Exhibit 10.3
LOAN AGREEMENT
Between
THE CITY OF SAN DIEGO
And
SAN DIEGO GAS & ELECTRIC COMPANY
Dated as of June 1, 1995
Relating to
$57,650,000
The City of San Diego
Industrial Development Revenue Refunding Bonds
(San Diego Gas & Electric Company)
1995 Series A
1995 Series B
LOAN AGREEMENT
TABLE OF CONTENTS
Page
PARTIES 1
PREAMBLES 1
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITION OF TERMS 2
SECTION 1.2. NUMBER AND GENDER 2
SECTION 1.3. ARTICLES, SECTIONS, ETC. 2
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS OF THE CITY 2
SECTION 2.2. REPRESENTATIONS OF THE BORROWER 3
ARTICLE III
ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS
SECTION 3.1. AGREEMENT TO ISSUE BONDS; APPLICATION OF
BOND PROCEEDS 4
SECTION 3.2. INVESTMENT OF MONEYS IN FUNDS 5
SECTION 3.3. AMENDMENT OF DESCRIPTION OF THE
PROJECT 5
ARTICLE IV
LOAN TO BORROWER; REPAYMENT PROVISIONS
SECTION 4.1. LOAN TO BORROWER 5
SECTION 4.2. REPAYMENT AND PAYMENT OF OTHER AMOUNTS
PAYABLE 5
SECTION 4.3. UNCONDITIONAL OBLIGATION 7
SECTION 4.4. ASSIGNMENT OF CITY'S RIGHTS 8
SECTION 4.5. AMOUNTS REMAINING IN FUNDS 8
SECTION 4.6.CREDIT FACILITY 9
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.1. RIGHT OF ACCESS TO THE PROJECT 9
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SECTION 5.2. THE BORROWER'S MAINTENANCE OF ITS
EXISTENCE; ASSIGNMENTS 9
SECTION 5.3. RECORDS AND FINANCIAL STATEMENTS OF
BORROWER 10
SECTION 5.4. MAINTENANCE AND REPAIR 11
SECTION 5.5. QUALIFICATION IN CALIFORNIA 11
SECTION 5.6. TAX EXEMPT STATUS OF BONDS 11
SECTION 5.7. NOTICE OF RATE PERIODS 12
SECTION 5.8. REMARKETING OF THE BONDS 12
SECTION 5.9. NOTICES TO TRUSTEE AND CITY 14
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT 14
SECTION 6.2. REMEDIES ON DEFAULT 15
SECTION 6.3. AGREEMENT TO PAY ATTORNEYS' FEES AND
EXPENSES 17
SECTION 6.4. NO REMEDY EXCLUSIVE 17
SECTION 6.5. NO ADDITIONAL WAIVER IMPLIED BY ONE
WAIVER 18
ARTICLE VII
PREPAYMENT
SECTION 7.1. REDEMPTION OF BONDS WITH PREPAYMENT
MONEYS 18
SECTION 7.2. OPTIONS TO PREPAY INSTALLMENTS 18
SECTION 7.3. MANDATORY PREPAYMENT 18
SECTION 7.4. AMOUNT OF PREPAYMENT 19
SECTION 7.5. NOTICE OF PREPAYMENT 19
ARTICLE VIII
NON-LIABILITY OF CITY; EXPENSES; INDEMNIFICATION
SECTION 8.1. NON-LIABILITY OF CITY 20
SECTION 8.2. EXPENSES 20
SECTION 8.3. INDEMNIFICATION 20
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NOTICES 21
SECTION 9.2. SEVERABILITY 22
SECTION 9.3. EXECUTION OF COUNTERPARTS 22
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SECTION 9.4. AMENDMENTS, CHANGES AND
MODIFICATIONS 22
SECTION 9.5. GOVERNING LAW 22
SECTION 9.6. AUTHORIZED BORROWER REPRESENTATIVE 22
SECTION 9.7. TERM OF THE AGREEMENT 23
SECTION 9.8. BINDING EFFECT 23
TESTIMONIUM 24
SIGNATURES AND SEALS 24
EXHIBIT A Description of the Project A-1
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of June 1, 1995, by and
between THE CITY OF SAN DIEGO, a municipal corporation and
charter city duly organized and existing under the laws and
Constitution of the State of California (the "City"), and SAN
DIEGO GAS & ELECTRIC COMPANY, a corporation organized and
existing under the laws of the State of California (the
"Borrower"),
W I T N E S S E T H :
WHEREAS, the City is a municipal corporation and
charter city, duly organized and existing under a freeholders'
charter pursuant to which the City has the right and power to
make and enforce all laws and regulations in accordance with and
as more particularly provided in Sections 3, 5 and 7 of Article
XI of the Constitution of the State of California and Section 2
of the Charter of the City (the "Charter"); and
WHEREAS, the City Council of the City, acting under and
pursuant to the powers reserved to the City under Sections 3, 5
and 7 of Article XI of the Constitution and Section 2 of the
Charter, has enacted the City of San Diego Economic Development
Revenue Bond Law, comprising Article 7 of Chapter IX of the San
Diego Municipal Code, pursuant to Ordinance No. 0-15586 (New
Series), adopted on September 14, 1981, as amended from time to
time (the "Law"), establishing a program to provide financial
assistance for the acquisition, construction and installation of
facilities for industrial, commercial or public utility purposes;
and
WHEREAS, the Borrower has duly requested that the City
assist in the refunding or replacement of certain outstanding
bonds previously issued by the City (the "Prior Bonds") to
provide the Borrower with financial assistance to acquire,
construct and install certain facilities for the local furnishing
of electric energy and gas (the "1985 Project"); and
WHEREAS, the City after due investigation and
deliberation has adopted its ordinance authorizing the issuance
of The City of San Diego Industrial Development Revenue Refunding
Bonds (San Diego Gas & Electric Company) 1995 Series A and 1995
Series B (collectively, the "Bonds") to refund and redeem a
portion of the Prior Bonds; and
WHEREAS, the City proposes to assist in refinancing the
portion of the 1985 Project which constitutes facilities for the
local furnishing of electric energy (the "Project") upon the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and
the respective representations and covenants herein contained,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITION OF TERMS. Unless the context
otherwise requires, the terms used in this Agreement shall have
the meanings specified in Section 1.01 of the Indenture of Trust,
of even date herewith relating to the Bonds (the "Indenture"), by
and between the City and Bank of America National Trust and
Savings Association, as Trustee (the "Trustee"), as originally
executed or as it may from time to time be supplemented or
amended as provided therein.
SECTION 1.2. NUMBER AND GENDER. The singular form of
any word used herein, including the terms defined in Section 1.01
of the Indenture, shall include the plural, and vice versa. The
use herein of a word of any gender shall include all genders.
SECTION 1.3. ARTICLES, SECTIONS, ETC. Unless
otherwise specified, references to Articles, Sections and other
subdivisions of this Agreement are to the designated Articles,
Sections and other subdivisions of this Agreement as originally
executed. The words "hereof," "herein," "hereunder" and words of
similar import refer to this Agreement as a whole. The headings
or titles of the several articles and sections, and the table of
contents appended to copies hereof, shall be solely for
convenience of reference and shall not affect the meaning,
construction or effect of the provisions hereof.
