AMENDED AND RESTATED LEASE AGREEMENT
between
STATE OF COLORADO, ACTING BY AND THROUGH THE
STATE BOARD OF LAND COMMISSIONERS, LESSOR
and
RANGEVIEW METROPOLITAN DISTRICT, LESSEE
Lease No. S-37280
TABLE OF CONTENTS
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ARTICLE 1 Definitions. . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 Preliminary Matters. . . . . . . . . . . . . . . . . . 5
ARTICLE 3 Effective Date . . . . . . . . . . . . . . . . . . . . 5
3.1 Effective Date of This Agreement . . . . . . . . . . . 5
3.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Objectives of This Agreement . . . . . . . . . . . . . 5
3.4 Rangeview. . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4 Leased Premises. . . . . . . . . . . . . . . . . . . . 6
4.1 General Description of Water Subject to This Agreement 6
ARTICLE 5 Grant of Lease . . . . . . . . . . . . . . . . . . . . 6
5.1 Grant. . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Term . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Effect of Expiration of the Agreement. . . . . . . . . 7
5.4 Land Board's Legal Right to Water. . . . . . . . . . . 7
5.5 Sale of Land . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 6 Right to Sell Water. . . . . . . . . . . . . . . . . . 8
6.1 Rangeview's Conveyance of Export Water . . . . . . . . 8
6.2 Right to Artificially Recharge . . . . . . . . . . . . 10
6.3 Water Available to Export. . . . . . . . . . . . . . . 13
6.4 Sale of Use of Water on the Xxxxx Range. . . . . . . . 13
6.5 Quality of Water . . . . . . . . . . . . . . . . . . . 14
6.6 Termination of Export Water. . . . . . . . . . . . . . 14
ARTICLE 7 Rent and Royalty Payments to Land Board. . . . . . . . 15
7.1 Annual Rent. . . . . . . . . . . . . . . . . . . . . . 15
7.2 Royalty for Export Water . . . . . . . . . . . . . . . 15
7.3 Royalties for On-site Use. . . . . . . . . . . . . . . 18
7.5 Payment of Royalty . . . . . . . . . . . . . . . . . . 19
7.6 Reporting. . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 8 Development of Infrastructure
and Water Service on the Xxxxx Range . . . . . . . . . 21
8.1 Rangeview Shall Serve. . . . . . . . . . . . . . . . . 21
8.2 Water Fees and Rates . . . . . . . . . . . . . . . . . 21
8.3 Substitution of Facilities . . . . . . . . . . . . . . 21
8.4 Right to Use Transmission Lines; Infrastructure. . . . 22
8.5 Title to Equipment and Improvements. . . . . . . . . . 23
8.6 Future Leases. . . . . . . . . . . . . . . . . . . . . 23
8.7 Rangeview District Boundaries. . . . . . . . . . . . . 23
8.8 Development of Xxxxx Range . . . . . . . . . . . . . . 23
8.9 Reserves . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 9 Service Provider Contract. . . . . . . . . . . . . . . 24
9.1 Service Provider for Rangeview . . . . . . . . . . . . 24
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ARTICLE 00 Xxxx Xxxxxx Xxxxx Xxxxxx
Xxxxx and Sanitation District. . . . . . . . . . . . . 26
10.1 Terms and Revenue. . . . . . . . . . . . . . . . . . . 26
10.2 Title Reversion. . . . . . . . . . . . . . . . . . . . 26
ARTICLE 11 Rights-of-Way. . . . . . . . . . . . . . . . . . . . . 26
11.1 Master Plan. . . . . . . . . . . . . . . . . . . . . . 26
11.2 Fee for Right-of-Way . . . . . . . . . . . . . . . . . 27
11.3 License to Service Provider. . . . . . . . . . . . . . 27
ARTICLE 12 Bonding Requirements . . . . . . . . . . . . . . . . . 27
12.1 Bond . . . . . . . . . . . . . . . . . . . . . . . . . 27
12.2 Bond of Contractors. . . . . . . . . . . . . . . . . . 27
ARTICLE 13 Default and Remedies . . . . . . . . . . . . . . . . . 28
13.1 Events of Default. . . . . . . . . . . . . . . . . . . 28
13.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . 29
13.3 No Waiver. . . . . . . . . . . . . . . . . . . . . . . 30
13.4 Land Board's Right to Cure Rangeview's Breach. . . . . 30
ARTICLE 14 Improvements . . . . . . . . . . . . . . . . . . . . . 31
14.1 Transfer of Improvements . . . . . . . . . . . . . . . 31
14.2 Abandonment of Export Water Facilities . . . . . . . . 31
ARTICLE 15 General Provisions . . . . . . . . . . . . . . . . . . 31
15.1 Assignment by Rangeview. . . . . . . . . . . . . . . . 31
15.2 Work Requirements. . . . . . . . . . . . . . . . . . . 32
15.3 Third Party Beneficiaries. . . . . . . . . . . . . . . 33
15.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . 33
15.5 Construction . . . . . . . . . . . . . . . . . . . . . 34
15.6 Entire Agreement . . . . . . . . . . . . . . . . . . . 34
15.7 Authority. . . . . . . . . . . . . . . . . . . . . . . 34
15.8 Copies . . . . . . . . . . . . . . . . . . . . . . . . 34
15.9 Amendment. . . . . . . . . . . . . . . . . . . . . . . 34
15.10 Compliance with Law. . . . . . . . . . . . . . . . . . 34
15.11 Binding Effect . . . . . . . . . . . . . . . . . . . . 35
15.12 Severability . . . . . . . . . . . . . . . . . . . . . 35
15.13 Optimum Long-Term Revenue. . . . . . . . . . . . . . . 35
15.14 Further Assurance. . . . . . . . . . . . . . . . . . . 35
15.15 Governing Law. . . . . . . . . . . . . . . . . . . . . 35
15.16 Arbitration. . . . . . . . . . . . . . . . . . . . . . 35
15.17 Litigation . . . . . . . . . . . . . . . . . . . . . . 36
15.18 Duty of Good Faith and Fair Dealing. . . . . . . . . . 36
15.19 Force Majeure. . . . . . . . . . . . . . . . . . . . . 36
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EXHIBITS
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Exhibit A Water Previously Conveyed
Exhibit B Service Agreement
Exhibit C Export Water Contract
Exhibit D Master Plan of Well Field and Rights-of-Way
Exhibit E Pipe Sizes
Exhibit F Right-of-Way Grant Form
Exhibit G Service Provider Right-of-Way License
Exhibit H Export Water Contractor Right-of-Way License
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AMENDED AND RESTATED LEASE AGREEMENT
------------------------------------
THIS AMENDED AND RESTATED LEASE AGREEMENT is by and between the State of
Colorado, acting through its State Board of Land Commissioners and Rangeview
Metropolitan District, a state quasi-municipal corporation and political
subdivision of the State of Colorado, acting by and through its water activity
enterprise.
NOW, THEREFORE, in consideration of the promises hereinafter stated, to be
kept and performed by the Parties, their successors and assigns, the Parties
agree as follows:
ARTICLE 1
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Definitions
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"Agreement" shall be defined to mean this Amended and Restated Lease
Agreement, Lease No. S-37280, dated April 4, 1996.
"Annual Rent" shall be defined as set forth in Section 7.1.
"Construction" shall be defined as set forth in Section 5.1.
"Delivered Basis" shall be defined as set forth in Section 7.2(d)(2).
"Effective Date" shall be defined as set forth in Section 3.1.
"East Cherry Creek Agreement" shall be defined to mean that certain
agreement dated July 8, 1983 by and between OAR, Incorporated (Rangeview's
predecessor), and East Cherry Creek Valley Water and Sanitation District.
"ECCV" shall be defined to mean East Cherry Creek Valley Water and
Sanitation District.
"Enterprise" shall be defined as Rangeview's water activity enterprise
established by resolution of Rangeview adopted at a public meeting of
Rangeview's board of directors on September 11, 1995, and effective as of the
date of its adoption.
"Entitlement Basis" shall be defined to mean a sale or other disposition of
water to a third party with the third party bearing all costs of withdrawal,
treatment and delivery.
"Export Water" shall be defined as set forth in Section 6.1.
"Export Water Contractor" shall be defined as set forth in Section 6.1.
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"Export Water Purchaser" shall be defined to mean the person or entity who
purchases Export Water other than the Export Water Contractor and a retail end
user.
"Force Majeure" shall be defined as set forth in Section 15.20.
"Gross Revenues" shall be defined to mean all pre-tax amounts or
consideration actually received directly or indirectly by Rangeview or the
Export Water Contractor, as applicable, from the sale or other disposition of
Water Rights, including tap fees, usage fees, service charges and all other
revenues, excluding taxes and refunds.
"Index" shall be defined to mean the Consumer Price Index for Urban
Consumers-All items (CPI-U) published by the Bureau of Labor Statistics of the
U.S. Department of Labor. In the event that the Index shall subsequently be
converted to a different standard reference base or otherwise revised, the
determination involved shall be made with the use of such conversion factor,
formula or table for converting said Index as may be published by the Bureau of
Labor Statistics, or if said Bureau shall not publish the same, then with the
use of such conversion factor, formula or table as may be published by Prentice
Hall, Inc., or, failing such publication, by any other nationally recognized
publisher of similar statistical information. In the event that the Index shall
cease to be published, then for the purposes of this Agreement, there shall be
substituted such other index as the Parties shall agree upon, and if they are
unable to agree, then ninety (90) days after the Index ceases to be published,
such matters shall be determined by arbitration as provided in Section 15.16 of
this Agreement.
"Initial Export Royalty Rates" shall be defined as set forth in Section
7.2(a).
"Initial Permitted Sale" shall be defined as set forth in Section 6.1.
"Land Board" is defined to mean the State of Colorado acting by and through
its State Board of Land Commissioners.
"Lease" is defined to mean the aggregate of the following:
a. Lease S-37280, dated April 26, 1982 between the Land Board and OAR,
Inc., whose rights and obligations were subsequently conveyed to Xxxxx Range
Metropolitan District, now known as Rangeview;
b. Amendment to Lease S-37280, dated February 22, 1983;
c. Amendment to Lease S-37280, dated December 19, 1983;
d. Amendment to Lease S-37280, dated November 26, 1984;
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e. Amendment to Lease S-37280, dated June 5 and 6, 1986;
f. Transfer Agreement dated December 8, 1986 ("Transfer Agreement");
and
g. Novation Agreement dated December 7, 1988 ("Novation Agreement").
"Litigation" is defined to mean the case entitled Apex Investment Firm, II,
L.P., et al. v. Colorado State Board of Land Commissioners, et al., Case No.
94CV5405, District Court, in and for the City and County of Denver, State of
Colorado.
"Xxxxx Range" shall be defined to mean the approximately 24,567.21 acres,
more or less, according to U.S. Government survey, in Arapahoe County, Colorado
more particularly described as follows:
Township 5 South, Range 64 West of the 6th P.M., Sections 7 through
--------------------------------------------------
10: all; Sections 15 through 22: all; Sections 27 through 34: all.
Township 4 South, Range 65 West of the 6th P.M., Sections 33: all; and
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34: all.
Township 5 South, Range 65 West of the 6th P.M., Section 3: all;
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Sections 10 through 15: all, less certain surface rights granted for
the Aurora Reservoir (but including the water under the Aurora
Reservoir) in Section 15; Sections 22 through 27: all, less certain
surface rights granted for the Aurora Reservoir (but including the
water under the Aurora Reservoir) in Section 22; Sections 35 and 36:
all; Section 34: north 2,183.19 feet.
Township 5 South, Range 66 West, of the 6th P.M., Section 36: all.
