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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 15, 1999
AVATAR HOLDINGS INC.
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE 0-7616 23-1739078
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification No.)
201 ALHAMBRA CIRCLE, CORAL GABLES, FLORIDA 33134
(Address of Principal Executive Offices) (Zip Code)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (305) 442-7000
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 15, 1999, Florida Cities Water Company and Poinciana
Utilities, Inc., two operating subsidiaries of Avatar Utilities Inc., a
wholly-owned subsidiary of Avatar Holdings Inc. (Avatar or the Company), that
own and operate water and wastewater utilities located in the counties of
Brevard, Collier, Hillsborough, Lee, Osceola, Polk and Sarasota, Florida, closed
on the sale of substantially all of their assets used in the Florida utilities
operations.
For purposes of the transaction, certain of the counties organized The
Florida Governmental Utility Authority. The Florida Governmental Utility
Authority obtained the financing for the acquisition through the issuance of
municipal bonds.
The cash sales price of $209 million, subject to certain adjustments
for the period December 31, 1998 to the closing date, was determined through
arms-length negotiation. The sale is expected to result in a gain to the Company
of approximately $102 million, subject to certain adjustments for the period
December 31, 1998 to the closing date.
Avatar's contract management services subsidiary has entered into
definitive agreements to provide operation and maintenance services as well as
billing and customer services for each of the water and wastewater systems.
These agreements have initial terms ranging from 14 months to five years.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(B) PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet
gives effect to the sale of substantially all of the assets used in the Florida
utilities operations as if it had occurred on December 31, 1998. For the year
ended December 31, 1998, the Company's consolidated statement of operations
presents the Florida utilities operations as discontinued. The gain on the sale
transaction will be classified in the Company's consolidated statement of
operations during the six months ended June 30, 1999 as a gain from the sale of
discontinued operations. Consequently, the sale transaction will have no effect
on the Company's loss from continuing operations or loss per share from
continuing operations, and accordingly, no pro forma condensed consolidated
statement of operations is presented herein.
The unaudited pro forma condensed consolidated balance sheet is not
necessarily indicative of the results which would have actually been obtained
had the sale transaction been consummated on such date. The pro forma condensed
consolidated balance sheet should be read in conjunction with the Notes to the
Pro Forma Condensed Consolidated Balance Sheet included herein, as well as the
Company's historical Financial Statements and Notes thereto filed with its 1998
Annual Report on Form 10-K.
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AVATAR HOLDINGS INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheet
(Unaudited)
(Dollars in thousands)
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December 31, Florida December 31,
1998 Utilities 1998
As Reported Disposition Pro Forma
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ASSETS
Cash and cash equivalents $ 32,521 $ 137,740 (a) $ 170,261
Restricted cash 5,232 -- 5,232
Contracts and mortgage notes receivable, net 13,737 -- 13,737
Other receivables, net 4,257 -- 4,257
Land and other inventories 170,555 4,089 (d) 174,644
Property, plant and equipment, net 26,366 (2,787)(d) 23,579
Other assets 11,724 2,617 (d) 14,341
Deferred income taxes -- 14,359 (e) 14,359
Assets of discontinued operations 208,599 (169,086)(b) 39,513
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Total Assets $ 472,991 $ (13,068) $ 459,923
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Notes, mortgage notes and other debt:
Corporate $ 130,000 $ (15,000)(a) $ 115,000
Notes, collateralized by contracts and mortgage
notes receivable 9,060 -- 9,060
Real estate 18,493 -- 18,493
Estimated development liability for sold land 8,671 8,525 (d) 17,196
Accounts payable 3,385 -- 3,385
Accrued and other liabilities 35,182 1,000 (d) 36,182
Deferred customer betterment fees 18,837 (18,828)(d) 9
Income taxes payable -- 14,359 (e) 14,359
Liabilities of discontinued operations 137,106 (105,392)(c) 31,714
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Total Liabilities 360,734 (115,336) 245,398
Stockholders' equity, net 112,257 102,268 214,525
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Total Liabilities and Stockholders' Equity $ 472,991 $ (13,068) $ 459,923
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AVATAR HOLDINGS INC.
Notes to Pro Forma Condensed Consolidated Balance Sheet
(Unaudited)
(Dollars in thousands)
On April 15, 1999, substantially all of the assets used in the Florida utilities
operations were sold to The Florida Governmental Utility Authority for a cash
sales price of $208,619, subject to certain adjustments for the period December
31, 1998 through the closing date. The pro forma adjustments to the Pro Forma
Condensed Consolidated Balance Sheet as of December 31, 1998 are as follows:
(a) To record the estimated proceeds from the sale transaction and the
anticipated use of proceeds therefrom:
Total cash proceeds from sale $208,619
Transaction expenses related to the sale (1,568)
Contingent proceeds remaining in escrow (2,900)
Repayment of utilities loans and preferred stock (44,974)
Repayment of bank credit line (15,000)
Cash included in discontinued operations
for payment of utilities liabilities (6,437)
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Net cash $137,740
========
(b) To record the disposal of the Florida utilities assets as a result of this
sale transaction.
(c) To record the effect on the liabilities of discontinued operations as it
relates to the disposal of the assets used in the Florida utilities
operations:
Repayment of utilities loans and
preferred stock $(44,974)
Extinguishment of CIAC (60,359)
Change in accruals of utilities liabilities (59)
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$105,392
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Contributions in aid of construction (CIAC) are advances from real estate
developers and other direct contributions for plant construction.
(d) Adjustments to the basis of assets sold and retained that were applicable to
utilities operations and the accrual of liabilities as a result of this sale
transaction.
(e) Reflects the effect of deferred tax assets and current tax liabilities as a
result of this sale transaction.
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(C) EXHIBITS
2.1 Utility System Asset Acquisition Agreement, dated as of April 1, 1999,
by and between Florida Governmental Utility Authority and Florida
Cities Water Company and Poinciana Utilities, Inc.*
2.2 Addendum to Utility System Asset Acquisition Agreement concerning the
Fort Myers Utility System, dated as of April 1, 1999.
2.3 Assignment (of the Fort Myers Utility System to Lee County), dated as
of April 1, 1999, by and among Florida Governmental Utility Authority;
Board of County Commissioners of Lee County, Florida; Florida Cities
Water Company; and Poinciana Utilities, Inc.
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* Certain schedules and similar attachments have been omitted. The Registrant
agrees to furnish supplementally a copy of any omitted schedule or attachment to
the Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
AVATAR HOLDINGS INC.
Dated: April 30, 1999 By: /s/ Juanita I. Kerrigan
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Juanita I. Kerrigan
Vice President and Corporate Secretary
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EXHIBIT INDEX
* Certain schedules and similar attachments have been omitted. The Registrant
agrees to furnish supplementally a copy of any omitted schedule or attachment to
the Commission upon request.
2.1 Utility System Asset Acquisition Agreement, dated as of April 1, 1999,
by and between Florida Governmental Utility Authority and Florida
Cities Water Company and Poinciana Utilities, Inc.*
2.2 Addendum to Utility System Asset Acquisition Agreement concerning the
Fort Myers Utility System, dated as of April 1, 1999.
2.3 Assignment (of the Fort Myers Utility System to Lee County), dated as of
April 1, 1999, by and among Florida Governmental Utility Authority; Board
of County Commissioners of Lee County, Florida; Florida Cities Water
Company; and Poinciana Utilities, Inc.
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EXHIBIT 2.1
UTILITY SYSTEM
ASSET ACQUISITION AGREEMENT
By and Between
FLORIDA GOVERNMENTAL UTILITY AUTHORITY
and
FLORIDA CITIES WATER COMPANY
AND
POINCIANA UTILITIES INC.
