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1994-0701_MUNICIPAL WATER DISTRICT OC_Agreement• 18 ORIGINAL AGREEMENT FOR ALLOCATION OF PROCEEDS OF SALE OF ALLEN-McCOLLOCH PIPELINE THIS AGREEMENT IS ENTERED INTO as of this 1st day of July, 1994 by and between MUNICIPAL WATER DISTRICT OF ORANGE COUNTY ("MWDOC"); MUNICIPAL WATER DISTRICT OF ORANGE COUNTY WATER FACILITIES CORPORATION ("MWDOCWFC"); the "AMP PARTICIPANTS" consisting of the following public entities: the CITY OF ANAHEIM, YORBA LINDA WATER DISTRICT, EAST ORANGE COUNTY WATER DISTRICT, SANTIAGO COUNTY WATER DISTRICT, SANTA MARGARITA WATER DISTRICT, MOULTON-NIGUEL WATER DISTRICT, IRVINE RANCH WATER DISTRICT, EL TORO WATER DISTRICT, TRABUCO CANYON WATER DISTRICT, LOS ALISOS WATER DISTRICT, and the CITY OI ORANGE (sometimes referred to as the "Participants" herein); and the non -Participant lessees of capacity in the Allen-McColloch Pipeline consisting of: COASTAL MUNICIPAL WATER DISTRICT (as agent for TRI -CITIES MUNICIPAL WATER DISTRICT and SOUTH COAST WATER DISTRICT) and CAPISTRANO VALLEY WATER DISTRICT ("Leasing Agencies"). RECITALS 1. The Allen-McColloch Pipeline ("AMP") was financed and constructed and is currently operated and maintained pursuant to a January 13, 1978 agreement entitled "Agreement for Construction, Operation and Maintenance of Pipeline and to Enter into Sublease Concerning the Diemer Filtration Plant/Santiago Aqueduct Intertie" and various amendments thereto and associated agreements (hereinafter collectively referred to as the "Diemer Agreements") among MWDOC, MWDOCWFC, the AMP Participants and The Irvine Company, 11 a private corporation ("TIC"). 2. In 1989, MWDOC, MWDOCWFC, the AMP Participants and TIC entered into the "Fifth Amendment to Agreement for Construction, Operation and Maintenance of Pipeline and to Enter into Sublease Concerning the Diemer Filtration Plant/Santiago Aqueduct Intertie" ("Fifth Amendment") pursuant to which the parties agreed to finance and construct certain improvements to augment the capacity of the AMP (the "AMP Flow Augmentation Project" or "FAP"). Certificates of Participation were issued by MWDOCWFC on behalf of four Participants (the 11189 Financing") and cash was contributed by other Participants ("Cash Participants") to finance the first phases of the FAP. The first phase, consisting of the parallel pipeline to Reaches S2/S3 of the AMP and the construction of the ST -21 Pump Station, was completed. The remaining proceeds of the 189 Financing were retained in the construction account to cover a portion of the cost of the planned construction of the Diemer Pump Station phase of the FAP. Cash, letters of credit and other securities were held on deposit against the Cash Participants, share of the Diemer Pump Station costs. 3. In 1992, MWDOC, MWDOCWFC, the Participants and TIC entered into a Memorandum of Understanding to defer construction of the Diemer Pump Station in contemplation of a sale of the AMP to Metropolitan Water District of Southern California ("Metropolitan"). In connection with the deferral of the Diemer Pump Station, the AMP Participants and TIC authorized MWDOC to enter into interim license and lease agreements with the Leasing K 0 0 Agencies ("Interim Licenses") to permit them to receive water deliveries through the AMP, pending the completion of the sale to Metropolitan. The Leasing Agencies have made annual payments under the Interim License and Lease Agreements for the right to utilize capacity in the AMP. 4. The Leasing Agencies also participated financially in the oversizing of the ST -21 Pump Station along with those AMP Participants who participated in the ST -21 Pump Station. 5. In 1992, some of the AMP Participants, who financed their original investment in the AMP, refinanced their debt through new Certificates of Participation issued by MWDOCWFC ("'92 Financing"). At the same time other AMP Participants who participated in the original financing paid off their remaining obligation. 6. MWDOC, MWDOCWFC and the AMP Participants, with input from the Leasing Agencies, have negotiated an agreement for the sale of the AMP to Metropolitan (the "Sale Agreement"). Under the proposed sale, the 189 Financing and the 192 Financing would remain in place with Metropolitan assuming the obligations thereunder, subject to some continuing payments by MWDOC. MWDOC and the AMP Participants will be responsible for paying an amount calculated as a portion of the remaining debt service under the terms of the sale to Metropolitan. Notwithstanding the assumption of obligations by Metropolitan, MWDOC remains the primary obligor and, in the event of a default by Metropolitan, will be obligated for the full amount of the 189 Financing and the 192 Financing and must look to the AMP Participants for rent payments to meet those debt service 3 0 requirements. 7. The sublease interest of TIC will be acquired by certain AMP Participants immediately prior to the sale of the AMP to Metropolitan pursuant to an agreement under threat of condemnation, and TIC will, therefore, have no interest in the sale to Metropolitan or in this Agreement. 8. The AMP Participants and the Leasing Agencies desire to enter into this Proceeds Agreement in order to establish an equitable basis for allocating among themselves the benefits and remaining obligations under the sale of the AMP to Metropolitan and to define their future rights and obligations with respect to the AMP. NOW, THEREFORE, in consideration of the promises, conditions and covenants herein and the sale of the AMP to Metropolitan, MWDOC, MWDOCWFC, the AMP Participants and the Leasing Agencies agree as follows: ARTICLE I DEFINITIONS Section 1.01. "Adjusted 189 Obligationel shall have the meaning given that term in Section 3.03 hereof. Section 1.02. "Closing Date'l shall mean the date on which the Initial Payment is made by Metropolitan and the documents to be delivered under Section 4.07 of the Sale Agreement are delivered. Section 1.03. "Construction Fund" shall mean the remaining proceeds of the 189 Financing together with earnings thereon held by the '89 Trustee which are restricted for use for improvements to the AMP or to prepay the 189 Financing. 4 0 Section 1.04. "Financing Documents,, shall mean the following documents evidencing MWDOC's obligations under the 189 Financing and the 192 Financing: "'89 Financing Documents" (a) The 1989 Trust Agreement by and among MWDOC, MWDOCWFC and the State Street Bank and Trust Company of California, N.A. dated as of August 1, 1989 and all amendments and supplements thereto. (b) The Allen-McColloch Pipeline Flow Augmentation Project Master Lease dated as of August 1, 1989 between MWDOC and MWDOCWFC and all amendments and supplements thereto ("FAP Master Lease"). (c) The Reimbursement Agreement dated as of July 1, 1989 between MWDOC and National Westminster Bank PLC, San Francisco Overseas Branch, and all amendments and supplements thereto. (d) The First Supplement Remarketing Agreement dated January 30, 1991 between MWDOC and Smith, Barney, Upham & Company and all amendments and supplements thereto. 11192 Financing Documents" (e) The 1992 Trust Agreement by and among MWDOC, MWDOCWFC and First Trust National Association dated as of August 1, 1992, and all amendments and supplements thereto. (f) The Amended and Restated Allen-McColloch Pipeline Lease dated as of August 1, 1992 between MWDOC and MWDOCWFC, and all amendments and supplements thereto ("Amended Master Lease"). 5 E 0 (g) The Reimbursement Agreement dated as of July 15, 1992 between MWDOC and National Westminster Bank PLC, New York Branch, and all amendments and supplements thereto. (h) The Remarketing Agreement dated August 1, 1992 between MWDOC and Sutro & Co., Inc. and all amendments and supplements thereto. Section 1.05. "Financing Participants" shall mean Santa Margarita Water District, Moulton -Niguel Water District, East Orange County Water District and the City of Orange with respect to the 189 Financing and with respect to the 192 Financing means the City of Anaheim, East Orange County Water District, E1 Toro Water District, Irvine Ranch Water District, Los Alisos Water District, Moulton - Niguel Water District, the City of orange, Santa Margarita Water District and Yorba Linda Water District. Section 1.06. 11Initial Payments' shall mean all amounts payable by Metropolitan on the Closing Date pursuant to Section 6.01 of the Sale Agreement. Section 1.07. "Interim Licenses" shall mean the Interim License and Lease of Capacity in the Allen-MCColloch Pipeline between MWDOC and Coastal Municipal Water District dated June 30, 1992 and the Interim License and Lease of Capacity in the Allen-McColloch Pipeline between MWDOC and Capistrano Valley Water District dated June 30, 1992. Section 1.08. I'Letter of Credit Banks's shall mean National Westminster Bank PLC, San Francisco Overseas Branch, with respect to the 189 Financing and National Westminster Bank PLC, New York M 0 0 Branch, with respect to the f92 Financing, or their successors. Section 1.09. 