LOAN AGREEMENT
Between
CITY OF CHULA VISTA
And
SAN DIEGO GAS & ELECTRIC COMPANY
Dated as of August 1, 1996
Relating to
$38,900,000
City of Chula Vista
Industrial Development Revenue Bonds
(San Diego Gas & Electric Company)
1996 Series A
LOAN AGREEMENT
TABLE OF CONTENTS
Page
PARTIES 1
PREAMBLES
1
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITION OF TERMS 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 7
SECTION 4.4. ASSIGNMENT OF CITY'S RIGHTS 7
SECTION 4.5. AMOUNTS REMAINING IN FUNDS 7
SECTION 4.6. CREDIT FACILITY 8
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 10
SECTION 5.6. TAX EXEMPT STATUS OF BONDS 10
SECTION 5.7 NOTICE OF RATE PERIODS 11
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 13
SECTION 6.2. REMEDIES ON DEFAULT 14
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 16
ARTICLE VII
PREPAYMENT
SECTION 7.1. REDEMPTION OF BONDS WITH PREPAYMENT
MONEYS 16
SECTION 7.2. OPTIONS TO PREPAY INSTALLMENTS 16
SECTION 7.3. MANDATORY PREPAYMENT 16
SECTION 7.4. AMOUNT OF PREPAYMENT 17
SECTION 7.5. NOTICE OF PREPAYMENT 17
ARTICLE VIII
NON-LIABILITY OF CITY; EXPENSES; INDEMNIFICATION
SECTION 8.1. NON-LIABILITY OF CITY 18
SECTION 8.2. EXPENSES 18
SECTION 8.3. INDEMNIFICATION 18
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NOTICES 19
SECTION 9.2. SEVERABILITY 19
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 20
SECTION 9.7. TERM OF THE AGREEMENT 20
SECTION 9.8. BINDING EFFECT 20
TESTIMONIUM 21
SIGNATURES AND SEALS 21
EXHIBIT A Description of the Project A-1
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of August 1, 1996, by and
between the CITY OF CHULA VISTA, a municipal corporation and charter
city duly organized and existing under the laws and Constitution of the
State of California (the "City"), and SAN DIEGO GAS & ELECTRIC COMPANY,
a corporation organized and existing under the laws of the State of
California (the "Borrower"),
W I T N E S S E T H :
WHEREAS, the City is a municipal corporation and
charter city, duly organized and existing under a freeholders' charter
pursuant to which the City has the right and power to make and enforce
all laws and regulations in accordance with and as more particularly
provided in Sections 3, 5 and 7 of Article XI of the Constitution of the
State of California and Section 200 of the Charter of the City (the
"Charter"); and
WHEREAS, the City Council of the City, acting under and
pursuant to the powers reserved to the City under Sections 3, 5 and 7 of
Article XI of the Constitution and Section 200 of the Charter, has
enacted Chapter 3.48 of the Chula Vista Municipal Code, pursuant to
Ordinance No. 1970 adopted on February 9, 1982, as amended from time to
time (the "Law"), establishing a program to provide financial assistance
for the acquisition, construction and installation of facilities for
industrial, commercial or public utility purposes; and
WHEREAS, the Borrower has duly applied to the City for
financial assistance to refinance the costs of acquisition, construction
and installation of certain facilities for the distribution of electric
energy as more fully described in Exhibit A hereto (the "Project") by
prepaying a loan (the "Prior Loan") made to the Borrower with the
proceeds of The City of San Diego Industrial Development Revenue Bonds
(San Diego Gas & Electric Company) 1986 Series 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) 1996 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:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITION OF TERMS. Unless the
context otherwise requires, the terms used in this Agreement shall have
the meanings specified in Section 1.01 of the Indenture of Trust, of
even date herewith relating to the Bonds (the "Indenture"), by and
between the City and First Trust of California, National Association, as
trustee (the "Trustee"), as originally executed or as it may from time
to time be supplemented or amended as provided therein.
SECTION 1.2. NUMBER AND GENDER. The singular form
of any word used herein, including the terms defined in Section 1.01 of
the Indenture, shall include the plural, and vice versa. The use herein
of a word of any gender shall include all genders.
SECTION 1.3. ARTICLES, SECTIONS, ETC. Unless
otherwise specified, references to Articles, Sections and other
subdivisions of this Agreement are to the designated Articles, Sections
and other subdivisions of this Agreement as originally executed. The
words "hereof," "herein," "hereunder" and words of similar import refer
to this Agreement as a whole. The headings or titles of the several
articles and sections, and the table of contents appended to copies
hereof, shall be solely for convenience of reference and shall not
affect the meaning, construction or effect of the provisions hereof.
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS OF THE CITY. The City
makes the following representations as the basis for its undertakings
herein contained:
(a) The City is a municipal corporation and
charter city in the State of California. Under the provisions of the
Law, the City has the power to enter into the transactions contemplated
by this Agreement and to carry out its obligations hereunder. The
Project constitutes a "project" as that term is defined in the Law. By
proper action, the City has been duly authorized to execute, deliver and
duly perform this Agreement and the Indenture.
(b) To refinance the cost of the Project, the
City will issue the Bonds which will mature, bear interest and be
subject to redemption as set forth in the Indenture.
(c) The Bonds will be issued under and secured
by the Indenture, pursuant to which the City's interest in this
Agreement (except certain rights of the City to give approvals and
consents and to receive payment for expenses and indemnification and
certain other payments) will be pledged to the Trustee as security for
payment of the principal of, premium, if any, and interest on the Bonds.
(d) The City has not pledged and will not
pledge its interest in this Agreement for any purpose other than to
secure the Bonds under the Indenture.
(e) The City is not in default under any of the
provisions of the laws of the State of California or the City's Charter
which default would affect its existence or its powers referred to in
subsection (a) of this Section 2.1.
(f) The City has found and determined and
hereby finds and determines that all requirements of the Law with
respect to the issuance of the Bonds and the execution of this Agreement
and the Indenture have been complied with and that refinancing the
Project by issuing the Bonds, refunding or replacing the Prior Bonds and
entering into this Agreement and the Indenture will be in furtherance of
the purposes of the Law.
(g) On May 21, 1996, the City Council of the
City adopted Resolution No. 18302 authorizing the issuance and sale of
the Bonds.
(h) On July 23, 1996, the City Council adopted
Resolution No. 18384 authorizing the execution and delivery of a bond
purchase agreement and official statement in connection with the sale of
the Bonds.
