LOAN AGREEMENT
Between
CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY
And
SAN DIEGO GAS & ELECTRIC COMPANY
Dated as of June 1, 1996
Relating to
$129,820,000
California Pollution Control Financing Authority
Pollution Control Refunding Revenue Bonds
(San Diego Gas & Electric Company)
1996 Series A
LOAN AGREEMENT
TABLE OF CONTENTS
Page
PARTIES 1
PREAMBLES 1
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITION OF TERMS 3
SECTION 1.2. NUMBER AND GENDER 3
SECTION 1.3. ARTICLES, SECTIONS,ETC. 3
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS OF THE AUTHORITY 3
SECTION 2.2. REPRESENTATIONS OF THE BORROWER 4
ARTICLE III
ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS
SECTION 3.1. AGREEMENT TO ISSUE BONDS; APPLICATION
OF BOND PROCEEDS 5
SECTION 3.2. INVESTMENT OF MONEYS IN FUNDS 6
SECTION 3.3. AMENDMENT OF DESCRIPTION OF THE
PROJECT 6
ARTICLE IV
LOAN TO BORROWER; REPAYMENT PROVISIONS
SECTION 4.1. LOAN TO BORROWER 6
SECTION 4.2. REPAYMENT AND PAYMENT OF OTHER
AMOUNTS PAYABLE 6
SECTION 4.3. UNCONDITIONAL OBLIGATION 8
SECTION 4.4. ASSIGNMENT OF AUTHORITY'S RIGHTS 8
SECTION 4.5. AMOUNTS REMAINING IN FUNDS 9
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.1. RIGHT OF ACCESS TO THE PROJECT 9
SECTION 5.2. THE BORROWER'S MAINTENANCE OF ITS
EXISTENCE; ASSIGNMENTS 9
SECTION 5.3. RECORDS AND FINANCIAL STATEMENTS OF
BORROWER 11
SECTION 5.4. MAINTENANCE AND REPAIR; TAXES;
UTILITY AND OTHER CHARGES; INSURANCE 11
SECTION 5.5. QUALIFICATION IN CALIFORNIA 12
SECTION 5.6. TAX EXEMPT STATUS OF BONDS 12
SECTION 5.7. NOTICE AND CERTIFICATES TO TRUSTEE 13
SECTION 5.8. CONTINUING DISCLOSURE 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 AUTHORITY; EXPENSES; INDEMNIFICATION
SECTION 8.1. NON-LIABILITY OF AUTHORITY 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
SECTION 9.4. AMENDMENTS, CHANGES AND MODIFICATIONS 22
SECTION 9.5. GOVERNING LAW 22
SECTION 9.6. AUTHORIZED BORROWER REPRESENTATIVE 23
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
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of June 1, 1996, by and between
the CALIFORNIA POLLUTION CONTROL FINANCING AUTHORITY, a public
instrumentality and political subdivision of the State of California
(the "Authority"), 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 Authority is a public instrumentality and
political subdivision of the State of California, organized and existing
under the California Pollution Control Financing Authority Act, being
Division 27 of the California Health and Safety Code, as amended and
supplemented (the "Act"); and
WHEREAS, the Act authorizes the Authority to issue its revenue
bonds for the purpose of paying all or any part of the costs of a
"project" as defined in the Act and for the purpose of funding or
refunding any such bonds; and
WHEREAS, pursuant to the Act, the Authority previously has
issued California Pollution Control Financing Authority Pollution
Control Revenue Bonds (San Diego Gas & Electric Company), 1977 Series A,
issued April 27, 1977, in the original aggregate principal amount of
$9,575,000, of which $8,855,000 principal amount are now outstanding
(the "1977A Bonds"), pursuant to an Indenture, dated as of April 1, 1977
(the "1977 Indenture"), between the Authority and First Trust of
California, National Association, as successor trustee (the "Prior
Trustee"), in order to provide financial assistance to the Borrower for
the acquisition, construction and installation of certain air and water
pollution control and sewage and solid waste disposal facilities (the
"1977A Project") located at the Encina Project, South Bay Project,
Silver Gate Project and Station "B" Project in San Diego County,
California; and
WHEREAS, pursuant to the Act, the Authority previously has
issued California Pollution Control Financing Authority Pollution
Control Revenue Bonds (San Diego Gas & Electric Company), 1979 Series A,
issued March 21, 1979, in the original aggregate principal amount of
$5,700,000, of which $5,480,000 principal amount are now outstanding
(the "1979A Bonds"), pursuant to the 1977 Indenture, as supplemented by
a First Supplemental Indenture of Trust, dated as of March 15, 1979,
between the Authority and the Prior Trustee, in order to provide
financial assistance to the Borrower for the acquisition, construction
and installation of certain air and water pollution control and sewage
