida Constitution and the laws of Florida to acquire Florida
Water's utility assets outside its boundaries.
SECTION 8.04. HERNANDO OBLIGATION. Florida Water and Hernando recognize
that there are concerns regarding water pressure in the Hernando System that
could affect service to current customers and the ability of the Hernando System
to provide service to future customers. The purchase price for the Hernando
System reflects in part the retention by Hernando of capital monies to remedy
these water pressure concerns that would otherwise have been paid to Florida
Water as additional purchase price. Accordingly, as material consideration for
Florida Water agreeing to sell the Hernando System for the Purchase Price set
forth in this Agreement, Hernando County covenants that after the Closing
Hernando County shall assume service obligations to all persons desiring utility
service within the utility service area for the Hernando System and Hernando
County agrees that post-Closing it will be responsible for resolving any low
pressure concerns. Hernando County covenants to use its Best Efforts and all
diligence after Closing to remedy the Hernando System water pressure problems,
for which time is of the essence.
SECTION 8.05. FLORIDA WATER EMPLOYEES.
(A) No later than 5:00 p.m. on the day which is forty-five (45) days after
the Signature Date or 70 days before Closing Date, whichever is earlier, each
Buyer shall deliver to Florida Water a written list of all Florida Water's
employees to whom the Buyers will offer employment upon Closing. Florida Water
shall be responsible for payment of all wages, salaries and benefits accrued and
payable to individuals employed by Florida Water through the Effective Time and
the Buyers shall be responsible for payment of all wages, salaries and
34
benefits relating to the period commencing on and from the Effective Time. If
required, Florida Water and the Buyers will comply with the notice requirements
under the Worker Adjustment Retraining and Notification Act ("WARN Act"), or any
similar federal, state or local legislation with respect to such employee
matters. It is expressly understood and agreed that the Buyers shall not be
responsible or liable, directly or indirectly, for payment of any benefits,
severance liability, compensation, pay or other obligations, of whatever nature,
due or alleged to be due to any employee attributable to any time period up to
or as a result of Closing. It is expressly understood and agreed that Florida
Water is not and shall not be responsible or liable, directly or indirectly, for
payment of any benefits, severance, liability, compensation, pay or other
obligations, of whatever nature, due or alleged to be due any employee
attributable to any time period upon or after Closing.
(B) The Buyers shall hire, or shall cause to be hired, as of the Closing
Date, all employees designated on the list referred to in Section 8.05 for at
least one year after Closing at rates of wages or salary comparable to those
being paid by Florida Water on the Signature Date, including any employees on
the list who are on short-term disability, and shall provide employee benefits
to such employees comparable to those offered by Florida Water, provided,
however, that each of the Buyers shall retain the right at all times after the
first anniversary of Closing to determine its own staffing needs, personnel
policies and employment practices with regard to such employees. Employees and
any managerial personnel who accept employment with the Buyers as of, or within
sixty (60) days following the Closing Date shall hereinafter be referred to as
"Transitioned Employees." The Buyers shall provide for group health coverage for
the Transitioned Employees and their dependents comparable to the health
insurance currently provided by Florida Water with no waiting period for
eligibility or entry into the plan and no
35
exclusion or limitation for preexisting conditions currently covered for such
Transitioned Employee under Florida Water's health insurance plan. If within
twelve (12) months after the Closing Date, any Transitioned Employee is
terminated (for any reason other than for cause), the terminated Transitioned
Employee shall continue to be paid such wages or salary which the Transitioned
Employee would have received if the Transitioned Employee had remained employed
for twelve (12) months after the Closing Date.
