EXHIBIT 10.6
REIMBURSEMENT AGREEMENT (the
"Agreement") dated as of November 22,2002,
between UNITED STATES FILTER CORPORATION
("USF") and NATIONAL WATERWORKS, INC.,
formerly known as Blue Acquisition Corp.
("NWW').
Reference is made to the Asset Purchase Agreement (the "Asset
Purchase Agreement") dated as of September 12,2002 among USF, NWW and U.S.
Filter Distribution Group, Inc. ("Distribution") pursuant to which NWW is
acquiring substantially all of the assets of, and certain liabilities of,
Distribution. All capitalized terms used but not defined herein shall have their
respective meanings set forth in the Asset Purchase Agreement.
USF has heretofore caused the supply and installation bonds
listed on Schedule A-1 hereto (the "Supply Bonds"), the performance bonds listed
on Schedule A-2 hereto (the "Performance Bonds") and the lease guaranties listed
on Schedule A-3 attached hereto (the "Lease Guaranties") to be executed on
behalf of Distribution in favor of the obligees referenced on such schedules.
Upon the consummation of the transactions contemplated by the Asset Purchase
Agreement, USF will remain obligated under the Supply Bonds, Performance Bonds
and Lease Guaranties.
Accordingly, USF and NWW agree as follows:
SECTION 1. Reimbursement.
NWW shall reimburse USF for (i) the amount of any claim made by the
issuer of the Supply Bonds and paid by USF and any liability, loss, cost or
expense incurred by USF in connection therewith (each such claim, liability,
loss, cost or expense, a "Supply Bond Obligation"), (ii) the amount of any claim
made by the issuer of the Performance Bonds and paid by USF and any liability,
loss; cost or expense incurred by USF in connection therewith, (each such claim,
liability, loss, cost or expense, a "Performance Bond Obligation"), and (iii)
the amount of any payment made by USF under the Lease Guaranties, and any
liability, loss, cost or expense incurred by USF in connection therewith (each
such claim, liability, loss, cost or expense, a "Lease Guaranty Obligation"), in
each case upon written notification from USF setting forth the amount of the
Supply Bond Obligation, Performance Bond Obligation or Lease Guaranty
Obligation, as the case may be, and documentation evidencing such obligation and
amount.
SECTION 2. Letters of Credit.
On the date hereof NWW is causing UBS AG, Stamford Branch (the "Issuing
Bank") to issue (i) a letter of credit to USF as beneficiary in the amount of
$1,025,758.25 in the form attached hereto as Exhibit A-l, to secure NWW's
obligations to USF pursuant to Section 1 above with respect to the Supply Bond
Obligations (the "Supply Bond L/C"), (ii) a letter of credit to USF as
beneficiary in the amount of $250,000, in the form attached hereto as Exhibit
A-2, to secure NWW's obligations to USF pursuant to Section 1 above with respect
to the Performance Bond Obligations (the "Performance Bond L/C"), and (iii) a
letter of credit to USF as beneficiary
in the amount of $86,531.75, in the form attached hereto as Exhibit A-3, in each
case to secure NWW's obligations to USF pursuant to Section 1 above with respect
to the Lease Guaranty Obligations (the "Lease Guaranty L/C"). USF shall have the
right to make one or more draws under the Supply Bond L/C, the Performance Bond
L/C or the Lease Guaranty L/C, as the case may be, in an amount equal to the
applicable Supply Bond Obligation, Performance Bond Obligation or Lease Guaranty
Obligation, respectively, if NWW fails to reimburse USF such amounts within 10
business days of receipt of notice given in accordance with Section 1 above.
SECTION 3. Termination.
(a) The reimbursement obligations of NWW contained herein with respect
to the Supply Bonds shall terminate at such time as all Supply Bonds have been
terminated or released. Within ten business days of written notice delivered by
NWW to USF of such release or termination of all Supply Bonds, USF shall take
all action reasonably necessary at NWW's cost and expense to terminate the
Supply Bond L/C, including providing written notice of termination to the
Issuing Bank and delivering the original Supply Bond L/C to the Issuing Bank.
Notwithstanding the foregoing, in the event all Supply Bonds have been
terminated or released but a claim for reimbursement of a Supply Bond is pending
pursuant to Section 1 above, then USF shall take all action reasonably necessary
at NWW's cost and expense to terminate the Supply Bond L/C within ten business
days of resolution of such claim.
