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HomeMy WebLinkAboutCC RESO 10,984 Formation of Sweetwater System Corporation and Approving Sweetwater System Lease and SubleaseRESOLUTION NO.10.984 RESOLUTION OF THE CITY COUNCIL OF PI4E CITY OF NATIONAL CITY APPROVING THE FORMATION OF THE SWEETWATER WATER SYSTEM CORPORATION AND APPROVING THE SWEETWATER SYSTEM LEASE AND SUBLEASE WHEREAS, the South Bay Irrigation District and the City of National City ("City" and "District" respectively) are in the process of acquiring the ownership of a water supply and dis- tribution system from the California -American Water Company ("Sweetwater System"); and WHEREAS, an alternative method of financing the acquis- ition of said Sweetwater System has been presented to this Council; and WHEREAS, such alternative method of acquisition requires the formation of a non-profit corporation and the leasing by said non-profit corporation of the Sweetwater System from the District and the City, and thereafter, the leasing back of such Sweetwater System to the District and the City for operation through the Sweetwater Authority; and WHEREAS, The Sweetwater Water System Corporation ("Corporation") has been formed; and WHEREAS, pursuant to the Sweetwater System Lease and Sublease the non-profit corporation can accomplish the above mentioned lease and lease -back and can finance the acquisition of the Sweetwater System by the issuance and sale of its leasehold mortgage bonds; NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED by the City Council of the City of National City as follows: Section 1. That the formation of The Sweetwater Water System Corporation all as more fully set forth in the Articles of -1- Incorporation, attached hereto as Exhibit A and made a part hereof, are hereby approved and the Bylaws of such Corporation as set forth in Exhibit B, attached hereto and made a part hereof, are also hereby approved. Section 2. That the members of the Board of Directors of the Corporation are hereby approved consisting of the following: Glenn E. Fuller Douglas F. Lindsey W. H. Eckhart Jerry Harris George William Webster Section 3. That the Sweetwater System Lease and Sublease, in the form attached hereto as Exhibit C and made a part hereof, is hereby approved and the proper officers of the City are hereby authorized and directed to execute the same. Section 4. Under said Sweetwater System Lease and Sub- lease the District and the City will have a beneficial interest in the Corporation while any indebtedness incurred by the Corpora- tion remains outstanding and this City accepts its proper share of such beneficial interest and agrees to take its proper share of the full legal title to the property of the Corporation with respect to which any indebtedness may be incurred upon the retire- ment of such indebtedness. Section 5. That the City hereby contributes the sum of $5,000 toward the aforesaid lease -back project by hereby approving the payment of said sum of $5,000 from its general funds to the aforesaid The Sweetwater Water System Corporation, a non-profit corporation. PASSED AND ADOPTED at a regular meeting of the City -2- Council of the City of National City held on Tuesday, February 20, 1973, by the following vote, to wit: AYES: Camacho, Pinson, Reid, Waters, Morgan NOES: None ABSENT:None ATTEST: at City Cle -3- f,E.,.,,e: t i- -• =-. i;c:---, 1..7(ye?:.,-----'1. '-';•,;;--c--0-i':;;;;Z-4--.;:-..-;,- i --Ps:11:!;.;;;.-;!,-s') ,. OFFICE': OF THE SECRETARY OF STATE I, EDMUND G. BROWN JR., Secretary of State of the State of California, hereby, certify: • That the annexed transcript has been compared with the RECORD on file in this office, of which it purports to be a copy, and that same is full, true and correct. IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this 1973 I I I; ? ; '11 I 1 It i ; 1 Secretary of State EnGli•',TY-TE' FOR, C%-`i 1.171' onT, cif nle f_n=t1n ARTICLES OF INCORPORATION MPUID(SH;r4-02 Pliat.HON THE SWEETWATER WATER SYSTEM CORPORATION The name of this Corporation shall be TEE SWEET - WATER WATER SYSTEM CORPORATION. 11 The purposes for which this corporation is formed are: (a) The specific and primary purposes for which this Corporation is formed are to acquire, maintain and operate a water system for domestic, irri- gation, sanitation, industrial, fire protection, recreation and any other public or private use. This Corporation shall have the power to do all necessary or incidental acts in the furtherance of its specific and primary purposes. (b) Subject to the limitations contained herein, the general purposes and powers are: (1) To solicit, collect, receive, acquire, hold and invest money and property, both real and personal, received by gift, contribution, bequest, devise, or otherwise; to sell and convert property, both real and personal, into cash; and to use the funds of this Corporation and the proceeds, income, rents, issues and profits derived from any property of this Corporation for any of the purposes for which this corpora ion is formed. (2) To purchase or otherwise acquire, own, hold, sell, assign, transfer or otherwise dispose -of, mortgage, pledge or otherwise hypothecate or encurrer, and to deal in and with shares, bonds, notes, debentures, or other securities or evidences of indebtedness of any person, firm, corporation or associa7 tion and, while the owner or holder thereof, to exercise all rights, powers and privileges of ownership. -2- (3) To purchase, lease or otherwise acquire, own, hold, use, sell, exchange, assign, convey, lease or otherwise dispose of and mortgage or otherwise hypothe- cate or encumber real and personal property. (4) To invest and reinvest its funds in such stock, common or preferred, bonds, debentures, mortgages, or in such other securities and property as its board of directors shall deem advisable, subject to the limitations and condi- tions contained in any bequest, devise, grant, or gift, provided such limita- tions and conditions are not in con- flict with the provisions of Section 501(c) (4) of the Internal Revenue Code and its regulations as they now exist or as they may hereafter be amended. (5) To borrow money, incur indebtedness and to secure the repayment of the same by mortgage, pledge, deed of trust, or other hypothecation of property, both real and personal. (6) To carry into effect any one or more of the objects and purposes hereinabove set forth and to that end to do any one or more of the acts and things aforesaid, and likewise any and all acts or things necessary or incidental thereto; and, in conducting or carrying on its activities, and for the purpose of promoting or furthering any one or more of its said objects or purposes, to exercise any or all of the powers hereinabove set forth in this Article, and any other or additional power now or hereafter authorized by law, either alone or in conjunction with others, as principal, agent, or otherwise; PROVIDED, HOWEVER, that this Corporation shall not have the power to, and shall not, do any act or conduct any activity, plan, scheme, design, or course of con- duct which in any way conflicts with - 4 - section 501(c) (4) of the Internal )Revenue Code and its regulations as they now exist or as they may hereafter be amended, including, but not limited to, the follow- ing prohibitions: 1. No part of the net earnings of the Corporation shall inure to the bene- fit Of any private shareholder or individual. 2. No substantial part of the activities of the Corporation shall, in any way, consist in the carrying on of propaganda, or otherwise attempting, to influence legislation. 3. The Corporation shall not, either directly or indirectly, participate in, or intervene in (including the publishing or distributing of state- ments), any political campaign on behalf of or in opposition to any candidate for public office. -5- 4. The property of the Corporation must be used exclusively for the promotion of social welfare, and, the net earnings of which are devoted exclusively to charitable, educational, or recrea- tional purposes. 