EXHIBIT 10.16
WATER CONTRACT
THIS AGREEMENT, made and entered the 8th day of Aug., 1990, by
and between CITY OF DUNSMUIR, a California municipality (hereinafter called
"City"), and DUNSMUIR BOTTLING COMPANY, a California corporation
(hereinafter called "Company").
WITNESSETH:
WHEREAS, City is the owner of certain water rights and entitled
to the use and disposition of water pursuant to such rights; and
WHEREAS, Company desires to purchase water from the City for
bottling and sale;
NOW, THEREFORE, the parties agree:
1. Sale of Water. City hereby agrees to sell and Company agrees
to purchase water from City delivered through the main pipeline which is
owned and operated by City for the taking and transmission of spring water
from the sources known as Xxxxxxxx Xxxxxxx Xx. 0, X, X and D in Siskiyou
County, California, under the terms and conditions set forth herein.
2. Terms of the Agreement. This agreement shall be and remain in
effect for a period of twenty-five (25) years from its effective date, and
shall be renewable for an additional twenty-five (25) years pursuant to the
option set forth in paragraph 15.
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3. Purchase Price.
a. City agrees to sell and Company agrees to purchase not
more than fifty million (50,000,000) gallons per year, provided that the
amount required by Company in any single day shall not interfere with or
require any curtailment of domestic water supplied by City to its existing
users or future residential users.
b. The amount of water received by Company hereunder shall
be measured by a meter which shall be installed by City, the cost of the
meter will be at the Company's expense, on Company's transmission line near
the place of attachment to the City's main transmission line.
c. City shall invoice Company in advance for the first year
beginning January 1, 1991, in the amount of $25,000, which is the minimum
annual fee applicable in the price schedule set forth below in paragraph
3d. The first annual minimum payment of $25,000 is due and payable within 5
days of successful completion of the validation action set forth in
paragraph 6b. Thereafter, the annual period will commence on January 1,
1992, whereby Company will make the annual minimum payment of $25,000 in
four equal quarterly installments. In the event that the execution of this
contract delays or interferes in any way with Company's plant completion,
thereby delaying Company's ability to utilize water, City shall waive a pro
rata portion of the first year's minimum annual payment corresponding to
the entire period of time until Company commences water usage. This period
of
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initial delay shall be limited to no more than three (3) months, whereby
any pro rated portion for the first year shall be credited to the annual
minimum payment for year two.
d. City shall invoice Company for water received by Company
from City based on the following rates:
0 - 2.5 million gallons $.010 per gallon
Over 2.5 million gallons $.005 per gallon.
Annual consumption in excess of 2.5 million gallons by Company shall be
invoiced to Company by City at conclusion of year, December 31st, and shall
be payable within 30 days of invoice date.
e. In the event that City is unable for any cause whatsoever
to permit Company to take water in the amounts permitted hereunder for any
period of time in excess of one (1) day, City shall waive a pro rata
portion of the minimum payment corresponding to the entire period of time
during which Company is not permitted to take water continually.
f. On the fifth, tenth, fifteenth, twentieth, and
twenty-fifth anniversaries of the effective date of this Agreement, the
rates per gallon which Company is obliged to pay City shall be increased in
the same proportion as any increase, or the aggregate of increases, during
the preceding five-year period in charges for water service by City to its
residential users, provided that this increase at the end of any five-year
period shall not exceed ten percent (10%).
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4. Representations and Warranties of City. City represents and
warrants as follows:
a. It is the legal and beneficial owner of the right to take
and use not more than one and 97/100ths cubic feet per second of water
diverted from the sources known as Spring 2, Spring B, Spring C, and Spring
D of Mossbrae Springs, whose respective locations are described as follows:
Spring No. 2 - North two degrees twenty-three minutes east (N2 23'E) one
thousand three hundred five and one-tenth (1305.1) feet from E1/4 corner of
Section 13, T39N, R4W, MDB&M, being within SW1/4 of NW1/4 of Xxxxxxx 0,
X00X, X0X, XXX&X.
Xxxxxx X - Xxxxx two degrees fifty minutes east (N2 50'E) one thousand
three hundred ninety-two and three-tenths (1392.3) feet from E1/4 corner of
Section 13, T39N, R4W, MDB&M, being within SW1/4 of NW1/4 of Xxxxxxx 0,
X00X, X0X, XXX&X.