ARTICLE IX
CLOSING PROCEDURES AND ADJUSTMENTS
SECTION 9.01. CLOSING DATE AND PLACE. The closing shall be held at such
place or offices designated by Florida Water in the Orlando area and on such
date on or before December 8, 2003, as mutually agreed among the parties (the
"Closing" or "Closing Date"). With respect to any Contemplated Transaction not
closed as of the Closing Date, Florida Water and the remaining Buyers will
continue to use all reasonable efforts to close at the earliest practicable
date, subject to the rights to terminate in Sections 10.09 and 4.03. Except as
set forth herein, no extension of the Closing Date shall modify any of the other
deadlines set forth in this Agreement unless specifically noted in a written
extension executed in accordance with the terms of this Section. Any Buyer that
desires to Close prior to the Closing Date may submit a written request to
Florida Water to close the transaction with respect to such Buyer at an earlier
date than the Closing Date ("Early Closing Date"). Florida Water, in its sole
discretion, may elect to agree to the Early Closing Date with respect to any
particular Buyer, or may elect to retain the Closing Date for such Buyer.
Florida Water's determination to agree to an Early Closing Date as to a
particular Buyer shall not obligate Florida Water to agree to an Early Closing
Date as to any other Buyer. In the event that some, but not all, of the Buyers
have met all requirements under
36
the Agreement for Closing on the Closing Date, Florida Water, in its sole
discretion, may elect to Close with any or all of such Buyers that are prepared
to Close ("Partial Closing") and may elect to terminate the Agreement as to any
or all of the other Buyers. Florida Water's determination to agree to a Partial
Closing with a particular Buyer shall not obligate Florida Water to agree to a
Partial Closing with any other Buyer.
SECTION 9.02. DOCUMENTS AFTER THE CLOSING.
From time to time after Closing, each party hereto shall, upon request of
the other, execute, acknowledge and deliver, or shall cause to be executed,
acknowledged and delivered, all such further acts, special warranty deeds,
assignments, bills of sale, transfers or other documentation for (1) confirming
or correcting title in the name of the Buyers or their successor(s) or
perfecting possession by the Buyers or their successor(s) of any or all of the
Purchased Assets, including the establishment of record of Easements without
resort to litigation, expenditure of monies or other extraordinary means, for
all Facilities which are a part of the Utility System in existence or use at the
time of Closing, or (2) otherwise fulfilling the obligations of the parties
hereunder. Further, from time to time after Closing should the parties discover
that certain land parcels, Easements, or other rights owned or enjoyed by
Florida Water at Closing and necessary to the proper operation and maintenance
of the Utility System had not been included in the appropriate appendices hereto
and thus not transferred to the Buyers or their successor(s) at Closing in
accordance with this Agreement, then the parties agree that Florida Water shall
execute or cause to be executed the documents including, but not limited to,
deeds, easements and bills of sale necessary to convey such ownership or rights
to the Buyers or their successor(s), at no cost to the Buyers, provided such
conveyances may be accomplished without resort to litigation, expenditure of
monies or other extraordinary means.
37
SECTION 9.03. RECORDING FEES AND DOCUMENTARY TAXES.
(A) Recording fees to record the deeds and any other instruments necessary
to deliver title to the Buyers shall be paid by the Buyers.
(B) The Purchased Assets are being purchased by the Buyers for public
purposes in lieu of eminent domain and condemnation by various local governments
throughout Florida which have passed resolutions or taken other actions
confirming their desire to cooperate in the Buyers purchase of Florida Water's
systems such that this transaction is immune from documentary stamp tax in
accordance with the ruling in DEPARTMENT OF REVENUE V. ORANGE COUNTY, 605 So. 2d
1333 (Fla. DCA 1992), affd, 620 So. 2d 991 (Fla. 1993). To the extent that
documentary stamp taxes are due and payable, such taxes and any related penalty
shall be paid by the Buyers.
SECTION 9.04. ACCOUNTS RECEIVABLE; UNBILLED REVENUES; CUSTOMER DEPOSITS;
ACCOUNTS PAYABLE.