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS OF THE CITY. The City
makes the following representations as the basis for its
undertakings herein contained:
(a) The City is a municipal corporation and charter
city in the State of California. Under the provisions of the
Law, the City has the power to enter into the transactions
contemplated by this Agreement and to carry out its obligations
hereunder. The Project constitutes a "facility" as that term is
defined in the Law. By proper action, the City has been duly
authorized to execute, deliver and duly perform this Agreement
and the Indenture.
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(b) To refinance the cost of the Project, the City
will issue the Bonds which will mature, bear interest and be
subject to redemption as set forth in the Indenture.
(c) The Bonds will be issued under and secured by the
Indenture, pursuant to which the City's interest in this
Agreement (except certain rights of the City to give approvals
and consents and to receive payment for expenses and
indemnification and certain other payments) will be pledged to
the Trustee as security for payment of the principal of, premium,
if any, and interest on the Bonds.
(d) The City has not pledged and will not pledge its
interest in this Agreement for any purpose other than to secure
the Bonds under the Indenture.
(e) The City is not in default under any of the
provisions of the laws of the State of California or the City's
Charter which default would affect its existence or its powers
referred to in subsection (a) of this Section 2.1.
(f) The City has found and determined and hereby finds
and determines that all requirements of the Law with respect to
the issuance of the Bonds and the execution of this Agreement and
the Indenture have been complied with and that refinancing the
Project by issuing the Bonds, refunding or replacing the Prior
Bonds and entering into this Agreement and the Indenture will be
in furtherance of the purposes of the Law.
(g) On August 3, 1992, the City Council of the City
adopted Ordinance No. 0-17813 (New Series), and on March 29,
1993, the City Council adopted Ordinance No. 0-17903 (New Series)
authorizing the issuance of the Bonds, and on May 1, 1995, the
City Council adopted Resolution No. R-285683, authorizing the
sale of the Bonds.
SECTION 2.2. REPRESENTATIONS OF THE BORROWER. The
Borrower makes the following representations as the basis for its
undertakings herein contained:
(a) The Borrower is a corporation duly formed under
the laws of the State of California, is in good standing in the
State of California and has the power to enter into and has duly
authorized, by proper corporate action, the execution and
delivery of this Agreement, the Mortgage Bonds and all other
documents contemplated hereby to be executed by the Borrower.
(b) Neither the execution and delivery of this
Agreement or the Mortgage Bonds, the consummation of the
transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions hereof and thereof,
conflicts with or results in a breach of any of the terms,
conditions or provisions of the Borrower's Articles of
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Incorporation or By-laws or of any corporate actions or of any
agreement or instrument to which the Borrower is now a party or
by which it is bound, or constitutes a default (with due notice
or the passage of time or both) under any of the foregoing, or
results in the creation or imposition of any prohibited lien,
charge or encumbrance whatsoever upon any of the property or
assets of the Borrower under the terms of any instrument or
agreement to which the Borrower is now a party or by which it is
bound.
(c) The Project consists and will consist of those
facilities described in Exhibit A hereto, and the Borrower shall
make no changes to such portion of the Project or to the
operation thereof which would affect the qualification of the
Project as a "facility" under the Law or impair the exemption
from gross income of the interest on the Bonds for federal income
tax purposes. In particular, the Borrower shall comply with all
requirements of the San Diego Gas & Electric Company Engineering
and Financial Certificate, dated the Issue Date (the "Engineering
Certificate"), which is hereby incorporated by reference herein.
The Project consists of facilities for the local furnishing of
electric energy as described in the Engineering Certificate. The
Borrower intends to utilize such portion of the Project as
facilities for the local furnishing of electric energy throughout
the foreseeable future.
(d) The Borrower has and will have title to the
Project sufficient to carry out the purposes of this Agreement.
(e) The economic useful life of the Project is as set
forth in the Engineering Certificate.
(f) All certificates, approvals, permits and
authorizations with respect to the construction of the Project of
agencies of applicable local governmental agencies, the State of
California and the federal government have been obtained; and
pursuant to such certificates, approvals, permits and
authorizations the Project has been constructed and is in
operation.
ARTICLE III
ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS
SECTION 3.1. AGREEMENT TO ISSUE BONDS; APPLICATION OF
BOND PROCEEDS. To provide funds to refinance a portion of the
cost of the Project, the City agrees that it will issue under the
Indenture, sell and cause to be delivered to the purchasers
thereof, the Bonds, bearing interest as provided and maturing on
the date set forth in the Indenture. The City will thereupon
apply the proceeds received from the sale of the Bonds as
provided in the Indenture.
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SECTION 3.2. INVESTMENT OF MONEYS IN FUNDS. Any
moneys in any fund held by the Trustee shall, at the written
request of an Authorized Borrower Representative, be invested or
reinvested by the Trustee as provided in the Indenture. Such
investments shall be held by the Trustee and shall be deemed at
all times a part of the fund from which such investments were
made, and the interest accruing thereon and any profit or loss
realized therefrom shall, except as otherwise provided in the
Indenture, be credited or charged to such fund.
SECTION 3.3. AMENDMENT OF DESCRIPTION OF THE PROJECT.
In the event that the Borrower desires to amend or supplement the
Project, as described in Exhibit A hereto, and the City approves
of such amendment or supplement, the City will enter into, and
will instruct the Trustee to consent to, such amendment or
supplement upon receipt of:
(i) a certificate of an Authorized Borrower
Representative describing in detail the proposed changes and
stating that they will not have the effect of disqualifying
any component of the Project as a facility that may be
financed pursuant to the Law;
(ii) a copy of the proposed form of amended or
supplemented Exhibit A hereto; and
(iii) an Opinion of Bond Counsel that such proposed
changes will not affect the exclusion from gross income of
interest on the Bonds for federal income tax purposes.
ARTICLE IV
LOAN TO BORROWER; REPAYMENT PROVISIONS
SECTION 4.1. LOAN TO BORROWER. The City and the
Borrower agree that the application of the proceeds of sale of
the Bonds to refund and retire a portion of the Prior Bonds and
the first mortgage bonds of the Borrower relating thereto will be
deemed to be and treated for all purposes as a loan to the
Borrower of an amount equal to the principal amount of the Bonds.
SECTION 4.2. REPAYMENT AND PAYMENT OF OTHER AMOUNTS
PAYABLE. To evidence, secure and provide for the repayment of
the loan made hereunder, the Borrower hereby and concurrently
herewith delivers to the Trustee its Mortgage Bonds, of like
principal amount, maturity date, interest rates and redemption
provisions as the Bonds. In addition, the Borrower agrees to
make the payments required by subsection (a) (to the extent such
payments are not timely provided for by the payment of principal
of and interest on the Mortgage Bonds) through (d) of this
Section as Repayment Installments on such loan.
