Memorandum of Understanding Between Agent and Real Estate Developer - PDF

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					             TOWN COUNCIL
         AGENDA PACKET
            REVISIONS

              REGULAR MEETING
                JULY 9, 2009
                  6:00 p.m.


Item 6   Revises backup material (MOU)
Item 8   Revises backup material (Agreement)
                   MEMORANDUM OF UNDERSTANDING
              Between Northern Arizona Council of Governments-
                  Economic/Workforce Development Division
                                   and the
                       Town of Chino Valley, Arizona

                               General Provisions

I) Introduction    –     Purpose        of    Memorandum of     Agreement
   This Memorandum of Understanding (MOU) is made and entered into by and
   between the Northern Arizona Council of Governments – Economic
   Workforce Development, hereafter referred to as NACOG, and the Town of
   Chino Valley, hereafter referred to as the Town.

   The purpose of this MOU is to establish an agreement between NACOG and
   the Town concerning their respective rights and responsibilities for the
   development and implementation of a voucher transit system, or VTS, which
   shall serve Chino Valley Residents in providing transportation services to the
   following areas, the Town of Chino Valley, the City of Prescott, the Town of
   Prescott Valley, and the Town of Dewey-Humboldt, hereafter referred to as
   the Quad-City area.

   All parties agree to coordinate and collaborate their efforts in mutual planning
   and implementation to ensure that each area benefits from this service. The
   vouchers shall be issued to residents of the Town to be used for travel only
   within the Quad-City area. Residents of the Town will pay a $2.00 co-payment
   per service provided.

II) NACOG - Authorities and Responsibilities Expressly Implied

   1. Fiscal Agent: NACOG will act as the fiscal agent for the VTS being
      responsible to receive and disperse funds.

   2. Eligibility: NACOG will establish eligibility screening which conforms to the
      requirements set forth. Income level shall be based primarily on current
      income information.

   3. Reporting: NACOG will collect data regarding all VTS users to include
      residency, origination, user name, eligibility category, age, income level as
      appropriate, and destination. This information will be compiled and
      reported to the Town on a quarterly basis.

   4. Records Management: NACOG will prepare and maintain all records
      relating to the VTS for the duration of this agreement. Records will be
      released to the Town, upon request, at the termination of this agreement.
   5. Staff: NACOG shall select and employ staff in order to provide project
      supervision and direct client services. This staff shall also perform
      administrative services as applicable.

   6. Compensation: NACOG will receive a 15% administrative fee for
      performing all duties set forth herein.

   7. Contributions: NACOG, when applicable, will make available other
      resources to VTS recipients.

III) Services to be provided

   It is understood and agreed upon by all parties that this agreement is the
   result of collaboration between the Town and NACOG. NACOG will develop
   and implement the VTS program, per the following guidelines:

   1. Funds will be distributed based on residency not on origination/destination
      of travel, i.e., the residency of a recipient shall determine the allocation of
      funds from the respective Quad-City area VTS budget.

   2. Transportation originations and destinations will be limited to the Quad-
      City area only.

   3. Eligibility includes youth, elderly (55 or older), developmentally disabled
      and low-income adults.

   4. Special needs clients and unaccompanied youth will be given
      transportation only when appropriate accessibility and safety precautions
      can be provided.

   5. Clients deemed eligible will be given vouchers based on a monthly
      expenditure budget of the Town of residency. The vouchers will be given
      out on a first come first serve basis beginning on the 1st on each month.

   6. Transportation will be provided only by NACOG approved and contracted
      vendors.

   7. NACOG may, as the Town has requested, authorize processing of
      vouchers by select organizations as may be deemed appropriate. Said
      organizations will be required to comply with all record maintenance
      procedures set forth by NACOG to facilitate the reporting process.
      NACOG reserves the right to withdraw on-site voucher processing from
      any organization which does not comply with required procedures.

   8. The Town agrees that NACOG shall not be held accountable in the event
      of abuse by another organization utilizing on-site voucher processing.
      Neither shall payments be denied for services rendered by providers in
      good faith.
IV) Assignment of this agreement

     This agreement is not assignable in whole or in part by NACOG without the
     express written permission of the Town.

V)     Term of this agreement

     The Town and NACOG agree that the terms of this agreement will become
     effective upon execution by signature and shall continue until such time as
     either party provides 30 days written notice to modify or amend or terminate
     this agreement.

VI) Conflict of Interest

     Pursuant to A.R.S. Section 38-511, the Town may cancel this agreement,
     without penalty or further obligation, if any person significantly involved in
     initiating, negotiating, securing, drafting, or creating the agreement on behalf
     of the Town is, at any time while the agreement or any extension of the
     agreement is in effect, an employee or agent of any other party to the
     agreement with respect to the subject matter of the agreement. In the
     foregoing event, the Town further elects to recoup any fee or commission
     paid on behalf of the Town from any other party to the agreement arising as a
     result of this agreement.

VII)    Legal Arizona Workers Act

     Under the provisions of A.R.S. § 41-4401, NACOG hereby warrants to Town
     that NACOG and any of its subcontractors (“Subcontractors”) will comply with,
     and are contractually obligated to comply with, all Federal Immigration laws
     and regulations that relate to their employees and A.R.S. §23-214(A)
     (hereinafter “Immigration Warranty”).

     A breach of the Immigration Warranty shall constitute a material breach of this
     Agreement and shall subject the NACOG to penalties up to and including
     termination of this Agreement at the sole discretion of the Town.

     The Town retains the legal right to inspect the papers of NACOG or any
     Subcontractor’s employee who works on this Agreement to ensure that
     NACOG or Subcontractor is complying with the Immigration Warranty.
     NACOG agrees to assist the Town in regard to any such inspections.

     The Town may, at its sole discretion, conduct random verification of the
     employment records of NACOG and any Subcontractor to ensure compliance
     with NACOG’S Immigration Warranty. NACOG agrees to assist the Town in
     regard to any random verifications performed.
    Neither NACOG nor any Subcontractor shall be deemed to have materially
    breached the Immigration Warranty if NACOG or Subcontractor establish that
    it has complied with the employment verification provisions prescribed by
    sections 274A and 274B of the Federal Immigration and Nationality Act and
    the E-Verify requirements prescribed by A.R.S. §23-214, Subsection A.