(A) Florida Water shall furnish to the appropriate Buyer, at least ten (10)
days prior to Closing, a listing of each respective Facility's accounts
receivable ("Accounts Receivable"), customer deposits, by customer and
individual amount and accrued interest ("Customer Deposits") and estimated
unbilled revenue through the date of Closing ("Unbilled Revenues"). Florida
Water shall assign to the appropriate Buyer at Closing, the Buyer's respective
Facility's Accounts Receivable and Unbilled Revenues and all rights of
collection therefor, together with the liabilities of Customer Deposits, in
accordance with the following terms. At the Closing, each appropriate Buyer
shall reimburse Florida Water for the excess of the sum of Accounts Receivable
that are not more than sixty (60) days in arrears plus 98% of Unbilled Revenues
over the Customer Deposits for the Buyer's respective Facility. Should the total
Customer Deposits
38
exceed the sum of Accounts Receivable and Unbilled Revenue, then Florida Water
shall reimburse the appropriate Buyer at Closing for any excess amount. Unbilled
Revenues shall be based upon the actual ▇▇▇▇▇▇▇▇ for the month immediately
preceding the month of the Closing and shall be prorated through the date of
Closing based on the number of days that have elapsed since the last billing
period. All amounts received by Florida Water through the date of closing for
Accounts Receivable which were collected by Florida Water subsequent to the date
Florida Water provided the Buyers with the list of Accounts Receivable, shall be
credited to the appropriate Buyer at the Closing. After the Closing, Florida
Water will promptly pay to Buyers any payments received by Florida Water on a
Buyer's customer's account.
(B) All bills for services, materials and supplies rendered in connection
with the operation of the Utility System prior to Closing, including but not
limited to electricity, for a period up to and including the Closing Date
("Accounts Payable"), shall be paid by Florida Water. Prorations shall be
required only for the following Accounts Payable: (1) electricity, to the extent
meters are not read on the Closing Date; (2) telephone, to the extent no final
▇▇▇▇ is rendered to Florida Water on the Closing Date and the Buyers continue
service with the provider; (3) rental, maintenance or lease charges under
contracts assumed by the Buyers or the Buyers' Contractors; (4) charges under
maintenance and service contracts assumed by the Buyers of the Buyers'
Contractors; (5) purchased water and wastewater to the extent meters are not
read on the Closing Date; (6) sludge hauling charges; and (7) other invoices
that include pre-Closing and post-Closing obligations.
(C) Property Taxes. Florida Water shall be responsible for any past due and
all ad valorem taxes, prorated through the date of Closing in accordance with
Section 196.295, Florida
39
Statutes, and shall escrow funds with the tax collector of the counties in which
the Systems are located if so required.
SECTION 9.05. CONNECTION CHARGES
(A) Connection Charges collected by Florida Water prior to Closing shall
remain Florida Water's sole and separate property with no claim of the Buyers
therefore.
(B) Connection Charges collected from and after Closing shall be paid to
the Buyers with no claim of Florida Water therefore.
(C) Notwithstanding the foregoing, if Florida Water entered into an
agreement with a developer or individual customer prior to the Signature Date
which provides for payment of Connection Charges in installments payable over a
period of time, Florida Water shall be entitled to retain payments from such
developer or individual customer that come due after the Closing Date to the
extent that such payments are attributable to connections of customers made
prior to the Closing Date.
(D) Florida Water shall supply to the Buyers documents relating to deposits
("Vendee Deposit") made by land contract vendees ("Deposit Vendee") pursuant to
land contracts for which deposits Florida Water has agreed to give the relevant
Deposit Vendee a credit equal to such deposits made by such Deposit Vendee
against Connection Charges which such Deposit Vendee would have to pay at the
time it obtains water and/or sewage service from the Utility System. After
Closing, some of such Deposit Vendees will continue to make such deposits and
Florida Water agrees to promptly after Closing take such action to cause all
such future deposits to be paid to the Buyers and shall supply the Buyers with
evidence that it has done so.
(E) Notwithstanding any contract rights which Hernando County may claim
against Florida Water as a result of the transfer of the Hernando Facilities to
Hernando County,
40
Hernando County expressly waives any rights to return or credit of Connection
Charges which Hernando County has paid to Florida Water.
SECTION 9.06. COSTS AND PROFESSIONAL FEES.
(A) Each party shall be responsible for securing its own counsel and
advisors for representation in connection with the negotiation of this
Agreement, and all other matters associated with performance, cancellation or
closing hereunder, unless otherwise specified herein. Each party shall be
responsible for the payment of the fees of its own attorneys, bankers,
engineers, accountants, and other professional advisors or consultants in
connection herewith. The Buyers shall be responsible for payment of the
Transaction Costs.
