Resolution No. 2012-224RESOLUTION NO. 2012-224
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON ACCEPTING THE BID OF THE CITY OF NORWALK-
NORWALK MUNICIPAL WATER SYSTEM AND APPROVING AND
AUTHORIZING THE EXECUTION OF A PURCHASE AND SALE
AGREEMENT AND ESCROW INSTRUCTIONS BY AND BETWEEN
THE CITY OF VERNON AND THE CITY OF NORWALK-NORWALK
MUNICIPAL WATER SYSTEM FOR THE SALE OF 500 ACRE-
FEET OF WATER RIGHTS IN THE CENTRAL BASIN
WHEREAS, on October 16, 2012, the City Council of the City
of Vernon adopted Resolution No. 2012-191 authorizing the issuance of
a request for bids for the sale of up to 500 acre feet of Allowed
Pumping Allocation ("APA" or "Water Rights"), including the Total.
Water Right associated with such APA, owned by the City, pursuant to
the terms of the case entitled, Central and West Basin Water
Replenishment District, et al
786,656; and
vs. Adams, et al., LASC Case No.
WHEREAS, the City received four qualified bids in response
to the Request For Bids; and
WHEREAS, by Memorandum dated November 15,.2012, the City
Administrator recommends that the City accept the bid of the City of
Norwalk -Norwalk Municipal Water System ("City of Norwalk"), as the
high bidder, and enter into a purchase and sale agreement, with escrow
instructions with the City of Norwalk according to the terms and
conditions for the sale of 500 acre-feet of water rights which were a
part of the bid specifications
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the above recitals are true and correct.
SECTION 2: The City Council of the City of Vernon finds
that the sale of water rights is categorically exempt under the
California Environmental Quality Act (CEQA) guidelines, Section 15312,
and in accordance with Section 15061(b)(3), the general rule that CEQA
only applies to projects that may have an effect on the environment.
SECTION 3: The City Council of the City of Vernon hereby
approves the Purchase and Sale Agreement and Escrow Instructions with
the City of Norwalk -Norwalk Municipal Water System, which were a part
of the bid specifications, and in substantially the same form attached
hereto as Exhibit A.
SECTION 4: The City Council of the City of Vernon hereby
authorizes the Mayor or Mayor Pro-Tem to execute said Agreement, for
and on behalf of, the City of Vernon, and the Interim City Clerk, or
Deputy City Clerk, is hereby authorized to attest thereto.
SECTION 5: The City Council of the City of Vernon hereby
instructs the City Administrator, or his designee, to take whatever
actions are deemed necessary or desirable for the purpose of
implementing and carrying out the purposes of this Resolution and the
transactions herein approved or authorized, including but not limited
to, any nonsubstantive changes to the Agreement attached herein and
executing any other related documents to complete the transactions.
SECTION 6: The City Council of the City of Vernon hereby
directs the Interim City Clerk, or the Interim City Clerk's designee,
to send a fully executed Agreement to the City of Norwalk.
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SECTION 7: The Interim City Clerk of the City of Vernon
shall certify to the passage, approval and adoption of this
resolution, and the Interim City Clerk of the City of Vernon shall
cause this resolution and the Interim City Clerk's certification to be
entered in the File of Resolutions of the Council of this City.
APPROVED AND ADOPTED this 20th day of November, 2012.
V �
Name: Willi m J. Davis
ATTES
Dan eed, Interim City Clerk
Title: Mayor / «ayo3—r�
_3_
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Dana Reed, Interim City Clerk of the City of Vernon, do hereby
certify that the foregoing Resolution, being Resolution No. 2012-224,
was duly passed, approved and adopted by the City Council of the City
of Vernon at a regular meeting of the City Council duly held on
Tuesday, November 20, 2012, and thereafter was duly signed by the
Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this day of November, 2012, at Vernon, California.
Da Reed, Interim City Clerk
(SEAL)
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EXHIBIT A
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
This Purchase and Sale Agreement (this "Agreement") is made as of the date executed by
Seller (the "Effective Date"), by and between CITY OF VERNON, a Municipal corporation,
("Seller"), and CITY OF NORWALK, a Municipal corporation, ("Buyer"), Buyer and Seller are
sometimes hereinafter individually referred to as a "Party" and collectively as the "Parties".
RECITALS
A. Reference is hereby made to that certain Judgment entered October 11, 1965, as
amended by that certain Second Amended Judgment dated May 6, 1991, as such judgment may
have been further amended prior to the Effective .Date (as so amended, the "Judgment") in the
case entitled Central and West Basin Water Replenishment District et al vs Adams et al., Case
No. 786,656 in the Superior Court of the State of California for the County of Los Angeles (the
"Court"), All initially capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Judgment.
B. According to records maintained by the Department of Water Resources of the
State of California, in its capacity as watermaster under the Judgment (in such capacity, the
"Watermaster"), Seller is currently the owner of 10,048.75 acre feet of Total Water Rights and
8,039 acre feet of Allowed Pumping Allocation (the "Seller's APA"). On the terms and
conditions set forth herein, Seller desires to sell to Buyer, and Buyer desires to buy from Seller,
on a perpetual and permanent basis, 625 acre feet of Total Water Rights and 500 acre feet of
Allowed Pumping Allocation (the "Purchased APA"),
C. The Purchased APA, together with Seller's other rights, privileges and
entitlements relating to the Purchased APA, or appurtenant thereto, if any, including without
limitation Seller's right, title and interest, if any, in and to the Allowed Pumping Allocation
arising from the Purchased APA for any period after the Closing Date (as defined below in
Section 5) and any carryover rights and any storage rights associated with the Purchased APA
are sometimes collectively referred to as the "Water Rights."
D. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the
Water Rights on the terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Seller and Buyer agree as follows:
1. Agreement to Transfer Title to Bier. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, the Water Rights, on the terms and conditions set forth herein.
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2. Escrow
2.1, Establishment of Escrow. Within two (2) business days following the
Effective Date, the Parties shall open an escrow (the "Escrow") at Fidelity National Title
Insurance Company, or such other escrow holder to which the parties shall mutually
agree (the "Escrow Holder") for this transaction. This Agreement shal I constitute escrow
instructions to Escrow Holder concerning this transaction.
2.2. Deposit. Within three (3) business days after the Effective Date, Buyer
shall deposit a sum equal to ten percent (101/4) of the Purchase Price, being the sum of Six
Hundred Thousand Dollars ($600,000,00), (the "Deposit") with Escrow Holder, by wire
transfer of immediately available funds denominated in U.S. dollars. If Buyer does not
deliver the Deposit in the time and manner provided herein, then Seller may elect, in its
sole and absolute discretion, to deliver a written notice to Buyer and Escrow Holder
terminating any further obligations of the Parties under this Agreement. The Deposit
shall be non-refundable, except as expressly provided in Sections 2.3 103,21 10 l 4, and
10.1.5 below.
2.3. Due Diligence Review. Buyer shall have seven (7) calendar days after the
Effective Date to review such documents and make such inquiries as Buyer deems
necessary or prudent to confirm that the Water Rights are satisfactory for its purposes
(the "Diligence Period"). In the event Buyer determines that the Water Rights are not
satisfactory for its purposes, Buyer shall have the right to terminate this Agreement by
delivering written notice thereof to Seller (the "Termination Notice") prior to the
expiration of the Diligence Period. Buyer's failure to deliver the Termination Notice to
Seller prior to the expiration of the Diligence Period shall be deemed Buyer's waiver of
any objection to matters affecting the Water Rights.
2A. Diligence Satisfaction. Within two (2) business days after the expiration
of the Diligence Period, Buyer shall deposit an amount equal to the Purchase Price (as
defined below in Section 4) less the Deposit with Escrow Holder (the "Purchase Price
Funds"), Buyer may elect to request that the Purchase Price Funds be invested by
Escrow Holder in a money market account, or similar investment, and the interest therein
shall be for the sole benefit of Buyer.
2.5. Title Matters. Seller shall not cause any lien, encumbrance or other
exception to title to the Water Rights to be recorded or to attach to the Water Rights
between the Effective Date and the recording of the Water Deed or earlier termination of
this Agreement pursuant to the terms hereof without the prior written consent of Buyer.
Unless and until this Agreement is terminated pursuant to the terms hereof, Seller shall
not assign, convey or otherwise transfer any record or beneficial interest in the Water
Rights to any person other than to Buyer at Closing (as defined below in Section 5)
pursuant to the terms of this Agreement.
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3. Watermaster
3.1. The Water Rights. Concurrently herewith, Seller and Buyer shall execute
a Water Rights Grand Deed naming Seller as grantor and Buyer as grantee in the form
attached hereto as Exhibit A (the "Water Deed"). Seller and Buyer shall deliver the
original of the Water Deed to Escrow Holder concurrently herewith. Promptly following
receipt of the Purchase Price Funds, Escrow Holder shall record the Water Deed in the
County of Los Angeles and provide a copy thereof to Watermaster.
3.2. Cooperation. The Parties shall provide such documents and information
to the Watermaster as Watermaster may reasonably request from the Parties in
connection with this transaction. If Watermaster fails to take all actions necessary for the
transfer contemplated by this Agreement to become effective, then the Parties shall
negotiate in good faith to determine whether any changes to the relevant documents
which are reasonably satisfactory to the Parties in their respective discretions, should be
made by them to facilitate such actions by Watermaster,
4, Purchase Price. The total purchase price for the Water Rights (the "Purchase
Price") shall be Six Million Dollars ($6,000,000.00), representing $12,000,00 per AF of the
Purchased APA.
5. Closing, The closing of the purchase and sale of the Water Rights (the "Closing")
shall occur within three (3) business days after the Watermaster approves the Watermaster
Transfer Form, The date of closing is referred to herein as the "Closing Date".
5.1. Seller Closing Deliveries. At or prior to Closing, Seller shall deposit the
following with Escrow Holder, all in form and substance reasonably satisfactory to
Escrow Holder and Buyer (except as otherwise provided below):
5.1.1. An original duly executed Water Deed in the form of
Exhibit A attached hereto (the "Water Deed").
5.1.2. Such other documents and instruments as Escrow Holder or
Buyer may reasonably request,
5.2. Buyer Closing Deliveries. At or prior to Closing, Buyer shall deposit the
following with Escrow Holder, all in form and substance reasonably satisfactory to
Escrow Holder and Seller:
5.2.1. The Purchase Price, in good and sufficient funds.
5.2.1. Such other documents and instruments as Escrow Holder or
Seller may reasonably request.
5.3. Costs and Prorations. Escrow Holder shall prepare and deliver one or
more preliminary closing statements to the Parties prior to the Closing, and the Parties
shall not unreasonably withhold their approval thereof. At Closing, Seller and Buyer
shall each pay one-half of the escrow fees of Escrow Holder for this transaction, subject
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to Section 5.5 below, and Buyer shall pay all legal fees and related costs incurred by the
Parties in the negotiation and preparation of this Agreement and any and all Exhibits
attached hereto. Buyer shall pay the recording fee for the Water Deed. Escrow Holder
may pro rate any administrative assessments payable to the Watermaster for the fiscal
year of the Watermaster in which the Closing Date occurs, such pro ration to be based
upon and proportional to (a) the number of days in such fiscal year before the Closing
Date, and (b) thenumber of days in such fiscal year after the Closing Date, Each of
Buyer and Seller shall deposit additional funds into Escrow in an amount equal to their
respective closing costs; provided, however, that Escrow Holder is hereby authorized to
withhold Seller's closing costs from funds that would otherwise be distributable by
Escrow Holder to Seller at Closing. All other costs incurred by the Parties in connection
with this transaction shall be paid in the manner which is customary in Los Angeles
County, California for transactions of the type contemplated by this Agreement. To the
extent that information for any such proration is not available on the Closing Date, Buyer
and Seller shall effect such prorations outside of Escrow, as soon as possible following
the Closing, but in no event later than one hundred twenty (120) days after the Closing
Date.
5.4. Procedure for Closing. Escrow Holder shall close the Escrow by doing
the following, in the following order:
5.4.1 Pay Seller's closing costs from funds deposited by Seller
or otherwise distributable to Seller.
5.4.2 Pay Buyer's closing costs from funds deposited by Buyer.
5.4.3 Deliver the Purchase Price, less Seller's closing costs, to
Seller pursuant to instructions to .be separately provided by Seller to
Escrow Holder.
5.4.4 Deliver interest, if any, on the Deposit to Buyer, by a
check made payable to Buyer.
5.4.5 Date the Water Deed as of the Closing Date,
5.4,6 Deliver the original Water Deed to the Los Angeles
County Recorder for recordation in the Official Records of Los Angeles
County, California (the "Official Records"), and copies of the executed,
dated Water Deed (and any other closing documents) to Seller, Buyer, and
Watermaster.
5.4.7 Return any other items to the Party who delivered it into
escrow.
5.5. Inability to Close, If this Agreement is terminated pursuant to Section
10.1, Seller and Buyer shall each pay one-half of any cancellation fees of Escrow Holder;
provided, however, that if the Escrow fails to close due to a default of a Party, then the
defaulting party shall, in addition to any other damages, pay all cancellation fees.
in
6. Seller's Conditions for Sale. Seller's obligations to sell the Water Rights pursuant
to this Agreement shall be subject to satisfaction or waiver by Seller, in its discretion, of the
following conditions as of the Closing Date:
6.1 Buyer's Performance. Buyer shall have timely performed all obligations
to be performed by Buyer pursuant to this Agreement, and Buyer's representations and
warranties set forth herein shall be true and correct in all material respects,
6.2 Watermaster. Seller shall have received evidence reasonably satisfactory
to Seller that the Watermaster has taken or will take all actions necessary for the transfer
contemplated by this Agreement to become effective.
7, Buyer's Conditions for Purchase. Buyer's obligations to purchase the Water
Rights pursuant to this Agreement shall be subject to satisfaction or waiver by Buyer, in its
discretion, of the following conditions as of the Closing Date:
7.1. Seller's Performance. Seller shall have timely performed all obligations to
be performed by Seller pursuant to this Agreement, and Seller's representations and
warranties set forth herein shall be true and correct in all material respects.
TZ Watermaster. Buyer shall have received evidence reasonably satisfactory
to Buyer that the Watermaster has taken or will take all actions necessary for the transfer
contemplated by this Agreement to become effective.
8. Representations and Warranties of Seller. Seller represents and warrants to Buyer
that, as of the Effective Date and the Closing Date:
8.1. Due Organization. Seller is a Municipal corporation, validly existing and
in good standing under the laws of the State of California.
8.2. Power and Authority. Seller has the right, power and authority to enter
into this Agreement, which has been duly authorized by valid action of Seller's governing
body, and to perform its obligations hereunder, and the person(s) executing this
Agreement on behalf of Seller have the right, power and authority to do so.
8.3, Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms. Neither this
Agreement nor the consummation of the transactions contemplated hereby violates any
provision of any agreement to which Seller is a party or by which Seller is bound.
8A, No Conflicts. To Seller's knowledge, Seller is not now in, nor will the
Closing of the transaction contemplated by this Agreement in any material respect
constitute a, violation of any law, ordinance, rule, regulation or administrative or judicial
order affecting the Water Rights, including without limitation the Judgment.
8.5. No Other Consents Needed, To Seller's knowledge, other than the
approval of the Watermaster, no consent from any third party (including any
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governmental agency or authority) is required in order to effectuate the transfer of the
Water Rights in accordance with this Agreement.
8.6. The Water Rights. Seller owns all of the beneficial right, title and interest
in and to the Water Rights and has not entered into any agreement to alienate, encumber,
transfer, option, lease, assign, or otherwise convey all or any portion of its interest in any
of the Water Rights, that would prevent Seller's sale of the Water Rights pursuant to this
Agreement.
9. Representations and Warranties of Buyer. Buyer represents and warrants to Seller
that, as of the Effective Date and the Closing Date:
9.1. Due Organization, Buyer is a Municipal corporation, duly organized,
validly existing and in good standing under the laws of the State of California. Buyer is
qualified to do and doing business in the State of California.
9.2. Power and Authority: Party to the Central Basin Judgment, Buyer has the
right, power and authority to enter into this Agreement and to perform its obligations
hereunder, and the person(s) executing this Agreement on behalf of Buyer have the right,
power and authority to do so. Buyer is a party to the Judgment and either currently holds
water rights thereunder or is not precluded from acquiring such rights.
9.3. Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms. Neither this
Agreement nor the consummation of the transactions contemplated hereby violates any
provision of any agreement to which Buyer is a party or by which Buyer is bound.
9A. No Conflicts. To Buyer's knowledge, Buyer is not now in, nor will the
Closing of the transaction contemplated by this Agreement in any material respect
constitute a, violation of any law, ordinance, rule, regulation or administrative or judicial
order affecting the Water Rights.
10. Termination: Waiver: Release.
10,1. Termination. This Agreement may be terminated at any time prior to the
Closing:
10.1.1, By written agreement of the Parties.
10.1.2, By Buyer, if there is a default or breach of any covenant
or an inaccuracy in any representation or warranty made by Seller in this
Agreement which default, breach or inaccuracy has not been cured to
Buyer's reasonable satisfaction within ten (10) calendar days following
receipt by Seller of written notice of such default, breach or inaccuracy.
10.1.3. By Seller, if there is a default or breach of any covenant
or an inaccuracy in any representation or warranty made by Buyer in this
Agreement which default, breach or inaccuracy has not been cured to
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Seller's reasonable satisfaction within ten (10) calendar days following
receipt by Buyer of written notice of such default, breach or inaccuracy.
