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EXHIBIT 10.3
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REIMBURSEMENT AGREEMENT
BY AND BETWEEN
SOUTHERN CALIFORNIA WATER COMPANY
AND
BANK OF AMERICA N.A.
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Dated as of September 1, 2000
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TABLE OF CONTENTS
Article I. DEFINITIONS...........................................................2
1.01 Definitions .....................................................2
1.02 Accounting Terms and Determinations .............................6
Article II. LETTER OF CREDIT .....................................................6
2.01 Issuance of the Letter of Credit ................................6
2.02 Expiration Date .................................................7
2.03 Pledge of Remarketing Certificates on
Principal Purchase Drawings .....................................7
2.04 Reimbursement for Draws Upon the Letter
of Credit .......................................................7
2.05 Reimbursement of Principal Purchase Drawings
under the Letter of Credit; Mandatory Prepayment; Interest.......7
2.06 Obligation to Pay Unconditional .................................8
2.07 Prepayments .....................................................9
2.08 Right of Bank to Extend Letter of Credit .......................10
2.09 Optional Prepayment of Certificates; Custodial Account .........10
2.10 Receipt of Certain Funds by Bank ...............................12
2.11 Removal and Replacement of Remarketing Agent ...................12
Article III. FEES; PAYMENTS; CHANGES IN CIRCUMSTANCES ............................13
3.01 Letter of Credit Fee ...........................................13
3.02 Transaction Fees ...............................................13
3.03 Computation of Fees and Interest ...............................13
3.04 Payments by the Borrower .......................................14
3.05 Payment Due on Non-Business Day to be
Made on Next Business Day ......................................14
3.06 Loan Accounts ..................................................14
3.07 Increased Costs ................................................14
Article IV. SECURITY .................................,..........................15
4.01 Borrower Collateral ............................................15
4.02 Security Agreement .............................................15
Article V. REPRESENTATIONS AND WARRANTIES ......................................15
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5.01 Existence and Power ...........................................15
5.02 Corporate Authorization; No Contravention......................15
5.03 Authority of Officers .........................................16
5.04 Governmental Approvals ........................................16
5.05 Taxes .........................................................16
5.06 Financial Information .........................................16
5.07 Binding Effect ................................................17
5.08 No Default ....................................................17
5.09 Litigation ....................................................17
5.10 ERISA..........................................................17
5.11 Disclosure ....................................................17
5.12 No Burdensome Restrictions ....................................18
Article VI. CONDITIONS .........................................................18
6.01 Conditions Precedent to the Issuance of
the Letter of Credit ..........................................18
6.02 Conditions Precedent to the Creation of
Any Advance ...................................................19
Article VII. COVENANTS ..........................................................20
7.01 Notices .......................................................20
7.02 Performance of Acts ...........................................20
7.03 Existence .....................................................20
7.04 Obligations and Taxes .........................................20
7.05 Related Documents .............................................20
7.06 Further Assurances ............................................21
7.07 Credit Agreement Covenants ....................................21
7.08 Related Agreements ............................................21
Article VIII. EVENTS OF DEFAULT ..................................................21
8.01 Events of Default .............................................21
8.02 Remedies ......................................................24
8.03 Rights Not Exclusive ..........................................24
Article IX. MISCELLANEOUS ......................................................25
9.01 Notices .......................................................25
9.02 Binding Agreement; Third Parties ..............................25
9.03 Participations ................................................26
9.04 No Waivers ....................................................26
9.05 Payment of Expenses ...........................................26
9.06 Indemnity......................................................28
9.07 Amendment and Modification of Agreement, Waivers ..............28
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9.08 Severability ..................................................29
9.09 Arbitration and Waiver of Jury Trial ..........................29
9.10 Confidentiality ...............................................31
9.11 Governing Law .................................................32
9.12 Table of Contents and Captions ................................32
9.13 Counterparts ..................................................32
Exhibit A Letter of Credit
Exhibit B Pledge and Security Agreement
Exhibit C Security Agreement (Second Trust Agreement Funds)
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REIMBURSEMENT AGREEMENT
This Reimbursement Agreement dated as of September 1, 2000, is entered
into by and between SOUTHERN CALIFORNIA WATER COMPANY, a California corporation,
(the "Borrower") and BANK OF AMERICA, N.A., a national banking association
organized and existing under the laws of the United States of America (the
"Bank").
A. The Borrower has requested the Three Valleys Municipal Water District,
a Municipal Water District of the State of California duly organized and
existing under the Constitution and laws of the State of California (the
"District"), to finance a portion of the costs of acquisition, construction,
equipping and installing of certain water treatment, water transmission and
hydroelectric generating facilities (the "Project") as described in Exhibit B to
the Second Lease-Purchase Agreement dated as of November 1, 1984 (the "Second
Lease-Purchase Agreement") between the District and Central Bank Leasing, a
division of Cenval Leasing Corp., a corporation organized under the laws of the
State of California (the "Leasing Firm") by the issuance pursuant to the Second
Trust Agreement dated as of November 1, 1984, as amended and modified (the
"Second Trust Agreement") among the District, the Leasing Firm, U.S. Bank Trust
National Association, as trustee (the "Trustee") and the Borrower, of $6,000,000
principal amount of Certificates of Participation (Variable Rate Obligation),
(Miramar Water Treatment, Water Transmission and Hydroelectric Generating
Facilities Project) (the "Certificates").
B. The Borrower has requested the Bank to issue an irrevocable letter of
credit substantially in the form of Exhibit A hereto (as amended or supplemented
from time to time, the "Letter of Credit") in an amount not exceeding $6,296,000
(Six Million Two Hundred Ninety-Six Thousand Dollars) (the "Letter of Credit
Commitment"), of which an amount not exceeding $6,000,000 (Six Million Dollars)
may be drawn upon with respect to the principal, or portion of the purchase
price equal to principal, of the Certificates, and of which an amount not
exceeding $296,000, (Two Hundred Ninety-Six Thousand Dollars) may be drawn upon
with respect to the payment of up to one hundred twenty (120) days' interest
accrued on the Certificates at or prior to the Expiration Date of the Letter of
Credit.
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C. The Bank has agreed to issue the Letter of Credit on the terms and
subject to the conditions set forth herein.
ARTICLE I
DEFINITIONS
1.01 Definitions. In addition to the terms defined in the Whereas clauses
above and elsewhere in this Agreement, the following terms used in this
Agreement and in any exhibits hereto shall, unless the context otherwise
requires, have the following meanings:
"Advance" means the reimbursement obligation of the Borrower outstanding
from time to time in respect of payments under the Letter of Credit pursuant to
a Purchase Drawing.
"Agreement" means this Reimbursement Agreement, as it may be amended and
supplemented from time to time.