and solid waste disposal facilities (the "1979A Project") located at the
Encina Project, South Bay Project, Silver Gate Project and Station "B"
Project in San Diego County, California; and
WHEREAS, pursuant to the Act, the Authority previously has
issued California Pollution Control Financing Authority Flexible Demand
Pollution Control Revenue Bonds (San Diego Gas & Electric Company), 1984
Series A, issued May 8, 1984, in the original aggregate principal amount
of $53,000,000, all of which are now outstanding (the "1984A Bonds"),
pursuant to an Indenture of Trust, dated as of May 1, 1984, between the
Authority and the Prior Trustee, in order to provide financial
assistance to the Borrower for the acquisition, construction and
installation of certain air and water pollution control and sewage and
solid waste disposal facilities (the "1984A Project") located at the San
Onofre Nuclear Generating Station; and
WHEREAS, pursuant to the Act, the Authority previously has
issued California Pollution Control Financing Authority Variable Rate
Demand Pollution Control Revenue Bonds (San Diego Gas & Electric
Company), 1984 Series B, issued December 19, 1984, in the original
aggregate principal amount of $27,000,000, all of which are now
outstanding (the "1984B Bonds"), pursuant to an Indenture of Trust,
dated as of December 1, 1984, between the Authority and the Prior
Trustee, in order to provide financial assistance to the Borrower for
the acquisition, construction and installation of certain air and water
pollution control and sewage and solid waste disposal facilities (the
"1984B Project") located at the San Onofre Nuclear Generating Station;
and
WHEREAS, pursuant to the Act, the Authority previously has
issued California Pollution Control Financing Authority Pollution
Control Revenue Bonds (San Diego Gas & Electric Company), 1985 Series A,
issued December 10, 1985, in the original aggregate principal amount of
$35,000,000, all of which are now outstanding (the "1985A Bonds" and,
together with the 1977A Bonds, the 1979A Bonds, the 1984A Bonds and the
1984B Bonds, the "Prior Bonds"), pursuant to an Indenture of Trust,
dated as of December 1, 1985, between the Authority and the Prior
Trustee in order to provide financial assistance to the Borrower for the
acquisition, construction and installation of certain air and water
pollution control and sewage and solid waste disposal facilities (the
"1985A Project" and, together with the 1977A Project, the 1979A Project,
the 1984A Project and the 1984B Project, the "Project") located at the
San Onofre Nuclear Generating Station; and
WHEREAS, the Borrower has duly requested that the Authority
issue refunding bonds to refund the Prior Bonds; and
WHEREAS, the Authority, after due investigation and
deliberation has taken all necessary action approving such request and
authorizing the issuance of its pollution control refunding revenue
bonds as provided in the Indenture of Trust, dated as of June 1, 1996
(the "Indenture"), between the Authority and First Trust of California,
National Association, as trustee (the "Trustee"), in an aggregate
principal amount not to exceed $129,820,000 (the "Bonds"), in order to
refund the Prior Bonds and refinance the Project;
WHEREAS, the Authority and the Borrower desire to enter into
this Agreement in order to specify the terms and conditions of the
lending of the proceeds of the Bonds to the Borrower for the purpose of
refunding the Prior Bonds and refinancing the Project, as well as the
terms and conditions of the repayment by the Borrower of such loan and
certain other matters;
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, 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 AUTHORITY. The Authority
makes the following representations as the basis for its undertakings
herein contained:
(a) The Authority is a public instrumentality and political
subdivision of the State of California. Under the provisions of the
Act, the Authority has the power to enter into the transactions
contemplated by this Agreement and to carry out its obligations
hereunder. By proper action, the Authority has been duly authorized to
execute, deliver and duly perform this Agreement and the Indenture.
(b) To refinance the cost of the Project, the Authority will
issue the Bonds, which will mature, bear interest and be subject to
redemption as provided in the Indenture.