Dated
as of April 1, 1999
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TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS AND CONSTRUCTION
SECTION 1.01. DEFINITIONS 3
SECTION 1.02. CONSTRUCTION AND INTERPRETATION 6
SECTION 1.03. INCORPORATION 6
SECTION 1.04. SECTION HEADINGS 6
ARTICLE II - REPRESENTATIONS
SECTION 2.01. REPRESENTATIONS OF THE GUA 7
SECTION 2.02. REPRESENTATIONS OF FCW AND PUI 9
ARTICLE III - PURCHASE AND SALE OF ASSETS
SECTION 3.01. PURCHASE AND SALE COVENANT 14
SECTION 3.02. PURCHASED ASSETS 14
SECTION 3.03. PURCHASE PRICE AND CONSIDERATION FOR SALE 16
ARTICLE IV - CONDITIONS PRECEDENT TO CLOSING
SECTION 4.01. PROVISION OF INFORMATION BY FCW AND PUI 19
SECTION 4.02. FINANCIAL DUE DILIGENCE 19
SECTION 4.03. ENGINEERING DUE DILIGENCE 20
SECTION 4.04. [INTENTIONALLY LEFT BLANK] 20
SECTION 4.05. ISSUANCE OF BONDS 21
SECTION 4.06. PURCHASE PRICE ADJUSTMENT FOR BOND MARKET INTEREST RATE 22
SECTION 4.07. ENVIRONMENTAL ASSESSMENT 24
SECTION 4.08. SURVEY 25
SECTION 4.09. TITLE VERIFICATION 26
SECTION 4.10. REGULATORY COMPLIANCE 28
SECTION 4.11. TRANSFER OF PERMITS 28
SECTION 4.12. DEADLINE TO CLOSE AND DISBURSE 29
ARTICLE V - CLOSING PROCEDURES
SECTION 5.01. CLOSING DATE AND PLACE 30
SECTION 5.02. DOCUMENTS FOR THE CLOSING 30
SECTION 5.03. RECORDING FEES AND DOCUMENTARY TAXES 31
SECTION 5.04. PROPERTY TAXES 31
SECTION 5.05. ACCOUNTS RECEIVABLE 32
SECTION 5.06. CONNECTION CHARGES 34
SECTION 5.07. PROFESSIONAL FEES; COSTS 35
SECTION 5.08. RISK OF LOSS 35
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SECTION 5.09. PROCEEDS OF SALE; CLOSING PROCEDURE 35
ARTICLE VI - GENERAL PROVISIONS
SECTION 6.01. RIGHT TO ENTER 39
SECTION 6.02. CONDUCT BETWEEN EXECUTION AND CLOSING 39
SECTION 6.03. TIME IS OF THE ESSENCE 40
SECTION 6.04. APPLICABLE LAW; JURISDICTION AND VENUE 40
SECTION 6.05. NOTICE 40
SECTION 6.06. ASSIGNMENT AND JOINDER 41
SECTION 6.07. AMENDMENTS AND WAIVERS 42
SECTION 6.08. ENTIRE AGREEMENT 42
SECTION 6.09. PUBLIC ANNOUNCEMENTS 43
SECTION 6.10. EFFECT OF TERMINATION 41
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APPENDICES
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APPENDIX A Real Property to be Conveyed to the GUA.....................................................A-1
APPENDIX B Easement Interests to be Conveyed to the GUA................................................B-1
APPENDIX C Schedule of Plans and Specifications........................................................C-1
APPENDIX D Schedule of Third Party Warranties Related to Completed or In Progress Construction.........D-1
APPENDIX E Schedule of Permits.........................................................................E-1
APPENDIX F General Location Map of Utility System......................................................F-1
APPENDIX G Inventory...................................................................................G-1
APPENDIX H Schedule of Operating and Vendor Contracts..................................................H-1
APPENDIX I Schedule of Reuse and Effluent Disposal Agreements..........................................I-1
APPENDIX J Schedule of Executory Agreements (Developer Agreements).....................................J-1
APPENDIX K Schedule of Continuing or Outstanding Water and Wastewater Service Obligations..............K-1
APPENDIX L Schedule of Executory Agreements (Other Than Developer Agreements)..........................L-1
APPENDIX M Schedule of Rates, Fees and Charges.........................................................M-1
APPENDIX N Excluded Assets.............................................................................N-1
APPENDIX O Permitted Exceptions........................................................................O-1
APPENDIX P Form of Documents for Closing...............................................................P-1
APPENDIX Q Form of Transfer, Assignment and Assumption Agreement.......................................Q-1
APPENDIX R Form of Document Escrow Agreement...........................................................R-1
APPENDIX S Form of Utility Operations Agreements.......................................................S-1
APPENDIX T Form of Water and Wastewater Facility and Capacity Expansion Agreement......................T-1
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UTILITY SYSTEM
ASSET ACQUISITION AGREEMENT
THIS AGREEMENT, is made and entered into as of this _____ day of April,
1999, by and between The Florida Governmental Utility Authority, a legal entity
and public body created by interlocal agreement pursuant to section 163.01(7),
Florida Statutes, (the "GUA"), and Florida Cities Water Company, a Florida
corporation ("FCWC") and Poinciana Utilities Inc., a Florida corporation
("PUI").
W I T N E S S E T H:
WHEREAS, FCWC and PUI own potable water supply, treatment, and
distribution systems and wastewater collection, transmission, treatment,
disposal and reuse systems in Brevard County, Collier County, Hillsborough
County, Lee County, Osceola County, Polk County, and Sarasota County, Florida;
and
WHEREAS, FCWC and PUI had no intention of selling their respective
utility assets, but received the threat of condemnation of its utility assets by
members of the GUA, which threat FCWC and PUI determined it was inadvisable to
resist and incur unnecessary time and expenses in defense of such proceedings,
but instead, in lieu of condemnation, agreed to negotiate an amicable resolution
of the threat of condemnation by entering into this Agreement;
WHEREAS, the GUA, pursuant to section 163.01, Florida Statutes (the
"Florida Interlocal Cooperation Act"), and that certain interlocal agreement
entered into and adopted by Brevard County, Lee County, Polk County and Sarasota
County, (the "Interlocal Agreement") to acquire the utility assets of FCWC and
PUI in lieu of condemnation by members of the GUA, has the power and authority
to provide potable water and wastewater infrastructure and service throughout
the State of Florida, and more specifically within Brevard County, Collier
County, Hillsborough County, Lee County, Osceola County, Polk County, and
Sarasota County, Florida; and
WHEREAS, the GUA held a public hearing on the proposed purchase and
sale of all or substantially all of the water and wastewater utility assets
owned by FCWC and PUI, and made a determination that such a purchase and sale
and privatization of such assets is in the public interest; and
WHEREAS, the GUA desires to acquire all or substantially all of the
assets which are used by FCWC and PUI in providing services through the water
and wastewater utility systems in Brevard County, Collier County, Hillsborough
County, Lee County, Osceola County, Polk County, and Sarasota County, Florida,
and FCWC and PUI have consented to sell those assets in lieu of condemnation by
individual members of the GUA, and Avatar Utilities Services, Inc. has
simultaneously agreed to enter into one or more operations, billing and customer
service agreements to continue the private operation and maintenance by contract
of such water and wastewater utility systems; and
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WHEREAS, the GUA, in determining if such a purchase and sale and
privatization of operations by contract is in the public interest considered, at
a minimum, all of the factors required by law.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and agreements contained herein, together with $10 and other
good and valuable consideration exchanged between the parties, the parties to
this Utility System Asset Acquisition Agreement do undertake, promise and agree
for themselves, their permitted successors and assigns as follows:
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ARTICLE I
DEFINITIONS AND CONSTRUCTION
SECTION 1.01. DEFINITIONS. As used in this Utility System Asset
Aquisition Agreement, the following terms shall have the meanings as defined
herein unless the context requires otherwise:
"ACCOUNTS RECEIVABLE ADJUSTMENT" has the meaning set forth in Section
5.05 of this Agreement.
"AGREEMENT" means this Utility System Asset Acquisition Agreement,
including any amendments and supplements hereto executed and delivered in
accordance with the terms hereof.
"AUSI" means Avatar Utilities Services, Inc., a Florida corporation and
its successors and assigns.
"BAREFOOT BAY SYSTEM" means that portion of the Utility System and
Purchased Assets located in Brevard County, Florida.
"BOARD" means the governing body of the GUA.
"BONDS" has the meaning set forth in Section 4.05 of this Agreement.
"CARROLLWOOD SYSTEM" means that portion of the Utility System and
Purchased Assets located in Hillsborough County, Florida.
"CLOSING" has the meaning set forth in Section 5.01 of this Agreement.
"DOCUMENT ESCROW" has the meaning set forth in Section 5.09(A) of this
Agreement.
"DUE DILIGENCE ADJUSTMENT" has the meaning set forth in Section 4.03 of
this Agreement.
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"EASEMENTS" means all rights, privileges, easements, licenses,
prescriptive rights, rights-of-ways, and rights to use public and private roads,
highways, streets, railroads and other areas owned or used by FCWC and PUI in
connection with the construction, reconstruction, installation, expansion,
maintenance and operation of the Utility System or the Purchased Assets.
"ESCROW CLOSING" has the meaning set forth in Section 5.09(A) of this
Agreement.
"EXCLUDED ASSETS" means those assets, properties and rights, both
tangible and intangible, real and personal, of FCWC and PUI described in
Appendix [N] hereto which shall not be and are not to be sold, conveyed, or
transferred to the GUA pursuant to this Agreement.
"GUA" means the Florida Governmental Utility Authority created by
interlocal agreement initially entered into by and among Brevard County, Lee
County, Polk County, and Sarasota County, Florida.
"FT. MYERS SYSTEM" means that portion of the Utility Assets and
Purchased Assets located in Lee County, Florida.
"GOLDEN GATE SYSTEM" means that portion of the Utility Assets and
Purchased Assets located in Collier County, Florida.
"NET INTEREST RATE ADJUSTMENT" has the meaning set forth in Section
4.06(A) of this Agreement.
"PURCHASED ASSETS" has the meaning set forth in Section 3.02 of this
Agreement.
"PERMITTED EXCEPTIONS" means those title exceptions described in
Appendix [O] hereto.
"POINCIANA SYSTEM" means that portion of the Utility System and
Purchased Assets located in Polk County, Florida, and Osceola County, Florida.
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"SARASOTA SYSTEM" means that portion of the Utility System and
Purchased Assets located in Sarasota County, Florida.
"TRANSACTION COST" means the costs, fees and expenses incurred by the
GUA in connection with the creation of the GUA, the negotiation, structure or
due diligence leading up to the GUA's acquisition of the Utility System or the
Purchased Assets, issuance of bonds or the use of any other interim financing
alternative contemplated in Section 4.03 hereof, including but not limited to
(A) rating agency and other financing fees; (B) the fees and disbursements of
bond counsel; (C) the discount taken by the underwriter; (D) the fees and
disbursements of the GUA's financial advisor; (E) the fees and disbursements of
the GUA's consulting engineers; (F) the fees and disbursements of the GUA's
water and wastewater counsel and consultants; (G) the costs of preparing or
printing the bonds and the documentation supporting issuance of the bonds; (H)
the fees payable in respect of any municipal bond insurance policy; and (I) any
other costs of a similar nature incurred in connection with issuance of the
bonds.
"UTILITY SYSTEM" means the potable water supply, treatment, storage,
and distribution systems and wastewater collection, transmission, treatment,
disposal and reuse systems owned by FCWC and PUI, which provide services to
portions of Brevard County, Collier County, Hillsborough County, Lee County,
Osceola County, Polk County, and Sarasota County, Florida. The Utility System is
comprised of the Barefoot Bay System, the Carrollwood System, the Ft. Myers
System, the Golden Gate System, the Poinciana System, and the Sarasota System
(each a "System").
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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 date of execution of this Agreement; and the term "hereafter" shall
mean on or after the initial date of execution of this Agreement.
(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. The Appendices hereto and each of the
documents referred to therein are incorporated and made a part hereof in their
entirety by reference.
SECTION 1.04. SECTION HEADINGS. Any headings preceding the texts of the
several Articles, Sections, Appendices, or Exhibits 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.
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ARTICLE II
REPRESENTATIONS
SECTION 2.01. REPRESENTATIONS OF THE GUA. The GUA makes the following
representations, which representations shall not survive the closing of this
Agreement.
(A) The GUA is duly organized and validly existing as an
independent special district created by interlocal agreement pursuant to section
163.01(7), Florida Statutes.