10,1.4. By Seller or Buyer, if the Watermaster refuses or
declines to approve the Watermaster Transfer Form, within five (5)
calendar days after the Watermaster provides written notice to the Parties
of such a final decision by the Watermaster,
10,1.5. By Buyer or Seller prior to the Closing, if the Closing
shall not have occurred for any reason, other than because of the default of
the Party seeking to terminate, on or before ninety (90) calendar days from
the Effective Date hereof, or such later date as may be agreed to in writing
by the Parties.
10.2. Effect of Termination. If this Agreement is terminated pursuant to Section
10.1 hereof, the Parties shall have no further obligations hereunder, provided that nothing
contained in this Section 10 shall relieve any party from liability for a breach or default
under this Agreement occurring prior to such termination.
10.3. Limitation on Seller's Liability. In the event the Closing fails to occur due
to a default by Seller hereunder (and provided that all conditions to Seller's obligations
have been satisfied), Buyer shall be entitled, as its sole and exclusive remedy, to
terminate this Agreement in accordance with Section 10. 1.2 above and obtain a return of
the Deposit and Purchase Price Funds, plus any interest accrued thereon. Buyer hereby
expressly waives any right to any actual, incidental, consequential or punitive damages or
any equitable remedies which it may otherwise have for Seller's default. This provision
shall survive the termination of this Agreement or the Closing.
10.4. LIQUIDATED DAMAGES, IF THE CLOSING FAILS TO OCCUR BY
REASON OF A BUYER DEFAULT OF THIS AGREEMENT, SELLER WILL BE
DAMAGED AND WILL BE ENTITLED TO COMPENSATION FOR THESE
DAMAGES, BUT SUCH DAMAGES WILL BE EXTREMELY DIFFICULT AND
IMPRACTICABLE TO ASCERTAIN FOR NUMEROUS REASONS, INCLUDING,
WITHOUT LIMITATION, THE FOLLOWING: (A) THE DAMAGES TO WHICH
SELLER WOULD BE ENTITLED WILL BE BASED ON THE DIFFERENCE
BETWEEN THE ACTUAL VALUE OF THE WATER RIGHTS AT THE TIME SET
FOR THE CLOSING AND TI-M PURCHASE PRICE FOR THE WATER RIGHTS AS
SET FORTH IN THIS AGREEMENT, (B) PROOF OF THE AMOUNT OF THESE
DAMAGES WILL BE BASED ON OPINIONS OF THE VALUE OF THE WATER
RIGHTS, WHICH CAN VARY IN SIGNIFICANT AMOUNTS, AND (C) IT IS
IMPOSSIBLE TO PREDICT AS OF THE DATE ON WHICH THIS AGREEMENT IS
ENTERED INTO WHETHER THE VALUE OF THE WATER RIGHTS WILL,
INCREASE OR DECREASE AS OF THE DATE SET FOR THE CLOSING DATE,
AND BUYER DESIRES TO LIMIT THE AMOUNT OF DAMAGES FOR WHICH
BUYER MIGHT BE LIABLE SHOULD BUYER BREACH THIS AGREEMENT.
BOTH BUYER AND SELLER WISH TO AVOID THE COSTS AND LENGTHY
DELAYS WHICH WOULD RESULT IF SELLER FILED A LAWSUIT OR
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COMMENCED AN ARBITRATION PROCEEDING TO SEEK TO ASCERTAIN ITS
DAMAGES FOR A BREACH OF THIS AGREEMENT, THEREFORE, BUYER AND
SELLER HEREBY AGREE THAT IN THE EVENT THE CLOSING SHALL FAIL TO
OCCUR BY REASON OF A DEFAULT OR BREACH OF THIS AGREEMENT BY
BUYER, SELLER SHALL BE ENTITLED TO RETAIN, AS ITS SOLE AND
EXCLUSIVE REMEDY, THE DEPOSIT AS A REASONABLE ESTIMATE OF
SELLER'S DAMAGES. IT IS AGREED THAT IN ORDER TO IMPLEMENT THE
PROVISIONS OF THIS SECTION, SELLER MAY UNILATERALLY INSTRUCT
ESCROW HOLDER TO CANCEL THE ESCROW AND DELIVER THE DEPOSIT TO
SELLER. NOTHING CONTAINED IN THIS SECTION SHALL BE DEEMED OR
CONSTRUED TO LIMIT BUYER'S OBLIGATIONS UNDER SECTION I1.16
BELOW, WHICH SHALL BE IN ADDITION TO THE LIQUIDATED DAMAGES
PROVIDED HEREIN. THIS PROVISION SHALL SURVIVE THE TERMINATION
OF THIS AGREEMENT AND THE CLOSING.
BUYER'S INITIALS
11. Miscellaneous.
SELLER'S INITIALS
11.1. Further Assurances. At any time and from time to time after the Effective
Date, each Party agrees to take such actions, to execute and deliver such instruments and
to provide such documents and information as the other Party may reasonably request to
effectuate the purposes of this Agreement.
l 1,2. Successors, This Agreement shall be binding upon and inure to the
benefit assigns and successors -in -interest of the Parties.
113. Amendment. Except as otherwise provided in this Agreement, neither this
Agreement nor any provision hereof may be waived, modified, amended, discharged, or
terminated except by an instrument in writing signed by the Party against which the
enforcement of such waiver, modification, amendment, discharge or termination is
sought, and then only to the extent set forth in such writing
11.4. Entire Agreement. This Agreement and the agreements referenced herein
constitute the entire understanding between the Parties with respect to the matters set
forth herein, and supersede all prior or contemporaneous understandings or agreements
between the Parties with respect to such matters, whether oral or written.
11.5, Notices. Any notice, approval, consent, waiver or other communication
required or permitted to be delivered upon a Party under this Agreement shall be in
writing and shall be personally delivered or sent by reputable overnight delivery service,
such as FedEx, and shall be deemed given: (a) if personally delivered, when actually
delivered; or (b) if sent by reputable overnight delivery service, such as FedEx, when
actually delivered, provided confirmation of delivery shall be retained by the sender.
Such notices shall be addressed to the Party to whom such notice is to be given at the
Party's address set forth below or as such Party shall otherwise direct in a writing to the
other Party delivered or sent in accordance with this Section. Any notices so given shall
be deemed given as of the date established by the overnight delivery service.
If to Seller, to: City of Vernon
City Clerk
4305 Santa Fe Avenue
Vernon CA 90058
Copy to: William F. Kruse, Esq.
Lagerlof, Senecal, Gosney & Kruse, LLP
301 North Lake Avenue
Tenth Floor
Pasadena, CA 91101
If to Buyer, to: City of Norwalk
Norwalk Municipal Water System
12700 Norwalk Blvd.
Norwalk, CA 90650
If to Escrow Holder, to: Valerie Rapp
Fidelity National Title Insurance Company
1300 Dove Street, Suite 310
Newport Beach, CA 92660
11.6. Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of California, without giving effect to principles of
conflicts of laws. The venue for the resolution of any disputes arising out of, or related
to, this Agreement shall be Los Angeles County, California.
1 1.7, Waiver. No failure by either Party to exercise, and no delay in exercising
any rights, shall be construed or deemed to be a waiver thereof, nor shall any single or
partial exercise by any Party preclude any other or future exercise thereof or the exercise
of any other right. Any waiver by a Party of any breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other breach of that
provision or of any breach of any other provision of this Agreement.
11.8, Liberal Construction. This Agreement constitutes a fidly-negotiated
agreement among commercially sophisticated Parties, each assisted by legal counsel, and
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the terms of this Agreement shall not be construed or interpreted for or against any Party
hereto because that Party or its legal representative drafted or prepared such terms.
11.9. Severability. If any provision of this Agreement is invalid, illegal or
unenforceable, such provision shall be deemed to be severed or deleted from this
Agreement and the balance of this Agreement shall remain in full force and effect.
11,10. Good Faith and Fair Dealing. The performances required by the
provisions of this Agreement shall be undertaken in good faith, and with each of the
Parties dealing fairly with the other.
1 I.11. No Third -Party Beneficiaries, This Agreement does not create, and shall
not be construed to create, any rights enforceable by any person, partnership, corporation,
joint venture, limited liability company or other form of organization or association of
any kind that is not a Party to this Agreement.
11,12. No Brokers, Each Party represents and warrants to the other that it has not
dealt with any broker, agent or finder in connection with this transaction. Buyer agrees to
indemnify and hold Seller harmless from and against any and all Claims arising out of
any claim to a commission or fee by any other party claiming by or through Buyer,
Seller agrees to indemnify and hold Buyer harmless from and against any and all Claims
arising out of any claim to a commission or fee by any other party claiming by or through
Seller. This provision shall survive the termination of this Agreement and the Closing,
11.13, Counterparts, This Agreement may be executed in counterparts (by
original, facsimile or electronic PDF signatures) which, when taken together, shall
constitute a single agreement. The signature page of any counterpart may be detached
therefrom without impairing the legal effect of the signature(s) thereon,
t 1.14, Back -Up Offers, After the execution of this Agreement and until the
expiration of the Diligence Period, Seller shall have the right, without liability to Buyer,
to solicit or initiate, directly or indirectly, and to encourage the submission of inquiries,
proposals, or offers from any potential buyer for the Water Rights. Buyer further agrees
that during the foregoing period of time, Seller may, without liability to Buyer, enter into
and agree to back-up offers from potential buyers for the Water Rights, provided that any
such back-up offer, if accepted by Seller, shall be subject to Buyer's rights under this
Agreement.
I t.15. Time of the Essence. Time is of the essence of each and every provision
of this Agreement. Whenever action must be taken under this Agreement during a
certain period of time that ends on a non -business day, then such period shall be extended
until the immediately following business day, As used herein, "business day" means any
day other than a Saturday, Sunday or federal or California State holiday.
11.16. Attorneys' Fees. In any action or proceeding for the purpose of enforcing
any provision of this Agreement, or to recover damages hereunder, or to obtain injunctive
or other relief, or for a declaration of rights or obligations hereunder, or for any other
judicial or equitable remedy, the prevailing Party shall be entitled, in addition to such
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other relief as may be granted, to an award, in the same or a subsequent proceeding, of its
reasonable attorneys' fees and costs.
11.17. Not an Offer, In no event shall any draft of this Agreement create any
obligations or liabilities, it being intended that only a fully executed and delivered copy
of this Agreement will bind the Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written.
SELLER: CITY OF VERNON, a Municipal corporation
By:
Name:
Its:
By:
Name:
Its:
BUYER: CITY OF NORWALK, a Municipal corporation
By:
Name:
Its:
By:
Name:
Its:
-11-
ACKNOWLEDGEMENT OF ESCROW FOLDER
Escrow Holder acknowledges its receipt of an executed version of this Agreement and agrees to
act as escrow holder with respect to its obligations expressly set forth herein.
FIDELITY NATIONAL TITLE INSURANCE CONVANY
By:
Name:
Its:
-13-
1*01*1101lI:\
Recording requested by
and when recorded mail to:
CITY OF NORWALK
Norwalk Municipal Water System
12700 Norwalk Blvd.
Norwalk, CA 90650
Space above this line for Recorder
WATER RIGHTS GRANT DEED
The undersigned grantor(s) declare(s)
DOCUMENTARY TRANSFER TAX $ 0.00 (Zero) - Exempt per Revenue and Taxation Code Section
11922 - conveyance is for the benefit of the City
of Norwalk
As of 2012, CITY OF VERNON, a Municipal
corporation, as Grantor herein, for valuable consideration, the receipt of which is hereby
acknowledged, does hereby grants to CITY OF NORWALK, a Municipal corporation, as
Grantee herein, all that certain real property in the County of Los Angeles, State of California,
described as:
625 acre feet of Total Water Rights and 500 acre feet of Allowed Pumping
Allocation (the "Purchased APA") together with all of Grantor's other rights,
privileges and entitlements relating to the Purchased APA, or appurtenant thereto,
if any, including without limitation Grantor's right, title and interest, if any, in and
to the Allowed Pumping Allocation for any period after the closing date, any
carryover rights and any storage rights associated with the Purchased APA
(collectively, the "Water Rights") allocated to Grantor in, under and pursuant to
that certain Second Amended Judgment dated May 6, 1991 (the "Judgment") in
the case entitled Central and West Basin Water Replenishment District et al vs
Adams, et al., Case No. 786 656 in the Superior Court of the State of California
for the County of Los Angeles.
According to records maintained by the Department of Water Resources of the State of
California, in its capacity as Watermaster tinder the Judgment (in such capacity, the
"Watermaster"), Grantor is currently the owner of 10,048.75 acre feet of Total Water Rights and
8,039 acre feet of Allowed Pumping Allocation. Pursuant to this instrument, Grantor is selling to
Grantee, on a perpetual and permanent basis, 625 acre feet of Total Water Rights and 500 acre
feet of Allowed Pumping Allocation, and Grantor is retaining 9,423.75 acre feet of Total Water
Rights and 7,539 acre feet of Allowed Pumping Allocation.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the date
first written above.
GRANTOR: City of Vernon,
a Municipal corporation
By:
Name:
Its:
By:
Name:
Its:
STATE OF CALIFORNIA )
ss.
COUNTY OF 1
On , 20, before me,
a Notary Public, personally appeared
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,
Notary Public in and for said State
Recording requested by
and when recorded mail to:
CITY OF NORWALK
Norwalk Municipal Water System
12700 Norwalk Blvd,
Norwalk, CA 90650
Space above this line for Recorder
WATER RIGHTS GRANT DEED
The undersigned grantor(s) declare(s)
DOCUMENTARY TRANSFER TAX $ 0,00 (Zero) — Exempt per Revenue and Taxation Code Section
11922 - conveyance is for the benefit of the City
of Norwalk
As of 2012, CITY OF VERNON, a Municipal corporation,
as Grantor herein, for valuable consideration, the receipt of which is hereby acknowledged, does
hereby grants to CITY OF NORWALK, a Municipal corporation, as Grantee herein, all that certain
real property in the County of Los Angeles, State of California, described as:
625 acre feet of Total Water Rights and 500 acre feet of Allowed Pumping
Allocation (the "Purchased APA") together with all of Grantor's other rights,
privileges and entitlements relating to the Purchased APA, or appurtenant thereto, if
any, including without limitation Grantor's right, title and interest, if any, in and to
the Allowed Pumping Allocation for any period after the closing date, any carryover
rights and any storage rights associated with the Purchased APA (collectively, the
"Water Rights") allocated to Grantor in, under and pursuant to that certain Second
Amended Judgment dated May 6, 1991(the "Judgment") in the case entitled Central
and West Basin Water Replenishment District, et al., vs Adams, et al., Case No. 796
656 in the Superior Court of the State of California for the County of Los Angeles.
According to records maintained by the Department of Water Resources of the State ofCalifornia, in
its capacity as Watermaster under the Judgment (in such capacity, the "Watermaster"), Grantor is
currently the owner of 10,048,75 acre feet of Total Water Rights and 8,039 acre feet of Allowed
Pumping Allocation. Pursuant to this instrument, Grantor is selling to Grantee, on a perpetual and
permanent basis, 625 acre feet of Total Water Rights and 500 acre feet of Allowed Pumping
Allocation, and Grantor is retaining 9,423.75 acre feet of Total Water Rights and 7,539 acre feet of
Allowed Pumping Allocation.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the date first
written above,
GRANTOR: City of Vernon,
a Municipal corporation
By:
Name:
Its:
By:
Name:
Its:
STATE OF CALIFORNIA )
ss.
COUNTY OF 1
On 20 before me,
a Notary Public, personally appeared
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.
Notary Public in and for said State
DATE: November 15, 2012
TO: Honorable City Council
FROM: Mark Whitworth, City Administrator
RE: Approval to award contract to high bidder for the Sale of Surplus Water Rights
Background
At the October 16's meeting City Council approved Resolution No. 2012-191 to invite sealed
proposals or bids for the sale of 500 acre-feet of water rights.
The City received four sealed bids at the deadline on Thursday, November 8, 2012. The highest
bid was received from the City of Norwalk -Norwalk Municipal Water System for 500 Acre Feet at a unit
price of $12,000 per acre foot.
Recommendation
It is recommended the City Council approve the attached contract for the sale of 500 acre-feet of
water rights awarding the highest bid to the City of Norwalk -Norwalk Municipal Water System at the
November 20, 2012 City Council meeting.
CITY OF VERNON
SALE OF UP TO 500 ACRE-FEET OF CENTRAL BASIN. ALLOWED
PUMPING ALLOCATION
BID FORM
Name of Person/City/Agenoy/Company:. City of Norwalk -Norwalk Municival Wate; SvstE
Address:12700 Norwalk' Blvd.
City/State/Zip C
Person to Conta
Phone Number:
E-mail Address
TLvnch norwalkca P�av
The undersigned as Bidder, agrees to purchase the following amount of Central Basin Allowed Pumping
Allocation (and the associated Total Water Right) at the unit price below: .
(The minimum bid is $7,800.00 per acre-foot)
Total Allowed Pumping Allocation to be purchased:
Five Hundred Acre Feet
(words)
500 Acre Feet,
At a unit price of:
Twelve Thousand Dollars per Acre Foot
(words)
S 12.000.00 _ per Acre Foot
Expfuscvefy Industr&f
Total Bid Price for all water units to be purchased:
$6.000.000.00
The undersigned certifies that the Bidder is currently the holder of an adjudicated Allowed Pumping
Allocation ("APA") as provided in Central and West $asin Water Replenishment District,et al. vs,
Ada -es al.,.L&SC Case No. 786,656 (the "Central Basin Judgment").
2012
ftfusivery Industriaf
AFFIDAVIT OF NON -COLLUSION
STATE OF CALIFORNIA )
)as
COUNTY OF LOS ANGELES )
Thomas E. Lynch ` being first duly sworn deposes
and"says that h0she is _ Assistant: City Manalger
(Insert"Sd9 owmr".. *Punier , 0"idool, "sxtc9m., 9ra14a proper [ilia)
of City of Norwalk
(inaert name arbidd9r).