----------------------------------------------------
"Non-Export Water" shall be defined to mean the Water Rights other than (i)
the Export Water and (ii) the water subject to the East Cherry Creek Agreement.
"Off-Site" shall be defined to mean outside the boundaries of the Xxxxx
Range.
"Operating Expenses" shall mean all actual maintenance and operating costs
incurred by Rangeview or its Service Provider in discharging Rangeview's
obligations to provide Non-Export Water to Water Users as required by Section
8.1. Such Operating Expenses may include, for example, expenses for repairs to
the infrastructure; salaries, wages and employee benefit expenses; fees for
services, materials and supplies; rents, administrative
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and general expenses; insurance expenses; fees for legal, engineering,
accounting and other consulting and technical services; and taxes and other
governmental charges. Such Operating Expenses shall not include expenditures
which are properly capitalized under generally accepted accounting principles,
depreciation or obsolescence charges or reserves therefor, reserves for any
other purpose, amortization of intangibles or other bookkeeping entries of a
similar nature, interest charges and charges for the payment of principal or
amortization of bonded or other indebtedness, royalties, or losses from the
sale, abandonment, reclassification, re-evaluation or other disposition of
capitalized assets.
"Parties" shall be defined to mean the Land Board and Rangeview.
"Rangeview" shall be defined to mean Rangeview Metropolitan District, a
State quasi-municipal corporation and political subdivision of the State of
Colorado, acting directly as such or acting by and through the Enterprise.
"Reserved Water" shall be defined as set forth in Section 5.1(e).
"Retail Sales Price" shall be defined to mean the gross rates and charges
per 1,000 gallons charged by a municipality, water district or other water
provider to retail end users of the water.
"Royalty Base" shall be defined as set forth in Section 7.2(b).
"Sale of Water" or similar phrases used herein shall mean the sale of the
rights as set forth in Section 5.1 and Section 6.1.
"Service Agreement" shall be defined as set forth in Section 6.4.
"Service Provider" shall be defined to mean any entity, other than
Rangeview, actually delivering the Non-Export Water and related services to the
Water Users as permitted by Article 9.
"Settlement Agreement" shall be defined to mean the Settlement Agreement
and Mutual Release dated April 4, 1996 among the Parties and the other parties
in the Litigation.
"Substitute Facilities" shall be defined as set forth in Section 8.3.
"Water Interest Ratio" shall be defined as set forth in Section 8.3.
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"Water Rights" shall be defined as set forth in Section 5.1.
"Water Users" shall be defined to mean surface tenants, occupants,
developers, land owners and all other water users on the Xxxxx Range.
ARTICLE 2
---------
Preliminary Matters
-------------------
2.1 A dispute has arisen between the Parties and others concerning the
status of the Lease as evidenced in part by the claims asserted by and against
various parties in the Litigation.
2.2 The Parties to this Agreement desire to: (1) amend and completely
restate the rights and obligations of the Lease; (2) acknowledge and agree that
the Lease as amended and completely restated by this Agreement is valid and
enforceable; (3) eliminate uncertainty surrounding the Lease as amended and
completely restated by this Agreement; and (4) resolve all issues between the
Parties to this Agreement which are related to all issues which have been raised
or could be raised in connection with the Litigation.
ARTICLE 3
---------
Effective Date
--------------
3.1 EFFECTIVE DATE OF THIS AGREEMENT. This Agreement shall be binding
---------------------------------
on the date it is fully executed and delivered by the Parties subject only to,
as a condition subsequent, entry of the final non-appealable order of the Denver
District Court in the Litigation approving this Agreement and the related
Settlement Agreement. The date of the final non-appealable order of the Denver
District Court shall be deemed the Effective Date of this Agreement. The
Parties agree to cooperate and to use their best efforts to obtain prompt entry
of a final non-appealable order.
3.2 AMENDMENT. This Agreement amends, restates in its entirety, and
---------
supersedes in all respects the Lease, and from and after the Effective Date,
this Agreement, including the Exhibits hereto and the Settlement Agreement,
shall control and define the rights and obligations of the Parties with respect
to the subject matter of this Agreement.
3.3 OBJECTIVES OF THIS AGREEMENT. The Parties acknowledge that it is
------------------------------
in their best interests to arrange for water development on the Xxxxx Range to
be pursued in a manner which encourages efficient and economical use of the
water resources which are the subject of this Agreement and encourages surface
development on the Xxxxx Range. Rangeview has the objective of acquiring an
adequate water supply to provide water delivery to Water Users pursuant to this
Agreement and, subject to the terms
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of this Agreement, to apply the Export Water to a use which creates revenue and
thereby provides additional royalty payments to the Land Board. In order to
achieve this objective, the Parties acknowledge that Rangeview's first priority
for utilization of its available revenues will be the fulfillment of its
commitment to provide water service to its Water Users. The Land Board
contemplates that it may lease, sell, or otherwise dispose of portions of the
surface of the Xxxxx Range at some undetermined point in the future and
anticipates that the availability and provision of water service to the Xxxxx
Range pursuant to this Agreement may promote development on the Xxxxx Range.
3.4 RANGEVIEW. The Enterprise agrees that it shall cause Rangeview,
---------
acting directly and not through the Enterprise, to execute and deliver a
guaranty of this Agreement in the form attached hereto as Exhibit I.
ARTICLE 4
---------
Leased Premises
---------------
4.1 GENERAL DESCRIPTION OF WATER SUBJECT TO THIS AGREEMENT. Except as
-------------------------------------------------------
otherwise reserved to the Land Board in Section 5.1 below, this Agreement shall
encompass the use of all of the waters on and under the surface of the Xxxxx
Range.
ARTICLE 5
---------
Grant of Lease
--------------
5.1 GRANT. Subject to the terms, conditions and limitations set forth
-----
in this Agreement, the Land Board hereby leases to Rangeview the right and
privilege during the term of this Agreement to divert and put to beneficial use
all water on and under the surface of the Xxxxx Range, including all rights to
the first use, reuse, successive use and disposition of such water, together
with the right to use as much of the surface and underground portions of the
Xxxxx Range as provided in Article 11 of this Agreement as may be reasonably
required in the exercise of the rights granted by this Agreement, including, in
accordance with commercially reasonable and prudent water provider practice in
Colorado, the right to drill and build xxxxx, construct buildings (except office
and other such buildings not directly necessary for the extraction and
transportation of water), make excavations, stockpiles, dumps, drains, roads,
power lines, pipelines, and other improvements (all such activity hereinafter
being referred to as "Construction"), but only as may be reasonably necessary
for the development and delivery of the water pursuant to this Agreement. The
foregoing items exclusive of the reservations set forth below are collectively
referred to as the "Water Rights."
-6-
Reserving, however, to the Land Board:
(a) Except as are herein specifically granted, the right to
exercise all rights and privileges of every type and nature which are incident
to the ownership of the Xxxxx Range, or any part thereof, at any time, for any
purpose, including, without limitation, the right to explore, prospect for and
extract oil and gas and other minerals, including sand and gravel, on or under
said land, in a manner not inconsistent with the full exercise by Rangeview of
the rights and privileges herein granted;
(b) The right at any time to go upon those portions of the Xxxxx
Range not exclusively utilized by Rangeview and the right at all reasonable
times upon five (5) days' written notice during the term of this Agreement to go
upon those portions of the Xxxxx Range exclusively utilized by Rangeview and
every part thereof for the purpose of inspecting same, including metering,
measuring and other similar devices, and, in accordance with Section 7.6, to
inspect the books of accounts and records of water development and use therein,
and of ascertaining whether or not Rangeview, and those entities holding under
and buying from or contracting with Rangeview, are carrying out the terms,
covenants and agreements of this Agreement;
(c) All interests in the Water Rights and all interests in the
Xxxxx Range previously granted by the Land Board identified in EXHIBIT A;
(d) The Land Board's recharge rights set forth in 6.2(b); and
(e) A total of 1,135 acre feet annually of non-tributary and not
non-tributary (as defined by statute) water blended proportionally from all
aquifers based on water court decrees adjudicating water under the Xxxxx Range
as such decrees may be amended from time to time ("Reserved Water"). Except for
the restriction on sale set forth in Section 6.1(b), this Reserved Water shall
not be subject to this Agreement and is released by Rangeview in favor of Land
Board.
5.2 TERM. The term of the Lease commenced at 12:00 noon on May 1,
----
1982, and, as amended by this Agreement, shall expire at 12:00 noon on May 1,
2081 unless terminated earlier in accordance with the terms of this Agreement or
otherwise extended.
5.3 EFFECT OF EXPIRATION OF THE AGREEMENT. Upon expiration, or earlier
-------------------------------------
termination of the term of this Agreement, the right to the use of the
Non-Export Water shall automatically and without further act of the Parties or
anyone else revert to the Land Board. To the extent Non-Export Water is
actually being delivered to provide water service to Water Users, the Land Board
agrees that such water will continue to be made available to
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Water Users under commercially reasonable agreements to be negotiated at the
time of such expiration or termination, which agreements shall include adequate
revenue for the Land Board. In the event no agreement is reached, then the terms
of such agreements shall be determined by arbitration pursuant to Section 15.16.
5.4 LAND BOARD'S LEGAL RIGHT TO WATER. The Land Board hereby warrants
----------------------------------
and represents that, except as provided in EXHIBIT A, it has all right, title
and interest in the Water Rights granted to Rangeview and it has not granted
such rights to any other person or entity. Rangeview agrees to pursue
diligently (1) the adjudication of all of the Water Rights, and (2) the
development of the Water Rights as necessary to provide water service to Water
Users in a commercially reasonable time and manner and in accordance with
prudent water provider practice in Colorado, without cost or legal expense to
the Land Board. The Land Board shall reasonably cooperate and render assistance
with respect to all permits, applications, filings and documents related to
Rangeview's activity in adjudicating all of the Water Rights and shall be
provided courtesy copies of such papers five (5) days before they are filed. It
is further agreed by the Parties hereto that all permits, applications, filings,
documents and decrees in connection with establishing such Water Rights shall
bear the name of, and be made in the name of Land Board and, if necessary,
Rangeview, as lessee. Legal title to the Water Rights shall be held in the name
of the Land Board except to the extent reasonably necessary to include
Rangeview, as lessee, in water decrees, without cost to the Land Board, and any
water rights adjudicated on and under the Xxxxx Range shall automatically become
Water Rights under this Agreement. Nothing in this Agreement shall be deemed to
prohibit Rangeview from adjudicating in its sole name and for its sole benefit
any other Off-Site water rights not subject to this Agreement.
Unless expressly agreed to by the Land Board in writing and in its sole
discretion, the Water Rights, the water system to be constructed, and the
rights-of-way on and aquifers under the Xxxxx Range required to deliver both
Export and Non-Export Water, and any other rights granted hereunder, shall not
be used for any business or other purpose except to provide water service
consistent with this Agreement and the water decrees by which such Water Rights
have been or may be adjudicated.
5.5 SALE OF LAND. C.R.S. 36-1-118(4) provides that the Land Board may,
------------
in its discretion, offer for sale any land leased at any time during the term of
any lease as though said lease had not been executed, or it may withdraw such
land from sale during the full term of the lease. The Land Board affirms that
the right to develop, divert, convey and use the Water Rights and the interest
in the surface of the Xxxxx Range conferred by Article 11 of this Agreement
shall be withdrawn from sale until
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this Agreement terminates in accordance with the provisions hereof.