Xxxxxx X - Xxxxx two degrees forty-six minutes east (N2 46'E) one thousand
three hundred ninety-six and five-tenth (1396.5) feet from E1/4 corner of
Section 13, T39N, R4W, MDB&M, being within XX0/0 xx XX xx Xxxxxxx 0, X00X,
X0X, MDB&M.
Spring D - North three degrees five minutes east (N3 05'E) one thousand
four hundred nine and four-tenth (1409.4) feet from E1/4 corner of Section
13, T39N, R4W, MDB&M, being within SW1/4 of NW1/4 of Section 7, T39N, R3W,
MDB&M.
b. City has the right to sell to Company water pursuant to the
above-mentioned rights.
c. City shall promptly, if necessary and to the extent necessary,
obtain at its own expense the consent or permission of any other person or
entity, whether private, commercial or governmental, for its performance
and fulfillment of its obligations under this Agreement, except as provided
in paragraph 6b.
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5. City Covenants.
City covenants and agrees:
a. Water shall be provided by City to Company in its natural
state without the addition of chlorine or other chemicals.
b. City shall install and maintain such devices as may be
necessary to prevent any back flow from its water treatment plant into the
water purchased by Company.
c. Company is hereby licensed to occupy and use, to the
extent reasonably necessary to install and maintain its water line for
delivery of water from City's main line, the real property which is subject
to an easement of the City for its maintenance and operation of its
transmission line or lines.
d. City shall not object to Company using for sales purposes
the slogan "Dunsmuir Home of the Best Water on Earth," or any derivative
thereof.
e. City will provide water in such quantities as Company may
desire, subject to a limitation of fifty million (50,000,000) gallons per
year; provided, however, that in the event of a drought or other natural
disaster which causes a decrease in the natural flow from the above
described springs to an amount approximately equal to or less than the City
needs for its existing users or future residential users, City shall
promptly notify Company of the decrease in the natural flow and, until such
time as the flow enables City to provide water in excess of the
requirements of its current users or future
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residential users, City shall be excused from providing water to Company
and Company shall be excused from its minimum payment obligation on a pro
rata basis.
f. City hereby consents to the installation by Company, at
Company's expense, of dual lines at any point beyond the City meter located
near the outlet from its main transmission line to the Company line and
Company is authorized to use such dual lines to supply both a bulk outlet
and its bottling facilities.
g. City shall refrain during the term of this agreement from
selling or providing "spring" water, as defined by the State of California,
Department of Health Services, to any other bottler or bulk user of water
for resale.
h. The services provided by the City are subject to
regulation by the State of California, Department of Health Services. The
City shall not be held responsible for any changes in regulation or
legislation which may affect its ability to provide water pursuant to this
Agreement.
i. City will make service available to Company to access
City's main water transmission line, at a point to be reasonably designated
between the said springs and the point at which City performs any treatment
of said water or adds anything to it, for installation and maintenance by
Company of a pipeline through which company may draw or pump water pursuant
to this Agreement.
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6. Indemnity by City.
a. City shall indemnify Company and hold it harmless from
any and all claims, demands, actions, causes of action or other challenges,
whether at law in equity, or in administrative proceedings, asserted by any
other person, firm, corporation or entity, whether private, commercial or
governmental, relating to or arising out of the agreement herein by City to
sell water to Company under the terms of this agreement and to permit
Company to connect its transmission line to the main transmission line
owned and maintained by City at the point described above and to take, use
and sell water purchased hereunder. In the event of any claim, demand,
action, cause of action or other challenge by any person or entity to the
right or power of City to sell water to Company or otherwise to perform
pursuant to the terms of this agreement, City will pay or reimburse to
Company any costs, losses and expenses, including attorney fees, which are
incurred by Company as a result of any defect or limitation in such rights
and powers of City which prevents, delays or materially interferes with the
rights granted herein to Company.
b. Upon signing this agreement, City and Company will file a
validation action, at equal expense to City and Company, in accordance with
and as specified in the Code of Civil Procedures. This agreement will
become effective upon the successful completion of this validation
proceeding or upon the mutual agreement of both City and Company.
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7. Representations and Warranties by Company. Company warrants
and agrees as follows:
a. Company is a corporation duly organized and existing
under and by virtue of the laws of California.
b. Company will, at its own cost and expense, connect its
pipelines for receiving water from the main transmission line of City on
its main transmission line at or near the City's pump house; provided that,
in the event City institutes use of a water treatment facility, Company
will be permitted to connect its pipelines at a point reasonably designated
between the source of water at the said springs and the said treatment
plant. Company will make its connection without any unreasonable
interference with or delay in transmission of water through said main
transmission line for other purposes by City.