(B) The GUA has full power and authority to enter into the transactions
contemplated by this Agreement.
(C) Whether or not applicable, the GUA has fulfilled and complied
with the provisions of section 125.3401 (as to Lee County) and section 189.423,
Florida Statutes, relative to the purchase and sale and privatization of the
operations of a water, sewer or wastewater reuse utility by a governmental
agency, or will do so prior to closing.
(D) The GUA is not in default under any provisions of the laws of
the State of Florida material to the performance of its obligations under this
Agreement. The execution and delivery and performance of this Agreement and the
consummation by the GUA of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the GUA. Assuming the due
authorization, execution and delivery by other parties hereto, this Agreement
constitutes a valid and legally binding obligation of the GUA, enforceable
against the GUA in accordance with its terms, except to the extent that the
enforceability thereof may be limited by any applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally, or
by the exercise of judicial discretion of a court of competent jurisdiction in
accordance with general principles of equity.
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(E) The authorization, execution, performance and delivery of this
Agreement and the consummation by the GUA of the transactions contemplated
hereby will not conflict with, violate or constitute a material breach of, or
default under, any existing law, court or administrative regulation, decree,
order, or any provision of the Constitution or the laws of the State of Florida
relating to the GUA or its affairs, or any ordinance, resolution, agreement,
lease or other instrument to which the GUA is subject or by which it is bound.
(F) There is no action, suit, investigation or proceeding pending
or, to the GUA's knowledge, threatened against or affecting the GUA, at law or
in equity or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, wherein any
decision, ruling or finding would adversely affect the transactions contemplated
hereby or which in any way would adversely affect the validity of this Agreement
or any other agreement or instrument to which the GUA is a party and which is
used or contemplated for use in the consummation of the transactions
contemplated hereby.
(G) The GUA has not dealt with any broker, salesman or finder in
connection with the transactions contemplated herein and no sales commissions or
finder's fees are due or payable as a result hereof.
(H) The GUA has no material assets or liabilities except as
contemplated by this Agreement.
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SECTION 2.02. REPRESENTATIONS OF FCWC AND PUI. FCWC and PUI make the
following representations and warranties, which representations and warranties
shall not survive the closing of this Agreement.
(A) FCWC and PUI are corporations, each duly organized, validly
existing and in good standing in the State of Florida and authorized to do
business in such jurisdiction, and have all requisite corporate power and
authority to enter into and fully perform this Agreement. FCWC is a wholly-owned
subsidiary of FCWC Holdings, Inc. FCWC Holdings, Inc. is a majority-owned
subsidiary of Consolidated Water Company. Consolidated Water Company is a
majority-owned subsidiary of Avatar Utilities Inc. PUI is a wholly-owned
subsidiary of Avatar Utilities Inc. Avatar Utilities Inc. is a wholly-owned
subsidiary of Avatar Holdings Inc.
(B) The execution, delivery and performance of this Agreement and the
consummation by FCWC and PUI of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of FCWC and PUI.
Assuming the due authorization, execution and delivery by the GUA, this
Agreement will be valid and enforceable against FCWC and PUI in accordance with
its terms, except to the extent that the enforceability thereof may be limited
by any applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally, or by the exercise of judicial discretion
of a court of competent jurisdiction in accordance with the general principles
of equity.
(C) There is no action, suit, investigation, or proceeding pending or,
to FCWC or PUI's knowledge, threatened against or affecting FCWC and PUI, at law
or in equity or before any federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality, wherein any
decision, ruling or finding would adversely and materially
Page 9 of 44
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affect the transactions contemplated hereby or which in any way would adversely
and materially affect the validity of this Agreement or any other agreement or
instrument to which FCWC and PUI are a party which is used or contemplated for
use in the consummation of the transactions contemplated hereby.
(D) To the best of its knowledge and belief, neither the execution and
delivery of this Agreement by FCWC and PUI, nor the consummation by FCWC and PUI
of the transactions contemplated hereby, will violate the provisions of any
applicable law or any applicable order or regulation of any governmental
authority having jurisdiction over FCWC and PUI or conflict with or result in a
breach of any terms, conditions or provisions of any agreement or instrument to
which FCWC and PUI are now a party, or constitute a default thereunder, except,
in each case, for violations, conflicts, breaches and defaults which in the
aggregate would not have material adverse effect on the Purchased Assets as a
whole or the business of the Utility System as a whole.
(E) FCWC and PUI have not dealt with any broker, salesman or finder in
connection with the transactions contemplated herein and no sales commissions or
finder's fees are due or payable as a result hereof.
(F) FCWC and PUI has prepared, completed and delivered to the GUA the
following Appendices, subject to any qualifications stated in the Appendices:
(1) Appendix [A] is a schedule providing a complete legal
description or recording references for all real property owned by FCWC and PUI
and used in the operation of the Utility System.
Page 10 of 44
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(2) Appendix [B] is a schedule identifying in reasonable
detail all private Easements known to FCWC and PUI at the time of execution of
this Agreement.
(3) Appendix [C] contains a list of the locations at which can
be examined the plans and specifications which substantially describe the
Utility System's water and wastewater plants, lift or pump stations, wastewater
collection system and major transmission and reuse facilities.
(4) Appendix [D] is a schedule of the separately stated
written third party warranties that have been located by FCWC and PUI that
relate to completed or in-progress construction. This schedule does not include
manufacturer's warranties.
(5) Appendix [E] is a schedule of all current or active
permits, applications or other documents, together with effective dates and any
expiration dates, which authorize the operation of the Utility System's water
and wastewater treatment facilities by all applicable governmental authorities,
and which are material to the continued operation of the Utility System.
(6) Appendix [F] is a series of location maps of the Utility
System which generally depict the areas served by each operating System.
(7) Appendix [G] is an inventory of the equipment, vehicles,
tools, parts, laboratory equipment, computer equipment and other personal
property, other than the Excluded Assets, used by FCWC and PUI in connection
with the operation of Utility System.
(8) Appendix [H] is a schedule of all operating and vendor
contracts affecting the Utility System.
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<PAGE> 16
(9) Appendix [I] is a schedule of all executory reuse or
effluent disposal agreements entered into by FCWC and PUI for sale or reuse of
effluent delivered through the Utility System.
(10) Appendix [J] is a schedule of all executory agreements,
sometimes referred to as developer agreements, entered into by FCWC and PUI and
owners or developers of real property for the provision of water or wastewater
disposal services through the Utility System for which all customers connections
have not been completed.
(11) Appendix [K] is a schedule which sets forth all executory
agreements under which FCWC and PUI as owners of the Utility System have any
continuing or outstanding water or wastewater service obligations relating to
the Utility System as of December 18, 1998, and the total number of (1)
contractual connections; (2) contractual connections paid for and not yet
connected; (3) contractual connections not yet paid for and not yet connected;
and (4) any contractual connections for which FCWC and PUI have or expect to
begin collecting a periodic minimum or base charge prior to Closing.
(12) Appendix [L] is a schedule of all other agreements
entered into between FCWC or PUI and third parties which would reasonably be
considered to be a material encumbrance upon the Purchased Assets, including
without limitation, any leasehold agreements or oral agreements, if any. Any
such agreements that have not been reduced to writing are identified on said
schedule with a narrative of the terms thereof included therein. This schedule
does not include agreements pertaining to AUSI's privatization contract
operations that do not relate to the Utility System or the Purchased Assets.
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(13) Appendix [M] is a schedule of all current tariffs and
collectively setting forth the most current schedule of rates, fees and charges
that FCWC and PUI are authorized to impose.
(G) To their knowledge, FCWC and PUI are not in violation of any
governmental rule, regulation, permitting condition, or other governmental
requirement of any type or nature which would have a material adverse effect on
the Purchased Assets as a whole or on the maintenance, construction or operation
of the Utility System.
(H) To the knowledge of FCWC and PUI, there are no hazardous substances
(as that term is defined in the Comprehensive Environmental Response and
Compensation and Liability Act, the Resource Conservation and Recovery Act or
analogous Florida Law), located upon or beneath the real estate to be conveyed
to the GUA at concentrations that could reasonably be expected to result in the
owner or operator of such real estate incurring material liabilities under
environmental laws to remediate such hazardous substances.
(I) There are no facts actually known to the management, officers and
directors of FCWC and PUI materially adversely affecting the physical condition
of the Utility System or Purchased Assets which are not readily observable or
which have not been disclosed or provided to the GUA in connection with this
transaction or otherwise.
(J) FCWC and PUI have undertaken steps to identify and correct or
minimize potential Year 2000 computer and software problems ("Y2K") that relate
to the Purchased Assets. FCWC and PUI are not aware of any material Y2K
compliance issues it has not addressed. Y2K relates to the fact that many
existing computer programs and embedded computer chips recognize only the last
two digits of the year, and are unable to distinguish
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between the year 1900 and the year 2000. Because of the unprecedented nature of
the Y2K issue, its effects and the success of related remediation efforts will
not be fully determined until the year 2000 and thereafter. FCWC and PUI can
provide no assurance that the Utility System is or will be year 2000 ready, or
that their remediation efforts will be successful in whole or in part; nor can
FCWC and PUI provide any assurance that vendors, government agencies, paying
agents or other third parties providing service to FCWC and PUI have or are
effectively dealing with Y2K issues in a timely manner.
ARTICLE III
PURCHASE AND SALE OF ASSETS
SECTION 3.01. PURCHASE AND SALE COVENANT. At Closing, the GUA shall
purchase and FCWC and PUI shall sell and convey the Purchased Assets to the GUA
upon the terms and subject to the conditions set forth in this Agreement. At
Closing, the GUA shall assume responsibility for the performance and
satisfaction of the liabilities and obligations of FCWC and PUI set forth on
Appendices A, B, E, H, I, J, K and L to this Agreement.
SECTION 3.02. PURCHASED ASSETS.
(A) The Purchased Assets, exclusive of the Excluded Assets, shall
consist of those assets, business properties, and rights both tangible and
intangible that FCWC and PUI own or possess as of December 18, 1998, in
connection with the operation of the Utility System, or any ownership interest
which it has or hereafter acquires until the Closing, relating thereto,
including the following:
(1) All fee simple real property owned by FCWC and PUI as
described in Appendix [A] hereof.