ARTICLE 6
---------
Right to Sell Water
-------------------
6.1 RANGEVIEW'S CONVEYANCE OF EXPORT WATER.
------------------------------------------
(a) As of the Effective Date and subject only to the terms of this
Agreement, Rangeview shall sell or have the right to sell the right to divert
and sell outside the Xxxxx Range the use of up to a total gross volume of
1,165,000 acre feet of the non-tributary and not non-tributary water included in
the Water Rights ("Export Water") pursuant to an agreement in the form attached
hereto as EXHIBIT C (the "Initial Permitted Sale"). The purchaser of the Export
Water, pursuant to EXHIBIT C, shall be referred to herein as the "Export Water
Contractor." The Export Water may be withdrawn only to the extent permitted by
the water decrees by which such water was adjudicated, as such decrees may be
amended from time to time, and may not be withdrawn in quantities or in any
other manner that would adversely affect the delivery of Non-Export Water to
Water Users. Notwithstanding the expiration or early termination of this
Agreement, such right to divert, sell and use the total gross volume of
1,165,000 acre feet of Export Water shall be absolute and irrevocable subject to
the provisions of Section 6.6. The diversion and use of the Export Water shall
be in accordance with the terms of the water decrees by which such water was
adjudicated, as such decrees may be amended, from time to time and will include
the right to sell all use, reuse, and successive uses of the Export Water. Upon
the sale or other disposition of all or any portion of the Export Water
following the Initial Permitted Sale, Rangeview shall cause to be paid and the
Land Board shall receive the royalty described in Section 7.2 below. The Land
Board will have no approval rights as to any sale or other disposition of the
use of the Export Water subsequent to the Initial Permitted Sale, except that
Rangeview shall provide to the Land Board written notice of and access to the
contemplated sale documents twenty-one (21) days in advance of such sale or
other disposition pursuant to Rangeview's rights as set forth in Section 12.1 of
EXHIBIT C. Contracts for sales of the use of Export Water shall provide for the
substitution of facilities and oversizing of pipes as provided in Sections 8.3
and 8.4 below and that the capital costs for the Off-Site delivery system and
oversizing of pipes will not be charged, directly or indirectly, to the Land
Board, Rangeview, or Water Users (except to the extent such facilities are
substituted for on-site service, in which case Water Users will indirectly bear
costs through rates and charges and Rangeview may incur administrative and
maintenance expenses with respect thereto). In addition, Rangeview shall cause
such contracts to provide for the payment of royalties as otherwise provided in
this Agreement.
-9-
(b) The Land Board agrees that the Reserved Water shall not be
sold by the Land Board before (i) the sale or disposition of the Export Water by
the Export Water Contractor subsequent to the Initial Permitted Sale or (ii) May
1, 2032, whichever is earlier.
(c) Rangeview is in the process of adjudicating certain tributary
waters on the Xxxxx Range. To the extent Rangeview is successful in completing
adjudication of such rights, and to the extent water is available pursuant to
such adjudication, the Export Water Contractor shall have the right at any time
during the first five (5) years following the adjudication to substitute up to
1,650 acre feet per year of non-tributary water which constitutes the Export
Water as defined in this Section 6.1 for an absolute and irrevocable decree for
up to 1,650 acre feet of tributary water. If the Export Water Contractor
exercises the foregoing right, the Export Water Contractor shall reconvey a
total gross volume of 165,000 acre feet of non-tributary water and not
non-tributary water which constitutes the Export Water to the Land Board, as
lessor, and Rangeview, as lessee, to become Non-Export Water subject to this
Agreement and the Export Water Contractor shall enter into an agreement with
Rangeview which provides that in years when less than a total of 3,300 acre feet
per year of tributary water on the Xxxxx Range is physically available, the
Export Water Contractor shall only utilize up to fifty percent (50%) of the
available tributary water unless the remaining available tributary water is not
being utilized by Rangeview, its Service Provider, or the Land Board, as
applicable, and Rangeview, its Service Provider, or the Land Board, if
applicable, agrees that it does not plan to utilize such water during the year,
in which case the Export Water Contractor may utilize the available tributary
water which Rangeview, its Service Provider, or the Land Board does not plan to
use up to a maximum of 1,650 acre feet. In no case shall Non-Export Water be
used to augment the Export Water Contractor's tributary water hereunder.
For example, if in a year there are only 2,400 acre feet of tributary water
available, the Export Water Contractor could only utilize 1,200 acre feet unless
Rangeview, its Service Provider, or the Land Board, if applicable, does not plan
to use some portion of the remaining 1,200 acre feet, in which case the Export
Water Contractor could use the unused tributary water up to a maximum of 450
acre feet for a combined total of 1,650 acre feet.
6.2 RIGHT TO ARTIFICIALLY RECHARGE.
---------------------------------
(a) Rangeview's Right to Recharge. Rangeview, the Service
--------------------------------
Provider (but only as to the provision of water to Water Users pursuant to the
Service Agreement) and the Export Water Purchaser shall have the right to
artificially recharge and to
-10-
store the recharged water in the aquifers from which such Water Rights are
withdrawn (but only to the extent all or some of the Water Rights have been
withdrawn from the aquifers by the recharging party) and to withdraw such
artificially recharged and stored water. Rangeview, the Service Provider, and
the Export Water Purchaser shall also have the right, to the extent Water Rights
have been withdrawn from the aquifers by the recharging party, to store
additionally acquired water in reservoirs on the surface of the Xxxxx Range in a
commercially reasonable manner consistent with prudent water provider practice
in Colorado and subject to the requirements set forth herein.
(i) The amount of recharged water stored in the aquifers and on the
surface in reservoirs combined cannot exceed the amount of Water Rights
withdrawn by the recharging entity from the aquifers.
(ii) If Rangeview, the Service Provider, or the Export Water
Purchaser desires to construct a surface reservoir, such entity must notify the
other entities of such intention and give them the opportunity to participate in
the project. Any such reservoir must be compatible with the existing and
reasonably projected development of the surrounding land. The Land Board shall
have the right to veto the construction of any surface reservoir if it
reasonably determines that the reservoir would adversely impact either (i) the
provision of service to Water Users, or (ii) the value of the Land Board's land
within the Xxxxx Range, based on then known facts and reasonable projections
regarding future needs of Water Users and future development of the Xxxxx Range.
Any disputes over whether the reservoir will be compatible with the development
of the surrounding land or whether the reservoir would adversely impact the
provision of service to Water Users or the value of the Land Board's land shall
be resolved by arbitration pursuant to Section 15.16 of this Agreement. The
burden of proof in such arbitration shall be on the entity desiring to construct
the reservoir. If a reservoir is constructed, the entity or entities
constructing such reservoir shall permit reasonable access to the reservoir, if
requested by surrounding land owners, municipalities, parks and recreation
districts or similar entities, provided that the access requested does not
interfere with or render more costly the planned use and operation of the
reservoir and provided that it shall not be the responsibility of Rangeview, the
Service Provider, or the Export Water Purchaser to provide amenities or safety
features to accommodate needs of such third persons unrelated to the water
service function of the reservoir.
(iii) Subject to the provisions of subsection (ii) above:
(a) Notwithstanding Article 11, if the Export Water Purchaser
plans to construct the reservoir, the Land Board shall grant to the Export Water
Purchaser a perpetual right-of-way on the land for such reservoir, which does
not
-11-
expire unless the reservoir is abandoned in accordance with Section 14.2. This
right-of-way shall be granted in exchange for payment of the then fair market
value for the land.
(b) If Rangeview or the Service Provider requests a
right-of-way for a reservoir, Rangeview shall be granted the right-of-way, and
Rangeview shall grant a license to the Service Provider, if necessary, and the
Land Board shall receive fees in accordance with Article 11.
(c) If the reservoir is planned to be jointly constructed by
Rangeview and/or its Service Provider and the Export Water Purchaser, then the
fees and rights-of-way granted will be based on the proportionate part of the
reservoir to be used by Rangeview or its Service Provider on the one hand, and
the Export Water Purchaser on the other.
For example, if Rangeview and the Export Water Purchaser agree to
construct a reservoir which will be used to store ten thousand (10,000) acre
feet of water per year and which requires a one hundred (100) acre right-of-way,
and each party intends to utilize one-half of the reservoir, then Rangeview will
pay to the Land Board the fee set forth in Section 11.2 for fifty (50) acres and
the Export Water Purchaser will pay fair market value for the remaining fifty
(50) acres. Rangeview will receive a right-of-way in the one hundred (100) acres
in the form of EXHIBIT F, and, if necessary, will license such right-of-way to
the Service Provider pursuant to a license in the form of EXHIBIT G. The Export
Water Purchaser shall receive a perpetual right-of-way in the one hundred (100)
acres. Each entity would thereafter have access to the entire reservoir but
would only have the usage rights to their undivided one-half of the reservoir.
(iv) Any artificial recharge must be done in accordance with all
applicable laws, rules, and regulations in effect at the time of such artificial
recharge, and notwithstanding such compliance, shall not interfere with or
render more burdensome or costly delivery of the Non-Export Water to Water
Users.
(v) Rangeview, the Service Provider, the Export Water Contractor, and
the Export Water Purchaser (but excluding the end user) shall be jointly and
severally liable for all damages, including without limitation, environmental or
water quality damages, if any, incurred by the Land Board or the Water Users
arising out of the artificial recharge, storage, or withdrawal of such
artificially recharged water.
(vi) Rangeview shall cause all contracts for the sale or other
disposition of the Export Water to provide that the Land Board shall be paid the
royalty required by Section 7.4(a) at the time the recharged water is withdrawn.
The royalty shall be
-12-
payable by the entity withdrawing such water and the Land Board shall have the
right to enforce such payment requirement, including the rights as provided in
Section 6.6. If there is a dispute as to the royalty attributable to such
recharged water when it is withdrawn, the royalty shall be resolved by
arbitration pursuant to Section 15.16 of this Agreement.
(vii) The right to recharge Export Water is not alienable from the
Export Water and must be sold in conjunction therewith. Subject to Section
15.19, the right to recharge sold with the Export Water shall be deemed
abandoned when the Export Water Purchaser withdraws the entire portion of the
Export Water purchased plus the entire amount of water recharged by the Export
Water Purchaser and such purchaser has failed to recharge any portion of the
aquifers for a period of ten (10) years. In the event of a dispute in the
determination of the abandonment of the right to recharge, the matter shall be
determined by arbitration pursuant to Section 15.16 of this Agreement.
(viii) Rangeview shall cause the Service Provider and the Export
Water Purchaser to comply with this Section 6.2(a) in conducting any recharge
activities permitted above.
(b) Land Board's Right to Recharge. The Land Board shall have the
------------------------------
right to artificially recharge, store and withdraw water in the aquifers
beneath the Xxxxx Range in accordance with all applicable laws, rules and
regulations in effect at the time of such artificial recharge; provided,
however, that notwithstanding such compliance, the Land Board shall not
interfere with or render more burdensome or costly the storage of or delivery of
or recharge of water by Rangeview, the Service Provider, or the Export Water
Purchaser and shall not interfere with or render more burdensome or costly the
delivery of Export Water by the Export Water Contractor if the Export Water is
sold by the Export Water Contractor on a Delivered Basis. Further, the Land
Board shall be liable for damages, including without limitation, environmental
or water quality damages, if any, incurred by Rangeview, the Service Provider,
the Export Water Contractor, the Export Water Purchaser or the Water Users
arising out of such artificial recharge, storage or withdrawal by the Land
Board.
6.3 WATER AVAILABLE TO EXPORT. The Non-Export Water (and water
----------------------------
recharged other than with respect to Export Water withdrawn) shall not be used,
transferred, sold, or otherwise disposed of Off-Site without the express written
consent of the Land Board. Disposal of untreated effluent, sewage, or sewerage
Off-Site shall be permitted only with the express written consent of the Land
Board, which consent shall not be unreasonably withheld. Rangeview shall pay to
the Land Board forty-five percent (45%) of Gross Revenues, if any, for the
disposal of untreated effluent, sewage, or sewerage Off-Site, within thirty (30)
days after receipt. In the event that Rangeview sells or
-13-
disposes of treated effluent off-site (subject to the consent required in the
first sentence of this Section 6.3), then Rangeview shall pay to the Land Board
forty-five percent (45%) of all Gross Revenues received after deduction of all
costs of treatment. If there is a dispute as to such payment, the matter shall
be resolved by arbitration pursuant to Section 15.16 of this Agreement. The Land
Board shall be provided twenty-one (21) days advance written notice and access
to contemplated contracts for the disposal of effluent, sewage, and sewerage
Off-Site.