"Bank" means the Bank.
"Borrower" means Southern California Water Company, a California
corporation.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions in California and New York are authorized or
required to close.
"Certificates" shall mean the $6,000,000 Certificates of Participation
(Variable Rate Obligation) (Miramar Water Treatment, Water Transmission and
Hydroelectric Generating Facilities) issued pursuant to the Second Trust
Agreement.
"Closing Date" means the date on which all conditions precedent under
Section 6.01 have been satisfied or have been waived by the Bank.
"Code" means the Internal Revenue Code of 1986, as amended. "Collateral
Documents" means the Pledge Agreement, the Security Agreement and each other
document, agreement and
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instrument granting to the Bank a lien as collateral security for the Borrower's
obligations to the Bank hereunder.
"Credit Agreement" means the Business Loan Agreement dated as of October
4, 1999, by and between the Bank and the Borrower as the same may be amended,
modified, renewed, extended and restated from time to time and shall refer to
any successor agreement which restates and supersedes the Credit Agreement in
its entirety.
"Default" means an event which with the giving of notice or lapse of
time, or both, would constitute an Event of Default.
"District" means Three Valleys Municipal Water District, a Municipal
Water District duly organized and existing under the Constitution and laws of
the State of California.
"Encumbrance" means any deed of trust, pledge, assignment, lien, charge,
encumbrance or security interest of any kind, or the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement.
"ERTSA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations issued thereunder as from time to time in
effect.
"Event of Default" means any of the events specified in Section 8.01.
"Expiration Date" means the date of expiration of the Letter of Credit,
which shall initially be at 3:00 p.m., Los Angeles time on November 15, 2003.
The Expiration Date may be extended as provided in Section 2.08 hereof.
"Governmental Authority" means any government, foreign or domestic, and
any political subdivision thereof, any court or any foreign or domestic,
federal, state, municipal or other department, commission, board, bureau,
agency, public authority or instrumentality.
"Governmental Requirement" means any law, ordinance, order, rule or
regulation of a Governmental Authority.
"Indebtedness" means for any Person calculated on a
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consolidated basis in accordance with generally accepted accounting principles
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property; (b) all direct or indirect guaranties of such Person
in respect of, and all obligations (contingent or otherwise) of such Person to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness of any other Person; and (c) all obligations of such
Person as lessee under leases which have been or should be in accordance with
generally accepted accounting principles recorded as capital leases. In
calculating Indebtedness, no amount shall be included more than once in the
aggregate of the above described amounts.
"Interest Drawing" means a drawing pursuant to Annex B of the Letter of
Credit.
"Interest Purchase Drawing" means a drawing pursuant to Annex D of the
Letter of Credit.
"Leasing Firm" means Central Bank Leasing, a division of Cenval Leasing
Corp., a corporation organized under the laws of the State of California.
"Letter of Credit" means the letter of credit, substantially in the form
of Exhibit A hereto, issued pursuant to Section 2.01(a) and any letter of credit
issued in substitution therefor pursuant to the terms of this Agreement, as such
Letter of Credit may be amended, renewed or extended from time to time.
"Obligations" means all obligations of the Borrower to the Bank
hereunder, whether monetary or nonmonetary.
"Person" means any individual, firm, partnership, joint venture,
corporation, association, business enterprise, trust, governmental authority or
other entity whether acting in an individual, fiduciary or other capacity.
"Plan" means an employee benefit plan or pension plan covered by ERISA.
"Pledge Agreement" means the Pledge and Security Agreement in the form of
Exhibit B hereto and required by Section 4.01, covering the Remarketing
Certificates.
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"Principal Drawing" means a drawing pursuant to Annex A of the Letter of
Credit.
"Principal Purchase Drawing" shall mean a drawing pursuant to Annex C of
the Letter of Credit.
"Project" shall have the meaning set forth in the Preamble.
"Prime Rate" means the rate of interest publicly announced from time to
time by the Bank, as its reference rate. The Prime Rate is a rate set by the
Bank based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans. The Bank may price loans at, above or below the Prime
Rate. Any change in the Prime Rate shall take effect on the day specified in the
public announcement of such change.
"Related Documents" means the Second Trust Agreement, the Certificates,
the Second Lease-Purchase Agreement, the Second Miramar Project Sublease, this
Agreement, the Pledge Agreement, the Security Agreement, the Remarketing
Agreement and any exhibit, certificate, notice or other written information or
document furnished by the Borrower on or prior to the Closing Date or to be
furnished by the Borrower to the Bank in connection therewith.
"Remarketing Agent" shall have the meaning defined in the Second Trust
Agreement.
"Remarketing Agreement" means that certain Remarketing Agreement dated
December 5, 1984, among the Borrower, the Trustee and the Remarketing Agent, as
such Remarketing Agreement may be amended or supplemented from time to time.
"Remarketing Certificates" shall have the meaning given in the Pledge
Agreement.
"Second Lease-Purchase Agreement" means that certain Second
Lease-Purchase Agreement dated as of November 1, 1984 by and between the
District and the Leasing Firm.
"Second Miramar Project Sublease" means that certain Second Miramar
Project Sublease dated as of October 5, 1984, by and between the District and
the Borrower.
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"Second Trust Agreement" means that certain Second Trust Agreement dated
as of November 1, 1984, as amended among the District, the Leasing Firm, the
Trustee and the Company.
"Security Agreement" means the Security Agreement (Second Trust Funds) in
substantially the form of Exhibit C hereto, to be executed and delivered by the
Trustee and the Bank, pursuant to which the Bank shall have a security interest
subordinate to that of the Trustee in all moneys and investments held by the
Trustee under the Second Trust Agreement.
"Trustee" means U.S. Bank Trust National Association or any successor
trustee thereto pursuant to the terms of the Second Trust Agreement.
1.02 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with, generally accepted
accounting principles as in effect from time to time and consistently applied.
ARTICLE II
LETTER OF CREDIT
2.01 Issuance of the Letter of Credit.
(a) Subject to the terms and conditions of this Agreement, the
Bank hereby agrees on the Closing Date, upon the request of the Borrower, to
issue its Letter of Credit in favor of the Trustee for the account of the
Borrower. The Letter of Credit shall be in a face amount not exceeding Six
Million Two Hundred Ninety-Six Thousand Dollars ($6,296,000).
(b) The request for issuance of the Letter of Credit shall
constitute a representation and warranty by the Borrower that as of the date of
such request the representations and warranties set forth in Article V are true
and correct and that no Default or Event of Default has occurred and is
continuing.
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2.02 Expiration Date. The Letter of Credit shall expire on the
Expiration Date.