(b) The reimbursement obligations of NWW contained herein with respect
to the Performance Bonds shall terminate at such time as all Performance Bonds
have been terminated or released. Within ten business days of written notice
delivered by NWW to USF of such release or termination of all Performance Bonds,
USF shall take all action reasonably necessary at NWW's cost and expense to
terminate the Performance Bond L/C, including providing written notice of
termination to the Issuing Bank and delivering the original Performance Bond L/C
to the Issuing Bank. Notwithstanding the foregoing, in the event all Performance
Bonds have been terminated or released but a claim for reimbursement of a
Performance Bond is pending pursuant to Section 1 above, then USF shall take all
action reasonably necessary at NWW's cost and expense to terminate the
Performance Bond L/C within ten business days of resolution of such claim.
(c) The reimbursement obligations of NWW contained herein with respect
to the Lease Guaranties shall terminate at such time as all Lease Guaranties
have been terminated or released. Within ten business days of written notice
delivered by NWW to USF of such release or termination of all Lease Guaranties,
USF shall take all action reasonably necessary at NWW's cost and expense to
terminate the Lease Guaranty L/C, including providing written notice of
termination to the Issuing Bank and delivering the original Lease Guaranty Bond
L/C to the Issuing Bank. Notwithstanding the foregoing, in the event all Lease
Guaranties have been terminated or released but a claim for reimbursement of a
Lease Guaranty is pending pursuant to Section 1 above, then USF shall take all
action reasonably necessary at NWW's cost and expense to terminate the Lease
Guaranty L/C within ten business days of resolution of such claim.
SECTION 4. Permit Bonds.
2
NWW has obtained, as of the closing of the transactions contemplated by
the Asset Purchase Agreement, permit bonds to replace the permit bonds listed on
Schedule B attached hereto which USF had caused to be issued on behalf of
Distribution for various obligees on or prior to the closing date of the
transactions contemplated by the Asset Purchase Agreement (the "Permit Bonds").
NWW shall use its best efforts (apart from commencing litigation), at NWW's cost
and expense, to obtain the release of the Permit Bonds as soon as reasonably
practicable following the closing date of the transactions contemplated by the
Asset Purchase Agreement.
SECTION 5. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ANY JURISDICTION'S CONFLICT
OF LAWS PRINCIPLES.
SECTION 6. Amendment.
Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between NWW and
USF.
SECTION 7. Notices.
All notices, requests, demands, claims, consents and other
communications which are required or otherwise delivered hereunder shall be in
writing in accordance with Section 10.2 of the Asset Purchase Agreement.
SECTION 8. Binding Agreement: Assignments.
Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of the parties
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and permitted assigns in accordance with Section
10.3(a) of the Asset Purchase Agreement.
SECTION 9. Severability.
In case any one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, no party hereto
shall be required to comply with such provision for so long as such provision is
held to be invalid, illegal or unenforceable, but the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
SECTION 10. Counterparts.
This Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. Delivery of an executed signature page to this
3
Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.
* * * * * * *
4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first appearing above.
UNITED STATES FILTER CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
NATIONAL WATERWORKS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President & C.E.O.
SCHEDULE A-l
SUPPLY BONDS
[SEE ATTACHED]
Supply-Installation
ACTIVE BOND SCHEDULE WITH WIP
ACCOUNT USF DISTRIBUTION GROUP ONLY UPDATED AS OF: NOVEMBER 21, 2002
▇▇▇▇ ▇▇▇▇.EFF. PREM.EFF.