6.4 SALE OF USE OF WATER ON THE XXXXX RANGE. Subject to the provisions
---------------------------------------
of this Agreement, Rangeview shall provide water service to all current and
future Water Users needing water service on the Xxxxx Range and shall have the
right to divert and use all Non-Export Water for such purpose. Reuse and
successive use of Non-Export Water, if any, shall be done in a commercially
reasonable manner consistent with prudent water provider practice in Colorado.
At its option, and subject to the provisions of Article 9 below, Rangeview may
enter into a Service Agreement contract to provide Non-Export Water to Water
Users substantially in the form attached hereto as EXHIBIT B (the "Service
Agreement"). To the extent that Non-Export Water is insufficient to provide
water service to Water Users, Rangeview shall be obligated to locate additional
sources of water for Water Users. Rangeview shall either acquire such
additional water and provide service to Water Users at the rates and charges set
forth in Section 8.2 or it shall notify the Land Board that it requires an
increase in the rates and charges to cover the cost of acquiring the additional
water, in which case the Land Board shall have the option of (i) permitting
Rangeview to charge such increased rates or (ii) serving any Water Users
requesting service after the Non-Export Water is committed. Rangeview agrees
that if it acquires such additional water, it shall, consistent with prudent
water provider practices in Colorado, use such water to provide water service to
Water Users without additional cost to the Land Board. Any additional water
shall not be subject to the terms of this Agreement except (i) to the extent
that such additional water is stored in aquifers beneath the surface of the
Xxxxx Range or in reservoirs on the surface of the Xxxxx Range, in which case,
such water shall thereafter be subject to the royalty set forth in Section
7.4(b) and (ii) to the extent such additional water may remain subject to the
rates and charges in Section 8.3 as described above. Such additional water
shall not be used to determine when Section 7.3(b) of this Agreement becomes
applicable and Section 7.3(b) shall not be applicable to such additional water
unless Rangeview utilizes additional water to provide water service to Water
Users when there is still sufficient Non-Export Water available on a
commercially reasonable basis and in compliance with prudent water provider
practice in Colorado to provide such service. If Rangeview does not acquire
additional water for Water Users, because the Land Board elects to serve Water
Users requesting service after the Non-Export Water is committed, then Rangeview
shall continue to
-14-
provide Non-Export Water to Water-Users who are issued taps prior to the time
when the available Non-Export Water was committed pursuant to such taps.
Rangeview shall not issue taps based on unused cumulative rights under the
decrees for the Non-Export Water. The phrase "unused cumulative rights under the
decrees" means the amount of water that could otherwise have been legally
withdrawn pursuant to the Statewide Non-Tributary Ground Water Rules, 2 C.C.R.
402-7, Rule 8A., over and above the allowed average annual amount of withdrawal
permitted under the decrees. The Land Board may utilize the Reserved Water or
any other water sources it may have or acquire, to service subsequent Water
Users. The Land Board shall have the right to jointly use and expand the
facilities constructed by Rangeview or its Service Provider to provide
Non-Export Water to Water Users to provide service to subsequent Water Users to
the same extent Rangeview would have used and expanded such facilities
consistent with prudent water provider practices in Colorado if it had acquired
additional water to service such Water Users.
6.5 QUALITY OF WATER. Unless authorized in writing by the Land Board,
-----------------
the use of Water Rights may only be sold or otherwise disposed of as water
blended proportionally from all aquifers based on water court decrees
adjudicating the Water Rights, except for the water committed pursuant to the
East Cherry Creek Agreement and the sale or disposition of any tributary water
(including the tributary water described as set forth in Section 6.1(c)).
6.6 TERMINATION OF EXPORT WATER. In the event the Export Water
------------------------------
Contractor or the Export Water Purchaser fails to pay the royalties required by
this Agreement within ten (10) business days after the applicable due date, or
takes or fails to take action which would cause material harm to the Water
Rights or the aquifers, or the surface of the Xxxxx Range then owned by the Land
Board and such action or failure is not cured within thirty (30) days after
written notice has been given by the Land Board or Rangeview specifically
setting forth the nature of the problem, or if more than thirty (30) days is
reasonably required to cure such matter complained of, if the Export Water
Contractor or Export Water Purchaser, as applicable, shall fail to commence to
correct the same within said thirty (30) day period and shall thereafter fail to
prosecute the same to completion with reasonable diligence, or commits a fraud
in the performance (as opposed to the inducement) of this Agreement, as may be
determined in a final non-appealable order of a court of competent jurisdiction,
the Land Board or Rangeview may elect to terminate the rights to the portion of
the Export Water which has not been conveyed or is not otherwise subject to a
good faith, binding agreement to be conveyed to an Export Water Purchaser and
pursue such other remedies as may be provided by law. Rangeview, at its option,
without prejudice to any other remedies it may have, may cure any of the
foregoing defaults in order to protect its rights under this Agreement without
waiting for the thirty
-15-
(30) day period to run and seek reimbursement from the Export Water Contractor
or Export Water Purchaser, as applicable, for any costs and damages associated
therewith.
ARTICLE 7
---------
Rent and Royalty Payments to Land Board
---------------------------------------
7.1 ANNUAL RENT. Rangeview shall pay annual rent ("Annual Rent") in
------------
the amount of Five Thousand Dollars ($5,000.00) to the Land Board on or before
May 1 of each year until this Agreement expires or otherwise terminates. The
Annual Rent shall be increased every five (5) years proportionally to the five
(5) year increase, in the Index. In no case shall the annual rent be reduced.
7.2 ROYALTY FOR EXPORT WATER.
---------------------------
(a) Royalty Rates for Public Versus Private Use. A sum equal to
---------------------------------------------
ten percent (10%) of the Royalty Base shall be paid to the Land Board as a
royalty in the case of a sale or other disposition of Export Water to a Title 00
xxxxx xxxxxxxx or other similar municipal or public entity, and a sum equal to
twelve percent (12%) of the Royalty Base shall be paid to the Land Board as a
royalty in the case of a sale or other disposition of Export Water to all
others. These royalty rates shall be referred to as the "Initial Export Royalty
Rates."
(b) Application of Initial Royalty Rates. In addition to the
----------------------------------------
Annual Rent, Rangeview shall pay or cause the Export Water Contractor to pay the
Initial Export Royalty Rates (subject to adjustment as provided in Section
7.2(c)) on the sale or other disposition of the Export Water. The royalty paid
to the Land Board upon a sale or other disposition of Export Water shall be
based on the greater of the following values ("Royalty Base"): (1) the Export
Water Contractor's Gross Revenues for the specific interest granted; or (2) the
value of the specific interest granted, as determined in accordance with Section
7.2(d). The Parties intend that the Royalty Base shall include, without
limitation, all Gross Revenues relative to the sale or other disposition of any
or all Export Water rights, including without limitation, option rights, the
right to first use, reuse, successive use, or any other disposition of the
Export Water.
(c) Adjustment of Initial Export Royalty Rate.
----------------------------------------------
(1) If the Export Water is sold or disposed of by the Export
Water Contractor on an Entitlement Basis to a public entity for an amount in
excess of Forty-Five Million Dollars ($45,000,000) in Gross Revenues, the
Initial Export Royalty Rate shall be increased for Gross Revenues received in
excess of $45,000,000 as follows:
-00-
Xxxxxxx
Xxxxx Xxxxxxx Rate
-------------- ----
0 - $45,000,000 10%
$45,000,000 - $60,000,000 20%
$60,000,000 - $75,000,000 30%
$75,000,000 - $90,000,000 40%
Over $90,000,000 50%
As an example, if the Export Water Contractor receives One Hundred Million
Dollars ($100,000,000) in Gross Revenues from sales of the Export Water on an
Entitlement Basis to a public entity, the Land Board will receive a royalty as
follows:
Gross Revenue Royalty
-------------- -------
the first $45,000,000 $4,500,000
the next $15,000,000 $3,000,000
the next $15,000,000 $4,500,000
the next $15,000,000 $6,000,000
the next $10,000,000 $5,000,000
(2) If the Export Water is sold by or disposed of by the
Export Water Contractor on an Entitlement Basis for a private use for an amount
in excess of Forty-Five Million Dollars ($45,000,000), the Initial Royalty Rate
shall be increased for the Export Water Contractor's Gross Revenues in excess of
Forty-Five Million Dollars ($45,000,000) as follows:
Royalty
Gross Revenue Rate
-------------- ----
0 - $45,000,000 12%
$45,000,000 - $60,000,000 24%
$60,000,000 - $75,000,000 36%
$75,000,000 - $90,000,000 48%
Over $90,000,000 50%
(3) The foregoing adjustments to the Initial Export Royalty
Rate shall also apply to sales or other dispositions on other than an
Entitlement Basis, i.e., where the Export Water Contractor bears all or part of
the costs of withdrawal, treatment or delivery. In such cases, there shall be
deducted from Gross Revenues those costs (including a reasonable overhead
allocation) which are incurred as a direct or indirect result of the incremental
activity associated with the withdrawal, treatment and delivery of the Export
Water involved on an other than Entitlement Basis. In such cases, the resulting
number (Gross Revenues less such incremental costs) shall be used as the "Gross
Revenues" number in the formulae set forth in subparagraphs 7.2(c)(1) and (2).
(d) Determination of Royalty Base.
--------------------------------
-17-
(1) If interests in the Export Water are sold or otherwise
disposed of by the Export Water Contractor on an Entitlement Basis, the value of
the Export Water shall be conclusively deemed to equal the Export Water
Contractor's Gross Revenues attributable to each acre foot of water plus Five
Hundred Dollars ($500.00) per acre foot and the $500 shall be added to Gross
Revenues for purposes of calculating the Royalty Base. The Five Hundred Dollar
($500.00) figure shall be increased or decreased every five (5) years
proportionally to the five (5) year increase or decrease in the Index.
(2) If the Export Water is sold or otherwise disposed of with the
Export Water Contractor bearing the cost of withdrawal, treatment and delivery
to a purchaser at least to the boundary of the Xxxxx Range (a "Delivered
Basis"), then the Royalty Base shall be as set forth in Section 7.2(b)(1).
(3) If the Export Water is sold other than on a Delivered Basis or
an Entitlement Basis, then each contract for the sale or other disposition of a
specific interest in the Export Water shall be delivered to the Land Board for
its review together with a written statement setting forth the Royalty Base
believed to apply to each such transaction (the "Proposed Royalty Base"). The
Land Board shall have forty-five (45) days to either approve the Proposed
Royalty Base or make its own determination of the Royalty Base. If the Land
Board does not make such determination within forty-five (45) days after receipt
of the Proposed Royalty Base, the Proposed Royalty Base shall conclusively be
deemed to have been accepted. In the event of a dispute in the determination of
the Royalty Base under this Section 7.2(d)(3), the matter shall be determined by
arbitration pursuant to Section 15.16 of this Agreement. The arbitrator shall
be required to determine a Royalty Base for a sale or other disposition under
this Section 7.2(d)(3) which results in a royalty no higher than that for a
Delivered Basis sale and no less than that for an Entitlement Basis sale.