2.03 Pledge of Remarketing certificates on Principal Purchase Drawings.
Upon any disbursement made under the Letter of Credit pursuant to a Principal
Purchase Drawing, the Co-Paying Agent (as defined in the Second Trust Agreement)
shall hold for the benefit of the Bank under the Pledge Agreement any
Remarketing Certificates purchased with the proceeds of such Principal Purchase
Drawing until such time as such Certificates are remarketed, redeemed or
canceled. No Certificate held by the Co-Paying Agent or the Trustee pursuant to
this Section nor any Certificate registered in the name of the Borrower shall be
entitled to the benefit of the Letter of Credit until remarketed.
2.04 Reimbursement for Draws Upon the Letter of Credit. Subject to
Section 3.04 and except as provided in Section 2.05, the Borrower agrees to
reimburse the Bank, on each date that any amount drawn upon the Letter of Credit
is honored by the Bank, for the amount of such drawing.
2.05 Reimbursement of Principal Purchase Drawings under the Letter of
Credit; Mandatory Prepayment; Interest.
(a) Any Principal Purchase Drawing not reimbursed by the Borrower
on the date the Purchase Drawing is honored by the Bank shall, subject to
Section 6.02, be automatically converted into an Advance maturing on the day
which is the earlier of (i) 364 days from the date that any amount is drawn
under the Letter of Credit pursuant to any Principal Purchase Drawing or (ii)
such date as (x) the principal amount of the Certificates purchased pursuant to
such Principal Purchase Drawing shall become due and payable under Section 13.02
of the Second Trust Agreement or as a result of redemption or prepayment of such
Certificates, (y) the Certificates purchased pursuant to such Principal Purchase
Drawing shall be purchased pursuant to Sections 3.11(a)(4) or 3.12 of the Second
Trust Agreement, or (z) the Letter of Credit shall terminate.
(b) Each Advance created pursuant to paragraph (a) of this
Section 2.05 shall bear interest until due at a rate per annum equal to the
Prime Rate plus one percent (1%). Any other amount drawn under the Letter of
Credit and any amount not paid when due under this Agreement shall bear interest
until paid in full at a
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rate per annum equal to the sum of the Prime Rate plus three (3) percentage
points. Interest shall be payable in arrears on each Interest Payment Date, and
on the date of maturity of the Advance or upon the acceleration of an Advance or
on the date of payment of the Advance, drawing or other amount due.
2.06 Obligation to Pay Unconditional.
(a) The Borrower's obligations to reimburse the Bank as provided
herein either directly, or from the proceeds of the remarketing of the
Certificates, is absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, under all circumstances
whatsoever, including without limitation the following circumstances except as
may be the result of the gross negligence or willful misconduct of the Bank:
(i) any lack of validity or enforceability of the Letter
of Credit, the Certificates or any Related Document (provided payments
are actually made under the Letter of Credit);
(ii) any amendment or waiver of or any consent to
departure from all or any of such documents;
(iii) the existence of any claim, set-off, defense or
other right which the Borrower may have at any time against the Trustee,
the Remarketing Agent, or any other Person, whether in connection with
this Agreement, the Certificates, the Related Documents or any unrelated
transaction;
(iv) payment by the Bank under the Letter of Credit
against presentation of a sight draft or certificate which complies in
all material respects with the terms of the Letter of Credit but does
not strictly comply therewith;
(v) any demand, statement or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever; or
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(vi) any other circumstance, happening or omission
whatsoever which is similar to any of the foregoing.
2.07 Prepayments. Pursuant to the Pledge Agreement, the Borrower has
agreed to pledge to the Bank, and grant to the Bank a security interest in, its
right, title and interest in Certificates purchased with the proceeds of any
Principal Purchase Drawing and delivered to the Bank (the "Remarketing
Certificates"; such Certificates when released by the Bank pursuant to Section 5
of the Pledge Agreement shall cease to be Remarketing Certificates). Remarketing
Certificates shall be registered as provided for in Section 3 of the Pledge
Agreement. Any amounts from time to time owing to the Bank may be prepaid at any
time (i) by the Borrower on notice stating the amount to be prepaid, or (ii) on
behalf of the Borrower by the Remarketing Agent on notice from the Remarketing
Agent or its designee directing the Bank to deliver Certificates held by the
Bank to the Remarketing Agent for sale pursuant to Section 3(c) of the
Remarketing Agreement, and specifying the principal amount of Certificates to be
so sold. Any notice furnished pursuant to clause (i) or (ii) of this Section
2.07 may be given by telephone and promptly confirmed in writing but shall not
be effective unless received by the Bank on or prior to the Business Day
preceding the day of the proposed prepayment referred to in clauses (i) and (ii)
of this Section 2.07. In addition, the Borrower shall, for the purpose of paying
the purchase price of any Certificate delivered to the Co-Paying Agent (as
defined in the Second Trust Agreement) pursuant to Section 3.02(e) of the
Second Trust Agreement forthwith upon demand by the Bank prepay any amount owing
to the Bank if the Bank shall at any time determine that the Co-Paying Agent or
the Remarketing Agent, as the case may be, failed for any reason to pay or
tender payment of the purchase price of such Certificate when due to or for the
account of the Person (as defined in the Second Trust Agreement) entitled
thereto, and such failure is continuing or any other Person shall assert that
such Person has a lien on or security interest in such Certificate and the Bank
determines that such assertion is not manifestly unreasonable. Upon such
prepayment, interest shall cease to accrue on the amount which has been prepaid
and the Bank shall release and deliver to the Borrower, in the case of a
prepayment pursuant to clause (i) of this Section 2.07, or the Co-Paying Agent,
in the case of a prepayment pursuant to clause (ii) of this Section 2.07, from
the pledge and security interest created by the Pledge Agreement, Remarketing
Certificates as to which the
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principal amount plus accrued interest to the date of such release and delivery
is equal to the amount of such prepayment.
2.08 Right of Bank to Extend Letter of Credit. Upon written notice given
by the Borrower to the Bank at least 195 days prior to the Expiration Date of
the Letter of Credit requesting the Bank to extend the Letter of Credit for the
period requested by the Borrower, the Bank shall have the right either (i)
subject to such terms and conditions as agreed upon by the Bank and the
Borrower, to extend the Letter of Credit for an additional period as requested
by the Borrower, or, (ii) to decline to extend the Letter of Credit. The Bank
shall have complete and absolute discretion in selecting one of the aforesaid
options. If the Bank elects to extend the Letter of Credit, the Bank shall give
written notice to the Borrower and the Trustee of such election at least 150
days prior to the Expiration Date of the Letter of Credit and shall issue to the
Trustee an advice of amendment providing for the extension of the Expiration
Date of the Letter of Credit provided, however, that the Bank shall also have
the option to instruct the Trustee to surrender the outstanding Letter of Credit
to the Bank and upon such instruction, the Trustee shall surrender the
outstanding Letter of Credit to the Bank on the Business Day next following the
day of such date and the Bank will issue a substitute irrevocable letter of
credit in substantially the form of Exhibit A having a new Expiration Date, but
otherwise having terms identical to the then outstanding Letter of Credit.