(B) In any litigation arising out of this Agreement, each party shall pay
its own attorney's fees and taxable costs at all judicial levels.
SECTION 9.07. RISK OF LOSS. At all times prior to and through the time of
Closing, Florida Water shall maintain adequate fire and extended insurance
coverage for the cost of any repairs to the Purchased Assets that maybe required
as a result of casualty damage. The risk of loss during the said period of time
shall fall upon Florida Water. The risk of loss shall pass to the Buyers at
Closing.
SECTION 9.08. PROCEEDS OF SALE; CLOSING PROCEDURE.
(A) On or prior to the Closing Date, Florida Water and the Buyers shall
execute all documents necessary to Close the transaction. At the Closing, the
appropriate parties shall execute and deliver to the closing agent appointed by
Florida Water (the "Closing Agent") all of the documents related to each Utility
System as delineated in subsection (D) below. The parties agree that legal
counsel for Florida Water may act as Closing Agent and waive any potential
conflict regarding the same.
41
(B) In order to secure title insurance coverage against the existence of
material adverse matters recorded during the period of time between the
effective date(s) of the Title Commitment and the date of recording of the
documents creating the estate to be insured, Florida Water and the Buyers agree
that the Closing Agent may also be the Title Company, or the Title Company's
agent, selected by Florida Water to issue the Title Policy, and waive any
conflict regarding the same.
(C) At the Closing, the appropriate party shall execute or cause to be
executed and deliver to the Closing Agent the following documents effecting the
separate transfer of the Purchased Assets related to each Utility System to the
appropriate Buyer (the "Transfer Documents") (E.g., Florida Water shall execute
a special warranty deed transferring the Fee Parcels within the Palm Coast
System to Palm Coast). These Transfer Documents shall be in final form, together
with any exhibits or appendices thereto and shall include, without limitation,
the following:
(1) Special warranty deeds for the conveyance of Fee parcels to be
conveyed;
(2) Conveyance instruments for Easements;
(3) The Transfer, Assignment and Assumption Agreement covering all
other interests in the Purchased Assets, together with a general assignment of
all contracts, agreements, permits and approvals;
(4) Bills of Sale or other documents of assignment and transfer, with
full warranties of title, to the Purchased Assets, other than Fee Parcels and
Easements;
(5) Post closing agreements, affidavits, assignments certificates,
estoppel certificates, corrective instruments, releases, satisfactions or
terminations necessary or required pursuant to this Agreement;
42
(6) "Marked-up" Title Commitments for each Utility System consistent
with Section 3.06 of this Agreement;
(7) Non-foreign affidavit and a Florida Department of Revenue Form
DR-219 completed and executed by Florida Water for each Utility System;
(8) Any affidavits, assignments certificates, estoppel certificates,
corrective instruments, releases, satisfactions or terminations necessary to
close, including, but not limited to, a no lien affidavit, a "gap" affidavit
along with those instruments identified by the Title Company insuring the real
property;
(D) Florida Water acknowledges that the Buyers will issue the Bonds to
generate proceeds to pay the Purchase Price as described in Section 4.01 hereof.
Therefore, all Closing procedures shall be subject to the customary and
reasonable requirements of the underwriters selected by the Buyers, the
purchasers of the Bonds or the provider of any interim financing. The
disbursement of proceeds shall be at the direction of the Title Company, or its
agent, in order to secure coverage against material adverse matters or defects
in title which are recorded during the period of time between the effective date
of the Title Commitment and the date of recording of the document creating the
estate or interest to be insured.
SECTION 9.09. TRANSFER OF PERMITS. The Buyers shall be responsible for
obtaining the transfer to each of the Buyers of the operating permits related to
the Utility System each Buyer is acquiring, as described in APPENDIX H hereof.
Florida Water and the Buyers shall cooperate in the preparation of all requisite
documents to notify, apply for and seek the transfer of such permits. Any permit
transfer application fees shall be paid by the appropriate Buyer, and the
parties will pay their respective costs to process such transfers.