(4) Except for the sale or disposition of Export Water on a
Delivered Basis, Rangeview shall cause each contract for the sale or other
disposition of Export Water by the Export Water Contractor to include a
requirement that the first Export Water Purchaser pay as additional
consideration ("Additional Consideration") at least five percent (5%) of such
Export Water Purchaser's Retail Sales Price at the time the Export Water is
delivered to a third person (regardless of whether such person is a retail end
user). Rangeview shall cause the Export Water Contractor to pay directly to the
Land Board an amount equal to the greater of (i) five percent (5%) of such
Export Water Purchaser's Retail Sales Price or (ii) fifty percent (50%) of such
Additional Consideration received by the Export Water Contractor.
-18-
As an example, if the Export Water Contractor sells the Export Water on an
Entitlement Basis for Two Thousand Dollars ($2,000.00) per acre/foot, plus
twelve percent (12%) of the Export Water Purchaser's Retail Sales Price, the
Land Board royalty shall be calculated as follows: the Land Board shall receive
Two Hundred Fifty Dollars ($250.00) per acre/foot (ten percent (10%) of the sum
of Two Thousand Dollars ($2,000.00) plus Five Hundred Dollars ($500.00) for each
acre foot) plus fifty percent (50%) of the twelve percent (12%) of the Retail
Sales Price when the Export Water is delivered to a third person. If the Retail
Sales Price to retail end users totals $2.00 per 1,000 gallons, then the Land
Board shall receive $.12 for each 1,000 gallons delivered to a third person even
if such third person uses such water for an augmentation plan or other
non-retail use.
(e) Subsequent to the anniversary date of this Agreement in the
year 2081, any ongoing Gross Revenues from the sale of Export Water shall belong
to and be paid to the Land Board.
7.3 ROYALTIES FOR ON-SITE USE.
----------------------------
(a) Initial Royalty. For sales or other dispositions of
----------------
Non-Export Water for use on the Xxxxx Range, Rangeview will pay to the Land
Board a royalty of twelve percent (12%) of the Gross Revenues related to the
sale or other disposition of the Non-Export Water (including any reuse or
successive use) to Water Users.
(b) Royalty at Build-Out. At such time as metered production in
----------------------
any calendar year of Non-Export Water reaches 13,000 acre feet (including any
re-use of water), or, alternatively, at such time as a total of 10,000 surface
acres on the Xxxxx Range has been (i) rezoned to a use other than agricultural,
(ii) finally platted, and (iii) water tap agreements have been entered into with
respect to all improvements to be constructed on such acreage, then the Land
Board may elect to receive, at its option, in lieu of the royalty provided in
Section 7.3(a), an amount equal to fifty percent (50%) of the collective net
profits derived by Rangeview and the Service Provider from the sale of
Non-Export Water to Water Users. Net Profits shall be defined as the Gross
Revenues received from Water Users less (i) the currently amortized portion of
applicable capital costs (assuming for purposes of this calculation that such
costs are to be amortized over the estimated useful lives of the assets
involved) incurred with respect to the Non-Export Water delivery system; and
(ii) all Operating Expenses whether incurred by Rangeview or its Service
Provider.
-19-
7.4 RECHARGE ROYALTY.
-----------------
(a) Export Water. If additional water acquired by the Export
-------------
Water Purchaser is stored pursuant to Section 6.2(a) in surface reservoirs or in
aquifers beneath the surface of the Xxxxx Range, Rangeview shall pay or cause to
be paid to the Land Board a royalty equal to ten percent (10%) (for sales or
dispositions to public entities) or twelve percent (12%) (for sales or
dispositions to all others) of the Export Water Purchaser's Retail Sales Price
at the time of the sale or other disposition of such stored or recharged water
(regardless of whether such sale or other disposition is to a retail purchaser).
(b) Non-Export Water. If additional water acquired by Rangeview
-----------------
or its Service Provider is stored pursuant to Section 6.2(a) in surface
reservoirs or in aquifers beneath the surface of the Xxxxx Range for sale or
other disposition to Water Users, Rangeview shall pay or cause to be paid to the
Land Board a royalty equal to ten percent (10%) (for sales or dispositions to
public entities) or twelve percent (12%) (for sales or dispositions to all
others) of the Retail Sales Price received by Rangeview or its Service Provider
from the sale or other disposition of such stored or recharged water to Water
Users.
7.5 PAYMENT OF ROYALTY. Payment of any royalty payable pursuant to
--------------------
this Agreement shall be deemed earned in proportionate part as Gross Revenues
derived from the subject transaction are received. In the case of an
installment sale, the royalty shall be deemed earned upon receipt of each
installment payment. The royalty on Export Water sold by the Export Water
Contractor shall be deemed earned as actual payments are made by the purchaser
of the Export Water or when the Export Water is delivered Off-Site whichever
shall first occur. Royalties earned in any calendar year quarter shall be paid
to the Land Board within thirty (30) days after the end of the quarter in which
earned. Unpaid royalties shall accrue interest at the rate of two percent (2%)
per month from the date due.
7.6 REPORTING.
---------
(a) Rangeview shall report to the Land Board the quantity of Water
Rights (including any recharged or stored water pursuant to Section 6.2(a))
delivered, the exact amount of Gross Revenues or, if applicable, Retail Sales
Price relating to the sale or other disposition of Water Rights, and the entity
to whom the Water Rights were delivered. The report shall be due within thirty
(30) days after the end of each calendar year, until such time as production of
Export and/or Non-Export Water reaches 500 acre feet in a calendar year, and
thereafter on or before the thirtieth (30th) day following the end of each
calendar quarter during the term of this Agreement.
-20-
(b) Rangeview shall, or shall cause its Service Provider and/or
the Export Water Contractor to, prepare and keep full, complete, and proper
books, records and accounts of all Water Rights (including any recharged or
stored water pursuant to Section 6.2(a)) sales or dispositions and shall
document such transactions as may be required by law. Said books, records, and
accounts of Rangeview, its Service Provider, and/or the Export Water Contractor
shall be open at all reasonable times, upon ten (10) days' prior written notice,
to the inspection of the Land Board and its representatives who may, at the Land
Board's expense, copy or extract all or a portion of said books, records, and
accounts for a period of up to five (5) years after the date such books, records
and accounts are made. The Land Board's right to inspect shall not prejudice
the Land Board's right to collect payments due pursuant to this Agreement. The
Land Board may, upon no less than fourteen (14) days' prior written notice to
Rangeview, its Service Provider, and/or the Export Water Contractor, cause a
partial or complete audit of the entire records and operations of Rangeview, its
Service Provider, and/or the Export Water Contractor for a five (5) year period
preceding the date of the audit relating to the Xxxxx Range and water use
pursuant to this Agreement to be made at the Land Board's expense by an auditor
selected by the Land Board. Within fourteen (14) days following the Land
Board's notice, Rangeview, its Service Provider, and/or the Export Water
Contractor shall make available to the Land Board's auditor the books and
records the auditor reasonably deems necessary or desirable for the purpose of
making the audit. Any deficiency in the payment of royalties determined upon
such inspection or audit shall be immediately due and payable by Rangeview, and
by the inspected or audited party if other than Rangeview, together with
interest thereon at the rate of two percent (2%) per month from the date or
dates such amounts should have been paid. If such deficiency is in excess of
two percent (2%) of the royalty previously paid, then Rangeview shall pay or
cause the audited party if other than Rangeview to pay to the Land Board the
actual cost of the audit at the time the deficiency is paid.
ARTICLE 8
---------
Development of Infrastructure
-----------------------------
and Water Service on the Xxxxx Range
------------------------------------
8.1 RANGEVIEW SHALL SERVE. Subject to the requirement that customers
-----------------------
pay any appropriate fees and charges and comply with reasonable policies, rules
and regulations which may govern the activities of Rangeview acting in its
capacity as the provider of water service to the Xxxxx Range, Rangeview shall,
consistent with the terms of this Agreement, and consistent with the obligations
of the Service Provider as set forth in Article 9 below, provide water service
during the term of this Agreement to all Water Users. All such service, whether
actually provided by Rangeview, or some other entity as may be approved by the
Land
-21-
Board, shall remain the primary obligation and responsibility of Rangeview,
and shall be provided in a commercially reasonable time and manner consistent
with prudent water service practice in Colorado.
8.2 WATER FEES AND RATES. Tap fees, usage charges, and service charges
--------------------
to Water Users on the Xxxxx Range for Non-Export Water shall not exceed the
average of those similar charges then imposed by the Town of Castle Rock, East
Cherry Creek Valley Water and Sanitation District, and Xxxxxx Water and
Sanitation District, or their respective successors.
8.3 SUBSTITUTION OF FACILITIES. All contracts for the sale of Export
----------------------------
Water shall allow Rangeview or the Service Provider, or the Land Board (upon the
expiration or termination of this Agreement), as applicable, at its option, to
utilize a portion (equal to the ratio of Export Water to Non-Export Water based
on the acre feet decreed in the now existing water court decrees, said ratio
being hereinafter referred to as the "Water Interest Ratio") of the capacity of
the ground water xxxxx which are used to produce the Export Water, under the
following conditions:
(a) Rangeview, the Service Provider or the Land Board, as
applicable, must provide substitute well capacity (the "Substitute Facilities")
of equivalent quantity and, to the extent practicable, water quality as the well
capacity utilized by the Export Water Purchaser under this Section 8.3.
(b) Subject to further substitution, the Substitute Facilities
will be dedicated to the benefit of the Export Water user. Title to the
Substitute Facilities shall be held in the same manner as title to the
facilities which they replace.
(c) The construction and operation of the Substitute Facilities
are intended to enable Rangeview, the Service Provider or the Land Board, as
applicable, to incrementally expand the delivery system for the Export Water to
provide service to those areas of the Xxxxx Range on which the Export Water
delivery system has already been developed.
(d) The intent of this Section 8.3 is to allow Rangeview, the
Service Provider or the Land Board, as applicable, the use of that portion of
the Export Water delivery system, utilizing the excess capacity as discussed in
Section 8.4, to provide water service to the Xxxxx Range. The further intent of
this Section 8.3 is to ensure that facilities initially constructed to serve
Export Water will, as necessary, be available for service to the Xxxxx Range if
Substitute Facilities are constructed and dedicated to the Export Water user as
outlined in Sections 8.3(a) and (b). The Export Water user will have the same
opportunity to substitute facilities from the Non-Export Water delivery system
for the Export Water delivery system so that the well field is developed in a
manner reasonably
-22-
consistent with the master plan attached hereto as EXHIBIT D. The well field and
Export Water and Non-Export Water delivery systems, when fully completed, shall
have been developed in a manner such that each of Rangeview, the Service
Provider, or the Land Board, as applicable, on the one hand, and the Export
Water Purchaser(s), on the other, shall bear the economic burden of developing
their proportionate part of the total infrastructure based on the ratio of Water
Rights used on the Xxxxx Range and outside the Xxxxx Range.
(e) In the event a dispute arises concerning substitution of
facilities pursuant to this Section, the dispute shall be resolved by
arbitration pursuant to Section 15.16 of this Agreement.
8.4 RIGHT TO USE TRANSMISSION LINES; INFRASTRUCTURE. All contracts for
-----------------------------------------------
the sale of Export Water will provide for construction of excess capacity in
Export Water transmission lines only within the Xxxxx Range, so as to
accommodate the transmission of water for on-site use within that portion of the
Xxxxx Range which may be served by those lines. The Service Provider,
Rangeview, or the Land Board, as applicable, shall have access to and the right
to use a portion of the capacity of any and all Export Water transmission lines
on the premises to the extent set forth in EXHIBIT E attached hereto. The well
field and delivery system built for delivery of Export Water must be built in a
commercially reasonable manner using accepted engineering practices considering
the requirements of Section 8.3 and 8.4 related to the development of
infrastructure for water service on the Xxxxx Range. The costs of constructing
(1) infrastructure to deliver Export Water; and (2) the excess pipeline capacity
required by this Section will not be paid, directly or indirectly, by Rangeview,
the Land Board, or Water Users (except to the extent such facilities are
substituted for on-site service, in which case Water Users will indirectly bear
costs through rates and charges and Rangeview may incur administrative and
maintenance expenses with respect thereto). Ownership of the excess capacity
needed for on-site use will be transferred to Rangeview, the Service Provider,
or the Land Board, as applicable, at such time as such capacity is utilized,
under agreements which provide for the payment by Rangeview, the Service
Provider, or the Land Board, as applicable, of a proportionate share of
operation, maintenance and replacement costs.
