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HomeMy WebLinkAboutContracts & Agreements_37-2024Stock Sale Agreement This Stock Sale Agreement ("Agreement") is made and entered into as of February 20, 2024 ("Effective Date"), by and between the City of Redlands ("City") and the Yucaipa Valley Water District ("Buyer"). City and Buyer are sometimes collectively referred to in this Agreement as the "Parties" and individually as a "Party." Recitals WHEREAS, City is currently the registered owner of six -hundred forty-six (646) shares of common stock of the South Mountain Water Company ("SMWC"); and WHEREAS, City has agreed to offer Buyer the opportunity to purchase six - hundred forty-six (646) shares of SMWC common stock (the "Purchased Shares"); and WHEREAS, Buyer desires to exercise such opportunity to purchase the Purchased Shares from City, upon the terms and conditions and for the consideration set forth in this Agreement; and WHEREAS, Crafton Hills Community College currently receives landscape irrigation water through the South Mountain Water Company system as a City customer; and WHEREAS, Yucaipa Valley Water District has agreed to continue providing Crafton Hills Community College with landscape irrigation water through the South Mountain Water Company system until Crafton Hills Community College physically disconnects from the South Mountain Water Company system; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Parties agree as follows: Operative Provisions 1. Incorporation of Recitals. The Recitals set forth above are material and by this reference are incorporated herein and made a part of this Agreement. 2. Purchase and Sale of Shares. Subject to the terms and conditions of this Agreement, Buyer agrees to purchase at the Closing, defined below, and City agrees to sell the Purchased Shares for the purchase price of Three Hundred Twenty Three Thousand Dollars ($323,000.00) ("Purchase Price"), payable in immediately available funds at Closing. 3. Closing; Delivery. (a) The purchase and sale of the Purchased Shares shall take place at 35 Cajon Street, Redlands, California 92373, five (5) days after City approves this Agreement, or at such other time and place as City and Buyer mutually agree upon, orally or in writing 1 I:\cmo\Agreements\Yucaipa Valley Water District Stock Sale Agreement 2.2,24 FY23-0033.docx-ms (which time and place are designated as the "Closing"). City and Buyer currently expect and will use their best efforts to ensure that Closing will occur on or before February 29, 2024. (b) At the Closing, Buyer shall deliver to City the full Purchase Price by wire transfer or other same day funds. (c) At the Closing, City shall deliver to Buyer an originally executed Stock Assignment in the form attached hereto as Exhibit "A," and by this reference incorporated herein, relinquishing all right, title and interest in the Purchased Shares. (d) City shall deliver to SMWC the following original stock certificates representing the Purchased Shares, endorsed by the City as transferred to Buyer or, in the alternative, for cancellation and issuance of a new certificate to Buyer representing the Purchased Shares in accordance with Article XI of the Bylaws of SMWC: A230 18 SHARES A234 7 SHARES A237 24.5 SHARES A243 29.75 SHARES A245 32 SHARES A257 2.25 SHARES A264 10.5 SHARES A274 28 SHARES A276 32 SHARES A284 29 SHARES A287 14 SHARES A288 25 SHARES A292 3 SHARES A301 30 SHARES A303 21 SHARES A312 4 SHARES A317 10.5 SHARES A325 5 SHARES A337 0.5 SHARES A344 2 SHARES A357 2 SHARES A358 5 SHARES A363 2 SHARES A384 3 SHARES A389 2 SHARES A397 11 SHARES A382 5 SHARES A402 2 SHARES A441 2 SHARES A446 284 SHARES (e) City shall cause the transfer of the Purchased Shares, whether by endorsement of the above listed certificates of stock or their cancellation and issuance of a new certificate to Buyer representing the Purchased Shares, to be acknowledged on the books of SMWC in accordance with Articles XI and XII of the Bylaws of SMWC. 4. Representations, Warranties and Covenants of Seller. As a material inducement to the Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, City represents and warrants to Buyer as follows: (a) Authorization. This Agreement, when executed and delivered by City, shall constitute a valid and legally binding obligation of City, enforceable against City in accordance with its terms. The Purchased Shares are free and clear of all encumbrances, liens and pledges and City has the right to sell the Purchased Shares in accordance with the terms of this Agreement. City has all requisite power and authority to 2 I:\cmo\Agreements\Yucaipa Valley Water District Stock Sale Agreement 2.2.24 FY23-0033,docx-ms enter into this Agreement and to perform the transactions contemplated hereby. This Agreement is a legal, valid and binding obligation of City, enforceable against City in accordance with its terms, except as limited by bankruptcy, insolvency or other laws affecting creditors' rights generally or by the availability of equitable remedies. (b) Annual Assessments. City shall have paid all annual assessments for the Purchased Shares and respective share certificates as of the transfer date. (c) Ownership of Shares of Company. City has full voting power and authority over the Purchased Shares, subject to no proxy, shareholders agreement, voting trust or other agreement or arrangement and has full right, power and authority to sell and deliver the Purchased Shares to Buyer in the manner provided for in this Agreement. Upon