SECTION 2.2. REPRESENTATIONS OF THE BORROWER. The
Borrower makes the following representations as the basis for its
undertakings herein contained:
(a) The Borrower is a corporation duly formed
under the laws of the State of California, is in good standing in the
State of California and has the power to enter into and has duly
authorized, by proper corporate action, the execution and delivery of
this Agreement and all other documents contemplated hereby to be
executed by the Borrower.
(b) Neither the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, nor
the fulfillment of or compliance with the terms and conditions hereof
and thereof, conflicts with or results in a breach of any of the terms,
conditions or provisions of the Borrower's Articles of Incorporation or
By-laws or of any corporate actions or of any agreement or instrument to
which the Borrower is now a party or by which it is bound, or
constitutes a default (with due notice or the passage of time or both)
under any of the foregoing, or results in the creation or imposition of
any prohibited lien, charge or encumbrance whatsoever upon any of the
property or assets of the Borrower under the terms of any instrument or
agreement to which the Borrower is now a party or by which it is bound.
(c) The Project consists and will consist of
those facilities described in Exhibit A hereto, and the Borrower shall
make no changes to such portion of the Project or to the operation
thereof which would affect the qualification of the Project as a
"project" under the Law or impair the exemption from gross income of the
interest on the Bonds for federal income tax purposes. In particular,
the Borrower shall comply with all requirements of the San Diego Gas &
Electric Company Engineering Certificate, dated the Issue Date (the
"Engineering Certificate"), which is hereby incorporated by reference
herein. The Project consists of facilities for the local furnishing of
electric energy as described in the Engineering Certificate. The
Borrower intends to utilize such portion of the Project as facilities
for the local furnishing of electric energy throughout the foreseeable
future.
(d) The Borrower has and will have title to
the Project sufficient to carry out the purposes of this Agreement.
(e) The economic useful life of the Project
is as set forth in the Engineering Certificate.
(f) All certificates, approvals, permits
and authorizations with respect to the construction of the Project of
agencies of applicable local governmental agencies, the State of
California and the federal government have been obtained; and pursuant
to such certificates, approvals, permits and authorizations the Project
has been constructed and is in operation.
ARTICLE III
ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS
SECTION 3.1. AGREEMENT TO ISSUE BONDS; APPLICATION
OF BOND PROCEEDS. To provide funds to enable the Borrower to refinance
a portion of the cost of the Project by prepaying the Prior Loan, the
City agrees that it will issue under the Indenture, sell and cause to be
delivered to the purchasers thereof, the Bonds, bearing interest as
provided and maturing on the date set forth in the Indenture. The City
will thereupon apply the proceeds received from the sale of the Bonds as
provided in Section 3.02 of the Indenture.
SECTION 3.2. INVESTMENT OF MONEYS IN FUNDS. Any
moneys in any fund held by the Trustee shall, at the written request of
an Authorized Borrower Representative, be invested or reinvested by the
Trustee as provided in the Indenture. Such investments shall be held by
the Trustee and shall be deemed at all times a part of the fund from
which such investments were made, and the interest accruing thereon and
any profit or loss realized therefrom shall, except as otherwise
provided in the Indenture, be credited or charged to such fund.
SECTION 3.3. AMENDMENT OF DESCRIPTION OF THE
PROJECT. In the event that the Borrower desires to amend or supplement
the Project, as described in Exhibit A hereto, and the City approves of
such amendment or supplement, the City will enter into, and will
instruct the Trustee to consent to, such amendment or supplement upon
receipt of:
(i) a certificate of an Authorized Borrower
Representative describing in detail the proposed changes and
stating that they will not have the effect of disqualifying any
component of the Project as a facility that may be financed
pursuant to the Law;
(ii) a copy of the proposed form of amended or
supplemented Exhibit A hereto; and
(iii) an Opinion of Bond Counsel that such
proposed changes will not affect the exclusion from gross income
of interest on the Bonds for federal income tax purposes.
ARTICLE IV
LOAN TO BORROWER; REPAYMENT PROVISIONS
SECTION 4.1. LOAN TO BORROWER. The City and the
Borrower agree that the application of the proceeds of sale of the Bonds
to refund and retire a portion of the Prior Bonds and the first mortgage
bonds of the Borrower relating thereto will be deemed to be and treated
for all purposes as a loan to the Borrower of an amount equal to the
principal amount of the Bonds.
SECTION 4.2. REPAYMENT AND PAYMENT OF OTHER AMOUNTS
PAYABLE.
(a) The Borrower covenants and agrees to pay to
the Trustee as a Repayment Installment on the loan to the Borrower
pursuant to Section 4.1 hereof, on each date provided in or pursuant to
the Indenture for the payment of principal (whether at maturity or upon
redemption or acceleration) of, premium, if any, and/or interest on the
Bonds, until the principal of, premium, if any, and interest on the
Bonds shall have been fully paid or provision for the payment thereof
shall have been made in accordance with the Indenture, in immediately
available funds, for deposit in the Bond Fund, a sum equal to the amount
then payable as principal (whether at maturity or upon redemption or
acceleration), premium, if any, and interest upon the Bonds as provided
in the Indenture.
Each payment required to be made pursuant to this
Section 4.2(a) shall at all times be sufficient to pay the total amount
of interest and principal (whether at maturity or upon redemption or
acceleration) and premium, if any, then payable on the Bonds; provided
that any amount held by the Trustee in the Bond Fund on any due date for
a Repayment Installment hereunder shall be credited against the
installment due on such date to the extent available for such purpose;
and provided further that, subject to the provisions of this paragraph,
if at any time the amounts held by the Trustee in the Bond Fund are
sufficient to pay all of the principal of and interest and premium, if
any, on the Bonds as such payments become due, the Borrower shall be
relieved of any obligation to make any further payments under the
provisions of this Section. Notwithstanding the foregoing, if on any
date the amount held by the Trustee in the Bond Fund is insufficient to
make any required payments of principal of (whether at maturity or upon
redemption or acceleration) and interest and premium, if any, on the
Bonds as such payments become due, the Borrower shall forthwith pay such
deficiency as a Repayment Installment hereunder.
The obligation of the Borrower to make any payment
under this Section 4.2(a) with respect to the Bonds shall be deemed to
have been satisfied to the extent of any corresponding payment by the
Credit Provider under the Credit Facility, if any, for such Bonds.
(b) The Borrower also agrees to pay to the Trustee
until the principal of, premium, if any, and interest on the Bonds shall
have been fully paid or provision for the payment thereof shall have
been made as required by the Indenture, (i) the annual fee of the
Trustee for its ordinary services rendered as trustee, and its ordinary
expenses incurred under the Indenture, as and when the same become due,
(ii) the reasonable fees, charges and expenses of the Trustee, the
Registrar and the reasonable fees of any paying agent on the Bonds as
provided in the Indenture, as and when the same become due, (iii) the
reasonable fees, charges and expenses of the Trustee for the necessary
extraordinary services rendered by it and extraordinary expenses
incurred by it under the Indenture, as and when the same become due.