8.5 TITLE TO EQUIPMENT AND IMPROVEMENTS. Rangeview acknowledges and
---------------------------------------
shall cause its Service Provider to acknowledge that equipment and improvements
placed on the Xxxxx Range are subject to the provisions of this Agreement.
Rangeview shall pay or cause its Service Provider to pay all taxes, fees,
assessments or other charges, if any, which may be assessed upon or become due
with respect to, the equipment and improvements during the term of this
Agreement. On the Effective Date, this Agreement
-23-
shall be recorded with the Clerk and Recorder for Arapahoe County.
8.6 FUTURE LEASES. The Parties acknowledge that the Xxxxx Range is tax
-------------
exempt as long as it is owned by the Land Board or another tax exempt entity and
that the operation of Rangeview is based upon a revenue and not a tax base. The
provisions of any leases or contracts for exchanges, sales or other dispositions
pertaining to any interest in the surface of the Xxxxx Range shall not restrict
the ability of Rangeview to sell water to, and receive revenue from, Water
Users. Unless expressly authorized in writing by the Land Board or unless
otherwise required by law, Rangeview will not impose taxes, assessments or other
charges of any kind on Water Users in connection with the provision of, or cost
to deliver, Non-Export Water to such Water Users except as contemplated by
Section 8.2; provided that Rangeview may assess amounts it is required to pay in
lieu of taxes pursuant to Sec. 36 1-120.5(5), 15 C.R.S. (1990 Rplc.).
8.7 RANGEVIEW DISTRICT BOUNDARIES. Subject to complying with
-------------------------------
reasonable policies, rules and regulations which may govern the activities of
Rangeview, and to the extent permitted by law, upon petition for inclusion by a
landowner within the Xxxxx Range qualified under Title 32 or other appropriate
action thereafter, Rangeview shall cooperate and, with due diligence proceed to
take action pursuant to law, to include such area as may be designated by such
petition or other action within Rangeview's district boundaries.
8.8 DEVELOPMENT OF XXXXX RANGE. Rangeview shall have no obligation to
---------------------------
promote development of the Xxxxx Range, other than its obligation under this
Agreement to provide water service and associated infrastructure as a prudent
water provider to meet all reasonable Water User demands, if and when a demand
may arise. The nature, timing, financing, and approval of development of any
land uses shall be the sole responsibility of the Land Board. The Land Board
makes no representation as to if, when, and how the land development, if any, on
the Xxxxx Range will occur, or as to the density of any such development.
8.9 RESERVES. Rangeview shall establish and maintain a maintenance and
--------
operating reserve for providing Non-Export Water to Water Users in accordance
with Section 8.1. The amount of such reserve shall be at least equal to
thirty-three and one-third per cent (33-1/3%) of the Operating Expenses budgeted
by Rangeview and, if applicable, its Service Provider, for the then current
calendar year. In establishing such reserve initially and in increasing the
amount of such reserve as a result of an increase in budgeted Operating Expenses
or an expenditure which diminishes the reserve below the required amount,
Rangeview shall allocate any available funds not budgeted to other proper and
necessary functions of Rangeview toward building such reserve. Such reserve
funds shall be continuously maintained and may be
-24-
utilized by Rangeview solely for paying lawful obligations relating to the
provision of Non-Export Water to Water Users as required by Section 8.1.
ARTICLE 9
---------
Service Provider Contract
-------------------------
9.1 SERVICE PROVIDER FOR RANGEVIEW. As of the Effective Date, at its
--------------------------------
option Rangeview may enter into a contract pursuant to which a Service Provider
will provide the service of delivering Non-Export Water to the current and
future Water Users pursuant to and consistent with the terms of this Agreement.
Rangeview shall not enter into any Service Provider contract except as
contemplated by the Settlement Agreement without the express written consent of
the Land Board. All Service Provider contracts shall be in the form of EXHIBIT
B only with such changes as may be approved in writing by the Land Board. If
Rangeview chooses to contract with a Service Provider to provide Non-Export
Water services on the Xxxxx Range, Rangeview shall cause such Service Provider
to comply with all obligations of Rangeview under this Agreement relating to
Non-Export Water services on the Xxxxx Range. Rangeview agrees (and will cause
any other Service Provider to agree) that:
(a) The Service Provider contract cannot be assigned or
transferred without the express written consent of the Land Board, which consent
may be withheld by the Land Board in its sole discretion. The Service Provider
contract cannot be amended without the express written consent of the Land
Board, which consent shall not be unreasonably withheld.
(b) Any breach by the Service Provider of its obligations under
its Service Provider contract with Rangeview shall constitute a breach of this
Agreement by Rangeview subject to Rangeview's right to cure such breach or
default.
(c) Ten (10) days prior to the execution of any construction or
financing contracts by Rangeview or the Service Provider in excess of Five
Hundred Thousand Dollars ($500,000) related to the provision of Non-Export Water
Service to Water Users (including contracts for the disposal of effluent, sewage
or sewerage as permitted under Section 6.3 of this Agreement), Rangeview shall
provide or cause the Service Provider to provide the Land Board with courtesy
copies of such contracts (drafts being acceptable if finals are not yet
available).
(d) Water service on the Xxxxx Range shall be provided as needed
in a commercially reasonable time and manner consistent with prudent water
service practice in Colorado if and when development of the surface of the Xxxxx
Range may occur.
-25-
(e) If there is an approved Service Provider, all financing for
infrastructure for delivery of Water Rights and all costs of operation,
maintenance, debt service and repair to provide water service to Water Users
will be provided without cost to Rangeview, the Land Board or any Water User on
the Xxxxx Range, except to the extent paid for with the water fees and rates
described in Section 8.2, and Rangeview shall not issue bonds to finance such
infrastructure or service.
(f) Re-use and successive use of Non-Export Water, if any, shall
be done in a commercially reasonable manner consistent with prudent water
provider practice in Colorado.
(g) Except for the disposal of effluent, sewage or sewerage
Off-Site as provided in Section 6.3 of the Agreement, none of the Non-Export
Water, including all re-use and successive uses of such water, shall be used,
sold, transferred, or otherwise disposed of outside the Xxxxx Range without the
express written consent of the Land Board.
(h) If the Service Provider decides not to provide or not to
continue providing service to Water Users on the Xxxxx Range during the term of
this Agreement, then Rangeview shall require the Service Provider to give one
(1) year's prior written notice to Rangeview which written notice shall be
transmitted by Rangeview to the Land Board. During such one-year period, the
Service Provider shall continue to provide service in accordance with the terms
of the Service Agreement, unless Land Board and Rangeview require the Service
Provider to discontinue providing services prior to the expiration of such
one-year period.
(i) Rangeview and its Service Provider shall, at all times, act in
a commercially reasonable manner consistent with prudent water provider practice
in Colorado.
(j) If and to the extent at any time monies are not available to
Rangeview to fund the reserve which Rangeview is required to maintain pursuant
to Section 8.9 or if monies in such reserve are withdrawn such that the amount
of the reserve drops below the amount which Rangeview is required to maintain
and such reserve cannot reasonably be expected to be reestablished from
anticipated income to Rangeview within one year, then Rangeview shall promptly
notify the Service Provider of such fact and the Service Provider shall within
thirty (30) days deliver funds to Rangeview sufficient to replenish the reserve
fund to its required level. Notwithstanding the fact that the reserve can
reasonably be expected to be reestablished within one year, the Service Provider
shall be required to deliver funds to Rangeview sufficient to replenish the
reserve fund to its required level at the time the Service Provider discontinues
service.
-26-
ARTICLE 10
----------
East Cherry Creek Valley
------------------------
Water and Sanitation District
-----------------------------
10.1 TERMS AND REVENUE. The terms of the East Cherry Creek Agreement
-------------------
are not altered or affected by this Agreement, nor is its duration extended.
All revenue paid by ECCV pursuant to the East Cherry Creek Agreement subsequent
to the Effective Date of this Agreement shall be paid as follows: fifty percent
(50%) to be paid by Rangeview directly to the Land Board (unless ECCV agrees to
pay such fifty percent (50%) directly to the Land Board) and fifty percent (50%)
to be paid by ECCV directly to Rangeview. Rangeview further agrees that within
ten (10) days following the Effective Date, Rangeview shall pay the Land Board
ten percent (10%) of all revenues paid by ECCV for January and February 1995 and
fifty percent (50%) of all revenues paid by ECCV to Rangeview for the period
from March 1, 1995 through the Effective Date. No additional royalty with
respect to the revenue derived from the East Cherry Creek Agreement shall be
payable to the Land Board.
10.2 TITLE REVERSION. Upon the expiration or termination of the East
----------------
Cherry Creek Agreement, for whatever reason, all interests in the water,
infrastructure, and leased premises related thereto, to the extent provided for
in the East Cherry Creek Agreement, shall automatically and without further act
of the Parties or anyone else revert to the Land Board free and clear of this
Agreement. Failure of Rangeview to contest the expiration or termination of the
East Cherry Creek Agreement, which the Land Board contends expires in 2032,
shall not be a default under this Agreement. The Land Board agrees not to take
any action inconsistent with the Land Board's rights, duties, and obligations of
this Agreement which would cause Rangeview to be in default or otherwise result
in liability to Rangeview under the East Cherry Creek Agreement. Nothing in the
preceding sentence shall prevent the Land Board or Rangeview from taking any
actions they are permitted to take by law with respect to ECCV.
ARTICLE 11
----------
Rights-of-Way
-------------
11.1 MASTER PLAN. The Parties agree to a master plan of rights-of-way,
-----------
which plan is attached to this Agreement as EXHIBIT D. To the extent not
already granted, the rights-of-way described on EXHIBIT D shall be granted by
Land Board to Rangeview within sixty (60) days of Rangeview's complete
application with Land Board for specific rights-of-way, provided that the
requested rights-of-way are necessary for construction of facilities within a
reasonable time after the rights-of-way are to be granted. The grant shall be
made in accordance with the form attached as EXHIBIT F, which form may be
amended to
-27-
comply with applicable statutes, regulations and Land Board policy directives
from time to time. Said master plan may be amended by Land Board for the
convenience of the Parties, provided that any such amendment shall not
materially adversely affect the rights and privileges of any Party. The total
acres of rights-of-way shall not be reduced and the Land Board may relocate
rights-of-way, whether planned or in use, for the commercially reasonable
development of the Xxxxx Range. If the Land Board relocates rights-of-way which
are in use by Rangeview, its Service Provider, or the Export Water Purchaser (or
which any such entity has expended funds to develop for use), then the Land
Board must pay the affected entities' costs associated with relocating such
rights-of-way.
11.2 FEE FOR RIGHT-OF-WAY. Rangeview shall pay Land Board an amount
----------------------
equal to Fifty Dollars ($50.00) per acre of the surface land utilized at the
time of granting a right-of-way, which, commencing with the Effective Date of
this Agreement, shall be increased every five (5) years proportionally to the
five (5) year increase in the Index. In no case shall the rights-of-way fee be
reduced. Land Board shall include a description of the master plan of
rights-of-way in subsequent leases, sales or other dispositions pertaining to
the Xxxxx Range and shall, subject to the amendment provisions set forth in
Section 11.1, be bound by such master plan in all subsequent leases, sales or
other dispositions.
