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,
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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
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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
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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.
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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").
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(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
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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).
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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).
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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
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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
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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
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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.
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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
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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.
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(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
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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
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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.
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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.
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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
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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
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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
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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:
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(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.)
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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.
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(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
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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
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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.
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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
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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
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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
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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.
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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
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