VIII)   Funding Level

    The Town agrees to fund the voucher program in the amount of $17,970.00_
    during the period July 1, 2009 to June 30, 2010. This equates to
    approximately _$1,497.50 per month. NACOG's 15% administration charge
    would equal approximately _$224.63_ per month, with the remainder of the
    funds going directly towards funding the vouchers.

IX) Signatures

    This Memorandum of Understanding shall constitute the entire agreement of
    both parties and is executed upon signature.


Passed, Approved, and Adopted by the Mayor and Council of the Town of Chino
Valley this ___ day of ____________, 2009.



                                             _______________________
                                             Jim Bunker, Mayor

ATTEST:


_________________________
Jami Lewis, Town Clerk

Pursuant to A.R.S. Section 11-952(D), the foregoing agreement has been
reviewed by the undersigned attorney for the Town of Chino Valley, who has
determined that the agreement is in proper form and is within the powers and
authority granted under the laws of this state to the Town of Chino Valley.


                                             ______________________
                                             Town Attorney


__________________________________
Teri Drew
NACOG – Regional Director
Economic/Workforce Development Division
                             AGREEMENT TO COMMIT WATER
               IN EXCHANGE FOR CONVEYANCE OF REAL PROPERTY
                               [7/7/09 RC&A FINAL DRAFT]
        THIS AGREEMENT TO COMMIT WATER IN EXCHANGE FOR CONVEYANCE
OF REAL PROPERTY (this “Agreement”), dated as of ______________ ___, 2009, is made by
the TOWN OF CHINO VALLEY, a municipal corporation of the State of Arizona (the “Town”),
and TerraMax Development Group, LLC, an Arizona limited liability company (“TerraMax”).
The Town and TerraMax are occasionally each referred to in this Agreement as a “Party” and
collectively as the “Parties.”

                                          RECITALS

    A.      On July 9, 2009, TerraMax entered into an option to purchase agreement involving         Deleted: real estate
            the purchase of an approximately 74.4 acre parcel in Yavapai County, Arizona,            Formatted: Not Highlight
            identified as parcel number 306-40-008D by the Yavapai County Assessor’s Office          Deleted: and sale
            (the “Property”) from Big Chino Materials L.L.C. (“Big Chino”). The Option to
            Purchase the Property is attached to this Agreement at Exhibit “A” (the “Option          Deleted: and Sale Agreement for
            Agreement”).                                                                             Deleted: Purchase


    B.      Pursuant to A.R.S. § 45-555(A), a city or town that owns or leases land consisting of
            “Historically Irrigated Acres” (as that term is defined in A.R.S. § 45-555(D)(3)), or
            “HIA,” in the Big Chino sub-basin has the right to withdraw groundwater from the
            land and transport that water to the Prescott Active Management Area (“AMA”) for
            municipal use.

    C.      Based on an unofficial Arizona Department of Water Resources (“ADWR”)
            determination, it is contemplated that ADWR will ultimately determine that a total of
            36.17 acres of the Property is HIA, thereby giving the Town the right to withdraw
            and transport up to 108.51 acre-feet (36.17 acres x 3 acre-feet per acre) of water per
            year. The HIA water rights associated with the Property are hereinafter referred to as
            the “HIA Water Rights,” and the water represented by those rights is “HIA Water.”

    D.      TerraMax may develop certain real property within the Town’s municipal
            boundaries. The terms on which TerraMax’s property may be developed shall be the
            subject of a separate development agreement between the Town and TerraMax.
            Upon execution of one or more development agreements with the Town for a specific
            parcel (or parcels) of real property in the Town, which is owned by TerraMax or a
            Third-Party Developer (as defined in Section 3.1, below), such parcel (or parcels)
            shall be deemed an “Approved Development(s)” (as defined in Section 3.2, below).

    E.      Pursuant to A.R.S. § 9-463.01(I), a final plat for a subdivision within an AMA may
            not be approved by a municipality unless it is accompanied by one or more
            Certificates of Assured Water Supply (“CAWS”) issued by ADWR.

    F.      Subject to Section 8.1 of this Agreement, TerraMax desires to convey to the Town
            fee title to the Property (but not the HIA Water Rights) in exchange for the Town’s


1053528.3
7/6/09
                  commitment to act as TerraMax’s import agent to allow TerraMax or Third-Party
                  Developers to which TerraMax has sold HIA Water Rights to use the HIA Water
                  Rights to obtain CAWS for Approved Developments in the Town.

      G.          The Parties desire to enter into this Agreement to memorialize the terms set forth in
                  Recital F, above, and to establish their respective rights and responsibilities
                  associated therewith.

                                              AGREEMENT

       NOW, THEREFORE, in consideration of the agreements and promises set forth below,
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

1.0        OBLIGATON TO PERFORM

           1.1.      TerraMax’s Obligation to Pay Costs Associated with Purchase of the Property.
                     Provided TerraMax exercises its right to purchase the Property as set forth in        Deleted: Unless expressly agreed to by
                                                                                                           the Town in writing
                     Section 4 of the Option Agreement, TerraMax shall timely close on the Property
                     in accordance with the terms of the purchase contract contemplated thereunder         Deleted: pursuant to the terms of the P
                     (“Purchase Agreement”), and TerraMax shall pay all costs associated therewith,        Deleted: Agreement
                     including, without limitation, payment of the purchase price of the Property
                     pursuant to a promissory note with Big Chino (the “Note”), due diligence costs,       Deleted: , a copy of which is attached
                                                                                                           hereto at Exhibit “B”
                     closing costs, and attorneys’ fees. The Town shall not be responsible for paying
                     any portion of the costs described in this Section 1.0.

           1.2.      TerraMax’s Obligation to Perform under Note and Deed of Trust. TerraMax
                     shall perform all obligations in accordance with the terms of the Note, and keep,
                     observe, and perform all of the obligations, covenants, and agreements of the
                     beneficiary under the deed of trust (“Deed of Trust”) securing, among other
                     things, the Note, in the manner, at the times, and in the other respects as therein   Deleted: a copy of which is attached
                                                                                                           hereto at Exhibit “C” (the “Deed of
                     provided.                                                                             Trust”),


2.0        CONVEYANCE OF PROPERTY TO THE TOWN                                                              Deleted: .


        Within five days after the Note has been fully satisfied and Big Chino has conveyed the
Property to TerraMax, TerraMax shall convey to the Town, at no cost to the Town, fee title to
the Property by special warranty deed, only reserving for itself, ownership of the HIA Water
Rights.