'Master Leases" shall mean the FAP Master Lease and the Amended Master Lease as defined in Section 1.04 (b) and (f) hereof, respectively. Section 1.10. "Memorandum of Understanding's or "MOU" shall mean the Memorandum of Understanding concerning Deferral of Construction of the Diemer Pump Station and Temporary Modification of the Allen- McColloch Pipeline, between MWDOC, the Participants and TIC dated May, 1992. Section 1.11. ('Performance Period's shall mean the period of time commencing with the Closing Date and continuing until July 1, 2016 or such earlier date that the Sale Agreement is terminated due to a default by Metropolitan. Section 1.12. "Rent Payment Dateses means with respect to the 192 Financing those dates on which rental payments are due under the Amended Subleases. Section 1.13. ('Sale Proceeds" shall have the meaning given that term in Section 3.05 hereof. Section 1.14. "Subleases" shall mean the Allen-McColloch Pipeline Flow Augmentation Project Subleases dated as of August 1, 1989 between MWDOC and each of the Participants ("FAP Subleases") and the Amended and Restated Allen-McColloch Pipeline Subleases dated as of August 1, 1992 between MWDOC and each of the Participants ("Amended Subleases"), and, unless the context requires otherwise, the New Subleases (defined in Section 2.05). 7 0 0 Section 1.15. "Sublease Capacity" shall mean that capacity in each reach of the AMP and AMPFAP allocated to each Participant as shown on Exhibit "A". The Sublease Capacity reflects the 416 cfs of capacity which exists without construction of the Diemer Pump Station due to the deferral of that phase of the AMPFAP. Section 1.16. 11ST-21 Agreement'@ shall mean the South County Pump Station Oversizing Agreement dated November 1, 1989 by and among MWDOC, Santa Margarita Water District, Moulton -Niguel Water District, Trabuco Canyon Water District, Capistrano Valley Water District, Coastal Municipal Water District, Tri -Cities Municipal Water District and South Coast Water District. Section 1.17. "Term of this Agreement" shall mean from the Closing Date to the date that all of the obligations under the 189 Financing and 192 Financing have been paid and discharged and all Proceeds of Sale have been distributed hereunder and all amounts to be paid by the Participants and Leasing Agencies have been paid. If, for any reason, the sale transaction to Metropolitan fails to close, this Agreement shall be of no further force or effect. Section 1.18. IfTrusteell shall mean the current or substituted trustee under the 1989 Trust Agreement with respect to the 189 Financing as identified in Section 1.04 (a) hereof, or with respect to the 192 Financing the current or substituted trustee under the 1992 Trust Agreement as identified in Section 1.04 (e). 8 ARTICLE II CONTRACTUAL ARRANGEMENTS Section 2.01. Suspension of Diemer Agreements. Pursuant to the Sale Agreement, Metropolitan has assumed the obligations of MWDOC under the Master Leases subject to the continuing obligation of MWDOC to pay a portion of the outstanding debt service with payments received from the Participants and Leasing Agencies. In exchange for Metropolitan's payments under the Sale Agreement, Metropolitan will have the right to operate the AMP on a "utility basis" serving all Metropolitan members upon request without regard to the capacity rights of the Participants under the Subleases and the Leasing Agencies under the Interim Licenses. Notwithstanding Metropolitan's assumption of the obligations of the Master Leases and the abrogation of capacity rights, MWDOC and the Participants will remain obligated under the Master Leases and the Subleases and, in the event of a default in payment by Metropolitan, the payment obligations thereunder will be reinstated. MWDOC, MWDOCWFC and the Participants and the Leasing Agencies hereby agree that during the Performance Period and so long as the Sale Agreement has not been terminated due to default by Metropolitan, the rights, duties and obligations of the Participants under the Subleases and the Diemer Agreements and of the Leasing Agencies under the Interim Licenses, shall be suspended, except as otherwise provided herein. In consideration for the suspension of obligations under the Diemer Agreement 0 0 0 Subleases and Interim Licenses, Participants and the Leasing Agencies shall have the rights, duties and obligations set forth in this Agreement. Section 2.02. Conditional Release and waiver of Riaht_ia nnA The Participants hereby conditionally release their rights, title and interest in the AMP under the Subleases and the Diener Agreements and consent to the sale of the AMP to Metropolitan on the terms and conditions set forth herein and in the Sale Agreement, subject to Metropolitan's full and complete performance of the obligations of Metropolitan therein. So long as Metropolitan is not in default under the Sale Agreement, the release of the Participants' rights, title and interest under the Subleases and the Diemer Agreements shall become final and unconditional on the date that all principal and interest under both the '89 Financing and the '92 Financing are fully paid and discharged. Section 2.03. The Leasing Agencies have contributed to the oversizing of the ST -21 Pump Station pursuant to the South County Pump Station oversizing Agreement (ST -21 Agreement) and have paid consideration for the use of capacity in the AMP pursuant to the Interim Licenses (at the rate of $50,000.00 per cfs for the 1992-93 fiscal year and $25,000.00 per cfs for the 1993-94 fiscal year). Leasing Agencies acknowledge that the sale of the AMP to Metropolitan confers a substantial benefit upon them comparable to the benefit to the 10 0 0 Participants who initially invested in the AMP. As an inducement to the Participants to enter into the Sale Agreement with Metropolitan, the Leasing Agencies agree to release all rights and interest which they may have under the Interim Licenses and ST -21 Agreement and terminate the Interim Licenses and ST -21 Agreement effective as of the Closing Date. Santa Margarita Water District and Moulton Niguel Water District hereby agree to release all rights and interests which they may have under the ST -21 Agreement and agree to terminate the ST -21 Agreement effective as of the Closing Date. The amount contributed by the Leasing Agencies toward oversizing ST -21 shall be credited toward the Leasing Agencies acquisition of capacity pursuant to Section 3.02. The credit to the Leasing Agencies against the cost of purchase of capacity under Section 3.02 shall be deemed to satisfy any right to reimbursement of costs contributed to the oversizing of the ST -21 Pump Station. Upon the Closing Date, MWDOC and the Leasing Agencies will be deemed to have executed and entered into Subleases pursuant to Section 2.05. Section 2.04. Release of Funds Denosited under Memorandum of Under the Memorandum of Understanding re Deferral of Diener Pump Station ("MOU"), the Participants agreed to defer construction of the Diemer Pump Station phase of the FAP in contemplation of a sale of the AMP to Metropolitan. Under the MOU, funds to construct the Diemer Pump Station were retained in the Construction Fund from proceeds of the 189 Financing and in the form of cash, letters of 11 0 0 credit or securities deposited by Cash Participants, to be used to complete the Diemer Pump Station in the event the sale to Metropolitan was abandoned or demand on the AMP required completion prior to sale. The terms of the Sale Agreement require Metropolitan to assume the obligation to augment the AMP as needed at Metropolitan's cost, therefore, the retention of funds by MWDOC for construction of the Diener Pump Station is no longer necessary. The remaining proceeds of the 189 Financing are restricted to use either to construct improvements to the AMP or to retire debt and cannot be disbursed to the Financing Participants as cash. The remaining proceeds of the 189 Financing in the Construction Fund will be disbursed pursuant to invoices submitted by Metropolitan for those restricted uses under the Sale Agreement or applied by MWDOC to prepay Certificates of Participation under the 189 Financing and the Financing Participants' obligations will be adjusted as set forth in Section 3.03 hereof. Within thirty (30) days after the Closing Date, the remaining cash, letter of credit and securities deposited with MWDOC by Cash Participants, along with interest earnings on cash deposits, will be released to the respective Cash Participants to the extent not expended for their share of the costs of the FAP. The amount of cash and/or the value of securities refunded shall not be counted toward those Participants' investment in determining the percentage of investment pursuant to Section 3.02. 