EXECUTION COPY
LOAN AGREEMENT
Between
CITY OF CHULA VISTA
And
SAN DIEGO GAS & ELECTRIC COMPANY
Dated as of October 1, 1997
Relating to
$25,000,000
City of Chula Vista
Industrial Development Revenue Bonds
(San Diego Gas & Electric Company)
1997 Series A
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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
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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
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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
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of October 1, 1997, 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, 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) 1987 Series A (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) 1997 Series A (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:
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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.
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(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.
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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
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(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.
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(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
$62,500.
(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
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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
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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:
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(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 147(a) of the 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
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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.
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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.
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(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
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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.
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(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
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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
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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
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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.
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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
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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.
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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 _______________________________
Vice President and Controller
[SEAL]
Attest:
_________________________________
Assistant Secretary
- 20 -
EXHIBIT A
Description of the Project
Local Electric Facilities
Acquisition and construction of additions and
improvements to the Borrower's electric distribution facilities
(12 KV and under) and related substations, and customer service
connections located within the Borrower's electric retail service
area, required by the Borrower to provide for the transfer and
distribution of electric energy to its customers located therein,
including all necessary poles, foundations, cable, conduit,
transformers, switches, controls, meters, substations, land and
land rights and other like facilities and equipment, as well as
necessary other equipment required for the proper installation,
protection, maintenance, control and operation of the foregoing
local electric distribution facilities. These facilities will be
required to meet the needs of new customers, maintain and improve
system capabilities, and make overhead to underground conversions.
- A-1 -
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