11.3 LICENSE TO SERVICE PROVIDER. To the extent necessary to implement
---------------------------
the intent of Article 11, Rangeview may grant to its Service Provider and/or the
Export Water Purchaser a license to use the rights-of-way granted by the Land
Board to Rangeview for the purposes contemplated by this Agreement. Such
licenses shall be in the forms attached hereto as EXHIBITS G and H,
respectively.
ARTICLE 12
----------
Bonding Requirements
--------------------
12.1 BOND. No operations are to be commenced on the Xxxxx Range until
----
Rangeview, its Service Provider, the Export Water Purchaser or their agents have
filed good and sufficient bonds with Land Board consistent with the requirements
of C.R.S. Sec.00-00-000 and Sec.36-1-129 in an amount fixed by Land Board, to
secure the payment for damages, losses or expenses caused by Rangeview, its
Service Provider, the Export Water Purchaser or their agents as a result of
operations on or under the Xxxxx Range. Land Board may waive the bonding
requirements, in its discretion, and may require that the bond be maintained in
full force and effect for one (1) year after cessation of the operations for
which the bond was intended.
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12.2 BOND OF CONTRACTORS. Bonds provided by contractors for
---------------------
construction activities to Rangeview, its Service Provider, or the Export Water
Purchaser may list Land Board as a coinsured. As long as such bonds otherwise
comply with Section 12.1 above and list Land Board as coinsured, the contractors
shall not be required to obtain any other bonds for the Land Board. Contracts
entered into by Rangeview, its Service Provider or the Export Water Purchaser
which constitute public works shall comply with Sec. 00-00-000, 103.5 and 103.6,
10B C.R.S. (1988 Rplc.).
ARTICLE 13
----------
Default and Remedies
--------------------
13.1 EVENTS OF DEFAULT. The following events shall hereinafter be
-------------------
referred to as "Events of Default":
(a) Rangeview shall default in the due and punctual payment of
royalties, rents or any other amounts payable hereunder, and such default shall
continue for ten (10) business days after the applicable due date;
(b) This Agreement shall be transferred to or shall pass to or
devolve upon any other person or party except as expressly permitted by this
Agreement;
(c) This Agreement or the Non-Export Water or any part thereof
shall be taken upon execution or by other process of law directed against
Rangeview, or shall be taken upon or subject to any attachment at the instance
of any creditor or claimant against Rangeview, and said attachment shall not be
discharged or disposed of within sixty (60) days after the levy thereof;
(d) Rangeview shall file a petition in bankruptcy or insolvency or
for reorganization or arrangement under the bankruptcy laws of the United States
or under any insolvency act of any state, or shall be dissolved or shall make an
assignment for the benefit of creditors;
(e) Involuntary proceedings under any such bankruptcy law or
insolvency act or for the dissolution of Rangeview shall be instituted against
Rangeview, or a receiver or trustee shall be appointed for all or substantially
all of the property of Rangeview, and such proceeding shall not be dismissed or
such receivership or trusteeship vacated within sixty (60) days after such
institution or appointment;
(f) If either party shall fail to perform any material term,
covenant or condition herein contained and such failure shall continue and not
be cured for a period of thirty (30) days after written notice specifically
setting forth the nature of the default has been given by the non-defaulting
party to the defaulting party, or if more than thirty (30) days is reasonably
-29-
required to cure such matter complained of, if the defaulting party shall fail
to commence to correct the same within said thirty (30) day period and shall
thereafter fail to prosecute the same to completion with reasonable diligence.
For purposes of this subparagraph (f), if Rangeview has a Service Provider and
such Service Provider shall breach any of its obligations to Rangeview, or if
the Export Water Contractor shall breach any of its obligations to Rangeview, or
if the Export Water Purchaser shall breach any of its obligations to Rangeview
or the Export Water Contractor, and such acts or omissions also constitute or
result in the failure to perform a material obligation for which Rangeview has
responsibility hereunder, then the same shall constitute a material failure of
performance by Rangeview. Further in such event, the thirty (30) day period
provided in the first sentence of such subparagraph (f) shall be extended up to
a maximum of sixty (60) days if Rangeview first attempts to require its Service
Provider, the Export Water Contractor, or the Export Water Purchaser, as
applicable, to cure during any applicable cure period provided in the agreements
applicable to the defaulting party, so that if in such case the Service
Provider, the Export Water Contractor, or the Export Water Purchaser, as
applicable, fails to cure, Rangeview itself shall have an additional thirty (30)
days to cure such material failure of performance. Thus, for example, if such a
material failure of performance results from an act or omission of Rangeview's
Service Provider, the Land Board may immediately give Rangeview notice regarding
the same and thereby commence the running of Rangeview's cure period. That
period would be thirty (30) days, unless Rangeview in turn gives notice to its
Service Provider and commences an applicable cure period under the Service
Provider Agreement, in which case if the Service Provider fails to cure,
Rangeview would have an additional thirty (30) days to cure; provided that no
more than a total of sixty (60) days shall be allowed for such cure period
(subject to any reasonably required extension as provided in the first sentence
of this paragraph (f)).
13.2 REMEDIES. If any one or more Events of Default shall occur and
--------
not be cured within any applicable cure period, then:
(a) If Rangeview is the defaulting party, Land Board, without
prejudice to any other remedies that it may have, may give written notice of its
intention to terminate this Agreement on the date of such notice or on any later
date specified in such notice, and, on the date specified in such notice,
Rangeview's right to possession of the premises will cease and this Agreement
will be terminated (except as to Rangeview's liability set forth in this Section
13.2) as if the expiration of the term fixed in such notice were the end of the
term of this Agreement. In connection with such termination, Land Board with
notice may re-enter and take possession of the leased premises or any part
thereof (subject to any existing licenses related to delivery of Export Water)
and repossess the same as the Land Board's former
-30-
estate, and expel Rangeview from the premises and those claiming through or
under Rangeview except with respect to the Export Water, and remove the effects
of both or either, without being deemed guilty of any manner of trespass and
without prejudice to any other remedies. In the event of such termination,
Rangeview and its Service Provider shall surrender and peacefully deliver to the
Land Board the above-described land and the Non-Export Water, and such land as
was in Rangeview's possession or control shall be returned to the Land Board in
good condition (subject to any existing licenses related to the delivery of
Export Water), and the Land Board shall be entitled to the return of all
Non-Export Water, plus the title to all infrastructure built to divert or
withdraw and deliver Non-Export Water and any other interest in shared
facilities for use with the Non-Export Water, plus the revenue stream associated
with such Non-Export Water and the East Cherry Creek Agreement, and the reserves
required to be maintained by Rangeview pursuant to Section 8.9. Upon such
termination, if Rangeview shall remain in possession of any part of the Xxxxx
Range (subject to any existing licenses related to delivery of Export Water) or
Non-Export Water, Rangeview shall be guilty of an unlawful detainer and shall be
subject to eviction or removal, forcibly or otherwise, to the extent provided by
law.
(b) In the Event of Default by either party, the non-defaulting
party shall be entitled to any and all damages proximately caused by the default
or breach and its costs and reasonable attorney fees from the defaulting party.
In addition, Rangeview shall be entitled to specifically enforce performance by
the Land Board of the Land Board's obligations under this Agreement.
13.3 NO WAIVER. No failure by Rangeview or the Land Board, to insist
----------
upon the strict performance of any agreement, term, covenant or condition hereof
or to exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial payment of any amount payable during the
continuance of any such breach, shall constitute a waiver of any such breach of
such agreement, term, covenant or condition hereof to be performed or complied
with by Rangeview or the Land Board, as the case may be. No breach thereof
shall be waived, altered, or modified except by written instrument executed by
the Land Board, or Rangeview, as the case may be. No waiver of any breach shall
affect or alter this Agreement, but each and every agreement, term, covenant and
condition hereof shall continue in full force and effect with respect to any
other then-existing or subsequent breach thereof. Notwithstanding any
termination of this Agreement, the same shall continue in force and effect as to
any provisions hereof which require observance or performance of Rangeview or
Land Board subsequent to termination.
13.4 LAND BOARD'S RIGHT TO CURE RANGEVIEW'S BREACH. The Land Board
-------------------------------------------------
may, but shall not be obligated to, cure any default by Rangeview, specifically
including, but not by way of
-31-
limitation, Rangeview's failure to pay any tax due hereunder, obtain insurance,
make repairs, or satisfy lien claims, after providing reasonable notice to
Rangeview, and whenever the Land Board so elects, all costs and expenses paid by
the Land Board in curing such default, including, without limitation, reasonable
attorneys' fees, shall be so much additional rent due ten (10) days after such
payment together with interest at the rate of two percent (2%) per month from
the date of advancement to the date of repayment by Rangeview to the Land Board.
ARTICLE 14
----------
Improvements
------------
14.1 TRANSFER OF IMPROVEMENTS. In the event this Agreement is
--------------------------
terminated by forfeiture, surrender, or election upon default or breach, and no
later than the expiration of this Agreement, title to all improvements and
equipment and related permits and licenses and all rights-of-way on the Xxxxx
Range exclusively for delivering Non-Export Water and interests in shared
facilities used for delivery of Non-Export Water shall automatically, without
the necessity of any further action by the Parties or anyone else, revert and be
transferred to the Land Board as of the date of such forfeiture, surrender,
election, upon default or breach, or as of the expiration of the Agreement.
Such automatic reversion and transfer shall be conclusively evidenced of record
by the Land Board's filing with the Clerk and Recorder for Arapahoe County a
certificate stating the fact of such reversion and transfer. Title to
improvements and rights-of-way on the Xxxxx Range for the sale of the use of
Export Water including, without limitation, the East Cherry Creek Agreement,
shall not be affected by termination of this Agreement.
14.2 ABANDONMENT OF EXPORT WATER FACILITIES. Once the Export Water
------------------------------------------
Purchaser withdraws the entire portion of the Export Water purchased plus the
entire amount of water recharged by the Export Water Purchaser and such
purchaser has failed to recharge any portion of the aquifer for a period of ten
(10) years, the Land Board shall have the right to notify the Export Water
Purchaser in writing of its intention to declare the rights-of-way, improvements
and equipment on the Xxxxx Range owned or licensed by such Export Water
Purchaser as abandoned. The Export Water Purchaser shall have three (3) months
from receipt of such notice to remove any improvements and equipment which can
be removed without damaging the Xxxxx Range or any shared facilities. At the
end of such three (3) month period, title to any improvements and equipment then
remaining and all rights-of-way shall automatically, without necessity of any
further action by the Export Water Purchaser or anyone else, revert and be
transferred to the Land Board as of such date. Such automatic reversion and
transfer shall be conclusively evidenced of record by the Land Board's filing
with the Clerk and Recorder for Arapahoe County a certificate stating the fact
of such reversion
-32-
and transfer. In the event of a dispute regarding this Section 14.2, the matter
shall be determined by arbitration pursuant to Section 15.16 of this Agreement.
ARTICLE 15
----------
General Provisions
------------------
15.1 ASSIGNMENT BY RANGEVIEW. Rangeview may assign its interest in
-------------------------
this Agreement, but only upon terms expressly approved in writing by the Land
Board in its sole discretion. Any attempted assignment in contravention of this
section shall be null and void.
15.2 WORK REQUIREMENTS. To the extent work is performed on the Xxxxx
------------------
Range directly by (i) Rangeview or its Service Provider (ii) independent
contractors of Rangeview or its Service Provider or (iii) a permitted assignee
(in which case any reference to Rangeview shall be deemed to be a reference to
the assignee where appropriate), the following shall apply:
(a) Indemnity. Rangeview and its Service Provider shall jointly
---------
and severally indemnify and hold harmless the Land Board against and from all
liabilities, claims and demands, settlement or litigation expenses and related
attorneys' fees (hereafter "Indemnified Items") for personal injury or property
damage arising out of, or caused by, any act or omission of Rangeview, its
Service Provider, or their contractors, agents or employees.