5. The property of the Corporation shall not be used or operated so as to benefit any officer, trustee, director, - shareholder., member, employee, contribu- tor or bondholder, or the owner or operator, or any other person, through the distribution of profits, payment of excessive charges or compensation, or the more advantageous pursuit of their business or profession. 6. The property of the Corporation shall not be used by the owner or members thereof for fraternal or lodge pur- poses, or for social club purposes except where such use isclearly incidental to the primary recreational, charitable or educational purpose. 7. The Corporation shall distribute its income for each taxable year at such time and in such manner as not to be- come subject to the tax on undistributed income imposed by Section 4942 of the In- ternal Revenue Code of 1954, or corres- ponding provisions of any subsequent Federal tax laws. 8. The Corporation shall not engage in any act of self -dealing as defined in Section 4941(d) of the internal Revenue Code of 1954, or corresponding provisions of any subsequent Federal tax laws. 9. The Corporation shall not retain any excess business holdings as defined in Section 4943(c) of the Internal Revenue Code of 1954, or corresponding provisions of any subsequent Federal, tax laws. 10. The Corporation shall not make any invest- ments in such manner as to subject it to tax under Section 4944 of the Internal Revenue Code of 1954, or corresponding provisions of any subsequent Federal tax laws. 11. The Corporation shall not make any taxable expenditures as defined in Section 4945(d) of the Internal Revenue Code of 1954, or corresponding provisions of any subsequent Federal tax laws. This Corporation is organized pursuant to the General Nonprofit Corporation Law of the State of California. zv The County in this State where the principal office for the transaction of the business of this Corporation is located is San Diego County. The names and addresses of the persons who are to act ir. the capacity of Directors until the selection of their successors are: -8- Names James Warren Beebe Michael Wells Jeanne W. Beebe William L. Strausz Susan M. Lowe VI The authorized number members of the membership, Addresses 611 West Sixth Street, Suite 2190 Los Angeles, California 90017 611 West Sixth Street, Suite 2190 Los Angeles, California 90017 611 West Sixth Street, Suite 2190 Los Angeles, California 90017 611 West Sixth Street, Suite 2190 Los Angeles, California 90017 611 West Sixth Street, Suite 2190 Los Angeles, California 90017 and qualification, of Corporation, the different classes of any, the property, voting and other rights and privileges of members and their liability to dues and assessments and the method of collection thereof, shall be as set forth in the By-laws. VI' This Corporation is one which does rot contem- plate pecuniary gain or profit to the members thereof and it is organized solely for nonprofit purposes. Upon the winding up and dissolution of this Corporation, after paying or adequately providing for the debts and obligations of the Corporation, the remaining assets shall be distributed to a nonprofit fund, foundation or corporation; which is organized and operated exclusively for charitable, educational, and/or recreational purposes and which has established its tax-exempt status under Section 501(c)(4) of the Internal Revenue Code. If this Corporation holds any assets on trust, such assets shall be disposed of in such manner as may be directed by decree of the superior court of the county in which this corporation's principal office is located, upon petition therefor by the Attorney General or by any person concerned in the liquidation. VIII The property of the Corporation is irrevocably dedicated to its specific and primary purposes. It is hereby declared that upon payment of all of the obliga- tions of the Corporation, the Corporation shall without further action by the members or board of directors, transfer, convey and set over unto the South Bay Irri- gation District and the City of National City and/or any other appropriate public corporation, its entire -10- right, title and interest in the water facility, without ther consideration due. IN WITNESS WHEREOF, the undersigned, being the persons herein.Tove named as the first directors, have executed these Articles of Incorporation, this of day ames Warren Beebe, Incorporator ells, Incorporator ,Jeanne W. Beebe, Incorporator Susan ril. Lowe,. Incorporator -3.1- STATE OF CALIFORNIA ) ss. COUNTY OF LOS ANGELES ) /j o On this 44-6 day of e 'u ciw, 1973, before me, fi n /4_ Notary «,f rState ��r' % :�'�:e a PI;h�2�C for the of California., with principal office in Los Angeles County, personally appeared JAMES WARREN BEEBE, MICHAEL WELLS, JEANNE W. BEEBE, WILLIAM L. STRAUSZ and SUSAN M. LOWE, known to me to be the persons whose names are subscribed to the within Articles of Incorporation, and acknowledged to me that they executed the same. IN WITNESS WHEREOF, I have hereunto set 1 and and affixed my official seal on the day and year first above written. (SEAL) ff! • 2t,�-C?.2.-.- .-4e-,ti Notary Public Ili'lllillliiill �111.IIIIIIIlill7:illlllilrrr•=Irll"II:'it""'I=II'r"111'I•'1111111111111f illr ore^ce' A. C... I1m fl r N GTARY r'..,,..... ..,,',.+;a LOS ANCl'"-_LE$ COUNTY Tres August 5, 1975 My Commission Expires ya3N{HIILInA4=i1:EJ;,II:rwiI.1;11,Illlillllull,IIIIAIIII,I;il,llaialllulllll,llllalll,lllllllllalw BYLAWS OF SWEETWATER WATER SYSTEM CORPORATION Exhibit "$ " id jJ %i i'1 CA co Cn 73 En .co co co (n co co in u) co co co co Ui [n Co Co CO Cri C i Cn Cn U� U� U� F', t,' 1 J O N N F; N N N N N C. 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CO ° O• • ct • • • • a F'i (U • • P) • • -• . • - EnFi .`j i - .fri • • U? • 0 • 1 • F'• a • ▪ FR• • •'• . • 0 •F(i Fh • . . 0rt - F,. • • • - - F'- e • • 0 - 4 • . • • 0 1_...•• . • • • • • • o • • • • • •• • • • 1—] U- . . - ••• • •• • •• • • • 0 ▪ • • lei • • • • • 0 • • • • - - • • • • • • • F' F' F' CO CO N F F'F-'F-'F'F�F' t) F' F' F-' F' ®O 01 lJ t0 CO CO GJ - - i Gi Cn C.n • • • • . ,R.T1,.P. CO CO N NJ hi • • • Page Section 4. President 13 Section 5. Vice -President 13 Section 6. Secretary 14 Section 7. Treasurer 14 Section 8. Removal and Resignation 15 ARTICLE VI -- Miscellaneous Section 1. Agents and Representatives 15 Section 2. Contracts 16 Section 3. Advisory Committee 16 Section 4. Voting Upon Stock of Other Corporations 17 Section 5. Fiscal Year 17 Section 6. Prohibition Against Sharing in Corporate Earnings 18 ARTICLE VII -- Investments 19 ARTICLE VIII -- Amendments 19 ARTICLE IX -- Exempt Activities 20 BYLAWS OF SWEETWATER WATER SYSTEM CORPORATION ARTICLE I PRINCIPAL OFFICE The principal office for the transaction of the business of the Corporation is hereby fixed and located in San Diego County, California. The Board of Directors may at any time or from time to time change the location of the principal office from one location to another in said county. ARTICLE II SEAL The Corporation shall have a seal, consisting of two (2) concentric circles. with the words, "SWEETWATER WATER SYSTEM CORPORATION", together with the date of incorporation of this Corporation. 4] )i O d) rr 4! 0 )71 L• i ru U) ! 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Such no CO Ei contain the date, time, anaJ, 7 ace of the meeting and a specific description of the busi- ness to be transacted thereat. Such notice shall. also beto . „p„ an, N.atioba1 Cbtysap, The SoubM. Ba 1 District. No business shall be tmabc4ocw.a-" annsodl or 'sbaoiqT, mweting excent that specaEicaily the notLce of such meeting. Section 5. Adonrned .[Yeetwing ar'' NoP2owo Th.ernn:' Any meeting of the menLers, annual or specie:I, whether or not a quorum is present, may be abjornod from 0) (I) O F-I ,<: (U 0.) 0 1-) SI: .51 m tl PI 0 rd (1) rd Y O (1-i 0 0 0) Cn ---I • -1.1 (. O 0 In N ci i 0 4) u) rd 0) O 51 )� )I • (1) 5) 5) i) 4)4 O .1 0 d (1) O Id (d 0 d 5i (n r; s ri O ri(;.5 O' 1 r,.a 'A IAA 0 •ri 1) 0 ...) 