Who submits herewith to the City of Vernon a bid;
That all statements of fact in such bid are true;
That such bid was not made in the interest of or on behalf of any undisclosed person, partnership,
company, association, organization or corporation;
That such bid is genuine and not collusive or sham;
That said bidder has not, directly or indirectly by agreement, communication or conference with anyone
attempted to Induce action prejudicial to the interest of the City of Vernon, or of any other bidder or
anyone else interested in the proposed contraot; and further
That prior to the public opening and reading of bids. said bidder:
a. Did not directly or Indirectly, induce or solicit anyone else to submit a false or sham bid;
b. Did not directly or indirectly, collude, conspire, connive or agree with anyone else that said
bidder or anyone else would submit a false or sham bid, or that anyone should refrain from
bidding or withdraw his bid:
C. Did not, in any manner, directly or indirectly seek by agreement, communication or conference
with anyone to raise or fix the bid price of said bidder or of anyone else, or to raise or fix any
overhead, profit or cost element of his bid price, or of that of anyone else;
d. Did not, directly or indirectly, submit his bid price or any breakdown thereof, or the contents
thereof, or divulge information or data relative thereto, to any corporation, partnership,
company, association, organization, bid depository, or to any member or agent thereof, or to any
individual or group of individuals, except the City of Vernon, or to any person or persons who
have a partnership or other financial interest with said bidder in his business.
Eviiisimcy Industtaf
Of perjury that the above information is correct
ftfusivefy Industriaf
BIDS RECEIVED
CITY OF VERNON
SALE OF UP TO 500 ACRE-FEET OF CENTRAL BASIN ALLOWED
PUMPING ALLOCATION
BID FORM
Name of Person/City/Agency/Company: City of Norwalk —Norwalk Municipal Water System
Address: 12700 Norwalk Blvd.
City/State/Zip Code: Norwalk, CA 90650
Person to Contact; Thomas E. Lynch Assistant City Manager
Phone Number: (562) 929-5760
E-mail Address (for official notices about this Bid and award.of the Bid):
TLynch@norwalkca�ov
The undersigned as Bidder, agrees to purchase the following amount of Central Basin Allowed Pumping
Allocation (and the associated Total Water Right) at the unit price below:
(The minimum bid is $7,800.00 per acre-foot)
Total Allowed Pumping Allocation to be purchased:
Five Hundred
(figures)
Acre Feet
Feet
At a unit price of:
Twelve Thousand Dollars per Acre Foot
(words)
per Acre Foot
Ersfusivefy Industriaf
Total Bid Price for all water units to be purchased:
6 000,000.00
(figures)
The undersigned certifies that the Bidder is currently the holder of an adjudicated Allowed Pumping
Allocation ("APA") as provided in Central and West Basin Water Replenishment District, et al. vs.
Adams,, eS al.,_,LA C Case No. 786,656 (the "Central Basin Judgment").
thomas IS. Lynch November 8 2012
(Print Name) (Date)
ftfusively rndustriar
AFFIDAVIT OF NON -COLLUSION
STATE OF CALIFORNIA )
ss
COUNTY OF LOS ANGELES )
Thomas E. Lynch , being first duly sworn deposes
and says that he/she is _ Assistant City Manager
(Insert"SoleOwner "Partner","Presidenl,'Swwary", or other proper title)
of City of Norwalk
(Insets name of bidder)
who submits herewith to the City of Vernon a bid;
That all statements of fact in such bid are true;
That such bid was not [Wade in the interest of or on behalf of any undisclosed person, partnership,
company, association, organization or corporation;
That such bid is genuine and not collusive or sham;
That said bidder has not, directly or indirectly by agreement, communication or conference with anyone
attempted to induce action prejudicial to the interest of the City of Vernon, or of any other bidder or
anyone else interested in the proposed contract; and further
That prior to the public opening and reading of bids, said bidder:
a, Did not directly or indirectly, induce or solicit anyone else to submit a false or sham bid;
b. Did not directly or indirectly, collude, conspire, connive or agree with anyone else that said
bidder or anyone else would submit a false or sham bid, or that anyone should refrain from
bidding or withdraw his bid;
C. Did not, in any manner, directly or indirectly seek by agreement, communication or conference
with anyone to raise or fix the bid price of said bidder or of anyone else, or to raise or fix any
overhead, profit or cost element of his bid price, or of that of anyone else;
d. Did not, directly or indirectly, submit his bid price or any breakdown thereof, or the contents
thereof, or divulge information or data relative thereto, to any corporation, partnership,
company, association, organization, bid depository, or to any member or agent thereof, or to any
individual or group of individuals, except the City of Vernon, or to any person or persons who
have a partnership or other financial interest with said bidder in his business.
ftfusivefy Industriaf
I certify under
l penalty of perjury that the above information is correct
li
Date:
Assistant Cit
Eridusivefy Industriar
CITY OF VERNON
SALE OF UP TO 500 ACRE-FEET OF CENTRAL BASIN ALLOWED
PUMPING ALLOCATION
BID FORM
Name of Person/City/Agency/Company: Park Water CoMan
Address: 9750 Washburn Road
City/Stale/Zip Code: Downey, California 90241
Person to Contact: Jeanne -Marie Bruno
PhoneNumber:
E-mail Address (for official notices about this Bid and award of the Bid):
jmbruno@parkwater.com
The undersigned as Bidder, agrees to purchase the following amount of Central Basin Allowed Pumping
Allocation (and the associated Total Water Right) at the unit price below:
(The minimum bid is $7,800.00 per acre-foot)
Total Allowed Pumping Allocation to be purchased:
ten
310
(figures)
Acre Feet
Feet
At a unit price of:
Nine thousand six hundred twenty seven dollars per Acre Foot
(words)
(figures) per Acre Foot
EixCusivefy Industiiar
Total Bid Price for all water units to be purchased:
2,984,370.00
The undersigned certifies that the Bidder is currently the holder of an adjudicated Allowed Pumping
Allocation ("APA") as provided in Central and West Basin Water Replenishment District, et al, vs.
Adams, et al., LASC Case No. 786,656 (the "Central Basin Judgment").
(Bidder's Signature)
(Title)
Jeanne -Marie Bruno 11-8-2012
(Print Name) (Date)
E,vCusive,5 Industriar
AFFIDAVIT OF NON -COLLUSION
STATE OF CALIFORNIA )
ss
COUNTY OF LOS ANCELES )
Jeanne -Marie Bruno
being first duly sworn deposes
and says that he/she is _General Manager/Senior Vice President
Qnaen "Sale Own.... "Pnnner", "President, "Seereiary", or other pmper lido)
of Park Water Company
(hwn name or bidder)
who submits herewith to the City of Vernon a bid;
That all statements of fact in such bid are true;
That such bid was not made in the interest of or on behalf of any undisclosed person, partnership,
company, association, organization or corporation;
That such bid is genuine and not collusive or sham;
That said bidder has not, directly or indirectly by agreement, communication or conference with anyone
attempted to induce action prejudicial to the interest of the City of Vernon, or of any other bidder or
anyone else interested in the proposed contract; and further
That prior to the public opening and reading of bids, said bidder:
a. Did not directly or indirectly, induce or solicit anyone else to submit a false or sham bid;
b. Did not directly or indirectly, collude, conspire, connive or agree with anyone else that said
bidder or anyone else would submit a false or sham bid, or that anyone should refrain from
bidding or withdraw his bid;
C. Did not, in any manner, directly or indirectly seek by agreement, communication or conference
with anyone to raise or fix the bid price of said bidder or of anyone else, or to raise or fix any
overhead, profit or cost element of his bid price, or of that of anyone else;
d. Did not, directly or indirectly, submit his bid price or any breakdown thereof, or the contents
thereof, or divulge information or data relative thereto, to any corporation, partnership,
company, association, organization, bid depository, or to any member or agent thereof, or to any
individual or group of individuals, except the City of Vernon, or to any person or persons who
have a partnership or other financial interest with said bidder in his business.
EXcfusivefy Inrfustridf
I certify under penalty of perjury that the above information is correct
l.Q- fI & C1C
BY� V l Title: General Manager/Senior Vice President
anne-Marie Bruno
Date: November 8, 2012
E)TCusivefy Industiiaf
CITY OF VERNON
SALE OF UP TO 500 ACHE -FEET OF CENTRAL BASIN ALLOWED
PUMPING ALLOCATION
BID FORM
Name ofPerson/City/Agency/Company: . City of Long Beach
Address: 1800 E. Wardlow Road
City/State/Zip Code: Long Beach, CA 90807
PersontoContact: Kevin L. Wattier, General Manager, Long B
Phone Number: -
E•mail Address (for official notices about this Bid and award of the Bid):
kevin.wattier@lbwater.org
er Dept.
The undersigned as Bidder, agrees to purchase the following amount of Central Basin Allowed Pumping
Allocation (and the associated Total Water Right) at the unit price below:
(The minimum bid is $7,800.00 per acre-foot)
Total Allowed Pumping Allocation to be purchased:
Five Hundred Acre Feet
500 (words)
Acre Feet
(figures)
At a unit price of:
Eight Thousand and One Hundred Dollars per Aare Foot
(words)
$ 8 , 10 0 . 0 0 per Acre Foot
(figures)
EvsCusively 7ndustriar
Total Bid Price for all water units to be purchased:
$4,050,000.00
(figures)
The undersigned certifies that the Bidder is currently the holder of an adjudicated Allowed Pumping
Allocation ("APA') as provided in Central and West Basin Winter Replenishment District, et al. vs.
Adains, et al., LASC Case No. 786,656 (die "Central Basin Judgment").
li- General Manager, Long Beach Water Dept.
Kevin L. Wattier
ftCusivefy hidustriral
Attachment "B"
AFFIDAVIT OF NON -COLLUSION
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
Kevin L. Wattier , being first duly sworn deposes
and says that he/she is General Manager, Long Beach Water Dept.
(fneed "sole Owner", Tanner`. "President. "Secretary", or other prgnr ride)
Citv of Loncr Beach
(Insed name of bidder)
who submits herewith to the City of Vernon a bid;
That all statements of fact in such bid are true;
That such bid was not made in the interest of or on behalf of any undisclosed person, partnership,
company, association, organization or corporation;
That such bid is genuine and not collusive or sham;
That said bidder has not, directly or indirectly by agreement, communication or conference with anyone
attempted to induce action prejudicial to the interest of the City of Vernon, or of any other bidder or
anyone else interested in the proposed contract; and further
That prior to the public opening and reacting of bids, said bidder:
a. Did not directly or indirectly, induce or solicit anyone else to submit a -false or sham bid;
b. Did not directly or indirectly, collude, conspire, connive or agree with anyone else that said
bidder or anyone else would submit a false or sham bill, or that anyone should refrain from
bidding or withdraw his bid;
c. Did not, in any manner, directly or indirectly seek by agreement, communication or conference
with anyone to raise or fix die bid price of said bidder or of anyone else, or to raise or fix any
overhead, profit or cost element of his bid price, or of that of anyone else;
d. Did not, directly or indirectly, submit his bid price or any breakdown thereof, or dip contents
thereof, or divulge information or data relative thereto, to any corporation, partnership,
company, association, organization, bid depository, or to any member or agent thereof, or to any
individual or group of individuals, except the City of Vernon, or to any person or persons who
have a partnership or other' financial interest with said bidder in his business.
EjOusiveCy InduAdif
I certify under penalty of perjury that the above information is correct
By: Executive Secretary to
Board of Water Commissioners
Date: /Iz��/ PL— City of Long Beach
Ex.pCusively industrial
3 „
r
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
October 16, 2012
Notice Inviting Sealed Bids for the Sale of 500 Acre -Feet of Water Rights in the Central
Basin
To All Interested Parties:
Notice is hereby given that the City of Vernon ("City") invites and will receive sealed bids for
the sale of up to 500 acre feet of Allowed Pumping Allocation ("APA" or "Water Rights"),
including the Total Water Right associated with such APA, owned by the City pursuant to the
terms of the case entitled Central and West Basin Water Replenishment District, et al. vs. Adams,
et al., LASC Case No. 786,656 (the "Central Basin Judgment").
The City will accept bids for all or a portion of the Water Rights. The minimum bid price for the
Water Rights shall be seven thousand eight hundred dollars ($7,800) per acre foot.
Qualified bidders are restricted to those parties already holding an Allowed Pumping Allocation
within the Central Basin as of the date City receives the sealed bid, which rights are recognized
by the Watermaster of the Central Basin. Qualified bidders shall further certify that they have
funds available to deliver and pay in full within fourteen (14) days of notice that the Bid has been
awarded by the City Council, including a period of due diligence review by Buyer as specified in
the attached Purchase and Sale Agreement and Escrow Instructions. Notice shall be given by
email and shall be deemed given as of the time the email is sent,
Due Date:
All sealed bids must be received in the City Clerk's office up to the hour of 2:00 pm on Thursday,
November 8, 2012 (according to the clock in the City Clerk's office), At said time, the bids will be
opened in public and announced at the City Clerk's Office.
Bid Form:
The bid must be made on the form provided for that purpose attached herewith as attachment "A", shall
be enclosed along with the affidavit mentioned below enclosed in a sealed envelope, and marked : "Bid
for Water Rights" and addressed to the City Clerk, City of Vernon, 't305 Santa Fe Avenue, Vernon CA
90058. If the Bid is made by an individual, it must be signed by that individual, and an address,
telephone (fax number and e-mail address if available) must be given. If made by a business or
municipal entity, it must be signed by the person(s) authorized to execute agreements and bind the entity
E7ccCusively Industriar
to contracts. A full business address, telephone (fax number and a -mail address if available) must be
given. No telegraphic, fax, telephonic or e-mailed bid will be considered. Any bidder may withdraw its
bid either personally or by signed written request any time prior to the scheduled time for opening of the
bids (but not after), Bids are irrevocable on bid opening and shall remain firm for ninety (90) days.
Blank spaces in the bid form must be filled in, using ink, indelible pencil, or typewriter and the text of the
proposal form must not be changed. No additions to the form may be made. Any unauthorized conditions,
limitations, or provisos attached to a proposal will render it informal and may cause its rejection.
Alterations by erasure or interlineations must be explained or noted in the proposal form over the
signature of the Proposer. Numbers shall be spelled out and written in Arabic figures. If the words and
the Arabic figures are different, the words shall be used and the Arabic figures disregarded. If the unit
price and the total amount set forth by a bidder calculate in error, the unit price shall be considered as
representing the bidder's intention, and the totals shall be corrected to conform thereto.
Affidavit:
An affidavit form is enclosed as Attachment "B". It must be completed and enclosed with the bid form,
The affidavit signifies that the bid is genuine and not collusive or made in the interest or on behalf of
any person not named in the bid, that the Bidder has not directly or indirectly induced or solicited any
other Bidder to put in a sham proposal or any other person, firm, or corporation to refrain from
proposing, and that the Bidder has not in any manner sought by collusion to secure for itself an
advantage over any other Bidder. Any bid submitted without an affidavit or in violation of this
requirement will be rejected.
Contract and Terms:
The form of contract that the successful bidder will be required to execute is attached herewith as
Attachment "C". Funds for the sale of the water rights shall be deposited in an escrow account no later
than fourteen (14) days from written notice that the Bid has been awarded by City Council. Upon
completion of a transfer of rights to the bidder as established by the Watermaster of the Central Basin, the
funds shall be released to the City as specified in the Purchase and Sale Agreement,
Reservation:
The City reserves the right to revise or amend these specifications prior to the date set for opening bids.
Revisions and amendments, if any, will be announced by an addendum to this Invitation to Bid. If the
revisions require additional time to enable Bidders to respond, the City may postpone the opening date
accordingly. In such case, the addendum will include an announcement of the new opening date.
All addenda must be attached to the bid, Failure to attach any addendum may render the bid non-
responsive and cause it to be rejected.
The City Council reserves the right to reject any and all bids received, to take all bids under advisement
for a period not to exceed ninety (90) clays after the date of the opening, to waive any informality in any
bid, and to be the sole judge of the relative merits of the respective bids received, The City reserves the
right to reject any bid not accompanied with all data or information required. The award shall be made to
the HIGHEST qualified bidder, except that the City reserves the right to sell the water rights in
incremental portions, with priority to given to the highest qualified bidder and the amount of units
requested in its bid, any remaining units will be sold to the next highest qualified bidder for the amount
requested in its bid, and so on until no rights remain.
Excfusivefy Industridf
Conditions for rooponsas to requests:
The following conditions apply to this request;
A. Nothing contained'in this Invitation to Did shall create any contractual relationship
between the rospondeut and the City,
D, The City shall not be liable for any expcnsos incurred by any organization in connection
. with thin Invltntion to Did,
C, No conversations or agreements with any e'ffioer, agent, or employee of the City shall
affect or triodtty any terns of No Invitation to 131d.'Oral communications or any written/0-
mail tutorials provided by any person other than designated contact staff•' of City #hall not
be considered binding,
D. Bidders shnll dot issue any news release, press release or public statement pertaining to
this Invitation to Did, or Did, without prior written approval of the City,
R, All aubmitt#d bids and information Inoludod therein or attached thereto shall become
pablio record upon bid opening,
Should you have mry questions you may contact Alex Kung, Assistant to the City Administrator,
Sincerely,
Mar Whilwoyth
City Administrator
Eytrc>tsiw y rrftfttitti ff
Attachment "A"
CITY OF VERNON
SALE OF UP TO 500 ACRE-FEET OF CENTRAL BASIN ALLOWED
PUMPING ALLOCATION
Name of Person/City/Agency/Company:
Address: 2460 EAST FLORENC]
City/State/Zip Code; WALNUT PAR]
Person to Contact; BIKE -. GO] GO]
Phone Number: (3231. 585-732:
BID FORM
WALNUT PARK MUTUAL WATER COMPANY
CAL
E-mail Address (for official notices about this Bid and award of the Bid):
Wpmwc@ sbcglobal . ne't
The undersigned as Bidder, agrees to purchase the following amount of Central Basin Allowed Pumping
Allocation (and the associated Total Water Right) at the unit price below:
(The minimum bid is $7,800.00 per acre-foot)
Total Allowed Pumping Allocation to be purchased:
******************TWENTY—FIVE************** Acre Feet
(words)
********************25*********************Acre Feet
(figures)
At a unit price of:
EIGHT. THOUSAND ,FIVE HUNDRED; iEIGHTY-FIVE DOLLARS per Acre Foot
(words)
****************$8.585 00***************** per Acre Foot
(figures)
Ersfusivefy Industiiaf
Total Bid Price for all water units to be purchased:
*****************$214,625.00*****************
(figures)
The undersigned certifies that the Bidder is currently the holder of an adjudicated Allowed Pumping
Allocation ("APA") as provided in Central and West Basin Water Replenishment District, et al.