12 Section 2.05. Reinstatement of certain Agreements upon Default by Metropolitan. If, for any reason, Metropolitan defaults in the payment of any amounts due under the Sale Agreement or defaults in the performance of any obligation under the 189 Financing or 192 Financing and fails to cure said default under the terms of the Sale Agreement, and MWDOC steps up to make the payments to cure or prevent a default under the 189 Financing or 192 Financing, then the Subleases shall be reinstated with Adjusted Capacities as provided herein and all obligations of the Participants thereunder, including the full rental payments, will be revived and will bind each Participant and be enforceable to the same extent as prior to execution of this Agreement, except that each Participant shall be relieved of those rental payments and additional rent to the extent that such payments were made by Metropolitan while Metropolitan was performing under the Sale Agreement. In the event of default and reinstatement of the Subleases, each Participant's Sublease Capacity shall be adjusted to reflect the Adjusted Capacities provided in Section 3.01 hereof. As of the effective date of this Agreement, the Leasing Agencies shall be deemed to have entered into new subleases on the same terms and in the same form as the Subleases with the existing Participants for their Adjusted Capacity and at a rent calculated in the same manner ("New Subleases"). The New Subleases shall be suspended subject to reinstatement in the event Metropolitan defaults under the Sale Agreement in the same manner as the existing Subleases. The balance of payments due to and from Participants and Leasing 13 0 0 Agencies for capacities transferred pursuant to Section 3.02 shall be calculated as of the time of a default and shall be paid separately from the rent obligations under the reinstated Subleases. The reinstatement of the Subleases and the New Subleases with the Leasing Agencies shall relate back to the date of the act, omission or failure on the part of Metropolitan which constituted the default, notwithstanding that the time for Metropolitan to cure the default had not expired. The Participants and Leasing Agencies shall be responsible for all costs incurred by MWDOC and MWDOCWFC in curing any defaults of Metropolitan under the 189 Financing or 192 Financing and any other costs incurred as a result of Metropolitan's default as additional rent under the Subleases, including the costs of retaking possession of the AMP and restoring it to independent operation, however, the retaking of possession of the AMP by MWDOC shall not be a condition of the revival of the Participants' obligations hereunder. The Participants and Leasing Agencies shall be entitled to an offset or reimbursement to the extent such costs are recovered pursuant to Section 4.03. ARTICLE III ALLOCATION OF PROCEEDS OF SALE TO METROPOLITAN Section 3.01. Adjustment of Capacities. Each of the Participants and each of the Leasing Agencies acknowledges that because Metropolitan has committed to meet all demands along the AMP, the benefit from the sale is proportional to each agency's future demand for capacity in the AMP. The 14 0 0 Participants and the Leasing Agencies agree to reallocate the existing Sublease Capacities of the AMP for the purpose of establishing a basis for the allocation of the proceeds of sale of the AMP to Metropolitan. Exhibit "A" reflects the Sublease Capacity ownership in the AMP and Exhibit "B" reflects the reallocated capacities based upon projected future needs. The Parties agree to an adjustment of capacities by the acquisition and transfer of capacity to place each Participant and Leasing Agency in the reallocated capacity position indicated on Exhibit "B". The reallocated capacity ownerships indicated on Exhibit "B" shall hereinafter be referred to as the "Adjusted Capacities". section 3.02. Payment for Capacity Transferred. The Participants and Leasing Agencies who must acquire additional capacity to bring them up to their Adjusted Capacity shall pay for said additional capacity at the current value thereof on the basis of replacement cost less depreciation ("RCLD") for each reach in which capacity is acquired (RCLD values as of 1993 are contained in Exhibit "B"). Participants who will dispose of excess capacity in order to reduce their capacity ownership to the level indicated in the Adjusted Capacities will receive compensation for capacity transferred at current value based upon RCLD. To the extent possible, payments for the reallocation of capacity shall be made by crediting or charging each Participant's share of the Sale Proceeds (as defined in Section 3.05). For this purpose, the RCLD value of each Participant's and Leasing Agency's 15 0 0 Adjusted Capacity shall be increased by the RCLD of capacity transferred or reduced by the RCLD of capacity acquired to determine their Revised Percentage of Investment ("RPOI") as shown on Exhibit "C" hereto which shall be the basis for distribution of Sale Proceeds. To the extent a Leasing Agency's payment obligation hereunder exceeds the present value of its share of the Metropolitan payments based upon the Adjusted Capacities, the Leasing Agency shall elect to either (1) make payments based upon a negative RPOI over the course of Metropolitan's payments under the Sale Agreement, or (2), within sixty (60) days after the Closing Date, make a one-time full payment to MWDOC of its net negative RPOI payment obligation in the amount shown in Column 7 of Exhibit "C" to this Agreement. Each Participant or Leasing Aqency with a negative RPOI shall notify MWDOC of the payment option it has elected within five (5) days after closing. The payments hereunder shall be in addition to each Leasing Agency's share of the Negotiation Costs as calculated pursuant to Section 3.05, which shall be paid within sixty (60) days after the Closing Date under either option. The election to make payment of a negative RPOI obligation in one payment shall not relieve such Leasing Agency of the obligation to make other payments as provided under this Agreement. Section 3.03. Metropolitan. The remaining proceeds of the 189 Financing in the Construction Fund will be disbursed pursuant to invoices submitted 16 0 0 by Metropolitan under the Sale Agreement for construction of improvements to the AMP or applied by MWDOC to retire debt under the 189 Financing. Because certain phases of the FAP were not constructed, the relative obligations of the Financing Participants under the 189 Financing will not reflect their proportionate share of the costs of those facilities actually constructed. In order to correct this situation, the proceeds of the 189 Financing remaining in the Construction Fund on the Closing Date will be credited to those Financing Participants under the 189 Financing according to their share of the unspent funds after allocation of the cost of facilities actually constructed. The remaining obligations of the Financing Participants under the 189 Financing shall be reduced by each Participant's share of the remaining 189 Financing proceeds transferred to Metropolitan to arrive at each Participant's "Adjusted 189 Obligation". So long as Metropolitan is not in default under the Sale Agreement, payment obligations of the Participants for the 189 Financing pursuant to Section 5.01 herein shall be calculated on the Adjusted 169 obligation instead of the payments calculated under the 189 Subleases. In the event the Subleases are reinstated due to a default by Metropolitan, the Financing Participants under the 189 Financing will be obligated for full debt service payments. Any payments due for capacity transferred and the credit for proceeds remaining in the Construction Fund for the 189 Financing shall be paid separately rather than offset against 189 Financing Payments. 