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(2) All water and wastewater treatment plants, including reuse
and reclaimed water wells, water supplies, wells, 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, 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 installations used in the operation of the Utility System, together
with an assignment of all existing and assignable third party warranties that
relate to completed or in progress construction.
(3) All equipment, vehicles, tools, parts, laboratory
equipment, and other personal property owned by FCWC and PUI in connection with
the operation of the Utility System as more particularly described in Appendix
[G] of this Agreement.
(4) All Easements as more particularly described in Appendix
[B] of this Agreement.
(5) All 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, computer studies, non-corporate accounting,
and non-corporate business records and all other non-corporate information, in
each case, controlled by or in the possession of FCWC and PUI that relate to the
description and operation of the Utility System, inclusive of all pertinent
computer records.
(6) All necessary regulatory approvals subject to all
conditions, limitations or restrictions contained therein; all existing permits
and other governmental authorizations and approvals of any kind necessary to
construct, operate, expand, and maintain the Utility System
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according to all governmental requirements, to be more specifically described in
Appendix [E] to this Agreement.
(B) The Purchased Assets, except Easements, shall be conveyed by FCWC
and PUI to the GUA free and clear of all liens or encumbrances, subject to the
Permitted Exceptions.
(C) At Closing, all revenue derived from the Purchased Assets shall be
free and clear of all liens and encumbrances.
(D) The Purchased Assets do not and shall not include the Excluded
Assets.
SECTION 3.03. PURCHASE PRICE AND REVENUE GUARANTEES.
(A) The aggregate purchase price shall be Two Hundred Twenty-Six
Million Dollars ($226,000,000.00) ("Purchase Price"), subject to the terms,
adjustments and prorations as provided herein. Such adjustments shall include,
but not be limited to, the Due Diligence Adjustment, the Accounts Receivable
Adjustment, the Net Interest Rate Adjustment and the Defeasance Adjustment. The
Purchase Price shall be payable by the GUA to FCWC and PUI in immediately
available funds at Closing by wire transfer pursuant to wire instructions to be
provided by FCWC and PUI at or prior to Closing. The Purchase Price for each of
the operating Systems is as follows:
(1) Barefoot Bay System $ 16,443,300;
(2) Carrollwood System $ 5,022,500;
(3) Ft. Myers System $135,885,000;
(4) Golden Gate System $ 27,126,000;
(5) Poinciana System $ 26,958,200; and
(6) Sarasota System $ 14,565,000.
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(B) FCWC and PUI have agreed to guarantee certain revenues of the
Poinciana System and the Golden Gate System as follows:
(1) FCWC and PUI shall guarantee that the billed revenue of
the Poinciana System from the application of monthly rates for water and
wastewater service as set forth in the current PUI Florida Public Service
Commission Water and Wastewater Tariff for the twelve month period commencing on
the date of Closing is at least equal to the amount of $3,992,280.00 and shall
guarantee that the billed revenue of the Golden Gate System from the application
monthly rates for water and wastewater service and other miscellaneous revenue
as set forth in the current Florida Cities Water Company Golden Gate Division
Water and Wastewater Tariffs approved by the Collier County Utility and
Franchise Regulation Department (excluding meter installation revenue, interest
income and impact fees) for the twelve month period commencing on the date of
Closing is at least equal to the amount of $3,396,350.00.
(2) In addition to the Poinciana System revenue guarantee in
subsection (1) above, FCWC and PUI shall guarantee the receipt by the GUA from
the operation of the Poinciana System of other revenues in the form of line
maintenance charges in effect as of December 18, 1998, based upon the existing
Poinciana System tariff in an amount at least equal to $316,000.00 for the
twelve month period commencing on the date of Closing; an amount at least equal
to $300,000.00 for the next successive twelve month period, an amount at least
equal to $284,000.00 for the next successive twelve month period, an amount at
least equal to $268,000.00 for the next successive twelve month period, and an
amount at least equal to $252,000.00 for the next successive twelve month
period, for a total amount of $1,420,000.00 over a period of sixty months from
the date of Closing.
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(3) To secure the revenue guarantees in subsection (1) and (2)
above, FCWC and PUI shall deposit with the trustee serving under the Indenture
of Trust for the Bonds ("Trustee") in separate escrow accounts or provide
separate irrevocable letters of credit, in form reasonably acceptable to the
underwriter of the Bonds, the amount of $800,000.00 for the Poinciana System
subsection (1) guarantee, the amount of $680,000.00 for the Golden Gate System
subsection (1) guarantee, and the amount of $1,420,000.00 for the Poinciana
System subsection (2) guarantee. Notwithstanding subsection (1) and (2) above,
the maximum liability of FCWC and PUI under the revenue guarantees in subsection
(1) and (2) above shall be the amounts provided for as security pursuant to this
subsection (3). The revenue guarantees in subsection (1) and (2) above shall not
apply in the event of a catastrophic event or "Act of God" which reduces usage.
(4) In the event that the Poinciana System does not meet the
guarantee amounts set forth in subsection (2) above for any identified fiscal
year, then the Trustee is authorized to withdraw on behalf of the GUA from the
Poinciana System escrow or draw on the Poinciana System letter of credit as
applicable the amount required to meet that fiscal year's guarantee amount. In
the event that the Poinciana System exceeds the guarantee amounts set forth in
subsection (2) above for any identified fiscal year, then the GUA shall deposit
in the Poinciana System escrow an amount of cash equal to the lesser of (i) such
surplus billed revenues actually received by the GUA or (ii) the net amount
previously withdrawn or drawn by the GUA as a result of the failure of the
Poinciana System to meet the applicable guarantee amount during preceding fiscal
years. At the end of the guarantee period, any balance remaining in the
Poinciana System escrow account, including interest earned, shall be refunded to
FCWC and PUI, in the
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case of an escrow. In the case of a letter of credit, to the extent not drawn
upon, the Poinciana System letter of credit shall lapse at the end of the
guarantee period. In the event that the Golden Gate System does not meet the
guarantee amounts set forth in subsection (1) above for the identified fiscal
year, then the Trustee is authorized to withdraw on behalf of the GUA from the
Golden Gate System escrow or draw on the Golden Gate System letter of credit, as
applicable, the amount required to meet that fiscal year's guarantee amount. At
the end of the guarantee period, any balance remaining in the Golden Gate System
escrow account, including interest earned, shall be refunded to FCWC and PUI, in
the case of an escrow. In the case of a letter of credit, to the extent not
drawn upon, the Golden Gate System letter of credit shall lapse at the end of
the guarantee period.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
SECTION 4.01. PROVISION OF INFORMATION BY FCWC AND PUI.
(A) FCWC and PUI has gathered, and delivered to the GUA, at FCWC and
PUI's expense, the information described and to be encompassed by Appendices [A
THROUGH M] hereof, which are more particularly described in Section 2.02(F)(1)
through (13) hereof.
(B) FCWC and PUI shall make any plans or specifications for the Utility
System available to the GUA, or its representatives, for inspection during
normal business hours.
SECTION 4.02. FINANCIAL DUE DILIGENCE. The GUA has had the opportunity
to examine the billing analysis and cause to be prepared at its expense a due
diligence investigation of the revenues of the Utility System by a GUA rate
consultant or fiscal agent
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selected by it. GUA has relied upon its own financial due diligence
investigation in entering into this Agreement.
SECTION 4.03. DUE DILIGENCE ADJUSTMENT. The GUA has had the opportunity
to cause at its expense a due diligence investigation of the Utility System and
the Purchased Assets. As a result of the due diligence investigation, the
parties have agreed to an aggregate Purchase Price adjustment of seven million
dollars ($7,000,000.00) (the "Due Diligence Adjustment") to be payable by FCWC
and PUI to the GUA as a reduction to the Purchase Price at Closing. No further
payment shall be due from FCWC and PUI for deficiencies of the Utility System or
the Purchased Assets and FCWC and PUI shall have no obligations or liabilities
to the GUA with respect to the condition of the Utility System and the Purchased
Assets after Closing. The GUA has relied upon its own engineering due diligence
investigation in entering into this Agreement.
The GUA has directed FCWC and PUI to allocate the Due Diligence
Adjustment among the operating Systems of the Utility System as follows, for
which allocation FCWC and PUI make no representations:
(a) Barefoot Bay System $ 150,000;
(b) Carrollwood System $ 90,000;
(c) Ft. Myers System $2,830,000;
(d) Golden Gate System $ 635,000;
(e) Poinciana System $1,190,000; and
(f) Sarasota System $2,105,000.
SECTION 4.04. [INTENTIONALLY LEFT BLANK]
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SECTION 4.05. ISSUANCE OF BONDS.
(A) The GUA agrees to use all reasonable commercial efforts to issue a
series of bonds (the "Bonds") for each operating System of the Utility System
with at least an "investment grade" rating by Moody's Investors Service, Inc. or
Standard and Poor's Ratings Group (based upon the current FCWC and PUI water and
wastewater rates for each of the respective operating Systems of the Utility
System) payable solely from the net revenues of each of the respective Systems
of the Utility System, in a principal amount sufficient to fund (A) the
respective allocable portion of the Purchase Price set forth in Section 3.03(A)
hereof, after adjustments and prorations as provided herein, (B) a deposit from
Bond proceeds for the establishment of required reserve accounts, and (C)
payment of the Transaction Cost. The GUA's obligation to close the transactions
contemplated in this Agreement shall be and is expressly conditioned upon the
issuance of such Bonds. In the event the GUA, in good faith, determines, in its
sole discretion, that such Bonds cannot be delivered on a date that permits the
Closing to occur on or prior to April 16, 1999, then the GUA shall immediately
notify FCWC and PUI 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 both the GUA and FCWC and PUI shall have the option
of canceling this Agreement, and, if cancelled, thereupon the GUA and FCWC and
PUI shall have no liabilities and no further obligations to each other under
this Agreement.
