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Purchase of Twin Ridge Water, Inc._Asset Purchase Agreement_Mueller
Copyright 2014 City of Dubuque Action Items # 1. ITEM TITLE: Purchase of Twin Ridge Water, Inc. SUMMARY: City Manager recommending the purchase Twin Ridge Water, Inc., which provides sewer and water service to 101 properties within and adjacent to the Twin Ridge Subdivision in an unincorporated area commonly called Key West. RESOLUTION Approving an Asset Purchase Agreement for the sale and transfer of existing assets by and between the City of Dubuque, Iowa and Twin Ridge Water, Inc., in Dubuque County, Iowa and approving an Offer to Buy and Acceptance for the acquisition of real estate owned by the Grace M. Mueller Revocable Family Trust and Raymond M. Mueller Irrevocable Family Trust in Dubuque County, Iowa SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt Resolution(s) ATTACHMENTS: Description Type ❑ Purchase of Twin Ridge Water, Inc.-MVM Memo City Manager Memo ❑ Staff Memo Staff Memo ❑ Asset Purchase Agreement Supporting Documentation ❑ Offer to Buy Supporting Documentation ❑ Resolution Supporting Documentation THE CITY OF Dubuque U E I erica .i Masterpiece on the Mississippi 2007-2012-2013 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Purchase of Twin Ridge Water, Inc. DATE: October 29, 2015 City Engineer Gus Psihoyos is recommending the City purchase Twin Ridge Water, Inc., which provides sewer and water service to 101 properties within and adjacent to the Twin Ridge Subdivision in an unincorporated area commonly called Key West. Over the last several years, City staff have been studying options for the annexation of property in the Key West area and how to best serve the area with City utilities. Engineering, Planning and Water Department staff have met with developers and property owners in the Twin Ridge Subdivision to understand their willingness to sell the utility system to the City of Dubuque. This input formed the basis of a preliminary study completed in 2004 and the 2006 Annexation Study, completed by the City's consultant, Veenstra & Kimm. City staff, including Assistant City Attorney Maureen Quann, have repeatedly met with Twin Ridge representatives regarding the purchase of their water and sewer systems. Twin Ridge recently presented the City an offer of $1,315,000.00. This offer consists of: $1,065,000.00 for the water and sewer systems and $250,000.00 for the land the lagoon cells occupy. In addition to the purchase price, the Muellers request the City take ownership and maintenance responsibility of the sewer lift station and piping in Southgate Center Subdivision located at the southwest corner of US 151/61 and US 52. WHKS Engineering assessed the condition of the Southgate sewer system and determined that a pump needed to be replaced as soon as possible. The Muellers have replaced this pump. In the long term, the City may need to invest approximately $100,000.00 to upgrade the station to comply with City standards for lift stations. Using the present worth method and a multiplier of 20 times the 2015 projected annual sewer and water revenue of$71,048.00, the utility could be valued as high as $1,420,960. This does not include the value of the marketable property where the lagoon is presently located. The purchase price of the water system is $482,125.50. In Fiscal Year 2016, the Water Department has budgeted $600,000 for the purchase of the Twin Ridge Water System and for off-site improvements to connect the Twin Ridge Water System to the City system and disconnection of the existing wells and pump station. Originally no funds were budgeted to purchase the Twin Ridge sanitary sewer system. City staff reviewed last year's budget and upcoming CIPs and determined that four CIPs can be postponed to finance the purchase of the Twin Ridge sanitary sewer system. The purchase price of the sanitary sewer system is $582,874.50 plus $250,000.00 for the lagoon land, totaling $832,874.50. An additional $870,000.00 is estimated for a pump station along Lake Eleanor (this pump station also will serve the new Truck Country facility) force main, and gravity main that is needed to connect this system to the City's sewer collection system. Consequently, the City sewer fund would need to budget $710,000.00 in future years to complete the integration of the Twin Ridge sewer system to the City's system along with abandoning the lagoon system. The remaining shortfall for this connection will be budgeted in the upcoming City Capital Improvement Program budget. The four CIPs delayed for Fiscal Year 2017 will need to be re- budgeted. The properties being served by the system will continue to pay the rates they are currently paying until the property owners can install meters on each property, which will be in 2016. The properties will then begin paying 1 .5 times the City rate for sewer and water, as they will initially be outside the City of Dubuque corporate limits. As property owners sign a Pre-Annexation Agreement or when they are eventually annexed into the City, their sewer and water rates will be reduced to be the same as the rest of the community. Over the first 10 years after future annexation, the City will receive approximately $4 million in property taxes and fees. I concur with the recommendation and respectfully request Mayor and City Council approval. Mic ael C. Van Milligen MCVM:jh Attachment 2 cc: Barry Lindahl, City Attorney Maureen Quann, Assistant City Attorney Cindy Steinhauser, Assistant City Manager Teri Goodmann, Assistant City Manager Gus Psihoyos, City Engineer Bob Green, Water Department Manager Todd Irwin, Engineering Technician Brant Schueller, Water Distribution Supervisor 3 THE CITY OF Dubuque DUB E U4MftaCftV Masterpiece on the Mississippi 2007•2013•2013 TO: Michael C. Van Milligen, City Manager FROM: Gus Psihoyos, City Engineer SUBJECT: Purchase of Twin Ridge Water, Inc. DATE: October 26, 2015 INTRODUCTION This memorandum summarizes the status of negotiations between the Muellers and the City for the purchase of Twin Ridge Water, Inc., which provides sewer and water service to 101 properties within and adjacent to the Twin Ridge Subdivision. BACKGROUND Over the last several years, City staff have been studying options for the annexation of property in the Key West area and how to best serve the area with city utilities. Engineering, Planning and Water department staff have met with developers and property owners in the Twin Ridge Subdivision to understand their willingness to sell the utility system to the City of Dubuque. This input formed the basis of a preliminary study completed in 2004 and the 2006 Annexation Study, completed by the City's consultant, Veenstra & Kimm. DISCUSSION City staff has repeatedly met with Twin Ridge representatives regarding the purchase of their water and sewer systems. Twin Ridge recently presented the City an offer of $1,315,000.00. This offer consists of: $1,065,000.00 for the water and sewer systems and $250,000.00 for the land the lagoon cells occupy, for a total of$1,315,000.00. In addition to the purchase price, the Muellers request that City take ownership and maintenance responsibility of the sewer lift station and piping located (the Southgate sewer system) in Southgate Center Subdivision located at the southwest corner of US 151/61 and US 52. WHKS assessed the condition of the Southgate sewer system and determined that a pump needs to be replaced as soon as possible. The Muellers have replaced this pump. In the long term, the City may need to invest approximately $100,000.00 to upgrade the station to comply with City standards for lift stations. Using the present worth method and a multiplier of 20 (high end that V&K suggest for municipal systems) times the 2015 projected revenue of $71,048.00, the utility could be valued as high as: • Average net revenue (2015) $71,048.00 • Present worth factor 20.00 • Utility valuation $1,420,960.00 BUDGET Based on information received from Twin Ridge, the gross revenue generated from water and sewer usage from Twin Ridge's 101 current customers would be as follows: Monthly Gross Utility Customers Rate Revenue/Year Water 101 $26.80 $32,481.60 Sewer 101 $36.96 $44,795.52 Total Annual Gross Revenue $77,277.12 *based on average water usage of 5,984 gallons per month The following is the latest projected cost for the water and sewer utilities respectively. Water 482,125.50 Sewer 582,874.50 Lagoon (sewer) 250,000.00 Total Cost $1,315,000.00 In fiscal year 2016 the Water Department has budgeted $600,000 for the purchase of the Twin Ridge Water System and for off--site improvements to connect the Twin Ridge Water System to the City system and disconnection of the existing wells and pump station. Originally no funds were budgeted to purchase the Twin Ridge sanitary sewer system. City staff reviewed last year's budget and upcoming CIPs and determined that four (4) CIPs can be postponed to fiscal year 2017 to finance the purchase of the Twin Ridge sanitary sewer system. The four (4) designated CIPs are: Delayed CIPs 7102530 Outfall Manhole 345,000.00 7101336 Hwy 20 Annexation Sewers 257,721.00 7101899 Southfork Interceptor Sewer 236,002.00 7101638 Street Program Related Sanitary Sewer 60,000.00 Total Budget $89 2 The cost of the sanitary sewer system is $582,874.50 plus $250,000.00 for the lagoon land, totaling $832,874.50. We estimate an additional $870,000.00 for a pump station along Lake Eleanor (this pump station also will serve the new Truck Country facility) force main, and gravity main that is needed to connect this system to the City's sewer collection system. Consequently, the City sewer fund would need to budget $710,000.00 in future years to complete the integration of the Twin Ridge sewer system to the City's system along with abandoning the lagoon system. The remaining shortfall for this connection will be budgeted in the upcoming CIP program. The four (4) CIPs delayed for FY17 will also need to be re-budgeted in the upcoming CIP program. This analysis does not cover any incremental revenue that would be generated by selling city water or sewer to the Key West users. RECOMMENDATION I recommend delaying the four (4) CIPs and using the sanitary sewer revenue from Twin Ridge customers to finance the remaining shortfall. When the City subsequently sells the lagoon land, the revenue may also offset the shortfall. I recommend that the City proceed with the purchase of and connection to the Twin Ridge sanitary sewer system as funds become available. 3 RESOLUTION NO. 384-15 APPROVING AN ASSET PURCHASE AGREEMENT FOR THE SALE AND TRANSFER OF EXISTING ASSETS BY AND BETWEEN THE CITY OF DUBUQUE, IOWA AND TWIN RIDGE WATER, INC., IN DUBUQUE COUNTY, IOWA AND APPROVING AN OFFER TO BUY AND ACCEPTANCE FOR THE ACQUISITION OF REAL ESTATE OWNED BY THE GRACE M. MUELLER REVOCABLE FAMILY TRUST AND RAYMOND M. MUELLER IRREVOCABLE FAMILY TRUST IN DUBUQUE COUNTY, IOWA WHEREAS, Twin Ridge owns and operates a public water supply and sanitary sewer system (the "System"), located in the Table Mound Township in Dubuque County, Iowa; and WHEREAS, the Grace M. Mueller Revocable Family Trust and Raymond M. Mueller Irrevocable Family Trust own real estate upon which the Twin Ridge Water, Inc. lagoon, which is essential in the operation of the sewer and water system, sits; and WHEREAS, City provides water service to approximately twenty-three thousand (23,000) customers and sanitary sewer service to approximately twenty-two thousand (22,000) customers throughout corporate City limits and beyond; and WHEREAS, City is expanding its provision of utilities to include City facilities and projects located outside the corporate City limits in the areas before and beyond Twin Ridge heading toward the Dubuque Regional Airport; and WHEREAS, it is recognized that interconnections between utility systems are encouraged and promoted by various regulatory agencies as being in the public interest; and WHEREAS, Twin Ridge desires to sell, and City desires to purchase, certain assets relating to the System, including pipes, wells, lift stations, pump houses, plant and equipment, supplies and inventories, contracts and contract rights, franchise rights, and easement rights, and excluding certain liabilities associated therewith, as more specifically set forth herein and subject to the terms and conditions set forth herein; and Whereas, Grace M. Mueller Revocable Family Trust and Raymond M. Mueller Irrevocable Family Trust are the owners of the following real property (the "Property"): Twin Ridge Sub #5 — Lot B; Part Lot 2-1 SW SW 13.96 AC ; and Whereas, the City Manager has tentatively agreed to purchase the Property from the Grace M. Mueller Revocable Family Trust and Raymond M. Mueller Irrevocable Family Trust, subject to the approval of an Offer to Buy Real Estate and Acceptance between the City of Dubuque and the Grace M. Mueller Revocable Family Trust and Raymond M. Mueller Irrevocable Family Trust, by the City Council; and Whereas, the City Council has determined that it would be in the best interests of the City to approve the Asset Purchase Agreement for the Sale and Transfer of Existing Assets By and Between the City of Dubuque, Iowa and Twin Ridge Water, Inc. and the Offer to Buy Real Estate and Acceptance between the City of Dubuque, Iowa and the Grace M. Mueller Revocable Family Trust and Raymond M. Mueller Irrevocable Family Trust. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. The attached Asset Purchase Agreement for the Sale and Transfer of Existing Assets By and Between the City of Dubuque, Iowa and Twin Ridge Water, Inc. is hereby approved. Section 2. The City Council hereby approves the Offer to Buy Real Estate and Acceptance between the City of Dubuque, Iowa and the Grace M. Mueller Revocable Family Trust and Raymond M. Mueller Irrevocable Family Trust attached hereto. Section 3. The City Manager and City Attorney are authorized to take such further action as is required to execute and complete the Asset Purchase Agreement for the Sale and Transfer of Existing Assets By and Between the City of Dubuque, Iowa and Twin Ridge Water, Inc. and the Offer to Buy Real Estate and Acceptance between the City of Dubuque, Iowa and the Grace M. Mueller Revocable Family Trust and Raymond M. Mueller Irrevocable Family Trust, including but not limited execution of deeds, leases, easement agreements, dedication of utilities, and assignments of easements. Passed, approved and adopted this 2nd day of November, 2015. Atte t: evin S. Firn ahl, City Clerk F:\USERS\Mquann\Twin Ridge\ResolutionApprovingAssetPurchaseAgreement_102915.doc ASSET PURCHASE AGREEMENT BY AND BETWEEN THE CITY OF DUBUQUE, IOWA AND TWIN RIDGE WATER, INC. THIS WATER AND SANITARY SEWER SYSTEM AGREEMENT ("Agreement"), effective as of November 2 2015, is entered into by and between the City of Dubuque, lowa, an Iowa municipal corporation, having an address of 50 West 13m Street, Dubuque, Iowa 52001 ("City"), and Twin Ridge Water, Inc., an Iowa corporation, having an address of 10753 Woodland Heights Road, Dubuque, Iowa 52003 ("Twin Ridge"). WITNESSETH: WHEREAS, Twin Ridge owns and operates a public water supply and sanitary sewer system, (the "System"), located in the Table Mound Township in Dubuque County, Iowa; WHEREAS, City provides water service to approximately twenty-three thousand (23,000) customers and sanitary sewer service to approximately twenty-two thousand (22,000) customers throughout corporate City limits and beyond; WHEREAS, City is expanding its provision of utilities to include City facilities and projects located outside the corporate City limits in the areas before and beyond Twin Ridge heading toward the Dubuque Regional Airport; WHEREAS, it is recognized that interconnections between utility systems are encouraged and promoted by various regulatory agencies as being in the public interest; and WHEREAS, Twin Ridge desires to sell, and City desires to purchase, certain assets relating to the System, including pipes, wells, lift stations, pump houses, plant and equipment, supplies and inventories, contracts and contract rights, franchise rights, and easement rights, and excluding certain liabilities associated therewith, as more specifically set forth herein and subject to the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises and the mutual promises hereinafter contained, City and Twin Ridge represent, warrant, covenant, and agree as follows: SECTION 1. SALE AND PURCHASE OF CERTAIN ASSETS, RIGHTS AND PRIVILEGES. 