17 Section 3.04. Obligation to Continue Debt Service Payments. Each Financing Participant under the 192 Financing shall make periodic payments calculated as the full amount of that Participant's debt service payment obligation under the 192 Financing. In addition, each Financing Participant under the 189 Financing shall make an annual payment on or before July 1 of each year calculated on the basis of the Adjusted 189 Obligation at the actual interest rate applicable to the variable rate Certificates of Participation under the '89 Financing. These payments shall be referred to collectively as "Debt Service Payments". Debt Service Payments for the 192 Financing shall be made on or before the Rent Payment Dates provided in the Subleases. If the Closing Date occurs after the payment of the July 1, 1994 rent payment by the Financing Participant under the 189 Financing, the difference between the payment actually made and the Adjusted 189 Debt Service Payment will be reimbursed to the 189 Financing Participants from Metropolitan's Initial Payment prior to distribution pursuant to Section 3.05. MWDOC shall apply such Debt Service Payments toward all principal and interest payments and other financing costs as required under the Trust Agreement and Reimbursement Agreement under the 192 Financing pursuant to the Sale Agreement. Section 3.05. Allocation of Sale Proceeds. The proceeds of the sale of the AMP to Metropolitan ("Sale Proceeds") shall be defined as (a) the Initial Payment as defined in the Sale Agreement, less any reimbursement pursuant to Section 18 3.04; (b) the annual Installment Payments of $4.6 Million per year paid by Metropolitan; (c) the balance of all Debt Service Payments for both the 189 Financing and 192 Financing held by MWDOC after payment of all amounts due under the 192 Financing pursuant to Section 3.04; and (d) interest earnings on the foregoing amounts (a), (b), and (c) prior to disbursement thereof by MWDOC. Within forty-five (45) days after receipt of the Initial Payment from Metropolitan and within forty-five (45) days after receipt of any payment from Metropolitan thereafter until July 1, 2016, or until all amounts due by and between the Participants and the Leasing Agencies hereunder have been paid and the Sale Proceeds distributed, MWDOC shall allocate all Sale Proceeds received by MWDOC among the Participants and Leasing Agencies with positive RPOIs in proportion to their RPOI. With respect to those Participants and/or Leasing Agencies that have elected, under Section 3.02, to make payments based upon a negative RPOI over the course of Metropolitan's payments under the Sale Agreement, payment shall be made to MWDOC within thirty (30) days after receipt of an invoice from MWDOC specifying the amount of such payment, provided that, not less than sixty (60) days prior to the due date, MWDOC shall give written notice to each Participant or Leasing Agency electing to make such payments of the estimated amount of such payment. The costs advanced by MWDOC in connection with the negotiation of the sale of the AMP to Metropolitan, including, but not limited to, the negotiation and drafting of the Sale Agreement, this YV7 0 0 Agreement, and all other documents connected therewith, the services of consultants and staff time ("Negotiation Costs") shall be allocated among the Participants and Leasing Agencies on the basis of their cfs-foot ownership under the Adjusted Capacities (as shown on Exhibit "B"). At the Closing Date, upon receipt of the Initial Payment from Metropolitan, MWDOC shall determine the total Negotiation Costs to be reimbursed to MWDOC and shall calculate each Participant's and Leasing Agency's share of said Negotiation Costs. MWDOC shall deduct each Participant's and Leasing Agency's share of the Negotiation Costs from its share of the Initial Payment prior to distribution or, with respect to those Leasing Agencies with a negative RPOI, shall either add such Participant's or Leasing Agency's share of the Negotiation Costs to its lump -sum payment under Section 3.02 or invoice the Participant or Leasing Agency separately for such share, of the Negotiation Costs which will be paid within sixty (60) days of such invoice. In the event all of the Negotiation Costs to be reimbursed to MWDOC have not been determined at the time of the first distribution of Sale Proceeds, deductions and invoices for the remaining Negotiation Costs will be made at the time of subsequent distributions of sale proceeds. Section 3.06. Readjustment of Capacities. During the term of this Agreement and until such time as Metropolitan augments the capacity of the AMP in any manner, including, but not limited to, construction of the Diemer Pump Station or other capital facility, MWDOC shall monitor each 20 Participant's and Leasing Agency's usage. At any time prior to augmentation of capacity in the AMP by Metropolitan, any Participant or Leasing Agency whose peak day flow exceeds its Adjusted Capacity, shall be required to pay for an additional full cubic foot per second (cfs) of capacity for the amount by which it exceeded its Adjusted Capacity rounded to the nearest cfs. For purposes of determining whether a Participant or Leasing Agency has exceeded its capacity, MWDOC shall not consider peak flows resulting from emergency situations, inadvertent flow changes or operational adjustments required by Metropolitan or other agencies. The Peak Flow shall be defined as the most recent three- year moving average peak day flow in each reach of the AMP. Calculation of payment for use of additional capacity will be made in the same manner as Section 3.02, except that the price of capacity shall be escalated from 1993 to the year in which the readjustment is made at the annual interest rate of 4.0% and payment shall be made in cash at the time of the readjustment. The readjustment of capacities hereunder and the payments shall not affect the Participants' and Leasing Agencies' RPOI or Debt Service Payments as provided herein. Payment for additional capacity purchases and the readjustment of capacities shall be shared among Participants and Leasing Agencies using less than their Adjusted Capacities in proportion to unused capacity calculated on the most recent three-year moving average of actual flows compared to the Adjusted Capacities on a cfs-foot weighting system. Notwithstanding the reallocation provided herein, any 21 0 0 Participant or Leasing Agency may elect to forego any portion of the readjustment payment and retain the full amount of its Adjusted Capacity allocation. After Metropolitan completes any project which augments the capacity of the AMP in any amount, no further readjustment of capacity shall be made. ARTICLE IV OBLIGATIONS OF MWDOC Section 4.01 Administration of Proceeds Allocation. MWDOC shall be responsible for and shall perform or provide for the performance of all functions necessary to administer the collection and allocation of funds under this Agreement. Said functions shall include: (a) Calculation of all amounts due from each Financing Participant at each rental payment date and notification of each Financing Participant of the amount and payment instructions thereof at least ten (10) days prior to the payment date. (b) Receipt of each installment payment from Metropolitan to be paid to MWDOC. (c) Calculation and distribution of each Participant's and Leasing Agency's share of Sale Proceeds based upon their RPOI and collection of the payments due from those Participants and Leasing Agencies with negative RPOIs. (d) Monitor peak day usage as provided in Section 3.06 and calculate readjusted capacities, and payments due to and from each Participant and Leasing Agency for the readjustment of 22 0 0 capacity. (e) Provide for the performance of an annual audit of all funds received and distributed under this Agreement (which may be included in MWDOC's annual audit). (f) Calculate, and assess the Participants and Leasing Agencies for, the respective share of Administration Costs (as defined in Section 5.03), repair costs pursuant to Section 5.04 and Right -of -Way Clean-up Costs pursuant to Section 5.05. (g) Notify non -defaulting Participants and Leasing Agencies in the event of a step-up obligation under Section 5.07. Section 4.02 Performance of Duties Under Sale Agreement. MWDOC shall perform all obligations and covenants required to be performed by MWDOC under the Sale Agreement with Metropolitan. Section 4.03 Enforcement of Sale Agreement. (a) MWDOC shall enforce, on behalf of the Participants and Leasing Agencies, all obligations, covenants and duties of Metropolitan under the Sale Agreement, including, but not limited to: (i) Metropolitan's payment obligations. (ii) Metropolitan's obligation to meet minimum Hydraulic Grade Lines as specified in Sections 5.04 and 5.05 of the Sale Agreement. (iii) Metropolitan's obligation to monitor and meet demands pursuant to Section 5.08 of the Sale Agreement. (iv) Metropolitan's obligation to permit wheeling of water pursuant to Section 5.11 of the Sale Agreement. 