(B) The use of an interim financing as an alternative to the GUA's
obligations in subsection (A) of this section by the GUA shall be solely within
the GUA's discretion. Under no circumstances whatsoever shall the exploration of
any interim financing alternative be interpreted or construed to require the GUA
to utilize interim financing to provide funds to close the
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transaction contemplated in this Agreement and, notwithstanding the availability
of any interim financing, the GUA shall retain its sole discretion to determine
in good faith that Bonds cannot be delivered on or prior to April 16, 1999, and
its right to exercise its option to cancel this Agreement as provided in
subsection (A) of this Section.
SECTION 4.06 INTEREST RATE ADJUSTMENT.
(A) The Purchase Price provided for in Section 3.03(A) of this
Agreement was arrived at based on a bondable cash flow pro-forma. That pro-forma
assumes an effective net interest rate (the arbitrage yield under federal tax
regulations) of 4.8% ("Initial Interest Rate") based upon a 30-year maturity
schedule of level principal and interest payments, AAA rated, bond insured,
municipal tax-free revenue bond issue, with a debt service coverage of 110%. The
parties agree that the Purchase Price shall be adjusted at Closing ("Net
Interest Rate Adjustment") to reflect the actual arbitrage yield achieved on the
Bonds issued by the GUA to finance the acquisition ( "Arbitrage Yield"). The GUA
shall direct the underwriters for the Bonds in the agreement in which the
underwriters agree to purchase the Bonds (the "Bond Purchase Agreement") to use
all reasonable efforts to attain the lowest possible Arbitrage Yield on the
Bonds. In the event FCWC and PUI, in good faith, determine, in their sole
discretion, that the underwriters have not attained the lowest possible
Arbitrage Yield on the Bonds, then FCWC and PUI shall immediately notify GUA 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 both the GUA and FCWC and PUI shall have the option of canceling this
Agreement, and, if canceled, thereupon the GUA and FCWC and PUI shall have no
liabilities and no further obligations to each other under this Agreement.
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(B) The Net Interest Rate Adjustment shall be determined based upon the
following formula: Net Interest Rate Adjustment equals the result of multiplying
the Purchase Price ("PP") times the sum of one and the amount resulting from
subtracting the Arbitrage Yield expressed as a percentage ("AY") from the
Initial Interest Rate expressed as a percentage ("IRR") times eleven hundred
fifty-three ten thousandths (0.1153); i.e. (APP = PP*(1+((IRR-AY)*0.1153)). As
an example, if the Arbitrage Yield equals 5.0%, then the adjusted Purchase Price
formula equals $226,000,000*(1+((4.8 - 5.0)*.1153) = $226,000,000*.97694 =
$220,788,440. If the Arbitrage Yield equals 4.6%, then the adjusted Purchase
Price equals $226,000,000*(1+((4.8 - 4.6)*.1153) = $226,000,000*1.02306 =
$231,211,560.
(C) In the event that the Net Interest Rate Adjustment results in a
Purchase Price less than $215,000,000, then FCWC and PUI shall have the option
of canceling this Agreement by providing written notice to the GUA of such
cancellation, and, if canceled, thereupon the GUA and FCWC and PUI shall have no
liabilities and no further obligations to each other under this Agreement.
(D) In the event that any of the Bonds for any of the operating Systems
are defeased or refunded or otherwise restructured by the GUA, or its successors
or assigns, on or before one year from the date of Closing, at an actual
arbitrage yield achieved on the defeased or refunded or otherwise restructured
Bonds less than the Arbitrage Yield on the Bonds, then the net monetary benefit
achieved as a result of such defeasance or refunding or otherwise restructuring
shall be paid to FCWC and PUI as an additional adjustment to the Purchase Price
(the "Defeasance Adjustment"). The Defeasance Adjustment shall be paid to FCWC
and PUI by wire transfer immediately upon closing of the defeasance or refunding
issue.
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SECTION 4.07. ENVIRONMENTAL ASSESSMENT.
(A) Prior to the execution of this Agreement, the GUA has directed and
authorized ARCADIS Geraghty and Miller to cause an environmental assessment of
the real property to be conveyed hereunder. The environmental assessment shall
be in general accordance with the scope and limitations of the American Society
for Testing and Materials Designation: E 1527-97 (Standard Practice for
Environmental Site Assessments: Phase I Environmental Site Assessment Process)
and shall verify that the real property and other facilities to be conveyed
hereunder appear to be in material compliance with all applicable state and
federal environmental laws, and that the real property to be conveyed to the GUA
is free of unlawful contamination and, if necessary, provide an itemized
estimate of all costs associated with bringing the subject real property and
facilities into material compliance and the response cost for clean-up, removal
and remediation of hazardous substances to the extent required by applicable
environmental laws. The environmental assessment cost shall be initially funded
by FCWC and PUI, provided, however, that upon Closing, the GUA shall reimburse
FCWC and PUI for the amount paid for the environmental assessment.
(B) The environmental assessment is expected to be completed and
delivered to the GUA and FCWC and PUI, not less than 15 days prior to Closing.
(C) If the environmental consultant's aggregate estimate of the costs
associated with bringing the subject real property and facilities into material
compliance and the response costs for clean-up, removal, and remediation is in
excess of $25,000, then the GUA shall have the option of either (1) waiving this
condition precedent to Closing or (2) canceling this Agreement, thereupon
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the GUA and FCWC and PUI shall have no liabilities and no further obligations to
each other under this Agreement.
SECTION 4.08. SURVEY. FCWC and PUI have provided the GUA any existing
surveys of the real property to be conveyed to the GUA. The GUA shall have the
option to order a new or updated survey of any or all real property being
insured by the title insurance policies hereunder. Such surveys shall be at the
GUA's expense. Any such surveys shall, (A) time permitting, be received not less
than 15 days prior to Closing and updated thereafter as required by the title
insurer; (B) be satisfactory and sufficient for the title insurer to delete the
standard exceptions of title insurance coverage concerning encroachments,
overlays, boundary line disputes or any other adverse matter which would be
disclosed by an accurate survey; (C) be certified as of the current date to the
GUA, FCWC and PUI, the title insurer or any other parties requested by the GUA;
and (D) show the location of all improvements and easements. Material adverse
matters (i.e., other than matters shown on existing or updated surveys or any
state of facts a personal inspection of the real property would disclose which
do not materially interfere with the present use of the real property) disclosed
by such surveys and disclosed to FCWC and PUI in writing not less than 10 days
prior to Closing may be resolved by FCWC and PUI in their sole and absolute
discretion so that such matters may be removed as an exclusion to coverage on
the title insurance commitment, at FCWC and PUI's expense, prior to the issuance
of any policy after Closing. Nothing shall obligate FCWC or PUI to expend any
monies to resolve such survey matters. If FCWC and PUI are unable or unwilling
to resolve such material adverse matters prior to Closing, the GUA shall have
the option of either (1) waiving this condition precedent to
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Closing or (2) canceling this Agreement, thereupon the GUA and FCWC and PUI
shall have no liability and no obligation to each other under this Agreement.
SECTION 4.09. TITLE VERIFICATION.
(A) FCWC and PUI have obtained and delivered to the GUA title
commitments for the real property to be conveyed hereunder as set forth in
Appendix [A] for each operating System for an ALTA form owner's title insurance
policy from Lawyers Title Insurance Corporation (the "Title Policy"). Subject to
subsection (D) of this section, any encumbrances or defects in title must be
removed from any title insurance commitment prior to Closing and the subsequent
title insurance policy issued free and clear of encumbrances, title defects,
materialman's liens or other adverse matters, created or potentially created by
FCWC and PUI, with the exception of (1) taxes for the current year which are not
yet due and payable, (2) the Permitted Exceptions reflected in the schedule
attached hereto as Appendix [O], and (3) any encumbrance of or created by the
GUA, including any instruments evidencing debt executed by the GUA at Closing.
(B) The estate or interests to be insured by the Title Insurance Policy
shall consist of all real property identified in Appendix [A].
(C) At Closing or upon issuance of any Title Insurance Policy after
Closing, the owner's title insurance policy shall show marketable title to the
insured estate or interests vested in the GUA. All charges for the issuance of
the owner's title insurance commitment and policy shall be paid by FCWC and PUI.
(D) Marketable title shall be determined according to applicable Title
Standards adopted by authority of The Florida Bar and in accordance with law. If
the title commitment
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reflects title exceptions other than those shown on the schedule attached hereto
as Appendix [O], the GUA shall thereafter by March 19, 1999, notify FCWC and PUI
in writing specifying the defects. If the defects are other than the Permitted
Exceptions, FCWC and PUI shall, time permitting, have no more than 15 days from
receipt of notice within which to remove the defects, failing which the GUA
shall have the option of either (1) waiving this condition precedent to Closing
or (2) canceling this Agreement, thereupon the GUA and FCWC and PUI shall have
no liability and no further obligations to each other under this Agreement.
Nothing shall obligate FCWC or PUI to expend monies to remove such defects.
(E) FCWC and PUI have ordered a search of the Official Records of
Brevard County, Collier County, Hillsborough County, Lee County, Osceola County,
Polk County, and Sarasota County, Florida and the records of the Secretary of
State for uniform commercial code financing statements evidencing a secured
interest in the Purchased Assets other than the real property. Such search shall
be the FCWC and PUI's expense. Time permitting, the results of such a search
shall be delivered to the GUA not less than 5 days prior to Closing. Any secured
interests in the Purchased Assets other than Permitted Exceptions and those
relating to real property must be paid off, released or terminated at FCWC and
PUI's expense. In the event such secured interests in the Purchased Assets other
than Permitted Exceptions and those relating to real property are not paid off,
released or terminated at or prior to Closing, the GUA shall have the option of
either (1) waiving this condition precedent to Closing or (2) canceling this
Agreement, thereupon the GUA and FCWC and PUI shall have no liability and no
further obligation to each other under this Agreement.