1.1 Sale and Transfer of Existing Assets, 1026201 Smaq A, Twin Ridge agrees to grant, sell, assign, transfer, and deliver to City and City agrees to purchase the following assets (collectively, the "System" or the "Assets") from Twin Ridge; 1. All existing easements, together with the improvements and appurtenances located thereon, required for the operation and maintenance of the System and its component parts as set forth in Exhibit A; 2. All assets of Twin Ridge pertaining to the operation of the System located or stored in the Table Mound Township, including, without limitation, the complete and operating System shown in Exhibit A and described in the appraisal performed by Veenstra & Kimm, Inc. attached as Exhibit B, including but not limited to wells, transmission and distribution mains, sanitary sewers and force mains, reservoirs, tanks and standpipes, pipes, pumps and pumping stations, well houses and well piping, hydrants, meters, lift stations, lagoon piping, and manholes and other component barts of the System, and all of Twin Ridge's right, title, and interest in and to the curb stops, service connections (to the extent curb stops and service connections may be owned by Twin Ridge) which pertain to the operation of Twin Ridge's System, and any and all franchise rights and exclusive service area grants and/or agreements relating to the operation of all or any portion of the System; 3, To the extent available and in the possession of Twin Ridge, all documents, reports, laboratory and operating reports, and customer records pertaining to the System for the three (3) years prior to the proposed date of sale, including, but not limited to all existing design, engineering, and customer service records, including meter readings and fixture surveys, property maps, distribution maps, gate drawings, main laying specifications and tap and service cards, but specifically excluding Twin Ridge's cash, bank deposits, accounts receivable, refunds, rebates, returns, and insurance proceeds relating (i) to damage that has been repaired in accordance with the standards set forth in this Agreement prior to the Closing Date, or (ii) to claims or liabilities retained by Twin Ridge, if any; and 4, Twin Ridge customer accounts are paid quarterly. The third quarter, covering July, August, and September water payments, was due September 15, 2015, The fourth quarter, covering October, November, and December, is due December 15, 2015. Presuming closing occurs prior to December 15, 2015, City will receive the fourth quarter payments. Said payments will include the entire fourth quarter, despite Twin Ridge's ownership of the property for a portion of said fourth quarter. Therefore, the City will pay to Twin Ridge at closing a proportionate share of the fourth quarter services payments, which the City will collect on or about 2 December 15, 2015 prorated to the date of closing. If any payments for the fourth quarter are received by Twin Ridge, either before or after closing, said payments will be immediately forwarded to the City after the date of closing and upon receipt, 5, Well Parcel„ Real estate located on Key West Drive (Parcel No, 1511428006) and commonly described as part of Lot 18 of Twin Ridge Subdivision and legally described as follows: Commencing at the Southeast corner of Lot 18 in "TWIN RIDGE" Subdivision, in Table Mound Township, Dubuque County, Iowa, according to the Plat thereof in Book of Plats #34, page 93 Records of Dubuque County, Iowa, thence Northeasterly 70 feet along the lot line between Lots 14, 15, and 18 of said Subdivision, thence Northwesterly 30 feet, thence Southwesterly 30 feet along said Southerly boundary line to the point of beginning, and the well or wells, plant, chemical treatment facilities, storage and distribution facilities, including water mains and lateral lines, heretofore constructed or to be constructed, including all easements incident to the ownership and operation of said Water System. This well parcel is subject to the restrictions as set forth in paragraph 2.3 herein, 6. Southgate Lift Station. The sewage lift station and piping located in Southgate Center on Parcel No, 1501452006 shall by this agreement, become the ownership, maintenance and care responsibility of the City, As such, the City shall accept the dedication of that asset or the transfer of ownership of that asset from Dubuque Southgate Investments, Inc. and the City shall sign any and all such documentation necessary to accomplish transfer, B. City will (i) purchase only the Assets relating to operation of the System located in Table Mound Township, (ii) obtain water and sanitary easements, and access easements currently obtained by Twin Ridge, (iii) receive as part of the System Assets all materials, supplies, if any, relating to the System, and (v) not assume or otherwise be responsible for any accounts payable, outstanding debt, taxes accrued, accrued interest, tax collections payable, deferred credits, or accumulated deferred income taxes of Twin Ridge. 1.2 Fixtures. All property that integrally belongs to or is part of the buildings, grounds, pipes, equipment, wells, lift stations, and other improvements on and to the System, whether attached or detached, and all other equipment related to the operation, care, and maintenance of the System, will be considered part of the System and included In the sale, Nothing herein shall be interpreted as releasing Twin Ridge's right to lease and access, for a period of at least one (1) year and for a period of no more than three (3) years, at the cost of ten dollars ($10.00) for the entire lease period, the white steel building approximately thirty (30) feet by sixty (60) feet existing on the Real Estate parcel #1512351019 described in the Offer to Buy Real Estate and Acceptance executed concurrent herewith and other buildings and structures on the Real Estate to be used in such manner as Twin Ridge chooses at Twin Ridge's sole discretion, so long as such uses do not obstruct the ownership, operation, and maintenance of the Twin Ridge water system and do not violate any local, state, or federal laws, rules, or regulations. The lease agreement is attached as Exhibit C. 1.3 Relinquishment of Service Rights, Twin Ridge relinquishes all right, title, interest, and claim to provide public water supply services, including treated and raw sewage services to its current customers in the Twin Ridge Subdivision shown in Exhibit A and to any other customers it currently serves from its location in the Table Mound Township, Dubuque County, Iowa. These specified Twin Ridge customers will become City customers effective at the Closing, Twin Ridge is in no way barred from doing business or serving customers outside the System area shown in Exhibit A. 1.4 No Liabilities to be Assumed. City assumes no liabilities or obligations of Twin Ridge in connection with the sale of Assets provided for in this Agreement, whether accrued, contingent or other, incurred prior to the Closing Date, or arising from the activities of Twin Ridge prior thereto, excepting only any obligations of Twin Ridge expressly assumed by City under any lease, contract, agreement, or similar document which is assigned to City on and as of the Closing. 1.5 Special Assessments, Twin Ridge will pay all special assessments, if any, which are a lien as of the date of Closing, prorated to the date of Closing. 1.6 Instruments of Transfer, Prior to the execution of this Agreement, Twin Ridge has provided the City with copies of all easements and agreements known to Twin Ridge and which are being assigned, to the extent possible pursuant to this Agreement, To the best of its knowledge, Twin Ridge has provided such easements and agreements, but Twin Ridge makes no further representations or warranties to City regarding the assignability of any easements, agreement or franchise rights. At closing, Twin Ridge will deliver to the City all of those assets identified in Section 1.1(A)(1) — 1,1(A)(6) above, and all such assignments and instruments of conveyance as may be reasonably requested by the City with the intent to obtain good and marketable title in and to all of the assets free and clear of ail liens and encumbrances, After the closing date, Twin Ridge, or its •successors in interest, will execute and deliver any such further instruments of conveyance as may reasonably be requested by the City in order to make effective and to assure the transfer of assets and vesting of title as provided for by this Agreement. Said obligation shall expire six (6) months following the date of the execution of this document. The City will prepare all assignments of such easements to the satisfaction of the City and Twin Ridge and will bring such assignments to the closing for execution by Twin Ridge. 4 1/ Access Rights. Twin Ridge owns buildings and structures located on the re& estate described in the separately executed Offer to Buy Real Estate and Acceptance an commonly referred to as the lagoon. Said buildings and structures are subject to transfer pursuant to this Asset Purchase Agreement, Twin Ridge shall be provided, at the time of closing, with a lease to the buildings and structures located on said real estate and shalt be provided with an access easement for ingress and egress to said buildings and structures located on said re& estate, Further, Twin Ridge shall be entitled to assign such rights to Dani& Mueller, Thomas Mueller, and the Grace M. Mueller Revocable Family Trust. Said rights shall be free of charge and shall continue until the City decides to remove or destroy said buildings, which such action shall not occur sooner than one (1) year following the date of closing. However, in no event shall this leasehold interest extend for a period of time of more than three (3) years following the date of the closing. After the expiration of one (1) year following the date of closing, if the City chooses to terminate the leasehold interest, the City shall provide ninety (90) days written notice of intent to terminate Twin Ridge's and/or Twin Ridge's assigns' leasehold interest. This lease is attached as Exhibit C. 1,8 Abandonment of Wells. The City, upon connection of the System to the City water supply system and upon the City's abandonment of the two (2) wells included In this purchase, shall close the wells in accordance with the Department of Natural Resources (DNR) Rule 567 -Chapter 30 of the lowa Administrative Code, and as may be subsequently modified and amended, at the City's sole cost. Such actions shall be taken prior to the transfer of either well including, but not necessarily limited to, the transfer contemplated by paragraph 2.3 herein, SECTION 2. PURCHASE PRICE. 2.1 Purchase Price. The purchase price to be paid by City for the System is one million sixty-five thousand dollars and zero cents ($1,065,000.00). Upon acceptance of the Offer To Purchase, the City shall pay non-refundable earnest money in the amount of fifteen thousand dollars and zero cents ($15,000,00) to be held in trust by Clemens, Walters, Conlon, Runde & Hiatt, LLP. of the 2080 Southpark Court, Dubuque, IA 52003 until final closing or termination of sale agreement by City. The balance of the purchase price shall be paid in cash at the time of closing in the amount of one million fifty thousand dollars and zero cents ($1,050,000,00). 2.2 No Hook Up Fees. In further consideration for the purchase of assets, rights, and privileges as set forth in Section 1 herein, City agrees that the following described properties shall not at this time, nor at any time in the future, be subject to any hookup or connection fees for sewer and/or water service. The usual monthly service rate shall apply after the service connection occurs. This entitlernerrt and for agreement shall be transferable to the new property owner of the following parcels should any or all of the following parcels be sold or transferred and shall be deemed to run with the land: A. Parcel No. 1512352010 Lot 7 of Twin Ridge Subdivision No, 5, Section 12, Table Mound Township, Dubuque County, lowa; B. Parcel No. 1512301001 Lot 17 in Twin Ridge Subdivision, Table Mound Township, Dubuque County, Iowa; C. Parcel No. 1512301002 Lot 16 in Twin Ridge Subdivision, Table Mound Township, Dubuque County, Iowa; D. Parcel No. 1511428002 Lot 1 of Subdivision of Lots 1 & 2 of the NE% of Section 11, Township 88 North, Range 2 East of the 5th P.M., according to the United States Government Survey and the recorded plats thereof, subject to easements of record, including easement for driveway purposes for ingress and egress. 2.3 Well Parcel Agreement* In further consideration for the purchase of certain assets, rights, and privileges as set forth in section 1 hereiri, City agrees, with respect to the real estate identified in section 1 .1 (A)(5), that it will abide by the terms and conditions imposed upon Twin Ridge in the Agreement filed as Instrument No. 2013- 00015737; and that in the event the City no longer needs the property described in section 1.1(A)(5), which is recognized as where the well, the well house, and wells for Twin Ridge are located, the property will be deeded to the then homeowner of the property legally described as Lot 18 in Twin Ridge Subdivision in Table Mound Township, Dubuque County, lowa, according to the recorded plat thereof, except that part sold to Twin Ridge Water* Inc. as described in Warranty Deed, Instrument No, 748 72 and Correction Warranty Deed filed as Instrument No. 4272-12, records of Dubuque County, Iowa. SECTION 3. REPRESENTATIONS AND WARRANTIES OF TWIN RIDGE. 3,1 Twin Ridge is an Iowa corporation duly organized, validly existing, and in good standing under the laws of the State of Iowa. 3.2 Title to Properties: Use of Water, Twin Ridge has good and marketable title to all of the System Assets referred to in Section 1 of this Agreement, Such Assets are or will be on the Closing Date free and clear of all mortgages, liens, pledges, security interests, restrictions on transfer, claims, or encumbrances of any nature (collectively, "Liens"). To the best of Twin Ridge's knowledge, Twin Ridge has the right to use the water it is now using in the manner in which it is using such water in the System, and such rights are transferable to City. To the best of Twin Ridge's knowledge and except as otherwise disclosed to City in writing, all mains and service connections are located on real estate owned by Twin Ridge in fee simple, within the public rights-of-way, or within appropriate permanent easements of record in favor of Twin Ridge, and all services to 6 customer premises from mains are located entirely on such customers' !premises, on public rights-of-way or on property owned by Twin Ridge in fee simple. 3.3 Location and Use of System Assets. To the best of Twin Ridge's knowledge, the location and present use of System Assets conform to all zoning, building, building line, and similar restrictions, or Twin Ridge has obtained the necessary variances or the same are legally non -conforming under the appropriate law and regulations. The System map attached hereto as Exhibit A, is, to the best of Twin Ridge's knowledge and belief, accurate in all material respects. The City shall be responsible for obtaining all necessary historic engineering plans or records from the respective engineering firms involved in the systems creation as per its needs and at the City's expense, 3,4 Contracts; Liabilities, Twin Ridge has provided to the City, to the extent Twin Ridge had such in Twin Ridge's possession, copies of all material contracts, agreements, leases, instruments, and similar or other documents pertaining, directly or indirectly, in whole or in part, to the ownership or operation of the System to which Twin Ridge is the owner. To the best of Twin Ridge's knowledge, ail such contracts, agreements, leases, instruments, and documents are valid and in full force and effect, and, to the best of Twin Ridge's knowledge, no other party to any such contract, agreement, lease, instrument, or document has breached any material provision of, or is in default in any material respect under the terms of any such contract, agreement, lease, instrument, or document. To the best of Twin Ridge's knowledge, every agreement, lease, instrument, and document can and will be transferred by Twin Ridge to City pursuant to this Agreement without obtaining the consent of any other party, or such consent has been given. To the best of Twin Ridge's knowledge, the Assets are subject to no actual or contingent liabilities of any type. 3,5 Absence of Adverse Change, Twin Ridge represents that, since June 30, 2014, there has not been any material change in the financial condition, results of operations, assets, liabilities, or business of the System, other than changes in the ordinary course of business, which have not been materially adverse, 3.6 Compliance with Laws; No Environmental Hazards. A. Twin Ridge represents, to the best of Twin Ridge's knowledge, that the location and construction, occupancy, operation and use of all improvements now and hereafter attached to or placed, erected, constructed or developed as all or part of the System (the "improvements") do not violate any applicable law, statute, ordinance, rule, regulation, policy, order or determination of any governmental authority or any restrictive covenant or deed restriction affecting any portion of the System, including without limitation, any applicable health, environmental, rates, utility, water quality, antitrust, collective bargaining, safety, payment of withholding and social security taxes, zoning ordinances and building codes, flood and disaster laws, rules and regulations, Twin Ridge will provide City with a list of ail governmental licenses, permits, certifications and approvals 7 of any governmental authority possessed by or granted to Twin Ridge (''Licenses") and used or relied upon in the operation of the System. To the best of Twin Ridge's knowledge, Twin Ridge knows of no reason why any License used in or necessary for the operation of the System should terminate prior to its stated expiration date or not be renewed in accordance with past practices of the System, and to the best of Twin Ridge's knowledge, Twin Ridge is not in violation of any term or condition of any License, 13. To the best of Twin Ridge's knowledge, without in any way limiting the generality of Section 3.7 (a) above, neither the System nor Twin Ridge are the subject of any pending or, to the best of Twin Ridge's knowledge, threatened investigation or inquiry by any governmental authority, or are subject to any known remedial obligations under any applicable laws pertaining to health or the environment, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), the Resource Conservation Recovery Act of 1987, as amended ("RCRA"), the Safe Drinking Water Act, as amended ("SDWAn), the Clean Water Act, as amended ("CWA"), the Toxic Substances Control Act ("TSCA"), or any other applicable provision of federal, state, or local law. C. To the best of Twin Ridge's knowledge, Twin Ridge is in compliance with applicable environmental laws and is not required to obtain any permits, licenses or authorizations to construct, occupy, operate or use any portion of the System as it is now being used by reason of any applicable environmental laws. D, To the best of Twin Ridge's knowledge, no prior use of the System by Twin Ridge, as original owner with no prior owners, has occurred which violates any Applicable Environmental Laws, Twin Ridge has not at any time, directly or indirectly "treated," "disposed of' "generated," "stored" or "released" any 'toxic or hazardous substances," as each term is defined under the applicable environmental laws, or arranged for such activities, in, on or under the System or any parcel of land, whether or not owned, occupied or leased by System, E. To the best of Twin Ridge's knowledge, no litigation is pending or threatened nor any settlement reached by or with any parties alleging the presence, disposal, release, or threatened release, of any toxic or hazardous substance or solid wastes from the use or operation of the System, and no part of the System is on any federal or state "Superfund" list, or subject to any environmentally related liens. 3.7 Insurance. Twin Ridge maintains insurance in connection with the System against hazards and risks and liability to persons and property to the extent and in the manner customary in the water and sanitary sewer utility industry. 3.8 Condition of Assets. To the best of Twin Ridge's knowledge and belief, the System was designed and installed in accordance with good waterworks and sanitary sewer engineering practice as of the date the same were designed and installed and the then applicable rules and regulations of the applicable government& authorities, To the best of Twin Ridge's knowledge, the System has been adequately maintained and is in operating condition and repair, ordinary wear and tear excepted, is fit for its intended purpose, and conforms to all restrictive covenants, applicable laws, regulations and ordinances relating to its construction, use and operation. 