LOAN AGREEMENT
Between
CITY OF CHULA VISTA
And
SAN DIEGO GAS & ELECTRIC COMPANY
Dated as of November 1, 1996
Relating to
$60,000,000
City of Chula Vista
Industrial Development Revenue Bonds
(San Diego Gas & Electric Company)
1996 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 4
SECTION 3.3. AMENDMENT OF DESCRIPTION OF THE PROJECT 4
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 6
SECTION 4.4. ASSIGNMENT OF CITY'S RIGHTS 7
SECTION 4.5. AMOUNTS REMAINING IN FUNDS 7
SECTION 4.6. CREDIT FACILITY 7
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.1. RIGHT OF ACCESS TO THE PROJECT 8
SECTION 5.2. THE BORROWER'S MAINTENANCE OF ITS EXISTENCE;
ASSIGNMENTS 8
SECTION 5.3. RECORDS AND FINANCIAL STATEMENTS OF BORROWER 9
SECTION 5.4. MAINTENANCE AND REPAIR 9
SECTION 5.5. QUALIFICATION IN CALIFORNIA 9
SECTION 5.6. TAX EXEMPT STATUS OF BONDS 9
SECTION 5.7. NOTICE OF RATE PERIODS 10
SECTION 5.8. REMARKETING OF THE BONDS 11
SECTION 5.9. NOTICES TO TRUSTEE AND CITY 12
SECTION 5.10. CONTINUING DISCLOSURE 12
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT 12
SECTION 6.2. REMEDIES ON DEFAULT 13
SECTION 6.3. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES 15
SECTION 6.4. NO REMEDY EXCLUSIVE 15
SECTION 6.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER 15
ARTICLE VII
PREPAYMENT
SECTION 7.1. REDEMPTION OF BONDS WITH PREPAYMENT MONEYS 15
SECTION 7.2. OPTIONS TO PREPAY INSTALLMENTS 16
SECTION 7.3. MANDATORY PREPAYMENT 16
SECTION 7.4. AMOUNT OF PREPAYMENT 16
SECTION 7.5. NOTICE OF PREPAYMENT 16
ARTICLE VIII
NON-LIABILITY OF CITY; EXPENSES; INDEMNIFICATION
SECTION 8.1. NON-LIABILITY OF CITY 17
SECTION 8.2. EXPENSES 17
SECTION 8.3. INDEMNIFICATION 18
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NOTICES 18
SECTION 9.2. SEVERABILITY 18
SECTION 9.3. EXECUTION OF COUNTERPARTS 19
SECTION 9.4. AMENDMENTS, CHANGES AND MODIFICATIONS 19
SECTION 9.5. GOVERNING LAW 19
SECTION 9.6. AUTHORIZED BORROWER REPRESENTATIVE 19
SECTION 9.7. TERM OF THE AGREEMENT 19
SECTION 9.8. BINDING EFFECT 19
TESTIMONIUM 20
SIGNATURES AND SEALS 20
EXHIBIT A Description of the Project A-1
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of November 1, 1996, by and
between the CITY OF CHULA VISTA, 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 200 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 200 of the Charter, has
enacted Chapter 3.48 of the Chula Vista Municipal Code, pursuant to
Ordinance No. 1970 adopted on February 9, 1982, 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 applied to the City for
financial assistance to refinance the costs of acquisition, construction
and installation of certain facilities for the distribution of electric
energy and gas, as more fully described in Exhibit A hereto (the
"Project"), by prepaying a loan (the "Prior Loan") made to the Borrower
with the proceeds of The City of San Diego Industrial Development Revenue
Bonds (San Diego Gas & Electric Company) 1986 Series B (the "Prior
Bonds"), resulting in the refunding of the Prior Bonds; and
WHEREAS, the City after due investigation and deliberation
has determined that the Project and the refinancing thereof, and the
resulting refunding of the Prior Bonds, will directly benefit the
citizens of the City by substantially promoting the public interests
recited in the Law and has adopted its resolutions authorizing the
provision or lending of financial assistance to the Borrower to refinance
the costs of acquisition, construction and installation of the Project
and to prepay the Prior Loan, and the issuance and sale of its bonds,
including its Industrial Development Revenue Bonds (San Diego Gas &
Electric Company) 1996 Series B (the "Bonds"), for such purposes; and
WHEREAS, the City proposes to assist in such refinancing
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 First Trust of California, National 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 "project" 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.
(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 May 21, 1996, the City Council of the City adopted
Resolution No. 18302 authorizing the issuance and sale of the Bonds.
(h) On July 23, 1996, the City Council adopted Resolution
No. 18384 authorizing the execution and delivery of a bond purchase
agreement and official statement in connection with 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 and
all other documents contemplated hereby to be executed by the Borrower.
(b) Neither the execution and delivery of this Agreement,
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 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 "project" 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 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 and gas 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 and gas 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 enable the Borrower to refinance a portion
of the cost of the Project by prepaying the Prior Loan, 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
Section 3.02 of the Indenture.
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.
(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 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.