consummation of the transaction contemplated herein, City will transfer to Buyer good and valid title to all of the Purchased Shares, free and clear of any claim, lien, charge or encumbrance of any nature whatsoever, except the share legend. (d) Effect of Closing. City acknowledges that as of the Closing and the sale of the Purchased Shares, City will have no right to share in anyy water rights of SMWC or receive any water service from SMWC associated with the Purchased Shares. (e) Unless specifically contained in this Section 4, City makes no representation or warranty of any kind whatsoever, express or implied, with respect to either the transactions contemplated hereby or the condition (financial or otherwise) of, or any other matter involving, SMWC, City, any annual assessments or water delivery from and after the Closing Date, or the Purchased Shares. 5. Survival. The warranties, representations, and covenants of City shall survive the execution of the Agreement and the consummation of the purchase and sale of the Purchased Shares herein described for a period of twelve (12) months. 6. Miscellaneous Provisions. (a) Non -assignability. Neither this Agreement, nor any interest herein, shall be assignable by Buyer without the prior written consent of City. (b) Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be sent by First Class mail, postage prepaid, deposited in the United States mail in California, and if intended for either Party shall be addressed to the address provided below each Party's name on the signature page of this Agreement. Any Party, by written notice to the other Party, may change the address for notices to be delivered. (c) Inurement. Subject to the restrictions against assignment set forth above, this Agreement shall insure to the benefit of, and shall be binding upon, the assigns, successors in interest, personal representatives, estates, heirs, and legatees of each of the Parties. 3 I:\cmo\Agreements\Yucaipa Valley Water District Stock Sale Agreement 2.2.24 FY23-0033.docx,ms (d) Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions of this Agreement shall continue in full force and effect without being impaired or invalidated in any way and shall be construed in accordance with the purpose and intent of this Agreement. (e) Entire Agreement. This Agreement contains the entire agreement of the Parties, and supersedes any prior written or oral agreement between them concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, between and among the Parties, relating to the subject matter contained in this Agreement, which are not fully expressed herein. (f) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original, but all of which together shall be deemed to be one and the same instrument. (g) Governing Law. All questions with respect to the construction of this Agreement, and the rights and liabilities of the Parties, shall be governed by the laws of the State of California. (h) Attorneys' Fees. If any action or proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing Party in such action or proceeding shall be entitled to recover reasonable attorneys' fees and other costs incurred in that action or proceeding, including fees for a Party's use of in-house counsel, in addition to any other relief to which such Party may be entitled. (i) Indemnification. From and after the Closing, Buyer shall indemnify, defend and hold harmless City and its successors and assigns against and from any and all claims, damages or liability sustained or incurred by City resulting from or arising out of or relating to the Purchased Shares with respect to periods subsequent to the Closing. From and after the Closing, City shall indemnify, defend and hold harmless Buyer and its successors and assigns against and from any and all claims, damages or liability sustained or incurred by Buyer resulting from or arising out of or relating to any failure to pay assessments with respect to the Purchased Shares for periods prior to the Closing. [signature page follows] 4 I:\cmo\Agreements\Yucaipa Valley Water District Stock Sale Agreement 2.2,24 FY23-0033.docx-ms IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above. BUYER Yucaipa Valley Water District y: Name: oseph Zoba Title: eneral Manager Address: 12770 2nd Street Yucaipa, CA 92399 CITY 0 By: Eddie Tejeda, Mayor Address: 35 Cajon Street Redlands, CA 92373 ATTEST: By: e Donaldson, City Clerk 5 I:\cmo\Agreements\Yucaipa Valley Water District Stock Sale Agreement 2.2.24 FY23-0033.docx-ms Exhibit "A" STOCK ASSIGNMENT ASSIGNMENT SEPARATE FROM SHARE CERTIFICATE The undersigned, hereby assigns and transfers to the Yucaipa Valley Water District, Six -Hundred Forty -Six (646) shares of common stock of South Mountain Water Company ("SMWC"), standing in the name of the City of Redlands, on the books of SMWC and represented by Stock Certificate Numbers: A230 18 SHARES A234 7 SHARES A237 24.5 SHARES A243 29.75 SHARES A245 32 SHARES A257 2.25 SHARES A264 10.5 SHARES A274 28 SHARES A276 32 SHARES A284 29 SHARES A287 14 SHARES A288 25 SHARES A292 3 SHARES A301 30 SHARES A303 21 SHARES Dated: A312 4 SHARES A317 10.5 SHARES A325 5 SHARES A337 0.5 SHARES A344 2 SHARES A357 2 SHARES A358 5 SHARES A363 2 SHARES A384 3 SHARES A389 2 SHARES A397 11 SHARES A382 5 SHARES A402 2 SHARES A441 2 SHARES A446 284 SHARES City of Red By: Name: Eddie Tejeda Title: Mayor Address: 35 Cajon Street 6 Redlands, CA 92373 I:\cmo\Agreements\Yucaipa Valley Water District Stock Sale Agreement 2.2.24 FY23-0033.docx-ins