43
SECTION 9.10. REGULATORY MATTERS. Subject to and with the exception of the
provisions set forth in Sections 4.04 and 8.02, and to the extent that Florida
Water has any regulatory proceedings pending before the PSC or any other
regulatory body with jurisdiction over the Utility System at the time of
Closing, Florida Water shall retain responsibility for all actions and costs
incurred to bring such proceedings to completion including all financial
responsibility or liability for any rate relief, refund or other obligations
imposed by the PSC or any county regulatory authority as a result of such
proceeding, and responsibility therefore is expressly not assumed by the Buyers.
All such matters are set forth and described in APPENDIX I. Notwithstanding the
above, upon Closing, Hernando shall cause all regulatory proceedings before the
Hernando County regulatory authority to be dismissed with prejudice.
SECTION 9.11. REGULATORY TRANSFER FILINGS. Within thirty (30) days of the
later of the Signature Date or the approval of the Agreement by the Governing
Bodies of each of the Buyers pursuant to Section 4.03(I) above, Florida Water
shall make any filings necessary to the PSC and appropriate county regulators
regarding the transfer of the Utility System and Purchased Assets from Florida
Water to the Buyers. Florida Water agrees to pay its fees and costs incident to
such filings. It is agreed that the Buyers shall apply every reasonable effort
to cooperate with Florida Water with respect to these filings and will render
all reasonable assistance necessary to Florida Water. The Buyers will pay their
fees and costs associated with its cooperation and assistance. The sale and
transfer of Utility System from Florida Water to the Buyers is contingent upon
any required approval by the PSC or other appropriate county regulators.
44
SECTION 9.12. ASSUMPTION BY THE BUYERS OF RESPONSIBILITY FOR SERVICE. The
Buyers shall assume responsibility for providing service to Florida Water's
customers who are receiving service at the time of Closing.
SECTION 9.13. PURCHASE PRICE ALLOCATION. Within ninety (90) days subsequent
to the Closing Date, Florida Water shall provide to the Buyers an allocation of
the Utility System Purchase Price to the Purchased Assets (tangible, intangible
and real estate assets, etc.) for each Utility System which allocation shall
comply with Section 1060 of the Internal Revenue Code of 1986, and the rules and
regulations promulgated thereunder, as amended and supplemented from time to
time, or any successor statute thereto. The parties affirm and agree that each
of them shall adhere to such allocation for all federal and state income tax
purposes, including the filing of all federal and state returns, if any, filed
by them subsequent to the Closing Date.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. RADON. Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
any county public health unit.
SECTION 10.02. TIME IS OF THE ESSENCE. Time is of the essence in this
Agreement. Time periods specified in this Agreement shall expire at midnight on
the date stated unless the parties agree in writing to a different date or time.
Any time period provided for herein
45
which ends on Saturday, Sunday or a legal holiday shall extend to 5:00 p.m. on
the next Business Day.
SECTION 10.03. ENFORCEMENT OF AGREEMENT. In the event that a dispute arises
from the Agreement, each party shall bear its own costs and expenses, including
attorneys' fees. Venue for any dispute shall be in the Circuit Court of Orange
County, Florida.
SECTION 10.04. APPLICABLE LAW; JURISDICTION AND VENUE.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida.
SECTION 10.05. NOTICE.
(A) All notices, certificates or other communications hereunder shall be
sufficiently given and shall be deemed given when hand delivered or mailed by
registered or certified mail, postage prepaid, or by courier service, charges
prepaid, to the parties at the following addresses:
To Hernando County: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
County Attorney
Hernando County Attorneys ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Rose, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
To Osceola: ▇▇ ▇▇▇▇▇▇▇, Esquire
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
46
To Marco Island: Mr. A. ▇▇▇▇▇▇▇ ▇▇▇▇
City Manager
City of Marco Island City Hall
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Rose, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
To Palm Coast: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
City Manager
City of Palm Coast
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
Stenstrom, McIntosh, Colbert,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
To the GUA: Florida Governmental Utility Authority
c/o Government Services Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Esquire
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
To Deltona: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
City Manager
City of Deltona
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ Blossom, Esq.