The obligation of the Borrower to make any payment under
this Section 4.2(a) with respect to the Bonds shall be deemed to have
been satisfied to the extent of any corresponding payment by the Credit
Provider under the Credit Facility, if any, for such Bonds.
(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.
(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 reasonable
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 within five days
following the Issue Date an issuance fee in the amount of $150,000.00.
(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.
(g) Any unpaid obligation of the Borrower under subsections
(b) through (e) of this Section 4.2 shall survive the payment and
discharge of the Bonds and the termination of this Agreement.
SECTION 4.3. UNCONDITIONAL OBLIGATION. The obligations of
the Borrower to make the payments required by Section 4.2 hereof 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 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 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 pay the
Repayment Installments directly to the Trustee (subject to the provisions
of Section 4.2(f)) 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.
SECTION 4.6. CREDIT FACILITY. No initial Credit Facility
shall be provided with respect to the Bonds. The Borrower may provide
and subsequently terminate or remove a Credit Facility with respect to
the 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 or
substitution of any Credit Facility with respect to Bonds during a Term
Rate Period or a Variable Term Segment with respect to such Bonds. Not
less than twenty-five days prior to the termination, removal,
substitution or delivery of any Credit Facility with respect to the
Bonds, the Borrower shall mail written notice of such termination,
removal, substitution or delivery to the Trustee. Not less than fifteen
days prior to the delivery of any substitute or new Credit Facility for
the Bonds, the Borrower shall mail written notice of such substitution or
delivery 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, 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 (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 (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.
(b) With the prior written consent of the City (which
consent shall not be unreasonably withheld), the rights and obligations
of the Borrower under this Agreement may be assigned by the Borrower, 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 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).
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. The City shall not be liable to make any such
payment except from funds provided by the Borrower for such purpose.
(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 person solely because
such person is a "substantial user" of the Project or a "related person"
within the meaning of Section 147(a) of the 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 set forth in this Section 5.6 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.
(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 the 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: The 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 financial institution 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
for the Bonds subject to the conditions set forth below. The 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 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 the Remarketing Agent and such other parties as shall be
appropriate, which may be combined with a Tender Agreement into a single
document. The 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.
SECTION 5.10. CONTINUING DISCLOSURE. The Borrower
hereby covenants and agrees, upon the adjustment of the Rate Period for
the Bonds to a Term Rate Period pursuant to Section 2.01(c)(iv) of the
Indenture and the remarketing of such Bonds in accordance with the
Indenture, to comply with the continuing disclosure requirements for the
Bonds as promulgated under Rule 15c2-12, as it may from time to time
hereafter be amended or supplemented. Notwithstanding any other
provision of this Agreement, failure of the Borrower to comply with the
requirements of Rule 15c2-12 applicable to the Bonds, as it may from time
to time hereafter be amended or supplemented, shall not be considered an
Event of Default hereunder or under the Indenture; however, any
Bondholder or beneficial owner of any Bonds may take such actions as may
be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the Borrower to comply with its
obligations pursuant to this Section 5.10.
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,
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) an Act of Bankruptcy of the Borrower; or
(d) 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) or (d) 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 provided in
Section 4.01(b)(3) 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(d) 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 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 amounts
due by reason of this Section 6.2 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 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 certain 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, in whole or in part, 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 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 (3) 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, the Registrar, the Tender Agent 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 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 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 (including but
not limited to financial liability under Section 5.6 hereof) 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 to the City or the Trustee pursuant to
Section 4.2(b), 4.2(c), 4.2(e), 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.
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 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, covenants 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 this Agreement; 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 reasonable costs, including but not limited to
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 set forth in the Indenture. 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.
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 an 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 are outstanding or the Trustee holds
any moneys under the Indenture, whichever is later; provided, however,
that the rights of the Trustee and the City under Section 8.2 and 8.3
hereof shall survive the termination of this Agreement, the retirement of
the Bonds and the removal or resignation of the Trustee. 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.
IN WITNESS WHEREOF, the City of Chula Vista 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.
CITY OF CHULA VISTA
By___________________________________
Mayor
[SEAL]
Attest:
________________________________________
City Clerk
APPROVED AS TO FORM:
JOHN M. KAHENY
CITY ATTORNEY
By______________________________________
Deputy City Attorney
SAN DIEGO GAS & ELECTRIC COMPANY
By__________________________________
Senior Vice President,
[SEAL] Chief Financial Officer and
Treasurer
Attest:
___________________________________
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.
Local Gas Facilities
Acquisition and construction of additions and
improvements to the Borrower's gas distribution (operating at pressures
at or below 400 psig) facilities, located within its gas retail service
area in San Diego County, required for the distribution of gas for
delivery to the Borrower's customers located therein. Such facilities
include the acquisition and construction of new, high-pressure
distribution mains, and new customer service lines or the extension,
replacement or relocation of such existing mains or portions or
components thereof, regulator stations controlling the passage of gas
from distribution mains of higher pressure to distribution mains of lower
pressure and the volume and pressure of gas within the mains, together
with all necessary valves, controls, meters, and other measuring and
regulating devices, and facilities, plant, property, and other equipment
and improvements (including land and land-rights) necessary for the
installation, protection, maintenance, control and operation of the
foregoing.