3.0        COMMITMENT, SERVICE, AND USE OF HIA WATER RIGHTS

        3.1     Town’s Commitment of Water for Assured Water Supply Purposes. Subject to
Section 3.4, below, as consideration for conveying fee title to the Property to the Town pursuant
to Section 2.0, above, effective upon the closing of the transaction contemplated by Section 1.0,
above (the “Closing”), the Town irrevocably commits 100 percent of the HIA Water Rights to



                                                      2
TerraMax for a period of 100 years from the date a final plat is recorded for an Approved
Development, and the Town commits to act as TerraMax’s import agent to allow TerraMax to
use the HIA Water Rights to obtain CAWS for its Approved Developments; provided, however,
TerraMax or its Affiliates (defined below) shall have until eighteen years after the Effective Date
(defined below) to apply for one or more CAWS based on all or a portion of the HIA Water
Rights. The Town shall cooperate fully with TerraMax in using the HIA Water Rights to obtain
CAWS for subdivisions owned by TerraMax or its Affiliates by, for example and not by
limitation, (i) signing Notices of Intent to Serve for such subdivisions as requested by TerraMax;
and (ii) otherwise notifying ADWR that the HIA Water Rights are so committed to TerraMax.
In this Agreement, “Affiliate” or “Affiliates” means (a) another person or entity that directly, or   Deleted: (a)
indirectly through one or more intermediaries, controls or is controlled by, or is under common       Deleted: i
control with, TerraMax; or (b) a third-party developer to which TerraMax has transferred a            Deleted: ii
portion of the HIA Water Rights pursuant to Section 3.5, below (individually, “Third-Party
Developer” and collectively, “Third-Party Developers”); and “Effective Date” means the date on
which both of the following have occurred: (i) this Agreement has been fully executed by the
Town and TerraMax, and (ii) this Agreement has been approved by the governing bodies of each          Deleted: ;
Party.

        3.2    Approved Developments. For purposes of this Agreement, an “Approved
Development” is a development proposed by TerraMax or its Affiliate at which some or all of
the HIA Water Rights will be used. Other developments by TerraMax and its Affiliates that do
not depend on any portion of the HIA Water Rights shall not be subject to the terms of this
Agreement. A development, whether inside or outside of the Town‘s municipal boundaries,
shall be considered an “Approved Development” if it is in substantial conformance with the
codes, regulations, and guidelines of the municipality in which it is proposed, provided such
development is located within the Prescott AMA.

       3.3     Approved Developments Outside of the Town’s Municipal Boundaries. If an
Approved Development lies outside of the Town’s municipal boundaries, another municipality
may act as the import agent with respect to the HIA Water Rights.

        3.4      TerraMax’s Failure to Pay Note. The Town’s obligation to commit the HIA
Water Rights and act as TerraMax’s import agent pursuant to Section 3.1, above, and issue a
Notice of Intent to Serve pursuant to Section 3.9, below, shall immediately terminate upon
TerraMax’s default on the terms of the Note or cancellation of the Note for any reason prior to its
satisfaction in full by TerraMax.

       3.5     Marketing of HIA Water Rights to Third Parties.

               3.5.1   Right to Market. TerraMax shall have the right to market HIA Water
                       Rights to Third-Party Developers for use in obtaining CAWS at
                       Approved Developments for a period of twenty years from the Effective
                       Date; provided, within eighteen years after the Effective Date, such
                       Third-Party Developers apply with an approved import agent (i.e., a city
                       or town) within the Prescott AMA for any CAWS based on the HIA
                       Water Rights. The foregoing notwithstanding, TerraMax acknowledges



                                                3
               and understands that the Town must ultimately hold fee title ownership to
               the Property before ADWR will issue any CAWS for Approved
               Developments in the Town.

       3.5.2   Town’s Right to Review and Comment. Any agreement between
               TerraMax and a Third-Party Developer pursuant to Section 3.5.1, above,
               shall be submitted to the Town for review and comment prior to its final
               execution by the parties thereof, and TerraMax shall in good faith
               consider for incorporation into such agreement any reasonable
               suggestions made by the Town.

       3.5.3   Notice of Transfer. TerraMax shall promptly provide written notice to
               the Town on each occasion that TerraMax transfers any of the HIA Water
               Rights to a Third-Party Developer pursuant to Section 3.5.1, above (the
               “HIA Water Rights Transfer Notice”).

       3.5.4   Town’s Obligation to Commit. Subject to Section 3.5.5(iii), below,
               provided the requirements of Sections 3.5.2, and 3.5.3, hereof, are fully
               satisfied by TerraMax and/or the Third-Party Developer, as the case may
               be, the Town shall commit a quantity of HIA Water Rights to the Third-
               Party Developer equal to the amount set forth in the HIA Water Rights
               Transfer Notice.

       3.5.5   Terms and Conditions of Third-Party Developer Agreement. Each
               agreement between TerraMax and a Third-Party Developer pursuant to
               this Section 3.5 shall include: (i) to the extent applicable, a notification
               that ADWR will not issue a CAWS for Approved Developments in the
               Town based on the HIA Water Rights until the Town acquires fee title
               ownership of the Property pursuant to Section 2.0, above; (ii) a
               notification of the expiration date contained in Section 3.5.1, above; (iii)
               an acknowledgment by the Third-Party Developer that in the event
               TerraMax (or it’s assigns) default on its obligations under this               Deleted:
               Agreement, the Purchase Agreement, the Note, the Deed of Trust, or a
               lease option to purchase the Property (“Lease Option to Purchase”), then
               the Town may, at its sole election, terminate its obligations to commit
               HIA Water to the Third-Party Developer pursuant to Section 3.5.4,
               above; (iv) a notification of the surrender provisions of Section 3.6,
               below; and (v) a provision including conditions on development and
               water use substantially in the form of Section 3.8 hereof.