The Borrower shall also pay the cost of printing any Bonds required to
be furnished by the City.
(c) The Borrower also agrees to pay, within 60 days
after receipt of request for payment thereof, all expenses required to
be paid by the Borrower under the terms of the bond purchase agreement
executed by it in connection with the sale of the Bonds, and all
reasonable expenses of the City related to the financing of the Project
which are not otherwise required to be paid by the Borrower under the
terms of this Agreement; provided that the City shall have obtained the
prior written approval of the Authorized Borrower Representative for any
expenditures other than those provided for herein or in said bond
purchase agreement.
The Borrower also agrees to pay to the City
within five days following the Issue Date an issuance fee in the amount
of $97,250.00.
(d) The Borrower hereby agrees to provide or cause
to be provided in immediately available funds, for deposit into the Bond
Purchase Fund maintained by the Tender Agent, all amounts necessary to
purchase Bonds tendered for purchase in accordance with Sections 2.01(d)
and 2.01(e) of the Indenture.
(e) In the event the Borrower should fail to make
any of the payments required by subsections (a) through (d) of this
Section, such payments shall continue as obligations of the Borrower
until such amounts shall have been fully paid. The Borrower agrees to
pay such amounts, together with interest thereon until paid, to the
extent permitted by law, at the rate of one percent (1%) per annum over
the rate borne by any Bonds in respect of which such payments are
required to be made pursuant to said subsection (a), and one percent
(1%) per annum over the average rate then borne by the Bonds as to all
other payments. Interest on overdue payments required under subsection
(a) or (d) above shall be paid to Bondholders as provided in the
Indenture.
(f) Upon written request of the Trustee, the
Borrower shall pay any Repayment Installment directly to the Paying
Agent.
(g) Any unpaid obligation of the Borrower under
subsections (b) through (e) of this Section 4.2 shall survive the
payment and discharge of the Bonds and the termination of this
Agreement.
SECTION 4.3. UNCONDITIONAL OBLIGATION. The
obligations of the Borrower to make the payments required by Section 4.2
hereof and to perform and observe the other agreements on its part
contained herein shall be absolute and unconditional, irrespective of
any defense or any rights of set-off, recoupment or counterclaim it
might otherwise have against the City, and during the term of this
Agreement, the Borrower shall pay absolutely net the payments to be made
on account of the loan as prescribed in Section 4.2 and all other
payments required hereunder, free of any deductions and without
abatement, diminution or set-off. Until such time as the principal of,
premium, if any, and interest on the Bonds shall have been fully paid,
or provision for the payment thereof shall have been made as required by
the Indenture, the Borrower (i) will not suspend or discontinue any
payments provided for in Section 4.2 hereof; (ii) will perform and
observe all of its other covenants contained in this Agreement; and
(iii) will not terminate this Agreement for any cause, including,
without limitation, the occurrence of any act or circumstances that may
constitute failure of consideration, destruction of or damage to the
Project, commercial frustration of purpose, any change in the tax or
other laws of the United States of America or of the State of California
or any political subdivision of either of these, or any failure of the
City or the Trustee to perform and observe any covenant, whether express
or implied, or any duty, liability or obligation arising out of or
connected with this Agreement or the Indenture, except to the extent
permitted by this Agreement.
SECTION 4.4. ASSIGNMENT OF CITY'S RIGHTS. As
security for the payment of the Bonds, the City will assign to the
Trustee the City's rights, but not its obligations, under this
Agreement, including the right to receive payments hereunder (except (i)
the rights of the City to receive notices under this Agreement, (ii) the
right of the City to receive certain payments, if any, with respect to
fees, expenses and indemnification and certain other purposes under
Sections 4.2(c), 4.2(e), 6.3, 8.2 and 8.3 hereof, and (iii) the right of
the City to give approvals or consents pursuant to this Agreement) and
the City hereby directs the Borrower to make the payments required
hereunder (except such payments for fees, expenses and indemnification)
directly to the Trustee. The Borrower hereby assents to such assignment
and agrees to pay the Repayment Installments directly to the Trustee
(subject to the provisions of Section 4.2(f)) without defense or set-off
by reason of any dispute between the Borrower and the City or the
Trustee.
SECTION 4.5. AMOUNTS REMAINING IN FUNDS. It is
agreed by the parties hereto that after payment in full of (i) the
Bonds, or after provision for such payment shall have been made as
provided in the Indenture, (ii) the fees and expenses of the City in
accordance with this Agreement, (iii) the fees, charges and expenses of
the Trustee, the Registrar and Paying Agents in accordance with the
Indenture and this Agreement and (iv) all other amounts required to be
paid under this Agreement and the Indenture, any amounts remaining in
any fund held by the Trustee under the Indenture shall belong, subject
to the requirements of Section 6.06 of the Indenture, to the Borrower
and be paid to the Borrower by the Trustee.
SECTION 4.6. CREDIT FACILITY. No initial Credit
Facility shall be provided with respect to the Bonds. The Borrower may
provide and subsequently terminate or remove a Credit Facility with
respect to the Bonds pursuant to the provisions of Section 5.07 of the
Indenture; provided, however, that, except in connection with the
redemption of Bonds, the Borrower shall not intentionally cause the
termination or substitution of any Credit Facility with respect to Bonds
during a Term Rate Period or a Variable Term Segment with respect to
such Bonds. Not less than twenty-five days prior to the termination,
removal, substitution or delivery of any Credit Facility with respect to
the Bonds, the Borrower shall mail written notice of such termination,
removal, substitution or delivery to the Trustee. Not less than fifteen
days prior to the delivery of any substitute or new Credit Facility for
the Bonds, the Borrower shall mail written notice of such substitution
or delivery to each Rating Agency.
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.1. RIGHT OF ACCESS TO THE PROJECT. The
Borrower agrees that during the term of this Agreement the City, the
Trustee and the duly authorized agents of either of them shall have the
right at all reasonable times during normal business hours to enter upon
the site of the Project described in Exhibit A hereto to examine and
inspect such Project; provided, however, that this right is subject to
federal and State of California laws and regulations applicable to such
site. The rights of access hereby reserved to the City and the Trustee
may be exercised only after such agent shall have executed release of
liability (which release shall not limit any of the Borrower's
obligations hereunder) and secrecy agreements if requested by the
Borrower in the form then currently used by the Borrower, and nothing
contained in this Section or in any other provision of this Agreement
shall be construed to entitle the City or the Trustee to any information
or inspection involving the confidential know-how of the Borrower.