2.09 Optional Prepayment of Certificates; Custodial Account.
(a) Section 3.11(a)(2) of the Second Trust Agreement provides
for the prepayment of all Outstanding Certificates on any Interest
Payment Date on or after February 6, 1985 (as these terms are defined in
the Second Trust Agreement) upon the exercise of the District's option
at the direction of the Borrower pursuant to Section 8.2 of the Second
Lease - Purchase Agreement to cause such prepayment. Section 8.2 of the
Second Lease - Purchase Agreement requires the District to give the
Leasing Firm, the Borrower and the Trustee notice of such prepayment at
least 60 days prior to the Interest Payment Date on which such
prepayment is to occur. The Borrower hereby agrees that it will give
prior written notice to the Bank of its intention to
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direct the District to exercise its option to prepay all Outstanding
Certificates at least fifteen (15) Business Days prior to such
direction. Such notice shall state (i) the date on which the Borrower
intends to give such direction to the District, (ii) the Interest
Payment Date on which all Outstanding Certificates are to be prepaid and
(iii) the Borrower's intentions with respect to the deposit of monies
pursuant to subsection (b) hereof sufficient to reimburse the Bank for a
drawing under the Letter of Credit with respect to such prepayment
pursuant to subsection (b) hereof. The Borrower agrees that it will not
direct the District to exercise its option to prepay all Outstanding
Certificates without the prior written consent of the Bank, provided
however, that the Bank agrees that it will give such consent if (i)
there has occurred no material adverse change in the financial condition
of the Borrower and (ii) the Borrower has demonstrated to the
satisfaction of the Bank that it will have sufficient moneys to make the
deposit required under subsection (b) hereof.
(b) In order to facilitate the optional prepayment by the
District of the Certificates pursuant to Section 3.11(a)(4) of the
Second Trust Agreement, the Borrower agrees to deposit, in a custodial
account maintained by and with the Bank for such purpose (the "Custodial
Account"), on or prior to thirty-five (35) days prior to the date
designated for such prepayment and in accordance with the Bank's
instructions, in immediately available funds, in an amount equal to the
amount of principal and accrued interest (if any) to be paid to prepay
such Certificates on such prepayment date.
The Bank agrees to invest any moneys deposited pursuant to this section as
directed by the Borrower in any investment permitted under the Second Trust
Agreement with a maturity of thirty (30) days or less that is generally made
available by the Bank to its customers. The Bank agrees to pay to the Borrower
on the respective prepayment date to which such deposit pertains any amounts not
needed to reimburse the Bank for any drawings under the Letter of Credit and any
other amounts owing hereunder. Cash deposited into the custodial account
described above shall be used solely to reimburse the Bank after any drawing by
the Trustee under the Letter of Credit in respect of the prepayment of
Certificates
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pursuant to Section 3.11(a)(4) of the Second Trust Agreement and any other
amounts owing hereunder and shall not be used by the Bank to fund any such
drawing, which shall be funded only from moneys of the Bank held separately from
such cash deposited. The Borrower hereby grants to the Bank, any participant in
the Letter of Credit and the Trustee as representative of the holders from time
to time for the Certificates, as security for the payment and performance of the
Obligations, a lien upon and security interest in all amounts deposited in the
Custodial Account. All funds deposited with the Bank pursuant to this Section
2.12 shall be held by the Bank on a pari passu basis with the interest in the
Trustee in such funds.
Section 2.10 Receipt of Certain Funds by Bank. The Trustee has agreed
that it will transfer the monies required to be transferred to the Bank pursuant
to the Second Trust Agreement. All such moneys received by the Bank shall be
credited by the Bank against any Obligations of the Borrower to the Bank and any
other amounts owning hereunder. The Bank shall also be entitled to retain all or
a portion of such moneys received equal to an amount which it reasonably
anticipates may be necessary to reimburse the Bank for Obligations and any other
amounts which may be incurred by the Bank in the future. The Bank shall transfer
all such moneys not required to be so credited or retained to the Borrower.
Section 2.11 Removal and Replacement of Remarketing Agent. Section 9.10
of the Second Trust Agreement and Section 5(a) of the Remarketing Agreement
grant the Borrower the right to remove the Remarketing Agent at any time with
the concurrence of the District and Section 9.10 of the Second Trust Agreement
grants the Company the right to appoint a successor Remarketing Agent with the
concurrence of the District. The Borrower hereby agrees that (i) upon the
receipt of written request by the Bank, it shall take such action so as to cause
the removal of the Remarketing Agent, and (ii) it shall not remove the
Remarketing Agent without the prior written consent of the Bank, which consent
shall not be unreasonably withheld. The Borrower additionally agrees that it
will not appoint a successor Remarketing Agent without the prior written consent
of the Bank which consent shall not be unreasonably withheld.
ARTICLE III
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FEES; PAYMENTS; CHANGES IN CIRCUMSTANCES
3.01 Letter of Credit Fee. The Borrower shall pay to the Bank a letter
of credit fee equal to ninety hundredths of one percent (0.90%) per annum of the
Stated Amount of the Letter of Credit (as defined therein) and as reduced or
increased from time to time. The letter of credit fee shall be payable quarterly
in advance, commencing on the Closing Date and on the last Business Day of each
calendar quarter thereafter.
3.02 Transaction Fees. The Borrower shall pay to the Bank:
(a) on the date of each drawing under the Letter of Credit, a
transaction fee in amount equal to Two Hundred Fifty Dollars ($250.00); and
(b) on the date of any transfer of the Letter of Credit, a
transaction fee in an amount equal to Two Thousand Five Hundred Dollars
($2,500.00).
3.03 Computation of Fees and Interest. All computations of fees and
interest under this Agreement shall be made on the basis of a three hundred
sixty (360) day year and actual days elapsed (which results in a higher interest
and higher fees than if a three hundred sixty-five (365) day year were used).
Interest shall accrue during each period during which interest is computed from
but excluding the first day thereof to and including the last day thereof.
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3.04 Payments by the Borrower.
(a) On the date each drawing (other than a Purchase Drawing)
under the Letter of Credit is honored by the Bank, the Borrower shall before
3:00 p.m. (California time) reimburse the Bank for any such drawing by making
the amount of such drawing available to the Bank by payment in immediately
available funds.
(b) Any payment received after 3:00 p.m. (California time) shall
be deemed to have been received on the next Business Day.