3.9 Reserved. 3.10 Litigation, Orders, Etc, As far as Twin Ridge is aware, there are no actions, suits, proceedings or governmental investigations pending or, in prospect or threatened, against or relating to Twin Ridge in its capacity as owner and operator of the System and the properties, the assets or the transactions contemplated by this Agreement in or before any court, regulatory commission, board, administrative body, arbitration board or tribunal or other federal, state or municipal government instrumentality. The System, and Twin Ridge in its capacity as owner and operator of the System and the properties, are not subject to or in violation of any judgment, order, decree, injunction or award of any court, regulatory commission, board, administrative body, arbitration board or tribunal or other federal, state or municipal government instrumentality entered in any proceeding to which it was a party or of which it had knowledge, including, without limitation, decisions, orders or proceedings of Iowa Department of Natural Resources, the Internal Revenue Service, and the Environmental Protection Agency. No proceedings are pending or, to the knowledge of Twin Ridge, threatened against the rates now being charged by Twin Ridge in the System. 3A1 Disclosure, No representation or warranty in this Section 3 or anywhere else in this Agreement or in connection with actions contemplated hereby contains or will contain any untrue statement of a material fact or omits or will omit a material fact necessary to make the statement contained herein or therein not misleading. SECTION 4. REPRESENTATIONS AND WARRANTIES Of' CITY. City hereby represents and warrants as follows: A. Organization and Good Standing. City is a municipal corporation duly organized, validly existing, and in good standing under the laws of the State of lows, is legally authorized to sell and distribute utilities, and has all requisite power and authority and all necessary licenses and permits to own, lease or operate the System. B. Authority Relative to this Agreement. This Agreement is subject to approval by the City Council of Dubuque, lowa. Once approved and executed by the City Council of Dubuque, Iowa, this Agreement will constitute a valid and legally binding obligation of City, enforceable in accordance with its terms. 9 C. investigation, City will notify Twin Ridge if City's investigation or examination of the business, property or operations of the System prior to the Closing Date reveals a violation of any representation or warranty by Twin Ridge; provided, however, that such investigation or examination by City does not affect the representations and warranties of Twin Ridge herein contained, SECTION 5. CONDUCT OFTHE PARTIES PENDING THE CLOSING. 51 Notification, Prior to the Closing, Twin Ridge will notify its customers of the upcoming change in ownership of the System. Said notice will be sent ten (10) days prior to closing conditioned upon all contingencies for the dosing having been released prior to said date. 5.2 Conduct of the Twin Ridge's Business, Until the Closing, Twin Ridge will conduct its business and affairs with respect to the System in the ordinary course, so the representations and warranties contained in Section 3 will remain true and correct as of the Closing, except for changes permitted or contemplated by this Agreement. Twin Ridge will use its best efforts to maintain and preserve the operation of the System, and to preserve its relationships with persons or entities having business relations with Twin Ridge relating to the System. Twin Ridge will cooperate with City on and after the Closing to effect a satisfactory transition in the operation of the System in accordance with Section 12, paragraph 12.17, Without prior written consent from City (which consent shall not be unreasonably withheld): A. Twin Ridge will not dispose of any assets other than in the ordinary course of business, and no such disposal will exceed $10,000 in any individual transaction or $25,000 in the aggregate; B. Twin Ridge will not incur any additional liabilities with respect to the System, except with respect to utilities as incurred in the ordinary course of business, or such other liabilities incurred in the ordinary course of business which do not exceed $10,000 individually or $25,000 in the aggregate, whether for borrowed money or otherwise, or encumber the System; C. Twin Ridge will not take any action that might adversely affect its ability to pass good and marketable title to the System free and clear of all liens and charges; D. Twin Ridge will maintain in force all existing casualty and liability insurance policies and fidelity bonds relating to the System, or policies or bonds providing substantially the same coverage; 10 E. Twin Ridge will advise City in writing of any material, adverse change or any event, occurrence or circumstance which is likely to cause a material adverse change in the System or liabilities (whether absolute, accrued, contingent or otherwise); and F. Twin Ridge will operate the System in accordance with general water and sanitary sewer standards, maintain the System in operating condition, and as good condition as exists as of the effective date of this Agreement, reasonable wear and tear excepted. 5.3 Information arid Access. Twin Ridge will give City full access to the System at suoh times and locations as are mutually agreed upon by the parties. All books, contracts, documents, accounting and financial records, customer records, and files of Twin Ridge related to the System may be inspected by City. Twin Ridge will give City copies of all such documents and records at City's expense, if City requests. Said access specifically includes access to (i) all contracts and agreements related to the System, (ii) all files and records related to the System or this Agreement; and (iii) the System. Twin Ridge will make its persormel available up to a maximum of ten (10) hours free of charge up to the time of dosing as pertaining to this paragraph. Thereafter, additional services of Twin Ridge personnel shall be paid for at the rate of thirty-five dollars ($35.00) per hour by City, 5.4 Observation. Until the Closing Date, City may assign its personnel or other representatives to observe the operations of the System or to consult with personnel or agents of Twin Ridge with respect to the conduct of the business of the System. Twin Ridge agrees to cooperate with City and its representatives to facilitate such observation in times, places and manners that allow City to gather necessary or appropriate information without disrupting or increasing the cost of Twin Ridge's ongoing operations. Twin Ridge will make its personnel available up to a maximum of ten (10) hours free of charge up to the time of closing as pertaining to this paragraph. Thereafter, additional services of Twin Ridge personnel shall be paid for at the rate of thirty-five dollars ($35,00) per hour by City. 5.5 Lawsuits, Twin Ridge will notify City promptly of any lawsuit, claim, proceeding or investigation that may be threatened, brought, asserted or commenced (a) involving the transaction contemplated by this Agreement or (b) which might have a material adverse effect on the System. 5.6 Compliance with Laws, With respect to the System, from the date hereof, Twin Ridge will use reasonable efforts to remain in compliance with all federal, state, local and other laws, statutes, ordinances, rules, regulations, orders, judgments, and decrees applicable to the System. Twin Ridge will promptly disclose any violations of any such laws, statutes, ordinances, rules, regulations, orders, judgments, and decrees, including without limitation any violations of water quality or environmental regulations, to City. 11 51 Additional Documents. The parties will each execute and deliver any other documents which may be reasonably requested for the purpose of carrying out the transactions contemplated by this Agreement. 5.8 Additional Easements, Twin Ridge has previously provided City copies of all easements and agreements establishing access rights, which had been in the possession of Twin Ridge. Twin Ridge is under no further obligation to identify any additional easements or other access rights, or other documents establishing access rights in connection with the System. 5..9 Risk of Loss and Insurance. Twin Ridge bears the risk of loss or damage to the System prior to Closing or possession, whichever first occurs. Twin Ridge agrees to maintain existing insurance and City may purchase additional insurance. In the event of substantial damage or destruction prior to closing, this Agreement will be null and void; provided, however that City has the option to complete the Closing and receive insurance proceeds regardless of the extent of damages. The System will be deemed substantially damaged or destroyed if it cannot be restored to its present condition on or before the Closing. SECTION 8. COVENANTS OF CITY. 6.1 Cooperation. City will refrain from voluntarily taking any action which would knowingly (a) render any representation or warranty contained in this Agreement inaccurate as of the Closing Date; (b) be inconsistent with the satisfaction of the requirements, covenants, and agreements applicable to it as set forth in this Agreement; or (c) impede or prevent the conditions to the consummation of the transaction contemplated by this Agreement from being satisfied, 6.2 Lawsuits, City will promptly notify Twin Ridge of any lawsuit, claim, proceeding or investigation which may be threatened, be brought, asserted or commenced involving the transactions in this Agreement or which might have an adverse impact upon Twin Ridge. SECTION 7. INDEMNIFICATION. 7.1 indemnification. City will be indemnified and held harmless by Twin Ridge from and against any and all liabilities, assessments, deficiencies, penalties, interest, damages, losses, claims and expenses (including, but not limited to, court costs and attorneys' fees) (hereinafter collectively referred to as the "Losses") which City may sustain or which may be asserted against City, arising out of or founded in any way upon (I) the operation of Twin Ridge's business prior to the Closing Date; or (ii) any breach or default of or under any of the representations, covenants or other provisions of this Agreement, including any document furnished or delivered to City pursuant to this Agreement, or resulting from any material omission in any of the foregoing, provided that in all cases City notifies Twin Ridge in writing of the claim within six (6) months of the Closing. 12 7.2 Indemnification Remedy; Arbitration. In the event that Twin Ridge is obligated to indemnify or hold harmless City pursuant to Section 7.1 hereof, City has the unqualified right under this Agreement to take any and all action, legal or otherwise, necessary or desirable, to obtain said payments. If the parties are unable to agree on the value of the losses, such dispute shall be settled by arbitration in Dubuque, Iowa, pursuant to the rules of the American Arbitration Association, SECTION 8. TERMINATION. 8.1 Termination Events, This Agreement may be terminated at any time prior to the Closing Date by mutual agreement of the parties, or by City if Twin Ridge does not cure title defects or remove liens or encumbrances on the System as requested by City prior to Closing. 8,2 Effect of Termination; Return of Materials; Expenses, Etc. If this Agreement is terminated, each party will return to the other party all written material obtained in connection with the transactions contemplated hereby, whether obtained before or after the execution of this Agreement Regardless of whether the transactions contemplated by this Agreement are consummated, each party will pay its own expenses (including, without limitation, the fees and expenses of its agents, representatives, counsel, and accountants) incurred in connection therewith. SECTION 9. AMENDMENT AND WAIVER. This Agreement may be amended in writing at any time prior to the Closing by mutual written consent of both parties. SECTION 10. REMEDIES OF THE PARTIES. 10.1 If City fails to timely perform this Agreement, Twin Ridge may forfeit it as provided in the Iowa Code, and all payments made will be forfeited or, at Twin Ridge's option, upon thirty (30) days written notice of intention to accelerate the payment of the entire balance because of such failure (during which thirty (30) days such failure is not corrected) Twin Ridge may declare the entire balance immediately due and payable. Thereafter this Agreement may be foreclosed in equity and the Court may appoint a receiver. 10.2 If Twin Ridge fails to timely perform this Agreement, City has the right to have all payments made returned to it, 10.3 City and Twin Ridge are also entitled to utilize any and all other remedies or actions at law or in equity available to the parties. SECTION 11 ENVIRONMENTAL PROVISIONS. 11,1 City may, at City's expense, have the System inspected further for the existence of any hazardous materials, substances, or wastes, Twin Ridge will cooperate in 13 providing reasonable access to City's inspectors and engineers. If hazardous materials, substances, or wastes are discovered in the System, City's obligation hereunder will be contingent upon the removal of such materials, substances, and conditions or wastes or other resolution of the matter reasonably satisfactory to City. 11.2 Until fifteen (15) days before Closing, City has the right to terminate this Agreement if environmental issues exist in the System that City determines in its sole discretion do not permit City to use the System for its intended use. Prior to terminating this Agreement pursuant to this section, City will offer Twin Ridge the opportunity to remediate the System to the satisfaction of City in its sole discretion and at Twin Ridge's cost SECTION 12. OTHER PROVISIONS, 12.1 Governing Law, This Agreement is governed by the laws of the state of Iowa. Venue for any action arising from this Agreement is the District Court of Dubuque County, Iowa, 12.2 Assignment. This Agreement may not be assigned without the prior written consent of the parties, and any attempt to assign without such consent shall be voidable by any party, 12.3 Agreement Binding on Successors in Interest. This Agreement applies to and binds the successors in interest of the parties. 12,4 Construction, Words and phrases will be construed as in the singular or plural number, and all masculine, feminine or neuter gender, according to the context. 12,5 Time Is Of The Essence. Time is of the essence in this Agreement, 12,6 Time For Acceptance. If this offer is not accepted by Twin Ridge on or before Lo)31 ,)e(> kc, 2015, this Agreement shall be null and void, e)( 10.40cw, 12.7 Possession, If Cly timely performs all obligations, possession of the System will be delivered to City on 110`.4 Ir7ia0152015 or such earlier date as the parties may agree in writing, with any adjustmenfs of rent, insurance, and interest to be made as of the date of transfer or possession. 12.8 Entire Agreement, This Agreement embodies the entire Agreement between the parties with reference to the subject matter. There are no agreements, understandings, conditions, warranties, or representations, oral or written, expressed or implied, with reference to the subject matter hereof that are not merged in this Agreement and superseded hereby. This Agreement may only be amended by a writing by all parties hereto. 14 12.9 Cooperation. The parties agree to cooperate with each other and to use commercially reasonable efforts in the implementation of this Agreement, and to sign or cause to be signed, in a timely fashion, any and all necessary instruments, documents, and petitions, and to take such other actions as may be reasonably necessary to effectuate the purposes of this Agreement, 1210 Notices, All notices, waivers, and consents under this Agreement must be in writing and will be deemed duly given if delivered or mailed, first class mail, postage prepaid, addressed as follows: If to City: If to Twin Ridge: City of Dubuque, lowa Michael C„ Van Milligen, City Manager 50 West 13th Street Dubuque, Iowa 52001 Daniel J. Mueller President, Twin Ridge Water Inc. 10753 Woodland Heights Road Dubuque, Iowa 52003 1211 This Agreement may be executed in any number of counterparts, each of which shall be treated as an original, but all of which, collectively, constitute only one instrument, 1212 Survival of Representations and Warranties. The parties agree that the representations and warranties contained in this Agreement or in any instrument delivered hereunder survive the Closing Date for a period of six (6) months and are unaffected by any investigation made by any party, The representations and warranties contained herein will not survive beyond said six (8) month period. 12,13 Waiver. Waiver of any term or condition of this Agreement by any party is only effective if in writing and will not be construed as a waiver of any subsequent breach or failure of the same term or condition, or a waiver of any other term or condition of this Agreement. 1214 Severability. If one or more provisions contained in this Agreement is deemed invalid, illegal or unenforceable in any respect under any applicable law, rule or regulation, the validity, legality, and enforceability of the remaining provisions contained herein will not be affected or impaired thereby. 12,15 No Brokers. All negotiations relative to this Agreement have been carried on by Twin Ridge directly with City, without the intervention of any person in such manner as to give rise to any valid claim against any of the parties for a brokerage commission, finder's fee or other like payment. 15 12,16 Concurrent Sales. The obligations of City and Twin Ridge, as set forth within this Asset Purchase Agreement, are contingent upon the sale and closing of the real estate of the Grace M. Mueller Revocable Family Trust and Raymond M, Mueller Irrevocable Family Trust in accordance with the separately executed Offer to Buy Real Estate and Acceptance executed concurrently herewith. In the event that for whatever reason the sale of said real estate does not occur in accordance with the terms of said Offer to Buy Real Estate and Acceptance executed concurrently herewith, then this Asset Purchase Agreement shall be deemed terniinated. 