3.6     Reversion of Water Rights. Upon expiration of the applicable time period set
forth in Section 3.1 or 3.5.1 hereof, ownership of any HIA Water Rights not pledged to
one or more applications for CAWS for Approved Developments shall automatically
revert to the Town at no cost to the Town, and the Town may use such water rights for
any lawful purpose.




                                        4
3.7     Recordation of Notice. Within 30 days after the Property is conveyed to the
Town pursuant to Section 2.0, above, the Town shall record a notice against the Property
stating that the HIA Water Rights are committed to TerraMax and its successors and
assigns, which notice may be unilaterally revoked by the Town upon a default of this
Agreement, the Purchase Agreement or Lease Option to Purchase (as the case may be),         Deleted: ,
the Note, or Deed of Trust, and to the extent any water rights revert back to the Town
pursuant to Section 3.6, above.

3.8    Conditions on Development and Use of Water.

       3.8.1   Compliance with Town Codes and Ordinances. Nothing in this
               Agreement shall be construed to exempt TerraMax, its successors or           Deleted: ,
               assigns, or Affiliates from compliance with Town laws, rules, and            Deleted: a
               regulations concerning development within the Town, including, without       Deleted: Third-Party Developer
               limitation, the Town Code, the Town’s Zoning Code, the Town’s
               Subdivision Code, and building codes adopted by the Town. All such
               laws, rules, and regulations shall apply fully to any and all Approved
               Developments.

       3.8.2   Use of Water. TerraMax, its successors and assigns, and Affiliates may       Deleted: ,
               use the water provided by the Town pursuant to this Agreement solely for     Deleted: Third-Party Developers
               indoor uses of potable water in residential, commercial, industrial,
               educational, or other structures located within Approved Developments.
               Such interior water uses shall comply with all applicable water
               conservation ordinances enacted by the Town. Any exterior uses of
               water within Approved Developments shall be limited to low water use
               trees, plants, or shrubs approved by ADWR in a xeriscape landscape
               design, and shall be supplied by alternative water supply technologies
               such as rain harvesting, or other alternative non-groundwater supply or
               alternative water capture system that does not use collected gray HIA
               water for exterior water uses. Alternative water supply systems shall be
               separately plumbed and shown as such in accordance with each building
               design plan. Hose bibs for exterior water use shall not be plumbed with
               interior HIA water use but shall be plumbed into the alternative water
               supply system.

       3.8.3   Location of Use. A minimum of 50 percent of the HIA water committed
               pursuant to this Agreement shall be used solely for the benefit of
               Approved Developments within the Town’s municipal boundaries. The
               balance of the HIA Water (up to a maximum of 50 percent) shall be
               available to be delivered or used inside or outside of the Town’s
               municipal boundaries, provided such use is within the Prescott AMA.

       3.8.4   Scope of Limitation on Location of Use. The limitation set forth in
               Section 3.8.3, above, is predicated upon the Town’s fulfillment of its
               obligations set forth in Section 3.14.1, below. If the Town is unable, for



                                       5
               whatever reason, to secure the ability (as further described in Section
               13.14.1, below) to construct the HIA Water Transportation System (as
               defined in Section 3.14.1, below), then 100 percent of the HIA Water
               Rights shall be available for use outside of the Town’s municipal
               boundaries by TerraMax or its assigns.

3.9      Town’s Issuance of Notice of Intent to Serve. TerraMax or its Affiliate, as the
case may be, shall submit to the Town a copy of any completed application(s) for CAWS
applicable to an Approved Development. Subject to Section 3.4, above, upon receipt of
each completed application for a CAWS, the Town shall prepare and issue a Notice of
Intent to Serve the Approved Development within 15 days.

3.10   Analysis of Assured Water Supply.

       3.10.1 Analysis Application. TerraMax or its Affiliate, as the case may be, shall
              file an application for CAWS with ADWR to demonstrate to ADWR that
              the requirements of A.A.C. R12-15-704 have been satisfied for the
              purpose of obtaining one or more CAWS for its Approved Developments
              (the “CAWS Application(s)”).

       3.10.2 Alternate Analysis of Assured Water Supply. Provided TerraMax or its
              Affiliate, as the case may be, has in good faith complied with all of the
              requirements of A.A.C. R12-15-704, if ADWR does not approve the
              CAWS Application(s) based on its determination that there are not
              sufficient supplies of water physically available to meet all or part of the
              estimated water demand of the subject developments for 100 years,
              according to the criteria in A.A.C. R12-15-716, the Town shall promptly
              enter into a separate agreement with TerraMax or its Affiliate under
              which the Town shall agree to reserve for use by TerraMax or its Affiliate
              up to a 108.51 acre-foot portion of the analysis of assured water supply
              previously issued to the Town, a copy of which is attached hereto as
              Exhibit “B” (the “Town’s AAWS”) for use in TerraMax’s or its                    Deleted: D
              Affiliate’s CAWS Application(s). The Town’s obligation to reserve a
              portion of the Town’s AAWS pursuant to this Section 3.10.2 is limited to
              that portion of the water supply required for use in applying for CAWS
              for TerraMax’s or its Affiliate’s Approved Developments, and shall be
              limited to an amount equal to 108.51 acre-feet less (i) the total quantity of
              water approved in all CAWS for TerraMax’s or its Affiliate’s Approved
              Developments using HIA Water pursuant to a CAWS Application; and
              (ii) the total quantity of water contained in all analyses of assured water
              supply issued by ADWR for use in a CAWS Application for any
              Approved Development or portion of an Approved Development using
              HIA Water not accounted for by Section 3.10.2(i) hereof.




                                        6
3.11   HIA Determination; Alternate Water Source.

       3.11.1 ADWR Determination of HIA. The Town shall expeditiously apply for
              and diligently pursue from ADWR a determination that the Property has
              36.17 acres of HIA upon it.