0.) 01 (I) .0,, 6) (1) .I.) id ,.I ✓ (!-i it (5) 0 c-; ( (1) (d (1) ;1 0 ; (I) >i 'I) ,C5 (I) ;) C1 (1) N R) }) ,c.; 0) 'd ) I.) (1) O 0 t -;) (;1 -lj S1 iU 5.1 0 4) .41 ;.) 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O 511 -, 1 :-. 0 -,-1 1,1,1 P . O 0 l 0 ,-I In 0 (d o XI tj -1 a (d (51 s) , El O ¢.i -0 O 0.) (1) Li ;%1 0 rd O 7 rd r--1 q i • (1) ,-1 r1 rd O c'. rI I-1 O 0 (1) -0 0 O --,1 rd 11 ! Q 5> 0 0 i 0 ) v' 0 i{_I C) 0'd O 11 ti (U 0) ,0) {-, O - •r1 PI ,.(1 ,il (II (1-,i r-i r-I -.ARTICLE V, DIRECTORS BOARD OF ����CTo:.s Section I. Number of D rectors The Board of members. Directors Shall consist of rive tp _ in tine event -i e'^ Directors is decreased by amendment to these the i11,..". u%l.r •Gi n +^ � i u1.L�:G;:>; each DireGtG"� •iT? office s'1311 serve untilis �.e ,."� i.di ex �or until his ' sigialtion or removal as herein provided. section 2. Powers of Directors. • Subject to the powers and limitations as provided law, the Articles of incorporation of this Corporation, Or as herein set forth, all co2:porate powers O" the Corporation • . • shall be exercised by or under the authority of, and the .affairs of the Corporation shall be controlled by, the Board of Directo"rs. Without limiting the generality of the forc- e, the coard of Directors. shall have the following powers. (a) •To select and remove all the other o fi- cars, agents, and employees of the Corporation, pre- scribe powers and duties for them as may not be incon- ' sistent with law, with the Articles of,, IncorporatiOfl or • the Bylaws, fix their compensation and reuire from 't'ern security for faithful service; •(b) To conduct, _manage, and. control the affairs of 'the Corporation, and to make such rules. and regulations therefor -not inconsistent with law, with the Articles of, incorporation or the Bylaws, as they may deem best; transaction location to To i office the principal Or the OT thebusiness of ..he Corporation from one y another within the same county; to fix and Iodate from time to time one or more subsidiary offices of the Corporation within Cr without the State of California' and to adopt, rase, and use a corporate seaa and to fai.ter the 'for:: thereof from time to time as _._ their judgment they may deem, best, provided sucri seal shall at ail times comply with the provisions of law; (d) To borrow money and incur indebtedness for the purposes of -the Corporation, and to cause to be executed , t- anddeliveredt+.. e r e= ti..neCu�ea c.nd therefor, in the corporate name, • promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations, or other evidences of debt and 'securities therefor., Section 3. Election of Directors. At.least t hirty (30) days before the annual meet- ing, the President Shall appoint a nominating committee con- sisting of at least three (3.) .,,embers. At the annual meeting of members, the nominating committee shall Submit .its report nominating persons to be elected to the Board of Directors at •such meeting. 'Other nominations' may be. made from the 'door. (4 >1 I") 0 A I 0 I 3 141 113 fAI 0 0 40 11-1 -1-3 0 4-t (I) • 4-1 0 'd t-.1 '',->t .5-1 f :1 0 1-.1 ,,--I 0 4-3 414 cd 0 > 0 -Ai 0 0 0 0 4-) ,....1 0-1 (1) 0 'an -P 0 1---. 0 5-1 0 4.3 4) .5:1 ., 1 ,c1 41 Id 4) 4.J -P -1- C.) (1) A -I ..i ,c.1 4-1 -,--I 0 0 `-.',..•• rd Pi () 0 1--1 (l) ,.-; 4)0 4) 4- AL). 5 1 rd rti AA CIA) A>1 (.1) - Ij 4) r-i -. t'it 0 II 0 4) -,-I >1 0 • ..0 sl 9 -1 9 Z.51 4) 11 -,--I A,...3 4) 11(1 0 0 0 0 0 51 .- 1 4) '5-I . (-1 ,o. (4 AAA -FA 43 -I) 0 t-1 0 X 0 AA: 11 0 Ai 5.9 1 kj) 9-1 4) Al .. 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Sec,- �� a = G:rl._at- tion of Government Officials . __..tom__ .. n �- :G governing ..�Ot,:Ny G_ the City G= National City , and e South Bay i Disshall be entitled to _:axe recommendations to `tilde Board or Directors or a Ly COM __.it...ea thereof with respect ct to any matter at any meet..,.__ Each _ te'=er of the governing body, and any other G`rce of the City of National City, artarld the Sou- it ___ gaion District ...:.:s icy.:. u.tC-C. by the governing body, shall �., tmeeting r Director. __.>sVE. �:.i=. rig to attend any G;:. the Board C1: o.r any committee t+ e_ec-7 with the a ght of debate, but shall h Le entitled to vote on any matter considered by the Board of Directors. Section 73. tlucrum A majority of the Directors shall constitute a quorum for the transaction of business at any meeting. The Directors present at a duly held meeting at which a quorum present may continue tO do business until adjournment, notwithstanding the withdrawal of Directors to leave less than a quorum. -10- :ction . 14. Adjournment. In the absence of cfuorum at any meeting of the Board of Directors, • , e majority of the Directors present'may meeting from time to -time .until the time , f_xed for the next' regular meet...ng of the Board. Section. .LGn. 1.5. Fees ani^.. Co;.,rienSaL`.:.Oii. Directors shall not receive any stated salary for heir services as Directors; but, by resolution of the Board, a reasoncable•fixed fee, with or without expenses• of attendance :ay be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity as an officer, agent, employee,. or -otherwise and receiving compensation there- for Sect -;on 16.• Chairman. At .all meetings of the Board of Directors, the resident or Vice -President, or. in their eir absence a Chairman chosen by the Directors present, shall preside. • Section. 1 7 , • Committees. The Board of Directors may establish committees from time to time and make Such regulations as it deems advis- able with respect to the membership, authority, and procedures of such committees, 'provided that the Board of Directors shall ^0 _tet have the power to.designate an Executive Committee. r ;a t _on 18. rowers. ' All'the corporate powers, except such as are other-' wise -o ovided for in these Bylaws and in the laws G the State of California shall be and hereby are vested in and shall be exercised by the'Board of Directors unless any such power wo'u'"d inArticles of Incorporation, vrOla'�e the powers enumerated. the y and crovi::ed further that no contract,- transaction, or act shall be taken on behalf of the Corporation if such contract, :...-anSact..on, or act is a prohibited transaction or would rc: 'ti1" one denial of tax exemption under Section 503 or Section 504 the internal Revenue Code and its regulations as they now • exist or as they may': ereafter be amended. IC Orr'iui..R:.S Secri on I. Officers. The officers of this Corporation shall be a President, Vice -President, -Secretary, and Treasurer, and such resid�:i�., P , as the Board i nthe other officers .Aru O-_ Directors hay appoint. When duties Co not ,co nriict,, one person, Other than• the President, may hold more than •one of theseo55ices. Section 2. Election.. _ fror "'..e The i^C.C�UGrS shall elect from' among.:.i- Board of �' Dir ctors all officer's of the Corporation for terms or one 1 V "'<. or until their successors are elected -�. �.. and qualified. date o such election shall be annual .:.V at the or jar,1zaGIOn meeting of. the Directors. Section 3. Vac G:Ll.1ej. In Case any office of the Corporation becomes vacant bv death, e ' gi atiofl retirement, disqualification, or in •any other caus the majority the -O Directors then y officer to althoughalthoughlesslessC.lo than .