Common use of Subordinated Indebtedness; CAW Financing Clause in Contracts

Subordinated Indebtedness; CAW Financing. If any Initial Capital Costs, Pre-Effective Date Costs and Expenses, Preconstruction Development and Permitting Fees and Expenses or Pre-Acceptance Defense Costs are not permitted to be treated as Indebtedness by reason of the rules governing the Indebtedness or the Indebtedness is insufficient to fund the full amount of such costs or, if the Parties determine that the weighted average cost of the Indebtedness might be reduced by the issuance of Indebtedness (for a portion of such costs) which is subordinate to all other Indebtedness (referred to herein as “Subordinated Indebtedness”), then the Parties shall meet and confer to discuss alternative sources and options for financing any such shortfall and/or reducing the weighted average cost of the Indebtedness. If the Parties, after using their diligent efforts to investigate the same, are unable to find less costly alternative financing to fund such shortfall and/or reduce the weighted average cost of the Indebtedness, CAW shall loan (or may arrange for an Affiliate of CAW to loan) on the terms described below, to MCWD and/or MCWRA, as applicable, up to a total of $17,500,000.00 (individually and collectively, a “CAW Loan”) in fixed rate notes; provided, that MCWD or MCWRA, as applicable, has, in the case of a shortfall, provided CAW with reasonable evidence reasonably acceptable to CAW of the subject cost and the basis for its exclusion from or non- inclusion in the Indebtedness and/or, relative to the costs of the Indebtedness, the reduction in the weighted average cost of the Indebtedness that will be realized as a result of the proposed CAW Loan. Any less costly means of providing funding of an Indebtedness shortfall and/or reducing the weighted average cost of the Indebtedness that is proposed by CAW and which is the financial equivalent to the above-described CAW Loan shall be reasonably considered by MCWD and MCWRA as an alternative to a CAW Loan. If Parties are unable to agree on whether the weighted average cost of the Indebtedness will be reduced by the utilization of any CAW Loan on the terms described in this Section 7.1(c), such determination shall be made by the underwriter for the Indebtedness issued by MCWD and MCWRA. In addition, at any time during the Term of this Agreement, CAW shall make available (or may arrange for an Affiliate of CAW to make available) on the terms described in this Section 7.1(c), up to a total of $8,000,000.00 in revolving credit facilities (individually and collectively, a “CAW Credit Line,” together with any and all CAW Loans, the “CAW Financing”). Any such CAW Financing shall be unsecured Subordinated Indebtedness but the CAW Credit Line shall be senior to the CAW Loan. For any such CAW Financing, the applicable Parties will enter into appropriate documentation reflecting the terms described in this Section 7.1(c). Neither the CAW Loan nor the CAW Credit Line shall increase the CPUC Settlement Cost Cap. The priority of utilization of either a CAW Loan or the CAW Credit Line by MCWD and MCWRA, at any given, time shall be determined by agreement of MCWD and MCWRA and, in the absence of such agreement being reached within ten (10) days of written notice of either Party’s desire to utilize CAW Financing, shall be determined as follows: (i) prior to the Acceptance Date, each of MCWD and MCWRA shall be entitled to utilize any unused portion of the CAW Credit Line in an amount equal to its respective percentage of total Pre-Effective Date Costs and Expenses; and

Subordinated Indebtedness; CAW Financing. If any Initial Capital Costs, Pre-Effective Date Costs and Expenses, Preconstruction Development and Permitting Fees and Expenses or Pre-Acceptance Defense Costs are not permitted to be treated as Indebtedness by reason of the rules governing the Indebtedness or the Indebtedness is insufficient to fund the full amount of such costs or, if the Parties determine that the weighted average cost of the Indebtedness might be reduced by the issuance of Indebtedness (for a portion of such costs) which is subordinate to all other Indebtedness (referred to herein as “Subordinated Indebtedness”), then the Parties shall meet and confer to discuss alternative sources and options for financing any such shortfall and/or reducing the weighted average cost of the Indebtedness. If the Parties, after using their diligent efforts to investigate the same, are unable to find less costly alternative financing to fund such shortfall and/or reduce the weighted average cost of the Indebtedness, CAW shall loan (or may arrange for an Affiliate of CAW to loan) on the terms described below, to MCWD and/or MCWRA, as applicable, up to a total of $17,500,000.00 (individually and collectively, a “CAW Loan”) in fixed rate notes; provided, that MCWD or MCWRA, as applicable, has, in the case of a shortfall, provided CAW with reasonable evidence reasonably acceptable to CAW of the subject cost and the basis for its exclusion from or non- non-inclusion in the Indebtedness and/or, relative to the costs of the Indebtedness, the reduction in the weighted average cost of the Indebtedness that will be realized as a result of the proposed CAW Loan. Any less costly means of providing funding of an Indebtedness shortfall and/or reducing the weighted average cost of the Indebtedness that is proposed by CAW and which is the financial equivalent to the above-described CAW Loan shall be reasonably considered by MCWD and MCWRA as an alternative to a CAW Loan. If Parties are unable to agree on whether the weighted average cost of the Indebtedness will be reduced by the utilization of any CAW Loan on the terms described in this Section 7.1(c), such determination shall be made by the underwriter for the Indebtedness issued by MCWD and MCWRA. In addition, at any time during the Term of this Agreement, CAW shall make available (or may arrange for an Affiliate of CAW to make available) on the terms described in this Section 7.1(c), up to a total of $8,000,000.00 in revolving credit facilities (individually and collectively, a “CAW Credit Line,” together with any and all CAW Loans, the “CAW Financing”). Any such CAW Financing shall be unsecured Subordinated Indebtedness but the CAW Credit Line shall be senior to the CAW Loan. For any such CAW Financing, the applicable Parties will enter into appropriate documentation reflecting the terms described in this Section 7.1(c). Neither the CAW Loan nor the CAW Credit Line shall increase the CPUC Settlement Cost Cap. The priority of utilization of either a CAW Loan or the CAW Credit Line by MCWD and MCWRA, at any given, time shall be determined by agreement of MCWD and MCWRA and, in the absence of such agreement being reached within ten (10) days of written notice of either Party’s desire to utilize CAW Financing, shall be determined as follows: (i) prior to the Acceptance Date, each of MCWD and MCWRA shall be entitled to utilize any unused portion of the CAW Credit Line in an amount equal to its respective percentage of total Pre-Effective Date Costs and Expenses; andand (ii) on and after the Acceptance Date, each of MCWD and MCWRA shall be entitled to utilize any unused portion of the CAW Credit Line in an amount equal to its respective percentage of total Indebtedness.