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SECTION 4.10. REGULATORY COMPLIANCE. To the extent that FCWC and PUI
have any regulatory rate relief proceedings pending before the Florida Public
Service Commission or other county regulatory authority at the time of Closing,
all financial responsibility or liability for any rate relief, refund or other
obligations imposed by the Florida Public Service Commission or other county
regulatory authority shall remain with FCWC and PUI after Closing, and shall
expressly not be assumed by the GUA, including specifically the proceedings
pending before the Florida Public Service Commission, Docket No. 950387-SU, on
the application for a rate increase for the North Ft. Myers Division in Lee
County.
SECTION 4.11. TRANSFER OF PERMITS. Within 5 days after execution of
this Agreement, FCWC and PUI shall commence all requisite action to notify,
apply for and seek the transfer of the permits and governmental approvals
described in Appendix [E] hereof, including, but not limited to the procedures
referenced in Rule 62-4.120, Florida Administrative Code (1990), 40 C.F.R.
'122.63(d) (1998) and 47 C.F.R. ' 73 (1998) and shall use all reasonable efforts
to obtain the transfer of such permits. The GUA shall timely cooperate and
provide all reasonably necessary assistance in this endeavor, including, but not
limited to, execution at Closing of the permit transfer applications prepared by
FCWC and PUI. Upon Closing, the GUA shall assume all obligations under the
permits and governmental approvals necessary for the continued operation of the
Utility System. The GUA acknowledges that the transfer of permits cannot be
effectuated until after the Closing of this Agreement, and as such shall
constitute a post-closing obligation of the parties until completed.
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SECTION 4.12. DEADLINE TO CLOSE AND DISBURSE. Notwithstanding any other
provision in this Agreement, if the Closing and disbursement to FCWC and PUI of
the Purchase Price, subject to the terms, adjustments and prorations as provided
herein, does not occur on or before April 16, 1999, then FCWC and PUI shall have
the option of (1) waiving this condition precedent to closing or (2) canceling
this Agreement, thereupon the GUA and FCWC and PUI shall have no liability and
no further obligations to each other under this Agreement.
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ARTICLE V
CLOSING PROCEDURES
SECTION 5.01. CLOSING DATE AND PLACE. The closing shall be held at such
place or offices and on such date on or before April 16, 1999, as mutually
agreed among the parties (the "Closing").
SECTION 5.02. DOCUMENTS FOR THE CLOSING.
(A) At Closing, FCWC and PUI shall furnish at Closing a certificate
reaffirming FCWC and PUI's representations and warranties as set forth in this
Agreement up to the date of Closing and shall furnish a release of documents
from the Escrow Closing.
(B) At Closing, the GUA shall furnish the closing statement, a
certificate reaffirming the GUA's representations and warranties under this
Agreement up to the date of Closing and shall furnish a release of documents
from the Escrow Closing.
(C) 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, deeds, assignments,
transfers or other documentation for (1) confirming or correcting title in the
name of the GUA or perfecting possession by the GUA 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 water and wastewater utility facilities and appurtenances which are a part
of the Utility System and in existence or use at the time of closing, or (2)
otherwise fulfilling the obligations of the parties hereunder.
Page 30 of 44
<PAGE> 35
SECTION 5.03. RECORDING FEES AND DOCUMENTARY TAXES.
(A) Recording fees to record the deed and any other instruments
necessary to deliver title to the GUA shall be paid by the GUA.
(B) The Purchased Assets are being purchased by the GUA for public
purposes in lieu of eminent domain and condemnation by Brevard County, Collier
County, Hillsborough County, Lee County, Osceola County, Polk County, or
Sarasota County, Florida, and therefore 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. 5th DCA 1992), approved 620 So. 2d 991
(Fla. 1993). The purchase price being given by the GUA hereunder constitutes the
total consideration to be paid or given by the GUA in connection with the
acquisition of the Purchased Assets.
SECTION 5.04. PROPERTY TAXES. FCWC and PUI shall be required to escrow
with the Tax Collector of Brevard County, Collier County, Hillsborough County,
Lee County, Osceola County, Polk County, and Sarasota County, Florida an amount
equal to the current ad valorem taxes, prorated through the date of closing in
accordance with section 196.295, Florida Statutes. The GUA shall cooperate with
FCWC and PUI in their effort to recover any taxes paid in excess of that due
through the date of closing. However, in no event, shall the GUA be responsible
for any ad valorem taxes (real or personal) for the current year, which are not
cancelled after the date of closing.
Page 31 of 44
<PAGE> 36
SECTION 5.05. ACCOUNTS RECEIVABLE, UNBILLED REVENUES, DEPOSITS.
(A) At Closing, the accounts receivable and unbilled revenues due FCWC
and PUI in the following amounts shall be credited to FCWC and PUI as additional
Purchase Price:
1. Golden Gate $350,000;
2. Barefoot Bay $260,000;
3. Carrollwood $120,000;
4. Sarasota $545,000; and
5. Poinciana $400,000.
B At Closing, credit shall be given to the GUA for the liabilities
assumed for customer deposits, including any interest due thereon through the
date of Closing, and the water management charges held by FCWC for the
Carrollwood System pursuant to the Carrollwood System water tariff, in the
following amounts:
1. Golden Gate System $186,000;
2. Barefoot Bay System $ 61,000;
3. Carrollwood System $ 35,000;
4. Sarasota System $173,000;
5. Poinciana System $251,000; and
6. Ft. Myers System $830,000.
The credits in subsections (A) and (B) collectively shall be referred
to as the "Accounts Receivable Adjustment."
Page 32 of 44
<PAGE> 37
(C) With respect to the Ft. Myers System, the accounts receivable,
whether bill or unbilled, due FCWC, including those amounts guaranteed under
prior agreements with certain developers, for which services were provided prior
to the date of Closing shall remain FCWC's sole and separate property with no
claim of the GUA therefore and FCWC shall be solely responsible for collecting
and retaining all such accounts receivable. The following estimates will be
utilized for the purposes of this subsection: billed accounts receivable of
$900,000.00 and unbilled accounts receivable of $885,000.00. The GUA will assist
FCWC in collecting such accounts receivable by hereby authorizing AUSI under the
Lee County System Operations and Maintenance Contract to assume collection of
FCWC accounts receivable payments in accordance to the following schedule:
(1) From the first payments received on accounts receivable during the
first 30 day period subsequent to the date of Closing, AUSI is authorized to
transfer $855,000.00 to FCWC, which is equal to 95% of the estimated billed
accounts receivable.
(2) From the first payments received on accounts receivable during the
second 30 day period subsequent to the date of Closing, AUSI is authorized to
transfer $881,250.00 to FCWC which is equal to 4.5% of the estimated billed
accounts receivable plus 95% of the estimated unbilled accounts receivable.
(3) From the first payments received on accounts receivable during the
third 30 day period subsequent to the date of Closing, AUSI is authorized to
transfer $39,825.00 to FCWC which is equal to 4.5% of the estimated unbilled
accounts receivable.
(D) Upon Closing, except as provided in subsection 5.05 (B) above, the
GUA shall be entitled to all revenue collected and derived from the Utility
System and Purchased Assets from
Page 33 of 44
<PAGE> 38
that date forward. At Closing, FCWC and PUI shall assign to the GUA all
interest in any accounts receivable and unbilled revenue, except as provided in
subsection 5.05 (B) above, and GUA shall assume all liabilities for customer
deposits and Carrollwood System water management charges.
SECTION 5.06. CONNECTION CHARGES.
(A) Sums collected by FCWC and PUI in the ordinary course of business
for connection charges, including capacity and deferred standby fees, up to and
including December 18, 1998, shall remain FCWC and PUI's sole and separate
property with no claim of the GUA therefore. FCWC and PUI shall not solicit,
encourage or take any action to materially increase or advance physical
connection to the Utility System and payment of connection or other similar
capacity or deferred standby fees prior to Closing subsequent to December 18,
1998.
(B) Sums collected by FCWC and PUI in the ordinary course of business
for connection charges, including capacity and deferred standby fees, after
December 18, 1998, and up to the date of Closing shall remain FCWC and PUI's
sole and separate property with no claim of the GUA therefore to the extent that
such connections are physically connected to the Utility System prior to
Closing. To the extent such connections are not physically connected to the
Utility Systems prior to Closing, then FCWC and PUI shall transfer the
connection charges for such connections to the GUA at Closing.
(C) All sums collected from and after the date of Closing relative to
the use of, or connection to, the Utility System shall be paid to the GUA, with
no claim of FCWC and PUI therefor.
Page 34 of 44
<PAGE> 39
SECTION 5.07. PROFESSIONAL FEES; COSTS.
(A) Each party shall be responsible for securing its own counsel 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, and 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 therewith.
(B) In any litigation arising out of this Agreement, the prevailing
party in such litigation shall be entitled to recover reasonable attorney's fees
and costs at all judicial levels.
SECTION 5.08. RISK OF LOSS. At all times prior to and through the time
of Closing, FCWC and PUI shall maintain adequate fire and extended insurance
coverage for the cost of any repairs to the Purchased Assets that may be
required by casualty damage. The risk of loss during the said period of time
shall fall upon FCWC and PUI. The risk of loss shall pass to the GUA at Closing.
SECTION 5.09. PROCEEDS OF SALE; CLOSING PROCEDURE.
(A) FCWC and PUI and GUA shall execute and place all documents
necessary to close in escrow prior to GUA closing the issuance of the Bonds to
pay the Purchase Price (the "Escrow Closing"). At the Escrow Closing, the
parties shall execute and enter into a document Escrow Closing Agreement in
substantially the form attached as Appendix [R] to this Agreement; and FCWC and
PUI shall furnish a non-foreign affidavit, a no-lien affidavit, a "gap"
affidavit, the special warranty deed, and the bill of sale, all in substantially
the form attached as Appendix P to this Agreement. FCWC and PUI shall also
furnish at the Escrow Closing any necessary assignments, estoppel letters,
releases, satisfactions, terminations and any corrective instruments,
Page 35 of 44
<PAGE> 40
and enter into a Transfer, Assignment and Assumption Agreement in substantially
the form attached as Appendix [Q] to this Agreement. GUA shall also enter into
at the Escrow Closing the Transfer, Assignment and Assumption Agreements, the
Utility Operating Agreements and the Poinciana Water and Wastewater Facility
Extension and Capacity Expansion Agreement in substantially the forms attached
as Appendices [Q], [S] and [T]. At the Escrow Closing, AUSI shall enter into the
Utility Operating Agreements for each operating System and Avatar Properties
Inc. shall enter into the Water and Wastewater Facility Extension Capacity
Expansion Agreement for the Poinciana System in substantially the form attached
as Appendix [S] and [T] to this Agreement.