NUMBER DATE DATE PREMIUM OBLIGEE NAME JOB DESCRIPTION PRINCIPAL
SUPPLY-INSTALLATION BONDS $52,646
217911 05/03/99 05/03/01 $15,956 City of Berwyn Install water conditioning equip USFDG
255233 02/20/01 02/20/03 $1,110 City of Camden Cold water meters USFDG
258486 03/22/01 03/22/03 $264 ▇▇▇▇▇▇▇ Township MUA supply water meters USFDG
261973 08/06/01 08/06/03 $214 City of Cleveland Supply valves & appurtenances USFDG
266690 08/20/01 08/20/03 $100 City of St. Louis, Supply Division Supply ductile iron pipe and fittings USFDG
266695 09/20/01 09/20/03 $100 City of Cleveland Purchase Contract USFDG
266714 10/24/01 10/24/03 $1,742 Village of Lagrange Park Ph. 2 - install water meters & hardware USFDG
266717 11/14/01 11/14/03 $670 City of Cleveland Supply Fire Hydrants & Appurt. USFDG
266725 10/19/01 10/19/03 $8,265 City of Chanhassen, MN Mtr replace & radio read interface USFDG
285909 12/28/01 12/28/03 $1,851 ▇▇▇▇▇▇▇ County Water & Sewer Auth supply of manholes USFDG
285910 12/28/01 12/28/03 $1,332 ▇▇▇▇▇▇▇ County Water & Sewer Auth. Provide PVC sewer pipe USFDG
290308 05/17/02 05/17/04 $706 ▇▇▇▇ Wastewater Alliance Supply Pipe & Fittings USFDG
290322 06/21/02 06/21/04 $12,945 City of Palos Heights supply/install water meters USFDG
290339 07/31/02 07/31/04 $3,157 Village of ▇▇▇▇▇▇▇ supply/install water meters USFDG
(Carol
Stream, IL)
290360 08/27/02 08/24/04 $320 City of Cleveland supply various fittings. USFDG
290363 09/08/02 09/07/05 $100 City of St. Louis Supply meters, detector water USFDG
290364 09/04/02 09/04/04 $107 Clearfield Mun. Auth., PA Supply 10" water main materials USFDG
290375 09/25/02 09/25/04 $698 ▇▇▇▇▇▇▇ Construction of Nevada supply underground pipe, valves and fittings. USFDG
290377 09/27/02 09/27/04 $435 National Metering Service, Inc. supply/deliver water meters/appurtenances USFDG
290382 10/11/02 10/11/04 $288 Township of East Brunswick supply water meters and ancillary equip. USFDG
290392 10/30/02 10/30/04 $100 Beaver Borough Mun Auth, Pa Supply waterline & sanitary sewer materials USFDG
290395 11/12/02 11/12/04 $100 Bucks county water & sewer auth, Pa Supply water-meter maint. Materials USFDG
290396 10/28/02 10/28/05 $1,962 Bucks county water & sewer auth, Pa Supply automated meter reading equip USFDG
290400 11/19/02 11/19/04 $124 City of Lorain, Oh Supply various water work materials USFDG
PERCENT- EST. COST COST
BOND CONTRACT AGE TO TO COST TO
NUMBER GRP BOND AMOUNT AMOUNT COMPLETE COMPLETE DATE COMPLETE TOTAL COST COMMENTS
SUPPLY-INSTALLATION BONDS $12,072,610 $13,033,459 $4,103,033 $13,003,459
217911 DG $4,178,185 $4,178,185 99% 41,782 4,136,403 $41,782 $4,178,185 Data room
255233 DG $1,110,000 $1,110,000 100% 0 1,110,000 $0 $1,110,000 copy obtained
258486 DG $264,065 $264,065 100% 0 264,065 $0 $264,065 Complete
261973 DG $53,455 $213,820 213,820 0 $213,820 $213,820 copy obtained
266690 DG $97,000 $97,000 97,000 0 $97,000 $97,000 copy obtained
266695 DG $67,106 $268,424 268,424 0 $268,424 $268,424 Data room
266714 DG $362,880 $362,880 97% 10,886 351,994 $10,886 $362,880 Data room
266717 DG $167,500 $670,000 670,000 0 $670,000 $670,000 Data room
266725 DG $1,332,998 $1,332,988 99% 13,330 1,319,658 $13,330 $1,332,988 Data room
Work to start August 2002,
expect to complete January
285909 DG $638,256 $638,256 10% 574,430 63,826 $574,430 $638,256 2003
Work to start August 2002,
expect to complete November
285910 DG $459,255 $459,255 5% 436,292 22,963 $436,292 $459,255 2002