12.17 Consultation Fees, Twin Ridge shall make its personnel available as independent contractor consultants to the City relating to transitional issues associated with the operation of the water and sewer system after the sale for a period of no more than one (1) year. Such consultation shall be provided by Twin Ridge at Twin Ridge's discretion and upon request by the City, The first ten (10) hours of such services shall be free of charge. Thereafter, additional services of Twin Ridge personnel shall be paid for at the rate of thirty-five dollars ($35.00) per hour by the City. CITY OF DUB QUE, IOWA By: Attest: Roy Buol Mayo ../..e" A TAtirAf!, irnstahl Kevi City Clerk TWIN RIDGE WATER, INC. By: 27-zectag Daniel ueller President By:)9')1 • Grace M. Mueller Secretary On thi 1 day of 2015, before me, a Notary Public in and for said state, personally appeared oy D. Bull and Kevin S, Fimstahl known to me to be the person(s) named in and who executed the foregoing instrument, and acknowledged that they executed the same as their voluntary act and deed. MELINDA RETTENBERGER Commission Number 1252$6 bly Comm My Commission expires 7 48 On thistl day of OCT, , 2015, before me, a Notary Public in and for said state personally appeared Daniel J. Mueller and Grace M. Mueller known to me to be the person(s) named in and who executed the foregoing instrument, and acknowledge that they executed the same as their voluntary act and deed, 16 17 0 My e on expires a JENNIFER A. CLEMENS-CONLON r- Commission Number 166352 • My Comm. Exp, AUG 31, 2016 EXHIBIT A TWIN RIDGE WATER, INC. EASEMENTS, SANITARY SEWER, AND WATER DISTRIBUTION SYSTEM 18 *DUBUQUE CORPORATE`LIMI`f , gF !cep'!' -r ��`At�; s p nw.,A+ ,'• _1� '-•7'4,' • -w 19 EXHIBITS Al AND A2 PARCELS INVOLVED IN TRANSACTION 20 THE CITY OF DUB Masterpiece on the Mistsissippi EXHIBIT Al DAGIS P6 t.1.41ffirpol01 P2 P7 P8 LEGEND PROPERTY 1 - LAGOON PARCEL 7Win Ridge Sub #5 — Lot B; Part Lot 2-1 SW SW (Parcel No. 1512351019) PROPERTY 2 - WELL PARCEL Part of Lot 18 of Twin Ridge Subdivision (Parcel No. 1511428006) PROPERTY 4 - LEASED BUILDING PARCEL Twin Ridge Sub 95 — Lot B; Part Lot 2-1 SW SW (Parcel No. 1512351019)) PROPERTY 5 - EXEMPT FROM CONNECTION FEES Lot 7 ofTwin Ridge Subdivision No. 5 (Parcel No. 1512352010) PROPERTY 6 - EXEMPT FROM CONNECTION FEES Lot 17 in Twin Ridge Subdivision (Parcel No. 1 512301001) PROPERTY 7 - EXEMPT FROM CONNECTION FEES Lot 16 In Twin Ridge Subdivision (Parcel No. 1 51 2301002) PROPERTY 8 - EXEMPT FROM CONNECTION FEES Lot 1 of Sub. of Lots 1 & 2 of the NE 14 of Section 11, 788N, R2E of the 5th P.M. (Parcel No 1511428002) DISCLIWIllft • r •••,, a•traurn.rrt-r,r4ttra. lo,enoks•srusr.,. wee.t. ce, 'Au'. 44 ke4test..1 04L1Z;e7 " •• "„ 0.e • Va.... 4.11^4 •.• Jaw. 640.,1 4.0414 V, 114 onto c, km., of 1 inch = 500 feet 200 100 0 200 400 600 800 Feet W E Map Prepared by: City of Dubuque Engineering Division 50 West 13th Street Dubuque, Iowa 52001 Phone: (563) 589-4270 Fax: (563) 589-4205 21 CrlY DUB EXHIBIT A2 DAGIS ,* Ur' >Al —74111116... — k tom 11!!41 !I MIT...! •1-41- '.• firr..tIrlYr r •*. . . . • LEGEND PROPERTY 3 - SOUTHGATE LIFT STATION PARCEL BAL LOT A SOUTHGATE CENTER SECOND ADD (Parcel No. 1501452006) Cv.e.,• It •,• ....Y141, 4,1AMIA.1.1. v •r, v.... 4 V.4 rfolv...“51,.. 4 V104 tree Ilv II,. -a vat N • • • 4 .o.I• 1 inch = 500 feet 200 100 0 200 400 600 800 Feet WE Map Preparod Sy' City of Dubuqua Enginooring Division 50 Was! 131h Street Dotaiqua, Iowa 52001 Pliant,. (563) 589-4270 Fax. (563) 589-4205 22 EXHIBIT B VEENSTRA & KIMM, INC. APPRAISAL OF TWIN RIDGE WATER, INC. 23 i3r3WevoaryParkway :. Wes1 3i2§6.1a2o 5152 85er +515- Z5.711111(FAY)+ 110•21V,60011WA11 December 30, 2f114 Maureen A, Quann Assistant City Attorney City of Dubuque Harbor View Place Suite 330 300 Main Street Dubuque, Iowa 52001-f 944 DUBUQUE, IOWA TWIN RIDCE WATER C. WATER AND SEWER UTILITY VALUATION This letter is to present Veenstra & Kimrn, Inc,'s valuation analysis of the Twin Ridge Water Corp. utility systems. The Twin Ridge Water Corp. owns and operates a water supply and distribution system and a sanitary sewer collection and treatment system. The purpose of the valuation analysis is to provide the City of Dubuque an estimate of the value of the utility systems owned by Twin Ridge Water Corp. for possible acquisition oldie utility systems by the City of Dubuque. There are several methods available to value the assets of a water utility and sewer utility, The various methods for valuation of a utility fall into two general categories. One category of valuation methods focuses on the current value. of the physical assets of the utilities The second category of valuation methods determines value through an analysis of the revenue generating potential of the utility.. For the Twin Ridge Water Corp.. utilities both an asset based valuation and revenue based valuations were developed. The most common method of determining the valuation of assets is to calculate the depreciated value of the physical assets. There are typically two approaches that can be used for calculating the value before depreciation. One approach utilizes the current cost of construction to determine the asset value. The other approach utilizes the ori al cost of construction of the system and adjusts the original cost of construction for tion to determine the current value before depreciation; r.e, Ctrratsilic 24 City • Sioux City. Cibe?rfy Maureen A. Quat n December 30, 201 Page 2 For the Twin Ridge Water Corp. the approximate dates of construction of the assets are available. The original cost of construction is not available. With no information available on the original cost of construction, the asset based method is developed using the current cost of construction. The depreciated value of the assets is determined based on the current co of construction as depreciated based on the age of the asset and the life span of the asset category. For purposes of the valuation analysis, the following life spans were established;. Water Mains 75 years Wells 50 years Pressure Tank 50 years Well House & Well Piping 60 year Sanitary Sewers & Force Main s 60 years Lagoon Cells 60 years Lagoon Piping 60 years Lift Station 50 years The water mains and sanitary sewers within the Twin Ridge Water Corp. system wvere constructed in several phases between 1970 and 1996, General information is available on the age of construction of each area of the water main system and sanitary sewer ystem, Two procedures were considered to determine tie depreciation fa for the water mains and sanitary sewers. The first procedure would identify the date of construction of each reach of water main and sanitary sewer. With that information the age of each reach of pipe is determined and the depreciation factor to be assigned to each pipe or group of pipes, The second procedure consio sanitary servers; The avera the development projects was praporti development phase compared to the tot' etermine an average age of the water mains and ed by assuming the length of pipe ira each of to the number of utility connections for that umber of utility service connections, 25 Maureen A. Quann December 30, 2014 Page 3 Although general information is available on the construction staging of the water mains and sanitary sewers, exact information when each reach of pipe was constructed was not determined. Based on the available information, it appears the preferable method of determining the depredated value of the water mains and sanitary sewers is the second procedure utilizing average age. The average age of the water mains and sanitary sewers would be calculated based on the development sequence. That pipe age would be applied to the applicable life span of water mains and sanitary sewers to determine the depreciation factor, The calculation of the average system age for water mains and sanitary sewer pipes was developed as follows: Development Number Composite Sge ofLots Age of Pjpe Factor 1 17 44 748 2 17 37 629 3A 13 35 455 3B 10 19 190 4 12 18 216 5 19 36 684 88 2,922 Based on this analysis, the average age of the water mains and sanitary sewers in the Twin Ridge Water Corp, would be 33.2 years, The 31.2 year age applied to the water mains results in a depreciated value equal to 55.73% of the current construction costs, With respect to the sanitary sewers the average age of 33,2 years would be applied to the life span of 60 years resulting in current deprer:iatecl value being 44,67% cif the current construction cost 26 Maureen A. Quann December 30, 2014 Page 4 The information provided by Twin Ridge Water Corp, indicated the following major assets are included in the water system: • 5,215 LF of 6 -inch ductile iron pipe • 10 fire hydrants and flushing hydrants • 5 gate valves (6 -inch) • 440 feet of 3 -inch well piping • 2 - 300 -foot deep wells with an 8 -inch casing • Well house The list of assets provided by Twin Ridge Water Corp. included a number of smaller iterris, such as fittings, bolts, seals and gaskets. For purposes of the valuation analysis these items are considered appurtenant to a larger underlying asset. The value assigned to the larger primary asset is intended to include the appurtenance costs associated with that underlying asset. The list of assets for the sanitary sewer systemprovided by Twin Ridge Water Corp, is as follows: • 6,796 LF of 8 -inch VCP sanitary sewer • 718 LF of 4 -inch ductile iron pipe force main • 33 manholes • 207 LF of 6 -inch cast iron pipe • 548 feet of 6 -inch and 8 -inch lagoon piping • 2 cell control discharge lagoon system • Smith and Loveless two pump lift station The listing of assets included a number of valves and fittings associated with the lagoon system. For purposes of the valuation, these smaller assets were not considered separately and are considered appurtenant to the lagoon system, The estimated construction cost for the lagoon system is intended to include all of the associated appurtenances. The third component of determining the asset value is to determine the current construction costs for the various components of the water system and sanitary sewer system 27 Maureen A. Qurann December 30, 2014 Page 5 For purposes of the valuation study, the 'foitowin costs were used in the determination of the current cortstruc tion value of the water system and saniteary sewer systern • 6 -inch ductile iron pipe water main $35/LF • Fina hydrants $3,750/FA • 6 -inch gate valves - $750/EA • 8 -inch VCP sanitary sewer - $45/LF • 6 -inch CIP sanitary sewer - $42/LF • 4 -inch IIP force main - $24/LF • Manholes - $4,000/EA • Well piping - $20/LF • Lagoon piping - $50/LF In addition to these pipe related Items it is necessary to develop an estimated construction cost for the wells, pressure tank and lagoon system. The developtlaent of the current construe on cost for these s sajcsr components of the utility systems is summarized as follows; • Wells 'The ex ring we are 300 -foot deep with an 8 -it teh ceasing pipe and include a high service pump designed to pump directly to the distribution ;system. The well is considered a smaller size. The 300 -foot well would be considered a moderate depth well. Based on recent costs for similar size and depth wells, the estimated cost for each of the two wells was estimated at $175,000. • Pressure tank -» The pressure tank is 775 gallon hydro -pneumatic storage//pressure tank with automatic air volume regulation. This type of pneumatic tank is available from several different vendors. The cost for the tank itself ranges from $28,000 to $32,000. Including installation, the value of the pressure tank was established at $45,000. • Weil house and controls - The well house is G includes the controls for the wells. The,estim and controls was established at V30,000, 28 20 square fa dreplacerrt t brick build ng that t cost for the building Maureen A. Quann December 30, 2014 Page • Controlled discharge lagoon - The estimated coast for the controlled discharge lagoon was established based on a cost estimating formula, The water system is reported to have 10"I customers. The estimated water consumption per customer per day is 350 gallons. The lagoon must store 160 days of flow above the 2 -foot level. This volume typically translates to about 220 total days of storage. The required storage volume in the lagoon cells based on these criteria would be 7,700,000 gallons, or approximately 907,000 cubic feet. The required volume translates to approximately 37,000 cubic yards of volume. In constructing a lagoon system the required earthwork is typically about 130% of the storage volume. The earthwork volume would calculate 48,000 cubic yards, or 24,000 cubic yards per cell The cost; for constructing a controlled discharge lagoon on a per cubic yard basis includes about $4 per cubic yard for the earthwork and an additional $3 to $5 per cubic yard for lining, appurtenances, surface restoration and other similar costs, For purposes of the analysis it was assumed the cost per cubic yard of the lagoon systei» is $o, resulting in an estimated costper cell of $192,000. For purposes of the valuation this was rounded upward to $200,000. The valuation of the water system and sewer system was developed in our separate components, separately valuing the water system and sewer system. Within the water system and sewer system the pipes were valued separately from the major supply and treatment facilities. The calculation of the depreciated value of the follows: e ppu nances is as Description Unit Quantify Unit Cost Value 6" DIP water main LE 5,215 $35 $182,525 Fire hydrants EA 10 $3,750 $37,500 6" gate valves EA 5 $750 $3,7..0 Current Value $223,775 Depreciation Factor 55.73°l Depreciated Value $124,717 29 Maureen A. Quann December 30, 2014 Page 7 The calculation of the depredated value of the wells, pressure tank and building is as foUows: Description Well No. 1 Well No. 2 Pressure tank Well house & controls Well piping Unit EA EA EA EA LF Replacement Facility Quantity Unit Cost Cost Age 1 $175,000 $175,000 44 1 $175,000 $175,000 22 1 $45,000 $45,000 44 1 530,000 $30,000 44 440 $20 $8,800 epreciation Factor 12.00% 56,00% 12.00% 26.67% Depreciated Value $21,000 $98,000 $5,400 $8,000 44 26.67% $2,347 Depreciated Value $134,747 The calculation of the depreciated value of the sanitary sewers force main and manholes k as follows; Description 8" VCP sanitary sewer 6" CiP sanitary sewer 4" DIP force main Manholes Unit LF IF LF EA Quantity Unit Cost 6,796 $45 207 $42 718 $24 33 $4,000 Current Value Depreciation Factor Depreciated Value Value $305,820 $8,694 $17,232 $132,000 $473,746 44,67% $207,140 The calculation of the depreciated value of the lift station and lagoons is as follows: Description Unit Quantity Lagoon Cell No, 1 EA 1 Lagoon Cell No. 2 EA 1 Lagoon piping LF 548 Lift station EA 1 Replacement Facility Depreciation Unit Cost Cost Age Factor $200,000 $200,000 38 36.67% $200,000 $200,000 36 40.00% $50 $27,400 38 36.67% 5135,000 $135,000 34 32.00% Depredated Value Depreciated Value $73,333 $80,000 $10,047 $43,200 $206,580 Although the lagoon system shows a fairly significant current value, the lagoon system poses a long term liability to the owner. At some time in the future the lagoon system will be retired from service and the owner of the lagoon system will incur a cost for the abandonment of the lagoon system. 30 Maureen A. Quann December 30, 2014 Page 8 The deferred liability for the abandonment should be taken into consideratic r ire determining the value of the lagoon system. For purposes of the analysis itis assumeeI the lagoon system has a deferred liability of $100,000 for abandonment. This deferred liability is an offset to the current depreciated value of the lagoon system and reduce its total value for purposes of the analysis. Taking into account the deferred liability the net depreciated value of the sanitary lagoon system and lift station is'$106,580. The total valuation using the depreciated asset methodology for Twin Ridge Water Corp, eater mains, sanitary sewers and: other facilities, is as follows: Description Water mains and appurtenances Wells and: pressure tank Sanitary sewers and appurtenances Lagoons and lift station. Total depreciated asset valuation Depreciated Asset Value $124,717 $134,747 $207,140 106,580 $573,184 The second category of calculating the value estimates the value of the utility based on its net revenue or cash flow, This method of valuation is based on the cash flow generating capability of the utility. This method is not directly tied to the value of the ets. f'or the Twin Ridge Water Corp, system the reported net revenue for the past six calendar years is as follows: Year 2009 2010 2011 2012 2013 2014 Average. INtt Revenue $46,934 $51,047 $56,674 $55,470 $59,051 $60,875 $55,00) Over the last six years the average net revenue of the combined trtilitits uvea $55,000. It`r recognized there has been an upward trend in the net revenue since 2012. win Midge Water Corp. projects a higher net revenue in 2015 due to recent rate increases. 31 Maureen A. Quann December 30, 2014 Page 9 Within the category of cash flow based valuations, there are differing methodologies that can be used to determine the value of the utility. The two most common methods•of valuation are as follows; • iviultipieof anrrtatal free cash flow • Present worth ofanrrual free cash flow Both methods are approximations of the value of the utility based on its profit generating potential. The multiple of annual free cash flow method calculates the value of the utility based on the cash flow that would be generated by the utility. For purposes of the valuation, 10 times the annual free cash flow would appear to be reasonable. The calculation of the valuation based on the multiple of net revenue is as. follows: • Average net revenue $55,009 • Valuation rnultifiller 10 • Utility valuation $550,085 The second method of valuing the utility based on annual cash flow calculates the net present worth of the projected earnings of the utility. This method is based Ctdi a number of assumptions. The first assumption is whether the future earnings will amain stable, increase or decrease from the current level. For purposes of the analysis itis assumed the future revenue will rema in at the current average rate of $55,009 per year. This assumption is consistent with the assumption used inthe valuation of the utility based on the multiple of annual free cash flow. The second assumption is the duration of the uniform series, In theory, the utility could' remain viable in perpetuity. The longer the assumed duration of the utility the higher the net present worth. The higher net present worth occurs because of the number of additional years of revenue generating potential. Although the future years will add an increasingly smaller amount to the net present worth, every year will add at least some value to the calculation of the net present worth. 