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OPTION TO PURCHASE
MOJAVE BASIN, CENTRO SUBBASIN UNUSED FREE PRODUCTION ALLOWANCE (CARRYOVER)
THIS OPTION TO PURCHASE TEMPORARY ASSIGNMENT OF FREE
PRODUCTION ALLOWANCE AND CARRYOVER AGREEMENT (“Agreement”) is entered into as of the Effective Date (defined below) by and between the Odessa Water District, a California municipal corporation, (“Optionor” or “Odessa”), and BNSF RAILWAY COMPANY, a Delaware corporation (“Optionee” or “BNSF”).
RECITALS
A. Odessa owns 299 acre-feet of Base Annual Production (“BAP”) as adjudicated in the Order Pursuant to Stipulation for Intervention and Judgment after Trial, dated January 10, 1996, entered in City of Barstow, et al. v. City of Adelanto, et al., Riverside County Superior Court Case No. CIV 208568 (the “Judgment”)] located in the Centro Subarea of the Mojave Basin Area of Riverside County.
B. BNSF requires more than 299 acre-feet of water per year while construction is ongoing to satisfy water needs for construction of the Proposed Barstow Industrial Gateway Project (“BIG Project”), located near the intersection of Hinkley Road and West Main Street, as further specified in Exhibit A, attached hereto and made a part hereof by reference.
C. Odessa desires to transfer, and BNSF desires to receive up to the entire amount of Odessa’s Free Production Allowance (“FPA”) (165 acre-feet for the 2023-24 water year) and Carryover FPA from prior years, if any, in the Centro Subarea of the Mojave Basin, which Free Production Allowance and Carryover are held by Odessa, beginning October 1, 2024. The unused Free Production Allowance and Carryover may be used by BNSF to offset its replacement obligations in the Centro Subarea of the Mojave Basin.
NOW THEREFORE, in consideration of the mutual covenants set forth in this Agreement and for other valuable consideration, which the parties acknowledge receiving, Optionor and Optionee agree as follows:
AGREEMENT
1. Option. Odessa hereby grants BNSF the exclusive option to purchase the FPA and Carryover (the “Option”) in accordance with the following:
1.1 Option Consideration. As consideration for the Option, BNSF shall pay to Odessa (the “Option Consideration”) the sum of four thousand Dollars ($4,000.00), which BNSF shall deliver to Odessa at the address in Section 5.2 below by Acceptable Funds (defined below) within five (5) business days1
following the Effective Date.
1 In this Agreement, “business day” means any day that is not a Saturday, Sunday or a federal holiday as listed on the internet website of the U.S. Office of Personnel Management.
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1.2 Term of Option. The Option shall continue in effect for a seven (7) year term (the “Term”), commencing on October 1, 2024 and continuing annually for a period of seven (7) years thereafter, and shall expire if not exercised, or extended, on or before the expiration of the Term.
1.3 Exercise of the Option. BNSF shall exercise the Option by producing up to the entire amount of unused Free Production Allowance and Carryover per water year upon commencement of construction of the BIG Project. BNSF shall deliver of written notice thereof to Odessa (the “Option Notice”) on or before March 31 of 2025, and on or before March 31 of each subsequent year during the Term of this Option, of the amount of Odessa’s FPA and Carryover to be purchased.
Upon notice of BNSF’s exercise of the Option, the parties shall complete and BNSF shall file the Temporary Transfer Form, as defined below, with the Mojave Basin Watermaster, provided, however, that Odessa may determine, in its sole discretion, whether to transfer Odessa’s FPA, Carryover, or both. Odessa hereby agrees to return the completed and executed Temporary Transfer Form to BNSF for filing with the Watermaster within fifteen (15) days following BNSF’s delivery of the Temporary Transfer Form. Odessa agrees to cooperate with BNSF and provide any additional forms or documents required by the Watermaster to complete BNSF’s filing with the Watermaster.
2. Purchase Price and Payment.
2.1 Purchase Price. In the event that BNSF exercises the Option in any given water year, the purchase price for the Water Rights (the “Purchase Price”) shall be based on the actual amount of acre-feet of FPA and/or Carryover transferred from Odessa to BNSF for the prior water year at fifty and 00/100 Dollars ($50.00) per acre-foot, payable in Acceptable Funds (defined below), and to be paid as follows:
2.2 Payment upon Authorization from Watermaster. Within five (5) Business Days of the Date that the Mojave Basin Area Watermaster approves the Temporary Assignment of FPA and/or Carryover (“Temporary Transfer Form”), attached hereto as Exhibit A and made a part hereof, BNSF shall pay the Purchase Price, by federal wire transfer or other immediately available funds (“Acceptable Funds”) to Odessa. It is agreed and understood by the parties that the Temporary Transfer Form will be completed and executed by the Parties upon the BNSF exercising the Option, pursuant to Section 1.3, but that the timing of the filing of the Temporary Transfer Form with the Watermaster shall occur at BNSF’s sole discretion, and may not occur until March 31 of the following Water Year. All costs and expenses associated with the preparation, filing and approval of the Temporary Transfer Form shall be born exclusively by BNSF. BNSF and Odessa shall be responsible to pay their respective consultants’ and attorneys’ fees, however BNSF shall pay the cost of all Watermaster assessments for the transfer of FPA and/or Carryover described in the Temporary Transfer Form. Odessa will be responsible to pay the Mojave Basin Watermaster annual Administrative Assessment Rate and Biological Assessment Rate for Odessa’s BAP.