� a quorum, a,ll..t may. elect an such vacancy, and the officer so elected shall hold office and serve. Until the..next organization meeting of the Board of Directors. Section 4. President. The President .shall preside at all meetings of the Directors; and shall have such Other powers and duties as may be prescribed from time "moo, tim e by the Board of Directors. Section 5 Vice -President. in the absence or disability of the President, th Vice --.President shall perform all the duties of the President, and in so acting shall have all the powers of the President. The Vice -President' shall have such other powers and perform s.:.,,_. other duties as may be prescribed from time to time by the Board of Directors. Section 6. Secretary. The Secretary shall keep a full and complete record of the proceedings of the Board of Directors, shall keep the seal of the Corporation and affix the same to such papers and instruments as may be required in the regular course of busi- ness, shall make service of such notices as may be necessary or proper, shall supervise the keeping of the books of the Corporation, and shall discharge such other duties as pertain to the office or as prescribed by the Board of Directors. Section 7. Treasurer. The Treasurer shallreceiveand safely keep all funds of the Corporation and deposit the same in such bank or banks as may be designated by the Board of Directors. Such funds shall be paid out only on the check of the Corporation signed by any two of the following officers: The President, Vice President, Treasurer, or Secretary, or by such officers as may be designated by the Board of Directors as authorized to sign the same. The Trasurer shall have such other powers and perform such other duties as may be prescribed from time to time by the Board of Directors. - 14. - ,c) 3 1. i 0 C.) CC) 33 0 I 3) I C3 o 3 -1 < I' 3 33'3 4:9 - R - t .1 rJ .) c) 0) .>i ,*--' 1 , -1 0 41 : I 0 i 3 41) li c1 n -_- s , ,..„ , , >-, (, i s; •,--s -,- , 24 cd 1 ) , i 40 0 '...' PA 4:13 r Li t..) r i 0 0 0 I' 1 0 >i Q.) 40 i Cd 0 ,,C1 34 0 X .0-3 4 •$--1 0 .-0 -4; 04 O (0 I 4 3..> tj) t'j 01 4 3 f 1 ... 0,4 •$-1 ---.. 0 ,r; -I I •-. CA '43 3)1 4- < ; 3-1 4:) X 41 3 I 3 1 X 40 0 0 0) •$--1 (1.) 0 0 0 ::-- i 0 'cl • $ 1 $ -{ I-3 0 „--(.1 `..1 13 0 ,.-- 1---1 •I- 4 s.. 0 .$ I 0 0 1 4 RS S i 4-) u_l 0 0 0 co 40 0 @ 10 4:1 ,c1 i (1) /.3.1 p ,c1 w ,s-: 0 0 .0 -.1 4:1 -. I 0 4.3 •1-) ,,41 o n >1 I- ) f 13 u) 311 C) 40 -. -I I-) fil fd 0 0 0 ;---1 (1) 4:4 C' 0 •$--1 I 3 () () C; ,. 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Contracts, Board of Directors. except as in these 3yaaws otherwise provided, may a o/ire any 'officer or agent to enter into any contract o execute d deliver any instrument in the name 32 ado behalf the Corporation, and such autho-ity may be general or confined to a speciric instance; a unlas =oauthorized' the %oard of Directors, no officer. agent, or empaoyee i h e any power or authority to Sim ha Corporation by an2 con act or engagement, or top eagc credit, or -ender it 7iable pecuniarily for any purpose or any amount. Section' 2. Advisory Committee. «The Board o2 Directors may appoint from their be=, or from among such parsons as the d may see Zit, ono <1).or more visor :con ittees. anu at any time may appoint .additional members thereto. The members o2 such co mittens snaha serve during e pleasure o2 the Board of Directors. Such advisory co mittee shall 'advise with and aid the officers of the:Corporation £2all matters. designated h the Board o - Directors. The members of any such advisory committee shall 66t receive•any stated saly or sum for expenses: of attendance. e��on C7GtinG Upon St ock of Other Corporations. Un iess otherwise ordered by the Board of D-7 rec ors l, have -u-Jvneaand authority on behalf o CG`.�pGra�_o,. - - n :o vote ei -her i� person �. by proxy at any meeting of s..ovk;:Giders of corporation in which thi s any .. such meeting r,ay possess Corporation. may hold stock ,_u at mower incident to the owner- ' other. _gilts and S r thereof; this CG ;� stock which, as tiie owner e s rociacich G_ ��.G J andexercised ifsent. The Board of have possessed Directors may confer like mowers upon any o hel person and its pleasure. Unless ot''.cr revoke any such •pGWe- as gralae�.. at �` a=- Y by s `-he President shall the Board G:. v_reO;.Grs, have wise ordered 'authoritybe' li Gf e Corocl_'a:..iOn_ to full and Jul c..-a purchase, se>.i, tran5 _, or encuMber any and all securities of• any other, corporatio;-, or other legal entity owned by the Corpo_'a-c..on and may execute and deliver such documents as nav be necessary to effectuate such purchase; sale., transfer, r,:l.e ('d Directors may from time vo time i;::.. u��:1ur` confer .ike powers upon any other person or persons. n Year. 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'I --'4, 0 7 . i 0 ). -1 471 id 1)-. ,:,,..-z, 0 ,_,"; -1J '4•:.) 4,4 ci, (J) 0 14 SA 1-3 ,n 0 '0 0 1141 -1--.3 4) 0, 0 ›. 0 O -,-7. c., (..) 66 !e--:.4 ID 4fri H 0 rd C.) - 0 - , I); li-i 0 71 01 0 0 0 -I-) 331 -!-) 24 -, -3 0 (1) 0 4) 43 0 44) 4-3 0 0 14 „0 (4) ..-3v )-) >1 fi n o ,iss,) o 11-1 7; •0 3-4 11) 0 4.) 0 0 3-1 60 • r --) 0 4.4 >1 3-1 RI -P 0 ,,C) 0 )3-i 0 '',]:.. , 4) 0..) --1 14) 0 3-1 !-3 .---1 4) f..-1 )), 0 O .1-) 4) 0 .4) , . . (1) 4) 11-4 '1.---4 71 id Id ›-i 0 41 4) 0 14 (41 al ,---1 0 47:4 0 . -.- - - - U-; ((3 0; 43 4 -1 sl 0 4 co 0 0 -, -I 2.4 0 ,-:,- > CY) 0 C) ID (4) 14 :-.) r -9 0 4! id 0 >1 7; 0 ,c): 14 4) 5/) 41 4) 0 (,) 43 0 CD >1 (i) , II-1 (1),n 11 o rci -0 (4)•,-1 (1)...c: rd ci us, rd r5,45 (7;i ' 0 111 CI 34 4.) 1664 •,-4 (1) d 2-1 0 X 43 ,g o --4 o 1s, rd q1.3 31-4 . 0 rd I-) . . , ).--)i ((3 ')..! `0 13,4) 0 rd 0 0 7 rq r•-: 3-4 ,-! ((3 >5 04 -0 r-1 (.) 4.311 0 >- ,c--: '0 '-', I 4) 4.3 0 “J (--) er, Director, o_e urovision of t iese 'Sy:Lavi ..G ... v .ployee representative of v.:..v_Gt±C.. J1_.._ll take any action Vi carry on any aC.._vity 1 vi' on -hen _ vtneO "per ._ on not permitted to be taken .. J- i 0-�-i under Section J (c) (z-- ) -rr.i �:Ci. on �V an �✓� _,��c _..:.Zat_3.vi_ exempt v_ ..__:,: InternaL ;.:: !v_.wc t..v...e ant.: i:_., _tu t,.ict.1o_"e s as they now ,..,.. _.. .._ or as they r .ay hereafter be G t'1..:"_C'.ec -20- CERTIFICATE OF SECRETARY I, the undersigned, do hereby certify: 1. That I am the duly elected and acting Secretary of Sweetwater Water System Corporation, a California corporation; and 2. That the foregoing Bylaws, comprising twenty (20) pages, constitute a full, true, and correct copy of the Bylaws of said Corporation in full force and effect as of the date hereof. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of said Corporation this 16th day of February, 1973. Susan M. Lowe 2/16/73 SWEETWATER SYSTEM LEASE AND SUBLEASE THIS LEASE and SUBLEASE, dated for convenience as of , 1973, by and between THE SWEETWATER WATER SYSTEM CORPORATION ("Corporation"), the SOUTH BAY IRRIGATION DISTRICT ("District") and the CITY OF NATIONAL CITY ("City"). WITNESSETH: WHEREAS, the District and the City are acquiring ownership of a water supply and distribution system from the California -American Water Company ("Sweetwater System"), more particularly described in Exhibit A, attached hereto and made a part hereof, which Sweetwater System contains certain real property more particularly described in Exhibit B, attached hereto and made a part hereof; and WHEREAS, the Corporation intends to lease the Sweetwater System from the District and the City and thereafter to lease -back such Sweetwater System to the District and the City for operation through the Sweetwater Authority; and WHEREAS, the Corporation intends to finance the acquisition of the Sweetwater System by the issuance and sale of its leasehold mortgage bonds; Now, THEREFORE, in consideration of the payment of rental and the performance of the mutual promises and agreements herein contained at the time and in the manner specified, the parties hereto agree as follows: SECTION 1. Definitions. The following words and terms, unless a different meaning clearly appears from the context, shall have the following meanings in this Lease and Sublease; "Additional Facilities" shall mean any works, buildings, structures or facilities that are added to and may reasonably be considered a part of the Sweetwater System, or are used or useful in connection therewith, including, without limitation, any improvement, addition or betterment to the Sweetwater System and any real estate or interest therein to be used or which will be useful in connection with any of the foregoing. "Additional Rent" shall mean the rent due for the Sweetwater System in addition to the Base Rent. "Agreement" shall mean the "Joint Powers Agreement of 1972 