(c) The Bonds will be issued under and secured by the
Indenture, pursuant to which the Authority's interest in this Agreement
(except certain rights of the Authority 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 Authority 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 Authority is not in default under any of the
provisions of the laws of the State of California which default would
affect its existence or its powers referred to in subsection (a) of this
Section 2.1.
(f) The Authority has found and determined and hereby finds
and determines that all requirements of the Act 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 Act.
(g) On May 22, 1996, the Authority conducted a public hearing
with respect to the Bonds and the Project in accordance with the
provisions of Section 147(f) of the Code and adopted its resolution
approving the issuance and sale of the Bonds. The meeting of the
Authority on such date was held in accordance with the applicable
provisions of Article 9 of Chapter 1 of Division 3 of Title 2 of the
California Government Code, as amended.
(h) No member, officer or other official of the Authority has
any interest whatsoever in the Borrower or in the transactions
contemplated by this Agreement.
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 Act or
impair the Tax-Exempt status of interest on the Bonds. In particular,
the Borrower shall comply with all requirements of the Tax Certificate,
which is hereby incorporated by reference herein.
(d) The Project consists of air and water pollution control
and sewage and solid waste disposal facilities and the Borrower intends
to utilize the Project as air and water pollution control and sewage and
solid waste disposal facilities.
(e) The Borrower has and will have an interest in the Project
sufficient to carry out the purposes of this Agreement.
(f) The economic useful life of the Project is as set forth
in the Tax Certificate.
(g) To the best knowledge of the Borrower, no member, officer
or other official of the Authority has any interest whatsoever in the
Borrower or in the transactions contemplated by this Agreement.
(h) All certificates, approvals, permits and authorizations
with respect to the construction of the Project of agencies of
applicable local governments, the State of California and the federal
government that are required on or before the date hereof 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 the cost of the Project and
refund the Prior Bonds, the Authority 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(s) set
forth in the Indenture. The Authority 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,
and such amendment or supplement alters the purpose and description of
the Project in Exhibit A hereto, and the Authority approves of such
amendment or supplement, the Authority 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 the Project as a
facility that may be financed pursuant to the Act;
(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 adversely affect the Tax-Exempt status of
interest on the Bonds.
ARTICLE IV
LOAN TO BORROWER; REPAYMENT PROVISIONS
SECTION 4.1. LOAN TO BORROWER. The Authority and the Borrower
agree that the application of the proceeds of sale of the Bonds to
refund and retire the Prior Bonds and the prior 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.
(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
Authority.
(c) The Borrower also agrees to pay (i) 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 (the
"Bond Purchase Agreement") executed by it in connection with the sale of
the Bonds, and all expenses of the Authority related to the financing of
the Project which are not otherwise required to be paid by the Borrower
under the terms of this Agreement; and (ii) all reasonable expenses of
the Authority related to the Project which are not otherwise required to
be paid by the Borrower under the terms of this Agreement; provided that
the Authority shall have obtained the prior written approval of an
Authorized Borrower Representative for any expenditures other than those
provided for herein or in the Bond Purchase Agreement.
(d) In the event the Borrower should fail to make any of the
payments required by subsection (b) or (c) 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 ten percent (10%) per annum.
(e) 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 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 Authority, 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) except as provided in
Article VII hereof, 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 Authority 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 AUTHORITY'S RIGHTS. As security
for the payment of the Bonds, the Authority will assign to the Trustee
the Authority's rights, but not its obligations, under this Agreement,
including the right to receive payments hereunder (except (i) the rights
of the Authority to receive notices under this Agreement, (ii) the right
of the Authority to receive certain payments, if any, with respect to
fees, expenses and indemnification and certain other purposes under
Sections 4.2(c), 4.2(d), 6.3, 8.2 and 8.3 hereof, and (iii) the right of
the Authority to give approvals or consents pursuant to this Agreement)
and the Authority 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 Authority 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 Authority 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 be applied as
provided in Section 5.06 of the Indenture.
