EXHIBIT 12-E
FIRST AMENDMENT TO
WATER PURCHASE AGREEMENT
This First Amendment to Water Purchase Agreement, dated
as of _________, 2004 (the “First Amendment to Water Purchase Agreement”), is
entered by and among the MONTEREY PENINSULA WATER MANAGEMENT DISTRICT, a
California public agency duly organized and existing under the laws of the
State of California (“MPWMD”), the CARMEL AREA WASTEWATER DISTRICT, a
California public agency duly organized and existing under the laws of the
State of California (“CAWD”) and the PEBBLE BEACH COMMUNITY SERVICES DISTRICT,
a California public agency duly organized and existing under the laws of the
State of California (“PBCSD”).
WHEREAS, the parties hereto have previously entered
into a certain Water Purchase Agreement, dated as of December 1, 1992 (the
“Original Water Purchase Agreement”) in connection with the issuance of
$33,900,000 Variable Rate Demand Certificates of Participation (Wastewater
Reclamation Project) Series 1992 (the “1992 Certificates”) evidencing the proportionate
interests of the owners thereof in Series 1992 Water Payments (as defined in
the Original Water Purchase Agreement) to be made by MPWMD.
WHEREAS, in accordance with the Original Water Purchase
Agreement, CAWD and PBCSD agreed to sell, and MPWMD agreed to purchase,
reclaimed water (also referred to as recycled water) produced by the wastewater
reclamation project which was financed and constructed with proceeds of the
1992 Certificates (the “Original Project”).
These Series 1992 Water Payments payable by MPWMD constitute the
security for payment of the principal and interest components of the Series
1992 Certificates.
WHEREAS, the performance of the Original Project has
not met the expectations of the parties with regard to either quantity or
quality of recycled water due to a number of factors beyond the consideration
of any of the parties participating in the Original Project. Prominent among these factors are: (1) the
salt sensitivity of the dominant species planted in the greens of many of the golf
courses irrigated with the recycled water; (2) inadequacy of the drainage
facilities to conduct accumulated salts away from the greens; (3) increased
salinity due to (a) smaller than anticipated amounts of secondary effluent due
to decreased flows of influent to the CAWD wastewater plant (resulting in part
from consumers’ water conservation efforts), (b) the addition of water
softening units, and (c) internal wastewater plant processes contributing
additional salinity loading; (4) the lack of sufficient data concerning the
composition of the secondary effluent produced by the CAWD Wastewater Treatment
Plant or concerning the water quality and water quantity requirements for golf
course irrigation; and (5) the absence of any seasonal storage of recycled water.
WHEREAS, the parties have agreed to cooperate in the
implementation and financing of certain improvements to the Original Project
(such improvements being the “Project Expansion”).
WHEREAS, the parties hereto desire to amend the
Original Water Purchase Agreement to provide for certain modifications thereto
caused by the Project Expansion and related activities.
WHEREAS, Section 9.12(b) of the Original Water Purchase
Agreement permits amendments thereto with (i) the written consent of the Credit
Bank and (ii) a certificate of MPWMD, CAWD, PBCSD and the Pebble Beach Company
(“PBC”) that such amendments will not adversely affect the interests of the
Owners of the Certificates.
WHEREAS the Credit Bank has filed its written consent
(attached hereto as Exhibit A) with U.S. Bank National Association, formerly
known as First Trust of California, National Association, as trustee (the
“Trustee”) under the Trust Agreement, dated as of December 1, 1992 (the
“Original Trust Agreement”) by and between the Trustee and MPWMD, and MPWMD,
CAWD, PBCSD and PBC have duly executed a certificate (attached hereto as
Exhibit B) that this First Amendment to Water Purchase Agreement will not
adversely affect the interests of the Owners of the Certificates.
WHEREAS, concurrently herewith, the Trustee and MPWMD
will execute a First Amendment to Trust Agreement (the “First Amendment to
Trust Agreement”) dated as of the date hereof, for which the Credit Bank has
filed its written consent with the Trustee.
NOW THEREFORE, in consideration of the foregoing, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto do hereby agree as follows:
A.