       3.11.2 Commitment of Town’s HIA Rights. Subject to Section 3.11.3, below, if
              upon filing a complete and correct application for a determination of HIA
              with ADWR pursuant to Section 3.11.1, above, ADWR determines that
              the total number of HIA associated with the Property (the “HIA
              Determination”) is less than 36.17 acres (including zero), thereby
              resulting in the total quantity of HIA Water Rights being less than 108.51
              acre-feet, or in the case where the HIA Water Rights are not available by
              reason of a lawsuit or governmental action, at such time TerraMax or its
              Affiliate is ready to apply for its first CAWS for an Approved
              Development, the Town shall commit a portion of the Town’s HIA water
              rights, ADWR confirmation of which is attached hereto as Exhibit “C,”          Deleted: E
              (the “Town’s HIA Rights”), sufficient to cause the HIA Water Rights to
              total 108.51 acre-feet.

3.12 Government Approvals for Municipal Water Service. The Town and TerraMax                 Deleted: Limitation on Town’s
                                                                                             Commitment of its Water Rights. The
and its Affiliates shall work cooperatively to establish any new service areas that may be   Town’s obligation to commit a portion of
required for the Town’s municipal water system to serve the Approved Developments,           the Town’s water Rights pursuant to
                                                                                             Section 3.11.2, above, is expressly
including filing any notices and petitions required to allow TerraMax or its Affiliates to   limited to Approved Developments
apply for CAWS and for the establishment of such new service areas. TerraMax and its         located within the Town’s municipal
                                                                                             boundaries and shall have no applicability
Affiliates shall be solely responsible for submitting to ADWR applications for CAWS for      to any Approved Development located in
their Approved Developments.                                                                 any portion of the Prescott AMA, which
                                                                                             is not within the Town’s municipal
                                                                                             boundaries. For example, if ADWR
3.13 Town Water Rates. The Town has established potable water rates and fees to be           determines that the total number of HIA
                                                                                             associated with the property is 25 acres,
charged to municipal customers within the Approved Developments pursuant to A.R.S. §         resulting in a total quantity of HIA Water
9-511.01 and the Town Code. All rates and fees charged by the Town for the provision         Rights of 75 acre-feet, and 25 acre-feet of
                                                                                             water is required to supply Approved
of municipal water service to customers within the Approved Developments shall be            Developments outside of the Town’s
charged to individual water users connecting to the Town’s municipal water system, and       municipal boundaries, then the Town
                                                                                             shall only be obligated to commit 8.51
not to TerraMax, except to the extent TerraMax requests direct potable water service         acre-feet of its HIA water rights pursuant
from the Town within one or more Approved Developments.                                      to Section 3.11.2, above.¶
                                                                                             ¶

3.14   Water Transportation and Delivery Infrastructure.                                     Formatted: Bullets and Numbering


       3.14.1 HIA Water Transportation System. The Town shall diligently work
              toward securing the ability to transport HIA water into the Prescott AMA,
              which may include, but not be limited to, the following: (i) the
              development of regional water transportation planning options; (ii) the
              establishment of public-private partnerships or other alliances that can
              create the infrastructure required to transport HIA water to the Prescott



                                        7
               AMA; or (iii) at the Town’s discretion, the construction and/or
               modification of wells and the construction and installation of water
               transportation infrastructure, such as pipelines, pumps, valves,
               appurtenances, booster stations, and related water distribution
               infrastructure necessary to pump, treat, store, and transport water
               withdrawn from any lawful HIA lands to an interconnection point with
               the Town’s municipal water system (collectively, an “HIA Water
               Transportation System”). For purposes of this Agreement, in the context
               of an HIA Water Transportation System, “secure the ability” or “securing
               the ability” shall include, but not be limited to, securing the financing for
               an HIA Water Transportation System, reaching a regional solution
               toward the construction and installation of an HIA Water Transportation
               System, or an agreement with a third party to construct and install an HIA
               Water Transportation System. TerraMax and its Affiliates shall not be
               responsible for the costs of designing, constructing, and installing an HIA
               Water Transportation System.

       3.14.2 Water Service Infrastructure. All reasonable and customary costs and
              expenses to design, construct, and install water service infrastructure,
              including, without limitation, transmission mains, lines, pumps, fittings,
              service lines, connections or “hookups,” and related infrastructure
              necessary to deliver potable water from the Town’s municipal water
              system to individual lots, pads, and units within Approved Developments
              shall be solely borne by TerraMax and its Affiliates and not by the Town.
              Offsite infrastructure costs shall be shared proportionately by the
              benefited parties to that infrastructure and be subject to reimbursement
              agreements through the Town. Any over-sizing requirements shall be
              paid for by the Town or shall be made subject to a reasonable
              reimbursement agreement between the developer and the Town. The
              water service infrastructure required by this Section 3.14.2 shall not
              include any portion of the HIA Water Transportation System
              contemplated by Section 3.14.1, above.

3.15 Interim Use of Prescott Active Management Area Groundwater. TerraMax
acknowledges and understands that ADWR is responsible for making, on a case-by-case
basis, the final determination of the appropriateness of a particular source of groundwater
for assured water supply purposes. In the event ADWR determines that financing or
construction of the Water Transportation System has not sufficiently progressed by such
time TerraMax or its Affiliate submits an application for its first CAWS for an Approved
Development, the Town will, at TerraMax’s request, work in good faith with TerraMax
or its Affiliate, as the case may be, to seek ADWR’s approval of the interim use of
Prescott AMA groundwater to serve as a water source for CAWS for Approved
Developments. The Town’s obligation to work in good faith with TerraMax or its
Affiliate pursuant to the immediately preceding sentence shall not, however, create a
guarantee by the Town that ADWR will ultimately approve the interim use of Prescott
AMA groundwater for assured water supply purposes.



                                        8
4.0    OWNERSHIP OF PROPERTY RIGHTS

        TerraMax’s sole consideration under this Agreement is set forth in Section 3.0 hereof.
Subject to Section 8.1, below, under no circumstances shall TerraMax, its successors, or assigns
obtain any ownership interest in the Property subsequent to the conveyance thereof to the Town
pursuant to Section 2.0, above, other than the HIA Water Rights; provided, however, ownership
of the HIA Water Rights shall not transfer to TerraMax or its assigns until the Note is fully
satisfied. The Town hereby discloses to TerraMax that the Town may not transport groundwater
to the Prescott AMA pursuant to the HIA Water Rights until the Note is repaid in full.
Accordingly, until such time the Note is repaid in full by TerraMax, any HIA water transported
to TerraMax, its successors or assigns, or Affiliates shall be deemed to be withdrawn and           Deleted: ,
transported pursuant to the Town’s HIA water rights.                                                Deleted: Third-Party Developers


5.0    EFFLUENT GENERATED WITHIN APPROVED DEVELOPMENTS

       5.1     On-Site Effluent Defined. For purposes of this Section 5.0, the term “On-Site
       Effluent” means sewage or wastewater generated within the Approved Developments
       that has been treated to acceptable federal, state, and local standards by any treatment
       facility used by the Town.