SECTION 5.2. THE BORROWER'S MAINTENANCE OF ITS
EXISTENCE; ASSIGNMENTS. (a) The Borrower agrees that during the term
of this Agreement it will maintain its corporate existence in good
standing and will not dissolve or otherwise dispose of all or
substantially all of its assets and will not consolidate with or merge
into another corporation or permit one or more other corporations to
consolidate or merge into it; provided, that the Borrower may, without
violating the covenants contained in this Section, consolidate with or
merge into another corporation, or permit one or more other corporations
to consolidate with or merge into it, or sell or otherwise transfer to
another corporation all or substantially all of its assets and
thereafter dissolve, provided that (1) either (A) the Borrower is the
surviving corporation or (B) the surviving, resulting or transferee
corporation, as the case may be, (i) assumes and agrees in writing to
pay and perform all of the obligations of the Borrower hereunder and
(ii) qualifies to do business in the State of California; and (2) the
Borrower shall deliver to the Trustee an Opinion of Bond Counsel to the
effect that such consolidation, merger or transfer and dissolution does
not in and of itself adversely affect the exclusion from gross income
for federal income tax purposes of interest on the Bonds.
(b) With the prior written consent of the City (which
consent shall not be unreasonably withheld), the rights and obligations
of the Borrower under this Agreement may be assigned by the Borrower, in
whole or in part, subject, however, to each of the following conditions:
(i) No assignment (other than pursuant to a
merger, consolidation or combination described in Section 5.2(a)) shall
relieve the Borrower from primary liability for any of its obligations
hereunder, and in the event of any assignment not pursuant to
Section 5.2(a), the Borrower shall continue to remain primarily liable
for the payments specified in Section 4.2 hereof and for performance and
observance of the other agreements on its part herein provided to be
performed and observed by it.
(ii) Any assignment from the Borrower shall
retain for the Borrower such rights and interests as will permit it to
perform its obligations under this Agreement, and any assignee from the
Borrower shall assume the obligations of the Borrower hereunder to the
extent of the interest assigned.
(iii) The Borrower shall, within thirty days
after delivery of such assignment, furnish or cause to be furnished to
the City and the Trustee a true and complete copy of each such
assignment together with an instrument of assumption.
(iv) The Borrower shall cause to be
delivered to the City and the Trustee an Opinion of Bond Counsel that
such assignment will not, in and of itself, result in the interest on
the Bonds being determined to be includable in the gross income for
federal income tax purposes of the owners thereof (other than a
"substantial user" of the Project or a "related person" within the
meaning of Section 103(b)(13) of the 1954 Code).
SECTION 5.3. RECORDS AND FINANCIAL STATEMENTS OF
BORROWER. The Borrower agrees (a) to keep and maintain full and
accurate accounts and records of its operations in accordance with
generally accepted accounting principles, (b) to permit the Trustee for
itself or on behalf of the holders of the Bonds and its designated
officers, employees, agents and representatives to have access to such
accounts and records and to make examinations thereof at all reasonable
times and (c) upon request of the Trustee, to provide the Trustee with
the Borrower's most recent audited financial statements.
SECTION 5.4. MAINTENANCE AND REPAIR. The Borrower
agrees that as long as it owns the Project it will (i) maintain, or
cause to be maintained, the Project in as reasonably safe condition as
its operations shall permit and (ii) maintain, or cause to be
maintained, the Project in good repair and in good operating condition,
ordinary wear and tear excepted, making from time to time all necessary
repairs thereto and renewals and replacements thereof.
SECTION 5.5. QUALIFICATION IN CALIFORNIA. The
Borrower agrees that throughout the term of this Agreement it, or any
successor or assignee as permitted by Section 5.2, will be qualified to
do business in the State of California.
SECTION 5.6. TAX EXEMPT STATUS OF BONDS. (a) It is
the intention of the parties hereto that interest on the Bonds shall be
and remain excluded from gross income for federal income tax purposes.
To that end, the covenants and agreements of the City and the Borrower
in this Section and in the Tax Certificate are for the benefit of the
Trustee and each and every person who at any time will be a holder of
the Bonds. Without limiting the generality of the foregoing, the
Borrower and the City agree that there shall be paid from time to time
all amounts required to be rebated to the United States pursuant to
Section 148(f) of the Code and any temporary, proposed or final Treasury
Regulations as may be applicable to the Bonds from time to time. This
covenant shall survive payment in full or defeasance of the Bonds. The
Borrower specifically covenants to pay or cause to be paid for and on
behalf of the City to the United States at the times and in the amounts
determined under Section 6.06 of the Indenture the Rebate Requirement as
described in the Tax Certificate. The City shall not be liable to make
any such payment except from funds provided by the Borrower for such
purpose.
(b) The City covenants and agrees that it has not
taken and will not take any action which results in interest to be paid
on the Bonds being included in gross income of the holders of the Bonds
for federal income tax purposes, and the Borrower covenants and agrees
that it has not taken or permitted to be taken and will not take or
permit to be taken any action which will cause the interest on the Bonds
to become includable in gross income for federal income tax purposes;
provided that neither the Borrower nor the City shall have violated
these covenants if interest on any of the Bonds becomes taxable to a
person solely because such person is a "substantial user" of the Project
or a "related person" within the meaning of Section 103(b)(13) of the
1954 Code; and provided further that none of the covenants and
agreements herein contained shall require either the Borrower or the
City to enter an appearance or intervene in any administrative,
legislative or judicial proceeding in connection with any changes in
applicable laws, rules or regulations or in connection with any
decisions of any court or administrative agency or other governmental
body affecting the taxation of interest on the Bonds. The Borrower
acknowledges having read Section 6.06 of the Indenture and agrees to
perform all duties imposed on it by such Section, by this Section and by
the Tax Certificate. Insofar as Section 6.06 of the Indenture and the
Tax Certificate impose duties and responsibilities on the City or the
Borrower, they are specifically incorporated herein by reference.
(c) Notwithstanding any provision of this Section
5.6 or Section 6.06 of the Indenture, if the Borrower shall provide to
the City and the Trustee an Opinion of Bond Counsel to the effect that
any specified action required under this Section 5.6 and Section 6.06 of
the Indenture is no longer required or that some further or different
action is required to maintain the exclusion from federal income tax of
interest on the Bonds, the Borrower, the Trustee and the City may
conclusively rely on such opinion in complying with the requirements of
this Section, and the covenants set forth in this Section 5.6 shall be
deemed to be modified to that extent.