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.1. RIGHT OF ACCESS TO THE PROJECT. To the extent
such access is within the control of the Borrower, the Borrower agrees
that during the term of this Agreement the Authority, 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 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 Authority 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 Authority
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) To the extent permitted by law and its Articles of
Incorporation, the Borrower agrees that during the term of this
Agreement it will maintain its existence as a corporation, will continue
to maintain its status as a corporation in good standing in the State
and will not dissolve or otherwise dispose of all or substantially all
of its assets and will not combine or consolidate with or merge into
another person or permit one or more other persons to consolidate or
merge into it; provided, however, that if the Borrower has obtained the
prior written consent of the Authority, the Borrower may combine,
consolidate with, or merge into another person legally existing under
the laws of one of the states of the United States, or permit one or
more other persons to consolidate with or merge into it, or sell or
otherwise transfer to another corporation all or substantially all of
its assets as an entity and thereafter dissolve. The consent of the
Authority shall be given within thirty (30) days after written evidence
acceptable to the Authority is provided by the Borrower to demonstrate
that (i) the surviving, resulting or transferee person, as the case may
be, (A) assumes and agrees in writing to pay and perform all of the
obligations of the Borrower hereunder, (B) qualifies to do business in
the State of California and (C) has a net worth (as determined in
accordance with generally accepted accounting principles) immediately
after such consolidation, merger, sale or transfer equal to at least
ninety-five percent (95%) of the net worth of the Borrower at the end of
the fiscal quarter immediately preceding the effective date of such
consolidation, merger, sale or transfer; and (ii) the ratings on the
Bonds, as determined by at least one Rating Agency, shall remain at the
same rating level, or a higher rating level, as the ratings on the Bonds
immediately prior to the effective date of such consolidation, merger,
sale or transfer. If the Authority does not act within thirty (30) days
after such written evidence is received, such consent shall be deemed to
have been given.
Within ten (10) Business Days after the consummation of the
consolidation, merger, sale or other transaction, the Borrower shall
provide the Authority with counterpart copies of the consolidation,
merger or sale instruments, or other documents constituting the
transaction, including (X) copies of the instruments of assumption
referred to in (i)(A) above and (Y) evidence of qualification as
referred to in (i)(B) above. The Borrower shall also at such time
provide the Authority with an Opinion of Counsel satisfactory to the
Authority that all of the provisions of this Section 5.2(a) have been
complied with. At least thirty (30) days but not more than ninety
(90) days prior to any transaction described above, the Borrower shall
provide the Authority with drafts of the documents of assumption, with
copies of pro forma financial statements showing expected compliance
with the requirements of (i)(C) above. The Borrower agrees to provide
such other information as the Authority may reasonably request in order
to assure compliance with this Section 5.2(a).
Notwithstanding any other provisions of this Section 5.2(a),
the Borrower need not comply with any of the provisions of Section
5.2(a) above if, at the time of such merger, combination, sale of
assets, dissolution or reorganization, the Bonds will be defeased as
provided in Article X of the Indenture.
(b) The rights and obligations of the Borrower under this
Agreement may be assigned by the Borrower to any person in whole or in
part, subject, however, to each of the following conditions:
(i) No assignment (other than pursuant to subsection (a)
of this Section 5.2) shall relieve the Borrower from primary liability
for any of its obligations hereunder, and in the event of any assignment
not pursuant to subsection (a) of this Section 5.2, 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 in writing the obligations of the Borrower hereunder to the
extent of the interest assigned.
(iii) The Borrower shall give the Authority thirty (30)
days' prior written notice of any assignment (other than pursuant to
subsection (a) of this Section 5.2) and shall, within thirty (30) days
after delivery of any assignment, furnish or cause to be furnished to
the Authority and the Trustee a true and complete copy of each such
assignment, together with an instrument of assumption and an Opinion of
Counsel satisfactory to the Authority that the provisions of this
Section 5.2(b) have been complied with.
SECTION 5.3. RECORDS AND FINANCIAL STATEMENTS OF BORROWER.
The Borrower shall, within one hundred twenty (120) days after the close
of each fiscal year, submit to the Authority and to the Trustee audited
financial statements with respect to the Borrower for such fiscal year.
The Trustee shall be permitted at all reasonable times during the term
of this Agreement to examine the books and records of the Borrower with
respect to the Project, subject to the limitations expressed in Section
5.1.
SECTION 5.4. MAINTENANCE AND REPAIR; TAXES; UTILITY AND OTHER
CHARGES; INSURANCE. The Borrower agrees to maintain, to the extent
permitted by applicable law and regulation, the Project, or cause the
Project to be so maintained, during the term of this Agreement (i) in as
reasonably safe condition as its operations shall permit and (ii) 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.