City Attorney
City of Deltona
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
47
To Florida Water: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, COO and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq., General Counsel
Florida Water Services Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
And additional copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Gildan, Esq.
(B) Any written notice given to one person in subsection (A) of this
Section shall also be copied and provided to all other persons identified in
subsection (A).
(C) The parties may, by notice in writing given to the others, designate
any future or different addresses to which the subsequent notices, certificates
or other communications shall be sent. Any notice shall be deemed given on the
date such notice is delivered by hand or by facsimile transmission or five (5)
days after the date mailed.
SECTION 10.06. ASSIGNMENT AND JOINDER.
(A) Except as provided in under Section 10.06(B) below, Neither Florida
Water nor the Buyers shall have the power or authority to assign this Agreement
or any of their rights, duties or obligations hereunder to a third party without
the express written consent of the other party and this Agreement shall be
construed as solely for the benefit of the Buyers and Florida Water, and their
successors by law, and no claim or cause of action shall accrue to or for the
benefit of any other third party by reason hereof.
(B) Consistent with the Tohopekaliga Transition Interlocal Agreement
entered into between the City of Kissimmee, Osceola County and Tohopekaliga
Water Authority, (an
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independent Special District, established and created pursuant to Chapter 189,
Florida Statutes, by Special Act of the Legislature) on July 17, 2003 (the
"Tohopekaliga Transition Interlocal Agreement") and this Agreement, Osceola may
hereby assign, transfer, convey, grant, bargain and sell unto the Tohopekaliga
Water Authority all of Osceola's rights, remedies, powers, title, interests,
duties, obligations and responsibilities arising under this Agreement which
relate to the Osceola System and the Facilities associated therewith; and the
parties hereto, including specifically Florida Water, hereby consent and agree
to such assignment and assumption. The Tohopekaliga Water Authority shall accept
and agree to, and Florida Water hereby consents to, such assignment and
assumption of all of Osceola's rights, remedies, powers, title, interests,
duties, obligations and responsibilities arising under the Agreement which
relate to the Osceola System and the Facilities associated therewith. Such
assignment and assumption shall be deemed subject to and be in all respects in
conformance with all provisions of this Agreement. The parties agree and
acknowledge that in facilitating closing pursuant to such assignment and
assumption all instruments required to close relating to the Osceola System will
be separately executed and directly conveyed from Florida Water to the
Tohopekaliga Water Authority as the assignee of Osceola. If the Tohopekaliga
Water Authority does not perform its obligations under the Agreement, Osceola
shall remain liable to Florida Water for such performance.
SECTION 10.07. AMENDMENTS AND WAIVERS. Except as otherwise provided in this
Agreement, no amendment, supplement, modification or waiver of this Agreement
shall be binding upon any party hereto unless executed in writing by such party.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement, whether or not
similar, unless otherwise expressly provided.
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SECTION 10.08. ENTIRE AGREEMENT. This Agreement is the entire agreement
between the parties and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions of the agreements, understandings,
negotiations and discussions of the parties, whether oral or written, pertaining
to the subject matter hereof, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof, except as specifically set forth herein.
SECTION 10.09. TERMINATION EVENTS. By notice given prior to or at the
Closing, subject to Section 10.10, this Agreement may be terminated as follows:
(A) by written notice from all of the Buyers that have not closed if a
material breach of any provision of this Agreement has been committed by Florida
Water and such breach has not been waived by such Buyers; provided in the event
of a breach which does not result in termination, Buyers retain all other
remedies available at law or in equity for such breach.
(B) by Florida Water if a material Breach of any provision of this
Agreement has been committed by the Buyers and such Breach has not been waived
by Florida Water;
(C) by written notice from all of the Buyers that have not closed if any
condition in Article V has not been satisfied as of the date specified for
Closing, or if satisfaction of such a condition by such date is or becomes
impossible (other than through the failure of the Buyers to comply with their
obligations under this Agreement), and the Buyers have not waived such condition
on or before such date;
(D) by Florida Water if any condition in Article VI has not been satisfied
as of December 8, 2003 (the date specified for Closing), or if satisfaction of
such a condition by such date is or becomes impossible (other than through the
failure of Florida Water to comply with its
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obligations under this Agreement), and Florida Water has not waived such
condition on or before such date;
(E) by mutual consent of all of the Buyers that have not closed and Florida
Water;
(F) by all of the Buyers that have not closed if the Closing has not
occurred on or before July 31, 2004, or such later date as the parties may agree
upon, unless the Buyers are in material Breach of this Agreement;
(G) by Florida Water if the Closing has not occurred on or before the
Closing Date or such later date as the parties may agree upon, unless Florida
Water is in material Breach of this Agreement;
(H) by Florida Water in the event that any Person initiates any Gain on
Sale Inquiry. Upon the occurrence of a Gain on Sale Inquiry, Florida Water may
(1) terminate this Agreement in total, (2) terminate this Agreement as to any
particular Buyer; or (3) waive this requirement and proceed to Closing; or
(I) by Florida Water in the event it is, in its discretion, dissatisfied
with any condition, requirement or burden imposed by any entity in any
regulatory approval process related to the Contemplated Transactions under this
Agreement.
SECTION 10.10. EFFECT OF TERMINATION
(A) Each party's right of termination under Section 10.09 is in addition to
any other rights it may have under this Agreement or otherwise, and the exercise
of such right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to Section 10.09, all obligations of the
parties under this Agreement will terminate unless otherwise stated in this
Agreement, provided, however, that, if this Agreement is terminated because of a
Breach of this Agreement by the non-terminating party or because one or more of
the conditions
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to the terminating party's obligations under this Agreement is not satisfied as
a result of the party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
(B) Neither the Buyers nor Florida Water shall be liable to the other in
the event that after the execution of this Agreement there occurs (1) a change
of law that prevents the Closing, (2) any action by a third party that prevents
the Closing or (3) any order by a Governmental Body or court that prevents the
Closing. Both parties agree to diligently defend against a third party attempt
to prevent a Closing.
SECTION 10.11. BUYERS' REPRESENTATIVE.
Within thirty (30) days after the Signature Date, Buyers shall designate in
writing a single Buyer's representative who shall be authorized to act on behalf
of Buyers with respect to Buyers communications with Florida Water under the
terms of the Agreement (the "Buyers' Representative"). Buyers have the right to
replace the Buyers Representative at any time without cause by delivering
written notice of such replacement to Florida Water. Florida Water shall have
the right to rely upon all written notices and written communications from
Buyers' Representative as the authorized representative of the Buyers under the
Agreement.
SECTION 10.12. SURVIVAL.
The provisions set forth in Sections 2.06, 2.09, 3.07, 4.02, 4.04, 6.04,
7.03, 8.01, 8.02, 8.04, 8.05, 9.02, 9.04, 9.05, 9.06, 9.09, 9.10, 9.12, 9.13,
10.03, 10.10 and this Section 10.12 shall survive Closing and not merge therein.
SECTION 10.13. JOINT AND SEVERABLE LIABILITY
In the event of a breach of this Agreement by a Buyer, liability for such
breach shall remain with such Buyer, and such liability shall not be joint and
several as to other Buyers.
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Remedy for a breach of Section 4.03 of this Agreement by a Buyer shall be
limited to cancellation of the Agreement, at Florida Water's option, as provided
therein.
SECTION 10.14. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be considered an original.
[SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, the Buyers and Florida Water have caused this Agreement
to be duly executed and entered into on the date first above written, subject to
the provisions of Section 4.03(I).
HERNANDO COUNTY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Its: County Attorney
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Attest:
THE CITY OF MARCO ISLAND
By: /s/ A. ▇▇▇▇▇▇▇ ▇▇▇▇
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Its: City Manager
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Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
THE CITY OF PALM COAST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its: City Manager
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Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
Deputy City Clerk
OSCEOLA COUNTY
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
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Its: Vice Chairman
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Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
THE CITY OF DELTONA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Its: City Manager
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Attest:
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FLORIDA GOVERNMENTAL
UTILITY AUTHORITY
By: /s/ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
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Its: Board Chair
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Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇
FLORIDA WATER SERVICES
CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Its: Chairman
---------------------------
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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