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(a) The Borrower covenants and agrees to pay to the
Trustee as a Repayment Installment on the loan to the Borrower
pursuant to Section 4.1 hereof, on each date provided in or
pursuant to the Indenture for the payment of principal (whether
at maturity or upon redemption or acceleration) of, premium, if
any, and/or interest on the Bonds, until the principal of,
premium, if any, and interest on the Bonds shall have been fully
paid or provision for the payment thereof shall have been made in
accordance with the Indenture, in immediately available funds,
for deposit in the Bond Fund, a sum equal to the amount then
payable as principal (whether at maturity or upon redemption or
acceleration), premium, if any, and interest upon the Bonds as
provided in the Indenture.
Each payment pursuant to the Mortgage Bonds, together
with any other payments required to be made pursuant to this
Section 4.2(a), shall at all times be sufficient to pay the total
amount of interest and principal (whether at maturity or upon
redemption or acceleration) and premium, if any, then payable on
the Bonds; provided that any amount held by the Trustee in the
Bond Fund on any due date for a Repayment Installment hereunder
shall be credited against the installment due on such date to the
extent available for such purpose; and provided further that,
subject to the provisions of this paragraph, if at any time the
amounts held by the Trustee in the Bond Fund are sufficient to
pay all of the principal of and interest and premium, if any, on
the Bonds as such payments become due, the Borrower shall be
relieved of any obligation to make any further payments under the
provisions of this Section. Notwithstanding the foregoing, if on
any date the amount held by the Trustee in the Bond Fund is
insufficient to make any required payments of principal of
(whether at maturity or upon redemption or acceleration) and
interest and premium, if any, on the Bonds as such payments
become due, the Borrower shall forthwith pay such deficiency as a
Repayment Installment hereunder.
(b) The Borrower also agrees to pay to the Trustee
until the principal of, premium, if any, and interest on the
Bonds shall have been fully paid or provision for the payment
thereof shall have been made as required by the Indenture,
(i) the annual fee of the Trustee for its ordinary services
rendered as trustee, and its ordinary expenses incurred under the
Indenture, as and when the same become due, (ii) the reasonable
fees, charges and expenses of the Trustee, the Registrar and the
reasonable fees of any paying agent on the Bonds as provided in
the Indenture, as and when the same become due, (iii) the
reasonable fees, charges and expenses of the Trustee for the
necessary extraordinary services rendered by it and extraordinary
expenses incurred by it under the Indenture, as and when the same
become due. The Borrower shall also pay the cost of printing any
Bonds required to be furnished by the City.
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(c) The Borrower also agrees to pay, within 60 days
after receipt of request for payment thereof, all expenses
required to be paid by the Borrower under the terms of the bond
purchase agreement executed by it in connection with the sale of
the Bonds, and all expenses of the City related to the financing
of the Project which are not otherwise required to be paid by the
Borrower under the terms of this Agreement; provided that the
City shall have obtained the prior written approval of the
Authorized Borrower Representative for any expenditures other
than those provided for herein or in said Bond Purchase
Agreement.
The Borrower also agrees to pay to the City (i) on or
before the Issue Date an origination fee for the Bonds in the
amount of $144,125 and (ii) annually in arrears on September 1 of
each year during which any Bonds are outstanding, an annual
administration fee equal to .025% of the weighted average
principal amount of the Bonds outstanding during the prior twelve
(12) months, as calculated by the Borrower and confirmed by the
City.
(d) The Borrower hereby agrees to provide or cause to
be provided in immediately available funds, for deposit into the
Bond Purchase Fund maintained by the Tender Agent, all amounts
necessary to purchase Bonds tendered for purchase in accordance
with Sections 2.01(d) and 2.01(e) of the Indenture.
(e) In the event the Borrower should fail to make any
of the payments required by subsections (a) through (d) of this
Section, such payments shall continue as obligations of the
Borrower until such amounts shall have been fully paid. The
Borrower agrees to pay such amounts, together with interest
thereon until paid, to the extent permitted by law, at the rate
of one percent (1%) per annum over the rate borne by any Bonds in
respect of which such payments are required to be made pursuant
to said subsection (a), and one percent (1%) per annum over the
average rate then borne by the Bonds as to all other payments.
Interest on overdue payments required under subsection (a) or (d)
above shall be paid to Bondholders as provided in the Indenture.
(f) Upon written request of the Trustee, the Borrower
shall pay any Repayment Installment directly to the Paying Agent.
SECTION 4.3. UNCONDITIONAL OBLIGATION. The
obligations of the Borrower to make the payments required by
Section 4.2 hereof (including payments on the Mortgage Bonds) and
to perform and observe the other agreements on its part contained
herein shall be absolute and unconditional, irrespective of any
defense or any rights of set-off, recoupment or counterclaim it
might otherwise have against the City, and during the term of
this Agreement, the Borrower shall pay absolutely net the
payments to be made on account of the loan as prescribed in
Section 4.2 and all other payments required hereunder, free of
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any deductions and without abatement, diminution or set-off.
Until such time as the principal of, premium, if any, and
interest on the Bonds shall have been fully paid, or provision
for the payment thereof shall have been made as required by the
Indenture, the Borrower (i) will not suspend or discontinue any
payments provided for in Section 4.2 hereof; (ii) will perform
and observe all of its other covenants contained in this
Agreement; and (iii) will not terminate this Agreement for any
cause, including, without limitation, the occurrence of any act
or circumstances that may constitute failure of consideration,
destruction of or damage to the Project, commercial frustration
of purpose, any change in the tax or other laws of the United
States of America or of the State of California or any political
subdivision of either of these, or any failure of the City or the
Trustee to perform and observe any covenant, whether express or
implied, or any duty, liability or obligation arising out of or
connected with this Agreement or the Indenture, except to the
extent permitted by this Agreement.
SECTION 4.4. ASSIGNMENT OF CITY'S RIGHTS. As security
for the payment of the Bonds, the City will assign to the Trustee
the City's rights, but not its obligations, under this Agreement,
including the right to receive payments hereunder (except (i) the
rights of the City to receive notices under this Agreement, (ii)
the right of the City to receive certain payments, if any, with
respect to fees, expenses and indemnification and certain other
purposes under Sections 4.2(c), 4.2(e), 6.3, 8.2 and 8.3 hereof,
and (iii) the right of the City to give approvals or consents
pursuant to this Agreement) and any such rights under the
Mortgage Bonds, and the City hereby directs the Borrower to make
the payments required hereunder (except such payments for fees,
expenses and indemnification) directly to the Trustee. The
Borrower hereby assents to such assignment and agrees to make
payments directly to the Trustee without defense or set-off by
reason of any dispute between the Borrower and the City or the
Trustee.