SECTION 5.7. NOTICE OF RATE PERIODS. The Borrower
shall designate and give timely written notice to the Trustee as
required by the Indenture prior to any change in Rate Periods for the
Bonds. In addition, if the Borrower shall elect to change Rate Periods
in accordance with the Indenture and the Bonds under circumstances
requiring the delivery of an Opinion of Bond Counsel, the Borrower shall
deliver such opinion to the Trustee concurrently with the giving of
notice with respect thereto, and no such change shall be effective
without an Opinion of Bond Counsel to the effect that such change is
authorized or permitted by the Indenture and the Law and will not
adversely affect the Tax-Exempt status of the interest on the Bonds.
SECTION 5.8. REMARKETING OF THE BONDS.
(a) The Borrower agrees to perform all obligations
and duties required of it by the Indenture with respect to the
remarketing of the Bonds, and, to appoint as set forth below a
Remarketing Agent and a Tender Agent meeting the qualifications and
otherwise meeting the requirements set forth in this Section 5.8.
(b) Tender Agent.
(i) Appointment and Duties: In order to carry out
the duties and obligations of the Tender Agent contained in the
Indenture, the Borrower shall appoint a Tender Agent or Tender Agents in
order to carry out such duties and obligations, subject to the
conditions set forth below. Each Tender Agent shall designate to the
Trustee its principal office and signify its acceptance of the duties
and obligations imposed upon it under the Indenture by entering into a
Tender Agreement with the Borrower and such other parties as shall be
appropriate, which may be combined with a Remarketing Agreement into a
single document, delivered to the City, the Trustee, the Borrower and
the Remarketing Agent, under which the Tender Agent shall agree,
particularly (but without limitation): (A) to perform the duties and
comply with the requirements imposed upon it by the Tender Agreement,
the Indenture and this Agreement; and (B) to keep such books and records
with respect to its activities as Tender Agent as shall be consistent
with prudent industry practice and to make such books and records
available for inspection by the City, the Trustee and the Borrower at
all reasonable times.
(ii) Qualifications: The Tender Agent shall be a
financial institution organized and doing business under the laws of the
United States or of a state thereof, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus
of at least Fifty Million Dollars ($50,000,000), and subject to
supervision or examination by federal or state authority. If such
financial institution publishes a report of condition at least annually,
pursuant to law or to the requirements of any supervising or examining
authority above referred to, then for the purposes of this Section the
combined capital and surplus of such financial institution shall be
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(c) Remarketing Agent. In order to carry out the
duties and obligations contained in the Indenture, the Borrower, by an
instrument in writing (which may be the Remarketing Agreement) signed by
an Authorized Borrower Representative, shall select the Remarketing
Agent for the Bonds subject to the conditions set forth below. The
Remarketing Agent shall designate to the Trustee its principal office
and signify its acceptance of the duties and obligations imposed upon it
under the Indenture by a written instrument of acceptance (which may be
the execution of a Remarketing Agreement) delivered to the City, the
Trustee and the Borrower under which the Remarketing Agent shall agree,
particularly (but without limitation): (i) to perform the duties and
comply with the requirements imposed upon it by the Remarketing
Agreement, the Indenture and this Agreement; and (ii) to keep such books
and records with respect to its activities as Remarketing Agent as shall
be consistent with prudent industry practice and to make such books and
records available for inspection by the City, the Trustee and the
Borrower at all reasonable times.
(d) Remarketing Agreement. In order to provide for
the remarketing of the Bonds, the Borrower shall enter into a
Remarketing Agreement with the Remarketing Agent and such other parties
as shall be appropriate, which may be combined with a Tender Agreement
into a single document. The Remarketing Agreement shall include the
following: (i) a requirement that the Remarketing Agreement shall not
be terminated by the Borrower without cause for a period of at least six
months after the effective date thereof; and (ii) a statement to the
effect that the Remarketing Agent is not acting in an agency capacity
with respect to the Borrower in establishing interest rates and Rate
Periods as described in Section 2.01 of the Indenture, but is acting as
agent of the City pursuant to the Law with respect to such functions.
SECTION 5.9. NOTICES TO TRUSTEE AND CITY. The
Borrower hereby agrees to provide the Trustee and the City with notice
of any event of which it has knowledge which, with the passage of time
or the giving of notice, would be an Event of Default, such notice to
include a description of the nature of such event and what steps are
being taken to remedy such Event of Default.
SECTION 5.10. CONTINUING DISCLOSURE. The Borrower
hereby covenants and agrees, upon the adjustment of the Rate Period for
the Bonds to a Term Rate Period pursuant to Section 2.01(c)(iv) of the
Indenture and the remarketing of such Bonds in accordance with the
Indenture, to comply with the continuing disclosure requirements for the
Bonds as promulgated under Rule 15c2-12, as it may from time to time
hereafter be amended or supplemented. Notwithstanding any other
provision of this Agreement, failure of the Borrower to comply with the
requirements of Rule 15c2-12 applicable to the Bonds, as it may from
time to time hereafter be amended or supplemented, shall not be
considered an Event of Default hereunder or under the Indenture;
however, the Trustee may (and, at the request of the Remarketing Agent
or the holders of at least 25% aggregate principal amount of Outstanding
Bonds, shall) or any Bondholder or beneficial owner of any Bonds may
take such actions as may be necessary and appropriate, including seeking
mandate or specific performance by court order, to cause the Borrower to
comply with its obligations pursuant to this Section 5.10.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT. Any one of the
following which occurs and continues shall constitute an Event of
Default pursuant to this Agreement:
(a) failure by the Borrower to pay any amounts
required to be paid under Section 4.2(a) or 4.2(d) hereof at the
times required to avoid causing an Event of Default pursuant to
the Indenture; or
(b) failure of the Borrower to observe and perform
any covenant, condition or agreement on its part required to be
observed or performed by this Agreement, other than making the
payments referred to in (a) above, which continues for a period of
60 days after written notice, which notice shall specify such
failure and request that it be remedied, given to the Borrower by
the City or the Trustee, unless the City and the Trustee shall
agree in writing to an extension of such time; provided, however,
that if the failure stated in the notice cannot be corrected
within such period, the City and the Trustee will not unreasonably
withhold their consent to an extension of such time if corrective
action is instituted within such period and diligently pursued
until the default is corrected; or
(c) an Act of Bankruptcy of the Borrower; or
(d) a default under any Credit Facility if the
Credit Provider notifies the Trustee in writing that such default
shall be treated as an Event of Default hereunder.