(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 of the title insurance commitment and the date of recording of
the documents creating the estate to be insured, FCWC and PUI and the GUA agree
that the escrow agent for the Escrow Closing may also be the title insurer, or
the title insurer's agent, selected by FCWC and PUI to issue the owner's title
insurance policy insuring the real property identified in Appendix [A] of this
Agreement.
(C) The parties shall execute or cause to be executed and tender the
following documents effecting the transfer of the Purchased Assets to the GUA at
the Closing; these documents shall be in final form, together with any exhibits
or appendices thereto:
(1) Special warranty deed for the conveyance of all real
property to be conveyed hereunder;
(2) Conveyance instruments for all Easements set forth in
Appendix [B];
Page 36 of 44
<PAGE> 41
(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 in substantially the form
attached as Appendix [Q] to this Agreement;
(4) Bill of Sale or other documents of assignment and
transfer, with full warranties of title, to all Purchased Assets, other than the
property set forth in Appendix [A] and Appendix [B];
(5) A Florida Department of Revenue Form DR-219 completed and
executed by FCWC and PUI in a manner satisfactory to the GUA;
(6) Any affidavits, certificates, estoppel certificates,
corrective instruments, releases, satisfactions or terminations necessary to
close including but not limited to those instruments identified by the title
insurer insuring the real property set forth in Appendix [A]; and
(7) The Utility Operating Agreements for each System, and the
Poinciana System Water and Wastewater Facilities Extension and Capacity
Expansion Agreement, in substantially the forms attached hereto as Appendices
[S] and [T].
(D) FCWC and PUI each acknowledge that the GUA will issue the Bonds to
generate proceeds to pay the Purchase Price as described in Section 3.03 hereof.
Therefore, all closing procedures shall be subject to the customary and
reasonable requirements of the underwriter selected by the GUA, the purchasers
of the revenue bonds or the provider of any interim financing. The disbursement
of proceeds shall be at the direction of the title insurer, 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 insurance commitment and the date of recording of the document creating
the estate or interest to be insured.
Page 37 of 44
<PAGE> 42
(E) Within 90 days after Closing, upon written request by the GUA, FCWC
and PUI shall reconcile any accounts receivable, unbilled revenues, customer
deposits or other charges not otherwise considered or accounted for at the time
of the Escrow Closing. Within 90 days after Closing, upon written request by
FCWC and PUI, the GUA shall reconcile any accounts receivables, unbilled
revenue, customer deposits or other charges not otherwise considered or
accounted for at the time of the Escrow Closing. Any amounts determined due from
a party as a result of the reconciliation process shall be paid within 120 days
after the Closing. The amount due shall be the amount by which the reconciled
accounts receivable, unbilled revenues, customer deposits and water management
charges vary from the amounts paid pursuant to Section 5.05.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.01. RIGHT TO ENTER. Prior to Closing, the GUA shall have the
right, at any reasonable time during normal business hours with prior notice to
FCWC and PUI, to enter upon FCWC and PUI's property to inspect the Utility
System and the Purchased Assets, to familiarize itself with day-to-day
operations, to review the operational practices of FCWC and PUI, and to ensure
compliance with any and all federal and state regulatory requirements; provided,
however, that such access shall not be had or done in any such manner so as to
unreasonably interfere with the normal conduct of the Utility System and
Purchased Assets.
SECTION 6.02. CONDUCT BETWEEN EXECUTION AND CLOSING.
(A) After the date of execution of this Agreement until the Closing,
FCWC and PUI shall continue to provide water and wastewater treatment to its
current customers in the ordinary and usual manner.
Page 38 of 44
<PAGE> 43
(B) After the date of execution of this Agreement until the Closing,
FCWC and PUI shall maintain the Utility System in the ordinary course of
business, consistent with prior practice.
(C) After the date of the execution of this Agreement until the
Closing, FCWC and PUI shall not, without prior written consent of the GUA, which
shall not be unreasonably withheld or delayed, dispose of or encumber any of the
Purchased Assets, with the exception of transactions occurring in the ordinary
course of business.
(D) After the date of execution of the Agreement until the Closing,
FCWC and PUI shall not, except in the ordinary course of business or as required
by law, (1) enter into or modify any effluent reuse or disposal agreements
affecting the Utility System, or (2) enter into or modify any developer, water,
or wastewater service agreement affecting the Utility Systems, without the prior
written consent of the GUA, which consent shall not be unreasonably withheld.
(E) After the date of execution of this Agreement until the date of
Closing, FCWC and PUI will cooperate with the GUA in identifying Easements as
provided in this Agreement.
SECTION 6.03. 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 which ends on Saturday, Sunday or a legal
holiday shall extend to 5:00 p.m. on the next business day.
SECTION 6.04. APPLICABLE LAW; JURISDICTION AND VENUE.
(A) This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida.
Page 39 of 44
<PAGE> 44
(B) The parties to this Agreement expressly consent to the jurisdiction
of and agree to suit in any court of general jurisdiction in the State of
Florida, whether state, local or federal, and further agree that venue shall lie
in Sarasota County, Florida.
SECTION 6.05. 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 THE GUA: Government Services Group, Inc.
315 south Calhoun Street, Suite 860
Tallahassee, Florida 32301
Attention: Robert Sheets
with a copy to: Nabors, Giblin & Nickerson, P.A.
Suite 800, 315 South Calhoun Street
Tallahassee, Florida 32301
Attention: Mark G. Lawson
TO FCWC AND PUI: c/o Avatar Utilities, Inc.
4837 Swift Road, Suite 100
Sarasota, Florida 34231
Attention: Gerald S. Allen, P.E.
with a copy to: Avatar Utilities, Inc.
201 Alhambra Circle, 12th Floor
Miami, Florida 33134
Attention: General Counsel
with a copy to: Greenberg Traurig, P.A.
777 South Flagler Drive, Suite 300 East
West Palm Beach, Florida 33401
Attention: Phillip C. Gildan
(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).
Page 40 of 44
<PAGE> 45
(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 5 days after the date mailed.
SECTION 6.06. ASSIGNMENT AND JOINDER.
(A) In accordance with this section, this Agreement and the
transactions contemplated in this Agreement are severable. Provided all of the
operating Systems which comprise the Utility System are purchased and sold as
provided for in this Agreement, the rights, duties and obligations of the
parties as to the individual operating Systems are assignable to the general
purpose county government(s) in which each operating System is located, provided
however, that any such assignments shall not be effective unless and until the
assignee and the GUA have executed and delivered to FCWC and PUI an assignment
and assumption agreement satisfactory to FCWC and PUI. In the event of such an
assignment, all reference in this Agreement to the GUA shall mean and include
the respective general purpose county government, unless the context requires
otherwise.
(B) Except as expressly provided for in this Agreement, neither FCWC
and PUI nor the GUA shall have the power or authority to assign this Agreement
or any of their rights, duties or obligations hereunder to a third party and
this Agreement shall be construed as solely for the benefit of the GUA and FCWC
and PUI, 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.
SECTION 6.07. AMENDMENTS AND WAIVERS. No amendment, supplement,
modification or waiver of this Agreement shall be binding upon any party hereto
Page 41 of 44
<PAGE> 46
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.
SECTION 6.08. 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 not warranties, representations or
other agreements between the parties in connection with the subject matter
hereof, except as specifically set forth herein.
SECTION 6.09. PUBLIC ANNOUNCEMENTS. Neither the GUA nor any of its
affiliates, employees or agents shall make any public statement, including,
without limitation, any press release, with respect to this Agreement and the
transactions contemplated in this Agreement, without the prior written consent
of FCWC and PUI, which consent may not be unreasonably withheld or delayed,
except as required by law.
SECTION 6.10. EFFECT OF TERMINATION. In the event of the termination of
this Agreement in accordance with its terms, this Agreement shall then become
void and have no effect, with no liability on the part of any of the parties to
this Agreement or their affiliates, except that nothing shall relieve a party
from liability for any breach of this Agreement.
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<PAGE> 47
IN WITNESS WHEREOF, the GUA and FCWC and PUI have caused this Agreement
to be duly executed and entered into on the date first above written.
FLORIDA GOVERNMENTAL UTILITY AUTHORITY:
By: /s/ Lea Ann Thomas
-----------------------------------
Its: Chairman
----------------------------------
Attest:
/s/ Robert Sheets
- --------------------------------
FLORIDA CITIES WATER COMPANY
By: /s/ Michael Murphy
-----------------------------------
Its: Vice President
----------------------------------
Attest:
/s/ Anita J. Chubbuck
- -------------------------------
Page 43 of 44
<PAGE> 1
EXHIBIT 2.2
ADDENDUM TO UTILITY SYSTEM ASSET ACQUISITION AGREEMENT
CONCERNING THE FORT MYERS UTILITY SYSTEM
THIS ADDENDUM is made and agreed to this _____ day of April, 1999, by
and between Lee County, Florida, a political subdivision of the State of Florida
(the "County"), and Florida Cities Company, a Florida corporation ("FCWC") and
Poinciana Utilities, Inc., a Florida corporation ("PUI"). FCWC and PUI are
collectively referred herein as the "Sellers".
WITNESSETH
NOW THEREFORE, in consideration of the mutual promises, covenants,
representations and agreements contained herein, together with $10.00 and other
good and valuable consideration exchanged between the parties, the parties to
this Addendum do undertake, promise and agree for themselves and their permitted
successors and assigns as follows:
SECTION 1. DEFINITIONS. As used in this Addendum capitalized terms shall
have meanings as defined in the Utility System Asset Acquisition Agreement dated
April ____, 1999, (the "Agreement"), the Assignment from the Florida
Governmental Utility Authority to the County dated April ____, 1999 relating to
the Fort Myers System (the "Assignment") and the meanings as defined herein
unless the context requires otherwise:
(A) "TOWN SYSTEM" means that portion of the Fort Myers System located
substantially within and which predominantly serves the
incorporated area of the Town of Fort Myers Beach, Florida,
commencing at a point of connection as designated in the Bulk
Service Agreement attached hereto as Exhibit 1.