23 0 0 (v) Metropolitan's obligation to pay East Orange County Water District's pumping costs pursuant to Section 5.07(b) of the Sale Agreement. (b) Any and all costs reasonably incurred by MWDOC in enforcing any of Metropolitan's obligations, duties and covenants under the Sale Agreement shall be deemed Administration Costs for which the Participants and Leasing Agencies shall be responsible under Section 5.03 of this Agreement. (c) In the event non -judicial efforts to secure Metropolitan compliance with the Sale Agreement are unsuccessful or would be unavailing, MWDOC shall pursue legal or equitable remedies against Metropolitan as provided in the Sale Agreement. MWDOC shall commence legal proceedings to enforce the Sale Agreement upon approval of all of the Participants and Leasing Agencies or upon the request of one or more of the Participants and Leasing Agencies, provided that if legal action is instituted at the request of fewer than all of the Participants and Leasing Agencies, the costs of suit, including attorneys' fees incurred by MWDOC to bring and prosecute the action or assessed against MWDOC by the court, shall be allocated solely among those Participants and Leasing Agencies who requested the action in accordance with the cfs-foot weighted allocation method (Section 5.03), subject to reimbursement out of any recovery of damages, costs and/or fees awarded to MWDOC in the action. If projected litigation costs are expected to exceed 24 0 0 budgeted amounts therefor in the administrative budget, MWDOC may amend the administrative budget subject to the approval of the Participants and Leasing Agencies who requested the legal action, which approval shall not be unreasonably withheld. Such Participants and Leasing Agencies shall increase their deposits pursuant to Section 5.03. (d) If MWDOC does not prevail in an action brought pursuant to this Section, MWDOC shall be entitled to reimbursement from the Participants and Leasing Agencies who requested the legal action of MWDOC's own litigation costs and costs awarded against it allocated on a cfs-foot weighted basis. To the extent that Metropolitan's covenants, duties and obligations under the Sale Agreement continue after the end of the term of the Sale Agreement, MWDOC's obligation to enforce those covenants, duties and obligations of Metropolitan shall survive the term of this Agreement. Section 4.04 Enforcement of Participants' and Leasing Agencies' Obligations. MWDOC shall be responsible for the enforcement of all of the Participants' and Leasing Agencies' obligations, covenants and duties under this Agreement. Notwithstanding MWDOC's obligation to enforce this Agreement, in the event of a default by one or more Participant or Leasing Agency in any payment hereunder and until said default is cured, MWDOC shall apply the funds which it has received from all non -defaulting Participants and Leasing Agencies and from Metropolitan first to perform the obligations and make the payments required under the Sale Agreement, second to provide 25 0 0 sufficient funds for MWDOC's administrative budget, and third, to distribute any remaining funds to the Participants and Leasing Agencies pursuant to Section 3.05 hereof. In the event the Debt Service Payments from the non -defaulting Participants and payments from Metropolitan are insufficient to meet the obligations under the Sale Agreement and MWDOC's administrative budget then the non - defaulting Participants and Leasing Agencies shall be assessed, pursuant to Section 5.07, to pay the deficiency in proportion to their Adjusted Capacity on a cfs-foot basis as shown on Exhibit "Bn section 4.05 Conduct of Participants' and Leasing Agencies' Meetings. Each Participant and Leasing Agency shall designate a representative to meet with representatives of MWDOC and Metropolitan for the purpose of reviewing actual usage and projected demand for deliveries from the AMP and to evaluate the need to augment the capacity of the AMP. MWDOC shall be responsible for coordinating and calling said meetings pursuant to Section 5.08 of the Sale Agreement. Section 4.06 Authority to Administer Debt Service under Contract with Metropolitan. Metropolitan has sought to enter into an agreement with MWDOC to have MWDOC act as Metropolitan's agent for the purpose of administering the debt service under the 189 Financing and the 192 Financing. The Participants and Leasing agencies hereby consent to MWDOC entering into such agreement and acting as agent for Metropolitan for that purpose. W 0 ARTICLE V 0 OBLIGATION OF PARTICIPANTS AND LEASING AGENCIES Section 5.01. Continuing Payment Obligations of Particivants and Leasing Agencies. The Purchase Price to be paid by Metropolitan under the Sale Agreement is less than the amount necessary to pay the full debt service and associated costs of the 189 Financing and 192 Financing and to reimburse a proportionate amount of the investment of those Participants who prepaid rent and Leasing Agencies who contributed cash. As a result, continuing payments are necessary from the Financing Participants and those Participants and Leasing Agencies acquiring additional capacity, to enable MWDOC to make the net debt service payments and pay financing costs and to make the payments under the allocation of the Sale Proceeds. Because the existing 189 Financing 192 Financing will remain in place and MWDOC will be liable for payment in the event of a default by Metropolitan, sufficient funds must be budgeted by each Financing Participant and must be available to make these payments. In order to meet these requirements, the Participants and the Leasing Agencies shall make the following payments: (a) Each Financing Participant under the 189 Financing shall pay principal and interest payments based upon their Adjusted 189 Obligation under Section 3.03 hereof. Payments shall be made on the same dates and in the same manner as called for under the FAP Subleases, except that payment shall be made to MWDOC rather than to the Trustee or Letter of Credit Bank. MWDOC shall notify each Financing Participant under the 189 27 Financing of the amount of each payment at least five (5) days prior to each due date. (b) Each Financing Participant under the 192 Financing shall continue to pay the full rent and additional rent payments called for in the Amended Subleases. Payment shall be made on the same dates and in the same manner as called for under the Amended Subleases as directed by MWDOC. MWDOC shall notify each Financing Participant under the 192 Financing of the amount of each payment at least five (5) days prior to the due date. (c) Each Participant or Leasing Agency with a negative RPOI which has elected, Under Section 3.02, to make a lump sum payment shall, within sixty (60) days after the Closing Date, pay to MWDOC the amount set forth in Column 7 of Exhibit "C" to this Agreement. Each Participant or Leasing Agency, which has elected, under Section 3.02, to make payments based on its negative RPOI, shall pay to MWDOC the net payment for capacity acquired, calculated as the total Sale Proceeds to be distributed on the next date of distribution multiplied by that Participant's or Leasing Agency's negative RPOI. Each of the payments required hereunder shall be paid in lawful currency of the United States of America and shall be paid on or before the date due in such a manner that the funds are immediately available on the due date for investment or other use by MWDOC. 28 Section 5.02. Obligation to Budget for Full Debt Service. Each Financing Participant shall remain obligated to include the full unadjusted rental payment for which it is obligated under the 189 Financing and the 192 Financing in its annual budget and make annual appropriations therefor and provide MWDOC with the appropriate certifications in accordance with Section 3.05 of the FAP Subleases and the Amended Subleases. Section 5.03. Expenses of Administration. In addition to the payment obligations under Section 5.01, each Participant and Leasing Agency shall pay a proportionate share of MWDOC's expenses of administering this Agreement and performing the obligations hereunder, including, but not limited to, staff time, attorneys' fees, fees and expenses of auditors and accountants and the administrative costs of MWDOCWFC ("Administration Costs"). Prior to May 1 of each year during the Term of this Agreement, MWDOC shall prepare a budget estimating all Administration Costs subject to the review and approval of the Participants and Leasing Agencies which approval shall not be unreasonably withheld. Each Participant and Leasing Agency shall deposit an amount equal to its proportionate share of such budgeted Administration Costs calculated on the basis of its cfs-foot ownership under the Adjusted Capacities (Exhibit "B"). If actual Administration Costs exceed the budgeted amount, MWDOC shall prepare and the Participants and Leasing Agencies shall reasonably approve a revised budget and shall increase their deposits by their proportionate share of the amount estimated by MWDOC in the revised M 0 0 budget to be needed to complete the fiscal year. If the amount deposited exceeds actual Administration Costs for a fiscal year, the