The Borrower agrees to pay or cause to be paid during the term
of this Agreement all taxes, governmental charges of any kind lawfully
assessed or levied upon the Project or any part thereof, including any
taxes levied against the Project which, if not paid, will become a
charge on the receipts from the Project prior to or on a parity with the
charge thereon and the pledge or assignment thereof to be created
therefrom or under this Agreement, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Project and all assessments and charges lawfully made by any
governmental body for public improvements that may be secured by a lien
on the Project, provided that with respect to special assessments or
other governmental charges that may lawfully be paid in installments
over a period of years, the Borrower shall be obligated to pay only such
installments as are required to be paid during the term of this
Agreement. The Borrower may, at the Borrower's expense and in the
Borrower's name, in good faith, contest any such taxes, assessments and
other charges and, in the event of any such contest, may permit the
taxes, assessments or other charges so contested to remain unpaid during
that period of such contest and any appeal therefrom unless by such
nonpayment the Project or any part thereof will be subject to loss or
forfeiture.
The Borrower agrees that it will keep, or cause to be kept (i)
the Project insured against such risks and in such amounts as similar
types of facilities are usually insured by companies similarly situated
(which may include self-insurance), and (ii) insurance against all
direct or contingent loss or liability for personal injury, death or
property damage occasioned by the operation of the Project, which
insurance may be a part of the policy or policies of insurance
customarily maintained by the Borrower in connection with its general
property and liability insurance upon all of the plants and properties
operated by it (including such deductibles as may be provided in said
policies).
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 Tax-Exempt and to that end, the covenants and agreements of the
Authority 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 Authority 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 Authority 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 Authority 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 Tax-Exempt to the holders of the Bonds, 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 not to be Tax-Exempt to the holders thereof;
provided that neither the Borrower nor the Authority 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 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
Authority 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 Authority 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
Authority 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 Tax-Exempt status of interest on the
Bonds, the Borrower, the Trustee and the Authority 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 AND CERTIFICATES TO TRUSTEE. The
Borrower hereby agrees to provide the Trustee with the following:
(a) On or before the fifth business day following
June 30 and December 31 (commencing December 31, 1996) of each
year in which any of the Bonds are outstanding a certificate of an
officer of the Borrower that all payments required under this
Agreement have been made, or explaining why not;
(b) Within one hundred twenty (120) days of the end of
the fiscal year of the Borrower, (i) a certificate of an officer
of the Borrower to the effect that all payments have been made
under this Agreement and that, to the best of such officer's
knowledge, there exists no event of default or potential default
(which exists or which has previously occurred) and (ii) the
audited annual report of the Borrower;
(c) Upon knowledge of an Event of Default under this
Agreement or the Indenture, notice of such 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; and
(d) On or before January 1 and July 1 of each year
during which any of the Bonds are outstanding, a written
disclosure of any significant change known to the Borrower that
occurs which would adversely impact the Trustee's ability to
perform its duties under the Indenture, or of any conflicts which
may result because of other business dealings between the Trustee
and the Borrower.
SECTION 5.8. CONTINUING DISCLOSURE. The Borrower hereby
covenants and agrees 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, and to comply
with the terms of the Continuing Disclosure Agreement. Notwithstanding
any other provision of this Agreement, failure of the Borrower to comply
with the requirements of the Continuing Disclosure Agreement shall not
be considered an Event of Default hereunder or under the Indenture;
however, the holders or beneficial owners of the Bonds may enforce the
Continuing Disclosure Agreement to the extent provided therein.
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
thirty (30) days after written notice, which notice shall specify
such failure and request that it be remedied, given to the
Borrower by the Authority or the Trustee, unless the Authority 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 Authority 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.
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) or (c) 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 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
Authority, 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.
(b) The Trustee may have access to and may 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 Authority 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. Nothing in Section 4.4 of this Agreement shall be
deemed to limit the rights of the Authority under this Section
6.2(c); provided that, the Authority will not exercise any
remedies, with respect to any of the Authority's rights assigned
to the Trustee pursuant to Section 4.4 of this Agreement unless,
in the Authority's reasonable judgment and after written request
to the Trustee, the Trustee has failed to enforce such rights.
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, 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 Authority 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.