3.05 Payment Due on Non-Business Day to be Made on Next Business Day. If
any sum becomes payable pursuant to this Agreement on a day which is not a
Business Day, the date for payment thereof shall be extended, without penalty,
to the next succeeding Business Day, and such extended time shall be included in
the computation of interest and fees.
3.06 Loan Accounts. The Bank shall open and maintain on its books one or
more loan accounts in the Borrower's name covering each obligation of the
Borrower under this Agreement. The entries made in the loan accounts shall
constitute prima facie evidence, in the absence of manifest error, of the
existence of the obligations of the Borrower recorded in the loan accounts.
3.07 Increased Costs. If after the date hereof any change in any law or
regulation or in the interpretation thereof by any court or administrative or
Governmental Authority charged with the administration thereof shall either (i)
impose, modify or deem applicable any reserve, special deposit, assessment or
insurance fee or similar requirement against letters of credit issued by the
Bank or (ii) impose on the Bank any other condition relating to this Agreement
or the Letter of Credit or affect the calculations relating to the Bank's
capitalization, and the result of any event referred to in clause (i) or (ii)
shall be to increase the cost to the Bank of issuing or maintaining the Letter
of Credit or funding amounts drawn thereunder, then, upon demand by the Bank,
the Borrower shall immediately pay to the Bank, from time to time as specified
by the Bank, additional amounts which shall be sufficient to compensate the Bank
for such increased cost from the date of such change, together with interest on
each such amount from the date demanded until payment in full thereof at the
Prime Rate plus
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two percent (2%). A certificate setting forth with reasonable explanations such
increased cost incurred by the Bank as a result of any event mentioned in clause
(i) or (ii) of this paragraph, submitted by the Bank to the Borrower, shall be
conclusive, absent manifest error, as to the amount thereof.
ARTICLE IV
SECURITY
4.01 Borrower Collateral. To secure the obligations of Borrower to the
Bank under this Agreement, the Borrower agrees to execute and deliver on or
before the Closing Date, the Pledge Agreement.
4.02 Security Agreement. To secure the obligation of the Borrower to the
Bank under this Agreement, the Borrower will cause the Security Agreement to be
executed and delivered by the Trustee on or before the Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
5.01 Existence and Power. The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and has all powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
5.02 Corporate Authorization; No Contravention. The execution and
delivery and performance by the Borrower of this Agreement and the Related
Documents to which the Borrower is a party are within the Borrowers powers, have
been duly authorized by all necessary action and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
its articles of incorporation or by-laws or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or the
Project in any material respect or result in the creation or
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imposition of any Encumbrance on any asset of the Borrower other than
Encumbrances contemplated herein or require the consent, approval or
authorization of any party (other than a party to agreements relating to the
Certificates).
5.03 Authority of Officers. The officers of the Borrower who will
execute this Agreement, who will request the issuance of the Letter of Credit
and who have executed the Related Documents to which the Borrower is a party and
all other documents, instruments and agreements required to be delivered or
contemplated hereunder or thereunder are or will be duly authorized to execute
the same.
5.04 Governmental Approvals. No order, permission, consent, approval,
license or authorization by registration or filing with, or exemption by, any
Governmental Authority is required by the Borrower to authorize, or is required
by the Borrower in connection with, the execution, delivery and performance by
the Borrower of this Agreement or the Related Documents to which the Borrower is
a party or the taking by the Borrower of any action hereby or thereby
contemplated, except as have been granted and which are in full force and effect
except for such licenses, certificates, approvals, variances or permits as may
be necessary for the operation of the Project which the Borrower has applied for
(or will apply for in the ordinary course of business) and expects to receive.
5.05 Taxes. The Borrower has filed all tax returns and reports required
to be filed and has paid all taxes shown to be due and payable on such returns
and has paid all tax assessments, fees and other governmental charges upon it or
its properties, income or assets otherwise due and payable except those
presently payable without penalty or interest and further except those which are
being contested in good faith by appropriate proceedings diligently conducted,
and for which adequate reserves have been set aside in accordance with generally
accepted accounting principles.
5.06 Financial Information. The financial information and other data
furnished by the Borrower to the Bank fairly and accurately reflect the
Borrower's financial condition as of the date and for the period indicated
therein.
5.07 Binding Effect. This Agreement and the Related Documents to which
the Borrower is a party constitute valid and binding agreements of the Borrower,
enforceable against Borrower in
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accordance with their respective terms, subject to the effect of applicable
bankruptcy and other similar laws affecting the rights of creditors generally
and the effect of equitable principles whether applied in an action at law or a
suit in equity.
5.08 No Default. No material Default or any Event of Default has
occurred and is continuing or would result from the obligations incurred by the
Borrower hereunder or by the actions contemplated hereby.
5.09 Litigation. There are no suits, proceedings, claims or disputes
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or its property, the adverse determination of which might in any
material respect affect the Borrower's financial condition or operations or
impair the Borrower's ability to perform its obligations hereunder, under the
Related Documents to which the Borrower is a party or under any instrument or
agreement required hereunder or thereunder.
5.10 ERISA. The Borrower has fulfilled its obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan maintained by
the Borrower and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and has not incurred any liability
to the Pension Benefit Guaranty Corporation or a Plan under Title IV of ERISA.
5.11 Disclosure. None of the representations or warranties made by
Borrower in any of the Related Documents as of the date of such representations
and warranties are or were made or deemed made, and none of the statements
contained in each exhibit, report, statement, or certificate furnished by or on
behalf of any such person in connection with the Related Documents as of the
date furnished, contains or contained any untrue statement of material fact or
omits or omitted any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances, under which
they are or were made, not misleading. There is no fact known to Borrower which
materially and adversely affects the business, operations, properties, assets or
condition (financial or otherwise) of Borrower and which has not been disclosed
herein or in other documents, certificates, and statements furnished to Bank
hereunder or pursuant hereto. The copies of all documents delivered to Bank from
time to time in connection with this Agreement are and shall be true and
complete
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copies of the originals thereof and have not been or shall not be amended except
as disclosed to Bank.
5.12 No Burdensome Restrictions. No contract, agreement or other
instrument as to which the Borrower or its Subsidiaries may be bound materially
adversely affect, or insofar as the Borrower may reasonably foresee may so
affect, the business, operations, property or financial or other condition of
the Borrower or its Subsidiaries taken as a whole.
The representations and warranties contained in this Article V shall be
deemed to be made by the Borrower on the date of execution of this Agreement.