balance shall be carried over to the next fiscal year to reduce the amount required to be deposited. Any balance remaining at the end of the Term of this Agreement shall be reimbursed to the Participants and Leasing Agencies in proportion to their deposits. Section 5.09. Obligation for Repair Costs. The Sale Agreement with Metropolitan provides for a sharing of expenses to repair certain defects in the AMP and remedy certain environmental conditions discovered prior to April 1, 1996 and to share the cost of certain environmental claims. To the extent MWDOC is obligated to pay for said repair and remediation costs or claims, each Participant and Leasing Agency shall be jointly liable for its proportionate share of the cost thereof based upon that Participant's or Leasing Agency's proportionate interest under the Adjusted Capacities in the AMP reach or other AMP facility to which the repair or remediation is made or the portion of the right-of- way or other property which is the subject of the environmental claim. The initial $500,000.00 of repair and remediation costs to be borne by Metropolitan shall be allocated among all the items of repair remediation or damages in proportion to the cost of each repair as a percentage of the total. Section 5.05. Right -of -Way Cleanup. The Sale Agreement identifies certain conditions of the AMP Right -of -Way associated easements, licenses and permits which Metropolitan requires to be modified, acquired or transferred in 0 0 connection with Metropolitan's acquisition of the AMP ("Right -of - Way Clean-up"). To the extent the Right -of -Way Clean-up involves the conveyance of an access easement over real property owned by a Participant or Leasing Agency or a license to use real property or an interest therein owned by a Participant or Leasing Agency for use in operating and maintaining the AMP, and such use is consistent with and does not expand a use historically permitted to MWDOC for such purpose, the Participant or Leasing Agency shall grant such easement or license without cost, in a form acceptable to Metropolitan. All costs incurred by MWDOC directly or reimbursed by MWDOC to Metropolitan to accomplish the Right -of -Way Clean-up shall be reimbursed to MWDOC by the Participants and Leasing Agencies which have capacity in the affected reach or other facility in the same manner as repair costs. Section 5.06. Payment for Water. After sale of the AMP to Metropolitan, each Participant and Teasing Agency within MWDOC, to which water is delivered through a connection to the AMP or through a connection to the SCP, will be liable for payment for all quantities of water delivered subject to the price, rates, classifications and conditions which MWDOC establishes from time to time for such water according to the use to be made of such water. Delivery will occur as the water is discharged from each connection and, thereafter, such water will be the property of the Participant or Leasing Agency for which the connection is designated. All deliveries will be metered by 31 0 0 Metropolitan, and monthly statements will be presented by MWDOC to each such Participant and Leasing Agency. Such statements will be due and payable within the time and according to the conditions established by MWDOC. Each Participant and Leasing Agency within MWDOC agrees to comply with each and all provisions of MWDOC's ordinances, water rates and policies which apply to the delivery of such water. These obligations will survive the Term of this Agreement. Water delivered through Coastal Municipal Water District connections will be billed by Coastal Municipal Water District and subject to ordinances, water rates and policies established by Coastal Municipal Water District. At such time as Metropolitan takes over the water billing functions for the AMP and South County Pipeline service connections, water delivered to the City of Anaheim and Coastal Municipal Water District through their connections to the AMP will be billed by Metropolitan directly to Anaheim and Coastal Municipal Water District, respectively. The variable cost of the ST -21 operations will be allocated and invoiced to the Participants and Leasing Agencies who take water below the ST -21 Facility. Section 5.07. Step up in Event of Default by Participant or Leasing Agency. In the event a Participant or Leasing Agency defaults in any of the payments required to be made hereunder and does not cure said default within the period of thirty (30) days allowed under Section 6.02 or such additional time as may be permitted by MWDOC, then the non -defaulting Participants and Leasing Agencies shall 32 contribute proportionately on the same cfs-foot basis as is used to allocate Administration Costs under Section 5.03. Said payments shall be made within thirty (30) days after written notice of the default and the amount due from each non -defaulting Participant and Leasing Agency is given by MWDOC. For purposes of this section, MWDOC shall give separate notice directly to Tri -Cities Municipal Water District and South Coast Water District specifying their proportionate share of the Coastal Municipal Water District payment. The payments will be applied in the same manner and for the same purposes for which the defaulted payment would have been applied. Notwithstanding the step-up obligation, each non -defaulting Participant and Leasing Agency shall be entitled to reimbursement of amounts contributed to the extent the defaulting Participant or Leasing Agency cures the default, or to the extent that the default is covered by rental interruption insurance, or to the extent that damages are recovered in a legal action against the defaulting Participant or Leasing Agency, except that any and all expenses incurred in effecting the recovery shall first be deducted from the recovered amount. ARTICLE VI. DEFAULTS AND REMEDIES Section 6.01. Events of Default. A Participant or Leasing Agency shall be in default under this Agreement in any of the following events: Ow 0 0 (a) The Participant or Leasing Agency shall fail to pay, when due, any payment due hereunder, time being expressly declared to be of the essence of this Agreement. (b) The Participant or Leasing Agency shall fail to keep, observe or perform any other term, covenant or condition of this Agreement to be kept or performed by the Participant or Leasing Agency. (c) The Participant or Leasing Agency shall file any petition or institute any proceeding in bankruptcy or is declared or adjudged bankrupt or insolvent under any act or acts, state or federal dealing with bankruptcy or insolvency, or if a receiver of the business, or of the property or assets of the Participant or Leasing Agency shall be appointed by any court, or if the Participant or Leasing Agency shall make a general assignment for the benefit of its creditors. Section 6.02. Cure of Defaults. A Participant or Leasing Agency who is in default under Section 6.01 (a) or (b), supra, may cure said default within thirty (30) days after written notice from MWDOC specifying the nature and occurrence of such default by payment of all amounts due and performance or correction of all failures under any term, covenant and condition, and the payment of all costs, penalties, interest and expense incurred by MWDOC as a result of such default, including the loss of interest on MWDOC funds advanced to prevent default under the Sale Agreement. (Payment may be made under protest pursuant to Section 6.05 hereof.) 34 0 0 Section 6.03. Remedies. If any Participant or Leasing Agency shall remain in default and shall not cure a default within thirty (30) days after written notice from MWDOC to do so, or after such additional time as may be allowed by MWDOC, then MWDOC shall have all rights and remedies available at law. In addition, MWDOC may exercise any or all of the following remedies: (a) MWDOC shall have the right to terminate water deliveries to any Participant or Leasing Agency through a connection to the AMP or to the South County Pipeline so long as that Participant or Leasing Agency remains in default, until the end of the Term of this Agreement. Service shall not be resumed unless and until all amounts due from the defaulting party are paid, including all costs and expenses and interest to non -defaulting parties who made payments under the step-up provisions of Section 5.07. (b) MWDOC shall have the right to withhold any and all distributions of Sale Proceeds under 3.05 to a Participant or Leasing Agency which is in default, and to apply said defaulting Participant's or Leasing Agency's share of the Sale Proceeds toward any defaulted payments due hereunder. Exercise of the remedy of withholding Sale Proceeds shall not be deemed or constitute a waiver of other remedies, nor an accord and satisfaction of amounts due from the defaulting Participant or Leasing Agency. 