Adams, et al.,, ASC Case No. 786,6�Fi (the "Central Basin Judgment").
(Title)
DR. MIKE GOMEZ
(Print Name)
(Date)
us.
Exclusively Industrial
Attachment "B"
AFFIDAVIT OF NON -COLLUSION
STATE OF CALIFORNIA
ss
COUNTY OF LOS ANGELES
DR. MIKE GOMEZ
and says that he/ii4rg is PRESIDENT
being first duly sworn deposes
(Inseq "Sole Owner", "Penner", "President, "Secretary", or ether proper title)
WALNUT PARK MUTUAL WATER COMPANY
(Insert nnato or bidder)
who submits herewith to the City of Vernon a bid;
That all statements of fact in such bid are true;
That such bid was not made in the interest of or on behalf of any undisclosed person, partnership,
company, association, organization or corporation;
That such bid is genuine and not collusive or sham;
That said bidder has not, directly or indirectly by agreement, communication or conference with anyone
attempted to induce action prejudicial to the interest of the City of Vernon, or of any other bidder or
anyone else interested in the proposed contract; and further
That prior to the public opening and reading of bids, said bidder:
a. Did not directly or indirectly, induce or solicit anyone else to submit a false or sham bid;
b. Did not directly or indirectly, collude, conspire, connive or agree with anyone else that said
bidder or anyone else would submit a false or sham bid, or that anyone should reftain from
bidding or withdraw his bid;
C. Did not, in any manner, directly or indirectly seek by agreement, communication or conference
with anyone to raise or fix the bid price of said bidder or of anyone else, or to raise or fix any
overhead, profit or cost element of his bid price, or of that of anyone else;
d. Did not, directly or indirectly, submit his bid price or any breakdown thereof, or the contents
thereof, or divulge information or data relative thereto, to any corporation, partnership,
company, association, organization, bid depository, or to any member or agent thereof, or to any
individual or group of individuals, except the City of Vernon, or to any person or persons who
have a partnership or other financial interest with said bidder in his business.
elusively Industrial
f certify underrpleqlt Fp .jury that the • bove information is correct
By: Title: PRESIDENT
Date: /0-W- rpl
ExcCusiveCy Industriaf
Attachment "C"
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
This Purchase and Sale Agreement (this "A reement") is made as of the date executed by
Seller (the "Effective Date"), by and between City of Vernon, a Municipal corporation
("Seller"), and (`Buyer"). Buyer and Seller are sometimes
hereinafter individually referred to as a "Paoty" and collectively as the "Parties".
RECITALS
A. Reference is hereby made to that certain Judgment entered October 1 1, 1965, as
amended by that certain Second Amended Judgment dated May 6, 1991, as such judgment may .
have been further amended prior to the Effective Date (as so amended, the "Judgment") in the
case entitled Central and West Basin Water Replenishment District et al.,vs Adams et al., Case
No. 786,656 in the Superior Court of the State of California for the County of Los Angeles (the
"Court"). All initially capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Judgment.
B. According to records maintained by the Department of Water Resources of the
State of California, in its capacity as waterniaster under the Judgment (in such capacity, the
"Watermaster"), Seller is currently the owner of 10,050 acre feet of Total Water Right and 8,039
acre feet of Allowed Pumping Allocation (the "Seller's APA"). On the terms and conditions set
forth herein, Seller desires to sell to Buyer, and Buyer desires to buy from Seller, on a perpetual
and permanent basis, acre feet of Total Water Right and acre feet of Allowed
Pumping Allocation (the "Purchased APA").
C. The Purchased APA, together with Seller's other rights, privileges and
entitlements relating to the Purchased APA, or appurtenant thereto, if any, including without
limitation Seller's right, title and interest, if any, in and to the Allowed Pumping Allocation
arising from the Purchased APA for any period after the Closing Date (as defined below in
Section 5) and any carryover rights and any storage rights associated with the Purchased APA
are sometimes collectively referred to as the "Water Rights."
D. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the
Water Rights on the terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Seller and Buyer agree as to] lows:
1. Agreement to Transfer Title to Buyer. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, the Water Rights, on the terns and conditions set forth herein.
2. Escrow.
2.1. Establishment of Escrow. Within two (2) business days following the
Effective Date, the Parties shall open an escrow (the "Escrow") at Fidelity National Title
Insurance Company, or such other escrow holder to which the parties shall mutually agree (the
"Escrow Holder") for this transaction. This Agreement shall constitute escrow instructions to
Escrow Holder concerning this transaction.
2.2. Deposit. Within three (3) business days after the Effective Date, Buyer
shall deposit a sum equal to ten percent (10%) of the Purchase Price (the "Deposit") with Escrow
Holder, by wire transfer of immediately available funds denominated in U.S. dollars. If Buyer
does not deliver the Deposit in the time and manner provided herein, then Seller may elect, in its
sole and absolute discretion, to deliver a written notice to Buyer and Escrow Holder terminating
any further obligations of the Parties under this Agreement. The Deposit shall be non-
refundable, except as expressly provided in Sections 2.3, 10.1_2, 10.1.4. and 10. l 5 below.
2.3. Due Diligence Review. Buyer shall have seven (7) calendar days after the
Effective Date to review such documents and make such inquiries as Buyer deems necessary or
prudent to, confirm that the Water Rights are satisfactory for its purposes (the "Diligence
Period"), In the event Buyer determines that the Water Rights are not satisfactory for its
purposes, Buyer shall have the right to terminate this Agreement by delivering written notice
thereof to Seller (the "Termination Notice") prior to the expiration of the Diligence Period.
Buyer's failure to deliver the Termination Notice to Seller prior to the expiration of the Diligence
Period shall be deemed Buyer's waiver of any objection to matters affecting the Water Rights.
2.4. Diligence Satisfaction. Within two (2) business days after the expiration
of the Diligence Period, Buyer shall deposit an amount equal to the Purchase Price (as defined
below in Section 4) less the Deposit with Escrow Holder (the "Purchase Price Funds"). Buyer
may elect to request that the Purchase Price Funds be invested by Escrow Holder in a money
market account, or similar investment, and the interest therein shall be for the sole benefit of
Buyer.
2.5. Title Matters. Seller shall not cause ally lien, encumbrance or other
exception to title to the Water Rights to be recorded or to attach to the Water Rights between the
Effective Date and the recording of the Water Deed or earlier termination of this Agreement
pursuant to the terms hereof without the prior written consent of Buyer. Unless and until this
Agreement is terminated pursuant to the terms hereof, Seller shall not assign, convey or
otherwise transfer any record or beneficial interest in the Water Rights to any person other than
to Buyer at Closing (as defined below in Section 5) pursuant to the terms of this Agreement.
3. Watermaster
3.1. The Water Rights. Concurrently herewith, Seller and Buyer shall execute
a Watermaster transfer form naming Seller as grantor and Buyer as grantee in the form attached
hereto as Exhibit A (the "Watermaster Transfer Form"). Seller and Buyer shall deliver the
original of the Watermaster Transfer Form to Escrow Holder concurrently herewith. Promptly
following receipt of the Purchase Price Funds, Escrow Holder shall file the Watermaster Transfer
Form with the staff of the Watermaster
3.2. Cooperation. The Parties shall provide such documents and information
to the Watermaster as Watermaster may reasonably request from the Parties in connection with
this transaction. if Watermaster fails to take all actions necessary for the transfer contemplated
by this Agreement to become effective, then the Parties shall negotiate in good faith to determine
whether any changes to the relevant documents which are reasonably satisfactory to the Parties
in their respective discretions, should be made by them to facilitate such actions by Watermaster.
4. Purchase Price, The total purchase price for the Water Rights (the "Purchase
Price") shall be Dollars
($ ), representing $ per AF of the Purchased APA.
5. Closine. The closing of tlhe purchase and sale of the Water Rights (the "Closine")
shall occur within three (3) business days after the Watermaster approves the Watermaster
Transfer Form. The date of closing is referred to herein as the "Closing Date".
5.1. Seller Closing Deliveries, At or prior to Closing, Seller shall deposit the
following with Escrow Holder, all in form and substance reasonably satisfactory to
Escrow Holder and Buyer (except as otherwise provided below):
5.I.1. An original duly executed and acknowledged grant deed in the
form of Exhibit C attached hereto (the "Water Deed").
5.1.2. Such other documents and instruments as Escrow Holder or Buyer
may reasonably request.
5.2. Buyer Closing Deliveries. At or prior to Closing, Buyer shall deposit the
following with Escrow Holder, all in form and substance reasonably satisfactory to
Escrow Holder and Seller:
5.2. I, The Purchase Price, in good and sufficient finds.
5.2.1. Such other documents and instruments as Escrow Holder or Seller
may reasonably request.
5.3. Costs and Prorations. Escrow Holder shall prepare and deliver one or
more preliminary closing statements to the Parties prior to the Closing, and the Parties
shall not unreasonably withhold their approval thereof. At Closing, Seller and Buyer
shall each pay one-half of the escrow fees of Escrow Holder for this transaction, subject
to Section 5.5 below, and Buyer shall pay all legal fees and related costs incurred by the
Parties in the negotiation and preparation of this Agreement and any and all Exhibits
attached hereto. At the time Buyer records the Water Deed, Buyer shall pay the
recording fee for the Water Deed, Escrow Holder may pro rate any administrative
assessments payable to the Watermaster for the fiscal year of the Watermaster in which
the Closing Date occurs, such pro ration to be based upon and proportional to (a) the
number of days in such fiscal year before the Closing Date, and (b) the number of days in
such fiscal year after the Closing Date. Each of Buyer and Seller shall deposit additional
funds into Escrow in an amount equal to their respective closing costs; provided,
however, that Escrow Holder is hereby authorized to withhold Seller's closing costs from
funds that would otherwise be distributable by Escrow Holder to Seller at Closing. All
other costs incurred by the Parties in connection with this transaction shall be paid in the
manner which is customary in Los Angeles County, California for transactions of the
type contemplated by this Agreement. To the extent that information for any such
proration is not available on the Closing Date, Buyer and Seller shall effect such
prorations outside of Escrow, as soon as possible following the Closing, but in no event
later than one hundred twenty (120) days after the Closing Date.
5.4. Procedure for Closing. Escrow Holder shall close the Escrow by doing
the following, in the following order:
5.4.1 Pay Seller's closing costs from funds deposited by Seller or
otherwise distributable to Seller.
5.4.2 Pay Buyer's closing costs from funds deposited by Buyer.
5.4.3 Deliver the Purchase Price, less Seller's closing costs, to Seller
pursuant to instructions to be separately provided by Seller to Escrow
Holder.
5.4.4 Deliver interest, if any, on the Deposit to Buyer, by a check made
payable to Buyer,
5.4.5 Date the Water Deed as of the Closing Date.
5.4.6. Deliver an original of the Water Deed to Buyer, which Buyer
shall record as soon as practicable in the Official Records of Los
Angeles County, California (the "Official Records"), and a copy of the
executed, dated Water Deed (and any other closing documents) to Seller.
5.4.7 Return any other items to the Party who delivered it into escrow
5.5. Inability to Close. If this Agreement is terminated pursuant to Section
10.1, Seller and Buyer shall each pay one-half of any cancellation fees of Escrow Holder;
provided, however, that if the Escrow fails to close due to a default of a Party, then the
defaulting party shall, in addition to any other damages, pay all cancellation fees.
6. Seller's Conditions for Sale. Seller's obligations to sell the Water Rights pursuant
to this Agreement shall be subject to satisfaction or waiver by Seller, in its discretion, of the
following conditions as of the Closing Date:
6.1 Buyer's Performance. Buyer shall have timely performed all obligations
to be performed by Buyer pursuant to this Agreement, and Buyer's representations and
warranties set forth herein shall be true and correct in all material respects.
6.2 Wateranaster. Seller shall have received evidence reasonably satisfactory
to Seller that the Watermaster has taken all actions necessary for the transfer
contemplated by this Agreement to become effective,
7. Buyer's Conditions for Purchase,. Buyer's obligations to purchase the Water
Rights pursuant to this Agreement shall be subject to satisfaction or waiver by Buyer, in its
discretion, of the following conditions as of the Closing Date:
7.1. Seller's Performance. Seller shall have timely performed all obligations to
be performed by Seller pursuant to this Agreement, and Seller's representations and warranties
set forth herein shall be true and correct in all material respects.
7.2. Watermaster. Buyer shall have received evidence reasonably satisfactory
to Buyer that the Wateranaster has taken all actions necessary for the transfer contemplated by
this Agreement to become effective.
8. Representations and Warranties of Seller. Seller represents and warrants to Buyer
that, as of the Effective Date and the Closing Date:
8.1. Due Organization. Seller is a Municipal corporation, validly existing and
in good standing under the laws of the State of California.
8.2. Power and Authority. Seller has the right, power and authority to enter
into this Agreement, which has been duly authorized by valid action of Seller's governing body,
and to perform its obligations hereunder, and the person(s) executing this Agreement on behalf
of Seller have the right, power and authority to do so.
8.3, Enforceability, This Agreement constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms, Neither this
Agreement nor the consummation of the transactions contemplated hereby violates any provision
of any agreement to which Seller is a party or by which Seller is bound.
8.4. No Conflicts. To Seller's knowledge, Seller is not now in, nor will the
Closing of the transaction contemplated by this Agreement in any material respect constitute a,
violation of any law, ordinance, rule, regulation or administrative or judicial order affecting the
Water Rights, including without limitation the Judgment.
8.5. No Other Consents Needed. To Seller's knowledge, other than the
approval of the Watermaster, no consent from any third party (including any governmental
agency or authority) is required in order to effectuate the transfer of the Water, Rights in
accordance with this Agreement.
8.6. The Water Rights. Seller owns all of the beneficial right, title and interest
in and to the Water Rights and has not entered into any agreement to alienate, encumber,
transfer, option, lease, assign, or otherwise convey all or any portion of its interest in any of the
Water Rights, that would prevent Seller's sale of the Water Rights pursuant to this Agreement.
4. Representations and Warranties of Buyer. Buyer represents and warrants to Seller
that, as of the Effective Date and the Closing Date:
9.1. Due Organization. Buyer is a duly organized, validly
existing and in good standing under the laws of the State of California. Buyer is qualified to do
and doing business in the State of California.
9.2. Power and Authority; Party to the Central Basin Judgment, Buyer has the
right, power and authority to enter into this Agreement and to perform its obligations hereunder,
and the person(s) executing this Agreement on behalf of Buyer have the right, power and
authority to do so. Buyer is a party to the Judgment and either currently holds water rights
thereunder or is not precluded from acquiring such rights.
9.3. Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms. Neither this
Agreement nor the consummation of the transactions contemplated hereby violates any provision
of any agreement to which Buyer is a party or by which Buyer is bound.
9.4. No Conflicts. To Buyer's knowledge, Buyer is not now in, nor will the
Closing of the transaction contemplated by this Agreement in any material respect constitute a,
violation of any law, ordinance, rule, regulation or administrative or judicial order affecting the
Water Rights.
10. Termination; Waiver; Release.
10.1. Termination. This Agreement may be terminated at any time prior to the
Closing:
103.1. By written agreement of the Parties.
10.1.2. By Buyer, if there is a default or breach of any covenant or
an inaccuracy in any representation or warranty made by Seller in this
Agreement which default, breach or inaccuracy has not been cured to
Buyer's reasonable satisfaction within ten (10) calendar clays following
receipt by Seller of written notice of such default, breach or inaccuracy.
10.1.3. By Seller, if there is a default or breach of any covenant or
an inaccuracy in any representation or warranty made by Buyer in this
Agreement which default, breach or inaccuracy has not been cored to
Seller's reasonable satisfaction within ten (10) calendar days following
receipt by Buyer of written notice of such default, breach or inaccuracy.
10.1.4. By Seller or Buyer, if the Watermaster refuses or declines
to approve the Watermaster Transfer Form, within five (5) calendar clays
after the Watermaster provides written notice to the Parties of such a
final decision by the Watermaster.
W.1.5. By Buyer or Seller prior to the Closing, if the Closing shall
not have occurred for any reason, other than because of the default of the
Party seeking to terminate, on or before ninety (90) calendar days from
the Effective Date hereof, or such later date as may be agreed to in
writing by the Parties.
10.2. Effect of Termination. If this Agreement is terminated pursuant to Section
10.1 hereof, the Parties shall have no further obligations hereunder, provided that nothing
contained in this Section 10 shall relieve any party from liability for a breach or default under
this Agreement occurring prior to such termination.