ARTICLE VI
CONDITIONS
6.01 Conditions Precedent to the Issuance of the Letter of Credit. The
obligation of the Bank to issue the Letter of Credit is subject to the condition
precedent that on or before the Closing Date the Bank shall have received the
following, in form and detail satisfactory to the Bank:
(a) copies of the resolution of the Borrower authorizing the
execution, delivery and performance of this Agreement and the transactions
contemplated by this Agreement, certified by the Secretary or Assistant
Secretary of the Borrower;
(b) a certificate of the Secretary or Assistant Secretary of the
Borrower dated the Closing Date, as to the incumbency and signatures of each
officer of the Borrower executing this Agreement and the Collateral Documents to
which the Borrower is a party, on its behalf, together with exemplar signatures
of such officers;
(c) copies of the articles of incorporation and bylaws of the
Borrower, certified by the Secretary or Assistant Secretary of the Borrower;
(d) a certificate of good standing for the Borrower
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from the Secretary of State of the State of California, dated as of a recent
date;
(e) an opinion of counsel to the Borrower, dated the Closing
Date, addressed to the Bank and in form and substance satisfactory to the Bank
and its counsel and covering such matters as the Bank or its counsel may
reasonably request;
(f) an executed copy of the Pledge Agreement;
(g) an executed copy of the Security Agreement;
(h) a copy of the opinion of Bond Counsel, with a letter
addressed to the Bank permitting the Bank to rely on such opinion;
(i) copies of the Related Documents and all other documents
executed or delivered in connection with the issuance of the Certificates as may
be requested by the Bank;
(j) the fees required by Section 3.01;
(k) a UCC lien search, satisfactory to Bank, showing no other
creditors with rights to, or claims against, Borrower's personal property unless
approved by the Bank;
(l) such other evidence, documents, instruments, approvals or
opinions as the Bank may reasonably request to establish the due execution of
the transactions contemplated by this Agreement.
6.02 Conditions Precedent to the Creation of Any Advance. The creation
of any Advance hereunder shall be subject to the further conditions precedent
that:
(a) no Default or Event of Default shall have occurred and be
continuing; and
(b) the representations and warranties set forth in Article V
shall be true on and as of the date the relevant notice of borrowing is given.
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ARTICLE VII
COVENANTS
The Borrower covenants and agrees that as long as the Letter of Credit
is outstanding and until the full and final payment of all indebtedness of the
Borrower incurred hereunder, unless the Bank shall otherwise consent in writing:
7.01 Notices. The Borrower shall promptly notify the Bank in writing of
any material Default or any Event of Default.
7.02 Performance of Acts. Upon request by the Bank, the Borrower shall
perform all acts which may be necessary or advisable to perfect any lien or
security interest provided for in this Agreement or to carry out the intent of
this Agreement and to reimburse the Bank for costs incurred to protect its
security interests and liens.
7.03 Existence. The Borrower will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
and franchises, maintain, preserve and protect all of its property used or
useful in the conduct of its business (ordinary wear and tear excepted), and
perform all its obligations under the Related Documents to which it is a party.
7.04 Obligations and Taxes. The Borrower will pay or discharge promptly
all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits before the same shall be in default.
7.05 Related Documents. The Borrower makes each of the covenants made by
it in the Related Documents to which it is or is to be a party, and to and for
the benefit of the Bank as if the same were set forth at length herein.
7.06 Further Assurances. The Borrower will execute and deliver to the
Bank all such documents, instruments and agreements (other than as specifically
required by this Agreement) and do all such other acts and things as may be
reasonably requisite to enable the Bank to exercise and enforce its rights
hereunder and in connection with the Related
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Documents.
7.07 Credit Agreement Covenants. The Borrower agrees to perform each and
every covenant contained in Paragraphs 7.2 through 7.16, inclusive of the Credit
Agreement. The above referenced covenants are hereby incorporated by reference
into this Agreement as in effect on the date hereof and as such covenants may be
further amended, modified, waived, or in any way changed; provided, however, if
the Credit Agreement is terminated for any reason, the Borrower will still
comply with the above referenced covenants as they exist on the date of
termination, unless otherwise agreed to in writing by the Bank.
7.08 Related Agreements. The Borrower agrees that it shall not alter or
amend any Related Document to which it is a party or any document, instrument or
agreement required thereunder without the approval of the Bank, which approval
shall not be unreasonably withheld or delayed.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Events of Default. The following events shall constitute "Events of
Default":
(a) Non-Payment, The Borrower shall fail to pay when due any
amount of principal, interest, fee or other amount payable by it hereunder;
(b) Representation or Warranties. Any representation or warranty
made by the Borrower in this Agreement or which is contained in any certificate,
financial statement or other document delivered at any time pursuant hereto or
in connection with any transaction contemplated hereby shall prove to have been
incorrect in any material respect when made or deemed to be made;
(c) Other Defaults. The Borrower shall fail to observe or perform
any material term, provision, covenant, agreement or obligation contained in
this Agreement not specifically mentioned in this Section 8.01;
(d) Cross-Default.
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(i) The Borrower shall default under any other agreement
involving the borrowing of money or the advance of credit to which it
may be a party as obligor, if such default consists of the failure to
pay any Indebtedness when due (other than in connection with trade
financing for accounts which are contested in good faith) or results in
the termination of a commitment to lend or, if such default consists of
any other failure on the part of the Borrower, such default gives to the
holder of the obligation concerned the right to accelerate the
Indebtedness or terminate its commitment to lend taking into account any
applicable period of grace;
(ii) Any event or condition shall occur which permits
the acceleration of the maturity or the mandatory redemption of the
Certificates;
(iii) An event of default shall occur under the Second
Trust Agreement, the Second Lease-Purchase Agreement, the Second
Miramar Project Sublease, the Remarketing Agreement or the Pledge
Agreement;
(iv) A Determination of Taxability (as defined in the
Second Lease-Purchase Agreement) shall occur.