In case the Trustee or the Authority 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 Authority, then, and in every
such case, the Borrower, the Trustee and the Authority shall be restored
respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Borrower, the Trustee and the
Authority shall continue as though no such action had been taken
(provided, however, that any settlement of such proceedings duly entered
into by the Authority, the Trustee or the Borrower shall not be
disturbed by reason of this provision).
The Borrower covenants that, in case an Event of Default shall
occur with respect to the payment of any Repayment Installment payable
under Section 4.2(a) hereof, then, upon demand of the Trustee, the
Borrower will pay to the Trustee the whole amount that then shall have
become due and payable under said Section.
In case the Borrower shall fail forthwith to pay such amounts
upon such demand, 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 Authority 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 Authority or the Trustee the
reasonable fees of such attorneys and such other expenses so incurred by
the Authority or the Trustee.
SECTION 6.4. NO REMEDY EXCLUSIVE. No remedy herein conferred
upon or reserved to the Authority 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 Authority 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 Authority 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 Authority 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 Authority 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 with respect to the Bonds, 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)(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
with respect to the Bonds 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) or (2) 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 with respect to the Bonds
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, required pursuant to the Indenture, (2) all reasonable and
necessary fees and expenses of the Authority, the Trustee, the Registrar
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 (45) days' prior written notice to the Authority and the
Trustee (or such lesser time as may be acceptable to the Trustee), with
a copy to the Authority, 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 Authority 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 Authority 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 Authority 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 AUTHORITY; EXPENSES; INDEMNIFICATION
SECTION 8.1. NON-LIABILITY OF AUTHORITY. The Authority 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 Authority'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),
4.2(d), 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
Authority 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
Authority and the Trustee against all costs and charges, including fees
and disbursements of attorneys, accountants, consultants and other
experts incurred, in good faith in connection with this Agreement, the
Bonds or the Indenture.
SECTION 8.3. INDEMNIFICATION. The Borrower releases the
Authority and the Trustee from, and covenants and agrees that neither
the Authority nor the Trustee shall be liable for, and covenants and
agrees, to the extent permitted by law, to indemnify, defend and hold
harmless the Authority and the Trustee and their members, directors,
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 Authority
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 required by this Section
shall be only to the extent that any loss sustained by the Authority or
the Trustee exceeds the net proceeds the Authority or 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 Authority and the Trustee and their
officers, employees and agents for any and all costs, reasonable
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 Authority, the Borrower or the
Trustee, as the case may be, as follows:
To the Authority: California Pollution Control Financing
Authority
915 Capitol Mall, Suite 446
Sacramento, California 95814
Attention: Executive Director
To the Borrower: San Diego Gas & Electric Company
101 Ash Street
P.O. Box 1831
San Diego, CA 92112
Attention: Treasurer
To the Trustee: First Trust of California,
National Association
550 South Hope Street
Los Angeles, CA 90071
Attention: Corporate Trust
A duplicate copy of each notice, certificate or other communication
given hereunder by either the Authority or the Borrower to the other
shall also be given to the Trustee. The Authority, 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 by the Trustee 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. Notice of any such amendment to this Agreement or the
Indenture shall be promptly delivered to each Rating Agency then
maintaining a rating on the Bonds.
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. This Agreement shall also be enforceable in
California and any action arising out of this Agreement shall be filed
and maintained in the Sacramento County Superior Court, Sacramento,
California; provided that the Authority may waive the requirement of
venue. The parties agree that the terms and conditions of this
Agreement supersede those of all previous agreements between the parties
other than the documents referred to in this Agreement, and that this
Agreement, together with the documents referred to in this Agreement,
contains the entire agreement between the parties hereto.
SECTION 9.6. AUTHORIZED BORROWER REPRESENTATIVE. Whenever
under the provisions of this Agreement the approval of the Borrower is
required or the Authority 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 Authority 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 Authority under Sections 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 Authority, 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 California Pollution Control Financing
Authority 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.
CALIFORNIA POLLUTION CONTROL
FINANCING AUTHORITY
By Matt Fong, Chairman
By____________________________
Deputy
[SEAL]
Attest:
By____________________________
Executive Director
SAN DIEGO GAS & ELECTRIC COMPANY
By_______________________________
[SEAL] Senior Vice President,
Chief Financial Officer
and Treasurer
Attest:
By_____________________________
Assistant Secretary