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3. Extension and Termination.
3.1 Extension. BNSF, in its sole discretion, may extend the Term of this Agreement by delivering written notice to Odessa (“BNSF’s Extension Notice”) a maximum of two times, each for a one (1) year extension of the Term, commencing from the original expiration date of the Term, up to a maximum of two (2) additional years. BNSF shall provide BNSF’s Extension Notice to Odessa at least thirty (30) calendar days prior to the expiration of the then proposed expiration date. The parties also may agree to extend the expiration date of the Option by written Amendment to this Agreement signed by both parties, for such consideration as may be agreed by the Parties at that time.
3.2 Termination. Upon expiration or termination of this Agreement, neither party will have any further rights or obligations under this Agreement, except those provision provided herein that survive the termination of this Agreement.
4. Optionor’s Covenants, Representations and Warranties.
4.1 Odessa covenants and agrees with BNSF that:
(1) During the Term of this Option, Odessa shall maintain the availability of all of its FPA and/or Carryover for BNSF to acquire. (2) No person, firm, corporation or other entity during the Term of this Option shall have any right or option to acquire the FPA and/or Carryover, or any part thereof, from Odessa.
(3) Odessa has not, and during the Term of this Option will not have, entered into any agreement affecting the FPA and/or Carryover, other than this Agreement.
(4) Except as otherwise provided herein, no permission, approval, or consent by third parties or governmental authorities is required for Odessa to consummate this transaction.
4.2 Odessa’s representations, warranties, and covenants in this Agreement are subject to the following terms and conditions:
(1) Odessa’s representations, warranties, and covenants are (i) material and being relied upon, and (ii) continuing, made both as of the Effective Date and as of the Option Notice date. If BNSF discovers during the Option Term that any representation or warranty was not true when made then BNSF shall be entitled to any remedy available at law or in equity. (2) Odessa’s representations, warranties, and covenants will survive the Option Term for a period of two (2) years.
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5. Notices.
5.1 Any notice under this Agreement must be written. Notices must be either (i) hand-delivered to the address set forth below for the recipient; (ii) placed in the United States certified mail, return receipt requested, addressed to the recipient as specified below; or (iii) deposited with an overnight delivery service, addressed to the recipient as specified below. Any notice is effective upon deposit with the U.S. Postal Service or with the overnight delivery service, as applicable; all other notices are effective when received.
5.2 Odessa’s address for all purposes under this Agreement is:
Odessa Water District
c/o City of Barstow
220 East Mountain View Street
Suite A
Barstow CA 92311
Attention: Kody Tompkins, Assistant General Manager
Telephone: 760.256.3531
Email: [email protected]
with a copy to:
Matthew T. Summers
Colantuono, Highsmith & Whatley, PC
790 E. Colorado Blvd., Suite 850
Pasadena, CA 91101
Telephone: 213-542-5700
Email: [email protected]
5.3 BNSF’s address for all purposes under this Agreement is:
BNSF RAILWAY COMPANY
2301 Lou Menk Drive, GOB-3W
Fort Worth, Texas 76131-2830
Attention: Ms. Sandra Bye
Telephone: (817) 352-2387
Email: [email protected]
with copies to:
BNSF RAILWAY COMPANY
Corporate Real Estate
2650 Lou Menk Dr.
Fort Worth, TX 76131
Attention: Melissa Cannon
Telephone: (817) 352-2371
Email: [email protected]
Option Agreement – Temporary Water Rights - 5 - 342295.2 Deborah Stephenson
DMS Natural Resources, LLC
602 S. Ferguson Ave., Suite 2
Bozeman, MT 59718
Office: 406-582-4988
Cell: 406-600-1422
[email protected]
5.4 Either party may designate another address for this Agreement by giving the other party at least five (5) business days’ advance notice of its address change. A party’s attorney may send notices on behalf of that party, but a notice is not effective against a party if sent only to that party’s attorney.
6. Entire Agreement. This Agreement (including its exhibits) contains the entire agreement between Odessa and BNSF, as to the matters stated herein. Oral statements or prior written matter not specifically incorporated into this Agreement has no force or effect. No variation, modification, or change to this Agreement binds either party unless set forth in a document signed by the parties or their duly authorized agents, officers, or representatives.