(e) Voluntary Bankruptcy; Insolvency. The Borrower shall (i)
suspend or discontinue its business, or (ii) make an assignment for the benefit
of creditors, or (iii) generally not be paying its debts as such debts become
due, or (iv) admit in writing its inability to pay its debts as they become due,
or (v) file a voluntary petition in bankruptcy, or (vi) become insolvent
(however such insolvency shall be evidenced), or (vii) file any petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment of debt, liquidation or dissolution or similar relief under any
present or future statute, law or regulation of any jurisdiction, or (viii)
petition or apply to any tribunal for any receiver, custodian or trustee for any
substantial part of its property;
(f) Involuntary Proceedings. An involuntary case or other
proceeding shall be commenced against the Borrower seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law
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now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of forty-five (45) days;
(g) Judgments. Any judgment or decree is issued in an amount
exceeding Two Million Five Hundred Thousand Dollars ($2,500,000) not covered by
insurance against the Borrower or against any of its property and such judgment
or decree shall remain unvacated, unstayed, undischarged, or unsatisfied for
forty-five (45) days after entry;
(h) Collateral. A court finds that the Pledge Agreement or any
other agreement granting to the Bank a security interest in any collateral
contemplated hereby shall fail to be valid or enforceable or shall cease to
create a valid security interest on the property covered thereby;
(i) Amendments of Related Documents. Any of the Related Documents
to which the Borrower is a party shall be amended, modified or supplemented
without the Bank's consent, which consent shall not be unreasonably withheld or
delayed;
(j) ERISA. Any Plan termination or any full or partial withdrawal
from a Plan or Plans shall occur which could result in a material liability of
the Borrower to the Pension Benefit Guaranty Corporation;
(k) Material Adverse Change. A material adverse change occurs in
the Borrower's financial condition, properties or prospects, or in the
Borrower's ability to repay any obligations hereunder;
(1) Other Bank Agreements. The Borrower fails to meet the
conditions of, or fails to perform any obligation under any other agreement the
Borrower has with the Bank or any affiliate of the Bank;
8.02 Remedies. If any Event of Default shall have occurred:
(a) The obligation of the Bank to issue, amend or
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reinstate the Letter of Credit, if the Letter of Credit has not yet been issued,
amended or reinstated, shall terminate; and/or
(b) The Bank may by written notice to the Trustee with a copy to
the Borrower, require the Trustee to declare the Certificates due and payable as
provided in the Second Trust Agreement; and/or
(c) The Bank may declare all amounts due hereunder (together with
accrued interest thereon) to be, and such amounts shall thereupon become, due
and payable without presentment, demand, protest or notice of any kind, all of
which are hereby waived by the Borrower; and/or
(d) The Borrower will at the request of the Bank immediately pay
to the Bank an amount equal to the aggregate amount which could be drawn under
the Letter of Credit to be held by the Bank in a cash collateral account as
security for the indebtedness hereunder and the Borrower agrees that such funds
may be applied against the indebtedness hereunder as the same becomes due and
payable; and/or
(e) The Bank may exercise all rights and remedies available to it
under this Agreement or any other agreement.
8.03 Rights Not Exclusive. The rights provided for in this Article are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity.
ARTICLE IX
MISCELLANEOUS
9.01 Notices. A11 notices, requests and other communications to any
party hereunder shall be in writing (including cable or telex) and shall be
given to such party at its address or telex number set forth below or such other
address or telex number as such party may hereafter specify by notice to the
Bank and the Borrower:
If to the Borrower:
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SOUTHERN CALIFORNIA WATER COMPANY
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial officer
if to the Bank:
Bank of America N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Each such notice, request or other communication shall be effective when
received at the addresses specified in this Section.
9.02 Binding Agreement; Third Parties.
(a) This Agreement shall be binding upon and inure to the benefit
of the Borrower and the Bank and their respective successors and assigns,
provided that the Borrower may not assign or transfer any of its rights under
this Agreement without the prior written consent of the Bank, which consent
shall not be unreasonably withheld or delayed.
(b) This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.
9.03 Participations. The Bank may at any time, upon written notice to
the Borrower, sell, assign, grant participations in, or otherwise transfer to
any other financial institution (each a "Participant") all or part of the
obligations of the Borrower under this Agreement. The Borrower agrees that each
such disposition will give rise to a direct obligation of the Borrower to the
Participant. The Borrower authorizes the Bank and each Participant, upon the
occurrence of an Event of Default, to proceed directly by right of setoff,
banker's lien, or otherwise, against any assets of the Borrower which may be in
the hands of the Bank or such Participant, respectively. The Borrower
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authorizes the Bank to disclose to any prospective Participant and any
Participant any and all information in the Bank's possession concerning the
Borrower, this Agreement and any collateral.
9.04 No Waivers. No failure or delay by the Bank in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
9.05 Payment of Expenses.
(a) The Borrower agrees:
(i) to pay or reimburse the Bank for all of its
out-of-pocket costs, attorneys' fees and expenses (including, without
limitation, allocated costs of in-house counsel) incurred in connection
with the preparation, review and execution of, and any amendment,
supplement or modification to, this Agreement, the Letter of Credit,
the Related Documents and any other document prepared in connection
herewith or therewith and the consummation of the transactions
contemplated hereby and thereby.
(ii) to pay the Bank's costs and expenses incurred in
connection with the administration of this Agreement, including draw
request fees and any other reasonable fees and costs for services,
regardless of whether such services are furnished by the Bank's
employees or agents or independent contractors
(iii) to pay or reimburse the Bank for all reasonable
costs and out-of-pocket expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the
Letter of Credit, the Related Documents and any other document prepared
in accordance herewith or therewith or any refinancing or restructuring
of this Agreement or such other documents in the nature of a "work-out",
including, out-of-pocket fees and disbursements of counsel to the Bank
(including without
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limitation, allocated out-of-pocket costs of in-house counsel), and
including any costs and attorneys fees incurred in any arbitration
proceeding. In the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title II, United States Code) or any
similar or successor statute, the Bank is entitled to recover costs and
reasonable attorneys' fees incurred by the Bank related to the
preservation, protection, or enforcement of any rights of the Bank in
such a case.
(b) The obligations of the Borrower in this paragraph shall
survive repayment of all disbursements made under the Letter of Credit and all
other amounts payable hereunder.
(c) In the event that any party hereto shall incur legal fees and
costs in connection with the actual or threatened breach of any provision
hereof, or to enforce any right or remedy hereunder, such party shall be
entitled to recover such fees and costs from the breaching party. In the event
that an action or arbitration proceeding is brought in connection with this
Agreement the prevailing party shall be entitled to recover from the losing
party in addition to any money judgment or other relief, such actual attorney's
fees (including allocated costs of staff counsel), disbursements and costs as
may be incurred by the prevailing party instituting or defending such litigation
or arbitration, together with such reasonable costs and expenses as may be
allowed by the court or arbitrator.
9.06 Indemnity.
(a) The Borrower agrees to indemnify and hold the Bank harmless
from any loss, liability, damages, judgments, and costs of any kind relating to
or arising directly or indirectly out of (i) this Agreement or any document
required hereunder, (ii) any credit extended or committed by the Bank to the
Borrower hereunder, and (iii) any litigation or proceeding related to or arising
out of this Agreement, any such document, or any such credit. This indemnity
includes but is not limited to reasonable attorneys' fees (including the
allocated cost of in-house counsel). This indemnity extends to the Bank, its
parent, subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys, and assigns. This indemnity will survive termination of
this Agreement and repayment of the Borrower's obligations to the Bank. All sums
due to the Bank
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hereunder shall be obligations of the Borrower, due and payable immediately
without demand.
(b) The Borrower agrees to save, indemnify and hold harmless the
Bank and its officers, directors, agents or employees from and against any and
all losses, claims, damages and liabilities (including liabilities for
penalties) resulting from any litigation brought in connection with the issuance
or sale of the Certificates, unless such liability shall be due to gross
negligence or willful misconduct on the part of the Bank or its respective
officers, directors, agents or employees.