(b) Insurance. Rangeview shall at all times carry insurance in
---------
the amounts and for the liabilities required by Sec. 00-00-000, 10A C.R.S. (1988
Repl.), as amended, which insurance shall name the Land Board as an additional
insured. Rangeview shall require its Service Provider at all times to carry
insurance in amounts and with carriers reasonably acceptable to the Land Board
for worker's compensation coverage in accordance with Colorado law, and for
public liability insurance covering death and bodily injury with limits of not
less than One Million Five Hundred Thousand Dollars ($1,500,000.00) for one
person, and Five Million Dollars ($5,000,000.00) for any one accident or
disaster, and property damage coverage with limits of not less than Five Hundred
Thousand Dollars ($500,000.00), which insurance shall name the Land Board as an
additional insured. The Land Board reserves the right to reasonably increase the
limits of insurance required of the Service Provider as the Land Board may deem
appropriate from time to time; provided that, if Rangeview or the Service
Provider disputes the reasonableness of such increase, the matter shall be
submitted to arbitration as provided in Section 15.16.
(c) Liens. Except with respect to liens or encumbrances expressly
-----
permitted hereunder, Rangeview and its
-33-
Service Provider shall jointly and severally indemnify and hold the Land Board
harmless from and against all Indemnified Items relating to liens or claims of
right to enforce liens arising from actions of Rangeview or its Service
Provider, their contractors and agents. Rangeview and its Service Provider shall
promptly cause any such lien to be removed notwithstanding the fact that
Rangeview may believe that there is a valid defense to any such claim. Rangeview
and its Service Provider shall retain the right to pursue any claims against the
claimant after any such lien is removed.
(d) Permits and Licenses. Rangeview and its Service Provider
---------------------
shall, at their own expense, apply for and obtain all necessary building,
occupancy, well and other permits and licenses which may be required by any
governmental entity which has jurisdiction over the operations to be performed
pursuant to this Agreement. Copies of all such permits and licenses shall be
provided to the Land Board.
(e) Taxes. Rangeview and its Service Provider shall be jointly
-----
and severally responsible for and shall pay all taxes, fees and assessments,
including payments pursuant to Sec. 36-1-120.5(5), 15 C.R.S. (1990 Rplc.), if
any, in connection with the work, improvements, facilities or the materials to
be utilized in accomplishing the activities of Rangeview or its Service Provider
pursuant to this Agreement.
15.3 THIRD PARTY BENEFICIARIES. Except as otherwise contemplated by
---------------------------
the provisions of this Agreement, it is not the intent of the Parties, nor shall
it be the effect of this Agreement, to vest rights of any nature or form in
individuals or entities not executing this Agreement.
15.4 NOTICE. All notices required by this Agreement shall be in
------
writing and shall be delivered to the person to whom the notice is directed,
either in person, by courier service or by United States mail as a certified
item, return receipt requested, addressed to the address stated below. Notices
delivered in person or by courier service shall be deemed given when delivered
to the person to whom the notice is directed. Notices delivered by mail shall
be deemed given on the date of delivery as indicated on the return receipt. The
Parties may change the stated address by giving ten (10) days' written notice of
such change pursuant to this section.
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>RANGEVIEW METROPOLITAN DISTRICT:
Rangeview Metropolitan District
000 Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
With a copy to:
Pure Cycle Corporation
0000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: President
STATE BOARD OF LAND COMMISSIONERS:
Board of Land Commissioners
Attention: President
620 Centennial Building
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
With a copy to:
Office of Attorney General
Attn: State Land Board Attorney
0000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
15.5 CONSTRUCTION. Where required for proper interpretation, words in
------------
the singular shall include the plural, and the masculine gender shall include
the neuter and the feminine, and vice versa, as is appropriate. The article and
section headings are for convenience and are not a substantive portion of this
Agreement. This Agreement shall be construed and interpreted in accordance with
the laws of the State of Colorado. It shall be construed as if it were equally
drafted in all aspects by all Parties.
15.6 ENTIRE AGREEMENT. This Agreement, including the items attached in
----------------
accordance with the provisions of this Agreement and Service Provider Agreement
and the Settlement Agreement and Mutual Release of even date herewith,
constitute the entire agreement among the Parties pertaining to the subject
matter of this Agreement and supersede all prior and contemporaneous agreements
and understandings of the Parties as to the subject matter of this Agreement.
No representation, warranty, covenant, agreement
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or condition not expressed in this Agreement shall be binding upon the Parties
or shall change or restrict the provisions of this Agreement.
15.7 AUTHORITY. Each of the Parties represents and warrants that it
---------
has all requisite power, corporate and otherwise, to execute, deliver and
perform its obligations pursuant to this Agreement, that the execution, delivery
and performance of this Agreement and the documents to be executed and delivered
pursuant to this Agreement have been duly authorized by it, and that upon
execution and delivery, this Agreement and all documents to be executed and
delivered pursuant to this Agreement will constitute its legal, valid and
binding obligations, enforceable against it in accordance with their terms.
15.8 COPIES. Numerous copies of this Agreement have been executed by
------
the Parties. Each such executed copy shall have the full force and effect of an
original, executed Agreement.
15.9 AMENDMENT. This Agreement shall not be amended except by a
---------
writing executed by all Parties.
15.10 COMPLIANCE WITH LAW. Rangeview and the Land Board covenant and
---------------------
agree that during the continuance of this Agreement, they shall comply fully
with all provisions, terms, and conditions of all laws whether state or federal,
and orders issued thereunder, which may be in effect during the continuance
hereof, which in any manner affect their operations and the Xxxxx Range and the
Water Rights which are the subject of this Agreement.
15.11 BINDING EFFECT. The benefits and terms and obligations of this
---------------
Agreement shall extend to and be binding upon the successors or permitted
assigns of the respective Parties hereto.
15.12 SEVERABILITY. If any clause or provision of this Agreement is
------------
illegal, invalid or unenforceable under present or future laws effective during
the term of this
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Agreement, then and in that event, it is the intention of the Parties hereto
that the remainder of this Agreement shall not be affected thereby. It is also
agreed that in lieu of each clause or provision of this Agreement that is
illegal, invalid or unenforceable, there shall be added as a part of this
Agreement a clause or provision as similar in terms to such illegal, invalid or
unenforceable clause or provision as may be possible and be legal, valid and
enforceable.
15.13 OPTIMUM LONG-TERM REVENUE. C.R.S. Sec. 36-1-118(1)(a) states
---------------------------
that the public lands of the State of Colorado may be leased by the Land Board
in such manner and to such persons as will produce an optimum long-term revenue.
Article IX, Section 10 of the Colorado Constitution provides that the Land Board
shall provide for the disposition of lands in such manner as will secure the
maximum possible amount therefor. The Land Board determines that, under all
existing facts and circumstances, this Agreement constitutes an arrangement
which will produce an optimum long-term revenue and meet the requirements of
C.R.S. Sec. 36-1-118(1)(a) and Article IX, Section 10 of the Colorado
Constitution.
15.14 FURTHER ASSURANCE. Each of the Parties hereto, at any time and
------------------
from time to time, will execute and deliver such further instruments and take
such further action as may reasonably be requested by the other Party hereto, in
order to cure any defects in the execution and delivery of, or to comply with or
accomplish the covenants and agreements contained in, this Agreement and/or any
other agreements or documents related thereto.
15.15 GOVERNING LAW. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Colorado and applicable federal law.
15.16 ARBITRATION. Any controversy or claim arising out of or relating
-----------
to the computation of royalties or net profits interest under this Agreement,
and all other controversies or claims which the Parties have expressly agreed
herein shall be submitted to arbitration, shall be settled by
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arbitration administered by the American Arbitration Association in accordance
with its commercial rules, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. Rangeview
and the Land Board agree that the Service Provider, the Export Water Contractor,
or the Export Water Purchaser, as applicable, may participate directly in any
arbitration which affects such entity's rights and/or obligations with respect
to the Water Rights; provided such entity agrees to be bound by the arbitration
award to the same extent as the Land Board and Rangeview.
15.17 LITIGATION. Except as provided in Section 15.16 above, in the
----------
event of claims, disputes or other disagreements between the Parties which the
Parties are not able to resolve amicably, either party may bring suit in a court
of competent jurisdiction seeking resolution of the matter.
15.18 DUTY OF GOOD FAITH AND FAIR DEALING. The parties acknowledge and
------------------------------------
agree that each party has a duty of good faith and fair dealing in its
performance of this Agreement. Rangeview will advise the Land Board of its and
its Service Provider's activities no less than annually until such time as
production of Water Rights exceeds 500 acre feet per year and thereafter,
quarterly during the term of this Agreement and will respond to reasonable
requests of the Land Board for additional information on Rangeview's and its
Service Provider's activities affecting the Xxxxx Range.
15.19 FORCE MAJEURE. Should either Party be unable to perform any
---------------
obligation required of it under this Agreement, other than the payment of money,
due to any cause beyond its control (including, but not limited to war,
insurrection, riot, civil commotion, shortages, strikes, lockout, fire,
earthquake, calamity, windstorm, flood, material shortages, failure of any
suppliers, freight handlers, transportation vendors or like activities, or any
other force majeure), then such party's performance of any such obligation shall
-------------
be suspended for such period as the party is unable to perform such obligation.
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>IN WITNESS WHEREOF, the Land Board has caused these presents to be
executed in multiple originals by the State Board of Land Commissioners and
sealed with the official seal of the Land Board. Rangeview has similarly
executed this Agreement this 4th day of April, 1996.
APPROVED AS TO FORM: STATE OF COLORADO
STATE BOARD OF LAND COMMISSIONERS
XXXX X. XXXXXX
Attorney General of the
State of Colorado /s/ Xxxxxx X. Xxxxxxx
------------------------
President
XXXXXXX X. XXXXXXXXXX
Chief Deputy Attorney
General
XXXXXXX X. XXXXXXXXX
Solicitor General
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxxx
Special Deputy Solicitor
General
RANGEVIEW METROPOLITAN DISTRICT,
ACTING BY AND THROUGH ITS WATER
ACTIVITY ENTERPRISE
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Its: President
-------------------------------
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STATE OF COLORADO )
) SS.
COUNTY OF Denver )
---------
The foregoing instrument was acknowledged before me this 9th day of
-----
April, 1996, by Xxxxxx X. Xxxxxxx, as President of the State of Colorado, State
Board of Land Commissioners.
Witness my hand and official seal.
My commission expires: July 28, 1997
-----------------------------
/s/ Xxxxxxxx X. Xxxx
-----------------------------
Notary Public
STATE OF COLORADO )
CITY AND ) SS.
COUNTY OF Denver )
---------
The foregoing instrument was acknowledged before me this 9th day of
----
April, 1996, by Xxxxxx X. Xxxxx, as President , of Rangeview Metropolitan
------------------ ------------
District.
Witness my hand and official seal.
My commission expires: July 17, 1996
-----------------
/s/ Xxxx X. Xxxxxxx
-----------------------
Notary Public
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EXHIBITS
Exhibit A Water Previously Conveyed
Exhibit B Service Agreement
Exhibit C Export Water Contract
Exhibit D Master Plan of Well Field and Rights-of-Way
Exhibit E Pipe Sizes
Exhibit F Right-of-Way Grant Form
Exhibit G Service Provider Right-of-Way License
Exhibit H Export Water Contractor Right-of Way License
Exhibit I Guaranty
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