10.3. Limitation on Seller's Liability. In the event the Closing fails to occur due
to a default by Seller hereunder (and provided that all conditions to Seller's obligations have
been satisfied), Buyer shall be entitled, as its sole and exclusive remedy, to terminate this
Agreement in accordance with Section 10. 1.2 above and obtain a return of the Deposit and
Purchase Price Funds, plus any interest accrued thereon. Buyer hereby expressly waives any
right to any actual, incidental, consequential or punitive damages or any equitable remedies
which it may otherwise have for Seller's default. This provision shall survive the termination of
this Agreement or the Closing.
10.4. LIQUIDATED DAMAGES. W TFIE CLOSING FAILS TO OCCUR BY
REASON OF A BUYER DEFAULT OF THIS AGREEMENT, SELLER WILL BE
DAMAGED AND WILL BE ENTITLED TO COMPENSATION FOR THESE DAMAGES,
BUT SUCH DAMAGES WILL BE EXTREMELY DIFFICULT AND IMPRACTICABLE TO
ASCERTAIN FOR NUMEROUS REASONS, INCLUDING, WITHOUT LIMITATION, THE
FOLLOWING; (A) THE DAMAGES TO WHICH SELLER WOULD BE ENTITLED WILL
BE BASED ON THE DIFFERENCE BETWEEN THE ACTUAL VALUE OF THE WATER
RIGHTS AT THE TIME SET FOR THE CLOSING AND THE PURCHASE PRICE FOR THE
WATER RIGHTS AS SET FORTH IN THIS AGREEMENT, (B) PROOF OF THE AMOUNT
OF THESE DAMAGES WILL BE BASED ON OPINIONS OF THE VALUE OF THE
WATER RIGHTS, WHICH CAN VARY IN SIGNIFICANT AMOUNTS, AND (C) IT IS
IMPOSSIBLE TO PREDICT AS OF THE DATE ON WHICH THIS AGREEMENT IS
ENTERED INTO WHETHER THE VALUE OF THE WATER RIGHTS WILL INCREASE
OR DECREASE AS OF THE DATE SET FOR THE CLOSING DATE, AND BUYER
DESIRES TO LIMIT THE AMOUNT OF DAMAGES FOR WHICH BUYER MIGHT BE
LIABLE SHOULD BUYER BREACH THIS AGREEMENT. BOTH BUYER AND SELLER
WISH TO AVOID THE COSTS AND LENGTHY DELAYS WHICH WOULD RESULT IF
SELLER FILED A LAWSUIT OR COMMENCED AN ARBITRATION PROCEEDING TO
SEEK TO ASCERTAIN ITS DAMAGES FOR A BREACH OF THIS AGREEMENT,
THEREFORE, BUYER AND SELLER HEREBY AGREE THAT IN THE EVENT THE
CLOSING SHALL FAIL TO OCCUR BY REASON OF A DEFAULT OR BREACH OF THIS
AGREEMENT BY BUYER, SELLER SHALL BE ENTITLED TO RETAIN, AS ITS SOLE
AND EXCLUSIVE REMEDY, THE DEPOSIT AS A REASONABLE ESTIMATE OF
SELLER'S DAMAGES. IT IS AGREED THAT IN ORDER TO IMPLEMENT THE
PROVISIONS OF THIS SECTION, SELLER MAY UNILATERALLY INSTRUCT ESCROW
HOLDER TO CANCEL THE ESCROW AND DELIVER THE DEPOSIT TO SELLER.
NOTHING CONTAINED IN THIS SECTION SHALL BE DEEMED OR CONSTRUED TO
LIMIT BUYER'S OBLIGATIONS UNDER SECTION 11,16 BELOW, WHICH SHALL BE IN
ADDITION TO THE LIQUIDATED DAMAGES PROVIDED HEREIN. THIS PROVISION
SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE CLOSING.
BUYER'S INITIALS
Miscellaneous
SELLER'S INITIALS
11.1. Further Assurances. At any time and from time to time after the Effective
Date, each Party agrees to take such actions, to execute and deliver such instruments and to
provide such documents and information as the other Party may reasonably request to effectuate
the purposes of this Agreement.
11.2. Successors. This Agreement shall be binding upon and inure to the
benefit assigns and successors -in -interest of the Parties.
11.3. Amendment. Except as otherwise provided in this Agreement, neither this
Agreement nor any provision hereof may be waived, modified, amended, discharged, or
terminated except by an instrument in writing signed by the Party against which the enforcement
of such waiver, modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such writing.
11.4. Entire Agreement. This Agreement and the agreements referenced herein
constitute the entire understanding between the Parties with respect to the matters set forth
herein, and supersede all prior or contemporaneous understandings or agreements between the
Parties with respect to such matters, whether oral or written.
11.5. Notices. Any notice, approval, consent, waiver or other communication
required or permitted to be delivered upon a Party under this Agreement shall be in writing and
shall be personally delivered or sent by reputable overnight delivery service, such as FedEx, and
shall be deemed given: (a) if personally delivered, when actually delivered; or (b) if sent by
reputable overnight delivery service, such as FedEx, when actually delivered, provided
confirmation of delivery shall be retained by the sender. Such notices shall be addressed to the
Party to whom such notice is to be given at the Party's address set forth below or as such Party
shall otherwise direct in a writing to the other Party delivered or sent in accordance with this
Section. Any notices so given shall be deemed given as of the date established by the overnight
delivery service.
If to Seller, to: City of Vernon
City Clerk
4305 Santa Fe Avemie
Vernon CA 90058
Copy to: William F. Kruse, Esq.
Lagerlof, Senecal, Gosney & Kruse, LLP
3010 North Lake Avenue
Tenth Floor
Pasadena, CA 91 l01
If to Buyer, to:
If to Escrow Holder, to:
11.6. Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of California, without giving effect to principles of
conflicts of laws. The venue for the resolution of any disputes arising out of, or related to, this
Agreement shall be Los Angeles County, California.
11.7. Waiver. No failure by either Party to exercise, and no delay in exercising
any rights, shall be construed or deemed to be a waiver thereof, nor shall any single or partial
exercise by any Party preclude any other or future exercise thereof or the exercise of any other
right. Any waiver by a Party of any breach of any provision of this Agreement shall not operate
as or be construed to be a waiver of any other breach of that provision or of any breach of any
other provision of this Agreement. .
11.8. Liberal Construction. This Agreement constitutes a fidly-negotiated
agreement among commercially sophisticated Parties, each assisted by legal counsel, and the
terms of this Agreement shall not be construed or interpreted for or against any Party hereto
because that Party or its legal representative dratted or prepared such terms.
11,9. Severability. If any provision of this Agreement is invalid, illegal or
unenforceable, such provision shall be deemed to be severed or deleted from this Agreement and
the balance of this Agreement shall remain in full force and effect.
IL 10. Good Faith and Fair Dealine. The performances required by the
provisions of this Agreement shall be undertaken in good faith, and with each of the Parties
dealing fairly with the other.
11.11_ No Third -Party Beneficiaries. This Agreement does not create, and shall
not be construed to create, any rights enforceable by any person, partnership, corporation, joint
venture, limited liability company or other form of organization or association of any kind that is
not a Party to this Agreement.
l 1.12. No Brokers. Each Party represents and warrants to the other that it has not
dealt with any broker, agent or tinder in connection with this transaction. Buyer agrees to
indemnify and hold Seller harmless from and against any and all Claims arising out of any claim
to a commission or fee by any other party claiming by or through Buyer. Seller agrees to
indemnify and hold Buyer harmless from and against any and all Claims arising out of any claim
to a commission or fee by any other party claiming by or through Seller. This provision shall
survive the termination of this Agreement and the Closing.
1 I,13. Counterparts. This Agreement may be executed in counterparts (by
original, facsimile or electronic PDF signatures) which, when taken together, shall constitute a
single agreement. The signature page of any counterpart may be detached therefrom without
impairing the legal effect of the signature(s) thereon.
11.14. Back-UpOffers. After the execution of this Agreement and until the
expiration of the Diligence Period, Seller shall have the right, without liability to Buyer, to solicit
or initiate, directly or indirectly, and to encourage the submission of inquiries, proposals, or
offers from any potential buyer for the Water Rights. Buyer further agrees that during the
foregoing period of time, Seller may, without liability to Buyer, enter into and agree to back-up
offers from potential buyers for the Water Rights, provided that any such back-up offer, if
accepted by Seller, shall be subject to Buyer's rights under this Agreement.
11.I S. Time of the Essence. Time is of the essence of each and every provision
of this Agreement. Whenever action must be taken under this Agreement (luring a certain period
of time that ends on a non -business day, then such period shall be extended until the immediately
following business day. As used herein, "business day" means any day other than a Saturday,
Sunday or federal or California State holiday.
I t.16. Attorneys' Fees. In any action or proceeding for the purpose of enforcing
any provision of this Agreement, or to recover damages hereunder, or to obtain injunctive or
other relief, or for a declaration of rights or obligations hereunder, or for any other judicial or
equitable remedy, the prevailing Party shall be entitled, in addition to such other relief as may be
granted, to an award, in the same or a subsequent proceeding, of its reasonable attorneys' fees
and costs.
11.17. Not an Offer. In no event shall any draft of this Agreement create any
obligations or liabilities, it being intended that only a fully executed and delivered copy of this
Agreement will bind the Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written.
SELLER: CITY OF VERNON, a Municipal corporation
BUYER:
By:
Name:
Its:
By:
Name:
Its:
By:
Name:
Its:
EXI3IBITS
A Watermaster Transfer Form
B Water Deed
ACKNOWLEDGEMENT OF ESCROW HOLDER
Escrow Holder acknowledges its receipt of an executed version of this Agreement and agrees to
act as escrow holder with respect to its obligations expressly set forth herein.
By:
Name:
tts:
EXHIBIT A
WATERMASTER TRANSFER FORM
For a valuable consideration, City of Vernon, a Municipal corporation, hereby sells and
transfers to
The Rights to extract acre feet of grantor's Allowed Pumping Allocation
( acre feet of Total Water Right) allocated to grantor (or predecessors in interest) under
and pursuant to Judgment dated October 11, 1965, and entered in Los Angeles Superior Court
Case No. 786,655 entitled,"Central and West Basin Water Replenishment District vs. Charles E.
Adams, et al."
DATED:. 2012,
Buyer
By_
Name
Title
By_
Name
Title
CITY OF VERNON,
a Municipal corporation
Grantor/Seller
By
Name
Title
By
Name
Title
EXHIBIT B
WATER DEED
WATER RIGHTS GRANT DEED
Space above this line for Recorder
The undersigned grantor(s) declare(s) ,
DOCUMENTARY TRANSFER TAX $ 0.00 (Zero)
( ) computed on full value of property conveyed, or
( ) computed on full value less liens and encumbrances remaining at time of sale.
( ) Unincorporated Area
As of 1 2012, City of Vernon, a Municipal corporation limited partnership, as Grantor
herein, for valuable consideration, .the receipt of which is hereby acknowledged, does hereby grants
to , as Grantee herein, all that certain real property in the County of
Los Angeles, State of California, described as:
acre feet of Total Water Right and acre feet of Allowed Pumping
Allocation (the "Purchased APA") together with all of Grantor's other rights, privileges
and entitlements relating to the Purchased APA, or appurtenant thereto, if any, including
without limitation Grantor's right, title and interest, if any, in and to the Allowed
Pumping Allocation for any period after the closing date, any carryover rights and any
storage rights associated with the Purchased APA (collectively, the "Water Rights")
allocated to Grantor in, under and pursuant to that certain Second Amended Judgment
dated May 6, 1991 (the "Judgment") in the case entitled Central and West Basin Water
Replenishment District, et al., vs. Adams, et al., Case No. 786 656 in the Superior Court
of the State of California for the County of Los Angeles.
According to records maintained by the Department of Water Resources of the State of California, in its
capacity as Waternraster under the Judgment (in such capacity, the "Watermaster"), Grantor is currently
the owner of acre feet of Total Water Right and acre feet of Allowed Pumping Allocation.
Pursuant to this instrument, Grantor is selling to Grantee, on a perpetual and permanent basis,
acre feet of Total Water Right and acre feet of Allowed Pumping Allocation, and Grantor is
retaining acre feet of Total Water Right and acre feet of Allowed Pumping
Allocation.
(Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the date first
written above.
GRANTOR: City of Vernon,
a Municipal corporation
By:
Name:
Its:
By:
Name:
Its:
[INSERT APPLICABLE ACKNOWLEDGEMENT]
COPY OF FULLY
EXECUTED
AGREEMENT & WATER
RIGHTS GRANT DEED
*ONLY RECEIVED PDF COPIES OF THE
DOCUMENTS FOR THE FILE
Lags �cal
Gosn6&Kruse
LLP
December 7, 2012
Ms. Valerie Rapp
Fidelity National Title Insurance Co.
1300 Dove Street, Suite 310
Newport Beach, CA 92660
Re: New Escrow: Water Rights; City of Vernon to City of Norwalk
Dear Ms. Rapp:
301 North Lake Avenue
loth Floor
Pasadena, CA 91101-4108
Phone: 626.793.9400
Fax: 626.793.5900
www.lagerlof.com
Established 1908
Confirming our telephone conversation, we represent the City of Vernon in connection with
the sale of certain water rights to the City of Norwalk. Enclosed are two originals of the Purchase
and Sale Agreement and Escrow Instructions which have now been fully executed by both cities.
Please open an escrow and advise us when convenient concerning the proper method by
which Norwalk may make its initial deposit. Note that under Section 5.3 of the Agreement, Seller
and Buyer are each responsible for one-half of the escrow fees, and Buyer is responsible for the
payment of all legal fees and related costs incurred by the City of Vernon in connection with the
negotiation and preparation of the Agreement. Buyer is also responsible for the recording fee for the
Water Deed. In the near future, we will provide you with a copy of our billings to assist you in these
calculations.
Also note that the City of Vernon has signed the Water Rights Grant Deed attached to each
original Agreement as Exhibit "A." This has been done in lieu of signing the original Water Rights
Grant Deed. Please advise whether you can use one of the two exhibits as the original Deed (of
course only one original should be recorded). If you will require a new Water Rights Grant Deed,
please let me know.
Finally, once escrow is opened, we will be contacting the Department of Water Resources,
which serves as the court -appointed Watermaster for the Central Basin. If Watermaster raises any
issues, we will let you know.
Ms. Valerie Rapp
Fidelity National Title Insurance Co.
December 7, 2012
Page 2
Each original of the Purchase and Sale Agreement requires escrow's signature on page 12.
Please also forward any supplemental escrow instructions that will be required.
Please contact me if you have questions.
Very truly yours,
Y
William F. Kruse
of
Lagerlof, Senecal, Gosney & Kruse, LLP
WFK/pjc
GACF OF VRRNONU P120712. a
Enclosures
cc: Alex Kung, w/o enc.
Thomas Lynch, w/o enc.
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Gosney�Kruse
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November 27, 2012
City of Norwalk
Norwalk Municipal Water System
Attn: Thomas E. Lynch
Assistant City Manager
12700 Norwalk Blvd.
Norwalk, CA 90650
Re: Water Rights Purchase and Sale Agreement
Dear Mr. Lynch:
301 North Lake Avenue
loth Floor
Pasadena, CA 91101-4108
Phone: 626.793.9400
Fax: 626.793.5900
www.lagertof.com
Established 1908
We are Special Counsel to the City of Vernon in connection with the sale of certain of its
water rights. We have been advised that the City of Norwalk is the successful bidder for 500 acre-
feet of Central Basin Allowed Pumping Allocation (representing 625 acre-feet of Total Water
Rights).
The Vernon City Council has approved the issuance of the enclosed Purchase and Sale
Agreement and Escrow Instructions to complete the sale. Two originals are enclosed. Please review
the Agreement and contact me if you have questions.
City representatives should initial on page 8 and execute the Agreements on page 11. Please
return both executed originals to me and I will circulate them for further signatures. You will be
contacted by Escrow when the account is to be opened.
Very truly yours,
William F. Kruse
of
Lagerlof, Seneca], Gosney & Kruse, LLP
WFK/pjc
G:CITY OF VBRNONVynch 112712.doc
Enclosures
cc: Alex Kung, Assistant City Administrator, w/enc.
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
This Purchase and Sale Agreement (this "Agreement") is made as of the date executed by
Seller (the "Effective Date"), by and between CITY OF VERNON, a Municipal corporation,
("Seller'), and CITY OF NORWALK, a Municipal corporation, (`Buyer"). Buyer and Seller are
sometimes hereinafter individually referred to as a "Party" and collectively as the "Parties".
RECITALS
A. Reference is hereby made to that certain Judgment entered October 11, 1965, as
amended by that certain Second Amended Judgment dated May 6, 1991, as such judgment may
have been further amended prior to the Effective Date (as so amended, the "Judgment") in the
case entitled Central and West Basin Water Replenishment District et al vs Adams et al., Case
No. 786,656 in the Superior Court of the State of California for the County of Los Angeles (the
"Court"). All initially capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Judgment.
B. According to records maintained by the Department of Water Resources of the
State of California, in its capacity as watermaster under the Judgment (in such capacity, the
"Watermaster"), Seller is currently the owner of 10,048.75 acre feet of Total Water Rights and
8,039 acre feet of Allowed Pumping Allocation (the "Seller's APA"). On the terms and
conditions set forth herein, Seller desires to sell to Buyer, and Buyer desires to buy from Seller,
on a perpetual and permanent basis, 625 acre feet of Total Water Rights and 500 acre feet of
Allowed Pumping Allocation (the "Purchased APA!').
C. The Purchased APA, together with Seller's other rights, privileges and
entitlements relating to the Purchased APA, or appurtenant thereto, if any, including without
limitation Seller's right, title and interest, if any, in and to the Allowed Pumping Allocation
arising from the Purchased APA for any period after the Closing Date (as defined below in
Section 5) and any carryover rights and any storage rights associated with the Purchased APA
are sometimes collectively referred to as the "Water Rights."
D. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the
Water Rights on the terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Seller and Buyer agree as follows:
1. Agreement to Transfer Title to Buyer. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, the Water Rights, on the terms and conditions set forth herein.
-1-
2. Escrow
2.1. Establishment of Escrow. Within two (2) business days following the
Effective Date, the Parties shall open an escrow (the "Escrow") at Fidelity National Title
Insurance Company, or such other escrow holder to which the parties shall mutually
agree (the "Escrow Holder") for this transaction. This Agreement shall constitute escrow
instructions to Escrow Holder concerning this transaction.
2.2. Deposit. Within three (3) business days after the Effective Date, Buyer
shall deposit a sum equal to ten percent (10%) of the Purchase Price, being the sum of Six
Hundred Thousand Dollars ($600,000.00), (the "Deft") with Escrow Holder, by wire
transfer of immediately available funds denominated in U.S. dollars. If Buyer does not
deliver the Deposit in the time and manner provided herein, then Seller may elect, in its
sole and absolute discretion, to deliver a written notice to Buyer and Escrow Holder
terminating any further obligations of the Parties under this Agreement. The Deposit
shall be non-refundable, except as expressly provided in Sections 2.3. 10.1.2, 10.1.4, and
10.1.5 below.
2.3. Due Diligence Review. Buyer shall have seven (7) calendar days after the
Effective Date to review such documents and make such inquiries as Buyer deems
necessary or prudent to confirm that the Water Rights are satisfactory for its purposes
(the "Diligence Period'). In the event Buyer determines that the Water Rights are not
satisfactory for its purposes, Buyer shall have the right to terminate this Agreement by
delivering written notice thereof to Seller (the "Termination Notice") prior to the
expiration of the Diligence Period. Buyer's failure to deliver the Termination Notice to
Seller prior to the expiration of the Diligence Period shall be deemed Buyer's waiver of
any objection to matters affecting the Water Rights.
2.4. Diligence Satisfaction. Within two (2) business days after the expiration
of the Diligence Period, Buyer shall deposit an amount equal to the Purchase Price (as
defined below in Section 4) less the Deposit with Escrow Holder (the "Purchase Price
Funds'). Buyer may elect to request that the Purchase Price Funds be invested by
Escrow Holder in a money market account, or similar investment, and the interest therein
shall be for the sole benefit of Buyer.
2.5. Title Matters. Seller shall not cause any lien, encumbrance or other
exception to title to the Water Rights to be recorded or to attach to the Water Rights
between the Effective Date and the recording of the Water Deed or earlier termination of
this Agreement pursuant to the terms hereof without the prior written consent of Buyer.
Unless and until this Agreement is terminated pursuant to the terms hereof, Seller shall
not assign, convey or otherwise transfer any record or beneficial interest in the Water
Rights to any person other than to Buyer at Closing (as defined below in Section 5)
pursuant to the terms of this Agreement.
-2-
3. Watermaster
3.1. The Water Rights. Concurrently herewith, Seller and Buyer shall execute
a Water Rights Grand Deed naming Seller as grantor and Buyer as grantee in the form
attached hereto as Exhibit A (the "Water Deed"). Seller and Buyer shall deliver the
original of the Water Deed to Escrow Holder concurrently herewith. Promptly following
receipt of the Purchase Price Funds, Escrow Holder shall record the Water Deed in the
County of Los Angeles and provide a copy thereof to Watermaster.
3.2. Cooperation. The Parties shall provide such documents and information
to the Watermaster as Watermaster may reasonably request from the Parties in
connection with this transaction. If Watermaster fails to take all actions necessary for the
transfer contemplated by this Agreement to become effective, then the Parties shall
negotiate in good faith to determine whether any changes to the relevant documents
which are reasonably satisfactory to the Parties in their respective discretions, should be
made by them to facilitate such actions by Watermaster.
4. Purchase Price. The total purchase price for the Water Rights (the "Purchase
Price") shall be Six Million Dollars ($6,000,000.00), representing $12,000.00 per AF of the
Purchased APA.
5. Closing. The closing of the purchase and sale of the Water Rights (the "Closing")
shall occur within three (3) business days after the Watermaster approves the Watermaster
Transfer Form. The date of closing is referred to herein as the "Closing Date".
5.1. Seller Closing Deliveries. At or prior to Closing, Seller shall deposit the
following with Escrow Holder, all in form and substance reasonably satisfactory to
Escrow Holder and Buyer (except as otherwise provided below):
5.1.1. An original duly executed Water Deed in the form of
Exhibit A attached hereto (the "Water Deed").
5.1.2. Such other documents and instruments as Escrow Holder or
Buyer may reasonably request.
5.2. Buyer Closing Deliveries. At or prior to Closing, Buyer shall deposit the
following with Escrow Holder, all in form and substance reasonably satisfactory to
Escrow Holder and Seller:
5.2.1. The Purchase Price, in good and sufficient funds.
5.2.1. Such other documents and instruments as Escrow Holder or
Seller may reasonably request.
5.3. Costs and Prorations. Escrow Holder shall prepare and deliver one or
more preliminary closing statements to the Parties prior to the Closing, and the Parties
shall not unreasonably withhold their approval thereof. At Closing, Seller and Buyer
shall each pay one-half of the escrow fees of Escrow Holder for this transaction, subject
-3-
to Section 5.5 below, and Buyer shall pay all legal fees and related costs incurred by the
Parties in the negotiation and preparation of this Agreement and any and all Exhibits
attached hereto. Buyer shall pay the recording fee for the Water Deed. Escrow Holder
may pro rate any administrative assessments payable to the Watermaster for the fiscal
year of the Watermaster in which the Closing Date occurs, such pro ration to be based
upon and proportional to (a) the number of days in such fiscal year before the Closing
Date, and (b) the number of days in such fiscal year after the Closing Date. Each of
Buyer and Seller shall deposit additional funds into Escrow in an amount equal to their
respective closing costs; provided, however, that Escrow Holder is hereby authorized to
withhold Seller's closing costs from funds that would otherwise be distributable by
Escrow Holder to Seller at Closing. All other costs incurred by the Parties in connection
with this transaction shall be paid in the manner which is customary in Los Angeles
County, California for transactions of the type contemplated by this Agreement. To the
extent that information for any such proration is not available on the Closing Date, Buyer
and Seller shall effect such prorations outside of Escrow, as soon as possible following
the Closing, but in no event later than one hundred twenty (120) days after the Closing
Date.
5.4. Procedure for Closing. Escrow Holder shall close the Escrow by doing
the following, in the following order:
5.4.1 Pay Seller's closing costs from funds deposited by Seller
or otherwise distributable to Seller.
5.4.2 Pay Buyer's closing costs from funds deposited by Buyer.
5.4.3 Deliver the Purchase Price, less Seller's closing costs, to
Seller pursuant to instructions to be separately provided by Seller to
Escrow Holder.
5.4.4 Deliver interest, if any, on the Deposit to Buyer, by a
check made payable to Buyer.
5.4.5 Date the Water Deed as of the Closing Date.
5.4.6 Deliver the original Water Deed to the Los Angeles
County Recorder for recordation in the Official Records of Los Angeles
County, California (the "Official Records"), and copies of the executed,
dated Water Deed (and any other closing documents) to Seller, Buyer, and
Watermaster.
5.4.7 Return any other items to the Party who delivered it into .
escrow.
5.5. Inability to Close. If this Agreement is terminated pursuant to Section
10.1 Seller and Buyer shall each pay one-half of any cancellation fees of Escrow Holder;
provided, however, that if the Escrow fails to close due to a default of a Party, then the
defaulting party shall, in addition to any other damages, pay all cancellation fees.
IS
6. Seller's Conditions for Sale. Seller's obligations to sell the Water Rights pursuant
to this Agreement shall be subject to satisfaction or waiver by Seller, in its discretion, of the
following conditions as of the Closing Date:
6.1 Buyer's Performance. Buyer shall have timely performed all obligations
to be performed by Buyer pursuant to this Agreement, and Buyer's representations and
warranties set forth herein shall be true and correct in all material respects.
6.2 Watermaster. Seller shall have received evidence reasonably satisfactory
to Seller that the Watermaster has taken or will take all actions necessary for the transfer
contemplated by this Agreement to become effective.
7. Buyer's Conditions for Purchase. Buyer's obligations to purchase the Water
Rights pursuant to this Agreement shall be subject to satisfaction or waiver by Buyer, in its
discretion, of the following conditions as of the Closing Date:
7.1. Seller's Performance. Seller shall have timely performed all obligations to
be performed by Seller pursuant to this Agreement, and Seller's representations and
warranties set forth herein shall be true and correct in all material respects.
7.2. Watermaster. Buyer shall have received evidence reasonably satisfactory
to Buyer that the Watermaster has taken or will take all actions necessary for the transfer
contemplated by this Agreement to become effective.
8. Representations and Warranties of Seller. Seller represents and warrants to Buyer
that, as of the Effective Date and the Closing Date:
8.1. Due Organization. Seller is a Municipal corporation, validly existing and
in good standing under the laws of the State of California.
8.2. Power and Authority. Seller has the right, power and authority to enter
into this Agreement, which has been duly authorized by valid action of Seller's governing
body, and to perform its obligations hereunder, and the person(s) executing this
Agreement on behalf of Seller have the right, power and authority to do so.
8.3. Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms. Neither this
Agreement nor the consummation of the transactions contemplated hereby violates any
provision of any agreement to which Seller is a party or by which Seller is bound.
8.4. No Conflicts. To Seller's knowledge, Seller is not now in, nor will the
Closing of the transaction contemplated by this Agreement in any material respect
constitute a, violation of any law, ordinance, rule, regulation or administrative or judicial
order affecting the Water Rights, including without limitation the Judgment.
8.5. No Other Consents Needed. To Seller's knowledge, other than the
approval of the Watermaster, no consent from any third party (including any
-5-
governmental agency or authority) is required in order to effectuate the transfer of the
Water Rights in accordance with this Agreement.
8.6. The Water Rights. Seller owns all of the beneficial right, title and interest
in and to the Water Rights and has not entered into any agreement to alienate, encumber,
transfer, option, lease, assign, or otherwise convey all or any portion of its interest in any
of the Water Rights, that would prevent Seller's sale of the Water Rights pursuant to this
Agreement.
9. Representations and Warranties of Buyer. Buyer represents and warrants to Seller
that, as of the Effective Date and the Closing Date:
9.1. Due Organization. Buyer is a Municipal corporation, duly organized,
validly existing and in good standing under the laws of the State of California. Buyer is
qualified to do and doing business in the State of California.
9.2. Power and Authority: Party to the Central Basin Judgment. Buyer has the
right, power and authority to enter into this Agreement and to perform its obligations
hereunder, and the person(s) executing this Agreement on behalf of Buyer have the right,
power and authority to do so. Buyer is a party to the Judgment and either currently holds
water rights thereunder or is not precluded from acquiring such rights.
9.3. Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms. Neither this
Agreement nor the consummation of the transactions contemplated hereby violates any
provision of any agreement to which Buyer is a party or by which Buyer is bound.
9.4. No Conflicts. To Buyer's knowledge, Buyer is not now in, nor will the
Closing of the transaction contemplated by this Agreement in any material respect
constitute a, violation of any law, ordinance, rule, regulation or administrative or judicial
order affecting the Water Rights.
10. Termination: Waiver: Release.
10.1. Termination. This Agreement may be terminated at any time prior to the
Closing:
10.1.1. By written agreement of the Parties.
10.1.2. By Buyer, if there is a default or breach of any covenant
or an inaccuracy in any representation or warranty made by Seller in this
Agreement which default, breach or inaccuracy has not been cured to
Buyer's reasonable satisfaction within ten (10) calendar days following
receipt by Seller of written notice of such default, breach or inaccuracy.
10.1.3. By Seller, if there is a default or breach of any covenant
or an inaccuracy in any representation or warranty made by Buyer in this
Agreement which default, breach or inaccuracy has not been cured to
0
Seller's reasonable satisfaction within ten (10) calendar days following
receipt by Buyer of written notice of such default, breach or inaccuracy.
10.1.4. By Seller or Buyer, if the Watermaster refuses or
declines to approve the Watermaster Transfer Form, within five (5)
calendar days after the Watermaster provides written notice to the Parties
of such a final decision by the Watermaster.
10.1.5. By Buyer or Seller prior to the Closing, if the Closing
shall not have occurred for any reason, other than because of the default of
the Party seeking to terminate, on or before ninety (90) calendar days from
the Effective Date hereof, or such later date as may be agreed to in writing
by the Parties.
10.2. Effect of Termination. If this Agreement is terminated pursuant to Section
10.1 hereof, the Parties shall have no further obligations hereunder, provided that nothing
contained in this Section 10 shall relieve any party from liability for a breach or default
under this Agreement occurring prior to such termination.
10.3. Limitation on Seller's Liability. In the event the Closing fails to occur due
to a default by Seller hereunder (and provided that all conditions to Seller's obligations
have been satisfied), Buyer shall be entitled, as its sole and exclusive remedy, to
terminate this Agreement in accordance with Section 10.1.2 above and obtain a return of
the Deposit and Purchase Price Funds, plus any interest accrued thereon. Buyer hereby
expressly waives any right to any actual, incidental, consequential or punitive damages or
any equitable remedies which it may otherwise have for Seller's default. This provision
shall survive the termination of this Agreement or the Closing.
10.4. LIQUIDATED DAMAGES. IF THE CLOSING FAILS TO OCCUR BY
REASON OF A BUYER DEFAULT OF THIS AGREEMENT, SELLER WILL BE
DAMAGED AND WILL BE ENTITLED TO COMPENSATION FOR THESE
DAMAGES, BUT SUCH DAMAGES WELL BE EXTREMELY DIFFICULT AND
IMPRACTICABLE TO ASCERTAIN FOR NUMEROUS REASONS, INCLUDING,
WITHOUT LIMITATION, THE FOLLOWING: (A) THE DAMAGES TO WHICH
SELLER WOULD BE ENTITLED WILL BE BASED ON THE DIFFERENCE
BETWEEN THE ACTUAL VALUE OF THE WATER RIGHTS AT THE TIME SET
FOR THE CLOSING AND THE PURCHASE PRICE FOR THE WATER RIGHTS AS
SET FORTH IN THIS AGREEMENT, (B) PROOF OF THE AMOUNT OF THESE
DAMAGES WILL BE BASED ON OPINIONS OF THE VALUE OF THE WATER
RIGHTS, WHICH CAN VARY IN SIGNIFICANT AMOUNTS, AND (C) IT IS
IMPOSSIBLE TO PREDICT AS OF THE DATE ON WHICH THIS AGREEMENT IS
ENTERED INTO WHETHER THE VALUE OF THE WATER RIGHTS WILL
INCREASE OR DECREASE AS OF THE DATE SET FOR THE CLOSING DATE,
AND BUYER DESIRES TO LIMIT THE AMOUNT OF DAMAGES FOR WHICH
BUYER MIGHT BE LIABLE SHOULD BUYER BREACH THIS AGREEMENT.
BOTH BUYER AND SELLER WISH TO AVOID THE COSTS AND LENGTHY
DELAYS WHICH WOULD RESULT IF SELLER FILED A LAWSUIT OR
-7-
COMMENCED AN ARBITRATION PROCEEDING TO SEEK TO ASCERTAIN ITS
DAMAGES FOR A BREACH OF THIS AGREEMENT. THEREFORE, BUYER AND
SELLER HEREBY AGREE THAT IN THE EVENT THE CLOSING SHALL FAIL TO
OCCUR BY REASON OF A DEFAULT OR BREACH OF THIS AGREEMENT BY
BUYER, SELLER SHALL BE ENTITLED TO RETAIN, AS ITS SOLE AND
EXCLUSIVE REMEDY, THE DEPOSIT AS A REASONABLE ESTIMATE OF
SELLER'S DAMAGES. IT IS AGREED THAT IN ORDER TO IMPLEMENT THE
PROVISIONS OF THIS SECTION, SELLER MAY UNILATERALLY INSTRUCT
ESCROW HOLDER TO CANCEL THE ESCROW AND DELIVER THE DEPOSIT TO
SELLER. NOTHING CONTAINED IN THIS SECTION SHALL BE DEEMED OR
CONSTRUED TO LIMIT BUYER'S OBLIGATIONS UNDER SECTION 11.16
BELOW, WHICH SHALL BE IN ADDITION TO THE LIQUIDATED DAMAGES
PROVIDED HEREIN. THIS PROVISION SHALL SURVIVE THE TERMINATION
OF THIS AGREEMENT AND THE CLOSING.
BUYER'S INITIALS
11. Miscellaneous.
SELLER'S INITIALS
11.1. Further Assurances. At any time and from time to time after the Effective
Date, each Party agrees to take such actions, to execute and deliver such instruments and
to provide such documents and information as the other Party may reasonably request to
effectuate the purposes of this Agreement.
11.2. Successors. This Agreement shall be binding upon and inure to the
benefit assigns and successors -in -interest of the Parties.
11.3. Amendment. Except as otherwise provided in this Agreement, neither this
Agreement nor any provision hereof may be waived, modified, amended, discharged, or
terminated except by an instrument in writing signed by the Party against which the
enforcement of such waiver, modification, amendment, discharge or termination is
sought, and then only to the extent set forth in such writing.
11.4. Entire Agreement. This Agreement and the agreements referenced herein
constitute the entire understanding between the Parties with respect to the matters set
forth herein, and supersede all prior or contemporaneous understandings or agreements
between the Parties with respect to such matters, whether oral or written.
11.5. Notices. Any notice, approval, consent, waiver or other communication
required or permitted to be delivered upon a Party under this Agreement shall be in
writing and shall be personally delivered or sent by reputable overnight delivery service,
such as FedEx, and shall be deemed given: (a) if personally delivered, when actually
delivered; or (b) if sent by reputable overnight delivery service, such as FedEx, when
actually delivered, provided confirmation of delivery shall be retained by the sender.