290308 DG $243,383 $243,383 95% 12,169 231,214 $12,169 $243,383
290322 DG $1,533,152 $1,533,152 75% 383,288 1,149,864 $383,288 $1,533,152 copy obtained
290339 DG $259,552 $259,552 85% 38,933 220,619 $38,933 $259,552 copy obtained
290360 DG $22,222 $88,888 0% 88,888 0 $88,888 $88,888 copy obtained
290363 DG $4,700 $4,700 0% 4,700 0 $4,700 $4,700 copy obtained
290364 DG $29,821 $29,821 100% 0 29,821 $0 $29,821 Copy Obtained
290375 DG $235,327 $235,327 0% 235,327 0 $235,327 $235,327
290377 DG $130,000 $130,000 0% 130,000 0 $130,000 $130,000
290382 DG $80,000 $80,000 0% 80,000 0 $80,000 $80,000
290392 DG $24,696 $24,696 0% 24,696 0 $24,696 $24,696
290395 DG $26,844 $26,844 0% 26,844 0 $26,844 $26,844
290396 DG $717,829 $717,829 0% 717,829 0 $717,829 $717,829
290400 DG $34,395 $34,395 0% 34,395 0 $34,395 $34,395
SCHEDULE A-2
PERFORMANCE BONDS
BOND EFFECTIVE EXPIRATION BOND JOB
NUMBER DATE DATE AMOUNT OBLIGEE DESCRIPTION
------ --------- ---------- -------- ------------------------- -------------
261957 03/01/02 02/28/03 $500,000 ▇▇▇▇▇▇▇▇ Development, LLC ▇▇▇▇▇▇▇ Lease
Guarantee
261958 12/01/01 02/28/03 $500,000 ▇▇▇▇▇▇▇▇ Development, LLC Tollenson
lease
guarantee
SCHEDULE A-3
LEASE GUARANTIES
EFFECTIVE EXPIRATION AMOUNT OF
DESCRIPTION DATE DATE OBLIGEE GUARANTY
----------- --------- ---------- ---------------------- ---------
Lease for 4700 __/__/97 9/30/03 Cattelus Development $51,912
District Blvd, Corporation
Vernon, California
Lease for 901 9/9/97 6/l1/03 REA Investment $63,365
Crafters Lane, Partners
Pineville,North
Carolina
Lease for 3668 2/28/98 2/29/08 Triple Net Investments $230,850
Crescent County VII, L.P.
Whitehall
Township
2
BOND
NUMBER EFF. DATE EXP. DATE AMT. ($) OBLIGEE NAME JOB DESCRIPTION
------ --------- --------- -------- ----------------------------- -------------------------
Superheavy or
186700 09/01/99 08/3l/02 10,000 Department of Transportation Oversize Permit
192164 03/l5/99 03/l5/02 6,000 State of Washington Contractor's License Bond
213209 08/1l/01 08/1l/02 204,916 State of Nevada Sales Tax bond
213419 11/09/98 11/09/02 100,000 State of Arizona Contractor's License Bond
213420 11/09/99 1l/09/02 10,000 State of Arizona Contractor's License Bond
213629 12/02/99 12/02/02 5,000 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇/▇▇▇▇▇▇
▇▇▇▇▇▇ 12/07/01 12/07/04 50,000 State of Nevada Contractor License bond
WA Dept of
218002 06/25/99 06/25/02 6,000 Labor & Industries Contractor's License Bond
221951 07/01/01 07/01/03 5,000 MN State Board of Electricity Contractor's License Bond
229755 08/3l/00 08/3l/03 2,000 County of Mecklenburg Land Develop and Constr
238769 03/l5/00 03/15/03 10,000 State of Oregon Contractor's License Bond
238788 04/06/01 04/06/02 150,000 State of Iowa License permit
20718016 08/14/02 08/14/03 50,000 U.S. Customs Customs
SCHEDULE B
PERMIT BONDS
[SEE ATTACHED]
3
EXHIBIT A-l
SUPPLY BOND L/C
[SEE ATTACHED]
4
[Date]
Irrevocable Standby Letter of Credit No. [Number]
Beneficiary: Applicant:
United States Filter Corporation National Waterworks, Inc.
▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇. ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
We hereby establish in your favor our Irrevocable Letter of Credit No. [NUMBER]
for the account of National Waterworks, Inc. ("Applicant") up to an aggregate
amount of ONE MILLION TWENTY FIVE THOUSAND SEVEN HUNDRED FIFTY EIGHT DOLLARS AND
TWENTY FIVE CENTS (US$1,025,758.25).