SECTION 4.5. AMOUNTS REMAINING IN FUNDS. It is agreed
by the parties hereto that after payment in full of (i) the
Bonds, or after provision for such payment shall have been made
as provided in the Indenture, (ii) the fees and expenses of the
City in accordance with this Agreement, (iii) the fees, charges
and expenses of the Trustee, the Registrar and Paying Agents in
accordance with the Indenture and this Agreement and (iv) all
other amounts required to be paid under this Agreement and the
Indenture, any amounts remaining in any fund held by the Trustee
under the Indenture shall belong, subject to the requirements of
Section 6.06 of the Indenture, to the Borrower and be paid to the
Borrower by the Trustee.
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SECTION 4.6. CREDIT FACILITY. The Borrower may
provide and subsequently terminate or remove a Credit Facility
with respect to a Series of Bonds, pursuant to the provisions of
Section 5.07 of the Indenture; provided, however, that, except in
connection with the redemption of Bonds, the Borrower shall not
intentionally cause the termination of, any Credit Facility with
respect to Bonds during a Term Rate Period. Not less than
twenty-five days prior to the termination, removal or
substitution of any Credit Facility with respect to a Series of
Bonds, the Borrower shall mail written notice of such
termination, removal or substitution to the Trustee. Not less
than fifteen days prior to the delivery of any substitute Credit
Facility for a Series of Bonds, the Borrower shall mail written
notice of such substitution to each Rating Agency.
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.1. RIGHT OF ACCESS TO THE PROJECT. The
Borrower agrees that during the term of this Agreement the City,
the Trustee and the duly authorized agents of either of them
shall have the right at all reasonable times during normal
business hours to enter upon the site of the Project described in
Exhibit A hereto to examine and inspect such Project; provided,
however, that this right is subject to federal and State of
California laws and regulations applicable to such site. The
rights of access hereby reserved to the City and the Trustee may
be exercised only after such agent shall have executed release of
liability (which release shall not limit any of the Borrower's
obligations hereunder) and secrecy agreements if requested by the
Borrower in the form then currently used by the Borrower, and
nothing contained in this Section or in any other provision of
this Agreement shall be construed to entitle the City or the
Trustee to any information or inspection involving the
confidential know-how of the Borrower.
SECTION 5.2. THE BORROWER'S MAINTENANCE OF ITS
EXISTENCE; ASSIGNMENTS. (a) The Borrower agrees that during the
term of this Agreement it will maintain its corporate existence
in good standing and will not dissolve or otherwise dispose of
all or substantially all of its assets and will not consolidate
with or merge into another corporation or permit one or more
other corporations to consolidate or merge into it; provided,
that the Borrower may (subject to any applicable restrictions
otherwise imposed by law or contract, including the Borrower's
franchises and the City's Charter), without violating the
covenants contained in this Section, consolidate with or merge
into another corporation, or permit one or more other
corporations to consolidate with or merge into it, or sell or
otherwise transfer to another corporation all or substantially
all of its assets and thereafter dissolve, provided that
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(1) either (A) the Borrower is the surviving corporation or
(B) the surviving, resulting or transferee corporation, as the
case may be, (i) assumes and agrees in writing to pay and perform
all of the obligations of the Borrower hereunder and under the
Mortgage Bonds, and (ii) qualifies to do business in the State of
California; and (2) the Borrower shall deliver to the Trustee an
Opinion of Bond Counsel to the effect that such consolidation,
merger or transfer and dissolution does not in and of itself
adversely affect the exclusion from gross income for federal
income tax purposes of interest on the Bonds, except that no such
opinion shall be required in the case of the reorganization
described in the proxy statement of the Borrower dated March 1,
1995.
(b) The rights and obligations of the Borrower under
this Agreement may be assigned by the Borrower, with the written
consent of the City, in whole or in part subject, however, to
each of the following conditions:
(i) No assignment (other than pursuant to a
merger, consolidation or combination described in Section 5.2(a))
shall relieve the Borrower from primary liability for any of its
obligations hereunder, and in the event of any assignment not
pursuant to Section 5.2(a), the Borrower shall continue to remain
primarily liable for the payments specified in Section 4.2
hereof, including payments pursuant to the Mortgage Bonds, and
for performance and observance of the other agreements on its
part herein provided to be performed and observed by it.
(ii) Any assignment from the Borrower shall retain
for the Borrower such rights and interests as will permit it to
perform its obligations under this Agreement, and any assignee
from the Borrower shall assume the obligations of the Borrower
hereunder to the extent of the interest assigned.
(iii) The Borrower shall, within thirty days after
delivery of such assignment, furnish or cause to be furnished to
the City and the Trustee a true and complete copy of each such
assignment together with an instrument of assumption.
(iv) The Borrower shall cause to be delivered to
the City and the Trustee an Opinion of Bond Counsel that such
assignment will not, in and of itself, result in the interest on
the Bonds being determined to be includable in the gross income
for federal income tax purposes of the owners thereof (other than
a "substantial user" of the Project or a "related person" within
the meaning of Section 103(b)(13) of the 1954 Code).
(c) The Borrower acknowledges that Section 103 of the
City's Charter specifies in part as follows: "No franchises shall
be transferable except with the approval of the Council expressed
by ordinance."
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SECTION 5.3. RECORDS AND FINANCIAL STATEMENTS OF
BORROWER. The Borrower agrees (a) to keep and maintain full and
accurate accounts and records of its operations in accordance
with generally accepted accounting principles, (b) to permit the
Trustee for itself or on behalf of the holders of the Bonds and
its designated officers, employees, agents and representatives to
have access to such accounts and records and to make examinations
thereof at all reasonable times and (c) upon request of the
Trustee, to provide the Trustee with the Borrower's most recent
audited financial statements.
SECTION 5.4. MAINTENANCE AND REPAIR. The Borrower
agrees that as long as it owns the Project it will (i) maintain,
or cause to be maintained, the Project in as reasonably safe
condition as its operations shall permit and (ii) maintain, or
cause to be maintained, the Project in good repair and in good
operating condition, ordinary wear and tear excepted, making from
time to time all necessary repairs thereto and renewals and
replacements thereof.
SECTION 5.5. QUALIFICATION IN CALIFORNIA. The
Borrower agrees that throughout the term of this Agreement it, or
any successor or assignee as permitted by Section 5.2, will be
qualified to do business in the State of California.
SECTION 5.6. TAX EXEMPT STATUS OF BONDS. (a) It is
the intention of the parties hereto that interest on the Bonds
shall be and remain excluded from gross income for federal income
tax purposes. To that end, the covenants and agreements of the
City and the Borrower in this Section and in the Tax Certificate
are for the benefit of the Trustee and each and every person who
at any time will be a holder of the Bonds. Without limiting the
generality of the foregoing, the Borrower and the City agree that
there shall be paid from time to time all amounts required to be
rebated to the United States pursuant to Section 148(f) of the
Code and any temporary, proposed or final Treasury Regulations as
may be applicable to the Bonds from time to time. This covenant
shall survive payment in full or defeasance of the Bonds. The
Borrower specifically covenants to pay or cause to be paid for
and on behalf of the City to the United States at the times and
in the amounts determined under Section 6.06 of the Indenture the
Rebate Requirement as described in the Tax Certificate.