Such notices shall be addressed to the Party to whom such notice is to be given at the
In
Party's address set forth below or as such Party shall otherwise direct in a writing to the
other Party delivered or sent in accordance with this Section. Any notices so given shall
be deemed given as of the date established by the overnight delivery service.
If to Seller, to: City of Vernon
City Clerk
4305 Santa Fe Avenue
Vernon CA 90058
Copy to: William F. Kruse, Esq.
Lagerlof, Senecal, Gosney & Kruse, LLP
301 North Lake Avenue
Tenth Floor
Pasadena, CA 91101
If to Buyer, to: City of Norwalk
Norwalk Municipal Water System
12700 Norwalk Blvd.
Norwalk, CA 90650
If to Escrow Holder, to: Valerie Rapp
Fidelity National Title Insurance Company
1300 Dove Street, Suite 310
Newport Beach, CA 92660
11.6. Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of California, without giving effect to principles of
conflicts of laws. The venue for the resolution of any disputes arising out of, or related
to, this Agreement shall be Los Angeles County, California.
11.7. Waiver. No failure by either Party to exercise, and no delay in exercising
any rights, shall be construed or deemed to be a waiver thereof, nor shall any single or
partial exercise by any Party preclude any other or future exercise thereof or the exercise
of any other right. Any waiver by a Party of any breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other breach of that
provision or of any breach of any other provision of this Agreement.
11.8. Liberal Construction. This Agreement constitutes a fully -negotiated
agreement among commercially sophisticated Parties, each assisted by legal counsel, and
the terms of this Agreement shall not be construed or interpreted for or against any Party
hereto because that Party or its legal representative drafted or prepared such terms.
11.9. Severability. If any provision of this Agreement is invalid, illegal or
unenforceable, such provision shall be deemed to be severed or deleted from this
Agreement and the balance of this Agreement shall remain in full force and effect.
11.10. Good Faith and Fair Dealing. The performances required by the
provisions of this Agreement shall be undertaken in good faith, and with each of the
Parties dealing fairly with the other.
11.11. No Third -Party Beneficiaries. This Agreement does not create, and shall
not be construed to create, any rights enforceable by any person, partnership, corporation,
joint venture, limited liability company or other form of organization or association of
any kind that is not a Party to this Agreement.
11.12. No Brokers. Each Party represents and warrants to the other that it has not
dealt with any broker, agent or finder in connection with this transaction. Buyer agrees to
indemnify and hold Seller harmless from and against any and all Claims arising out of
any claim to a commission or fee by any other party claiming by or through Buyer.
Seller agrees to indemnify and hold Buyer harmless from and against any and all Claims
arising out of any claim to a commission or fee by any other party claiming by or through
Seller. This provision shall survive the termination of this Agreement and the Closing.
11.13. Counterparts. This Agreement may be executed in counterparts (by
original, facsimile or electronic PDF signatures) which, when taken together, shall
constitute a single agreement. The signature page of any counterpart may be detached
therefrom without impairing the legal effect of the signature(s) thereon.
11.14. Back -Up Offers. After the execution of this Agreement and until the
expiration of the Diligence Period, Seller shall have the right, without liability to Buyer,
to solicit or initiate, directly or indirectly, and to encourage the submission of inquiries,
proposals, or offers from any potential buyer for the Water Rights. Buyer further agrees
that during the foregoing period of time, Seller may, without liability to Buyer, enter into
and agree to back-up offers from potential buyers for the Water Rights, provided that any
such back-up offer, if accepted by Seller, shall be subject to Buyer's rights under this
Agreement.
11.15. Time of the Essence. Time is of the essence of each and every provision
of this Agreement. Whenever action must be taken under this Agreement during a
certain period of time that ends on a non -business day, then such period shall be extended
until the immediately following business day. As used herein, "business day" means any
day other than a Saturday, Sunday or federal or California State holiday.
11.16. Attorneys' Fees. In any action or proceeding for the purpose of enforcing
any provision of this Agreement, or to recover damages hereunder, or to obtain injunctive
or other relief, or for a declaration of rights or obligations hereunder, or for any other
judicial or equitable remedy, the prevailing Party shall be entitled, in addition to such
-10-
other relief as may be granted, to an award, in the same or a subsequent proceeding, of its
reasonable attorneys' fees and costs.
11.17. Not an Offer. In no event shall any draft of this Agreement create any
obligations or liabilities, it being intended that only a fully executed and delivered copy
of this Agreement will bind the Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written.
SELLER: CITY OF VERNON, a Municipal corporation
By:
Name:
Its:
By:
Name:
Its:
BUYER: CITY OF NORWALK, a Municipal corporation
By:
Name:
Its:
By:
Name:
Its:
-11-
ACKNOWLEDGEMENT OF ESCROW HOLDER
Escrow Holder acknowledges its receipt of an executed version of this Agreement and agrees to
act as escrow holder with respect to its obligations expressly set forth herein.
FIDELITY NATIONAL TITLE INSURANCE COMPANY
By:
Name:
Its:
-13-
Recording requested by
and when recorded mail to:
CITY OF NORWALK
Norwalk Municipal Water System
12700 Norwalk Blvd.
Norwalk, CA 90650
Space above this line for Recorder
WATER RIGHTS GRANT DEED
The undersigned grantor(s) declare(s)
DOCUMENTARY TRANSFER TAX $ 0.00 (Zero) - Exempt per Revenue and Taxation Code Section
11922 - conveyance is for the benefit of the City
of Norwalk
As of , 2012, CITY OF VERNON, a Municipal
corporation, as Grantor herein, for valuable consideration, the receipt of which is hereby
acknowledged, does hereby grants to CITY OF NORWALK, a Municipal corporation, as
Grantee herein, all that certain real property in the County of Los Angeles, State of California,
described as:
625 acre feet of Total Water Rights and 500 acre feet of Allowed Pumping
Allocation (the "Purchased APA") together with all of Grantor's other rights,
privileges and entitlements relating to the Purchased APA, or appurtenant thereto,
if any, including without limitation Grantor's right, title and interest, if any, in and
to the Allowed Pumping Allocation for any period after the closing date, any
carryover rights and any storage rights associated with the Purchased APA
(collectively, the "Water Rights") allocated to Grantor in, under and pursuant to
that certain Second Amended Judgment dated May 6, 1991 (the "Judgment") in
the case entitled Central and West Basin Water Replenishment District, et al., vs.
Adams, et al., Case No. 786 656 in the Superior Court of the State of California
for the County of Los Angeles.
According to records maintained by the Department of Water Resources of the State of
California, in its capacity as Watermaster under the Judgment (in such capacity, the
"Watermaster"), Grantor is currently the owner of 10,048.75 acre feet of Total Water Rights and
8,039 acre feet of Allowed Pumping Allocation. Pursuant to this instrument, Grantor is selling to
Grantee, on a perpetual and permanent basis, 625 acre feet of Total Water Rights and 500 acre
feet of Allowed Pumping Allocation, and Grantor is retaining 9,423.75 acre feet of Total Water
Rights and 7,539 acre feet of Allowed Pumping Allocation.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the date
first written above.
GRANTOR: City of Vernon,
a Municipal corporation
By:
Name:
Its:
By:
Name:
Its:
STATE OF CALIFORNIA )
ss.
COUNTY OF 1
On , 20 , before me,
a Notary Public, personally appeared
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.
Notary Public in and for said State
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
This Purchase and Sale Agreement (this "Agreement") is made as of the date executed by
Seller (the "Effective Date"), by and between CITY OF VERNON, a Mpnicipal corporation,
CITY OF NORWALK, a Municipal corporation, (" Buver'), Buyer and Seller are
sometimes hereinafter individually referred to as a "E y" and collectively as the "Parties".
RECITALS
A. Reference is hereby made to that certain Judgment entered October 11, 1965, as
amended by that certain Second Amended Judgment dated May 6, 1991, as such judgment may
have been further amended prior to the Effective Date (as so amended, the "jttdg�nt") in the
case entitled Sgnnt[aland West Basin Water Replenishment District. et al. V`5 Adams, et al:, Case
No. 786,656 in the Superior Court of the State of California for the County of Los Angeles (the
"Court"), All initially capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Judgment.
B, Accordirig to records maintained by the Department of Water Resources of the
State of California, in its capacity as watermaster under the Judgment (in such capacity, the
"Waterm. aster'), Seller is currently the owner of 10,048,75 acre feet of Total Water Rights and
9,039 acre feet of Allowed Pumping Allocation (the "Seller's APA"), On the terms and
conditions set forth herein, Seller desires to sell to Buyer, and Buyer desires to buy from Seller,
on a perpetual .and permanent basis, 625 acre feet of Total Water Rights and 500 acre feet of
Allowed Pumping Allocation (the "Purchased APA").
C The Purchased APA, together with Seller's other rights, privileges and
entitlements relating to the Purchased APA, or appurtenant thereto, if any, including without
limitation Seller's right, title andinterest, if any, in and .to the Allowed Pumping Allocation
arising from:the Purchased APA for any period after the Closing Date (as defined below in
Section 5) and any carryover rights and any storage rights associated with the Purchased APA
are sometimes collectively referred to as the "Water Rights."
D. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the
Water,W&s on the terms and conditions set forth herein,
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants contained herein, and for
other good and valuable consideration, the receipt and adequacy .of which are hereby
acknowledged. Seller and Buyer agree as follows:
I. Agreamem to Transfer Title to 13 !yq. Seller shall sell to Buyer, and Buyer shall
purchase From Seller, the Water Rights, on the, erms, and conditions set. forth herein.
2. Escrow.
2.1. Establishment gf BaSrow, Within two (2) business days following the
Effective Date, the Parties shall open an escrow (the "Escrow') at Fidelity National Title
Insurance Company, or such other escrow holder to which the parties shall mutually
agree (the "Escrow Holder") for this transaction. This Agreement shall constitute escrow
instructions to Escrow Holder concerning this transaction.
2.2. D osi . Within three (3) business days after the Effective Date, Buyer
shall deposit a sum equal to ten percent (10%) of the Purchase Price, being the sum of Six
Hundred Thousand Dollars ($600;000.00), (the "Deposit") with Escrow Holder, by wire
transfer of immediately.available funds denominated in U.S. dollars. Ir Buyer does not
deliver the Deposit in the time and manner provided herein, then Seller may elect, in its
sole and absolute discretion, to deliver a written notice to Buyer and Escrow Holder
terminating any further obligations of the Parties under this Agreement. The Deposit
shall be non-refundable, except as expressly provided in Sections 2.3, 10 1_2._• 10 .1.4, and
IA,1.5 below,
2.3. Due Diligence Revigw. Buyer shall have seven (7) calendar days after the
Effective Date to review such documents and make such inquiries as Buyer deems
necessary or prudent to confirm that the Water Rights are satisfactory for its purposes
(the "Diligence Period"). In the event Buyer determines that the Water Rights are not
satisfactory for its purposes, Buyer shall have the right to terminate this Agreement by
delivering written notice thereof to Seller (the "Termination Nolice") prior to the
expiration of the Diligence Period. Buyer's failure to deliver the Termination Notice to
Seller prior to the expiration of the Diligence Period shall be deemed Buyer's waiver of
.any objection to matters affecting the Water Rights.
2.4. Di1fizence Satisfaction. Within two (2) business days after the expiration
of the Diligence Period, Buyer shall deposit an amount equal to the Purchase Price (as
defined below in Section 4) less the Deposit with Escrow Holder Xthe "Purchase Price
Funds"). Buyer may elect to request that the Purchase Price Funds be invested by
Escrow Holler in a money market account, or similar investment, and the interest therein
shall be for the sole benefit of Buyer.
2.5, Title Matters. Seller shall not cause any lien, encumbrance or other
exception to title to the Water Rights to be recorded or to attach to the Water Rights
between the Effective Date.and the recording of the Water Deed or earlier termination of
this Agreement pursuant to the terms hereof without the prior written consent of Buyer.
Unless and until this Agreement is terminated pursuant to the terms hereof, Seiler shall
not assign, convey or otherwise transfer any record or beneficial Interest in the Water
Rights to any person other than to Buyer at Closing (as defined below in Section 5)
pursuant to the terms of this Agreement.
-2-
1"IMM"=
3.1. The Water Rights. Concurrently herewith, Seller and Buyer shall execute
a Water Rights Grand Deed naming Seller as grantor and Buyer as grantee in the form
attached hereto as Exhibit A (the "Water Deed ). Seller.and Boyer shall deliver the
original of the Water Deed to Escrow Holder concurrently herewith. Promptly following
receipt of the Purchase Price Funds, Escrow Holder shall record the Water Deed in the
County of Los Angeles and provide a copy thereof to. Watermaster.
3.2 • _Cmm s. The Ponies shall provide such documents and information
to the Watermaster as Watermaster may reasonably request from the Parties in
connection with this transaction. If Watermaster fails.to take all actions necessary for the
transfer contemplated by this. Agreement to become effective, then the Ponies shall
negotiate in good faith to determine whether any changes to the relevant 'documents
which are reasonably satisfactory to the Parties in their respective discretions, should be
made by them to facilitate such actions by Watermaster.
4. Purchase Pricg. The total purchase price for the Water Rights (the " Pumbase
ric ")shall be Six Million Dollars ($6,000,000.00), representing S12,000.00 per AF of the
Purchased APA.
3. C12 ine. The closing orthe purchase and sale of the Water Rights (the "Closine")
shall occur within three (3) business days after the Watermaster approves the Watermaster
Transfer Form, The date of closing is referred to herein as the "Closinn Dale"
S.I. Seller Closing Deliveries. At or prior to Closing, Seller shall deposit the
following with Escrow Holder, all in form and substance reasonably satisfactory to
Escrow Holder and Buyer (except as otherwise provided below):
5.1.1. An original duly executed Water Deed in the form of
Exhibit A attached hereto (the "Water Deed").
5.1.2. Such other documents and instruments as Escrow Holder or
Buyer may reasonably request.
5.2. Byxgf Closing Deliveries. At or prior to Closing, Buyer shall deposit the
following with Escrow Holder, all in form and substance reasonably satisfactory to
Escrow Holder and Seller:
5.2.1. The Purchase Price, in good and suMcient funds.
5.2.1. Such other documents and instruments as Escrow Holder or
Seller may reasonably request.
5.3. Costs and Prorations. Escrow Holder shall prepare and deliver one or
more preliminary closing statements to the Parties prior to the Closing, and the Parties
shall not unreasonably withhold their approval thereof. At Closing, Seller and Buyer
shall each pay one-half of the escrow fees of Escrow' Holder for this transaction, subject
-3-
to Section 5.5 below, and Buyer shall pay all legal fees and related costs incurred by the
Parties. in the negotiation and preparation of this Agreement and any and all Exhibits
attached hereto. Buyer shall pay the recording fee for the Water Deed. Escrow Holder
may pro rate any administrative assessments payable to the Watermaster for the fiscal
year of the Watermaster in which the Closing Date occurs, such p%v ration to be based
upon and proportional to (a) the number of days in such fiscal year before the Closing
Date, and (b) the number of days in such fiscal year after the Closing Date. Each of
Buyer and Seller shall deposit additional funds into Escrow in an amount equal to their
respective closing costs, provided, however, that Escrow Holder is hereby authorized to
withhold Seller's closing costs from funds that would otherwise be distributable by
Escrow Holder to Seller at Closing. All other costs incurred by the Parties in connection
with this transaction shall be paid in the manner which is customary in Los Angeles
County, California. for transactions of the type contemplated by this Agreement. To the
extent that information for any such proration is not available on the Closing Date, Buyer
and Seller shall effect such proration outside of Escrow, as soon as possible following
the Closing, but in no event later than one hundred twenty (120) days after the Closing
Date,
5.4. Procedure for Closing Escrow Holder 'shall close the Escrow by doing
the following, in the following order.
5.4.1 Pay Seller's closing costs from funds deposited by Seller
or otherwise distributable to Seller.
5.4.2 Pay Buyer's closing costs from funds deposited by Buyer.
5.4.3 Deliver the Purchase Price, less Seller's closing costs, to
Seller pursuant to instructions to be separately provided by Seller to
Escrow Holder.
5AA Deliver interest, if any, on the Deposit to Buyer, by a
:check made payable to Buyer.
5.4.5 Date the Water Deed as of the Closing Date.
5.4.6 Deliver the original Water Deed to the Los Angeles
County Recorder for recordation in the Official Records of Los Angeles
County, California (the "Official Record '), and copies of the executed,
dated Water Deed (and any other closing documents) to Seller, Buyer, and
Watermaster.
5.4.7 Return any other items to the Party who delivered it into
escrow
5.5. InAbilily to Close. If this ,Agreement is terminated pursuant to Section
191, Seller and Buyer shall each pay one-half of any cancellation fees of Escrow Holder;
provided, however, that if the Escrow falls to close due to a default of a Party, then the
defaulting party shall; in addition to any other damages, pay all cancellation fees.
-4-
6. Seller's Conditions for Sale. Seller's obligations to sell the Water Rights pursuant
to this Agreement shall be subject to satisfaction or waiver by Seller, in, its discretion, of the
followingconditions as of the Closing Date:
6.1 Buyer's Performance. Buyer shall have timely .performed all obligations
to be performed by Buyer pursuant to this Agreement, and Buyer's representations and
warranties set forth herein shall be true and correct in all material respects
6.2 Watermaster, Seller shall have received evidence reasonably satisfactory
to Seller that the Watermaster has taken or will take all actions necessary for the transfer
contemplated by this Agreement to become effective.