(e) The Bank shall not in any way be responsible for performance
by the Trustee or any paying agent for the Certificates of its obligations to
the Borrower, nor for the form, sufficiency, correctness, genuineness, authority
of person signing, falsification or legal effect of any documents called for
under the Letter of Credit if such documents on their face appear to be in
order.
9.07 Amendment and Modification of Agreement, Waivers. No modification
or waiver of any provision of this Agreement or any other document, instrument
or agreement required, referred to or contemplated hereunder, nor consent to any
departure by the Borrower or the Bank therefrom shall in any event be effective
unless the same shall be in writing and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on either party in any case shall entitle such party to any
other or further notice or demand in the same, similar or other circumstances.
9.08 Severability. In case any one or more of the provisions contained
in this Agreement or any document, instrument, OR agreement required hereunder
should be declared invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein or therein shall not in any way be affected or impaired thereby.
9.09 Arbitration and Waiver of Jury Trial.
(a) This paragraph concerns the resolution of any
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controversies or claims between the Borrower and the Bank, whether arising in
contract, tort or by statute, including but not limited to controversies or
claims that arise out of or relate to; (i) this Agreement (including any
renewals, extensions or modifications); or (ii) any document related to this
Agreement (collectively a "Claim").
(b) At the request of the Borrower or the Bank, any Claim shall
be resolved by binding arbitration in accordance with the Federal Arbitration
Act (Title 9, U. S. Code) (the "Act"). The Act will apply even though this
Agreement provides that it is governed by the law of a specified state.
(c) Arbitration proceedings will be determined in accordance with
the Act, the rules and procedures for the arbitration of financial services
disputes of JAMS/Endispute, LLC, a Delaware limited liability company or any
successor thereof ("JAMS"), and the terms of this paragraph. In the event of any
inconsistency, the terms of this paragraph shall control.
(d) The arbitration shall be administered by JAMS and conducted
in any U. S. state where real or tangible personal property collateral for this
credit is located or if there is no such collateral, in California. All Claims
shall be determined by one arbitrator; however, if Claims exceed Five Million
Dollars ($5,000,000), upon the request of any party, the Claims shall be decided
by three arbitrators. All arbitration hearings shall commence within ninety (90)
days of the demand for arbitration and close within ninety (90) days of
commencement and the award of the arbitrator(s) shall be issued within thirty
(30) days of the close of the hearing. However, the arbitrator(s), upon a
showing of good cause, may extend the commencement of the hearing for up to an
additional sixty (60) days. The arbitrator(s) shall provide a concise written
statement of reasons for the award. The arbitration award may be submitted to
any court having jurisdiction to be confirmed and enforced.
(e) The arbitrator(s) will have the authority to decide whether
any Claim is barred by the statute of limitations and, if so, to dismiss the
arbitration on that basis. For purposes of the application of the statute of
limitations, the service on JAMS under applicable JAMS rules of a notice of
Claim is the equivalent of the filing of a lawsuit. Any dispute
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concerning this arbitration provision or whether a Claim is arbitrable shall be
determined by the arbitrator(s). The arbitrator(s) shall have the power to award
legal fees pursuant to the terms of this Agreement.
(f) This paragraph does not limit the right of the Borrower or
the Bank to: (i) exercise self-help remedies, such as but not limited to,
setoff; (ii) initiate judicial or nonjudicial foreclosure against any real or
personal property collateral; (iii) exercise any judicial or power of sale
rights, or (iv) act in a court of law to obtain an interim remedy, such as but
not limited to, injunctive relief, writ of possession or appointment of a
receiver, or additional or supplementary remedies.
(g) The procedure described above will not apply if the Claim, at
the time of the proposed submission to arbitration, arises from or relates to an
obligation to the Bank secured by real property located in California. In this
case, both the Borrower and the Bank must consent to submission of the Claim to
arbitration. If both parties do not consent to arbitration, the Claim will be
resolved as follows: The Borrower and the Bank will designate a referee (or a
panel of referees) selected under the auspices of JAMS in the same manner as
arbitrators are selected in JAMS administered proceedings. The designated
referee(s) will be appointed by a court as provided in California Code of Civil
Procedure Section 638 and the following related sections. The referee (or the
presiding referee of the panel) will be an active attorney or a retired judge.
The award that results from the decision of the referee(s) will be entered as a
judgment in the court that appointed the referee, in accordance with the
provisions of California Code of Civil Procedure Sections 644 and 645.
(h) The filing of a court action is not intended to constitute a
waiver of the right of the Borrower or the Bank, including the suing party,
thereafter to require submittal of the Claim to arbitration.
(i) By agreeing to binding arbitration, the parties irrevocably
and voluntarily waive any right they may have to a trial by jury in respect of
any Claim. Furthermore, without intending in any way to limit this Agreement to
arbitrate, to the
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extent any Claim is not arbitrated, the parties irrevocably and voluntarily
waive any right they may have to a trial by jury in respect of such Claim. This
provision is a material inducement for the parties entering into this Agreement.
9.10 Confidentiality. The Bank agrees to use reasonable precautions to
keep confidential, in accordance with its customary procedures for handling
confidential information of the same nature, all non-public information supplied
by the Borrower pursuant to this Agreement which (a) is identified as non-public
at the time it is delivered to the Bank or (b) constitutes any financial
statement, financial projections or forecasts, budget, compliance certificate,
audit report, management letter or accountants' certification delivered
hereunder or any contract or agreement not previously filed, or filed on a
confidential basis, with any governmental authority (collectively, the
"Confidential Information"), provided that nothing herein shall limit the
disclosure of any such Confidential Information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) on a confidential basis, to
the counsel to the Bank, (iii) to bank examiners, auditors or accountants and
any analogous counterpart thereof, (iv) in connection with litigation related to
this Agreement to which the Bank is a party, or (v) to any participant or
prospective participant in the Letter of Credit so long as such participant or
prospective participant agrees to keep such Confidential Information
confidential on substantially the same basis as provided in this Section;
provided, however, with respect to any disclosure required by judicial process
or otherwise in connection with litigation, the Bank shall give Borrower prompt
notice of any such disclosure requirement, to the extent permitted by applicable
law.
9.11 Governing Law. This Agreement and the rights and obligations of the
parties under this Agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the State of California.
9.12 Table of Contents and Captions. The table of contents and captions
contained in this Agreement are for convenience of reference only and shall not
limit or define the provisions of this Agreement or affect the interpretation or
construction thereof.
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9.13 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
SOUTHERN CALIFORNIA WATER COMPANY, a
California corporation
By:
Title:
BANK OF AMERICA N.A.
By:
Title:
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