8. Company Covenants.
Company covenants and agrees that:
a. The establishment by Company of its connection for
receiving water from the City's main transmission line shall be made
without any unreasonable interference with or delay in transmission of
water through said transmission line for other purposes by City.
b. Company shall accept water at the point of connection of
its transmission line with City's main transmission line in the natural
state of the water without any warranty or guarantee by City of its
chemical or physical content for the
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condition of the water, except that City will provide the water in the same
state as it does to its own treatment plant.
c. Company shall at its own cost and expense receive and
treat and sell the water purchased from City without cost or expense to
City.
d. Company shall install, maintain and operate its
transmission line and facilities in accordance with applicable laws and
regulations.
e. Company will construct and maintain a bottling facility
in the City of Dunsmuir within twelve (12) months after approval of this
contract by City and the issuance to Company of all permits and licenses
which may be required by any local, state, or federal regulatory agency.
9. Indemnity by Company.
Company warrants and agrees that it will indemnify and hold City
harmless from any claims, demands, actions or causes of action related to
or arising from the processing, bottling, handling or shipping of water by
Company, from the establishment and operation by Company of a water
treatment and bottling plant to which water acquired from City is
transmitted by Company, and from death or injury to any person arising from
his or her ingestion or use of water provided or sold by Company, excepting
only City's liability for its own gross negligence or wilful misconduct. In
the event of any claim, demand, action or cause of action related to or
arising from the processing, bottling, handling or shipping of water by
Company, from the establishment
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and operation by Company of a water treatment and bottling plant to which
water acquired from City is transmitted by Company, or from death or injury
to any person arising from his or her ingestion or use of water provided or
sold by Company, Company will pay or reimburse to City any costs, losses
and expenses, including attorney fees, which are incurred by City as a
result of any such claim, demand, action or cause of action.
10. Additional Documents.
Each party shall execute and deliver to the other such additional
documents as may be reasonably necessary to carry out the intent of the
parties to this agreement.
11. Notices.
Any notice to be given either party hereunder shall be given in
writing and shall be sufficient if sent by certified mail, return receipt
requested, or by:
a. If to City: Xxx Xxxxx, City Manager, 0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx, XX 00000, with a required copy to Xxxxx Xxxxxxxxxx, Esq.,
City Attorney, X.X. Xxx 000, Xxxxxxxx, XX 00000.
b. If to Company: Dunsmuir Bottling Company, X.X. Xxx 00,
Xxxxxxxx, XX 00000, with a required copy to Xxxxxx X. Xxxxxx, Esq.,
Rochester & Lea, 00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000.
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12. Rights of Parties.
This agreement shall not be construed to create any right, power
or privilege in favor of anyone except the parties hereto.
13. Section Headings.
All section headings are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
14. Counterparts.
This agreement may be executed in several counterparts, each of
which is an original; provided that the original and each executed
counterpart shall be deemed to be one and the same instrument, which shall
constitute proof of the agreement without the necessity of production or
accounting for any other counterpart.
15. Renewal Option.
Company is hereby granted an option to renew this agreement for a
further term of twenty-five (25) years from the effective date, on the same
terms and conditions, except, if on each of the preceding five-year
anniversaries the rate increase to the City's residential users equaled or
exceeded ten percent (10%), whereby City may at its option renegotiate
future five-year increases provided that the increase in any five-year
period shall not exceed fifteen percent (15%). Company shall give City
written notice of the exercise of the option not less than one (1) year
prior to the end of the primary term.
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16. Effective Date.
The effective date of this agreement shall be the next business
day following final approval of the terms and conditions, including those
provided in 6b, and by such formalities as may be required by the
ordinances of City and the execution of this agreement on behalf of the
City and on behalf of the Company promptly following such formal approval.
DATED: August 8, 1990
CITY OF DUNSMUIR
By: /s/ (signature illegible)
----------------------------
City Manager
Attested by: /s/ (signature illegible)
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DUNSMUIR BOTTLING COMPANY
By: /s/ Xxxx X. Xxxxxx
----------------------------
President
By: /s/ Xxxxx X. Xxxxxxx
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Secretary
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