7. Buyer's Conditions fgr Purchase. Buyer's obligations to purchase the Water
Rights pursuant to this Agreement shall be subject to satisfaction or waiver by Buyer, in its
discretion, of the following conditions as of the Closing Date:
7.1: . Aler's Performance; Seiler shall have titdely performed all obligations. to
be performed by Seller pursuant to this Agreement, and Seller's representations and
warranties set forth herein shall be true and correct in all material respects
7.2. Watermaster. Buyer shall have received evidence reasonably satisfactory
to Buyer that the Watermaster has taken or will take all actions necessary for the transfer
contemplated by this Agreement to become effective.
8. Reoresentations and Warranties of Seller. Seller represents and warrants to Buyer
that, as of the Effective Date and the Closing Date:
S.I. Due QrMization. Seller is a Municipal corporation, validly existing and
in good standing under the laws of the State of California.
8.2. Power and Authority. Seller has the right, power and authority to enter
into this Agreement, which has been duly authorized by valid action of Seller's governing
body, and to perform its obligations hereunder, and the person(%) executing this
Agreement on behalf of Seiler have the right, power and authority to do so.
8.3, Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Seller enforceable.against Seller in accordance with its terms. Neither this
Agreement nor the consummation of the transactions contemplated hereby violates any
provision of any agreement to which Seller is a party or by which Seller is bound.
8.4. No Conflicts. To Seller's knowledge, Seller is not now in, nor will the
Closing of the transaction contemplated by this Agreement in -any material respect
constitute a, violation of any law, ordinance,, rule, regulation or administrative or judicial
order affecting the Water Rights, including without limitation the Judgment.
8.5. No Other Consents Needed. To Seller's knowledge, other than the
approval of the Watermaster, no consent from any third party (including any
-5-
Seller's reasonable satisfaction within ten (10.) calendar days following
receipt by Buyer of written notice of such default, breach or inaccuracy.
10.1.4, By Seller or Buyer, if the W'atenmaster refuses or
declines td approve the Watermaster Transfer Form, within fivo (5)
calendar days after the Watermaster.provides written notice to the Parties
of such a final decision by the Watermaster.
10.1,5, By Buyer or Seller prior to the Closing, if the Closing
shall not have occurred for any reason, other than because of the default of
the Party seeking to terminate, on or betbre ninety (90) calendar days from
the, Effective Date hereof, or such later date as may be agreed to in writing
by the Parties.
10.2. Effect of Termination. If this Agreement is terminated pursuant to Section
101 hereof, the Parties shall have no further obligations hereunder, provided that nothing
contained in this Sectian 1Q shall relieve any party from liability for a breach or default
under this Agreement occurring prior to such termination.
10.3. Limitation on Seller's Liability, In the event the Closing rails to occur due
to a default by Seller hereunder (and provided that all conditions to Seller's obligations
have been satisfied), Buyer shall be entitled, as its sole and exclusive remedy; to
terminate this Agreement in accordance with Section 10.1.2 above and obtain a return of
the Deposit and Purchase Price Funds, plus any interest accrued thereon. Buyer hereby
expressly waives any right to any actual, incidental, consequential or punitive damages or
any equitable remedies which it may otherwise have for Seller's default. This provision
shall survive the termination of this Agreement or the Closing.
10.4. 41OUIDATED DAMAGES. IF THE CLOSING FAILS TO OCCUR BY
REASON OF A BUYER DEFAULT OF THUS AGREEMENT, SELLER WALL BE
DAMAGED AND. WILL BE ENTITLED TO COMPENSATION FOR THESE
DAMAGES, BUT SUCH DAMAGES WILL BE EXTREMELY DIFFICULT AND
IMPRACTICABLE TO ASCERTAIN FOR NUMEROUS REASONS, INCLUDING,
WITHOUT LIMITATION, THE FOLLOWING: (A) THE DAMAGES TO WHICH
SELLER WOULD BE ENTITLED WILL BE BASED ON THE DIFFERENCE
BETWEEN THE ACTUAL VALUE OF THE WATER RIGHTS AT THE TIME SET
FOR THE CLOSING AND THE PURCHASE PRICE FOR THE WATER RIGHTS AS
SET FORTH IN THIS AGREEMENT, (B) PROOF OF THE AMOUNT OF THESE
DAMAGES WILL BE BASED ON OPINIONS OF THE VALUE OF THE WATER
RIGHTS, WHICH CAN VARY IN SIGNIFICANT AMOUNTS, AND (C) IT IS
IMPOSSIBLE TO PREDICT AS OF THE DATE ON WHICH THIS AGREEMENT 1S
ENTERED INTO WHETHER THE VALUE OF THE WATER RIGHTS WILL
INCREASE OR DECREASE AS OF THE DATE SET FOR TIME CLOSING DATE.
AND BUYER DESIRES TO LIMIT THE AMOUNT OF DAMAGES FOR WHICH
BUYER MIGHT BE LIABLE SHOULD BUYER BREACH THIS AGREEMENT.
BOTH BUYER AND SELLER WISH TO AVOID THE COSTS AND LENGTHY
DELAYS WHICH WOULD RESULT IF SELLER FILED A LAWSUIT OR
-7-
COMMENCED AN ARBITRATION PROCEEDING TO SEEK TO ASCERTAIN ITS
DAMAGES FOR A BREACH OF THIS AGREEMENT. THEREFORE, BUYER AND
SELLER HEREBY AGREE THAT IN THE EVENT THE CLOSING SHALL FALL TO
OCCUR BY REASON OF A DEFAULT OR BREACH OF THIS AGREEMENT BY
BUYER, SELLER SHALL BE ENTITLED TO RETAIN, AS ITS SOLE AND
EXCLUSIVE REMEDY, THE DEPOSIT AS A REASONABLE ESTIMATE OF
SELLER'S DAMAGES. IT IS AGREED THAT IN ORDER TO IMPLEMENT THE
PROVISIONS OF THIS SECTION, SELLER MAY UNILATERALLY INSTRUCT
ESCROW HOLDER TO CANCEL THE ESCROW AND DELIVER THE DEPOSIT TO
SELLER, NOTHING CONTAINED IN THIS SECTION SHALL BE DEEMED OR
CONSTRUED TO LIMIT BUYER'S OBLIGATIONS UNDER SECTION 11.16
BELOW, WHICH SHALL BE IN ADDITION TO THE LIQUIOATFD DAMAGES
PROVIDED HEREIN. THIS PROVISION SHALL SURVIVE THE TERMINATION
OF THIS AGREEMENT AND THE CLOSING.
BUYER'S INITIALS SELLER'S INITIALS
1009397MM M.
1 I.I . Further Assurances, At any time and from time to time after the Effective
Date, each Party agrees to take such actions, to execute and deliver such instruments and
to provide such documents and information as the other Party may reasonably request to
effectuate the purposes of this Agreement.
11.2. Successors. This Agreement shall be binding upon and inure to the
benefit assigns and successors -in -interest of the Parties.
11.3. Amendment, Except as otherwise provided in this ASreement, neither this
Agreement nor any provision hereof may be waived, modified, amended, discharged, or
terminated except by an instrument in writing signed by the Party against which the
enforcement of such waiver, modification, amendment, discharge or termination is
sought, and theft only to the extent set forth in such writing.
11.4. Entire Agreement, This Agreement and the agreements referenced herein
constitute the entire understanding between the Parties. with respect to the matters set
forth herein, and supersede all prior or contemporaneous understandings or agreements
between the Parties with respect to. such matters, whether oral or written
I I.S. Npqtig& . Any notice, approval, consent, waiver or :other communication
required or permitted to be delivered upon a Party under this Agreement shall be in
writing and shall be personally delivered or sent by reputable overnight delivery service,
such as FedEx, and shall be deemed given: (a) if personally delivered, when actually
delivered; or (b) if sent by reputable overnight delivery service, $uch as FedEx, when
actually delivered, provided confirmation of delivery shall be retained by the sender,
Such notices shall be addressed to the Party to whom such notice is to be given at the
.g.
Party's .address set forth below or as such Party shall otherwise direct in a writing tothe
other Party delivered or sent in accordance with this Section. Any -notices so given shall
be deemed given as of.the date established by the overnight delivery service.
If to Seller, to, City of Vernon
City Clerk
4305 Santa Fe Avenue
Vernon CA 90058
Copy to: William F. Kruse, F,sq.
Lagerlof, Seneca!, Gosney & Kruse, LLP
301 North Lake Avenue
Tenth Floor
Pasadena, CA 91101
Ifto Buyer, to: City of Norwalk
Norwalk Municipal Water System
12700 Norwalk Blvd.
Norwalk, CA 90630
If to Escrow Holder, to: Valerie Rapp
Fidelity National Title Insurance Company
1300 Dove Street, Suite 310
Newport Beach, CA 92660.
11.6. Governing Law. This Agreement shall be governed by. and interpreted in
accordance with, the laws of the State of California, without giving effect to principles of
conflicts of laws. The venue for the resolution of any disputes arising out of, or related
la, this Agreement shall be Los Angeles. County, California.
11.7. Waiver. No failure by either Party to exercise, and w delay in exercising
any rights, shall be construed or deemed to be a waiver thereof, nor shall any single or
partial exercise by any Party preclude Any other or future exercise thereof or the exercise
of any other tight. Any waiver by a Party of any breach of any provision of this
Agreement shall not operate as or be. construed to be a waiver of any other breach of that
provision or of any breach of any other provision .of this Agreement.
11.8., Uberal Construction, This Agreement eonstitutcs a fully -negotiated
agreement among commercially sophisticated Parties, each assisted:by legal counsel, and
Wil
the terms of this Agreement shall not be construed or interpreted far or against any Party
hereto because that Party or its legal representative drafted or prepared such terms.
11.9. Severability_ If any provision of this Agreement is invalid, illegal or
unenforceable, such provision shall be deemed to be severed or deleted from this
Agreement and the balance of this Agreement shall remain in full force and effect.
11.10. Good Faith and Fair Dealine.. The performances required by the
provisions of this Agreement shall be undertaken in good faith, and with each of the
Parties dealing fairly with the other.
11.1 1. No Third -Party Beneficiaries. This Agreement does not create, and shall
not be construed to create, any rights enforceable by any person, partnership, corporation,
joint venture, limited liability company or other form of organization or association .of
any kind that is not a Party to this Agreement_
11 12, No Broker . Each Party represents and warrants to the other that it has not
dealt with any broker, agent or finder in connection with this transaction Buyer agrees to
indemnify and hold Seller harmless from and against any and all Maims arising out of
any claim to a commission or fee by any other party claiming by or through Buyer.
Seller abnees to indemnify and hold Buyer harmless from and against any and all Claims
arising out of any claim to, a commission or fee by any other party claiming by or through
Seller. This provision shall survive the termination of this Agreement and the Closing.
11.13. Counterparts. This Agreement may be executed. in counterparts (by
original, facsimile or electronic PDF signatures) which, when taken together, shall
constitute a single Weement. The signature page of any counterlpan maybe detached
therefrom without impairing the legal effect of the signature(s) thereon.
11.14. Back -Up Offers. After the execution of this Agreement and until the
expiration of the Diligence Period, Seller shall have the right, wilhout liability to Buyer,
to solicit or initiate, directly .or indirectly, and to encourage the submission of inquiries,
proposals, or offers from any potential buyer for the Water Rights. Buyer further agrees
that during the foregoing period of time, Seller may, without liability to Buyer, enter into
and agree to back-up offers from potential buyers for the Water Rights, provided that any
such back-up offer, if accepted by Seller, shall be subject to Buyer's rights under this
Agreement.
11.1S. Time.or the Esseace. Time is of the essence of each and every provision
of this Agreement. Whenever action must be taken under this Agreement during a
certain period of time that ends on a non -business day, then such period shall be extended
until the immediately following business day. As used herein, "business day" means any
day other than a Saturday, Sunday, or federal or California State holiday
1 I.16. Attor eevs' Fees. In any action or proceeding for the.purpose of enforcing
any provision of this Agreement, or to recover damages hereunder, of to obtain injunctive
or other relief, or for a declaration of rights or obligations hereunder, or for any .other
judicial or equitable remedy, the prevailing Party shall be entitled.. in addition to such
-10-
other relief as may be granted, to an award, in the same or a subsequent proceeding, of its
reasonable attorneys' fees and costs.
11.17, Not an Ot%r. In no event shall any draft of this agreement create any
obligations or liabilities, it being intended that only a fully executed and delivered copy
of this Agreement will bind the Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement as or the date first
above written.
SELLER: CITY OF VERNON, a Municipal corporation
c
By:
Name: William nevi n
Its: Mayor —,—
.ATTEST: ,d
By:
Mime: Dade Reed
Its:
APPROM A YORM, '
Nicholas Morge Rodriguez, City Attorney
BUYER: CITY OF NORWALK, a Municipal corporation
By.
Name:
Its:
By:
Name:
Its:
ACKNOWLEDGEMENT OF ESCROW HOLDER
Escrow Holder acknowledges its receipt of an executed version of this Agreement and agrees to
act as escrow holder with respect to its obligations expressly set forth herein.
FIDELITY NATIONAL TITLE INSURANCE COMPANY
J)
Name: t,Y rV.
Its: � i n
; `'�r✓11w yr�uicrt,el ..xr4(.) O4-)• e r-
,
EXHIBIT A
Recording requested by
and when recorded mail to:
CITY OF NORWALK
Norwalk Municipal Water System
12700 Norwalk Blvd.
Norwalk, CA 90650.
Space above this line for Recorder
WATER RIGHTS GRANT DEED
The undersigned grantor(s) declarc(s)
DOCUMENTARY TRANSFER TAX $ 0.00 (Zero) - Exempt per Revenue and Taystion Code Section
11922 - convuvance is for the benefit of the City
of Norrvalk
As of December 6, 2012 , 2012, CITY OF VERNON, a Municipal
corporation, as Grantor herein, for valuable consideration, the receipt of which is hereby
aeknoW)edgcd; does hereby grants to CITY. OF NORWALK, a Municipal corporation; as
Grantee herein, all that certain real property in the County of Los Angeles, State of California,
described as:
035 acre feet of Total Water Rights and 500 acre feet of Allowed Pumping
Vocation (the "Purchased APA") together with all of Grantor's other rights,
privileges and entitlements relating to the Purchased APA, or appurtenant thereto,
if any, including without limitation Grantor's right, title and interest, if any, in and
to the Allowed Pumping Allocation for any period after the closing date, any
carryover rights and any storage rights associated with the Purchased APA
(collectively, the "Water Right " ) allocated to Grantor in, under and pursuant to
that 'certain Second Amended Judgment dated May 6, 1991 (the "Judgment") in
the case entitled Central and West Bain Water Replenishment Distiict a vs
&&ms, et al., Case No. 786 656 in the Superior Court of the State of Califomia
for the County of Los Angeles.
According to records maintained by the Department of Water Resources of the State of
California, in its capacity as Watermaster under the Judgment (in such capacity, the
"Wa graoste["), Grantor is currently the owner or lo,0 vs acre feet of Total Water Rights and
9,039 acre feet of Allowed Pumping Allocation: Pursuant to this instrument, Grantor is selling to
Grantee, on a perpetual and permanent basis, 625 acre feet of Teti] Water Rights and 500 acre
feet of Allowed Pumping Allocation, and Grantor is. retaining 9,423.75 acre feet of Total Water
Rights and 7,539 acre feet of.Allowed Pumping Allocation.
[Signature page followsl
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the date
first written above.
GRANTOR: City of Vernon,
a Municipal corporation
Name: William Davis
Its: Mayor
By:
Name: _
Its:
STATE OF CALIFORNIA )
ss.
COUNTY OF�'�Irtr ! > )
OnLtc�,,txc i<, .��r.y-- ,before me,�t,�.:1 /,.u�i1G•_,
a Notary Public, personally appeared 6L, Ili!~ n �1
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 h0shehhey executed the same
io hisfher/their authorized capacity(ies), and that by his/her/their signatures) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
1 certify under PENALTY OF PERJURY under the laws of the Stgte of California that
the foregoing paragraph. is true. and correct.
WITNESS my hand and official seal.
MARMOL TRUJILLO
Commirrion 11516415
Wary Pubilc • CearonW
Lue MpHee Coumr
M Cm. E 1m bee 23. 2014
Notary Oulilic In and fd said Slate
STATE OF CALIFORNIA- CALIFORNIA NATURAL RESOURCES AGENCY - EDMUND G. BROWN 1R. Governor
DEPARTMENT OF WATER RESOURCES
SOUTHERN REGION OFFICE
770 FAIRMONT AVENUE, SUITE 102 dT•
GLENDALE, CA 91203-1035
APR 10 2013
Mr. Noel Ford
Utility Supervisor
City of Norwalk
Post Office Box 1030
Norwalk, California 90651-1030
Dear Mr. Ford:
RWMVE&ECEIVE®
APR 15 2013 APR 14�2013
Community Ser"TY CLERK'S OFFICE
The Central Basin Watermaster's office received a Deed of Water Rights, dated
December 6, 2012, transferring water rights in the Central Basin from the City of Vernon
to the City of Norwalk.
In accordance with the deed and in accordance with Subpart 2 of Part V of the Central
Basin Judgment, we have transferred 500.00 acre-feet of Allowed Pumping Allocation
to the City of Norwalk and have reduced the account of the City of Vernon to 7,539.00
acre-feet. The transfer was made effective April 8, 2013.
For further assistance regarding this water rights transfer, please contact Mike Weil at
(818) 500-1645, extension 251.
Sincerely,
ORIGINAL SIGNED BY:
Bob Pierotti
Mark Stuart, Chief
Southern Region
and Watermaster
cc: Mr. Samuel Kevin Wilson
Director of Community Services
and Water
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90058-0805
Water Replenishment District
Of Southern California
4040 Paramount Boulevard
Lakewood, California 90712