(b) The City covenants and agrees that it has not
taken and will not take any action which results in interest to
be paid on the Bonds being included in gross income of the
holders of the Bonds for federal income tax purposes, and the
Borrower covenants and agrees that it has not taken or permitted
to be taken and will not take or permit to be taken any action
which will cause the interest on the Bonds to become includable
in gross income for federal income tax purposes; provided that
neither the Borrower nor the City shall have violated these
covenants if interest on any of the Bonds becomes taxable to a
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person solely because such person is a "substantial user" of the
Project or a "related person" within the meaning of Section
103(b)(13) of the 1954 Code; and provided further that none of
the covenants and agreements herein contained shall require
either the Borrower or the City to enter an appearance or
intervene in any administrative, legislative or judicial
proceeding in connection with any changes in applicable laws,
rules or regulations or in connection with any decisions of any
court or administrative agency or other governmental body
affecting the taxation of interest on the Bonds. The Borrower
acknowledges having read Section 6.06 of the Indenture and agrees
to perform all duties imposed on it by such Section, by this
Section and by the Tax Certificate. Insofar as Section 6.06 of
the Indenture and the Tax Certificate impose duties and
responsibilities on the City or the Borrower, they are
specifically incorporated herein by reference.
(c) Notwithstanding any provision of this Section 5.6
or Section 6.06 of the Indenture, if the Borrower shall provide
to the City and the Trustee an Opinion of Bond Counsel to the
effect that any specified action required under this Section 5.6
and Section 6.06 of the Indenture is no longer required or that
some further or different action is required to maintain the
exclusion from federal income tax of interest on the Bonds, the
Borrower, the Trustee and the City may conclusively rely on such
opinion in complying with the requirements of this Section, and
the covenants hereunder shall be deemed to be modified to that
extent.
SECTION 5.7. NOTICE OF RATE PERIODS. The Borrower
shall designate and give timely written notice to the Trustee as
required by the Indenture prior to any change in Rate Periods for
the Bonds. In addition, if the Borrower shall elect to change
Rate Periods in accordance with the Indenture and the Bonds under
circumstances requiring the delivery of an Opinion of Bond
Counsel, the Borrower shall deliver such opinion to the Trustee
concurrently with the giving of notice with respect thereto, and
no such change shall be effective without an Opinion of Bond
Counsel to the effect that such change is authorized or permitted
by the Indenture and the Law and will not adversely affect the
Tax-Exempt status of the interest on the Bonds.
SECTION 5.8. REMARKETING OF THE BONDS.
(a) The Borrower agrees to perform all obligations and
duties required of it by the Indenture with respect to the
remarketing of the Bonds, and, to appoint as set forth below a
Remarketing Agent and a Tender Agent meeting the qualifications
and otherwise meeting the requirements set forth in this
Section 5.8.
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(b) Tender Agent.
(i) Appointment and Duties: In order to carry out the
duties and obligations of the Tender Agent contained in the
Indenture, the Borrower shall appoint a Tender Agent or Tender
Agents in order to carry out such duties and obligations, subject
to the conditions set forth below. Each Tender Agent shall
designate to the Trustee its principal office and signify its
acceptance of the duties and obligations imposed upon it under
the Indenture by entering into a Tender Agreement with the
Borrower and such other parties as shall be appropriate, which
may be combined with a Remarketing Agreement into a single
document, delivered to the City, the Trustee, the Borrower and
each Remarketing Agent, under which the Tender Agent shall agree,
particularly (but without limitation): (A) to perform the duties
and comply with the requirements imposed upon it by the Tender
Agreement, the Indenture and this Agreement; and (B) to keep such
books and records with respect to its activities as Tender Agent
as shall be consistent with prudent industry practice and to make
such books and records available for inspection by the City, the
Trustee and the Borrower at all reasonable times.
(ii) Qualifications: Each Tender Agent shall be a
financial institution organized and doing business under the laws
of the United States or of a state thereof, authorized under such
laws to exercise corporate trust powers, having a combined
capital and surplus of at least Fifty Million Dollars
($50,000,000), and subject to supervision or examination by
federal or state authority. If such financial institution
publishes a report of condition at least annually, pursuant to
law or to the requirements of any supervising or examining
authority above referred to, then for the purposes of this
Section the combined capital and surplus of such banking
corporation or banking association shall be deemed to be its
combined capital and surplus as set forth in its most recent
report of condition so published.
(c) Remarketing Agent. In order to carry out the
duties and obligations contained in the Indenture, the Borrower,
by an instrument in writing (which may be the Remarketing
Agreement) signed by an Authorized Borrower Representative, shall
select the Remarketing Agent(s) for each series of Bonds subject
to the conditions set forth below. Each Remarketing Agent shall
designate to the Trustee its principal office and signify its
acceptance of the duties and obligations imposed upon it under
the Indenture by a written instrument of acceptance (which may be
the execution of a Remarketing Agreement) delivered to the City,
the Trustee and the Borrower under which the Remarketing Agent
shall agree, particularly (but without limitation): (i) to
perform the duties and comply with the requirements imposed upon
it by the Remarketing Agreement, the Indenture and this
Agreement; and (ii) to keep such books and records with respect
to its activities as Remarketing Agent as shall be consistent
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with prudent industry practice and to make such books and records
available for inspection by the City, the Trustee and the
Borrower at all reasonable times.
(d) Remarketing Agreement. In order to provide for
the remarketing of the Bonds, the Borrower shall enter into a
Remarketing Agreement with each Remarketing Agent and such other
parties as shall be appropriate, which may be combined with a
Tender Agreement into a single document. Each Remarketing
Agreement shall include the following: (i) a requirement that
the Remarketing Agreement shall not be terminated by the Borrower
without cause for a period of at least six months after the
effective date thereof; and (ii) a statement to the effect that
the Remarketing Agent is not acting in an agency capacity with
respect to the Borrower in establishing interest rates and Rate
Periods as described in Section 2.01 of the Indenture, but is
acting as agent of the City pursuant to the Law with respect to
such functions.
SECTION 5.9. NOTICES TO TRUSTEE AND CITY. The
Borrower hereby agrees to provide the Trustee and the City with
notice of any event of which it has knowledge which, with the
passage of time or the giving of notice, would be an Event of
Default, such notice to include a description of the nature of
such event and what steps are being taken to remedy such Event of
Default. The Borrower further agrees and covenants to notify the
City promptly upon receiving actual notice of any non-performance
by the Trustee of its duties and obligations under the Indenture
or this Agreement.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT. Any one of the
following which occurs and continues shall constitute an Event of
Default pursuant to this Agreement:
(a) failure by the Borrower to pay any amounts
required to be paid under Section 4.2(a) or 4.2(d) hereof at
the times required to avoid causing an Event of Default
pursuant to the Indenture; or
(b) failure of the Borrower to observe and
perform any covenant, condition or agreement on its part
required to be observed or performed by this Agreement,
other than making the payments referred to in (a) above,
which continues for a period of 60 days after written
notice, which notice shall specify such failure and request
that it be remedied, given to the Borrower by the City or
the Trustee, unless the City and the Trustee shall agree in
writing to an extension of such time; provided, however,
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that if the failure stated in the notice cannot be corrected
within such period, the City and the Trustee will not
unreasonably withhold their consent to an extension of such
time if corrective action is instituted within such period
and diligently pursued until the default is corrected; or
(c) occurrence of a "completed default" under and
as defined in the Borrower Indenture; or
(d) an Act of Bankruptcy of the Borrower; or
(e) a default under any Credit Facility if the
Credit Provider notifies the Trustee in writing that such
default shall be treated as an Event of Default hereunder.