Between the South Bay Irrigation District and The City of National City Creating the Sweetwater Authority." "Authority" shall mean the Sweetwater Authority, a public entity and agency duly organized and existing pursuant to the Agreement. "Base Rent" shall mean the total rent due for the Sweetwater System, but does not include Additional Rent. "Board of Directors" shall mean either the Board of Directors of the Corporation or any duly authorized Committee of that Board. "Bond" or "Bonds" shall mean any Bond or Bonds authenticated and delivered under and pursuant to the provisions of an Indenture filed with the District and the City pursuant to Section 15 hereof. "City" shall mean the City of National City, California, a municipal corporation organized and existing under the laws of the State of California (Title 4 of the Government Code). I• South Bay Irrigation District — F-3454 Exhibit "C" 2/20/73 "Corporation" shall mean The Sweetwater Water System Corporation. "District" shall mean the South Bay Irrigation District, an irrigation district organized and existing under the Irrigation District Law of the State of California (Division 11 of the Water Code). "Fiscal Year" shall mean the fiscal year as established from time to time by the District and the City. SECTION 2. Acquisition of Water System. The District and the City shall prosecute the eminent domain proceeding (San Diego Superior Court No. 306441) to final judgment as provided in the Agreement. When the interlocutory condemnation judgment is final, the District and the City shall request from the Corporation sufficient funds for the acquisition and financing of the Sweetwater System, including: the total acquisition cost; all legal fees, engineering and expert witness fees, and other costs and expenses of the eminent domain proceeding; working capital; and other costs and expenses incidental to or connected with such acquisition and financing. The Corporation shall issue sufficient Bonds in accordance with Section 15 to pay the total cost of acquisition and to provide funds for the related needs set forth above and the costs of the issuance and sale of the Bonds, necessary reserves and administrative costs as more fully set forth in Section 15. As soon as money is available therefrom, the Corporation shall deposit in court in proceeding No. 306441 the sum required to secure an order for possession of the Sweetwater System pursuant to Code of Civil Procedure Section 1254. Any additional sum required to be paid as a condition to the entry of the final order of condemnation shall be deposited by the Corporation from the proceeds of the sale of the bonds. When such payments are made, title and ownership and possession of the Sweetwater System shall vest in the District and the City as tenants in common, subject to this Lease, to the Indenture and to the Agreement. The Corporation shall repay to the District and the City all payments or advances made by the District and the City pursuant to the Agreement, with the exception of abandonment costs. Such repayment shall be made from the proceeds of the sale of Bonds by the Corporation as soon after the sale as is convenient, but no later than six (6) months after entry of the final order of condemnation. SECTION 3. Lease to Corporation Term. The District and the City hereby lease to the Corporation and the Corporation hereby accepts and rents from the District and the City the Sweetwater System, subject to the terms and conditions of this Lease and Sublease. The term of this Lease shall commence on the date of execution hereof and shall end one week after the end of the term of the Sublease to the District and City set forth in Section 5 hereof, unless earlier ended as hereinafter provided (except in the case of a default by the District or City as specified in Section 14 hereof), or if not ended earlier, on July 1, 2014. At the end of the term of this Lease, or up any earlier termination thereof, or upon the payment of all principal, interest and premiums, if any, or other sums so that any and all Bonds and other security instruments filed with the District and the City pursuant to Section 15 hereof shall be discharged, the Corporation shall dissolve. The District and the City may require such discharge at any time if the District and the City provide the Corporation the necessary funds therefor, subject to the terms of any such security instruments. Upon dissolution, liquidation, or winding up of the Corporation, or upon abandonment, its assets remaining after payment of or provision for all of its debts and liabilities shall be distributed to the District and the City, and the District and the City agree that in such event they will accept such distribution of assets. South Bay Irrigation District — F•3454 2/16/73 SECTION 4. Rent Paid by Corporation. This Lease is for and in consideration of advance rent consisting of a sum of dollars computed as set forth in Exhibit C, attached hereto and made a part hereof, which will be sufficient for the payments set forth in Section 2, above. Such sum shall be payable on the date or dates set forth in Section 2, above. SECTION 5. Sublease of Sweetwater System. The Corporation hereby subleases to the District and the City and the District and the City hereby accepts and rents from the Corporation the Sweetwater System subject to the terms and conditions of this Lease and Sublease. The term of this Sublease (sometimes referred to as "lease -back") shall com- mence on the date of execution hereof and shall end on the earlier of: (i) June 23, 2014 or (ii). upon the payment of all principal, interest and premiums, if any, or other sums so that any and all Bonds and other security instruments filed with the District and the City pursuant to Section 15 hereof have been discharged. SECTION 6. Rent Paid to Corporation. The District and the City shall pay Base Rent and Additional Rent to the Corporation in the amounts, at the times and in the manner set forth herein. (a) Base Rent. For the period commencing on the date on which the District and the City shall acquire title in the Sweetwater System, as provided in Section 2 hereof, the District and the City shall pay for the use of the Sweetwater System in advance for each six (6) month period of occupancy rent at the rate of $ semi-annually, ("Base Rent") subject to adjustment as hereinafter set forth. In the event that the liability of the District and the. City for rent at said semi-annual rate does not commence on January 1 or July 1, the rent to be paid for the remaining portion of the six (6) . month period in which such liability commences shall be prorated and shall be paid within thirty (30) days following commencement of such liability, but in no event later than the next succeeding June 30. During the remainder of the term of the sublease to the District and the City said Base Rent shall be paid on or before January 1 and July 1 respectively, for the use of the premises during the next succeeding six (6) month period. (b) Additional Rent. In addition to and after the commencement of the liability for Base Rent, as hereinabove set forth, the District and the City shall pay to the Corporation an amount or amounts ("Additional Rent") equivalent to the following: (1) all taxes and assessments of any nature whatsoever, including, but not limited to, excise taxes, ad valorem taxes, ad valorem and specific lien special assessments and gross receipts taxes, if any, levied upon the Sweetwater System or upon the Corporation's interest therein, or upon the rental income derived therefrom, except State and Federal income taxes; and (2) insurance premiums (as hereinafter provided); and (3) all administrative costs of the Corporation, including, without limitation, wages, expenses, compensation and indemnification of the Trustee under the Indenturereferred to in Section 15 hereof, fees and charges of auditors, accountants, architects, engineers and attorneys, and all other necessary administrative costs of the Corporation or charges