This letter of credit is available by your sight draft(s) drawn on UBS AG,
Stamford Branch accompanied by a statement signed by one of your officers in
substantially the following form:
"The undersigned hereby certifies that National Waterworks, Inc. ("Applicant")
has failed to reimburse United States Filter Corporation ("Beneficiary") for a
Supply Bond Obligation in an amount equal to [AMOUNT IN WORDS] Dollars ($ )
pursuant to the
Reimbursement Agreement dated as of November 22, 2002 between
Applicant and Beneficiary (as amended, modified, restated or replaced). The date
of Beneficiary's notice to Applicant of such obligation is more than 10 days
prior to the date hereof. Beneficiary hereby draws under the Letter of Credit in
an amount equal to [AMOUNT IN WORDS] Dollars ($ )."
Your acceptance of this Letter of Credit will constitute your agreement to
return, for the account of the Applicant, any funds paid to you hereunder and
not applied by you, when you determine, in your sole discretion, that no further
liability exists. The aggregate amount of drawings under this Letter of Credit
shall not exceed the amount of $1,025,758.25.
In no event will this Letter of Credit be terminated prior to NOVEMBER 22, 2003
unless directed by you in writing.
This Letter of Credit sets forth in full the terms of our undertaking.
References in this Letter of Credit to other agreements, contracts, documents or
instruments shall not modify or affect the terms hereof or cause such
agreements, contracts or instruments to be deemed incorporated herein.
It is a condition of this Letter of Credit that it shall be automatically
extended without amendment for a period of one year from the present or any
future expiration date, unless thirty (30) days prior to the expiration, we
shall notify you and the Applicant via registered or certified mail, by courier
or by messenger that we elect not to extend it.
If this Letter of Credit shall not be extended as herein above provided or
replaced no later than fifteen (15) days prior to the present or future
expiration date, you may draft upon us forthwith, for the undrawn portion of
this Letter of Credit, to be presented to UBS AG, Stamford Branch [PROPER
ADDRESS AND ROUTING INFORMATION FOR DRAW DOCUMENTATION].
We hereby agree that all drafts drawn and negotiated in compliance with the
terms hereof will be duly honored upon presentation and delivery of this
original Letter of Credit and each document specified above during the term of
this Letter of Credit.
Except when the expiration date of this Letter of Credit is extended for one
year, this Letter of Credit cannot be modified without written consent or
written acknowledgment of the Beneficiary. All fees and banking charges are at
the expense of the Applicant.
Except as otherwise expressly stated this Letter of Credit is subject to the
"Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500."
UBS AG, Stamford Branch
Sincerely,
[SIGNATURE]
[NAME AND TITLE OF BANK OFFICER]
EXHIBIT A-2
PERFORMANCE BOND L/C
[SEE ATTACHED]
5
[Date]
Irrevocable Standby Letter of Credit No. [Number]
Beneficiary: Applicant:
United States Filter Corporation National Waterworks, Inc.
▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇. ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
We hereby establish in your favor our Irrevocable Letter of Credit No. [NUMBER]
for the account of National Waterworks, Inc. ("Applicant") up to an aggregate
amount of TWO HUNDRED FIFTY THOUSAND DOLLARS (US$250,000).
This letter of credit is available by your sight draft(s) drawn on UBS AG,
Stamford Branch accompanied by a statement signed by one of your officers in
substantially the following form:
"The undersigned hereby certifies that National Waterworks, Inc. ("Applicant")
has failed to reimburse United States Filter Corporation ("Beneficiary") for a
Performance Bond Obligation in an amount equal to [AMOUNT IN WORDS] Dollars
($ ) pursuant to the
Reimbursement Agreement dated as of November 22, 2002
between Applicant and Beneficiary (as amended, modified, restated or replaced).
The date of Beneficiary's notice to Applicant of such obligation is more than 10
days prior to the date hereof. Beneficiary hereby draws under the Letter of
Credit in an amount equal to [AMOUNT IN WORDS] Dollars ($ )."
Your acceptance of this Letter of Credit will constitute your agreement to
return, for the account of the Applicant, any funds paid to you hereunder and
not applied by you, when you determine, in your sole discretion, that no further
liability exists. The aggregate amount of drawings under this Letter of Credit
shall not exceed the amount of $250,000.
In no event will this Letter of Credit be terminated prior to NOVEMBER 22,2003
unless directed by you in writing.
This Letter of Credit sets forth in full the terms of our undertaking.
References in this Letter of Credit to other agreements, contracts, documents or
instruments shall not modify or affect the terms hereof or cause such
agreements, contracts or instruments to be deemed incorporated herein.