32 Maureen A. Quann December 30, 2014 Page 10 The third fac included in the analysis is the interest rate or discount factor. Under the net present worth future revenue are discounted to the current present value basedon the exponential of the interest rate. The higher the assumed interest rate the lower the present value of a uniform series of payments, The present value moves inversely to the interest rate. At the present time interest rates are exceedingly low by historical standards. It is not anticipated interest rates will remain at current levels for the entire period of the analysis. Rather, it is anticipated interest rates will return to more normal levels, Historically, interest rates for purposes of calculating a present worth are between 4% and 5% per year, For purposes of the analysis it is assumed the present series will be for a period of 20 years. This assumption appears reasonable as within a 20 year period it is likely there will be factors, such as regulatory requirements, that will sufficiently change the business operations that is viability is less than assured, For purposes of the analysis it is assumed Interest rates will be 4%. The 4% interest rate would be on the low end of the normal range of 4% to 5%, but is reflective of the anticipated low interest rates at the present time:. The present worth factor based can a uniform series for 20 years at 4% is 13.59 times the annual free cash flow. Based on the present worth methodology the valuation u Quid be as follows: • Average net revenue $55,009 • Present worth tactor 13,59 • Utility valuation $747,572 The valuation of the combined water and sewer utility based on the three rnethociologies is as follows. Depreciated asset method $573,184 Net revenue method (10 multiplier) $550,085 • Net present worth (2U years at 4%) $747,572 Maureen A. Quann December 30, 2014 Page 11 In the case of the Twin Ridge Water Corp. two of the three methods result in approximately the same projection of value of the utility. These methods are the depreciated asset method and the multiple of cash flow. The third method, present worth, calculates a higher value for the utility. This higher value is the result of the methodology that assumes the utility will be viable for 20 years, or a longer period of time than may be determined by the other two methods. In some instances the valuation methodologies result in similar projects of value, In some instances the methods of valuation result in very differing values. Although the spread of the three valuation methodologies for the Twin Ridge Water Corp. seems significant, it is fairly close considering the fundamentally different approaches to the methodologies, For older utilities with significant age on the assets it is fairly common for the depreciated asset method to result in a valuation lower than the cash flow based methodologies. Conversely, for relatively new utilities it is common for the depreciated asset methodology to result in a value significantly higher than that projected based on cash flow. It is not uncommon for the utilities with valuations that vary significantly based on the method at any particular tune tri experience a narrowing of the differences over tune. For older utilities with significant asset age it is not uncommon for the utility to experience increased operation, maintenance and replacement costs that will eventually reduce the valuation rased on fret cash flaw. Conversely, the asset value will tend to decrease toward the value based on free cash flow. In determining the value of the utility in the City of Dubuque there are factor that can be taken into consideration. The valuation of the sewer utility factored in the future abandonment cost for the treatment facility. The water system valuation did not include the addition of facilities that would be necessary to convert the system to one viable for the City of Dubuque. For example, customers of the utility are not metered and the City of Dubuque meters all customers. Also, none of the fire hydrants appear to have hydrant lead valves and this would not be in accordance with the City standards. The spacing of values and hydrants also appears to be inadequate. 34 Maureen A Quann December 30, 2014. Page .1 2 In some respects the lack of valves and hydrants is reflected in the asset value of the utility. The lack of meters is not directly reflected In the valuation, Nonetheless, the City will incur an expenditure to integrate the water system within the City of Dubuque's water system, excluding any direct connection costs to extend wafer and sewer to the system itself. These future costs do not necessarily reduce the value of the utility;, but may weigh against the City considering the higher utility value and focusing the City's initial negotiations on the more valuations associated with depreciated asset method and multiple of annual free cash flow. If you have any questions or co nmerit s ccrncetn ng the project, please evntact the avriter at 1-800-241-8000. V ENSTRA K INC; H. R. Veenstr -tRVJrpjh 34337 35 EXHIBIT C LEASE BETWEEN TWIN RIDGE AND CITY 36 THIS LSA I.)kit?ud Jennifer A. Clemens -Conlon LEASE w BUSINESSPROPERTY to this: ziauor purpose of this lease n: th by and beriaeen The Ci mord' whose address for the e is 10753 \4(71pc3Jtarnt# f" i tits R =td, Dubt 1, PREIIAIS S AND TERM, The I.andiin cons. onteiried leases t the Tenant and T following described "premises" situated 1n 1)ul in w located on List 1 of Twin Ridge Subdivi;ac5rI Nu. , ii uthiwest 1!4 of the Southwest 1/4 of Section 12, all 'n Is e nth 1.1 .• Dubuque County, Iowa, rid T'winidc nt" 3 whose erartts and tndi he terms df this re County, Iowa; c•ti it €?, rind Loi 2 of 1 of the und oww°nship, T&SN, R2E of"' yea the toss the space s,.cornn-rersctn it rights, easements and appurtenances, whiC#r, more pa icularly, d premie as may be shown on "Exhibit A,' if attached, for a terra of 3 , midnight c# the day previous to the first day of the lease terra, YaTh h shall be on Ending at midnight on the last oay oof the lease terra„ wh"ich upon rite condition that the Tenant p partrrrms Tenon t egr_ H ftU , in adv Mal Sys Ail sums s3ail be the address of Lartdiord, as bowo d rsignated, or at such erne€ place rn Iowa, or elsewhere, as +: ndlerd may, from time to time, designate in writing. Delinquent payments shall draw interest at annum from the due date, unfit paid" •T AN•11.8 1t- «estheniXe nfe r ed e4nieg eatsea-s#fararesponeit iiliy-witn rt -expert;+es-t "Pc entegesitilzc#iec#,f ttiwdktar r eratsrin-this•leese dive -p ti'rtim t totaksli d,expen m-43reentagas .» iii'±6f•#g-shar vent th6. edloid•»trGkPS —pay ha:344.w) at• #13r»tire,arnount-se-puffs iFi» SONA1.4t'lO{ al/RE12d' Ridge - Ciiy Lease 37 3. POSSESSION, Tenant shall he entitled to possession on the first day of the tern of this lease, and shall Id possession to the Landlord at the end of the lease teen except as herein otherwise expressly provided, old Landlord be unable to give possession on said date, Tenant's only damages shalt be a rebating re rata.:. rental. 4, USE OF PREMISES. Tenant covenants and agrees durrng the term of this lease to use and to occupy the leased promises only for any legal purpose. uch uss, see patagr ph s t 4c , a (d) and 11 (b} bete' YMENT.. Lartdfrsr covenants that its estatein said premises is in fee simple and mat the ull, shall' peaceably have hold and enjoy the premises for the term of this leas Landlord to mortgage all of its right, title, interest in said premises at any time without notice, subject to ItPMENT, t)ECORATINGLAC ENT, REPAIR ANO taiANT E IANCE. DEFINITIONS "Mainlaln'" means la clean and keep In good condition, 'Repair' ° tnearss to fix and restore to geed condition after CONDITION A. Tenant takes the premises in its present condition, except for such repairs and atteration5 a expressly otherwise provided in this lease. REPAIR INR MAINTENANCE t:e and repair the structural parts of the building, For purposes of thin leans, Ins rag shall mean the foundation, exterior weals, load bearing components of intarrdl roes and welts, it c, roo and alt sewers,: pipes, wiring and electrical ixtttres outside of the structure., d and paid for by the parties es follows: PeRFORMANCE PAYMENT L=LANDLORL T -TENANT % Landlord % Tenrwnk. atton or parti may be piumbing fixtures, pipes wiring, electricat fixtures within the structure HeatIngequipment Air conditioning Plate glass (repia Sidewalks Parking areas other common areas tstrike if inapplicable) ITATION. In no oven(, shall the Tenants All costs of such era incident o d shall be respor sibte Ior maintenanc 1-atlreitat )tet; t) N/A N/A N/A N/A N/A N/A N/A N/ N/A NIA Vii, A NSA. NIA NIA N!'A NiA N/A .. N/A, N/A NIA repair for any one incident of r of such amount shall be paid by oder Landlord's control I t e- art er •Tenet; -tis trerc E. Airy repafr ar9terttaracr toi ly Feubjeet-ta tra4FFA €ON perry .r rdrr, reptsies F. Each party shall perfrrrrrr their nsaoonslbil'st be kept in a safe and serviceable condition. Nai. depreciated in value by any act, omissiont4Ct, t 2 the end that the premises will pts mises to be damaged or ployeee EQUIPMENT, DECORATING AND ALTERATIONS G. The following items of equipment, furnishings and fixtures shall be supplied and replaced by the parties follows: SUPPLIED REPLACED Ltstandlord L.Landlord 1 -7 --Tenant T=Tenant Heating equipment N/A NIA Air conditioning equipment N/A N/A Carpeting/floor covering N/A N/A Drapes, shades, blinds N/A N/A Any similar equipment, furnishings, and fixtures not specifically provided for above 3hall be provided and pad for by Landlord, except; NOL aPplicablc. Any equipment, furnishings or fixtures to be supplied by Tenant shell be subject to the Landlord's pricy written approval as to quality and method of installation. Tenant shall provide all trade equipment, furnishing3 and fixtures used in connection with the operation of its business, such as telephones, computers, desks, chairs. shelving and simifar items, 1-1., Landlord shell Provide and pay for the following items of interior decorating' Not a Heat*, Thereafter, Tenant shall be responsible for all interior decorating, Tenant shall make no structural alterations or Improvements without the prior written consent of the LandlOrd, AMERICANS WITH pl$ABILITIES ACT Tenant will make no unlawful use of said premises and agrees to comply with all valid regulations of the Board of Heath, City Ordinances or applicable municipality, the taws of the State of Iowa and the Federal government, but this provision shall not be construed as creating any duty by Tenant to members of the general public, provided, however, responsibility for compliance with the Americans with Disabilities Act shall be performed and paid for by the parties as follows: % Landlord % Tenant Common areas 100 0 Tenants area. Initial compliance (specify) Future compliance 100 0 100 0 T. UTILITIES AND SE vicEsutilities and services shall be furPtstied and paid for by the parties as follows; PERFO NCE PAYMENT L=.Landlord TrzTenant % Landlord % Tenant Electricity N/A NiA .1),2A._ Gas N/A ,.„ NJA Water and Sewer ,N/A *NA .....L\a„, Garbage/Trash T 0 Janitor/Cleaning '1 0 100 Common areas N/A NA NIA Other; rwA 39 8. TERMINATION, SURRENDER of PR>~Mi ES AT END OF TERM •- REMOVAL, OF Ft KTURES. (a) TERMINATION, This lease shall terminate upon expiration of the original term, or if this tease exoress! provides for any option to renew, and if any such option is exercised by the Tenant, then this lease will terminal at the expiration of tt* option term or terms. 1bi'-OPTN TO -RENEW. 1N+T-iAirlt~Ar L-feABL-E (c) SURRENDER, Tenant agrees that upon termination trr this tease rt will surrender and deliver the premises in good and clean Condition, except tate effects of ordinary wear and tear and depreciation arising from lapse of time, or damage without fault or liability of Tenant. (d) HOLDING GIVER. continued possession by Tenant, beyond the expiration 01 its tenancy, coapted with the receipt of the specified rental by the Langford (and absent a written agreement by both parties for en or of this lease„ or for e new lease) shall constitute a month to month extension of the tease:. REMOVAL OF FIXTURES. Tenant may, at the expiration of its tenancy, if Tenant is not in default, y fixtures or equipment which Tenant has installed in the premises, providing Tenant repairs any and s caused by removal. . ASSIGNMENT AND SUBLETTING. Any assignment of this lease or subletting of the premises or any part thereof, without the Landlord's written permission shat!, at the option of the Landlord, make the rental for the balance of the lease terra due and payable at once, Such written permission shall not be unreasonably withheld. 10. REAL ESTATE TAXES. A, All installments of real estate taxes would become delinquent if not paid dunng the term of this lease, shall be paid by the parties in the following proportions: Landlord i O(? % Tenant 0 % S, Any increase to such it staliments that exceetfa the amount of the installment that would be delinquent i' I be paid as follows: Landlord lilt) "!a Tenant d fa O. PERSONA1, PROPERTY I ES: Tenant agrees to timely pay all taxes; es levied or assessed by lawful authority against its personal property on the not paid by, or other public Ing the term of ECIAL ASSESSMENTS. Special' assessments that would be delinquent if nrit paid during the term of shalt be timely paidby the parties In the following proportions. Landlord 100 e'o Tenant t) „ , % E. Each party reserves its right of pretest of any assesarnent of taxes, 11, INSURANCE, A, PROPERTY INSURANCE Landlord and Tenant agree to insure their respective real and personal property for the full insurable value Such Insurance shall cover losses includedin the special form causes of foss (formerly alt risks coverage), To Inc extent permitted by their policies the Landlord and Tenant waive ell rights of recovery against each other. a. LIABILITY INSURANCE, Tenant shall obtain commercial general liability insurance in the amounts of $ 500,000,00 each occurrence and $ 500,000.00 annual aggregate per Location, Such policy shall include liability arising from premises operations, independent contractors, personal injury, products and completed 4 40 operations and liability assumed under an insured con#tact, Thi s policy shall be endorsed io include the Landlord as an additional insured. C, CERTIFICATES OF INSURANCE. Prior to the time the lease takes affect the Tenant writ, provide the Landlord wit a certificate of nsurance with these property and liability insurance requirements, such certificate shalt include 30 days advance notice of canceitation to the landlord.. A renewal certificate shall be provided prior to expiration of the current policies. D ACTS BY TENANT Tenant will not do or omit doing of any act which would invalidate any insurance, or increase` the insurance rates in force on the premises. E INCREASED RISKS OR HAZARDS. Tenant further agrees to be liable for and to promptly pay, as if current rental, any increase in insurance rates on said premises and' qn the building of which said premises are a part, dire to increased risks or hazards resulting from Tenant's use of the premises otherwise than as herein contemptated and agreed, F. Landlord and Tenant shall each provide a copy of this lease to their respective insurers. 12, LIABILITY FOR DAMAGE, Each party shall be liable to the other for all damage to the property cf the ottts€r negligently, recklessly or intentionally caused by that party for their agents, employees or invitees), except to the extent the loss is insured and subrogation Is waived under the owners policy< 13, INDEMNITY. Except as provided in paragraph 21 (A) (5) and except for the negligence of Landlord, Tenant will protect,,: defend and indemnify Landlord from and against aft loss. costs, damage aunt expenses occasioned by, or arising out ot, any accident or other occurrence causing or inflecting injury or damage to any person or property, happening or done in, upon ,or about the premises , or due directly or indirectly to the tenancy, use or occupancy thereof, or any part thereof by Tenant or any person claiming through: or under Tenant. 14, FIRE AND CASUALTY. (a) PARTIAL DESTRUCTION OF PREMISES. In the event of a partial ction or damage of the premises; which is a business interference which prevents the conducting of a near nal buisiness operation and which damage Is repairable within 60 days alter Its occurrences, this tease shalt not ttrminatl put the rent for the premises shall abate during the time of such business Interference. In the event of a partial etesfructii sn, Landlord shall repair such damages within 60 days of Its occurrence unless preversted frprn doing sea by acts of God, governrltont regulations, or ether causes beyond Landlord's reasonable conk'l (b3 ZONING. Shout d fhe zoning ordinance of the municipality in which this property Is located make it impossible for Landlord to repair car rebuild so that Tenant is not able to conduct Its business on these premises, then sudh partial deetruotton shall ba treated as a total destruction as provided in the next paragraph. (C) TOTAL DE OF BtJStNESS USE. In the event of a destruction or damage of the leased premises including the parking area (If parking area is a part of this lease)` so that Tenant is not able to conduct its business on the premlaes or the then current Legal use for which the premises are being used and " darleages cannot be repaired w#tkih 60 days this lease may terminated at the option of either the at, Such termination in such event shall beeffectedby written notice of one party to the other, days sitar such destruction, Tenant shell surrender possession within 10 days after such notice issues and each party shalt be released from all future obligations, and Tenant shall pay rent pro rata only to the date of such des:nlotron. In the event of such termination of this lease, Landlord at its option, may rebuild or not, at its discretion. 16. CONDEMNATION. (a) DISPOSITION OF AWARDS, Should the whole cr any part of the prerniees be condemned or taken for any public or quasi-public purpose, each party shalt be entitled to retains as its own property; any award payable to It Or In the event that a single entire award is made on account of the condemnation, each party will then be entitled to take such proportion of said award es may be fair and reasonable.. (b) DATE OF LEASE TERMINATION. If the whole of the demised premises shall be condemned or taken, the Landlord shall not be liable to the Tenant except and as its rights are preserved in paragraph 15 (a) above. 16. DEFAULT, NOTICE OF DEFAULT ANO REMEDIES. EVENT$ QF DEFAULT A. Eaoh of the itatttawing shall constitute an event of default by Tenant tire to pay rent when due. 2, Failure to'observe or perform any duties, obligations, agreements pr conditions imposed on Tenant pursuant tea terms of the lease: 41 3, Ab not and customart 4, Inst€tutlorl a a debtor, asslg appointment ti within ten (10) and0n nt of the premises, "Aband business activities on the prem!, y bankruptcy proceeding or the benefit of creditor the property or of po€ntrnerrtof the reo C . Landlord shall give Tenant which to correct the default, If the including rent) that carnet be rerne additional period of time in which to withheld by the Landlord. Landlord ssrrna default within any 385 day peri s the Tenant has failed to engage; in its usual more than fifteen (15) consecutive business days, hich the Court orders relief against the Tenant as e interest of Tenant under this tease agreement of Tenant, where the receivership is not vacated elver, NOTICE OFDE,FAULT n notice specifying the default and giving the Tenant ten (10) days in t (other than for nonpayment of a menetaty obligation of Tenant, (19) days by diligent efforts of the Tenant Tenant shall propose an dy the default, consent to additional time shall not be unreasonably not be required to give Tenant any more than three notices for the REMEDIES. C in Me event Tenant has not remedied a default In a tin7ely manner foI owing a Notice of Default, Landlord may proceed with all available-rernediee at law or in equity, including but not limited to the following: 1. Termination. Landlord may declare this lease to be terminated and shall give Tenant a written notice of such termination In the event of termination of this lease, Lendlord shall be entitled to prove claire for and obtain judgment against Tenant for the balance of the rent agreed to be paid for the term herein provided, plus all expenses of Landlord in regaining possession of the premises and the reletting thereof, including attorney's fees and court costs, crediting against such claim, however, any amount obtained by reason of such reletting- 2, Forfeiture. If a default is not remedied In a timely manner, Landlord may then declare this lease to be forfeited and shall give the Tenant a written notice of such forfeiture, and may, at the time, give Tenant it a n0tiee to quit provided for in Chapter 64$ of the Code of Iowa. 17, RIGHT OF EITHER PARTY TO MAKE GOOD ANY DEFAULT OF THE OTHER. If default shall be made by either party in the performance of, or compliance with, any of the terms or conditions of this lease, and such default shall have continued for thirty (30) days after written notice thereof from one party to the other. the person aggrieved, in addition to all other remedies now or hereafter provided by law, may, but need not, perform such term or condition, or mance good such default and any amount advanced shall ;be repaid forthwith on demand, together with interest at the rate of 3.0% perannum, from date of advance 18. SIGNS, (a) Tenant shall have the rght and privilege of attaching, panting or exhibiting signs on the teased premises, provided only (1) that any sign shah comply with theordinances of municipality in which the. roperty is located and the laws of the State of Iowa; (2) such sign shall not change the structure of the butidieg; such sign, if end when removed, shall not damage the building; and (4) such sign shall be subject to the pproval of the Landlord, which approval shalt not be unreasonably withheld. tndtord during the last ninety (90) days of this lease, or extension shall have the right to matntatn in the windows dr on the building or on the premises either or both a "For Rent" or "For Sale"' sign and Tenant will pewit, et such ttrne, prospective tenants or buyers to enter and examine the premises. 19. MECHANIC'S LIENS, Neither the Tenant not anyone claiming by, through, or under the Tenant, shaft right to file or place any mechanic's liens or other lien of any kind ce character whatsoever, upon said es or upon any building or improvement thereon, or upon the leasehold interest of the Tenant, and notice ereby given that no contractor, sub -contractor; or anyone else who may furnish any material, service or labor r any building, improvements, alteration„ repairs or any part thereof, shalt at any time be or become entitled to any lien on the premises, and fife the further security of the Landlord, the Tenant covenants and agrees to give actual notice thereof in adv ardca any and ail contractors and sub -contractors who may furnish or agree to furnish any such material, service ar labor. 20, LANDLORD'S LIEN AND SEC1,7 ITY INTEREST, (b) Said t.amilord shall have, in addition to any lien given by law, a security interest as provided by the Uniform Corn Code of Iowa, upon all personal property and a il.eubstitutlans thereof, kept and used on said premises p?y Tenant: Landlord may proceed at law or in equity with any remedy provided by law or by this tease for the recovery of rent, or for termination of this lease because of Tenant's default in its performance; (b) SPOUSE. If Tenant's spouse is not a Tenant, then the execution of this instrument by Tenant's spouse shat' be for the sole purpose of creating a security interest, on personal property and waiving rights of homestead, rights of distributive share, and exemptions, 6 42 NVIR©NMIENTAL, andlo.j. To the best of Landlord's knowledge to date:. 1. Neither landlord nor Landlords former or present tenants are subject to any lnvestrgatiort concerning the premises by any governmental authority under any appficabta fed aceta, or Ic' I codes, rules and regulations pertaining to air and water quality, the handling, trans storage, treat hent, usage, or disposal of toxic or hazardous substances, air emissions, other environrnental and all matters zoning and other land use matters. 2.. Any handling, transportation, storage, treatment, or use of toxic or hazardous substances that ices occurred on the premises has Doerr in compliance with all applicable federal, state and. local codes, rules and regulations, No leak,; spill release, on the premises; 4 The soil, grouncf,:vater, and solivapor on o under the premise siibstttnoes. 5. Landlord shall assume liability and shalt indemnify+ and hold Tenant harmless against at[ liability or expense arising from any condition which existed, uhethar known or unknown at the itrne.01 execution of the lease which condition rs net a result of actions of the Tenant or which condition arises after date of e ecution but which isnot a result of actions of the Tenant, Tenant. Tenant expressly represents and agrees:. 1, During the tease term„ Tenant's use of the property will not include the use of any ha rdius ansa without Tenant first obtaining the written consent of Landlord. Tenant understands and ndiord's consent is at Landlord's sole option and complete discretion and that such withheld or may be granted with any conditions or requirements that Landlord deems emission or disposal of toxic or hazardous substances has occurred tall 53100 151 rwtel regutai substance, dt its sole m, Tenant shall be fully liable for ail costs and expenses related to the use, lsposat of hazardous substances used or kept on the property by Tenant, and tis Landlord of any violation or any potential violation of any ordinance relating to the use, storage or disposal of any pease, agrees Go remediate, carred ar remove from the premises any ed by arty hazards us substances which have been used or permitted by Tenant on the premises during any term of this tense. Ramed6atlon, correction or removal shall be in a safe and reasonobie manner, and in ctanforn'iw ce with all applicable laws, rules and regulations. Tenant reserves all rights allowed by law to seek ipdemnIty or contribution from any person, other than Landlord, who is or may be liable for any such cost and expense. 4. Tenant agrees to indemnify and hold Landlord harmless from and against all claims causes of action damages. loss, costs, expense, penalties, fines, tawsuils, liabilities, attorney fees, engineering and consulting fees, arising out of or in any manner connected with hazardous substances., which are caused or created by Tenant on or after the date of this lease and during any term of this tease, including, but not ttmited to, injury or death to persons or damage to property, and including any diminution of the value of any leased premises which may resrill from the foregoing, This indemnity shall survivo the cessation, terrnlnetion, abandonment or expiration of this lease. 22. SUBSTITUTION OF EQUIPMENT, MERCHANDISE. ETC, (a) During its tenancy, the Tenant shall have right to sell or otherwise dispose of any personal property of the Tenant situated on the premises, when in 1 et the Tenant it shell have become obsolete, outworn: or unnecessary in connection with the. e business on the premises; provided, however, that the `Tenant shall, lir such instance (unless no ole or item is necessary) etits own expense, substitute for such items a clew of other item in substitution therradf, In IIK`e or greater valid: (b) Nothing heroin contained shall be oohs' as denying to Tenant the right to dispose of Inventoried merchandise in the drdtnery course of the Tenant de or business. 23, RIGHTS C tl ttf,.A,TiV , The various rights, powers, options, elections and remedies of either party, provided' in this lease, shall construed as curnulatlee and no one of them as exclusive of the olh5rs, or exclusive of any rights, remedies or priorities allowed either party by law, and shall in no way affect or impair the 7 43 right of ejther party to pursue any other eqvitable or legal remedy to Mitch either party may be entitled as long as any default remains in any way tinrernedied, unsatisfied or undischarged, 24. NOTICES AND DEMANDS, Notices as provided for In this lease shail be given to the respective parties hereto at the respective addresses designated on page one of this lease unless either pally notifies the other, in writing, of a different address, Without prejudice to any other method of notifying a party in writing or making a demand or other communication, such message shall be considered given under the terms of this tease when sent, addressed as above designated, postage prepaid, by certified mall deposited in a United Statemail box. 25, PROVISIONS TO BIND AND BENEFIT SUCCESSORS, ASSIGNS, ETC, Each and every covenant and agreement herein contained shalt extend to and be binding upon the respective successors, heirs, adminislratorS, executors and assigns of the parties; except that If any part of this lease is held in ont tenancy, the successor In interest shall be the surviving joint tenant, 26. CHANGES TO ElE IN WRITING, None of the cOvenants, provisions, terms or conditions of this lease shall lie iriodified. waived or abandoned, except by a written instrument duly signed by the parties, This lease contains the whole agreement of the parties. 27. RELEASE OF DOWER. Spouse of Landlord appears es a signatory to this lease solely tor the purpose of releasing dower, or distributive share, unless said spouse Is also a CO -Owner Of an interest in the teased premises, 213 CONSTRUCTION. VVorcis and phrases herein, including acknowledgment hereof, snail be construed as in the singular pr plural number, and as masculine, feminine or neuter gender according to the contexL 29, CERTIFICATION. Tenant certifies that it is not acting, directly or indirectly, for or on behalf of any person, group, entity or nation named by any Executive Order or the United States Treasury Department as a terrodst, 'Specially Designated National and Stocked Person" or any other banned or blocked person, entity, nation or transaction pursuant to any law, order, rule or regulation that is enforced or administered by the Office of Foreign Assets Control', and it is not engaged in his transaction, directly or Indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of, any such person, group, entity or naticin. Tenant hereby agreesto defend, indemnify and hold harmless Landlord from and against any and all claims, damages., losses, risks, liabilities and expenses (Including- attorney's fees and costs) arising from or related to any breach of the foregoing certification, 30, ADDITIONAL PROVISIONS. See the attached Addendum A. TWIN RIDGE WATER, INC, TENANT (and spouse if 20(b) is applicable) THE CITY OF DU8UQUE LANDLORD (and spouse if 27 is applicable) SPOUSE SP E (ATTACH APPROPRIATE ACKNOWLEDGMENTS hEPtE 8 44 ADDENDUM A TO LEASE - BUSINESS PROPERTY Tenant shall have access to buildings and structures located on the real estate described herein and is hereby provided with an access easement for ingress and egress to said buildings and structures across the existing dirt/graval drive, which rims from Timothy Street approximately 500 feet to the buildings located on the property, Said gravel drive shall remain unobstructed, Landlord shall have no obligation to conduct SIIONV removal on said gravel drive, Tenant shall have the right but not the obligation to conduct snow removal on said gravel drive, Twin Ridge shall be entitled to assign all rights under this Lease Agreement and Addendum thereto to Daniel Mueller, Thomas MUeller and Qrace M. Mueller Revocable Family Trust tn its discretion, This Lease shall remain in effect for a period of three t3) years, However, M the event the City decides to remove or destroy said buildings, after the expiration of one (1) year following the date of this Lease Agreement, then this Lease may be terminated upon an earlier date, more than one (1) year following the date of closing, with a minimum 01 ninety (90) days written notice of intent to terminate directed to Twin Ridge tmd/or Twin Ridge's assigns. .ti,WFDtak,Pterlk, RP* WaNv...,11.4Adeendisn5 !ON:06m OFFER TO BUY REAL ESTATE AND ACCEPTANCE TO: Grace M. Mueller Revocable Family Trust and Raymond M. Mueller Irrevocable Family Trust, which have joint ownership of the Real Estate (collectively "Seller") SECTION 1. REAL ESTATE DESCRIPTION. The City of Dubuque, Iowa (Buyer) offers to buy real estate in Dubuque County, Iowa, described as follows: Twin Ridge Sub #5 — Lot B; Part Lot 2-1 SW $W 13.96 AC hereafter ("Real Estate"), legal description to be confirmed per continued abstract per Section 10, with any easements and appurtenant servient estates, but subject to the following: a) any zoning and other ordinances; b) any covenants of record; c) any easements of record for public utilities, roads, and highways. The Real Estate is shown on the attached Exhibit A. SECTION 2. PRICE. The purchase price shall be two hundred fifty thousand dollars and zero cents ($250,000.00), payable in cash at the Closing. SECTION 3. REAL ESTATE TAXES. Seller shall pay any unpaid real estate taxes payable for fiscal year 201.4-2.015 and prior years. Seller shall also pay real estate taxes for fiscal year 2015-2016 prorated through the date of closing. Buyer shall pay all subsequent real estate taxes after the date of closing. SECTION 4. SPECIAL ASSESSMENTS. Seller shall pay all special assessments, if any, which are a lien as of the date of closing, prorated to the date of closing, SECTION 5. RISK OF LOSS AND INSURANCE. Seller shall bear the risk of loss or damage to the Real Estate prior to closing or possession, whichever first occurs. Seller agrees to maintain existing insurance and Buyer may purchase additional insurance. In the event of substantial damage or destruction prior to closing, this Agreement shall be null and void; provided, however, Buyer shall have the option to complete the closing and receive insurance proceeds regardless of the extent of damages. The Real Estate shall be deemed substantially damaged or destroyed if it cannot be restored to its present condition on or before the closing date, SECTION 6., CERTIFICATION. Buyer and Seller each certify that they are not acting, directly or indirectly, for or on behalf of any person, group, entity, or nation named by any Executive Order or the United States Treasury Department as a terrorist, "Specially Designated National and Blocked Person," or any other banned or blocked person, entity, nation, or transaction pursuant to any law, order, rule, or regulation that is enforced or administered by the Office of Foreign Assets Control; and are not engaged in this transaction, directly or indirectly on behalf of, any such person, group, entity, or nation. Each party hereby agrees to defend, indemnify, and hold harmless the other party from 10262015 maq and against any and all claims, damages, losses, risks, liabilities, and expenses (including attorney's fees and costs) arising from or related to a breach of the foregoing certification, SECTION 7. CONDITION OF PROPERTY. The Property as of the date of this Agreement, including buildings, grounds, and all improvements, will be preserved by the Seller in its present condition until closing, ordinary wear and tear excepted. Seller sells the Real Estate "AS IS" and makes no warranties, expressed or implied, as to the condition of the Real Estate, SECTION 8. POSSESSION. If Buyer timely performs all obligations, possession of the Real Estate shall be delivered to Buyer on oc-NAre. l'101, Y12015 or such earlier date as the parties may agree in writing, with any adjustments of rent, insurance, and interest to be made as of the date of transfer of possession. Closing shall occur after the approval of title by Buyer but prior to possession of Buyer. The transaction shall be considered closed upon the delivery of the title transfer documents to Buyer and receipt of all funds then due at closing from Buyer under this Offer to Buy Real Estate and Acceptance. SECTION 9. FIXTURES. All property that integrally belongs to or is part of the buildings on the Real Estate, whether attached or detached, such as light fixtures, shades, rods, blinds, awnings, windows, storm doors, screens, plumbing fixtures, water heaters, water softeners, automatic heating equipment, wall to wall carpeting, built-in items, and electrical service cable, outside television towers and antenna, fencing, gates and landscaping shall be considered a part of Real Estate and included in the sale. SECTION 10. ABSTRACT AND TITLE. Seller shall promptly obtain an abstract of tide to the Real Estate, At Seller's expense, the abstract will be continued through the date of acceptance of this Offer, and delivered to Buyer for examination. It shall show merchantable title in Seiler in conformity with this agreement, Iowa law, and Title Standards of the Iowa State Bar Association, The abstract shall become the property of the Buyer when the purchase price is paid in full, Seller shall pay the costs of any additional abstracting and title work due to any act or omission of Seller, including transfers by or the death of Seller or its assignees. SECTION 11. DEED. Upon payment of the purchase price, Seller shall convey the Real Estate to Buyer, by Warranty Deed, free and clear of all liens, restrictions, and encumbrances except as provided in Section 1(a) through 1(c) above and further subject to a Lease Agreement from the City to Twin Ridge Water, Inc, as specified in Section 17, paragraph 17.4 below. Any general warranties of title shall extend only to the time of acceptance of this Offer, with special warranties as to acts of Seller continuing up to time of delivery of the deed. SECTION 12. TIME IS OF THE ESSENCE. Time is of the essence in this contract. SECTION 13. REMEDIES OF THE PARTIES. 