The provisions of subsection (b) of this Section are subject to the
limitation that the Borrower shall not be deemed in default if and so
long as the Borrower is unable to carry out its agreements hereunder by
reason of strikes, lockouts or other industrial disturbances; acts of
public enemies; orders of any kind of the government of the United
States or of the State of California or any of their departments,
agencies, or officials, or any civil or military authority;
insurrections, riots, epidemics, landslides; lightning; earthquake;
fire; hurricanes; storms; floods; washouts; droughts; arrests; restraint
of government and people; civil disturbances; explosions; breakage or
accident to machinery, transmission pipes or canals; partial or entire
failure of utilities; or any other cause or event not reasonably within
the control of the Borrower; it being agreed that the settlement of
strikes, lockouts and other industrial disturbances shall be entirely
within the discretion of the Borrower, and the Borrower shall not be
required to make settlement of strikes, lockouts and other industrial
disturbances by acceding to the demands of the opposing party or parties
when such course is, in the judgment of the Borrower, unfavorable to the
Borrower. This limitation shall not apply to any default under
subsections (a), (c) or (d) of this Section.
SECTION 6.2. REMEDIES ON DEFAULT. Whenever any Event
of Default shall have occurred and shall continue, the following
remedies may be pursued:
(a) The Trustee may, and upon the written request of
any Credit Provider or the holders of not less than 25% in
aggregate principal amount of Bonds then outstanding, shall, by
notice in writing delivered to the Borrower with copies of such
notice being sent to the City and each Credit Provider, declare
the unpaid balance of the loan payable under Section 4.2(a) of
this Agreement and the interest accrued thereon to be immediately
due and payable and such principal and interest shall thereupon
become and be immediately due and payable. Upon any such
acceleration, the Bonds shall be subject to mandatory redemption
as provided in Section 4.01(b)(3) of the Indenture. After any
such declaration of acceleration, the Trustee shall immediately
take such actions as necessary to realize moneys under any Credit
Facility.
(b) The Trustee shall have access to and the right
to inspect, examine and make copies of the books and records and
any and all accounts, data and federal income tax and other tax
returns of the Borrower.
(c) The City or the Trustee may take whatever action
at law or in equity as may be necessary or desirable to collect
the payments and other amounts then due and thereafter to become
due or to enforce performance and observance of any obligation,
agreement or covenant of the Borrower under this Agreement.
The provisions of clause (a) of the preceding paragraph,
however, are subject to the condition that if, at any time after the
loan shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, there shall have been
deposited with the Trustee a sum sufficient (together with any amounts
held in the Bond Fund) to pay all the principal of the Bonds matured
prior to such declaration and all matured installments of interest (if
any) upon all the Bonds, with interest on such overdue installments of
principal as provided herein, and the reasonable expenses of the
Trustee, and any and all other defaults known to the Trustee (other than
in the payment of principal of and interest on the Bonds due and payable
solely by reason of such declaration) shall have been made good or cured
to the satisfaction of the Trustee or provision deemed by the Trustee to
be adequate shall have been made therefor, then, and in every such case,
the holders of at least a majority in aggregate principal amount of the
Bonds then outstanding, by written notice to the City and to the
Trustee, may, on behalf of the holders of all the Bonds, rescind and
annul such declaration and its consequences and waive such default;
provided that no such rescission and annulment shall extend to or shall
affect any subsequent default, or shall impair or exhaust any right or
power consequent thereon; and provided further that there shall not be
rescinded or annulled any such declaration which follows an event
described in Section 6.1(d) without the written consent of the Credit
Provider.
In case the Trustee or the City shall have proceeded to
enforce its rights under this Agreement and such proceedings shall have
been discontinued or abandoned for any reason or shall have been
determined adversely to the Trustee or the City, then, and in every such
case, the Borrower, the Trustee and the City shall be restored
respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Borrower, the Trustee and the City
shall continue as though no such action had been taken (provided,
however, that any settlement of such proceedings duly entered into by
the City, the Trustee or the Borrower shall not be disturbed by reason
of this provision).
In case the Borrower shall fail forthwith to pay
amounts due by reason of this Section 6.2 upon demand of the Trustee,
the Trustee shall be entitled and empowered to institute any action or
proceeding at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or
final decree, and may enforce any such judgment or final decree against
the Borrower and collect in the manner provided by law the moneys
adjudged or decreed to be payable.
In case proceedings shall be pending for the bankruptcy
or for the reorganization of the Borrower under the federal bankruptcy
laws or any other applicable law, or in case a receiver or trustee shall
have been appointed for the property of the Borrower or in the case of
any other similar judicial proceedings relative to the Borrower, or the
creditors or property of the Borrower, then the Trustee shall be
entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount
owing and unpaid pursuant to this Agreement and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee allowed in such judicial proceedings relative to the Borrower,
its creditors or its property, and to collect and receive any moneys or
other property payable or deliverable on any such claims, and to
distribute such amounts as provided in the Indenture after the deduction
of its charges and expenses. Any receiver, assignee or trustee in
bankruptcy or reorganization is hereby authorized to make such payments
to the Trustee, and to pay to the Trustee any amount due it for
compensation and expenses, including expenses and fees of counsel
incurred by it up to the date of such distribution.
SECTION 6.3. AGREEMENT TO PAY ATTORNEYS' FEES AND
EXPENSES. In the event the Borrower should default under any of the
provisions of this Agreement and the City or the Trustee should employ
attorneys or incur other expenses for the collection of the payments due
under this Agreement or the enforcement of performance or observance of
any obligation or agreement on the part of the Borrower herein
contained, the Borrower agrees to pay to the City or the Trustee the
reasonable fees of such attorneys and such other expenses so incurred by
the City or the Trustee.
SECTION 6.4. NO REMEDY EXCLUSIVE. No remedy herein
conferred upon or reserved to the City or the Trustee is intended to be
exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other
remedy given under this Agreement or now or hereafter existing at law or
in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the City or the Trustee to exercise any
remedy reserved to it in this Article, it shall not be necessary to give
any notice, other than such notice as may be herein expressly required.
Such rights and remedies as are given the City hereunder shall also
extend to the Trustee, and the Trustee and the holders of the Bonds
shall be deemed third party beneficiaries of all covenants and
agreements herein contained.
SECTION 6.5. NO ADDITIONAL WAIVER IMPLIED BY ONE
WAIVER. In the event any agreement or covenant contained in this
Agreement should be breached by the Borrower and thereafter waived by
the City or the Trustee, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other breach
hereunder.
ARTICLE VII
PREPAYMENT
SECTION 7.1. REDEMPTION OF BONDS WITH PREPAYMENT
MONEYS. By virtue of the assignment of certain of the rights of the
City under this Agreement to the Trustee as is provided in Section 4.4
hereof, the Borrower agrees to and shall pay directly to the Trustee any
amount permitted or required to be paid by it under this Article VII.