35 0 0 (c) MWDOC may accelerate the remaining payments due hereunder to the end of the Term of this Agreement, including a reasonable estimate of administrative costs and other unliquidated or contingent obligations and may bring an action to recover the entire amount at any time after the default. (d) The obligations of the Participants and Leasing Agencies hereunder shall be specifically enforceable by action in mandamus. The Participants and Leasing Agencies hereby waive any and all claims for damages caused or which may be caused by MWDOC in terminating water service pursuant to Subsection 6.03 (a) provided that notice of default was properly given by MWDOC in accordance with this Agreement. Each and all of the remedies of MWDOC hereunder or pursuant to any law existing or hereafter enacted are cumulative and the exercise of any remedy hereunder shall not impact the right of MWDOC to exercise any other remedy. section 6.04. Remedies of the Participants and Leasing Agencies. In the event MWDOC is in default under this Agreement and remains in default and fails to cure the default within a reasonable time after notice from any Participant or Leasing Agency to do so, then each Participant or Leasing Agency shall have the following remedies in addition to all rights and remedies available at law: (a) The Participants and Leasing Agencies shall have the right to bring an action to compel MWDOC to account for all 36 E 0 funds received from Metropolitan, the Participants and Leasing Agencies, interest on investments of such funds, insurance proceeds and any other sources hereunder, as a trustee. (b) The Participants and Leasing Agencies shall have the right to specific performance of MWDOC's obligations under Section 4.03 and 4.04 to enforce Metropolitan's obligations under the Sale Agreement and the Participants and Leasing Agencies obligations under this Agreement. The Participants and Leasing Agencies shall not have the right to suspend or withhold any payment due hereunder notwithstanding that MWDOC is in default, however such payments may be made under protest. MWDOC shall be entitled to reasonable attorney's fees and costs if it prevails in any action brought pursuant to this section. MWDOC shall not be entitled to recover its attorney's fees and costs or fees, costs or damages awarded against it as Administration Costs under Section 5.03 if MWDOC does not prevail in an action brought under this Section. Section 6.05. obligation to Continue Payments. In the event of a dispute hereunder, each Participant and Leasing Agency shall continue to make full payments hereunder as directed by MWDOC and MWDOC shall continue to provide for the payments to be made under the 189 Financing and the 192 Financing to prevent any default from occurring thereunder. Said payments may be made under protest by notice to MWDOC, in which case the Participant or Leasing Agency reserve all rights to contest its 37 0 9 payment obligation or the allocation of Sale Proceeds. In the event full payment is made under protest, MWDOC shall not exercise any remedies under Section 6.03. After all debt service and any other payments required under the Sale Agreement are made, MWDOC shall hold all remaining funds received by MWDOC concerning which a dispute arises until such time as the dispute is resolved by agreement, mediation, arbitration or by a court of competent jurisdiction, and then shall distribute said funds in accordance with such resolution. Section 6.06. Santa Margarita Water District Obligation to Terminate Water Service. MWDOC's ability under Section 6.03(a) to terminate water service to any Participant or Leasing Agency which is in default pursuant to Section 6.01 hereof through connections on the AMP or through connections controlled by Metropolitan on the South County Pipeline are secured by agreement with Metropolitan under the Sale Agreement. With respect to connections on the South County Pipeline which are controlled by Santa Margarita Water District, and through which water is delivered to any Participant or Leasing Agency, including to Santa Margarita Water District, Santa Margarita Water District agrees and covenants to terminate deliveries through such connection upon written demand by MWDOC provided that such written demand includes a certification by MWDOC that notice of default has been given pursuant to Section 6.02 and the time to cure has expired without such default being cured. Such demand to terminate service shall be in writing and shall specify that the Participant or Leasing Agency to which service is 38 terminated is in default under this Agreement. MWDOC shall indemnify Santa Margarita Water District against any claims or actions by other Participants or Leasing Agencies arising out of Santa Margarita Water District's compliance with this Section 6.06. ARTICLE VII. INDEMNIFICATION Section 7.01. Indemnification. The Participants and the Leasing Agencies shall indemnify and hold MWDOC, and MWDOCWFC and their officers, agents and employees harmless from any and all costs, expenses, damages, losses, claims and actions of third parties arising out of or in connection with MWDOC's performance of the terms of this Agreement, including all court costs and reasonable attorneys' fees, except to the extent such costs, expenses, damages, losses, claims or action arise solely out of the intentional misconduct or gross negligence of the party seeking indemnification. MWDOC and MWDOCWFC shall indemnify and hold each Participant and Leasing Agency and their officers, agents and employees harmless from any and all costs, expenses, damages, losses, claims and actions of third parties arising solely out of or in connection with the intentional misconduct or gross negligence of MWDOC or MWDOCWFC respectively in the performance of the terms of this Agreement, including all court costs and reasonable attorney's fees. 39 0 0 ARTICLE VIII. MISCELLANEOUS Section 8.01. Due Authorization. The person executing this Agreement on behalf of MWDOC, MWDOCWFC, each Participant and each Leasing Agency represents that the execution, delivery and performance of this Agreement has been duly authorized by the Board of Directors or City Council of such party and that he or she is duly authorized to execute this Agreement on that party's behalf. Section 8.02. Effective Date. This Agreement shall become effective on the "Closing Date" as defined in the Sale Agreement. Section 8.03. Tax Covenants. Neither MWDOC nor any Participant nor any Leasing Agency shall take or omit to take any action, which action taken or omission will cause any obligations issued pursuant to the 189 Financing or the '92 Financing to be "arbitrage bonds" by reason of Section 148 of the Internal Revenue Code of 1986 and regulations thereunder (collectively, the "Code") or "federally guaranteed" under Section 149(b) of the Code or "private activity bonds" as described in Section 141 of the Code. Except as provided herein relative to adjustment of capacities and readjustment of capacities (Article III), no interest of MWDOC nor any Participant nor any Leasing Agency under this Agreement or in the System or Assets (as defined in the Sale Agreement) shall be sold, leased, disposed of or otherwise transferred or conveyed 40 0 0 unless, prior to the transfer of conveyance, there shall have been obtained an opinion of nationally recognized bond counsel that such transfer or conveyance will not have any of the effects described in the foregoing paragraph. Any transfer or conveyance or attempted transfer or conveyance in violation of the requirements of this paragraph shall be null, void and of no effect, and the interest shall be restored to the conveying or transferring party, or, if restoration is not possible, shall be distributed among the remaining parties in proportion to their Adjusted Capacities. Section 8.04. Notices. All notices under this Agreement by any party to the other party or parties shall be in writing (unless otherwise specified herein) and shall be sufficiently given and served upon the other parties, if delivered by hand directly to the offices named below or sent by United States first-class mail, postage prepaid and addressed, or sent by telecopier or facsimile transmission, as follows: If to MWDOC or MWDOCWFC: Municipal Water District of Orange County P. O. Box 20895 Fountain Valley, CA 92827 ATTN: General Manager Telephone 714-963-3058 Facsimile 714-964-9389 If to the Participants: City of Anaheim Water Engineering Mgr. P.O. Box 3222 Anaheim, CA 92803 41 0 Irvine Ranch Water District ATTN: General Manager P.O. Box 57000 Irvine, CA 92619-7000 Santiago County water District ATTN: General Manager P.O. Box 575 Silverado, CA 92676 Yorba Linda Water District ATTN: General Manager P.O. Box 309 Yorba Linda, CA 92686 East Orange County Water District ATTN: General Manager 185 N. McPherson Road Orange, CA 92669 Los Alisos Water District ATTN: General Manager P.O. Box 699 Lake Forest, CA 92630 City of Orange Water Superintendent P.O. Box 449 Orange, CA 92666 E1 Toro Water District ATTN: General Manager P.O. Box 4000 Laguna Hills, CA 92654 Moulton -Niguel Water District ATTN: General Manager 27500 La Paz Road Laguna Niguel, CA 92656 Santa Margarita Water District ATTN: General Manager P.O. Box 2279 Mission Viejo, CA 92690 Trabuco Canyon ATTN: General P.O. Box 500 Trabuco Canyon, Water District Manager CA 92679 42 r� U 0 If to the Leasing Agencies: Coastal Municipal Water District #3 Monarch Bay Plaza Suite 205 Dana Point, CA 92629 Capistrano Valley Water District 32450 Paseo Adelanto P.O. Box 967 San Juan Capistrano, CA 92693 South Coast Water District 31592 West Street Laguna Beach, CA 92677 Tri -Cities Municipal Water District 851 Calle Agua San Clemente, CA 92672 Section 8.05. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original. section 8.06. Attorney's Fees. In the event of any action or suit based upon or arising out of any alleged breach by any party of any representation, warranty, covenant or agreement contained in this Agreement, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs of such action or suit from the other party. section 8.07. Amendments. This Agreement may be amended as may be mutually agreed to by MWDOC, MWDOCWFC, the Participants and the Leasing Agencies, but any such amendments shall be in writing and shall be executed by all parties. 43 Section 8.08. Entire Agreement. This Agreement (including the Exhibits referred to in this Agreement, which are incorporated in and constitute a part of this Agreement) contains the entire agreement of the parties and supersedes all prior oral or written agreements and understandings with respect to the subject matter. Section 8.09. Waiver. Except as expressly provided herein, this Agreement or any of its provisions may not be waived except in writing. The failure of any party to enforce any right arising under this Agreement on one or more occasions will not operate as a waiver of that or any other right on that or any other occasion. Section 8.10. Severability. Any term or provision of this Agreement which is invalid or unenforceable will be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining rights of the party intended to be benefitted by such provision or any other provisions of this Agreement. Section 8.11. Construction. This Agreement has been negotiated by MWDOC, MWDOCWFC, the Participants, the Leasing Agencies and their respective legal counsel, and legal or equitable principles that might require the construction of this Agreement, or any provisions of this Agreement against the party drafting this Agreement, will not apply in any construction or interpretation of this Agreement. 44 0 0 Section 5.12. Section Headings. All Section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Agreement. WHEREFORE, the parties have duly executed this Agreement as of the date first set forth above. 45 MUNICIPAL WATER DISTRICT OF ORANGE COUNTY MUNICIPAL WATER D WTRICT OF ORANGE COUNTY WATER FACILITIES CORPOORRATTION�j D By CITY OF ANAHEIM By YORBA LINDA WATER DISTRICT By EAST ORANGE COUNTY WATER DISTRICT By SANTIAGO COUNTY WATER DISTRICT By 0 0 Section 8.12. Section Headings. All Section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Agreement. WHEREFORE, the parties have duly executed this Agreement as of the date first set forth above. APPROVED AS TO FORM: JACK L. WHITE. CITY ATTORNEY By LUCINA LEA MOSES ASSIST CITY ATTORNEY Attest: CITY CLERK 45 MUNICIPAL WATER DISTRICT OF ORANGE COUNTY By MUNICIPAL WATER DISTRICT OF ORANGE COUNTY WATER FACILITIES CORPORATION By CITY OF ANAHEIM By Edward K hj yan Public i ities General Manager YORBA LIN WATER DISTRICT By EAST ORANGE COUNTY WATER DISTRICT By SANTIAGO COUNTY WATER DISTRICT By 0 0 SANTA MARGARITA WATER DISTRICT By MOULTON-NIGUEL WATER DISTRICT By IRVINE RANCH WATER DISTRICT By EL TORO WATER DISTRICT By TRABUCO CANYON WATER DISTRICT By LOS ALISOS WATER DISTRICT By CITY OF ORANGE By COASTAL MUNICIPAL WATER DISTRICT (as agent for TRI -CITIES MUNICIPAL WATER DISTRICT and SOUTH COAST WATER DISTRICT) By �Cil�1 C�GdL .�'%A.LiAGc/L� 46 0 0 Section 8.12. Section Headincs. All Section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Agreement. WHEREFORE, the parties have duly executed this Agreement as of the date first set forth above. 45 MUNICIPAL WATER DISTRICT OF ORANGE COUNTY By MUNICIPAL WATER DISTRICT OF ORANGE COUNTY WATER FACILITIES CORPORATION By CITY OF ANAHEIM By YORBA LINDA WATER DISTRICT By EAST ORANGE COUNTY WATER DISTRICT BY ` —�� �L, 1, . SANTIAGO COUNTY WATER DISTRICT\ By 0 0 SANTA MARGARITA WATER DISTRICT By MOULTON-NIGUEL WATER DISTRICT By IRVINE RANCH WATER DISTRICT By EL TORO WATER DISTRICT TRABUCO CANYON WATER DISTRICT By LOS ALISOS WATER DISTRICT By CITY OF ORANGE By COASTAL MUNICIPAL WATER DISTRICT (as agent for TRI -CITIES MUNICIPAL WATER DISTRICT and SOUTH COAST WATER DISTRICT) By 46 0 46 SANTA MARGARITA WATER DISTRICT By MOULTON-NIGUEL WATER DISTRICT By IRVINE RANCH WATER DISTRICT By EL TORO WATER DISTRICT By TRABUCO CANYON WATER DISTRICT By LOS ALISOS WATER DISTRICT By CITY OF ORANGE By COASTAL MUNICIPAL WATER DISTRICT (as agent for TRI -CITIES MUNICIPAL WATER DISTRICT and SOUTH COAST WATER DISTRICT) By 0 0 SANTA MARGARITA WATER DISTRICT By MOULTON-NIGUEL WATER DISTRICT By IRVINE RANCH WATER DISTRICT By EL TORO WATER DISTRICT By TRABUCO CANYON WATER DISTRICT By LOS ALISOS WATER DISTRICT .Y,L" ( & - ii^ CITY OF ORANGE By COASTAL MUNICIPAL WATER DISTRICT (as agent for TRI -CITIES MUNICIPAL WATER DISTRICT and SOUTH COAST WATER DISTRICT) By 46 SANTA MARGARITA WATER DISTRICT By MOULTON-NIGUEL% WATER DI TRICT C IRVINE RANCH WATER DISTRICT EL TORO WATER DISTRICT By TRABUCO CANYON WATER DISTRICT By LOS ALISOS WATER DISTRICT By CITY OF ORANGE By COASTAL MUNICIPAL WATER DISTRICT (as agent for TRI -CITIES MUNICIPAL WATER DISTRICT and SOUTH COAST WATER DISTRICT) By [ii 0 0 SANTA MARGARITA WATER DISTRICT m MOULTON-NIGUEL WATER DISTRICT By IRVINE RANCH WATER DISTRICT By EL TORO WATER DISTRICT By TRABUCO CANYON WATER DISTRICT By LOS ALISOS WATER DISTRICT APPROVED AS TO FOAM By DATE. m 46 CITY OF ORANGE By _ sAw com)-m, Ayo �j i COX9TAL MUNICIPAL WATER DISTRICT (as agent for TRI -CITIES MUNICIPAL WATER DISTRICT and SOUTH COAST WATER DISTRICT) By 0 0 SANTA MARGARITA WATER DISTRICT MOULTON-NIGUEL WATER DISTRICT By IRVINE RANCH WATER DISTRICT By EL TORO WATER DISTRICT By TRABUCO CANYON WATER DISTRICT By LOS ALISOS WATER DISTRICT By CITY OF ORANGE By COASTAL MUNICIPAL WATER DISTRICT (as agent for TRI -CITIES MUNICIPAL WATER DISTRICT and SOUTH COAST WATER DISTRICT) By :Irl SANTA MARGARITA WATER DISTRICT By MOULTON-NIGUEL WATER DISTRICT By IRVINE RANCH WATER DISTRICT By EL TORO WATER DISTRICT By zwke) � M�lll 0 4-9 4 zi LOS ALISOS WATER DISTRICT By CITY OF ORANGE By COASTAL MUNICIPAL WATER DISTRICT (as agent for TRI -CITIES MUNICIPAL WATER DISTRICT and SOUTH COAST WATER DISTRICT) By 46 0 0 Section 8.12. Section Headings. All Section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Agreement. WHEREFORE, the parties have duly executed this Agreement as of the date first set forth above. 45 MUNICIPAL WATER DISTRICT OF ORANGE COUNTY By MUNICIPAL WATER DISTRICT OF ORANGE COUNTY WATER FACILITIES CORPORATION By CITY OF ANAHEIM By YORBA LINDA WATER DISTRICT By EAST ORANGE COUNTY WATER DISTRICT By SANTIAGO COUNTY WATER DISTRICT By 0 9 Section 8.12. Section Headings. All Section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Agreement. WHEREFORE, the parties have duly executed this Agreement as of the date first set forth above. 45 MUNICIPAL WATER DISTRICT OF ORANGE COUNTY By MUNICIPAL WATER DISTRICT OF ORANGE COUNTY WATER FACILITIES CORPORATION LYA CITY OF ANAHEIM By YORBA LINDA WATER DISTRICT By EAST ORANGE COUNTY WATER DISTRICT By SANTIAGO COUNTY WATER DISTRICT By N I co N • 00 � N 8 8 U 0• O a O o N 0) 888 O 0 r co U N O � 8 08 8 Q co L o0�0 Q L... S W N QCi .o - C a 8 0 0 8 0 N L U 001 N Q O m N N m Q o U N U Q _ N ❑ 8 0 rn v 80 a °' 0 IOo X j Q W d ocz `r'moN°1 a O � m ❑ co O O 0 rn v 880 CL N cc$ ❑ U O N IA N m 0 O N Q m co N 10 a 0 88 o 8 0 8 0 0 0 • 00 8 8 0• N 888 0 8 08 8 0 o0�0 S W N 8 0 0 8 0 0 001 N m N N m Q N M m N N 8 0 rn v 80 0 0 IOo `r'moN°1 a e 0 rn v 880 0 0 0. O N IA N m 0 O Q m co N 10 N 88 o 8 0 8 0 0 0 co O 0 M N 10 (1 N 808 0 0 O 0 . 0 O1 Q$ CC N IA N 0 V O 'C 0 t7 N N N 0100800)v$oo m 0 Q CO m N 100 N emo�ioio$ogiv$oo N l7 p0 N N t07 O N 10 C') NN N O N N O N 0 O� O O O O O (0 O 01 W O . 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