2 13,1 if Buyer fails to timely perform this contract, Seller may forfeit it as provided in the lowa Code, and all payments made shall be forfeited or, at Seller's option, upon thirty (30) days' written notice of intention to accelerate the payment of the entire balance because of such failure (during which thirty (30) days such failure is not corrected) Seller may declare the entire balance immediately due and payable. Thereafter this contract may be foreclosed in equity and the Court may appoint a receiver, 13.2 If Seller fails to timely perform this contract, Buyer has the right to have all payments made returned to it. 13,3 Buyer and Seller also are entitled to utilize any and all other remedies or actions at law or in equity available to them and shall be entitled to obtain judgment for costs and attorney fees as permitted by law, SECTION 14. CONTRACT BINDING ON SUCCESSORS IN INTEREST. This contract shall apply to and bind the successors in interest of the parties. SECTION 15. CONSTRUCTION. Words and phrases shall be construed as in the singular or plural number, and as masculine, feminine, or neuter gender, according to the context, SECTION 16. TIME FOR ACCEPTANCE. If this Offer is not accepted by Seller on or before VA C.N 2015 it shall become void and all payments shall be repaid to the Buyer. SECTION 17. OTHER PROVISIONS. 17.1 After execution of this Offer by Seller and Buyer and final approval of the City Council of the City of Dubuque, Iowa, Buyer shall deliver a copy of the executed Offer to Buy Real Estate and Acceptance executed by Michael C. Van IVIilligen, City Manager, along with a copy of the Resolution of the City Council authorizing the purchase of this Real Estate. 17.2 Environmental Provisions: A. Seller warrants to the best of its knowledge and belief that there are no abandoned wells, solid waste disposal sites, hazardous wastes or substances, underground storage tanks, burial sites or private wastewater disposal systems located on the Real Estate, the Real Estate does not contain radon gas, asbestos or asbestos containing building materials, or urea -formaldehyde foam insulation, and Seller has done nothing to cause or allow contamination of the Real Estate with hazardous wastes, substances or pollutants. Seller warrants to the best of its knowledge and belief that the Real Estate is not subject to any local, state, or federal judicial or administrative action, investigation or order regarding any environmental matter. Seller shall provide Buyer with a properly executed Groundwater Hazard Statement showing no wells, solid waste disposal sites, hazardous wastes, underground storage tanks, private burial sites or private wastewater disposal systems on the Real Estate which shall be considered a warranty and representation by Seller to Buyer. B. Seller hereby represents that, to the best of its knowledge and belief, there is no active or abandoned septic tank or septic system on the property. C. Buyer may, at Buyer's expense, have the Property inspected further for the existence of any hazardous materials, substances, or wastes. Seller shall cooperate in providing reasonable access to Buyer's inspectors and engineers, If hazardous materials, substances, or wastes are discovered on the Property, Buyer's obligation hereunder shall be contingent upon the removal of such materials, substances, conditions or wastes or other resolution of the matter reasonably satisfactory to Buyer. D. Until ten (10) days prior to closing, Buyer shall have the right to terminate this agreement if environmental issues exist on the Real Estate that Buyer determines in its sole discretion do not permit Buyer to use the Real Estate for its intended use. Prior to terminating this Agreement pursuant to this section, Buyer shall offer Seller the opportunity to remediate the Real Estate to the satisfaction of Buyer in its sole discretion and at Seller's sole cost. 17.3 The obligations of both Buyer and Seiler, as set forth within this Offer to Buy Real Estate and Acceptance, •are contingent upon the sale and closing of the personal property of Twin Ridge Water, Inc. to the City of Dubuque in accordance with an Asset Purchase Agreement executed concurrently herewith. In the event that for whatever reason the sale of the assets of Twin Ridge Water, Inc. does not occur in accordance with the terms of the Asset Purchase Agreement concurrently executed herewith, this Offer to Buy Real Estate and Acceptance shall be deemed terminated. 17,4 Seller's Access Rights, Seller, Twin Ridge Water, Inc. and its representatives, Dan Mueller and Tom Mueller, by separate lease agreement attached hereto as Exhibit 8, shall continue to have access to the buildings and structures located on the real estate described herein for a period of at least one (1) year and up to three (3) years from the date of closing of this transaction. Seller is granted an easement pursuant to the terms and conditions set forth in the lease agreement attached as Exhibit 8 to go upon and across the real estate described herein for purposes of ingress and egress to the buildings and structures located on the real estate described herein, with such easement to continue for a period of at least one (1) year and up to three (3) years following the date of closing of this Real Estate transaction, This right to access the buildings and structures shall be free of charge and shall continue until the City decides to remove or destroy said buildings, which such action shall not occur sooner than one (1) year following the date of closing. However, in no event shall this leasehold interest or accompanying easement extend for a period of time of more than three (3) years following the date of closing. After the expiration of one (1) year following the date of closing, if the City chooses to terminate the leasehold interest, the City shall provide 4 ninety (90) days written notice of intent to terminate Twin Ridge's and/or Twin Ridge's assignsleasehold interest. 17,5 A separate agreement will be signed at closing that preserves the terms and conditions set forth in the Offer to Buy Real Estate and Acceptance that will survive closing and remain enforceable by the parties even after the execution and delivery of a warranty deed. These terms and conditions include but are not limited to the consultation services, fees, and conditions, the lease of the building located on the Real Estate, and access rights to the Real Estate. SECTION 18. ADDITIONAL PROVISIONS. 18.1 Except as provided in Section 17, the Real Estate is sold/purchased "as is" and "with all faults". 18,2 The parties agree that all understandings and agreements, if any previously made between the parties hereto are merged into this Offer, which alone fully and completely expresses their understanding with respect to the purchase and sale of the Real Estate, This Offer may not be changed or terminated orally, but only an instrument in writing executed by all of the parties hereto. 18.3 This Offer shall not be transferred or assigned without the prior written consent of the other party hereto, which consent shall not be unreasonably withheld, 18.4 This Offer shall be governed by and construed in accordance with the laws of the State of Iowa. Dated: November 2, 2015 CITY OF DUBU UE, IOWA By: Roy D. Buol, Mayor THIS OFFER IS ACCEPTED Dated /0/J 9/2D11/4 GRACE M. MUELLER REVOCABLE FAMH:fT UST, AMERICAN TRUST & SAVINGS BANK TRUS tE /2 KIRCHHO VICE PRESIDENT & TO By: CARLA R M HI\GHES, ST P & TR OFFICER RAYMOND M. MUELLER IRREVOC BLE FAMILY TRUST AMERICAN/RUST & SAVINGS BANK TRUSTEE A KIRCHHOFF, VICE PRESIDENT & TO •light& ____ CARLA R M HUGH , 1ST 3P & TR OFFICER IN _2�di9 V y 3•A a 34' �, LNIl33Y}IOdL sna _ { � o E r o6 f a @s f AI e z o •� . 1 gn r = v p = � I� _ x EXHIBIT B 7 ME IOWA 5TATC 8Ak 4,ISOCIATION Wfw341rormNa,. pi _ Jennifer Al. Clemens -Conlon t.,.. •:: ";',,,--, -5.) THIS LeA3e, is entered into this dav of , 2.015 by and between The City o f Dubuque ("Landlord") whose address for the purpose of this lease is 50 West 13th Street. l')urstone, lbw(' 52001 and Twin Ridee , ("Tenant) whose address for the V land I-14 /1 ad Dtib . i we S2 f i LEASE - BUSINESS PROPERTY FOP PIE LEGAL EFFECT OF rev use of THIS roes', cteauml2RIly.y.,2U_ Water, trt‘.% purpose or this lease Is 1, PREMISES AND TERM. The Landlord. In considerate' n of tile rents, agreements and conditions I herein contained, leases to the Tenant and Tenant leases from Landlord, according to he terms of this lease, the foliowirig described "premises", situated in Dubuque County, Iowa: Buildings Meated on Lot 13 of Twin Ilidge Subdivision No, 5, M Section 12, and Lot 201 1 of thel ,Southwest 1/4 or the Sotohwst 1/4 0/Seddon 12, all in 'rebid Mound Township, TBSN, R2F, ofi :the 5t1:, Deboque county, rowe, with the improvements thereon, and all rights, easements and appurtenances, which, more particularly, Includes the space end premises as may be shown on 'Exhibit A,' lf attached, for a term of 3 years, commencing at midnaght of the de y previous to the first day or the Mese term, which shalt be on the a of 7 1 end nding at midntght on the last day of the lease term which shall be on the upon the condition that the Tenant pays rent therefor, and otheraise performs as in this tease provided 2 RENTAL, Tenant agrees to pay to Landlord as rental tor said term, as follows: , $10.00 per math, in advance, the first rent payment be min doe upon (a) execution of this Maser, *pef-mentet, 11,11"athsstiVer011***V-- day-ofeacIrmorithibmeeftes doring-thertenyrotitasietse, et---eddaten—te*-the-atieve-assenesly—rentel—fenent—stsall---aleis--fey.: All sums shalt be paid al the address of Landlord, as above designated, or M such other place in Iowa, or elsewhere, as the Landlord may, from time to time, designate in writing. Delinquent payments shall draw Interest at St, per annum from the due date, unlit paid ' 2 (1), kitillAtfP),E-T-644A106,14-any-otheip-Tenaneadn-siolairtintalswisisas-snairs-ressterieatilateseth +,tiridierd-enril-Tettent-imarly-experiset-the-portertteges-Mfectitted-M-tianditteekand•Tenentimiremiettee ehea-representenly4lise*Htespeethamporecrwante.totatahmettexpmsesis,-,-Ther-eform thee -percentages 443-Y4r4W-4046,44,444-1444,--44othing4,14.114r4voat-toa.,44Nilo44mm,,payi4+-a-T4nant'4-dare.of-411 -staii)enset,and4)11111roo4rio4eassa,for4146)-amountars,pa4, .4-42444MP,LEAlalCleA0142400/A1L.4014,1044,44.) lir)T4Atrifl'iNat%1GABLE llertant-agetiftehaterlfelutlesifesiveligationtietrepafr)enainrainimef-provtde Laintriord 4stilities-antifeetaissq-paeagraphs-Giast-7*,-teliasy4s-xes-and-spestal'aseiess- ( .ments.,(parasitrapht$0)-and-topWor-e4Sdalry.artati4lalitiltry,iratkiranet$4404graph -4-13-sitell-be*bonmeateiy-ey-T-enent-Ouring-tteatermeNhis-lease,-(4411e,partees Tenant-seleettnimeree 'taitemelbelutietendobiligetionmeeeferlit-imparagreptes-67440 at)S-4.1-shailba-perfertned-atties-TeriaM). three year period deirRE12015 Twin Ridge * City Lease wrz.,4oc,'taa) LEASE,,.BUSUE-$5 3. POSSESSION, Tenant shall be entitled to possess* on thr yield possession to the Landlord at the end of the lease term. except a Should Landlord be unable to give possession on said date, Tenant's only of the pro rata rental. 4. USE OF PREMISES. Tenant covenants and agrees during the term of this lease to use and to occupy the leased premises only for any Ikgtlputpuse. For restrictions on such use, see paragraphs 8 (c). 6 (d) and 11 (b) befov 6. QUIET ENJOYMENT, Landlord covenants that its estate in said premises is in fes simple and that the Tenant, if not in default, shall peaceably have, hold and enjoy the premises for the term of this lease. Landlord shall have the right to mortgage all of its right, title, interest in said premises at any time without notice, subject to this lease. 6. EQUIPMENT, AE I ease: and shall xpressly provided. halt be a rebating BENT, REPAIR AN pgaNtTlONIS � .x COMM, n after damage, deter oration or part bNOITMONS OF PREMt• A Tenant takes the premises In Ila present condition, except for such repairs and altereYions as may be expressly o1herwtsrt provided in this lease REPAIRS AND MAINTENANCE E. Landlord shelf replace and repair the structural parts of the building, For purposes of this Iease, the structural parts of the building shalI mean the foundation-, extenor walls, load bearing components of interior floors and walls, the root and ail sewers, pipes, wining and etectncal fixtures outside of the structure. C Repair shall be performed and paid for by the parties as follows: tein'' means to'ciean AINTENANCE; Interior'vralf a, floo7s end NO umbtng rtctures, pipes, wiring, electrical fixtuin the structure Heating equipnren, Aar conaitioning Pate glass (replacement) Otte (strike t1 inapplicab LIMITATION. In no event shall the Tenants share of the cost of repair for any one Incident of repair exceed $ p,ttl} All Gosls of such en incident of repair in excess of such amount shall be paid by Landlord. D Landlord shaJJ be reapohsibie for maintenance of all common area under L control. Tenant -shelf be-resp€rrtsit v t tl et t r�rtee -except; EgFtFQRfy1ANC,:; Ir. -LANDLORD TriTENANT N/A N/A Nf _ — N/A N/A N/A NIA NIA rd % Tenor NIA N/A. N/A. N/A N/A N/A N/AN. !A .. N/A E Anyrepair-ars smtenariceTtobspeetilostlfrprovi ksubleet-ie4iM44ATl6ii:,if-trey regerdingrepairelnferagraph- F, Each party shall perforin their responsibilities of repair and maintenance to Me end that the prom be kept in a safe and serviceable condition, Neither party wili permit nor allow the premises to be damaged' depreciated In value by any act, omission to act or negligence of Itself, its agents or employees, 2 9 EQUIP tyi"NT DECORATJNOANt? ALTERATIONS G. The folEofng tfems of equipment, furnishings and f x€ureas shall be supplied and replaced by the parties 7ttOW5:;. SUPPLIED L Landlord T=Tenant Heating equipment N/A Aar -conditioning equipment WA Carp covering N/A Drops shades, blinds N/A Any similar equipment, futritsiaings, and l paid for by Landlord, except: i'Nrat applicdbt spoonoaily pro: } EPLA,,,D LaLandtord T=Tenant NIA NIA_..._:. N/A WA bow shalt be provide Any equipment, furnishings or fixtures to be supplied by Tenant siiafl be eubtect to the E endiord's pn written approval as to quality and method of installation.. Tenant shed provide alttrade equipment, furnishings and fixtures used in connection with the operation of its business„ Burda as to lephones, ctsrrtisutere, desks, chairs, shelving and strnitar items. H. Landlord shall provide and pay for the foltowing items of interior decorating; Not appllceb Thereafter, Tenant shalt be responsible far all interior dcCtsrating Tenant shall make no Slructuraf at. fmprovernents without the prior written consent of the Landi'. AMERICA - H CilSABILITIES ACT 1 Tenant will make no unlawful use of said tise€niseS end agrees eta comply a,vitl Board of Health, City Ordinances or applicable ttnicspality, ththe State government, but this provision shall not be construied_as ereattng arw duty by tenant to rn nae public, provided, however, responsibility for compliance with the Arn ns with Disabilities Act performed and paid For by the parties as follows; °I4 Landlord Common areas Tenants area: initial compliance (apeclfy} 100 Future cornptiance 100 100 % Tenant 0 Z. UTILITIES AND SERVtOBB Utilities and servaGes-shalt oe turnisherb and paid fir key the psrti? follows: Electricity Gas Water and Se M e Garbage/Trash PERFORMANCE 1 -Landlord Tenant N/A PAYMENT % Landlord % Tenant 1Q0 Janitor/Cleaning T 0 Common areas JNA NIA NIA Other': N/A N/A Par',1 10 S. TERMINATION, SURRENE1ER OF PRE SES AT ENO OF TERM ,. REMOVAL OF FIXTUR (a) TERMINATION. This shall terminate upon expiration of the ©rigif of term; or if this lea d€ s for any option to renew, and if any such option is exercised by the Tenant. then this lease wi explratIpn df the Option'terni or terms, Te RE E . NEf-tA1 APiPiibleABLE Tenarientarre birgiving-bandlorrfarert the expiratiorrof theitendithatipre iwilli#e eme -wine-tersaterrd-e ,ndit+erh -tf eachileneweivifhtreiersiitollows: fir; reriew°af term: -S — pardwonth S r ewationrr-ia ...---__._ tatter; expressty h its (c) BURRENDER. Tenant agrees that upon termination of this lease it will surrender end deliver the premtees in geed and clean condition, except the effects of ordinary wear and tear and depreciation arising from lapse of time. or damage without fault or liability of Tenant, (d) HOLDING OVER. Continued possession by Tenant, beyond the expiration of its tenancy, coupled with the receipt of the specified rental by the landlord (and absent e written agreement by both parties for an extension of this tease, or fora new lease) shalt constitute a month to month extension of the lease, (e) REMOVAL OF" FIXTURES, Tenant may; at the expiration of its tenancy, if Tenant is not in defecllt, remove any fixtures ori equipment which Tenant has installed in the premises, providing Tenant repairs any and all damages causedby- removal. S. ASSIGNMENT AND UBLETTfNG. Any as. any part thereof, wtthout the Landlord's vrritten perr rental for the balance of the lease terra due end pay unreasonably withheld. 