The Trustee shall use the moneys so paid to it by the Borrower to effect
redemption of the Bonds in accordance with Article IV of the Indenture
on the date specified for such redemption pursuant to Section 7.5
hereof.
SECTION 7.2. OPTIONS TO PREPAY INSTALLMENTS. The
Borrower shall have the option to prepay the amounts payable under
Section 4.2 hereof, in whole or in part, by paying to the Trustee, for
deposit in the Bond Fund, the amount set forth in Section 7.4 hereof,
under the circumstances set forth in Section 4.01(a) of the Indenture;
provided, however, that if any event specified in Section 4.01(a)(1)(A)
through (D) of the Indenture gives rise to the Borrower's exercise of
its option to prepay such amounts payable hereunder, the amount of such
loan payment prepaid shall not exceed the original cost of the portion
of the Project affected by such event.
SECTION 7.3. MANDATORY PREPAYMENT. (a) The Borrower
shall have and hereby accepts the obligation to prepay Repayment
Installments to the extent mandatory redemption of the Bonds is required
pursuant to Section 4.01(b) of the Indenture. The Borrower shall
satisfy its obligation hereunder by prepaying such Repayment
Installments within one hundred eighty (180) days after the occurrence
of any event set forth in paragraphs (1) through (3) of said
Section 4.01(b) giving rise to such required prepayment, and immediately
upon the occurrence of any event set forth in paragraph (3) thereof
giving rise to such required prepayment. The amount payable by the
Borrower in the event of a prepayment required by this Section shall be
determined as set forth in Section 7.4 and shall be deposited in the
Bond Fund.
SECTION 7.4. AMOUNT OF PREPAYMENT. In the case of a
prepayment of the entire amount due hereunder pursuant to Section 7.2 or
7.3 hereof, the amount to be paid shall be a sum sufficient, together
with other funds and the yield on any securities deposited with the
Trustee and available for such purpose, to pay (1) the principal of all
Bonds outstanding on the redemption date specified in the notice of
redemption, plus interest accrued and to accrue to the payment or
redemption date of the Bonds, plus premium, if any, pursuant to the
Indenture, (2) all reasonable and necessary fees and expenses of the
City, the Trustee, the Registrar, the Tender Agent and any Paying Agent
accrued and to accrue through final payment of the Bonds, and (3) all
other liabilities of the Borrower accrued and to accrue under this
Agreement.
In the case of partial prepayment of the Repayment
Installments, the amount payable shall be a sum sufficient, together
with other funds deposited with the Trustee and available for such
purpose, to pay the principal amount of and premium, if any, and accrued
interest on the Bonds to be redeemed, as provided in the Indenture, and
to pay expenses of redemption of such Bonds.
SECTION 7.5. NOTICE OF PREPAYMENT. The Borrower shall
give forty-five days' prior written notice to the City and the Trustee
specifying the date upon which any prepayment pursuant to this
Article VII will be made. If, in the case of a mandatory prepayment
pursuant to Section 7.3 hereof, the Borrower fails to give such notice
of a prepayment required by this Section 7.5, such notice may be given
by the City or by any holder or holders of ten percent (10%) or more in
aggregate principal amount of the Bonds Outstanding, and shall be given
by the Trustee, but solely at the times and under the circumstances
provided in Section 4.01(b) of the Indenture. The City and the Trustee,
at the request of the Borrower or any such Bondholder or Bondholders,
shall forthwith take all steps necessary under the applicable provisions
of the Indenture (except that the City shall not be required to make
payment of any money required for such redemption) to effect redemption
of all or part of the then outstanding Bonds, as the case may be, on the
earliest practicable date thereafter on which such redemption may be
made under applicable provisions of the Indenture.
Notwithstanding anything to the contrary in this
Agreement, each notice contemplated in this Section 7.5 that is given
with respect to an optional prepayment pursuant to Section 7.2 hereof
may state that it is subject to and conditional upon receipt by the
Trustee on or prior to the proposed prepayment date of amounts
sufficient to effect such prepayment and, if a notice so states, such
notice shall be of no force and effect and the prepayment need not be
made and the Repayment Installments will not become due and payable on
the proposed prepayment date unless such amounts are so received on or
prior to the proposed prepayment date.
ARTICLE VIII
NON-LIABILITY OF CITY; EXPENSES; INDEMNIFICATION
SECTION 8.1. NON-LIABILITY OF CITY. The City shall not
be obligated to pay the principal of, or premium, if any, or interest on
the Bonds, or to discharge any other financial liability (including but
not limited to financial liability under Section 5.6 hereof) in
connection herewith, except from Revenues. The Borrower hereby
acknowledges that the City's sole source of moneys to repay the Bonds
will be provided by the payments made by the Borrower pursuant to this
Agreement (excluding payments to the City or the Trustee pursuant to
Section 4.2(b), 4.2(c), 4.2(e), 5.6, 6.3, 8.2 and 8.3 of this
Agreement), together with other Revenues, including investment income on
certain funds and accounts held by the Trustee under the Indenture, and
hereby agrees that if the payments to be made hereunder shall ever prove
insufficient to pay all principal of, and premium, if any, and interest
on the Bonds as the same shall become due (whether by maturity,
redemption, acceleration or otherwise), then upon notice from the
Trustee, the Borrower shall pay such amounts as are required from time
to time to prevent any deficiency or default in the payment of such
principal, premium or interest, including, but not limited to, any
deficiency caused by acts, omissions, nonfeasance or malfeasance on the
part of the Trustee, the Borrower, the City or any third party.
SECTION 8.2. EXPENSES. The Borrower covenants and
agrees to pay within fifteen (15) days after billing therefor and to
indemnify the City and the Trustee against all costs and charges,
including fees and disbursements of attorneys, accountants, consultants,
including financial consultants, engineers and other experts incurred,
in the absence of willful misconduct, in connection with this Agreement,
the Bonds or the Indenture. The City shall notify the Borrower in
writing prior to engaging any professional or expert for which the City
plans to ▇▇▇▇ the Borrower.