It is a condition of this Letter of Credit that it shall be automatically
extended without amendment for a period of one year from the present or any
future expiration date, unless
thirty (30) days prior to the expiration, we shall notify you and the Applicant
via registered or certified mail, by courier or by messenger that we elect not
to extend it
If this Letter of Credit shall not be extended as herein above provided or
replaced no later than fifteen (15) days prior to the present or future
expiration date, you may draft upon us forthwith, for the undrawn portion of
this Letter of Credit, to be presented to UBS AG, Stamford Branch [PROPER
ADDRESS AND ROUTING INFORMATION FOR DRAW DOCUMENTATION].
We hereby agree that all drafts drawn and negotiated in compliance with the
terms hereof will be duly honored upon presentation and delivery of this
original Letter of Credit and each document specified above during the term of
this Letter of Credit.
Except when the expiration date of this Letter of Credit is extended for one
year, this Letter of Credit cannot be modified without written consent or
written acknowledgment of the Beneficiary. All fees and banking charges are at
the expense of the Applicant.
Except as otherwise expressly stated this Letter of Credit is subject to the
"Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500."
UBS AG, Stamford Branch
Sincerely,
EXHIBIT A-3
LEASE GUARANTY L/C
[SEE ATTACHED]
6
[Date]
Irrevocable Standby Letter of Credit No. [Number]
Beneficiary: Applicant:
United States Filter Corporation National Waterworks, Inc.
▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇. ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
We hereby establish in your favor our Irrevocable Letter of Credit No. [NUMBER]
for the account of National Waterworks, Inc. ("Applicant") up to an aggregate
amount of EIGHTY SIX THOUSAND FIVE HUNDRED THIRTY ONE DOLLARS AND SEVENTY FIVE
CENTS (US$86,531.75).
This letter of credit is available by your sight draft(s) drawn on UBS AG,
Stamford Branch accompanied by a statement signed by one of your officers in
substantially the following form:
"The undersigned hereby certifies that National Waterworks, Inc. ("Applicant")
has failed to reimburse United States Filter Corporation ("Beneficiary") for a
Lease Guaranty Obligation in an amount equal to [AMOUNT IN WORDS] Dollars ($ )
pursuant to the
Reimbursement Agreement dated as of November 22, 2002 between
Applicant and Beneficiary (as amended, modified, restated or replaced). The date
of Beneficiary's notice to Applicant of such obligation is more than 10 days
prior to the date hereof. Beneficiary hereby draws under the Letter of Credit in
an amount equal to [AMOUNT IN WORDS] Dollars ($ )."
Your acceptance of this Letter of Credit will constitute your agreement to
return, for the account of the Applicant, any funds paid to you hereunder and
not applied by you, when you determine, in your sole discretion, that no further
liability exists. The aggregate amount of drawings under this Letter of Credit
shall not exceed the amount of $86,531.75.
In no event will this Letter of Credit be terminated prior to NOVEMBER 22, 2003
unless directed by you in writing.
This Letter of Credit sets forth in full the terms of our undertaking.
References in this Letter of Credit to other agreements, contracts, documents or
instruments shall not modify or affect the terms hereof or cause such,
agreements, contracts or instruments to be deemed incorporated herein.
It is a condition of this Letter of Credit that it shall be automatically
extended without amendment for a period of one year from the present or any
future expiration date, unless thirty (30) days prior to the expiration, we
shall notify you and the Applicant via registered or certified mail, by courier
or by messenger that we elect not to extend it.
If this Letter of Credit shall not be extended as herein above provided or
replaced no later than fifteen (15) days prior to the present or future
expiration date, you may draft upon us forthwith, for the undrawn portion of
this Letter of Credit, to be presented to UBS AG, Stamford Branch [PROPER
ADDRESS AND ROUTING INFORMATION FOR DRAW DOCUMENTATION].
We hereby agree that all drafts drawn and negotiated in compliance with the
terms hereof will be duly honored upon presentation and delivery of this
original Letter of Credit and each document specified above during the term of
this Letter of Credit.
Except when the expiration date of this Letter of Credit is extended for one
year, this Letter of Credit cannot be modified without written consent or
written acknowledgment of the Beneficiary. All fees and banking charges are at
the expense of the Applicant.
Except as otherwise expressly stated this Letter of Credit is subject to the
"Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500."
UBS AG, Stamford Branch
Sincerely,