       5.2    Town’s Ownership and Control of On-Site Effluent. The Town shall own and
       control all On-Site Effluent and shall be free to use such On-Site Effluent for any lawful
       purpose, including, but not limited to, direct reuse, underground storage and recovery,
       and mitigation of impacts caused by groundwater pumping.

       5.3     Measuring Device. TerraMax or its Affiliates shall install, or cause to be
       installed, a measuring device at the main point of sewer outflow from each of the
       Approved Developments to measure the quantities of sewage or wastewater discharged
       from each of the Approved Developments. Such measuring device shall be constructed
       and installed in accordance with the Town’s specifications governing such equipment
       and appurtenances and have an accuracy that is commensurate with industry standards
       for measuring devices used for similar purposes.

6.0    CLOSING DOCUMENTS

         Within five days after the Closing, TerraMax shall provide to the Town a copy of the
fully executed Purchase Agreement or Lease Option to Purchase (as the case may be), a copy of
the fully executed Note, a copy of the fully executed Deed of Trust, and such other documents
related to TerraMax’s purchase of the Property that the Town may reasonably request.

7.0    PAYMENT FOR PROFESSIONAL SERVICES

       All costs and expenses of every kind and character in connection with drafting and
negotiating this Agreement (the “Professional Expenses”) shall be paid by TerraMax, subject to a
cap of $5,000, unless otherwise agreed to by TerraMax in writing (the “Cap”). The Town shall



                                               9
invoice TerraMax for the Professional Expenses, and within 30 days of receipt thereof,
TerraMax shall reimburse the Town the invoiced amount, up to the Cap.

8.0     REMEDY FOR TOWN’S BREACH

        8.1      TerraMax’s Sole Remedy. Section 3.14.1, above, notwithstanding, and subject to
        Section 9.0, below, if the Town is unable to secure the ability to construct a Water
        Transportation System within a period of five years from the Effective Date, and the
        Town and TerraMax cannot agree upon an extension thereof, then TerraMax’s sole
        remedy shall be to take title to the Property by quit claim deed. Upon the occurrence of
        such an event, (i) all timeframes respecting ownership and use of the HIA Water Rights
        set forth in Sections 3.1, 3.5, and 3.6, above, shall be considered null and void from that
        date forward, and ownership of 100 percent of the HIA Water Rights shall remain with
        TerraMax or its assigns without time limits respecting the ownership and use thereof; and
        (ii) the location of use restrictions set forth in Section 3.8.3, above, shall be of no further
        force and effect. If TerraMax is issued a quit claim deed by the Town for the Property
        pursuant to this Section 8.1, concurrent therewith, the Town shall transfer to TerraMax
        all rights, fixtures, and personal property associated with the Property, which the Town
        received at the time of the Property’s purchase by TerraMax. The Property must be free
        of all liens when deeded back to TerraMax, provided the Property was in lien-free
        condition when conveyed to the Town by TerraMax pursuant to Section 2.0, above.
        TerraMax hereby expressly waives all consequential, incidental, punitive, and monetary
        damages of any other kind and nature.

        8.2     Assignment of Aggregate Rights and Easement Agreement. Big Chino
        Materials, L.L.C. and Sunshine Concrete & Materials, Inc. entered into that certain
        Assignment of Aggregate Rights and Easement Agreement, dated March 10, 2008, a
        copy of which is attached hereto as Exhibit “F” (the “Aggregate Agreement”).
        TerraMax hereby acknowledges that it has reviewed the Aggregate Agreement and
        understands that if the Town assumes the obligations of Big Chino Materials, L.L.C.
        under the Aggregate Agreement (as described in Recital B. of the Aggregate Agreement),
        and TerraMax subsequently takes title to the Property by quit claim deed pursuant to
        Section 8.1, above, TerraMax will be subject to the terms and provisions of the
        Aggregate Agreement as set forth in Addendum “A” to the Aggregate Agreement, unless
        otherwise agreed to by TerraMax and Sunshine Concrete & Materials, Inc.

9.0     FORCE MAJEURE EVENT

        The Town shall not be liable to TerraMax, its Affiliates, successors, or assigns for failure,
default, or delay in performing any obligation hereunder in case such failure, default, or delay is       Deleted: , other than for the payment of
                                                                                                          money obligations specified herein,
caused by: (i) strikes, slowdowns, or lockouts; floods, fire, casualties, earthquake, or other acts of
God; (ii) epidemics or quarantine restriction; (iii) freight embargoes or lack of transportation;
(iv) unavoidable accident; (v) war, insurrection, riot, or acts of a public enemy; (vi) interference
by civil authorities; (vii) passage of laws or adoption of rules or ordinances by governmental
entities other than the Town; (viii) acts, failures to act, decisions, or orders or regulations of any
governmental or military body or agency, office, or commission other than the Town; (ix) orders



                                                  10
of a court of competent jurisdiction, including, but not limited to, injunctions; (x) the inability of
any contractor, subcontractor, or supplier to perform acts, which create conditions causing a
material delay in construction of the Water Transportation System; or (xi) any other cause,
whether or not of similar nature, not within the control of the Town and which, by the exercise of
due diligence, the Town is unable to prevent (any of which events shall constitute a “Force
Majeure Event”). The Town’s failure, default, or delay in performance shall be excused only for
so long as the Force Majeure Event continues. Should a Force Majeure Event occur, the Town
shall, within ten days of learning of that event, notify TerraMax of the same; and the Town shall
proceed with diligence to do what is reasonable and necessary with respect to the Force Majeure
Event so that the Town may perform its obligations under this Agreement.