't0, REAL ESTATE TAXES, A, At installments of real este te taxes would become delinquent i€ riot paid durin shall be paid by the parties In the follow ng proportions: Landlord P. 00 TetatrntJL. % 6 Any Ince not paid by u Landlord lnts that exce C. PERSONAL PROPEfRTY TAX charges'evied or assessed by lawful this1e G. SPECIAL ASSESSMENTS S tease shall be timely paid' by the part Landlord 140 E Each party reserves its right of protest of any 11. INSURANCE, to ala t?ult of t shalt be paid as Tolle Tenant 0 % nt agrees' to timely pay all t personal property on th premises or rd, make the alt not be he term cif this lease, flment that would be deiinquen pi or other public ern of xe delinquent if not paid during the term of roporticnst. runt f1 imcnt of taxes: A. PROPERTY INSURANCE. Landlord and Tenant agree to insure their respeal and personal property for the full insurable value. Such insurance shall cover losses included in the special form causes of toss (rormerly all risks coverage). To the extent permitted by their policies the Landlord amid Tenant waive all rgttte of recovery against each other. B. LIABILITY INSURANCE. Tenant shall obtain commercial general liability insurance in the amounts of $ 5.00,000.00 each occurrence and $ 500,000,00 annual aggregate per location. Such policy shall include liability arising from premises operations, independent contractors. personal injury, products and completed d liability assumed under an Insured anti- t. This policy shalt be endorsed to include the n eOdle nal insured. C. CERTIFICATE$ OF INSURANCE, Prior to the ti rtp the lease takes effect the Tenant will provide the Landlord with a certificate of insurance with theses property and liability insurance requirements, such certificate shall include 30 days advance notice of cancellation to the Landlord. A renewal certificate shall be provided prior to expiration of the current policies.. D, ACTS BY TENANT, Tenant will not do or omit doing of any act which would invalidate any insurance. or increase the insurance rates in force on the premises,, E INCREASED RISKS OR HAZARDS, Tenan current rental, any increase in insurance rates on sa part, due to increased risks or hazards resulting from contemplated and agreed, F, Landlord and Tenant shall each provide a copy of this lease to their respective insurers. 12, LIABILITY FOR DAMAGE. Each party shall be liable to the other for p11 damage to the property of the other negligently, recklessly or intentionally caused by that party (or their agents„ employees or invitees), except to tiro extent the loss is insured and subrogation. Is waived tinder the owners papery; 13. INDEMNITY. Except as provided to paragraph 21(A) (5) and except for Inc negligence of Landlord, Tenant will protect, defend and indemnify Landlord from and against all loss, costs damage and expenses occasioned by. or arising out of, any accident or other occurrence, causing or Inflicting injury or damage b any person or properly, happening or done in, upon or about the premises , ordue directly or indirectly to the tenancy, use or occupancy thereof, or any part thereof by Tenant or any person claiming through or under .tenant, 14. FIRE AND CASUALTY. (a) PARTIAL DESTRUCTION OF PREMISES. In the event of a partial destruction or damage of the premises, which is a business Interference which prevents the conducting of a normal business operation and which damage is repairable within (Q days atter its occurrences. this lease shall not terminate but the rent for the premises shall abate during the time of such business interference, In the event of a partial destruction, Landlord shall repair such damages within #i0 days of its occurrence unless prevented from doing so by acts of God, government regulations, or other causes beyond Landlord's reasonable control. (b) ZONING. Should the zoning ordinance of the municipality In which this property is located make it impossible for Landlord to repair or rebuild so that Tenant te not able to conduct its business on these premises, then such partial destruction shall be treated as a total destruction as provided in the next paragraph.. (c) TOTAL DESTRUCTION OF BUSINESS USE. In the event of a destruction or damage of the leased premiss including the parking area (d parking area is apart of this tease) so that Tenant is not able to tact its businer>s on the premises or the then current legal use for which the premises are being used and which damages cannot be repaired within UO days this tease may be terminated at the option of either the Landlord or Tenant.. Such termination in such event shall be effected by written notice of one party to the other, within 211 days ;after such destruction Tenant shall surrender possession • within 10 days :after such notice issues and each party shall be released from ail future obligations, ,and Tenant shall pay rent pro rata only to the date of such 0estructtarh to the event of such termination of this tease, Landlord at its option, may rebuild or not, at its discretion, 15. CONDEMNATION. (a) DISPOSITION OF AWARDS. Should the wrote or any part of the p be condemned or taken for public or quasi -public purpose, each party shall be entitled to retain, es Ile flown property, any award payable iff the event that a single entire award Is made on account of the condemnation, each party wail then be entitled to take such proportion of said award as may be fair and reasonable, DATE OF LEASE TE,RNIINATION. If the whole of the demised premises shall be condemned or taken, sdEord shall not be liable to the Tenant except and as Its rights are preserved in paragraph 15 (a) above. l6. DEFAULT, NOTICE OF DEFAULT AND REmernes, EVENTS 01= DEFAULT A. Each of the following shall constitute an event Cif default by Tenant 1, Failure to pay rent when due, 2. Failure to observe or perform any duties, obligations, agreements or conditions imposed on Tenant pursuant to terms of the lease, rasa lei be liable for and to promptly pay, as if nd on the building of which said premises are=a rse of the premises otherwise than as herein 12 3. Abandonment of the premises, "Abandonment" means the Tenant has farled to engage in its usual and customary business activities on the premises forritord than fifteen (15) consecutive business days, 4. institution of voluntary bankruptcy proceedings in which the Court orders relief against the Tenant as a debtor; assignment for the penefit of creditors of the tnfereat of Tenant under this lease agreement; appointment of a receiver for the property or affairs of Tenant, where the receivership is not vacated within ten (10) days after the appointment of the receiver. NOTICE OF DEFAULT I ord :shaft give Tenant a written notice specifying the default and giving the Tenant ten (18) days in t the default If there is a default (other than for nonpayment of a monetary obligation of Tenant, hat cannot be remedied in ten (10) days by diligent efforts of the Tenant, Tenant shall propose an of time in which tri rsrnedy the default, consent to additional time sliall not be unreasonably ord shall not be required =tot give Tenant any more than three notices for the efatrlt within any 365 dtvy period. C In the event may proceed witt 1 Terrnina3ori. of such termination, end obtain judgment again provided, plus all expenses of Landiortt In thereof, including attorney's fees and court co obtained by reason of such ralelting, 2, Forfeiture If a default is not remedied in a timely manner, Landlord may then declare this lease to be forfeited and shall give the Tenant a written notice of such forfeiture, and may, at the time, give Tenant the notice to quit provided for in Chapter 648 of the Code of Iowa 17- RIGHT OF EITHER PARTY TO MAKE GOOD ANY DEFAULT OF THE OTHER. If default shall be made by either party in the performance of, or camptlanc€ with, any of the terms or conditions of this lease, and such default shaft have continued for thirty (30) days after written notice thereof from one party to the other, the person Aggrieved, In addition to ail other remedies now or hereafter provided by law, may, but need not, perform such term or condition, or make good such default and any amount advanced snail be repaid forthwith an demand, together with interest at the rate of ,G)'1l per annum, from date of advance. 18. SIGNS. (a) Tenant shall have the right and pr'vllege of attaching, painting or exhibiting signs on the leased premises, provided only (1) that any sign shall oontpiy with the ordinances of municipality in which the property is located and the taws of the State of tows, (2) such sign shalt not change the structure of the building, (3) such .sign, if and when Melee d, srta3l trot dsmag the' building; and (4) such sign shalt be subject to the written approval of the Landlord, which approval shall not be unreasonably withheld (b) Landlord during the last ninety (90) days of this lease, or extension, shall have the right to maintain in tare windows or on the building or on the premises either or both a "For Rent" or "For Sale" sign and Tenant will permit, at such trate, prospective tenants or buyers to enter and examine the premises. 19, MECHANIC'S LIENS, Neither the Tenant nor anyone claiming by, through or under the Tenant, shall have the right to rite or place any mechanic's liens or other lien of any kind or character whatsoever, upon said premises or upon any building; or improvement thereon, or upon the leasehold interest of the Tenant, and notice is hereby given that no contractor, sub -contractor, or anyone else who may furnish any material, service ar labor Mr any building, improvements, eitarati000n, repairs or any partthereof, shell at any time be or become entitled to any lien on the premises, and for the further security of the Landlord, the Tenant covenants and agrees to give actual notice thereof in advance, to any and all contractors and sub -contractors who may furnish or agree to furnish any such material, service or labor, 20, LANDLORD'S LIEN AND SECURITY INTEREST, (a) Said Landlord stall have, in addition to any lien given by law, e security interest OS provided by the Uniform Commercial Code of Iowa, upon all personal property and alt substitutions thereof, kept and used on said premises by Tenant: Landlord may proceed at law or in equity with any remedy provided by law or by this lease for the recovery of rent, or for termination of this Pease because of Tenant's detault in its performance, (b) SPOUSE. if Tenant's spouse is not a Tenant, then the execution of this instrument by Tenants spouse shall be for the sole purpose of creating a security interest on personal property and waiving rights of homestead rights of distributive share, and exemptions, REMEDIES defauit in a timely manner following a Notice of Defeult, Ldt :r'd )rin equity, including but not limited to the follow hie lease to be•terminated and shall give Tenant a written notice nation of this lease, Landlord shall be entitled to prove"claim for e of Inc rent agreed to be paid' for the term herein possitslon of the premises and the reletting such claim, however, any amount a 13 21. ENVIRONIV ENTAL. A Landlord. To the bestaf Land9 1. Neither Landlord no tf a premises by any gc and regulations pertaining, usage, or disposal of toxic or zoning and other lend use rrta 2, Any handling, transportation, storage; tt occurred on the premises hiss been in comp anti regulations; 3. No teak, spin release discharge, emissioi on the premises. 4, The soil, ground owtedge to date rmer ttr present• authQ ty ardor id vvatar quality u& substances, subject to ble federal, $ transport trier environm 5. Landlord sh xpr nee arisrng front d" of the lease whioh card "t execution but which is n a re I Tenant. Tenant expressly reftrese. t.. During the lease term, Tena oncernirmg des, rules treatmerrt, use of toxic or hazardous substances that 1app{i eral, state and local codes, r disposal of toxio or hazardous substances has occurred vapor on or under the premises is free of toxic or hazardous all assume liability and shall Indemnify and hold Tenant harmless against ail liability or any condition which existed, whether known or unknown, at the time of execution •c n isnot a result of actions of the Tenant or which condition arises after date cifsu t of actions of the Tenant, nd'agrees: e of the property will not include tthe use of any hazardous substance without Tenant first obtaining the written consent of Landlord, Tenant understands and agrees that Landlord's consent is at Landlord's sole option and complete discretion and that such consent may be withheld or may be granted with any conditions or requirements that Landlord deems appropriate, 2 During the tease tern, Tenant shall be fully liable for all costs and expenses related to the use, storage, removal and disposal of hazardous substances used or kept on the property by Tenant, and Tenant Was give Immediate notice to landlord of any violation or any potential violation of any environmental reguration, rule, statute or ordinance refacing to the use, storage or disposal of any hazardous substance, 3. Tenant, at its sole cost and expense, agrees to remediate, correct or remove from the premises any contamination of the property caused by any hazardous substances which have been used or permitted by Tenant on the premises during any term of this lease Remediation, correction or removal shall be in a safe and reasonable manner, and in conformance with all applicable laws, rules and regulations, Tenant reserves aft rights allowed by iew'to seek Indemnity or contribution from any person, other than Landlord, who Is or may be liable for any such cost and expense. 4, Tenant agrees to indemnify artd hold Laradford harmless from and against all claims, causes of action. :parse, penalties, fines, lawsuits, liabilities, attorney fees, engineering and any manner connected with hazardous substances, which are r the date of this lease and during any term of this lease, to persons or damage to property, and including any which may result from the foregoing, This indemnity r expiration of this lease. damages, loss, oC consulting fees, oris€h caused or created by Tenant including, but not limited to, diminution of the value of a Shall survive the cessation,, 2. SUBSTITUTION rata _EQUIPMtwNT, MtrI r HANCISE. ETC, (a) During its tenancy, the Tenant shell have the right to sell or otherwise dispose of any personal property of the Tenant situated on the premises, when in the judgarent of the Tenant #t shall have beoorn0 obsolete, outworn or unnecessary in connection with the opernCirrn of the business on the premises; provided, however, that the Tenant shaft, in such instance (unless no to or item is necessarY) et its own expense, substitute for such items a new or other Item in n thereof, in like or greater value, (b) Nothing herein contained shall be construed as denying to Tenant the right to dispose of inventoried merchandise In the ordinary course of the Tenant's trade or business. 23. RIGHTS CUMULATIVE. The various rights powers, options, elections and remedies of erther party, provided in this lease, shelf be construed as cumulative and no one of them as exclusive of Me others„ or exclusive of any rights, remedies or priorities allowed either party by law, and shall in no way affect or impair the 7 14 right of either party to pursue any other etyultabte;or legal rerr edy to which ith party maty be encltied as Tong as any default remains in any way unremedied, unsatisfied err undischarged. 24, NOTICES AND DEMANDS, Notices as provided torin this lease *trail be given to the respective parties hereto at the respective addresses designated on page one of this lease unless either party notifies the other, in writing, o1a different address, Without prejudice to any other method of notifying a party in writing or making a demand or other cornmunicat€on, such message shall be considered given under the terms of this lease when sent, addressed as above designated, postage prepaid, by certified mail deposited in a United States mali box. 25, PROVISIONS TO BIND AND BENEFIT SUCCESSORS, ASSIGNS, ETC. Each and every covenant and agreement herein contained shalt extend to and be binding upon the respective successors, heirs, administrators, executors and assigns of the parties. except Mat if any part of this lease is held in joint tenancy, the successor in interest shall be the surviving joint tenant. 26. CHANGES TO SE IN WRITING. None of the covenants, provisions, terms or conditions of this lease shall be modified, waived or abandoned, except by a written instrument duly signed by the parties. This lease contains the whole agreement of the parties; 27, RELEASE OF DOWER, Spouse of Landlord appears as a signatory to this lease solely for the purpose hg dower, or distributive share, unless said spouse is also a co owner of an interest in the leased premises: 28. CONSTRUCTION. Wards antiphrases her rn the singular or piural number, and 29. CERTIFICATION. Tenant roup entity or nation named b nst, "Specialty Designated National an nation or transect€on pursuant to any law, ort of Foreign Assets Control, and it is not eng Instigating or facilitating this transaction, directly� nation. Tenant hereby agrees to defend, €ndentnif claims, damages, losses, risks, liabilities and expe rotated to any breech of the foregoing certification, 30, ADDITIONAL PROVISIONS. tr3t ase s e the attached Addendum A, including acknowiedgi ne or neuter gender Ing, directly or'. r the United S TWIN RIDGE WATER, INC, TENANT (and ,spouse if 20(t4 is applicable) SPiU E ht hereof, shall be construed es rding to the context, ctly„ for or on behalf of any Treasury Department as e r any other banned or blocked person, entity, on that is enforced or administered by the Office nsactron, directly or indirectly on behatr of, or y on behalf of;, any such person, group, entity or hold harmless Landlord from and against any and all (including attorney's fees and costs) arising from or THE 0t7? OF DUSUGttJE (and LANDILOND 2.7 is applicable) (ATTACH APPROPRIATE ACi(NOilMtt.E00MENTS HERE) 15 SPOUSE ADDENDUM A TO LEASE - BUSINESS PROPERTY Tenant shall have access to buildings and structures located on the real estate described herein and is hereby provided With an access easement or ingrcss and egress to said buildings and structures across the existing dirt/gravel drive, which runs from Timothy Street approximately 5(X) feet to the buildings located on the propertySaid gruel drive shall remain unobstructed, Landlord shall have no obligation to conduct snow removal on said gravel drive, Tenant shall have the right but not the obligation to conduct snow removal on said gravel drive, Twin Ridge shall be entitled to assign all rights under this Lease Agreement and Addendum thereto to Daniel Mueller, Thomas Mueller and Grace M. 'Mueller Revocable Family Trust at its discretion, This Lease shall remain in effect for a period of three (3) years, However, in the event the City decides to remove or destroy said buildings, rifler the expiration of one (I) year following the date of this Lease Agreement, then this Lease may be terminated upon an earlier date, more than one (I) year followMg the date of closirt6,, With a irtinimum of ninety (0) days written notice of intent to terminate directed to Twin Ridge and/or Twin Ridge's assigns. tfulte..