Definitions.
Unless otherwise indicated herein or in the
First Amendment to Trust Agreement, all capitalized terms shall have the
meanings set forth in the Original Water Purchase Agreement and the Original
Trust Agreement, as amended by the First Amendment to Trust Agreement. The Original Water Purchase Agreement, as
amended by this First Amendment to Water Purchase Agreement, is referred to
herein as the “Water Purchase Agreement.”
B.
Allocation of Operating Revenues.
The second through sixth
paragraphs of Section 4.02 are hereby amended to read as follows, in order to
provide that the Operation and Maintenance Reserve Fund shall be held by CAWD
and PBCSD and not by MPWMD and to otherwise reflect Section 5.5 of the Amended
and Restated Construction and Operation Agreement:
In addition, there is hereby established an Operation
and Maintenance Reserve Fund which CAWD and PBCSD agree and covenant to hold
separate and apart from other funds so long as any Water Payments remain
unpaid. Moneys in the Operation and
Maintenance Reserve Fund shall be used and applied by CAWD and PBCSD as provided
in this Water Purchase Agreement. CAWD
and PBCSD shall, from the moneys in the Operation and Maintenance Reserve Fund,
pay Operation and Maintenance Expenses as they become due and payable during a
Fiscal Year to the extent the timing or amount of Operating Revenues for such
Fiscal Year are insufficient to provide for such payments. The Operation and Maintenance Reserve Fund
shall be maintained in an amount equal to the Operation and Maintenance Reserve
Requirement. Any deficiency in the
Operation and Maintenance Reserve Fund shall be replenished from Net Operating
Revenues as provided in paragraph (a) below.
The Operation and Maintenance Reserve Fund shall be valued by CAWD and
PBCSD on or before June 15 of each year.
Any amounts on deposit in the Operation and Maintenance Reserve Fund in
excess of the Operation and Maintenance Reserve Requirement shall be
transferred to MPWMD at least 10 Business Days prior to each 1992 Water Payment
Date for deposit in the Revenue Fund and applied pursuant to this Section 4.02.
MPWMD shall apply the moneys in the Revenue Fund first
to pay all Operation and Maintenance Expenses and Bond Carrying Costs as they
become due and payable. All remaining
moneys in the Revenue Fund shall be set aside by MPWMD at the following times,
in the following respective special funds, in the following order of priority
and in the amounts provided below (unless there are insufficient moneys
remaining in the Revenue Fund to make such transfers in such amounts, in which
case such transfers shall be made to the maximum extent possible from such
available moneys) and all moneys in each of such funds shall be held in trust
and shall be applied, used and withdrawn only for the purposes hereinafter
authorized in this Section 4.02:
(a) Operation
and Maintenance Reserve Fund. If and
to the extent necessary, the Operation and Maintenance Reserve Fund shall be
replenished by MPWMD from Net Operating Revenues at the beginning of each
Fiscal Year in accordance with that Fiscal Year’s approved budget, and during
such Fiscal Year as requested by the Management Committee.
(b) Certificate
Payment Fund. (i) On the Business
Day at least five days preceding each Series 1992 Water Payment Date, MPWMD
shall, from the moneys in the Revenue Fund, transfer to the Trustee for deposit
in the Certificate Payment Fund a sum sufficient to provide for the next
succeeding Series 1992 Water Payment designated as interest and coming due on
the next succeeding Series 1992 Water Payment Date; provided, however, that so long as the Letter
of Credit shall be in full force and effect and the Credit Bank is honoring
draws thereunder, the Trustee, at the sole direction of the Credit Bank, shall
direct MPWMD to make such payments directly to the Credit Bank.
(ii) On
the Business Day at least three days preceding July 1 of each year, MPWMD shall, from the moneys in the Revenue
Fund, transfer to the Trustee for deposit in the Certificate Payment Fund a sum
sufficient to provide for the portion of the next succeeding Series 1992 Water
Payment designated as principal and coming due on the next succeeding July 1;
provided, however, that so long as the Letter of Credit shall be in full force
and effect and the Credit Bank is honoring draws thereunder, the Trustee, at
the sole direction of the Credit Bank, shall direct MPWMD to make such payments
directly to the Credit Bank.