10.0   REPRESENTATIONS AND WARRANTIES

         10.1 TerraMax’s Representations, Warranties, and Covenants. TerraMax makes the
following representations, warranties, and covenants, which are agreed to constitute a material
part of the consideration hereunder:

                10.1.1 TerraMax has full power and authority to enter into and perform its
        obligations under this Agreement and all actions on the part of TerraMax that are
        required for the execution, delivery, and performance by TerraMax of this Agreement,
        including obtaining any third-party approvals or consents; and each of the documents and
        agreements to be delivered by TerraMax to the Town have been duly and effectively
        taken;
              10.1.2 This Agreement constitutes a legal, valid, and binding obligation of                Formatted: Indent: Left: 65.45 pt,
                                                                                                         Hanging: 36 pt, Tabs: 101.45 pt,
                     TerraMax, enforceable against TerraMax in accordance with its terms,                List tab + Not at 37.4 pt + 74.8 pt
                     subject to the conditions and disclosures contained herein;
                                                                                                         Formatted: Bullets and Numbering

               10.1.3 TerraMax will cooperate in good faith with the Town and take all                   Formatted: Bullets and Numbering
        reasonable actions necessary to achieve the objectives of this Agreement; and

                10.1.4 The information furnished by TerraMax to the Town in accordance with              Formatted: Bullets and Numbering
        the provisions of this Agreement is true, complete, and accurate.

         10.2 Town’s Representations, Warranties, and Covenants. The Town makes the
following representations, warranties, and covenants, which are agreed to constitute a material
part of the consideration hereunder:

                10.2.1 The Common Council of the Town has formally approved the Town’s
        entry into this Agreement and has vested the persons executing this Agreement on behalf
        of the Town with the full power and authority to do so and to perform every act and to
        execute and deliver every document and instrument necessary or appropriate to
        consummate the transactions contemplated hereby;

                10.2.2 The Town has full power and authority to enter into and to perform its
        obligations under this Agreement;




                                                 11
               10.2.3 This Agreement constitutes a legal, valid, and binding obligation of the
       Town, enforceable against the Town in accordance with its terms, subject to the
       conditions and disclosures contained herein;

               10.2.4 The information furnished by the Town to TerraMax in accordance with
       the provisions of this Agreement is true, complete, and accurate; and

              10.2.5 The Town will cooperate in good faith with TerraMax and take
       reasonable actions necessary to achieve the objectives of this Agreement.

11.0   MISCELLANEOUS PROVISIONS

       11.1 Incorporation by Reference. The recitals and exhibits referenced herein are
expressly incorporated in this Agreement by this reference.

        11.2 Time of the Essence. Time is of the essence with respect to each and every term
and provision of this Agreement. The Parties acknowledge that each Party will be relying upon
the timely performance by the other Party of its obligations hereunder as a material inducement
to each Party’s execution of this Agreement. Any extension of the time for performance under
this Agreement by either Party must be in writing and signed on behalf of TerraMax and the
Town. No extension as to any obligation to perform shall be deemed a waiver of this Section
11.2 with respect to any other obligation to perform by either Party.

        11.3 Time Periods. Except as expressly provided for herein, the time for performance
of any obligations or taking any action under this Agreement shall be deemed to expire at 5:00
p.m. (Arizona time) on the last day of the applicable time period provided for herein. If the time
for the performance of any obligation or taking any action under this Agreement expires on a
Saturday, Sunday, or legal holiday, the time for performance or taking such action shall be
extended to the next succeeding day that is not a Saturday, Sunday, or legal holiday. The time in
which any act is to be done under this Agreement is to be computed by excluding the first day
and including the last day.

        11.4 Notices.       All notices, requests, demands, waivers, consents, and other
communications required under this Agreement shall be in writing, shall be delivered either in
person, by overnight air courier, or by mail, and shall be deemed to have been duly given and
received and to have become effective: (i) upon receipt if delivered in person; (ii) one business
day after having been delivered to an air courier for overnight delivery; or (iii) three business
days after having been deposited in the U.S. Mail as certified or registered mail, return receipt
requested, all fees prepaid, directed to the Party at the following addresses or at such other
address as shall be given in writing by a Party:

               To the Town:

                      Town of Chino Valley
                      1020 West Palomino Road
                      Chino Valley, Arizona 86323



                                               12
                      Attn: Town Manager

               With a copy to:

                      L. William Staudenmaier
                      Ryley Carlock & Applewhite
                      One North Central Avenue, Suite 1200
                      Phoenix, Arizona 85004

               To TerraMax:

                      Jeffrey A. Dana
                      TerraMax Development Group, LLC
                      1112 E. Kael Circle
                      Mesa, AZ 85203

A Party may change its address for the purposes of delivery and receipt of notices by advising
the other Party in writing of the change. No notice will be deemed effective unless sent in one of
the manners described above.

        11.5 Succession and Assignment. TerraMax may assign its rights and obligations                Formatted: Tabs: 233.75 pt, Left
under this Agreement to any other entity or person after consulting with the Town to ensure that
the Town’s rights under this Agreement continue to be in force and are not compromised in any
way. Notwithstanding the foregoing, TerraMax may, upon 30 days’ prior notice to the Town,
assign to an Affiliate this Agreement (but only to the extent the term “Affiliate” is more narrowly
defined under Section 3.1(a) hereof), or any portion hereof, and any or all of TerraMax’s rights,
interests, and obligations hereunder without the prior written approval of the Town. TerraMax’s
right to assign its rights and obligations to an Affiliate pursuant to the immediately preceding
sentence shall not apply to Third-Party Developers referenced in Section 3.1(b) hereof. The
provisions of this Agreement shall be binding upon and shall inure to the benefit of the Parties
and their respective heirs, personal representatives, successors, and assigns.

         11.6 Entire Agreement; Modification. No oral agreement or conversation with any
officer, agent, or employee of the Town, either before or after the execution of this Agreement,
shall affect or modify any of its terms or obligations herein contained. This Agreement,
including all exhibits attached hereto constitutes the entire agreement between the Parties
regarding the issues herein contained and supersedes all previous or contemporaneous
communications, representations, or agreements. No changes, alterations, or modifications to
this Agreement shall be effective unless in writing and signed by an authorized representative of
each of the Parties. Any changes, alterations, or modifications to this Agreement, including
agreed upon interpretation of meaning and other mutually agreed upon conditions provided for in
this Agreement, shall be covered by a written amendment signed by an authorized representative
of each Party.