SECTION 8.3. INDEMNIFICATION. The Borrower releases
the City and the Trustee from, and covenants and agrees that neither the
City nor the Trustee shall be liable for, and covenants and agrees, to
the extent permitted by law, to indemnify, defend and hold harmless the
City and the Trustee and their officers, employees and agents from and
against, any and all losses, claims, damages, liabilities or expenses,
of every conceivable kind, character and nature whatsoever arising out
of, resulting from or in any way connected with (1) the Project, or the
conditions, occupancy, use, possession, conduct or management of, or
work done in or about, or from the planning, design, acquisition,
installation or construction of the Project or any part thereof; (2) the
issuance of any Bonds or any certifications, covenants or
representations made in connection therewith and the carrying out of any
of the transactions contemplated by the Bonds, the Indenture and this
Agreement; (3) the Trustee's acceptance or administration of the trusts
under the Indenture, or the exercise or performance of any of its powers
or duties under the Indenture or this Agreement; or (4) any untrue
statement or alleged untrue statement of any material fact or omission
or alleged omission to state a material fact necessary to make the
statements made, in light of the circumstances under which they were
made, not misleading, in any official statement or other offering
circular utilized by the City or any underwriter or placement agent in
connection with the sale of any Bonds; provided that such indemnity
shall not be required for damages that result from negligence or willful
misconduct on the part of the party seeking such indemnity. The
indemnity of the Trustee required by this Section shall be only to the
extent that any loss sustained by the Trustee exceeds the net proceeds
the Trustee receives from any insurance carried with respect to the loss
sustained. The Borrower further covenants and agrees, to the extent
permitted by law, to pay or to reimburse the City and the Trustee and
their officers, employees and agents for any and all reasonable costs,
including but not limited to attorneys fees, liabilities or expenses
incurred in connection with investigating, defending against or
otherwise in connection with any such losses, claims, damages,
liabilities, expenses or actions, except to the extent that the same
arise out of the negligence or willful misconduct of the party claiming
such payment or reimbursement. The provisions of this Section shall
survive the retirement of the Bonds or resignation or removal of the
Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NOTICES. All notices, certificates or
other communications shall be deemed sufficiently given on the second
day following the day on which the same have been mailed by first class
mail, postage prepaid, addressed to the City, the Borrower or the
Trustee, as the case may be, as set forth in the Indenture. A duplicate
copy of each notice, certificate or other communication given hereunder
by either the City or the Borrower to the other shall also be given to
the Trustee. The City, the Borrower and the Trustee may, by notice
given hereunder, designate any different addresses to which subsequent
notices, certificates or other communications shall be sent.
SECTION 9.2. SEVERABILITY. If any provision of this
Agreement shall be held or deemed to be, or shall in fact be, illegal,
inoperative or unenforceable, the same shall not affect any other
provision or provisions herein contained or render the same invalid,
inoperative, or unenforceable to any extent whatever.
SECTION 9.3. EXECUTION OF COUNTERPARTS. This Agreement
may be simultaneously executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the
same instrument; provided, however, that for purposes of perfecting a
security interest in this Agreement under Article 9 of the California
Uniform Commercial Code, only the counterpart delivered, pledged, and
assigned to the Trustee shall be deemed the original.
SECTION 9.4. AMENDMENTS, CHANGES AND MODIFICATIONS.
Except as otherwise provided in this Agreement or the Indenture,
subsequent to the initial issuance of Bonds and prior to their payment
in full, or provision for such payment having been made as provided in
the Indenture, this Agreement may not be effectively amended, changed,
modified, altered or terminated without the written consent of the
Trustee.
SECTION 9.5. GOVERNING LAW. This Agreement shall be
governed exclusively by and construed in accordance with the applicable
laws of the State of California.
SECTION 9.6. AUTHORIZED BORROWER REPRESENTATIVE.
Whenever under the provisions of this Agreement the approval of the
Borrower is required or the City or the Trustee is required to take some
action at the request of the Borrower, such approval or such request
shall be given on behalf of the Borrower by an Authorized Borrower
Representative, and the City and the Trustee shall be authorized to act
on any such approval or request and neither party hereto shall have any
complaint against the other or against the Trustee as a result of any
such action taken.
SECTION 9.7. TERM OF THE AGREEMENT. This Agreement
shall be in full force and effect from the date hereof and shall
continue in effect as long as any of the Bonds are outstanding or the
Trustee holds any moneys under the Indenture, whichever is later;
provided, however, that the rights of the Trustee and the City under
Section 8.2 and 8.3 hereof shall survive the termination of this
Agreement, the retirement of the Bonds and the removal or resignation of
the Trustee. All representations and certifications by the Borrower as
to all matters affecting the Tax-Exempt status of the Bonds shall
survive the termination of this Agreement.
SECTION 9.8. BINDING EFFECT. This Agreement shall
inure to the benefit of and shall be binding upon the City, the
Borrower, the Trustee and their respective successors and assigns;
subject, however, to the limitations contained in Section 5.2 hereof.
IN WITNESS WHEREOF, the City of Chula Vista has caused
this Agreement to be executed in its name and its seal to be hereunto
affixed and attested by its duly authorized officers, and San Diego
Gas & Electric Company has caused this Agreement to be executed in its
name and its seal to be hereunto affixed by its duly authorized
officers, all as of the date first above written.
CITY OF CHULA VISTA
By___________________________________
Mayor
[SEAL]
Attest:
____________________________________
City Clerk
APPROVED AS TO FORM:
▇▇▇ ▇. ▇▇▇▇▇
Acting City Attorney
By__________________________________
SAN DIEGO GAS & ELECTRIC COMPANY
By______________________________
Senior Vice President,
[SEAL] Chief Financial Officer and
Treasurer
Attest:
__________________________________
Assistant Secretary
EXHIBIT A
Description of the Project
Local Electric Facilities
Acquisition and construction of additions and
improvements to the Borrower's electric distribution facilities (12 KV
and under) and related substations, and customer service connections
located within the Borrower's electric retail service area, required by
the Borrower to provide for the transfer and distribution of electric
energy to its customers located therein, including all necessary poles,
foundations, cable, conduit, transformers, switches, controls, meters,
substations, land and land-rights and other like facilities and
equipment, as well as necessary other equipment required for the proper
installation, protection, maintenance, control and operation of the
foregoing local electric distribution facilities. These facilities will
be required to meet the needs of new customers, maintain and improve
system capabilities, and make overhead to underground conversions.
Local Gas Facilities
Acquisition and construction of additions and
improvements to the Borrower's gas distribution (operating at pressures
at or below 400 psig) facilities, located within its gas retail service
area in San Diego County, required for the distribution of gas for
delivery to the Borrower's customers located therein. Such facilities
include the acquisition and construction of new, high-pressure
distribution mains, and new customer service lines or the extension,
replacement or relocation of such existing mains or portions or
components thereof, regulator stations controlling the passage of gas
from distribution mains of higher pressure to distribution mains of
lower pressure and the volume and pressure of gas within the mains,
together with all necessary valves, controls, meters, and other
measuring and regulating devices, and facilities, plant, property, and
other equipment and improvements (including land and land-rights)
necessary for the installation, protection, maintenance, control and
operation of the foregoing.