7. Assigns. This Agreement inures to the benefit of and binds the parties and their respective legal representatives, successors, and permitted assigns. BNSF may assign its rights or obligations under this Agreement with consent of Odessa’s General Manager, such consent not to be unreasonably withheld.
8. Effective Date. The date on which the last of Odessa and BNSF signs this Agreement is the “Effective Date” of this Agreement.
9. Governing Law. This Agreement is governed by and must be construed in accordance with California law without regard to principles of conflicts of law. Venue for any disputes lies in the Superior Court of San Bernardino County or the United States District Court for the Central District of California.
10. Severability. If any provision in this Agreement is found to be invalid, illegal, or unenforceable, its invalidity, illegality, or unenforceability will not affect any other provision, and this Agreement must be construed as if the invalid, illegal, or unenforceable provision had never been contained in it unless further enforcement would frustrate the basic purpose of this Agreement .
11. Rule of Construction. Each party and its counsel have reviewed and revised this Agreement. The parties agree that the rule of construction that any ambiguities are to be resolved against the drafting party must not be employed to interpret this Agreement or its amendments or exhibits.
12. Attorneys’ Fees. If any action at law or in equity is necessary to enforce or interpret this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, costs, and necessary disbursements in addition to any other relief to which that party may be entitled.
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13. Counterparts. To facilitate execution, this Agreement may be executed in as may counterparts as may be convenient or required. It shall not be necessary that the signature or acknowledgement of, or on behalf of, each part, or that the signature of all persons required to bind any party or the acknowledgment of such party, appear on each counterpart. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, and the respective acknowledgments of, each of the parties hereto. Any signature or acknowledgment page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures or acknowledgments thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature or acknowledgment pages.
[Signatures on Following Page]
Option Agreement – Temporary Water Rights - 7 - 342295.2 EXECUTED as of the Effective Date.
OPTIONOR
______________________________
By: _________________________________
Name: _______________________________
Title: ________________________________
Date: ________________________________
By: _________________________________
Name: _______________________________
Title: ________________________________
Date: ________________________________
OPTIONEE
BNSF RAILWAY COMPANY,
a Delaware corporation
By: _________________________________
Name: _______________________________
Title: ________________________________
Date: ________________________________
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EXHIBIT A
FORM OF TEMPORARY ASSIGNMENT OF FREE PRODUCTION ALLOWANCE 5623959.1
OCTOBER 29, 2008
TEMPORARY ASSIGNMENT OF FREE PRODUCTION ALLOWANCE
To be executed by both Transferee and Transferor, be accompanied by a map of the service area where the water was used by Transferor, and a map of the service area where the water is intended to be used by the Transferee. Have the appropriate individual(s) or corporate attached acknowledgments completed as part of the temporary transfer. (To be accompanied by completed Exhibit "F" if Transferee is not a party to the Judgment and Preliminary Title Report on Seller's property, if over one (1) year) For a valuable consideration, in the amount of $ per acre-foot receipt of which is hereby acknowledged, ("Transferor") does hereby
assign and transfer to ("Transferee") during the
water year and the following:
(Check the following appropriate category)
Required Adjustments
[ ] Free Production Allowance of acre-feet in the Subarea [ ] Carryover Right of acre-feet in the Subarea
adjudicated to Transferor or his predecessor in the Judgment in the case of "City of Barstow", et al vs. "City of Adelanto", et al, Riverside Superior Court No. 208568.
Said assignment is made upon condition that:
(1) Transferee shall exercise said right on behalf of Transferor during the water year described hereinabove and the first water produced by Transferee from the relevant Subarea of the MOJAVE Basin Area after the date hereof shall be that produced hereunder.
(2) Transferee shall put all waters utilized pursuant to said transfer to reasonable beneficial use; and (3) shall pay all Watermaster assessments on account of the water production hereby assigned or leased.
DATED:
TRANSFEREE TRANSFEROR
(Signature) (Signature)
Name of Designee of Transferee to receive Name of Designee of Transferor to receive service of Processes & Notices: service of Processes & Notices:
Address Address
Telephone No. of Designee: Telephone No. of Designee:
Exhibit "D"
WATERMASTER USE ONLY
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California
County of
On before me, ,
Date Here insert name and title of the officer
personally appeared
Name(s) of Signer(s)
,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the
laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
Signature of Notary Public
Place Notary Seal Above
Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document Description of Attached Document
Title or Type of Document: _________________________ Document Date: ____________________ Number of Pages: _______ Signer(s) Other Than Named Above: ____________________________ Capacity(ies) Claimed By The Signer(s)
Signer’s Name___________________________
Corporate Officer – Title(s) _______________
Partner – Limited General
Individual Attorney in Fact
Trustee Guardian or Conservator
Other _____
Signer is Representing:
Signer’s Name___________________________
Corporate Officer – Title(s) _______________
Partner – Limited General
Individual Attorney in Fact
Trustee Guardian or Conservator
Other _____
Signer is Representing:
OPTIONAL