required to be paid by the Corporation in order to comply with the terms of the bonds or said Indenture and to defend the Corporation and its members and directors; and (4) all costs and expenses which the Corporation may incur in consequence of or because of any default by the District and/or the City under this Lease and Sublease, including reasonable attorneys' fees and costs of suit or action at law to enforce the terms and conditions of this Lease and Sublease, South Bay Irrigation District — F-3454 2/16/73 said Additional Rent payments to be made within sixty (60) days after the District and the City have been furnished receipted bills or cancelled checks showing payment by the Corporation. In the event this Lease and Sublease expires or is terminated, or in the event the Sweetwater System becomes un- tenantable, such taxes and special assessments (except taxes and special assessments on land or on an interest in land) and insurance premiums shall be prorated as herein provided and any unused portions shall be refunded to the District and the City. Insurance premiums shall be prorated upon the basis of the period of time for which each such premium is paid. Taxes and ad valorem special assessments shall be prorated upon the basis of the fiscal year for which they were levied. Specific lien assessments shall be prorated upon the basis of the period of time that bonds would run in the event the property were in private ownership and the assessments had not been paid in cash. (c) Credit on Rent. There shall be credited against the Base Rent and Additional Rent due here- under any amount of money available for such credit pursuant to the terms of the Bonds and any other security instruments issued by the Corporation pursuant to Section 15 hereof. (d) Budget. The District and the City shall take such action as may be necessary for each to include and maintain all rental payments due hereunder in each fiscal year in its budget for such fiscal year, and to make the necessary appropriations for all such rental payments. The District and the City shall furnish to the Corporation copies of their respective budgets at least fifteen (15) days before the final adoption thereof. Such covenants shall be deemed and construed to impose ministerial duties by law and it shall be the duty of each and every public official of the District and the City to take such action and do such things as are required by law in the performance of such duty to enable the District and the City to carry out and perform said covenants. (e) Consideration. The payments of Base Rent and Additional Rent hereunder for each fiscal year of the term of this Lease and Sublease shall constitute the total rental for said fiscal year and shall be paid by the District and the City for and in consideration of the right of use and occupancy, and the continued quiet use and enjoyment, of the Sweetwater System for and during said fiscal year which the District and the City receive. The parties hereto have agreed and determined that such total rental represents the fair rental value of the Sweetwater System. In making such determination, consideration has been given to the costs of acquisition and financing the Sweetwater System, the uses and purposes which will be served by the Sweetwater System and the benefits therefrom which will accrue to the parties and the general public by reason of the Sweetwater System. (f) Adjustment of Base Rent. The Base Rent above set forth is used for computing the yearly rent necessary for the Corporation to receive to enable it to pay the principal of and interest on its Bonds issued pursuant to Section 15 hereof and to furnish the Corporation with the necessary working capital and reserves. When the interest rate or rates on the Corporation's Bonds are known, the Corporation, District and City shall recompute the Base Rent based upon said new figures and shall adjust the Base Rent upwards or downwards to the new figure so determined. (g) Payment. Any installment of rent accruing under this Section which shall not be paid when due shall bear interest at the rate of seven percent (7%) per annum from the date when the same is due hereunder until the same shall be paid. Notwithstanding any dispute between the Corporation and the District and/or the City hereunder, the District and/or the City shall make all rental payments when due and shall not withhold any rental payments pending the final resolution of such dispute. In the event of a determination that the District and/or the City was not liable for said rental payments or any portion thereof, said payments or excess of payments as the case may be shall be credited against subsequent rental payments due hereunder. (h) Net — net Sublease. The sublease provided for herein shall be deemed and construed to be a "net -net -net" sublease, and the District and the City agree that the rents provided for herein shall be an absolute net return to the Corporation, free and clear of any expenses, charges or set -offs whatsoever. 4 South Bay Irrigation District — F-34S4 2/16/73 SECTION 7. Payments. All payments made by or on behalf of any party to this Lease and Sublease shall be paid in lawful money of the United States of America at such place or places as may be designated by the parties receiving the payments involved. All sums payable to the Corporation by the District and the City shall be paid seventy-three per cent (73%) by the District and twenty-seven per cent (27%) by the City; provided, however, that the District and the City may agree upon a different proportion and notify the Corporation of such agreement and from the date of such notification, make payments in the new proportions. SECTION 8. Insurance. The Corporation shall, during the term of this Lease and Sublease, carry such insurance as is required by the Indenture or other security instrument referred to in Section 15 hereof. All premiums and charges for the aforesaid insurance shall be paid by the District and the City in accordance with the provisions of Section 6 hereof, provided that the District's and the City's obligation in any fiscal year to make such payment shall be limited to payment for insurance applicable to said fiscal year. SECTION 9. Changes or Additions to the System. The District and the City shall not make any changes, additions or alterations in the Sweetwater System and shall not make any addiitons thereto except with the written consent of the Corporation and upon such terms as may then be agreed upon, including, without limitation, the financing thereof by the Corporation by the issuance of additional bonds pursuant to Section 15 hereof. This shall not prevent the District and the City, without obtaining the Corporation's consent, from temporarily affixing personal property to the Sweetwater System, provided the District and the City shall repair any damage thereto when such property is removed. SECTION 10. Title to Property. Title to the Sweetwater System shall remain in the District and the City, subject to the terms and conditions of this Lease and Sublease. Title to the improvements, all additions thereto, and all fixtures, equipment and apparatus provided by the Corporation shall remain in the Corporation during the term of this Lease and Sublease and shall vest in the District and the City at the end of the term. Title to all personal property and fixtures placed in the Sweetwater System by the District and the City shall remain in the District and the City. SECTION 11. Utilities, Management, Operation and Maintenance. The District and the City shall furnish, or cause to be furnished, to the extent permitted by law, in conjunction with its right hereunder to occupy and use the Sweetwater System, the source of all sewer, water, power, gas, telephone and other utility services. As long as the District and the City are in possession of the Sweetwater System they shall keep it free and clear of all liens, charges and encumbrances (except any arising through the Corporation) and shall