The provisions of subsection (b) of this Section are subject to
the limitation that the Borrower shall not be deemed in default
if and so long as the Borrower is unable to carry out its
agreements hereunder by reason of strikes, lockouts or other
industrial disturbances; acts of public enemies; orders of any
kind of the government of the United States or of the State of
California or any of their departments, agencies, or officials,
or any civil or military authority; insurrections, riots,
epidemics, landslides; lightning; earthquake; fire; hurricanes;
storms; floods; washouts; droughts; arrests; restraint of
government and people; civil disturbances; explosions; breakage
or accident to machinery, transmission pipes or canals; partial
or entire failure of utilities; or any other cause or event not
reasonably within the control of the Borrower; it being agreed
that the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the discretion of the
Borrower, and the Borrower shall not be required to make
settlement of strikes, lockouts and other industrial disturbances
by acceding to the demands of the opposing party or parties when
such course is, in the judgment of the Borrower, unfavorable to
the Borrower. This limitation shall not apply to any default
under subsections (a), (c), (d) or (e) of this Section.
SECTION 6.2. REMEDIES ON DEFAULT. Whenever any Event
of Default shall have occurred and shall continue, the following
remedies may be pursued:
(a) The Trustee may, and upon the written request
of any Credit Provider or the holders of not less than 25%
in aggregate principal amount of Bonds then outstanding,
shall, by notice in writing delivered to the Borrower with
copies of such notice being sent to the City and each Credit
Provider, declare the unpaid balance of the loan payable
under Section 4.2(a) of this Agreement and the interest
accrued thereon to be immediately due and payable and such
principal and interest shall thereupon become and be
immediately due and payable. Upon any such acceleration,
the Bonds shall be subject to mandatory redemption as
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provided in Section 4.01(b)(4) of the Indenture. After any
such declaration of acceleration, the Trustee shall
immediately take such actions as necessary to realize moneys
under any Credit Facility.
(b) The Trustee shall have access to and the
right to inspect, examine and make copies of the books and
records and any and all accounts, data and federal income
tax and other tax returns of the Borrower.
(c) The City or the Trustee may take whatever
action at law or in equity as may be necessary or desirable
to collect the payments and other amounts then due and
thereafter to become due or to enforce performance and
observance of any obligation, agreement or covenant of the
Borrower under this Agreement.
The provisions of clause (a) of the preceding
paragraph, however, are subject to the condition that if, at any
time after the loan shall have been so declared due and payable,
and before any judgment or decree for the payment of the moneys
due shall have been obtained or entered as hereinafter provided,
there shall have been deposited with the Trustee a sum sufficient
(together with any amounts held in the Bond Fund) to pay all the
principal of the Bonds matured prior to such declaration and all
matured installments of interest (if any) upon all the Bonds,
with interest on such overdue installments of principal as
provided herein, and the reasonable expenses of the Trustee, and
any and all other defaults known to the Trustee (other than in
the payment of principal of and interest on the Bonds due and
payable solely by reason of such declaration) shall have been
made good or cured to the satisfaction of the Trustee or
provision deemed by the Trustee to be adequate shall have been
made therefor, then, and in every such case, the holders of at
least a majority in aggregate principal amount of the Bonds then
outstanding, by written notice to the City and to the Trustee,
may, on behalf of the holders of all the Bonds, rescind and annul
such declaration and its consequences and waive such default;
provided that no such rescission and annulment shall extend to or
shall affect any subsequent default, or shall impair or exhaust
any right or power consequent thereon; and provided further that
there shall not be rescinded or annulled any such declaration
which follows an event described in Section 6.1(e) without the
written consent of the Credit Provider.
In case the Trustee or the City shall have proceeded to
enforce its rights under this Agreement and such proceedings
shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Trustee or the City, then,
and in every such case, the Borrower, the Trustee and the City
shall be restored respectively to their several positions and
rights hereunder, and all rights, remedies and powers of the
Borrower, the Trustee and the City shall continue as though no
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such action had been taken (provided, however, that any
settlement of such proceedings duly entered into by the City, the
Trustee or the Borrower shall not be disturbed by reason of this
provision).
In case the Borrower shall fail forthwith to pay such
amounts upon demand of the Trustee, the Trustee shall be entitled
and empowered to institute any action or proceeding at law or in
equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against
the Borrower and collect in the manner provided by law the moneys
adjudged or decreed to be payable.
In case proceedings shall be pending for the bankruptcy
or for the reorganization of the Borrower under the federal
bankruptcy laws or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of
the Borrower or in the case of any other similar judicial
proceedings relative to the Borrower, or the creditors or
property of the Borrower, then the Trustee shall be entitled and
empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount owing and
unpaid pursuant to this Agreement and, in case of any judicial
proceedings, to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the
claims of the Trustee allowed in such judicial proceedings
relative to the Borrower, its creditors or its property, and to
collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute such amounts as
provided in the Indenture after the deduction of its charges and
expenses. Any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized to make such payments to the
Trustee, and to pay to the Trustee any amount due it for
compensation and expenses, including expenses and fees of counsel
incurred by it up to the date of such distribution.
SECTION 6.3. AGREEMENT TO PAY ATTORNEYS' FEES AND
EXPENSES. In the event the Borrower should default under any of
the provisions of this Agreement and the City or the Trustee
should employ attorneys or incur other expenses for the
collection of the payments due under this Agreement or the
enforcement of performance or observance of any obligation or
agreement on the part of the Borrower herein contained, the
Borrower agrees to pay to the City or the Trustee the reasonable
fees of such attorneys and such other expenses so incurred by the
City or the Trustee.
SECTION 6.4. NO REMEDY EXCLUSIVE. No remedy herein
conferred upon or reserved to the City or the Trustee is intended
to be exclusive of any other available remedy or remedies, but
each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Agreement or now
17
or hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing upon
any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the City or the Trustee to
exercise any remedy reserved to it in this Article, it shall not
be necessary to give any notice, other than such notice as may be
herein expressly required. Such rights and remedies as are given
the City hereunder shall also extend to the Trustee, and the
Trustee and the holders of the Bonds shall be deemed third party
beneficiaries of all covenants and agreements herein contained.
SECTION 6.5. NO ADDITIONAL WAIVER IMPLIED BY ONE
WAIVER. In the event any agreement or covenant contained in this
Agreement should be breached by the Borrower and thereafter
waived by the City or the Trustee, such waiver shall be limited
to the particular breach so waived and shall not be deemed to
waive any other breach hereunder.
ARTICLE VII
PREPAYMENT
SECTION 7.1. REDEMPTION OF BONDS WITH PREPAYMENT
MONEYS. By virtue of the assignment of the rights of the City
under this Agreement to the Trustee as is provided in Section 4.4
hereof, the Borrower agrees to and shall pay directly to the
Trustee any amount permitted or required to be paid by it under
this Article VII. The Trustee shall use the moneys so paid to it
by the Borrower to effect redemption of the Bonds in accordance
with Article IV of the Indenture on the date specified for such
redemption pursuant to Section 7.5 hereof.
SECTION 7.2. OPTIONS TO PREPAY INSTALLMENTS. The
Borrower shall have the option to prepay the amounts payable
under Section 4.2 hereof by paying to the Trustee, for deposit in
the Bond Fund, the amount set forth in Section 7.4 hereof, under
the circumstances set forth in Section 4.01(a) of the Indenture;
provided, however, that if any event specified in Section
4.01(a)(1)(A) through (D) of the Indenture gives rise to the
Borrower's exercise of its option to prepay such amounts payable
hereunder, the amount of such loan payment prepaid shall not
exceed the original cost of the portion of the Project affected
by such event.
SECTION 7.3. MANDATORY PREPAYMENT. (a) The Borrower
shall have and hereby accepts the obligation to prepay Repayment
Installments to the extent mandatory redemption of the Bonds is
required pursuant to Section 4.01(b) of the Indenture. The
Borrower shall satisfy its obligation hereunder by prepaying such
Repayment Installments within one hundred eighty (180) days after
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the occurrence of any event set forth in paragraphs (1) through
(3) of said Section 4.01(b) giving rise to such required
prepayment, and immediately upon the occurrence of any event set
forth in paragraph (4) thereof giving rise to such required
prepayment. The amount payable by the Borrower in the event of a
prepayment required by this Section shall be determined as set
forth in Section 7.4 and shall be deposited in the Bond Fund.
SECTION 7.4. AMOUNT OF PREPAYMENT. In the case of a
prepayment of the entire amount due hereunder pursuant to Section
7.2 or 7.3 hereof, the amount to be paid shall be a sum
sufficient, together with other funds and the yield on any
securities deposited with the Trustee and available for such
purpose, to pay (1) the principal of all Bonds outstanding on the
redemption date specified in the notice of redemption, plus
interest accrued and to accrue to the payment or redemption date
of the Bonds, plus premium, if any, pursuant to the Indenture,
(2) all reasonable and necessary fees and expenses of the City,
the Trustee and any paying agent accrued and to accrue through
final payment of the Bonds, and (3) all other liabilities of the
Borrower accrued and to accrue under this Agreement.
In the case of partial prepayment of the Repayment
Installments, the amount payable shall be a sum sufficient,
together with other funds deposited with the Trustee and
available for such purpose, to pay the principal amount of and
premium, if any, and accrued interest on the Bonds to be
redeemed, as provided in the Indenture, and to pay expenses of
redemption of such Bonds.
SECTION 7.5. NOTICE OF PREPAYMENT. The Borrower shall
give forty-five days' prior written notice to the City and the
Trustee specifying the date upon which any prepayment pursuant to
this Article VII will be made. If, in the case of a mandatory
prepayment pursuant to Section 7.3 hereof, the Borrower fails to
give such notice of a prepayment required by this Section 7.5,
such notice may be given by the City or by any holder or holders
of ten percent (10%) or more in aggregate principal amount of the
Bonds of any Series Outstanding, and shall be given by the
Trustee, but solely at the times and under the circumstances
provided in Section 4.01(b) of the Indenture. The City and the
Trustee, at the request of the Borrower or any such Bondholder or
Bondholders, shall forthwith take all steps necessary under the
applicable provisions of the Indenture (except that the City
shall not be required to make payment of any money required for
such redemption) to effect redemption of all or part of the then
outstanding Bonds, as the case may be, on the earliest
practicable date thereafter on which such redemption may be made
under applicable provisions of the Indenture.
Notwithstanding anything to the contrary in this
Agreement, each notice contemplated in this Section 7.5 that is
given with respect to an optional prepayment pursuant to Section
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7.2 hereof may state that it is subject to and conditional upon
receipt by the Trustee on or prior to the proposed prepayment
date of amounts sufficient to effect such prepayment and, if a
notice so states, such notice shall be of no force and effect and
the prepayment need not be made and the Repayment Installments
will not become due and payable on the proposed prepayment date
unless such amounts are so received on or prior to the proposed
prepayment date.
ARTICLE VIII
NON-LIABILITY OF CITY; EXPENSES; INDEMNIFICATION
SECTION 8.1. NON-LIABILITY OF CITY. The City shall
not be obligated to pay the principal of, or premium, if any, or
interest on the Bonds, or to discharge any other financial
liability in connection herewith, except from Revenues. The
Borrower hereby acknowledges that the City's sole source of
moneys to repay the Bonds will be provided by the payments made
by the Borrower pursuant to this Agreement (excluding payments
pursuant to Section 4.2(b), 4.2(c), 5.6, 6.3, 8.2 and 8.3 of this
Agreement), together with other Revenues, including investment
income on certain funds and accounts held by the Trustee under
the Indenture, and hereby agrees that if the payments to be made
hereunder shall ever prove insufficient to pay all principal of,
and premium, if any, and interest on the Bonds as the same shall
become due (whether by maturity, redemption, acceleration or
otherwise), then upon notice from the Trustee, the Borrower shall
pay such amounts as are required from time to time to prevent any
deficiency or default in the payment of such principal, premium
or interest, including, but not limited to, any deficiency caused
by acts, omissions, nonfeasance or malfeasance on the part of the
Trustee, the Borrower, the City or any third party.
SECTION 8.2. EXPENSES. The Borrower covenants and
agrees to pay within fifteen (15) days after billing therefor and
to indemnify the City and the Trustee against all costs and
charges, including fees and disbursements of attorneys,
accountants, consultants, including financial consultants,
engineers and other experts incurred, in the absence of willful
misconduct, in connection with this Agreement, the Bonds or the
Indenture. The City shall notify the Borrower in writing prior
to engaging any professional or expert for which the City plans
to bill the Borrower, other than under the circumstances
described in Section 6.3 hereof.