       11.7 Waiver. The failure of a Party to insist, in any one or more instances, on
performance of any of the terms, covenants, or conditions of this Agreement shall not be



                                                13
construed as a waiver or relinquishment of any rights granted hereunder or of the future
performance of any such term, covenant, or condition, but the obligations of the Parties with
respect thereto shall continue in full force and effect. No waiver of any provision or condition of
this Agreement by a Party shall be valid unless in writing signed by such Party. A waiver by one
Party of the performance of any covenant, condition, representation, or warranty of the other
Party shall not invalidate this Agreement, nor shall such waiver be construed as a waiver of any
other covenant, condition, representation, or warranty.

       11.8 No Partnership, Joint Venture, or Third-Party Beneficiaries. It is not intended by
this Agreement to, and nothing contained in this Agreement shall, create any partnership, joint
venture, or other arrangement between TerraMax and the Town.                                          Deleted: No term or provision of this
                                                                                                      Agreement is intended to, or shall be for
                                                                                                      the benefit of any person, firm,
         11.9 No Third-Party Beneficiaries. Nothing in this Agreement, express or implied, is         corporation, or other entity not a Party
                                                                                                      hereto, and no such party shall have any
intended to confer any rights or remedies under or by reason of this Agreement on any persons         right or cause of action hereunder.
other than the Parties. Nothing in this Agreement is intended to relieve or discharge the
obligation or liability of any third person to any Party. This Agreement does not create any duty,
liability, or standard of care to any person not a Party, including, but not limited to, the
purchasers of individual lots within an Approved Development.

        11.10 Construction. This Agreement is the product of negotiation between the Parties
and shall be construed without regard to the identity of the person who drafted the various
provisions of the same. Each and every provision of this Agreement shall be construed as
though the Parties participated equally in drafting the same. Consequently, the Parties
acknowledge and agree that any rule of construction that a document is to be construed against
the drafting party shall not be applicable to this Agreement.

        11.11 Independent Legal Counsel. Each Party hereby confirms that it has obtained
advice from independent legal counsel regarding this Agreement.

       11.12 Captions and Section Headings. Captions and section headings used herein are
for convenience only and are not a part of this Agreement and shall not be used in construing the
same.

        11.13 Attorneys’ Fees. If either Party brings an action against the other Party arising
out of this Agreement, the Party in whose favor judgment is entered shall be entitled to have and
recover from the other Party its reasonable attorneys’ fees and other reasonable expenses
incurred in connection with such action or proceeding.

       11.14 Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws and judicial decisions of the State of Arizona.

       11.15 Severability. If any provision or any portion of this Agreement or of any other
document to be executed in connection with this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal, or unenforceable, such invalidity, illegality, or
unenforceability shall not affect the remaining portion of that provision or any other provision of




                                                14
this Agreement or such other document, as each provision of this Agreement and all such other
documents shall be deemed to be severable from all other provisions hereof and thereof.

        11.16 Conflict of Interest. Notice is hereby given of the provisions of A.R.S. § 38-511,
as amended. By this reference, the provisions of that statute are incorporated herein to the extent
of their applicability to contracts of the nature of this Agreement under the laws of the State of
Arizona.

       11.17 Counterparts. This Agreement may be signed in counterparts by the Parties with
the same effect as though each Party had executed the same document. Signature and notary
pages may be detached from the counterparts and attached to a single copy of this Agreement to
form one legally effective document.

        IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.

                         [Remainder of page intentionally left blank.]




                                                15
                                            TOWN OF CHINO VALLEY, an Arizona
                                            municipal corporation



                                            By:
                                                  Its: Mayor

STATE OF ARIZONA                 )
                                 ) ss.
County of Yavapai                )

       The foregoing instrument was acknowledged before me this ___ day of ____________
2009, by Karen Fann, the Mayor of the TOWN OF CHINO VALLEY, an Arizona municipal
corporation, who executed the foregoing on behalf of the Town, being authorized to do so for the
purposes therein contained.




                                                     Notary Public

My Commission Expires:




                                              16
                                           TerraMax Development Group, LLC, an Arizona
                                           limited liability company



                                           By:


                                           Its:


STATE OF                        )
                                ) ss.
County of                       )

         The foregoing instrument was acknowledged before me this ___ day of ____________
2009, by Jeffrey A. Dana, manager of TerraMax Development Group, LLC, an Arizona limited
liability company, who executed the foregoing on behalf of the company, being authorized to do
so for the purposes therein contained.




                                                   Notary Public

My Commission Expires:




                                              17
We, as members of the Seller under the Option Agreement acknowledge that we have read the        Deleted: Purchase
terms of this Agreement and do not object to any of the provision contained herein.              Deleted: , Maker under the Note, and
                                                                                                 Beneficiary under the Deed of Trust,




By:



By:



STATE OF                        )
                                ) ss.
County of                       )

       The foregoing instrument was acknowledged before me this ___ day of
____________2009, by Kevan and Robbi Larson, members of Big Chino Materials, L.L.C., an
Arizona limited liability company, who executed the foregoing on behalf of said company, being
authorized to do so for the purposes therein contained.




                                                  Notary Public

My Commission Expires:




                                             18
                 EXHIBIT “A”

            COPY OF OPTION AGREEMENT   Deleted: PURCHASE




1053528.3
7/6/09
                 EXHIBIT “B”                      Deleted: EXHIBIT “B”¶
                                                  ¶
                                                  COPY OF THE NOTE¶
COPY OF TOWN’S ANALYSIS OF ASSURED WATER SUPPLY                Page Break
                                                  EXHIBIT “C”¶
                                                  ¶
                                                  COPY OF THE DEED OF TRUST¶
                                                               Page Break

                                                  Deleted: D
             EXHIBIT “C”                  Deleted: E


CONFIRMATION OF TOWN’S HIA WATER RIGHTS
       EXHIBIT “F”

COPY OF AGGREGATE AGREEMENT

				
DOCUMENT INFO
Description: Memorandum of Understanding Between Agent and Real Estate Developer document sample