maintain the same in good repair and working order and shall have the responsibility for all management, operation, maintenance and repair of the Sweetwater System, including without limitation, security service, groundskeeping, power, gas, telephone, light, heating, air conditioning and other utility services. It is presently contemplated that the Sweetwater System will be operated by the Authority pursuant to the Agreement and that the obligations of the District and the City as above set forth will be discharged by them through the Authority, and the District and the City may, in their discretion, discharge such responsibility in that manner, or by: (1) using their own employees; or (2) contracting for services; or (3) subleasing all or part of the Sweetwater System; or (4) any combination of said 5 South Bay Irrigation District — F-3454 2/16/73 methods. No such contract or sublease shall place a greater burden on the Corporation than provided herein, nor infringe rights granted to or retained by the Corporation hereunder, nor violate or in any way impair the Corporation's obligations under the Indenture or other instrument issued pursuant to Section 15 hereof securing or declaring the terms of any debt or borrowngs by the Corporation, all or sub- stantially all of the proceeds of which are to be used to finance the acquisition and/or construction of the Sweetwater System. The Corporation does not agree to provide anything more than the Sweetwater System as herein defined. SECTION 12. Damage by Fire, Earthquake, Etc. It is expressly understood and agreed that the rent hereunder shall become due only in consideration of the right to occupy and use the Sweetwater System, and, except as herein provided, it is the responsibility of the Corporation to provide such right at all times during the period for which the rental involved is paid. In the event of destruction or damage of the Sweetwater System by fire or earthquake or other casualty or event so that it becomes wholly or partly unusable the Corporation, at its option, may do either of the following: (1) Rebuild and repair the Sweetwater System so that it shall be restored to use, in which case this Lease and Sublease shall remain in full force and effect; or (2) Declare this Lease and Sublease terminated and use the money collected from insurance against destruction of or damage to the Sweetwater System to the extent necessary to retire any outstanding securities or any debts or liabilities which the Corporation may have; provided, however, that if the Sweetwater System can be repaired or rebuilt, and if the Corporation shall have sufficient funds from the proceeds of insurance or otherwise, for the necessary repairing or rebuilding, the Corporation shall not proceed under this option without the consent of the District and the City. During such time as the Sweetwater System is unusable rent shall cease and no further rental payments shall accrue until the Sweetwater System is again ready for occupancy and rental payments already made, if any, shall be equitably adjusted. In the event of partial damage or destruction, rental payments, including those already made, if any, shall be abated or adjusted in a manner so as to reflect the fair rental value of the usable portion of the Sweetwater System remaining. SECTION 13. Condemnation. In the event the Sweetwater System, or so much thereof as to render the same unusable for the purposes intended, shall be permanently taken under the power of eminent domain or sold to any govern- mental agency threatening to exercise such power, the Corporation shall receive that portion of the con- demnation award or sale proceeds attributable to the taking or sale of the Corporation's leasehold and this Lease and Sublease shall terminate as of the date possession of the Sweetwater System passes to the agency exercising the power of eminent domain or so purchasing such Sweetwater System. In the event the Sweetwater System, or a portion thereof, shall be temporarily taken under the power of eminent domain, the Corporation shall receive that portion of the condemnation award attribu- table to the taking of the Corporation's leasehold estate, and this Lease and Sublease shall not terminate; provided that rent shall be abated in the same manner provided in the last paragraph of Section 12 hereof during the period the agency exercising the power of eminent domain is in possession of the Sweetwater System, or a portion thereof. In the event that less than all of the Sweetwater System shall be taken under the power of eminent domain or sold to any governmental agency threatening to exercise such power and the remainder is usable for the purposes intended, this Lease and Sublease shall not terminate, but rental payments shall be partially abated or adjusted in the same manner provided in the last paragraph of Section 12 hereof, such partial abatment or adjustment to be effective from and after the date the agency exercising or threatening to exercise the power of eminent domain takes possession of the Sweetwater System. 6 South Bay Irrigation District — F-3454 2/16/73 The proceeds of any condemnation award or sale received or retained by the Corporation shall be used to pay amounts due under any Bonds issued under the Indenture or other security instruments issued by the Corporation pursuant to Section 15 hereof. SECTION 14. Default by District or City. If (a) the District and/or the City shall fail to pay any rent payable hereunder within fifteen (15) days from the date such rent is payable, or (b) the District and/or the City shall fail to keep any other terms, covenants or conditions herein for a period of twenty-five (25) days after written notice thereof from the Corporation to the District and/or the City, or (c) the District and/or the City shall abandon or vacate the premises, or (d) the District's and/or the City's interest in this Lease and Sublease or any part thereof shall be assigned or transferred without the written consent of the Corporation, either voluntarily or by operation of law, then, in any of such events, the District and/or the City shall be deemed to be in default hereunder. If the District and/or the City should, after notice, fail to remedy any default with all reasonable dispatch, not exceeding thirty (30) days, then the Corporation shall have the right, at its option, without any further demand or notice (i) to terminate the Sublease without terminating the Lease and to re-enter the premises and eject all parties in possession therefrom, or (ii) to re-enter the premises and eject all parties therefrom, and, without terminating the Sublease, relet the premises, or any part thereof, as the agent and for the account of the District and/or the City, upon such terms and conditions as the Corpo- ration may deem advisable, in which event the rents received on such reletting shall be applied first to the expenses of reletting and collection, including necessary renovation and alteration of the premises, reasonable attorneys' fees, and any real estate commissions actually paid, and thereafter toward payment of all sums due or to become due to the Corporation hereunder, and, if a sufficient sum shall not be thus realized to pay such sums and other charges, the District and/or the City shall pay the Corporation any deficiency. The foregoing remedies of the Corporation are in addition to and not exclusive of any other remedies of the Corporation, including, but not limited to, the right to recover rent as it becomes due pursuant to Section 6 hereof, without terminating this Lease and Sublease or the District and/or the City's right to possession of the Sweetwater System. Any such re-entry shall be allowed by the District and/or the City without let or hindrance, and the Corporation shall not be liable in damages for any such re-entry or be guilty of trespass. The Corporation and the District and/or the City consider the foregoing remedies to be essential to the validity of this Lease and Sublease, and intend