SECTION 8.3. INDEMNIFICATION. The Borrower releases
the City and the Trustee from, and covenants and agrees that
neither the City nor the Trustee shall be liable for, and
covenants and agrees, to the extent permitted by law, to
indemnify, defend and hold harmless the City and the Trustee and
their officers, employees and agents from and against, any and
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all losses, claims, damages, liabilities or expenses, of every
conceivable kind, character and nature whatsoever arising out of,
resulting from or in any way connected with (1) the Project, or
the conditions, occupancy, use, possession, conduct or management
of, or work done in or about, or from the planning, design,
acquisition, installation or construction of the Project or any
part thereof; (2) the issuance of any Bonds or any certifications
or representations made in connection therewith and the carrying
out of any of the transactions contemplated by the Bonds, the
Indenture and this Agreement; (3) the Trustee's acceptance or
administration of the trusts under the Indenture, or the exercise
or performance of any of its powers or duties under the
Indenture; or (4) any untrue statement or alleged untrue
statement of any material fact or omission or alleged omission to
state a material fact necessary to make the statements made, in
light of the circumstances under which they were made, not
misleading, in any official statement or other offering circular
utilized by the City or any underwriter or placement agent in
connection with the sale of any Bonds; provided that such
indemnity shall not be required for damages that result from
negligence or willful misconduct on the part of the party seeking
such indemnity. The indemnity of the Trustee required by this
Section shall be only to the extent that any loss sustained by
the Trustee exceeds the net proceeds the Trustee receives from
any insurance carried with respect to the loss sustained. The
Borrower further covenants and agrees, to the extent permitted by
law, to pay or to reimburse the City and the Trustee and their
officers, employees and agents for any and all costs, attorneys
fees, liabilities or expenses incurred in connection with
investigating, defending against or otherwise in connection with
any such losses, claims, damages, liabilities, expenses or
actions, except to the extent that the same arise out of the
negligence or willful misconduct of the party claiming such
payment or reimbursement. The provisions of this Section shall
survive the retirement of the Bonds or resignation or removal of
the Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NOTICES. All notices, certificates or
other communications shall be deemed sufficiently given on the
second day following the day on which the same have been mailed
by first class mail, postage prepaid, addressed to the City, the
Borrower or the Trustee, as the case may be, as follows:
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To the City: City Manager
City of San Diego
City Administration Building
202 C Street
San Diego, CA 92101
Attention: Economic Development Services
To the Borrower: San Diego Gas & Electric Company
101 Ash Street
P.O. Box 1831
San Diego, CA 92112
Attention: Treasurer
To the Trustee: Bank of America National Trust and
Savings Association
333 South Beaudry Avenue
Los Angeles, CA 90017
Attention: Corporate Trust Division, #8510
A duplicate copy of each notice, certificate or other
communication given hereunder by either the City or the Borrower
to the other shall also be given to the Trustee. The City, the
Borrower and the Trustee may, by notice given hereunder,
designate any different addresses to which subsequent notices,
certificates or other communications shall be sent.
SECTION 9.2. SEVERABILITY. If any provision of this
Agreement shall be held or deemed to be, or shall in fact be,
illegal, inoperative or unenforceable, the same shall not affect
any other provision or provisions herein contained or render the
same invalid, inoperative, or unenforceable to any extent
whatever.
SECTION 9.3. EXECUTION OF COUNTERPARTS. This
Agreement may be simultaneously executed in several counterparts,
each of which shall be an original and all of which shall
constitute but one and the same instrument; provided, however,
that for purposes of perfecting a security interest in this
Agreement under Article 9 of the California Uniform Commercial
Code, only the counterpart delivered, pledged, and assigned to
the Trustee shall be deemed the original.
SECTION 9.4. AMENDMENTS, CHANGES AND MODIFICATIONS.
Except as otherwise provided in this Agreement or the Indenture,
subsequent to the initial issuance of Bonds and prior to their
payment in full, or provision for such payment having been made
as provided in the Indenture, this Agreement may not be
effectively amended, changed, modified, altered or terminated
without the written consent of the Trustee.
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SECTION 9.5. GOVERNING LAW. This Agreement shall be
governed exclusively by and construed in accordance with the
applicable laws of the State of California.
SECTION 9.6. AUTHORIZED BORROWER REPRESENTATIVE.
Whenever under the provisions of this Agreement the approval of
the Borrower is required or the City or the Trustee is required
to take some action at the request of the Borrower, such approval
or such request shall be given on behalf of the Borrower by the
Authorized Borrower Representative, and the City and the Trustee
shall be authorized to act on any such approval or request and
neither party hereto shall have any complaint against the other
or against the Trustee as a result of any such action taken.
SECTION 9.7. TERM OF THE AGREEMENT. This Agreement
shall be in full force and effect from the date hereof and shall
continue in effect as long as any of the Bonds is outstanding or
the Trustee holds any moneys under the Indenture, whichever is
later. All representations and certifications by the Borrower as
to all matters affecting the Tax-Exempt status of the Bonds shall
survive the termination of this Agreement.
SECTION 9.8. BINDING EFFECT. This Agreement shall
inure to the benefit of and shall be binding upon the City, the
Borrower, the Trustee and their respective successors and
assigns; subject, however, to the limitations contained in
Section 5.2 hereof.
SECTION 9.9. EQUAL OPPORTUNITY AND NONDISCRIMINATION.
The Borrower agrees to use its best efforts to require any and
all of its contractors, subcontractors, independent contractors
and employees to comply with applicable federal, state or local
equal opportunity and nondiscrimination requirements imposed by
statute, ruling or regulation and to hold the City harmless from
any and all liability, claims, damages or injuries to any person
in connection with any failure by such contractors,
subcontractors, independent contractors or employees to act in
accordance with such requirements. The Borrower further agrees
to monitor such contractors, subcontractors, independent
contractors and employees for compliance with such equal
opportunity and nondiscrimination requirements. The Borrower
also agrees, upon request of the City, to provide the City with a
copy of the Borrower's Equal Employment Opportunity Policy and
any requested compliance information concerning any underwriters
or bond counsel employed by the Borrower in connection with this
Agreement.
23
IN WITNESS WHEREOF, The City of San Diego has caused
this Agreement to be executed in its name and its seal to be
hereunto affixed and attested by its duly authorized officers,
and San Diego Gas & Electric Company has caused this Agreement to
be executed in its name and its seal to be hereunto affixed by
its duly authorized officers, all as of the date first above
written.
THE CITY OF SAN DIEGO
By_______________________________
Director,
Economic Development Services
[SEAL]
Attest:
By ___________________________
Deputy City Clerk
APPROVED AS TO FORM
AND LEGALITY:
JOHN W. WITT,
City Attorney
By __________________________
Deputy City Attorney
SAN DIEGO GAS & ELECTRIC COMPANY
By _____________________________
[SEAL] Assistant Treasurer
Attest:
By _____________________________
Assistant Secretary
EXHIBIT A
Description of the Project
Local Electric Facilities
Acquisition and construction of additions and
improvements to the Borrower's electric distribution facilities
(12 KV and under) and related substations, and customer service
connections located within the Borrower's electric retail service
area, required by the Borrower to provide for the transfer and
distribution of electric energy to its customers located therein,
including all necessary poles, foundations, cable, conduit,
transformers, switches, controls, meters, substations, land and
land-rights and other like facilities and equipment, as well as
necessary other equipment required for the proper installation,
protection, maintenance, control and operation of the foregoing
local electric distribution facilities. These facilities will be
required to meet the needs of new customers, maintain and improve
system capabilities, and make overhead to underground
conversions.
A-1