SECTION 2. FINDINGS. It is hereby ascertained, determined and declared
that:
(A) Pursuant to the Interlocal Agreement Relating to Establishment of
the Florida Governmental Utility Authority dated February 1, 1999,
and the Agreement, the Florida Governmental Utility Authority has
assigned to the County the right and obligation to acquire the
Purchased Assets comprising the Fort Myers System and the Sellers
have consented to such assignment (the "Assignment").
SECTION 3. FINDINGS CONCERNING THE TOWN OF FORT MYERS BEACH. It is hereby
ascertained, determined and declared by the County that:
(A) The acquisition of the Fort Myers System by the County serves a
public purpose and is in the best interest of the citizens of the
County.
(B) In recognition of the Addendum to the Agreement authorized by
Section 4
<PAGE> 2
hereto, that the portion of the Fort Myers System located
substantially within and which predominantly services the
incorporated area of the Town of Fort Myers Beach is separate,
distinct and severable from the remaining assets of the Fort
Myers System which is located outside of the municipal
boundaries of the Town.
(C) The severance of the Fort Myers System and the acquisition of only
that portion of the Fort Myers System which is outside of the
municipal boundaries of the Town of Fort Myers Beach, is both
physically and financially feasible and that not detrimentally
impact the service within either area. The County anticipates that
water will be provided to those customers within the Town of Fort
Myers Beach through a "bulk service" type agreement at rates
consistent with those that are currently being imposed by the
County.
SECTION 4. ADDENDUM TO ACQUISITION AGREEMENT.
(A) The County and the Sellers agree that closing shall occur as
contemplated in the Agreement and the Assignment for the Fort
Myers System, save and except that portion thereof described as
the Town System. Closing shall occur on the Town System as
provided herein.
(B) The purchase price allocated to the Fort Myers System shall be
reduced by the amount of $3,330,255 and the purchase price for the
Town System shall be $3,330,255; all subjected to terms,
conditions, prorations and other adjustments as provided in the
Agreement, the Assignment and this Addendum.
(C) Closing on the Town System shall be delayed until the sooner of
thirty (30) days after (1) the negotiated resolution of the
objections raised by the Town of Fort Myers Beach in Lee County
Case No. 99-1753CA-JBR; or (2) a final judicial determination
thereof.
(D) In order to facilitate the provisions of this Addendum: (1) the
County and Florida Cities Water Company shall enter into a Bulk
Service Agreement in substantially the form attached hereto as
Exhibit 1 for the provisions of potable water services to the Town
System; (2) the County and Avatar Utility Services, Inc. shall
amend the Fort Myers System Utility Operations, Billing and
Customer Service Agreement in substantially the form attached
hereto as Exhibit 2; (3) the parties agree that the estimates of
liabilities assumed for customer deposits in Section 5.05 (B)(6)
of the Agreement will be adjusted from $830,000 to $735,000; and
(4) the parties agree that the estimates of billed accounts
receivable and unbilled accounts receivable in Section 5.05 (C)
2
<PAGE> 3
will be adjusted from $900,000 to $797,000 and from $783,000,
respectively.
(E) Except as otherwise provide herein the Agreement and the
Assignment shall otherwise remain in full force and effect.
(F) The Agreement and the Assignment are hereby incorporated herein by
reference.
SECTION 5. BINING EFFECT. This Addendum shall enure to the benefit of and
binding upon the parties hereto and their successors and assigns.
3
<PAGE> 4
IN WITNESS WHEREOF, the Addendum has been duly executed and entered into on
the date first above written.
BOARD OF COUNTY COMMISSIONERS OF
LEE COUNTY, FLORIDA
By: /s/ John E. Albion
----------------------------
Vice-Chairman
ATTEST: CHARLIE GREEN
CLERK OF COURTS
By: /s/ Robert E. Sheets APPROVED AS TO FORM:
--------------------------------
Deputy Clerk By: /s/ James Yaeger
------------------------------
Office of the County Attorney
FLORIDA CITIES WATER COMPANY
ATTEST: By: /s/ Michael E. Murphy
------------------------------
Vice-President
By: /s/ Anita J. Chubbock
--------------------------------
Secretary
POINCIANA UTILITIES, INC.
ATTEST: By: /s/ Michael E. Murphy
------------------------------
Vice-President
By: /s/ Anita J. Chubbock
--------------------------------
Secretary
4
<PAGE> 1
EXHIBIT 2.3
ASSIGNMENT
THIS ASSIGNMENT is made and agreed to this 7th day of April, 1999, by
and among the Florida Governmental Utility Authority, a legal entity and public
body created by interlocal agreement pursuant to Section 163.01 (7), Florida
Statutes, (the "Purchaser"), Lee County, Florida, a political subdivision of
the State of Florida (the "Assignee"), and consented to by Florida Cities Water
Company, a Florida corporation ("FCWC") and Poinciana Utilities, Inc., a
Florida corporation ("PUI"). FCWC and PUI are collectively referred to herein
as the "Sellers".
WITNESSETH
NOW THEREFORE, in consideration of the mutual promises, covenants,
representations and agreements contained herein, together with $10 and other
good and valuable consideration exchanged between the parties, the parties to
this Assignment do undertake, promise and agree for themselves and their
permitted successors and assigns as follows:
SECTION 1. DEFINITIONS. As used in this Assignment capitalized terms
shall have meanings as defined in the Utility System Asset Acquisition
Agreement dated April 1, 1999, and entered into between the Purchaser and the
Seller (the "Agreement") and the meanings as defined herein unless the context
requires otherwise:
SECTION 2. FINDINGS. It is hereby ascertained, determined and declared
that:
(A) Purchaser and Sellers have entered into the Agreement,
which provides in Section 6.06 thereof that the transactions
contemplated therein are severable; provided all of the water and
wastewater utility systems addressed therein are purchased and sold
simultaneously, and that any such assignment shall not be effective
unless and until the Assignee and the Purchaser have executed and
delivered to the Sellers a satisfactory assignment and assumption
agreement.
(B) The Assignee is one of the initial members of the
Interlocal Agreement Relating to Establishment of the Florida
Governmental Utility Authority dated February 1, 1999 (the "Interlocal
Agreement"). Pursuant to the Interlocal Agreement, the Assignee has
the right to acquire the Purchased Assets comprising the Ft. Myers
System.
5
<PAGE> 2
(C) The Assignee desires to immediately acquire the Purchased
Assets relating to the Ft. Myers System and the Purchaser is willing
to assign the Assignee such rights in conformance with the Agreement
and the Interlocal Agreement.
SECTION 3. ASSIGNMENT AND ASSUMPTION.
(A) Pursuant to the Interlocal Agreement and the Agreement,
the Purchaser hereby assigns, transfers, conveys, grants, bargains and
sells unto the Assignee all of Purchaser's rights, remedies, powers,
title, interests, duties, obligations and responsibilities arising
under the Agreement which relate to the Ft. Myers System and the
Purchased Assets associated therewith; and Sellers hereby consent and
agree to such assignment and assumption. Except as provided in
subsection (B) of this Assignment, such assignment and assumption
shall be deemed subject to and be in all respects in conformance with
all provisions of the Agreement.
(B) Notwithstanding the provisions of Section 4.06 of the
Agreement, the Net Interest Adjustment to the purchase price of
$135,885,000 for the Ft. Myers System shall be based on an assumed
Arbitrage Yield on the Bonds issued by Lee County calculated by using
the lowest bond yield achieved on any series of Bonds issued by the
GUA rather than the bond yield achieved on the Bonds issued by Lee
County and a bond insurance premium of 22.75 basis points.
(C) The Assignee hereby accepts and agrees to, and the
Sellers hereby consent to, the assignment and assumption of all of the
Purchaser's rights, remedies, powers, title, interests, duties,
obligations and responsibilities arising under the Agreement which
relate to the Ft. Myers System and the Purchased Assets associated
therewith.
(D) The parties agree and acknowledge that in facilitating
closing all instruments required to close relating to the Ft. Myers
System will be separately executed and directly conveyed from the
Sellers to the Assignee.
(E) The Agreement is hereby incorporated herein by
reference.
SECTION 4. BINDING EFFECT. This assignment shall inure to the benefit
of and be binding upon the parties hereto and their successors and assigns.
6
<PAGE> 3
SECTION 4. BUILDING EFFECT. This assignment shall inure to the benefit
of and be binding upon the parties hereto and their successors and assigns.
IN WITNESS WHEREOF, the Purchaser has caused this Assignment, the
Assignee has accepted same, and the Sellers have consented thereto; this
Assignment has been duly executed and entered into on the date first above
written.
FLORIDA GOVERNMENTAL
UTILITY AUTHORITY
ATTEST: By: /s/ Lea Ann Thomas
-------------------------------
Chairman
By: /s/ Robert E. Sheets
-------------------------------
Secretary - Treasurer
BOARD OF COUNTY COMMISSIONERS OF
LEE COUNTY, FLORIDA
(SEAL)
By: /s/ John E. Albion
-------------------------------
Vice-Chairman
ATTEST:
CHARLIE GREEN, Clerk
of the Circuit Court
and Ex-Officio Clerk
of the Board of County
Commissioners of Lee APPROVED AS TO FORM
County, Florida
By: /s/ James Yaeger
-----------------------------
Office of County Attorney
By: /s/ Lisa L. Pierce, Deputy Clerk
--------------------------------
Clerk
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<PAGE> 4
FLORIDA CITIES WATER COMPANY
By: /s/ Michael E. Murphy
----------------------------------
Vice-President
ATTEST:
By: /s/ Anita J. Chubbuck
-----------------------------
Secretary
POINCIANA UTILITIES, INC.
By: /s/ Michael E. Murphy
----------------------------------
Vice-President
ATTEST:
By: /s/ Anita J. Chubbuck
------------------------------
Secretary
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