that, by virtue of Section 1952.6 of the Civil Code, the provisions of Sections 1951 and 1952.2, inclusive, of said Code shall not be applicable to this Lease and Sublease. SECTION 15. Mortgage of Leasehold. Except as otherwise provided herein, the Corporation shall not assign or transfer the performance of its duties and obligations hereunder without the consent of the District and the City. It is intended that the expenses of the acquisition of the Sweetwater System and other costs referred to in Section 2 will be financed by the Corporation by the issuance of its leasehold mortgage bonds, secured by an Indenture, to investors or other purchasers to the extent permitted by law. In such financing, or in any new financing by the issuance of additional bonds for changes, additions or alterations of the Sweetwater System, the Corporation may, without the consent of the District and the City, give, assign, transfer, mortgage, hypothecate or encumber the Corporation's interest under this Lease and Sublease (including the right to receive rental payments) to any bona fide lender or lenders (including purchasers or holders of notes, bonds or other obligations of the Corporation) on the security of the leasehold estate, and the Corporation may execute an Indenture and any and all instruments necessary for such financing, including, without limitation, instruments providing for the paying of rent directly to a trustee for such lender or lenders. Any such lender or lenders may be granted the right, prior to termination of this Lease and Sublease: 7 South Bay Irrigation District — F-3454 2/16/73 (a) To do any act or thing required of the Corporation in order to prevent a forfeiture of the Corporation's rights hereunder, and all such acts or things so done shall be as effective to prevent a forfeiture of the Corporation's rights hereunder as if done by the Corporation; (b) To realize on the security of the leasehold estate and to acquire and succeed to the interest of the Corporation hereunder by foreclosure or by a deed or assignment in lieu of fore- closure, and thereafter, at such lender's option, to convey or assign the interest in or title to said leasehold estate to any other person subject to all the terms, conditions and covenants of this Lease and Sublease. Two copies of any Indenture and all other security instruments shall be filed with the District and the City two (2) weeks prior to the effective date thereof, and the Corporation shall give the District and the City prior written notice of any changes or amendments thereto. SECTION 16. Default by the Corporation. If (a) the Corporation shall fail to keep any terms, covenants or conditions set forth in this Lease and Sublease for a period of twenty-five (25) days after written notice thereof from the District and the City to the Corporation, or (b) the Corporation's interest in this Lease and Sublease or any part thereof shall be assigned or transferred without the written consent of the District and the City, except as permitted under Section 15 hereof, either voluntarily or by operation of law, then in any of such events the Corporation shall be deemed to be in default hereunder. If the Corporation should, after notice, fail to remedy any default with all reasonable dispatch, not exceeding thirty (30) days, then the District and the City shall have the right, at their option, to terminate this Lease and Sublease by delivering written notice of such termination to the Corporation, and thereafter the District and the City shall be relieved of all obligations hereunder. SECTION 17. Access to Premises. The Corporation and its designees shall have the right to enter the Sweetwater System during reasonable business hours (and in emergencies at all times) (i) to inspect the same and (ii) for purposes connected with the Corporation's rights or obligations hereunder. SECTION 18. Notices. Any notices or filings required to be given or made under this Lease and Sublease shall be served or made personally or by registered mail in the following manner: upon the District by serving the Secretary of the Board of Directors thereof at the District offices, upon the City by serving the City Clerk at the City Hall, or such other place as may hereafter be designated in writing by the District and the City, and upon the Corporation by serving the Secretary thereof at such place as the Corporation shall hereafter designate in writing. SECTION 19. Section Headings, Severability. The paragraph headings contained herein are for convenience and reference and are not intended to define or limit the scope of any provision of this Lease and Sublease. If any section, subsection, sentence, clause or phrase of this Lease and Sublease, or the application thereof to any party, person or circumstance is for any reason held invalid, it shall be deemed severable and the validity of the remainder of the Lease and Sublease or the application of such provision to any other party, person or circumstance shall not be affected thereby. 8 South Bay Irrigation District — F-3454 2/16/73 IN WITNESS WHEREOF, the Corporation has caused this Lease and Sublease to be executed by their respective officials heretofore duly authorized by the legislative bodies thereof, as of the day and year first above written. THE SWEETWATER WATER SYSTEM CORPORATION By President By Secretary (SEAL) SOUTH BAY IRRIGATION DISTRICT By ATTEST: Secretary (SEAL) ATTEST: President CITY OF NATIONAL CITY By City Clerk (SEAL) Mayor 9 South Bay Irrigation District — F•3454 2/16/73 STATE OF CALIFORNIA COUNTY OF SAN DIEGO On this day of , 1973, before me, the undersigned, a Notary Public in and for said State, personally appeared , known to me to be the President, and , known to me to be the Secretary, of the SWEETWATER WATER SYSTEM CORPORATION, one of the corporations that executed the within instrument, known to me to be the persons who executed the within instrument on behalf of such corporation, and acknowledged to me that such corporation executed within instrument pursuant to a resolution of its board of directors. WITNESS my hand and official seal. (SEAL) STATE OF CALIFORNIA COUNTY OF SAN DIEGO Notary Public in and for the State of California On this day of , 1973, before me, the undersigned, a Notary Public in and for said State, personally appeared , known to me to be the President, and , known to me to be the Secretary, of the SOUTH BAY IRRIGATION DISTRICT, one of the corporations that executed the within instrument, known to me to be the persons who executed the within instrument on behalf of such corporation, and acknowledged to me that such corporation executed within instrument pursuant to a resolution of its board of directors. WITNESS my hand and official seal. (SEAL) STATE OF CALIFORNIA COUNTY OF SAN DIEGO Sss• Notary Public in and for the State of California On this day of , 1973, before me, the undersigned, a Notary Public in and for said State, personally appeared , known to me to be the Mayor, and , known to me to be the City Clerk of the City of National City, California, one of the corporations that executed the within instrument, known to me to be the persons who executed the within instrument on behalf of such corporation, and acknowledged to me that such corporation executed the within instrument pursuant to a resolution of its Board of Supervisors. WITNESS my hand and official seal. (SEAL) Notary Public in and for the State of California 10 2/16/73 EXHIBIT A Description of the Sweetwater System, will probably include a map or maps, perhaps showing major lines and service area. 2/16/73 EXHIBIT B Legal Description of Real Property which is part of the Sweetwater System and Subject to the Lease and Sublease 13 2/20/73 EXHIBIT C Formula for Computation of the advance rent to be paid pursuant to Section 4.* Condemnation Award Inventory Adjustment Water Purchases Working Capital Expenses and Contingencies $19,500,000 * This is pro forma and is subject to change prior to the issuance of Bonds by the Corporation. 1$