The remainder of Section 4.02 shall remain unchanged.
C.
Investments.
Section 4.04 is hereby amended to read as follows in
order to reflect that the Operation and Maintenance Reserve Fund is held by
CAWD and PBCSD:
All moneys held by MPWMD in the Revenue Fund and by CAWD and
PBCSD in the Operation and Maintenance Reserve Fund shall be invested in
Permitted Investments, and the investment earnings thereon shall remain on deposit
in such fund, except as otherwise provided herein.
D.
Accounting for Operating Revenues and Capital
Reserve Fund.
Section 5.05(b) is hereby amended to read as follows:
MPWMD will prepare annually not more than one hundred
eighty (180) days after the close of each Fiscal Year (commencing with the
Fiscal Year ending June 30, 1993) a summary report showing in reasonable detail
the Operating Revenues for such Fiscal Year.
MPWMD will furnish a copy of such summary report to the Trustee and the
Credit Bank and upon request to any others interested in the Water Payments.
Section 5.05(c) is hereby added to read as follows:
In accordance with Section 5.5 of the Amended and
Restated Construction and Operation Agreement, the Capital Reserve Fund, as
defined therein, shall be transferred by MPWMD to, and remain under the control
of, CAWD and PSCSD in accordance with the terms of the Amended and Restated
Construction and Operation Agreement.
E.
Notices.
Section 9.09 is hereby amended to read as follows:
All written notices to be given hereunder shall be
given by first-class mail or overnight delivery service to the party entitled
thereto at its address set forth below, or at such other address as such party
may provide to the other party in writing from time to time, namely:
If to MPWMD: Monterey Peninsula Water
Management District
5 Harris Court, Building G
Monterey, California 93940
P.O. Box 85
Monterey, California 93942-0085
Attn: General Manager
and
David
C. Laredo
De Lay & Laredo
606 Forest Avenue
Pacific Grove, California
93950
If to CAWD: Carmel Area Wastewater District
3945 Rio Road
P.O. Box 221428
Carmel, California
93922
Attn: General Manager
and
Wellington Law Office
Attn: Robert R. Wellington
857 Cass Street, Suite D
Monterey, California
93940
If to PBCSD: Pebble Beach Community
Services District
3101 Forest Lake Road
Pebble Beach, California
93953
Attn: General Manager
and
Wellington Law Office
Attn: Robert R. Wellington
857 Cass Street, Suite D
Monterey, California
93940
If
to the Credit Bank: Bank of America
901 Main Street, 64th Floor
Dallas, Texas
75202-3714
Attn: Portfolio Management – Lodging and Real Estate
If to the Trustee: U.S. Bank National Association
One California Street, Suite 2550
San Francisco, California
94111
Attn: Corporate Trust Services
F.
Execution in Counterparts. This First Amendment to Water Purchase
Agreement may be executed in counterparts, each of which shall be an original
and all of which shall together constitute one instrument. A telecopied signature hereon shall be deemed
an original for all purposes.
G.
Complete Agreement. This First Amendment to Water Purchase
Agreement sets forth the complete agreement of the parties hereto with respect
to the subject matter hereof. Further,
except as specifically described herein, nothing in this First Amendment to
Water Purchase Agreement shall replace or amend the terms of the Original Water
Purchase Agreement or the other COP Documents, which, except as otherwise
amended from time to time, shall remain in full force and effect, or be deemed
a waiver of any right, benefit, protection, or assurance under such documents.
H.
Governing Law.
This First Amendment to Water Purchase Agreement shall be governed by,
interpreted, and enforced in accordance with the laws of the State of California.
I.
Effective Date.
This First Amendment to Water Purchase Agreement shall become effective
as of the date first written above, upon the execution and delivery hereof by
the parties hereto and the filing with the Trustee of the written consent of
the Credit Bank. In accordance with
Section 9.12(c) of the Original Water Purchase Agreement, MPWMD shall promptly
mail a copy of this First Amendment to Water Purchase Agreement to each Rating
Agency.
By: