HomeMy WebLinkAboutAgenda Report - November 3, 1999 I-01CITY OF LODI AGENDA — LODI FINANCING CORPORATION
Carnegie Forum Date: November 3, 1999
305 West Pine Street, Lodi Time: 7:00 p.m.
For information regarding this Agenda please contact:
Alice M. Reimche
City Clerk
Telephone: (209) 333-6702
MEETING OF THE
LODI FINANCING CORPORATION
_
Aa c M. Rei he
I y Clerk
JACITYURKTORMSToorpll-Idoc 10/26/99
A.
Call to Order
B.
Certificate of the Incorporator Designating Directors and Articles of Incorporation
(information only)
Res. No. LFC-1
C.
Election of Officers
Res. No. LFC-2
D.
Adoption of Bylaws and Designation of Annual Meeting Date
Res. No. LFC-3
E.
Appointment of Counsel
F.
Application for Tax -Exempt Status — Authorize Filing of Request
Res. No. LFC-4
G.
Adoption of Financing Resolution
H.
Public Comments
I.
Adjournment
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Aa c M. Rei he
I y Clerk
JACITYURKTORMSToorpll-Idoc 10/26/99
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LODI FINANCING BOARD COMMUNICATION
CORPORATION
AGENDA TITLE: Meeting of the Lodi Financing Corporation
MEETING DATE: November 3, 1999
PREPARED BY: City Attorney
RECOMMENDATION: That the Board approve the attached Resolution.
BACKGROUND: This memo is an omnibus memorandum covering the items that are
listed on the agenda for the meeting of the Lodi Financing
Corporation. While this particular format is somewhat unusual, all of
the items are basically interrelated and therefore I felt it was appropriate to simply deal with the agenda by
developing one memorandum to the Board.
The reason for the establishment of the Lodi Financing Corporation is really quite simple. In order to
perform a financing transaction as is proposed, the transaction has to be bilateral. By that I simply mean it
takes two parties to enter into the transaction that would result in the issuance of Certificates of
Participation as proposed under the action taken by the City Council. The Lodi Financing Corporation
represents that second party. The Lodi Financing Corporation was created in order to have that second
party. It also is created in order to make very clear that the transaction is between parties who are solely
involved in the environmental abatement program with a revenue stream being dedicated to that program
consisting of recoveries from that particular program. This makes it very clear that no other City revenues
are involved.
The City Clerk will call the meeting to order since the Corporation is basically meeting for the first time and
undertaking its initial organizational activities prior to conducting any business. In the packet you have
been provided with various documents which indicate the existence of the Corporation and the initial
designation of Directors as undertaken by the incorporator. Those documents consisting of the Certificate
designating the Directors of the Corporation and the Articles of Incorporation are presented to you for
information only.
The first action item, Item C on the agenda, would be the election of officers. This activity will be
conducted by the City Clerk. It is staff's recommendation that you follow the pattern that the City has
established relative to this type of corporation and elect the Mayor and the Mayor Pro Tempore as the
President and Vice -President of the Corporation. The Treasurer and Secretary are recommended to be
the Finance Director and the City Clerk respectively.
Now that the officers of the Corporation have been elected, the remainder of the meeting will be conducted
by the President of the Corporation. Item No. D on the agenda is the adoption of the Bylaws of the
Corporation and designation of the annual meeting as it is contained in the Bylaws. You have been
provided a copy of the Bylaws of the Lodi Financing Corporation as well as a copy of the Bylaws of the
APPROVED:
H. D' on Flynn -- City Manager
Lodi Public Improvement Corporation. The Lodi Public Improvement Corporation was the entity that the
City partnered with in completing the recent financing transaction involving the City's Electric Utility. You
have been presented with both copies of the bylaws in order for you to see that the Corporations are not
dissimilar and in fact have bylaws which are very nearly identical. This particular comparison opportunity
was requested by Council Member Nakanishi. The action of the Board that is requested is the adoption of
Resolution No. LFC-2 which adopts the Bylaws.
Item No. E on your agenda is another housekeeping chore to be undertaken by the Board. It is simply the
adoption of Resolution No. LFC-3 that appoints the position of City Attorney as Counsel to the Corporation.
This particular appointment is consistent with how the City has handled its other Corporation. Staff
recommends adoption of the Resolution.
Item F on the agenda is a request to take minute action. What is being asked of the Board here is simply
to authorize staff to make the necessary filings to deal with the tax exempt status of the Corporation and to
request a refund of fees that were initially paid at the time of incorporation. Again this is merely a
housekeeping measure and action by the Board would allow staff to undertake the appropriate actions.
Item G on your agenda is the action item which results in the approvals given by the City Council to
become effective. By adopting the documents that are presented to the Board, the transaction becomes
the bilateral transaction that we have spoken of and can then be fully implemented. The documents
presented to you reflect the transaction as it was laid out in the memorandum and proceedings undertaken
by the City Council. It is recommended that you adopt Resolution No. LFC-4 which would create the
bilateral circumstance previously articulated.
Funding: Not applicable.
Respectfully submitted,
RESOLUTION NO. LFC-1
A RESOLUTION ELECTING OFFICERS OF
THE LODI FINANCING CORPORATION
WHEREAS, under the organizational procedures of the Lodi Financing
Corporation, an annual meeting of Directors shall be held and officers elected.
NOW, THEREFORE, BE IT RESOLVED by the Directors of the Lodi
Financing Corporation that the following persons are elected to the offices set
forth opposite their names below as officers of the Corporation, to serve until the
election and qualification of their successors as provided in Article III, Section
303, of the bylaws of the Corporation:
Keith Land
Stephen J. Mann
Vicky McAthie
Alice M. Reimche
Title
President
Vice President
Treasurer
Secretary
Dated: November 3, 1999
---------------------------------------------
---------------------------------------------
I hereby certify that Resolution No. LFC-1 was passed and adopted by the
Board of Directors of the Lodi Financing Corporation in a regular meeting held
November 3, 1999, by the following vote:
AYES: DIRECTORS — Hitchcock, Mann, Nakanishi, Pennino and Land
(President)
NOES: DIRECTORS — None
ABSENT: DIRECTORS — None
ABSTAIN: DIRECTORS — None
►R
L
LFC-1
RESOLUTION NO. LFC-2
A RESOLUTION ADOPTING BYLAWS AND
DESIGNATING TIME AND PLACE OF
ANNUAL MEETING OF THE LODI
FINANCING CORPORATION
RESOLVED, by the Board of Directors of the Lodi Financing Corporation,
that the Bylaws of the Lodi Public Improvement Corporation, in the form hereto
attached and incorporated herein by reference, are hereby adopted and
approved and shall stand as the Bylaws of this Corporation until valid
amendment thereof; and
BE IT FURTHER RESOLVED, by the Board of Directors of the Lodi
Financing Corporation that the first Wednesday in December of each year at the
hour of 7:00 p.m., or as soon thereafter as can be heard, at the Carnegie Forum,
305 West Pine Street, Lodi, California, is hereby appointed as the time and place
for the annual meeting of this Board pursuant to Article III, Section 3.05 of the
Bylaws of this Corporation.
Dated: November 3, 1999
I hereby certify that Resolution No. LFC-2 was passed and adopted by the
Board of Directors of the Lodi Financing Corporation in a regular meeting held
November 3, 1999, by the following vote:
AYES: DIRECTORS — Hitchcock, Mann, Nakanishi, Pennino and Land
(President)
NOES: DIRECTORS — None
ABSENT: DIRECTORS — None
ABSTAIN: DIRECTORS — None
LFC-2
BYLAWS
OF THE
LODI FINANCING CORPORATION
ARTICLE I
NA1IIE, ORGANIZATION AND PURPOSE
Princioal Office
Section 1.01. Name. The name of this corporation is the LODI FINANCING
CORPORATION (hereinafter referred to as the "Corporation").
Section 1.02. Organization. Purpose and Use of Funds. The Corporation is a nonprofit
public benefit corporation organized under the Nonprofit Public Benefit Corporation Law of the
State of California to provide financial assistance to the City of Lodi (the "City"), by assisting
the City with the financing of the costs of its environmental abatement program, thus enhancing
the water supply of the City for the use, benefit and enjoyment of the public served by the City
and any other purpose incidental thereto. The activities of the Corporation shall be limited to the
activities described in its Articles of Incorporation. No gains, profits or dividends shall be
distributed to any of the Directors or officers of the Corporation; and no part of the net earnings,
funds or assets of the Corporation shall inure to the benefit of any Director or any other person,
firm or Corporation excepting only the City.
Section 1.03. Principal Office. The principal office of the Corporation is hereby fixed
and located at the offices of the City of Lodi, 221 West Pine Street, Lodi, California 95241-
1910. The Board of Directors is hereby granted full power and authority to change said principal
office from one location to another. Any such change shall be noted by the Secretary opposite
this section, but shall not be considered an amendment to these Bylaws.
ARTICLE II
NO MEMBERS
Section 2.01. No Members. Pursuant to Section 5310 of the Nonprofit Public Benefit
Corporation Law, the bylaws of a nonprofit corporation may provide that the corporation shall
have no members. The Corporation shall have no members.
ARTICLE III
DIRECTORS
Section 3.01. Powers. Subject to limitations of the Articles of Incorporation or the
Bylaws, and of the California Nonprofit Public Benefit Corporation Law, and subject to the
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duties of Directors as prescribed by the Bylaws, all powers of the Corporation shall be exercised
by or under the authority of, and the business and affairs of the Corporation shall be controlled
by, the Board of Directors. No Director shall be responsible for any error in judgment or for
anything that he or she may do or refrain from doing in good faith. without prejudice to such
general powers, but subject to the same limitations, it is hereby expressly declared that the
Directors shall have the following powers, to wit:
First - to select and remove all of the other officers, agents
and employees of the Corporation, prescribe such powers and
duties for them as may not be inconsistent with law, the Articles of
Incorporation or the Bylaws, fix their compensation and require
from them security for faithful service;
Second - to conduct, manage and control the affairs and
business of the Corporation and to make such rules and regulations
therefor not inconsistent with law, the Articles of Incorporation or
the Bylaws, as the Directors may deem best; and
Third - to borrow money and incur indebtedness for the
purposes of the Corporation, and to cause to be executed and
delivered therefor, in the name of the Corporation, promissory
notes, bonds, certificates of participation, debentures, deeds of
trust, mortgages, pledges, hypothecations or other evidences of
debt and securities therefor.
Section 3.02. Number of Directors. The authorized number of Directors shall be five
until changed by amendment of the Articles of Incorporation or by amendment of the Bylaws.
Directors are collectively to be known as the Board of Directors.
Section 3.03. Selection and Term of Office. The Board of Directors shall be constituted
based upon the approval and appointment of the Lodi City Council (the "City Council"), and no
person shall be eligible to serve as a Director except a person initially approved by resolution of
the City Council. The initial Directors of the Corporation shall be the members of the City
Council. Except as hereinafter provided, each Director shall hold office for a term concurrent
with such Director's term as a member of the City Council. Unless a vacancy in the office
occurs as herein provided, the Director appointed shall hold office until the expiration of his/her
term and until a successor has been designated and has accepted the office. The Board of
Directors of the Corporation by a two-thirds vote may remove any Director from office, with or
without cause.
Section 3.04. Vacancies. Subject to the provisions of Section 5226 of the California
Nonprofit Public Benefit Corporation Law, any Director may resign effective upon giving
written notice to the President, the Secretary or the Board of Directors, unless the notice specifies
a later time for the effectiveness of such resignation. If the resignation is effective at a future
time, a successor may be selected before such time, to take office when the resignation becomes
effective.
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A vacancy or vacancies in the Board of Directors shall be deemed to exist in case of the
death, resignation, or removal of any Director, or if the authorized number of Directors is
increased.
Vacancies in the Board shall be filled in the same manner as the Director whose office is
vacant was selected. Each Director so selected shall hold office until the expiration of the term
of the replaced Director and until a successor has been selected and has accepted the office.
Section 3.05. Organization and Annual Meetings. The Board of Directors shall hold an
anrival meeting for the purpose of organization, selection of officers, and the transaction of other
business. Annual meetings of the Board shall be held without call or notice on
Pending such organization meeting, all officers of the Corporation shall hold over, except any
officer required by law or these Bylaws to be a Director and who does not qualify as a Director.
A Director elected at such meeting of the Board of Directors shall forthwith become a member of
the Board of Directors for purposes of such organization.
In the event such an organizational meeting shall not occur at the annual meeting, it shall
thereafter be held at the next regular meeting or at a special meeting, and notice thereof shall be
given in the manner provided in Section 3.07 hereof for notice of special meetings.
Section 3.06. Regular Meetings. The Board of Directors by resolution may provide for
the holding of regular meetings and may fix the time and place of holding such meetings. Notice
of regular meetings need not be given.
Section 3.07. Soecial Meetings: Notice Waiver. A special meeting of the Board of
Directors shall be held whenever called by the President or by a majority of the Directors.
Written notice of each such meeting shall be delivered personally or by telegram to each Director
at least 48 hours before the time of such meeting or shall be sent to each Director by mail,
charges prepaid, at least four days before the time of such meeting as specified in the notice. The
call and notice shall be posted at least 24 hours prior to the special meeting in a location that is
freely accessible to members of the public. The call and notice shall signify the time and place
of the special meeting and the business to be transacted. No other business shall be considered at
such meeting by the Board of Directors. Notice of adjournment of a meeting need not be"given
to absent Directors if the time and place are fixed at the meeting adjourned. The transactions of
any meeting of the Board of Directors, however called and noticed and wherever held, shall be as
valid as though had at a meeting held affer regular call and notice, if a quorum is present;
provided, however, that before the meeting, each of the Directors not present signs a written
waiver of notice and files said written waiver of notice with the Secretary; and provided further,
that notice be given to each local newspaper of general circulation, radio or television station
requesting notice in writing pursuant to Government Code Section 54956. All waivers shall be
filed with the corporate records and made a part of the minutes of the meeting.
Section 3.08. Adiourned Meetings: Notice of Adiournment. The Board of Directors
may adjourn any regular, adjourned regular, special or adjourned special meeting to a time and
place specified in the order of adjournment. Less than a quorum may so adjourn from time to
time. A copy of the order or notice of adjournment shall be conspicuously posted on or near the
door of the place where the regular, adjourned regular, special or adjourned special meeting was
SFLIB1/108183,'/-'/13350'00495iboAmuns/Sepeember29, 1999-6:29
held within 24 hours after the time of the adjournment. When a regular or adjourned regular
meeting is adjourned as provided in this section, the resulting adjourned regular meeting is a
regular meeting for all purposes.
Section 3.09. Quorum. A majority of the authorized number of Directors shall be
necessary to constitute a quorum for the transaction of business. Every act or decision done or
made by a majority of the Directors present at a meeting duly held at which a quorum is present
shall be regarded as the act of the Board of Directors, unless a greater number is required by law
or by the Articles of Incorporation.
Section 3.10. Fees and Compensation. Directors shall receive no compensation, but
each Director may be reimbursed his or her necessary and actual expenses, including travel
incident to his services as Director, pursuant to resolution of the Board of Directors. Any
Director may elect, however, to decline said reimbursement.
Section 3.11. Nonliability for Debts. The private property of the Directors shall be
exempt from execution or other liability for any debts, liabilities or obligations of the
Corporation, and no Director shall be liable or responsible for any debts, liabilities or obligations
of the Corporation.
Section 3.12. Indemnitv by Corporation for Litigation Expenses of Officer. Director or
Emnlovee. Should any Director, officer or employee of the Corporation be sued, either alone or
with others, because he is or was a Director, officer or employee of the Corporation, in any
proceeding arising out of his alleged misfeasance or nonfeasance in the performance of his duties
or out of any alleged wrongful act against the Corporation or by the Corporation, indemnity for
his reasonable expenses, including attorneys' fees incurred in the defense of the proceedings,
may be assessed against the Corporation, its receiver, or its director by the court in the same or a
separate proceeding if the person sued acted in good faith and in a manner such person
reasonably believed to be in the best interests of the Corporation and, in the case of a criminal
proceeding, had no reasonable cause to believe the conduct of such person was unlawful. The
amount of such indemnity shall be so much of the expenses, including attorneys' fees, incurred in
the defense of the proceeding, as the court determines and finds to be reasonable.
Section 3.13. Ralph M. Brown Act. Notwithstanding any of the provisions of these
Bylaws to the contrary, all meetings of Directors shall be subject to the Ralph M. Brown Act,
commencing at Section 54950 of the Government Code of the State of California.
Section 3.14. Conduct of Meetings. The President or, in the President's absence, the
Vice President, or a Chairman chosen by a majority of the Directors present, shall preside.
ARTICLE IV
OFFICERS
Section 4.01. Officers. The officers of the Corporation shall be a President, a Vice
President, Secretary and a Treasurer. The Corporation may also have, at the discretion of the
Board of Directors, one or more additional Vice Presidents, one or more Assistant Secretaries,
one or more Assistant Treasurers, and such other officers as may be appointed by the Board of
SFLIBI,'103l33././13350/QO»95/bowTrans/September29, 1999 -6:29
4
Directors. One person may hold two or more offices, except that the offices of President and
Secretary may not be combined.
Section 4.02. Desi --nation and Election. The President of the Corporation shall be the
then -current Mayor of the City; the Vice President of the Corporation shall be the then -current
Mayor pro tem of the City; the Secretary of the Corporation shall be the then -current City Clerk
of the City; the Treasurer of the Corporation shall be the then -current Finance Director of the
City of Lodi; and the Legal Counsel to the Corporation shall be the then -current City Attorney of
the City. Any other officers of the Corporation shall be chosen by the Board of Directors. Each
officer shall hold office until the officer shall resign, be removed, or otherwise become
disqualified to serve, or the officer's successor shall be elected and qualified.
Section 4.03. Removal and Resignation. Any officer may resign, or may be removed,
with or without cause, by the Board of Directors at any time. Vacancies caused by death,
resignation or removal of any officer may be filled by appointment by the Board of Directors, or
by the President until such appointment by the Board of Directors.
Section 4.04. President. The President shall be the executive officer of the Corporation
and, subject to the control of the Board of Directors, shall have general supervision, direction and
control of the affairs of the Corporation. The President shall preside at all meetings of members
and meetings of the Board of Directors. The President shall be ex officio member of all standing
committees, shall have the general powers and duties of management usually vested in the office
of President of a corporation, and shall have such other powers and duties as may be prescribed
by the Board of Directors or by these Bylaws.
Section 4.05. Vice President. In the absence or disability of the President, the Vice
President shall perform all the duties of the President, and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the President. The Vice President shall
have such other powers and perform such other duties as from time to time may be prescribed for
the Vice President by the Board of Directors or by the Bylaws.
Section 4.06. Secretary. The Secretary shall keep at the principal office of the
Corporation a book of minutes of all meetings of Directors, with the time and place of holding,
how called or authorized, the notice thereof given, and the names of those present at such
meetings. The Secretary shall give or cause to be liven notice of all meetings of the Board of
Directors of the Corporation, shall keep the corporate records in safe custody and shall have such
other powers and perform such other duties as may be prescribed by the Board of Directors or
these Bylaws.
Section 4.07. Treasurer. The Treasurer shall be the chief financial officer of the
Corporation and shall keep and maintain adequate and correct books of account showing the
receipts and disbursements of the Corporation and an account of its cash and other assets, if any.
Such books of account shall at all reasonable times be open to inspection by any Director. The
Treasurer shall deposit all moneys of the Corporation with such depositories as are designated by
the Board of Directors, and shall disburse the funds of the Corporation as may be ordered by the
Board of Directors, and shall render to the President or the Board of Directors, upon request,
statements of the financial condition of the Corporation.
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Section 4.08. Assistant Secretaries and Assistant Treasurers. The Assistant Secretaries
and the Assistant Treasurers in the order of their seniority as specified by the Directors shall, in
the absence or disability of the Secretary or the Treasurer, respectively, perform the duties and
exercise the powers of the Secretary or Treasurer and shall perform such duties as the Board of
Directors shall prescribe.
Section 4.09. Subordinate Officers. Subordinate officers shall perforin such duties as
shall be prescribed from time to time by the Board of Directors or the President.
ARTICLE V
i✓IISCELLAINTEOUS
Section 5.01. Execution of Documents. The Board of Directors may authorize any
officer or officers as agent or agents to enter into any contract or execute any instrument in the
name of and on behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board of Directors, no officer, agent or other
person shall have any power or authority to bind the Corporation by any contract or engagement
or to pledge its credit or to render it liable for any purpose or to any amount.
Section 5.02. Inspection of Bylaws. The Corporation shall keep in its principal office
the original or a copy of these Bylaws, as amended or otherwise altered to -date, certified by the
Secretary, which shall be open to inspection by the members and the Directors at all reasonable
times during office hours.
Section 5.03. Annual Report. The annual report referred to in Section 6321 of the
Nonprofit Public Benefit Corporation Law of the State of California is expressly dispensed with.
Section 5.04. Fiscal Year. The fiscal year of the Corporation shall begin July 1 and end
June 30 of each year, except for the first fiscal year which shall run from the date of
incorporation to June 30, 2000.
Section 5.05. Dissolution. The Corporation may be dissolved by vote of the Directors,
or by the action of the Board of Directors in accordance with the provisions of California law. In
the event of dissolution of the Corporation in any manner and for any cause, after the payment or
adequate provision for the payment of all of its debts and liabilities, all of the remaining funds,
assets and properties of the Corporation shall be paid or distributed to the City. If for any reason
the City is unable or unwilling to accept the assets of the Corporation; said assets will be
distributed to the Federal Government; to a state or local government for public purposes; or to a
nonprofit fund, foundation, or corporation which is organized and operated for charitable
purposes and which has established its tax-exempt status under Section 501(c)(3) or 501(c)(4) of
the Internal Revenue Code of 1986, as amended.
Section 5.06. Construction and Definitions. Unless the context otherwise requires, the
general provisions, rules of construction and definitions contained in the Nonprofit Public
Benefit Corporation Law of the State of California shall govern the construction of these Bylaws.
If any section, subsection, sentence, clause or phrase of these Bylaws, or the application thereof,
is contrary to the Nonprofit Public Benefit Corporation Law of the State of California, the
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6
provisions of that law shall prevail. Without limiting the generality of the foregoing, the
masculine gender includes the feminine and neuter, the singular number includes the plural and
the plural number includes the singular, and the term "person" includes a corporation as well as
a natural person.
ARTICLE VI
GENERAL PROVISIONS
Section 6.01. Pavment of Monev. Sianatures. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness issued in the name of or payable to
the Corporation and any and all securities owned by or held by the Corporation requiring
signature for transfer shall be signed or endorsed by such person or persons and in such manner
as from time to time shall be determined by the Board of Directors.
Section 6.02. Annual Audit. The affairs and financial condition of the Corporation shall
be audited annually at the end of each fiscal year (as provided in Section 5.04 above)
commencing with fiscal year 1999-2000 by an independent certified public accountant selected
by the Board of Directors, and a written report of such audit and appropriate financial statements
shal l be submitted to the Board cf Directors prior to the next regular meeting of the Board of
Directors of the Corporation following the completion of such audit. Additional audits may be
authorized as considered necessary. or desirable by the Board of Directors.
ARTICLE VII
EXEMPT ACTIVITIES
Section 7.01. Exempt Activities. Notwithstanding any other provisions of these Bylaws,
no Director, officer, employee or representative of the Corporation shall take any action or carry
on any activity by or on behalf of the Corporation not permitted to be taken or carried on by an
organization exempt under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986,
as amended, and the Regulations promulgated thereunder as they now exist or as they may
hereafter be amended.
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ARTICLE VIII
AMENDMENTS
Section 5.01. Power of Directors. New Bylaws may be adopted or these Bylaws may be
amended or repealed by the vote of the Board of Directors. No amendment to these Bylaws shall
be effective until approved by the Board of Directors.
ADOPTED by the Board of Directors of the Lodi Financing Corporation on
11999.
LM -
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Secretary
SECRETARY'S CERTIFICATE
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary of the Lodi Financing
Corporation, a California nonprofit public benefit corporation; and
2. That the foregoing Bylaws constitute a full, true and correct copy of the Bylaws
of said Corporation in full force and effect as of the date hereof.
N WITNESS WHEREOF, I have hereunto subscribed my name this day of
, 1999.
M
Secretary
SEL I B I/ 103133%3/ 133 50i00493,boK=ns/Stptc,-Der 29. 1999 - 6:29
9
RESOLUTION NO. 90-2
----------------------
----------------------
A RESOLUTION OF THE LODI PUBLIC IMPROVEMENT CORPORATION
AMENDING BYLAWS OF THE
LODI PUBLIC IMPROVEMENT CORPORATION
RESOLVED BY THE BOARD OF DIRECTORS OF THE LODI PUBLIC
IMPROVEMENT CORPORATION, that the Bylaws of such organization, duly
adopted on the 4th day of May 1988 are hereby amended by the deletion
in its entirety of Article V, Section 4, requiring an annual audit.
Dated: May 2, 1990
I hereby certify that the foregoing is a full, true and correct
copy of a resolution duly passed and adopted by the Board of Directors
of the Lodi Public Improvement Corporation, at a.meeting thereof duly
held on the 2nd day of May, 1990, by the following vote of the .
Directors thereof:
AYES, and in favor thereof, Directors: Hinchman, Olson, Pinkerton,
Reid and Snider (Chairman)
NOES, Directors: None
ABSENT, Directors: None
(31 Ak
' nifer 4. Perrin
ing S cretary
Approved As To Form:
--6> (.,j
Bob McNatt
City Attorney
RESPIC90.2/TXTA.02J
GFB3726 13
RESOLUTION NO. 88-1
A RESOLUTION ADOPTING BYLAWS
LODI PUBLIC IMPROVEMENT CORPORATION
RESOLVED, by the Board of Directors of the Lodi Public Improvement
Corporation, that the Bylaws of the Lodi Public Improvement Corporation, in the form
hereto attached and incorporated herein by reference, are hereby adopted and approved
and shall stand as the Bylaws of this Corporation until valid amendment thereof.
I hereby certify that the foregoing is a full, true and correct copy of a resolution
duly passed and adopted by the Board of Directors of the Lodi Public Improvement
Corporation, at a meeting thereof duly held on the 41h day of May, 1988, by the following
vote of the Directors thereof:
AYES, and in favor thereof, Directors
NOES, Directors:
ABSENT, Directors:
Approved As 'b r-bm,
BohSy i•7. bic:vatt
City Attorney
E . --Tan, Olson, Reid, & Sni.der (mavor
Pro Te.rcore)
None
Pinker -'ton
1
Secretary
22023-02 JHHW:3DO:GF3 G:l2JlBH � GF3F2i
BYLAWS
OF
LODI PUBLIC IMPROVEMENT CORPORATION
ARTICLE 1
Offices and Seal
Section 1. Offices. The principal office of the Corporation for the transaction of
business shall be 221 West Pine Street, Lodi, California 95240. The Board of Directors
may, however, fix and change from time to time the principal office from one location to
another by noting the change of address in the minutes of the meeting of the Board of
Directors at which the address was fixed or changed. The fixing or changing of such
address shall not be deemed an amendment to these Bylaws.
Section 2. Seal. The Corporation shall have a seal, consisting of two (2)
concentric circles with the words "Lodi Public Improvement Corporation", with the date
of incorporation of the Corporation.
ARTICLE II
Directors
Section 1. Powers. Subject to the limitations of the Articles of Incorporation of
the Corporation, the terms of these Bylaws, and the laws of the State of California, the
powers of the Corporation shall be vested in and exercised by and its property controlled
and its affairs conducted by the Board of Directors.
Section 2. Number. The Corporation shall have five (5) Directors. Directors are
collectively to be known as the Board of Directors. The number of Directors may be
changed by a Bylaw or amendment thereof duly adopted by the Board of Directors.
Section 3. Selection, Tenure of Office and Vacancies -'—The individuals who act
as the members of the City Council (the "City Council") of the City of Lodi, California (the
"City") shall constitute the Board of Directors of the Corporation, and each member of
the City Council shall be and remain a member of the Board of Directors of the
Corporation for so long as such member remains a member of the City Council.
Section 4. Compensation. Directors shall serve without compensation but each
Director may be reimbursed his or her necessary and actual expenses, including travel
incident to his services as Director, pursuant to resolution of the Board of Directors. Any
Director may elect, however, to decline said reimbursement.
Section 5. Organization Meetings. Immediately following the annual meeting of
the Board of Directors or any special meeting of the Board of Directors at which
Directors shall have been elected, the Directors shall meet for the purpose of organizing
the Board, the election of officers and the transaction of such business as may come
before the meeting. Pending such organization meeting, all officers of the Corporation
shall hold over, except any officer required by law or these Bylaws to be a Director and
who does not qualify as a Director. A Director elected at such meeting of the Board of
Directors shall forthwith become a member of the Board of Directors for purposes of
such organization.
In the event such an organizational meeting shall not be held immediately
following such meeting of the Board of Directors, it shall thereafter be held at the next
regular meeting or at a special meeting and notice thereof shall be given in the manner
provided in Section 7 of this Article for notice of special meetings.
Section 6. Regular and Organizational Meetings. Regular meetings of the
Board of Directors shall be held at such time as the Board may fix by resolution from
time to time; provided, however, that at least one regular meeting shall be held each
year and such meetings shall, in all respects, conform to provisions of the Ralph M.
Brown Act, being Sections 54950 through 54961 of the Government Code of the State of
California (the "Brown Act").'
No. notice of any organizational meeting of the Board of Directors, held
immediately following the annual meeting of the Board of Directors or on or after any
special meeting of the Board of Directors shall have been elected, need be given;
provided, that if such an organizational meeting is not held immediately following such
meeting of the Board of Directors, then notice thereof shall be given in a manner
provided in Section 7 of this Article, in the same manner as notice of special meetings.
Section 7. Special Meetings. Special meetings of the Board of Directors shall
be called, noticed and held in accordance with the provisions of Section 54956 of the
Brown Act.
Section 8. Ouorum. A quorum shall consist of a majority of the members of the
Board of Directors unless a greater number is expressly required by statute, by the
Articles of Incorporation of the Corporation, or by these Bylaws. Every act or decision
done or made by a majority of the Directors present at a meeting duly held at which a
quorum is present, shall be the act of the Board of Directors.
Section 9. Order of Business. The order of business at the regular meeting of
the Board of Directors and, so far as possible, at all other meetings of the Board of
Directors, shall be essentially as follows, except as otherwise determined by the Directors
at such meeting:
(a) Report on the number of Directors present in person in order to determine the
existence of a quorum.
(b) Reading of the notice of the meeting and proof of the delivery or mailing
thereof, or the waiver or waivers of notice of the meeting then filed, as the
case may be.
-2-
(c) Reading of unapproved minutes of previous meetings of the Board of
Directors and the taking of action with respect to approval thereof.
(d) Presentation and consideration of reports of officers and committees.
(e) Unfinished business.
(f) New business.
(g) Adjournment.
Section 10. Resignation of Directors. Any Director of the Corporation may resign
at any time by giving written notice to the President or to the Board of Directors;
provided, however, in the event of such resignation, such Director's position shall remain
vacant until a new member of the City Council is elected to fill such Director's position.
Such resignation shall take effect at the time specified therein, and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to make it
effective.
Section 11. Nonliability for Debts. The private property of the Directors shall be
exempt from execution or other liability for any debts, liabilities or obligations of the
Corporation and no Director shall be liable or responsible for any debts, liabilities or
obligations of the Corporation. - "
Section 12. Indemnity by Corporation for Litigation Expenses of Officer,
Director or Employee. Should any Director, officer or employee of the Corporation be
sued, either alone or with others, because he is or was a director, officer or employee of
the Corporation, in any proceeding arising out of his alleged misfeasance or nonfeasance
in the performance of his duties or out of any alleged wrongful act against the
Corporation or by the Corporation, indemnity for his reasonable expenses, including
attorneys' fees incurred in the defense of the proceedings, may be assessed against the
Corporation, its receiver, or its director by the court in the same or a separate
proceeding if the person sued acted in good faith and in a manner such person
reasonably believed to be in the best interests of the Corporation and, in the case of a
criminal proceeding, had no reasonable cause to believe the conduct of such person was
unlawful. The amount of - such indemnity shall be so much of the expenses, including
attorneys' fees, incurred in the defense of the proceeding, as the court determines and
finds to be reasonable.
ARTICLE III
Officers
Section 1. Officers. The officers of the Corporation shall be a President, a Vice
President, a Secretary and such other officers as the Board of Directors may appoint.
The Mayor of the City shall act ex officio as the President of the Corporation, the Mayor
pro tem of the City shall act ex officio as the Vice President of the Corporation, and the
City Clerk of the City shall act ex officio as the Secretary of the Corporation. The
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Corporation may also have, at the discretion of the Board of Directors, one or more
additional Vice Presidents, one or more Assistant Secretaries, and one or more Assistant
Treasurers. In addition to such officers, the Finance Director of the City, or his designee,
shall act ex officio as the Treasurer of the Corporation; and the City Attorney of the City
shall act ex officio as legal counsel to the Corporation.
Section 2. Election of Officers. The officers of the Corporation (other than the
Treasurer and legal counsel to the Corporation) shall be chosen by and shall serve at the
pleasure of the Board of Directors and each shall hold office until any such officer shall
resign or shall be removed or otherwise disqualified to serve or any successor shall be
elected and qualified to serve.
Section 3. Subordinate Officers. The Board of Directors may elect or authorize
the appointment of such other officers than those hereinabove mentioned as the
business of the Corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in these Bylaws, or as the
Board of Directors from time to time may authorize or determine.
Section 4. Removal of Officers. Any officer may be removed, either with or
without cause, by a majority of the Directors then in office at any regular or special
meeting of the Board, or, except in the case of an officer chosen by the Board of
Directors, by any officers upon _whom such power of removal may be conferred by the
Board of Directors. Should* a vacancy occur in any office as a result of death,
resignation, removal, disqualification or any other cause, the Board of Directors may
delegate the powers and duties of such office to any officers or to any Directors until
such time as a successor for said office has been elected and appointed.
Section 5. President. The President shall preside at all meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from time
to time assigned to him by the Board of Directors or be prescribed by the Bylaws.
The President shall also be the chief corporate officer of the Corporation and shall,
subject to the control of the Board of Directors, have general supervision, direction and
control of the business and officers of the Corporation. He shall preside at all meetings
of the Board of Directors. He shall be ex officio member of all standing committees, and
shall have the general powers and duties of management USually vested in the office of
President of a corporation and shall have such other powers and duties as may be
prescribed by the Board of Directors or by these Bylaws.
Section B. Vice President. In the absence or disability of the President, the Vice
President, or the Vice Presidents in order of their ranks as fixed by the Board of
Directors, or if not ranked, the Vice President designated by the Board of Directors, shall
perform all the duties of the President and when so acting shall have all the powers of
and be subject to all of the restrictions upon the President. The Vice Presidents shall
have such other powers and perform such other duties as may from time to time be
prescribed for them, respectively, by the Board of Directors or by these Bylaws.
Section 7. Secretary. The Secretary shall keep or cause to be kept a book of
minutes at the principal office or at such other place as the Board of Directors may
order, of all meetings of the Directors, with the time and place of holding, whether
-4-
regular or special, and if special, how authorized, the notice thereof given, the names of
those present at Directors` meetings and the proceedings thereof. The Secretary shall
give or cause to be given notice of all meetings of the Board of Directors of the
Corporation, shall keep the corporate records in safe custody and shall have such other
powers and perform such other duties as may be prescribed by the Board of Directors or
these Bylaws.
Section 8. Treasurer. The Treasurer shall keep and maintain or cause to be kept
and maintained adequate and correct amounts of its assets, liabilities, receipts,
disbursements, gains and losses. The books of account shall at all times be open to
inspection by any Director. The Treasurer shall deposit all monies and other valuables in
the name and to the credit of the Corporation in such depositories as may be designated
by the Directors. He shall disburse the funds of the Corporation as shall be ordered by
the Board of Directors, shall render to the President and the Directors whenever they
shall request it, an account of all of his transactions as Treasurer and of the financial
condition of the Corporation, shall take proper vouchers for all disbursements of the
funds of the Corporation, and shall have such other powers and perform such other
duties as may be prescribed by the Board of Directors or by these Bylaws.
Section 9. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretaries and the Assistant Treasurers in the order of their seniority as specified by the
Directors shall, in the absence or disability of the Secretary or the Treasurer, respectively,
perform the duties and exercise the powers of the Secretary or Treasurer and shall
perform such duties as the Board of Directors shall prescribe.
ARTICLE IV
Objects and Purposes
Section 1. Nature of Objects and Purposes. The business of the Corporation is to
be operated and conducted in the promotion of its objects and purposes as set forth in
Article II of its Articles of Incorporation.
Section 2. Dissolution. The Corporation may be dissolved by vote of the
Directors, or by the action of the Board of Directors in accordance with the provisions of
California law. Upon the dissolution of the Corporation, and after payment or provision
for payment, all debts and liabilities, the assets of the Corporation shall be distributed to
the City. If for any reason the City is unable or unwilling to accept the assets of the
Corporation, said assets will be distributed to the Federal Government; to a state or local
government for public purposes; or to a nonprofit fund, foundation, or corporation which
is organized and operated for charitable purposes and which has established its tax-
exempt status under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1986,
as amended.
Section 3. Merger. The Corporation may merge with other corporations organized
solely for nonprofit purposes, qualified and exempt from Federal taxation pursuant to
Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1996, as amended, and
-5-
from State taxation, upon compliance with the provisions of California law relating to
merger and consolidation.
ARTICLE V
General Provisions
Section 1. Payment of Money, Signatures. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness issued in the name of or
payable to the Corporation and any and all securities owned by or held by the
Corporation requiring signature for transfer shall be signed or endorsed by such person
or persons and in such manner as from time to time shall be determined by the Board of
Directors.
Section 2. Execution of Contracts. The Board of Directors, except as in the
Bylaws otherwise provided, may authorize any officer or officers, agent or agents, to
enter into any contract or execute any contract or execute any instrument in the name of
and on behalf of the Corporation and such authority may be general or confined to
specific instances and unless so authorized by the Board of Directors, no officer, agent
or employee shall have any power or authority -to bind the Corporation by any contract or
engagement or to pledge its credit or to render it liable for any purpose or in any
amount....
Section 3. Fiscal Year. The fiscal year of the Corporation shall commence on the
1st day of July of each year and shall end on the 30th day of June of the next succeeding
year.
Section 4. Annual Audit. The affairs and financial condition of the Corporation
shall be audited annually at the end of each fiscal year (as provided in Section 3 above)
commencing with fiscal year 1988-1989 by an independent certified public accountant
selected by the Board of Directors and a written report of such audit and appropriate
financial statements shall be submitted to the Board of Directors prior to the next regular
meeting of the Board of Directors of the Corporation following the completion of such
audit. Additional audits may be authorized as considered necessary or desirable by the
Board of Directors.
ARTICLE VI
Exempt Activities
Notwithstanding any other provisions of these Bylaws, no Director, officer, employee
or representative of the Corporation shall take any action or carry on any activity by or
on behalf of the Corporation not permitted to be taken or carried on by an organization
exempt under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code of 1980, as
amended, and the Regulations promulgated thereunder as they now exist or as they may
hereafter be amended.
—6—
ARTICLE VII
Amendment to Bylaws
These Bylaws may be amended by majority vote of the Board of Directors.
ADOPTED by the Board of Directors of the Lodi Public Improvement Corporation on
May 4, 1988.
B } � n
By 1(/,1;1: lit ��' •r�ce1l1fi/
Secretary
—7—
SECRETARY'S CERTIFICATE
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary of the Lodi Public Improvement
Corporation, a California nonprofit public benefit corporation; and
2. That the foregoing Bylaws 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 this Qr2 day of
J
11
By
Secretary
":E
RESOLUTION NO. LFC-3
A RESOLUTION APPOINTING COUNSEL FOR
THE LODI FINANCING CORPORATION
NOW, THEREFORE, BE IT RESOLVED by the Directors of the
Lodi Financing Corporation that the City Attorney for the City of Lodi shall act as
Counsel to the Lodi Financing Corporation.
Dated: November 3, 1999
--------------------------------------------------------------
--------------------------------------------------------------
I hereby certify that Resolution No. LFC-3 was passed and adopted by the
Board of Directors of the Lodi Financing Corporation in a regular meeting held
November 3, 1999, by the following vote:
AYES: DIRECTORS — Hitchcock, Mann, Nakanishi, Pennino and Land
(President)
NOES: DIRECTORS — None
ABSENT: DIRECTORS — None
ABSTAIN: DIRECTORS — None
LFC-3
RESOLUTION NO. LFC-4
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE LODI
FINANCING CORPORATION RELATING TO VARIABLE RATE
CERTIFICATES OF PARTICIPATION (ENVIRONMENTAL
ABATEMENT PROGRAM), APPROVING THE FORMS OF AND
AUTHORIZING THE EXECUTION AND DELIVERY OF A PROGRAM
RECEIPTS SALE AND REPURCHASE AGREEMENT, A TRUST
AGREEMENT, A CERTIFICATE PURCHASE CONTRACT AND A
PLACEMENT AGENT AGREEMENT AND AUTHORIZING CERTAIN
OTHER RELATED ACTIONS AND CERTAIN OTHER DOCUMENTS
IN CONNECTION THEREWITH
WHEREAS, the Lodi Financing Corporation (the "Corporation") is a nonprofit public
benefit corporation organized and existing under the laws of the State of California with the
authority to assist with the financing of the costs of the environmental abatement program of the
City of Lodi (the "City"); and
WHEREAS, the City and the Corporation desire to enter into that certain Program
Receipts Sale and Repurchase Agreement ("Sale and Repurchase Agreement"), dated as of
, by and between the City and the Corporation, the form of which has been
presented to this Board of Directors at the meeting at which this Resolution has been adopted,
pursuant to which the City will agree to irrevocably sell and convey to the Corporation its right to
receive Program Receipts (as defined in the Sale and Repurchase Agreement), and the
Corporation will resell and reconvey such Program Receipts to the City in consideration of the
City's agreement to make certain Repurchase Payments (as described in the Sale and
Repurchase Agreement) in connection therewith, which payments have been pledged to the
owners of the Certificates of Participation (defined below) by the Corporation pursuant to a
Trust Agreement, dated as of (the "Trust Agreement"), by and between the
Corporation and the Trustee named therein, as trustee (the "Trustee"), the form of which has
been presented to this Board of Directors at the meeting at which this Resolution has been
adopted; and
WHEREAS, the Corporation and the City have determined that it would be in the best
interests of the Corporation, the City and citizens of the community to authorize the execution
and delivery of Certificates of Participation in an aggregate principal amount not to exceed
$16,000,000 (the "Certificates"), which Certificates evidence proportionate interests in certain
Repurchase Payments to be made pursuant to the Sale and Repurchase Agreement, and
which financing will facilitate the effective and expeditious abatement of an existing or
threatened Environmental Nuisance, as defined in the City's Comprehensive Municipal
Environmental Response and Liability Ordinance, being Ordinance No. 1684, adopted
November 17, 1999 and effective December 17, 1999, repealing and reenacting Title 8, chapter
8.24 of the Lodi Municipal Code (the "Ordinance") within or affecting the City.
NOW, THEREFORE, the Board of Directors of the Corporation does hereby resolve as
follows:
SECTION 1: Certificates. This Board of Directors hereby authorizes the execution and
delivery of the Certificates in an aggregate principal amount not to exceed $16,000,000 in
accordance with the terms and provisions of the Trust Agreement. The purposes for which the
proceeds of the sale of the Certificates shall be expended are to assist with the cost of financing
the City's environmental abatement program, as described in the Sale and Repurchase
Agreement.
SECTION 2: Certificate Documents. The Sale and Repurchase Agreement, the Trust
Agreement, the Certificate Purchase Contract and the Placement Agent Agreement presented
at this meeting are approved. The President, Vice -President or the President's designee is
authorized and directed to execute and deliver said agreements. The agreements shall be
executed in substantially the forms hereby approved, with such additions thereto and changes
therein as are recommended or approved by counsel to the Corporation and approved by such
officers of the Corporation executing the documents, such approval to be conclusively
evidenced by the execution and delivery thereof.
SECTION 3: Other Actions. The President, Vice President, Secretary and such other
officers of the Corporation are authorized and directed, jointly and severally, to do any and all
things and to execute and deliver any and all documents which they may deem necessary or
advisable in order to consummate the sale and delivery of the Certificates, and the delivery of
the documents described above, and otherwise effectuate the purposes of this Resolution, and
such actions previously taken by such officers are hereby ratified and confirmed.
SECTION 4: Effective Date. This Resolution shall take effect upon the effective date
of the Ordinance, unless the Ordinance does not become effective by June 1, 2000, in which
event this Resolution shall be of no further force and effect.
vote:
ADOPTED, SIGNED AND APPROVED this 3rd day of November, 1999, by the following
AYES: BOARD MEMBERS — Hitchcock, Mann, Nakanishi, Pennino and
Land (President)
NOES: BOARD MEMBERS — None
ABSENT: BOARD MEMBERS — None
ABSTAIN: BOARD MEMBERS — None
INCORPORATOR'S DESIGNATION OF DIRECTORS
LODI FINANCING CORPORATION
I am the Incorporator of the Lodi Financing Corporation (the "Corporation").
The Articles of Incorporation of the Corporation were filed with the California Secretary
of State's office on October 12, 1999.
As the Incorporator, I hereby designate the following persons as directors of the
Corporation:
Ira( kill <711
Date
Keith Land
Steve Mann
Susan Hitchcock
Alan Nakanishi
Phillip Pennino
Eric D. Tashman
Incorporator
2016959
fin \c
SECRETARY OF STATE
I, BILL JONES, Secretary of State of the State of California,
hereby certify:
That the attached transcript of page(s) has
been compared with the record on file in this office, of
which it purports to be a copy, and that it is full, true
and correct.
Sec/State Form CE -107 (rev. 9198)
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal of
the State of California this day of
OCT 121999
Secretary of State
OSP 98 13524
2016959
,... i _
ARTICLES OF INCORPORATION
OF GCT
OF Si�T_
LODI FINANCING CORPORATION ' - -
I.
The name of this corporation is LODI FINANCING CORPORATION.
II.
This corporation is a nonprofit public benefit corporation and is not organized for the
private gain of any person. It is organized under the Nonprofit Public Benefit Corporation Lav
(commencing at Section 5110 of the California Corporations Code) for public purposes. The
public purposes for which the corporation is organized include the following: to provide
financial assistance to the City of Lodi (the "City") by assisting the City with the financing of the
costs of its environmental abatement program, thus enhancing the water supply of the City for
the use, benefit and enjoyment of the public served by the City, as well as any other purpose
incidental thereto.
This corporation is organized under the direction of a group of public-spirited citizens for
the sole purpose of assisting the City with the financing as a civic venture for and on behalf of
the City. This corporation shall never engage in any business or activity other than that
necessary or convenient for or incidental to the carrying out of the purpose set forth in Article II
hereof.
IV.
No part of the net earnings, if any, of this corporation, either during its existence or upon
its dissolution, shall ever inure to the benefit of any member, private shareholder, individual,
person, firm or corporation excepting only the City. No substantial part of the activities of this
corporation shall consist of carrying on propaganda, or otherwise attempting to influence
legislation; nor shall it participate in, or intervene in (including the publishing or distributing of
statements) any political campaign on behalf of any candidate for public office. The property,
assets, profits and net revenues of this corporation are irrevocably dedicated to the City;
provided, however, that until all indebtedness of this corporation shall have been paid, such net
revenues may be used for the purpose of paying or calling for redemption of any bonds,'
certificates of participation, debentures, notes or other evidences of such indebtedness. Upon the
dissolution, liquidation or winding up of this corporation, or upon abandonment, the assets of
this corporation remaining after payment of all or provision for all debts or liabilities of this
corporation and after compliance with Chapters 15, 16 and 17 of the California Nonprofit Public
Benefit Corporation Law shall be distributed to the City to the extent said assets relate to any
lease or agreement between this corporation and said City. This corporation is organized and
operated exclusively for public purposes within the meaning of Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"). Notwithstanding any other
provision of these Articles, the corporation shall not carry on any other activities not permitted to
be carried on (a) by a corporation exempt from federal income tax under Section 501(c)(3) of the
Internal Revenue Code or (b) by a corporation contributions to which are deductible under
Section 170(c)(2) of the Internal Revenue Code.
2
t
Is:
IV
The name and address in this state of the corporation's initial agent for service of process
Dixon Flynn
c/o City of Lodi
221 West Pine Street
Lodi, California 95240-1910
VI.
The number of directors of this corporation shall be fixed by the Bylaws. The persons
who are directors of this corporation, from time to time, shall be selected as provided in the
Bylaws. The directors of this corporation shall have no liability for dues or assessments. There
shall be no members of the corporation.
IN WITNESS WHEREOF, for the purposes of forming the corporation under the laws of
the State of California, the undersigned has executed these Articles of Incorporation this 12`h day
of October, 1999.
3
Eric D. Tashman
Incorporator
I declare that I am the person who executed the above Articles of Incorporation, and that
this instrument is my act and deed.
Eric D. Tashman
Incorporator
PROGRAM RECEIPTS SALE AND
REPURCHASE AGREEMENT
Dated as of [Dated Date]
Between the
THE CITY OF LODI,
As Seller and Repurchaser, and
LODI FINANCING CORPORATION,
as Purchaser
1073224/28/13350/00495/October 13,1999 - 1:58
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section1.1. Definitions...................................................................................................................4
ARTICLE II
CONTENT OF CERTIFICATES AND OPINIONS
Section 2.1. Content of Statements and Opinions......................................................................... 15
Section 2.2. Reasonable Basis for Statements and Opinions........................................................ 15
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the City.............................................................. 16
ARTICLE IV
CONVEYANCE OF PROGRAM RECEIPTS
Section 4.1. Sale and Repurchase of Program Receipts............................................................... 18
Section 4.2. Sale Effected Without Further Action...................................................................... 18
Section 4.3. Protective Filings...................................................................................................... 18
ARTICLE V
TERM OF THE AGREEMENT
Section5.1. Term.......................................................................................................................... 18
ARTICLE VI
COVENANTS AND SECURITY PROVISIONS REGARDING PROGRAM RECEIPTS
Section 6.1. Pledge of Program Receipts...................................................................................... 19
Section6.2. No Liens....................................................................................................................19
Section6.3. Notice of Liens.......................................................................................................... 19
Section 6.4. Collection and Remittance of Program Receipts...................................................... 19
Section 6.5. Subordination of Claims under Retainer and Fee Agreement .................................. 20
Section6.6. Settlements................................................................................................................ 21
Section6.7. Payments................................................................................................................... 22
1073224/28/13350/00495/October 13, 1999 - 1:58
i
Page
Section 6.8. Obligations of the City Unconditional...................................................................... 24
Section 6.9. Payment of the Deferred Commitment Fee.............................................................. 25
Section 6.10. Taxes, Other Governmental Charges...................................................................... 25
Section 6.11. Application of Moneys in the Program Account .................................................... 25
Section 6.12. Program Budget; Reallocation of Certain Amounts ............................................... 26
Section 6.13. Delivery of Reports and Records............................................................................ 26
Section 6.14. Annual Certification and Audit............................................................................... 27
Section 6.15. Diligent Pursuit of Program Receipts; Engagement of Outside Counsel ............... 27
Section 6.16. Single Purpose Corporation.................................................................................... 27
Section 6.17. Cooperation With Removal or Replacement of Trustee ......................................... 27
ARTICLE VII
ASSIGNMENT OF AGREEMENT TO TRUSTEE
Section 7.1. Assignment by City and Corporation....................................................................... 27
ARTICLE VIII
NON -LIABILITY OF CORPORATION; INDEMNIFICATION
Section 8.1. Non -Liability of Corporation.................................................................................... 28
Section 8.2. Indemnification............................................................................ ................... 28
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default...................................................................................................... 30
Section 9.2. Remedies on Default................................................................................................. 31
Section 9.3. Remedies Not Exclusive; No Waiver of Rights ....................................................... 31
Section 9.4. Expenses on Default................................................................................................. 31
Section 9.5. Notice of Default....................................................................................................... 31
Section 9.6. Survival of Obligations ................................................ ..... 32
........................................
ARTICLE X
MISCELLANEOUS
Section10.1. Notices..................................................................................................
Section 10.2. Governing Law.....................................................................................
Section 10.3. Binding Effect.......................................................................................
Section 10.4. Severability of Invalid Provisions.........................................................
Section 10.5. Article and Section Headings and References ......................................
Section 10.6. Agreement Represents Complete Agreement; Amendments ...............
Section 10.7. Trustee Third Party Beneficiary ............................................................
1073224/28/13350/00495/October 13, 1999 -1:58
ii
Pace
Section 10.8. Waiver of Personal Liability................................................................................... 34
Section 10.9. Execution of Counterparts...................................................................................... 34
EXHIBITA
Program Budget.............................................................................................
A-1
EXHIBIT B
Form of Issuance Request..............................................................................
B-1
EXHIBIT C
Form of Remittance Report ...........................................................................
C-1
EXHIBIT D
Form of Reallocation Notice and Request Regarding Amounts
inProgram Account.......................................................................................
D-1
EXHIBIT E
Ongoing Obligation Payment Limit Increase Approval Form ......................
E-1
EXHIBIT F
Form of Termination Notice..........................................................................
F-1
1073224/28113350/00495/October 13,1999 - 1:58
iii
PROGRAM RECEIPTS SALE AND REPURCHASE AGREEMENT
THIS PROGRAM RECEIPTS SALE AND REPURCHASE AGREEMENT, dated as of
[Dated Date] (the "Agreement"), is hereby entered into by and between the CITY OF LODI, a
municipal corporation organized and existing under the laws of the State of California, as seller
and assignor (the "City") and the LODI FINANCING CORPORATION, a nonprofit corporation
organized and existing under the laws of the State of California, as purchaser and assignee (the
"Corporation");
WITNESSETH:
WHEREAS, there exists in the City a significant water contamination problem
threatening the City's water supply and the health and safety of the City's inhabitants;
WHEREAS, in May 1997, the City executed a Comprehensive Joint Cooperative
Agreement (Including Related Delegation and Settlement Agreements) with the California
Department of Toxic Substances Control ("DTSC") Relating to the Investigation and Abatement
of the Hazardous Substance Contamination In and Affecting the City (the "Cooperative
Agreement");
WHEREAS, under the Cooperative Agreement, the City is committed to act as lead
agency in initiating and prosecuting environmental enforcement actions (the "Program") to
compel responsible parties to investigate and clean up all actual or potential dangers to public
health and the environment arising from or related to hazardous substance contamination of
portions of the City's groundwater and soil located within an area of approximately 600 acres and
encompassing the City's central business area (the "Lodi Area of Contamination"), as described
in the Cooperative Agreement;
WHEREAS, the Cooperative Agreement fully resolved the City's liability, if any, for
contamination arising, in whole or in part, from the design, construction, operation or
maintenance of the City's sewer systems;
WHEREAS, it is in the public interest and welfare of the City's inhabitants that the City
find a means of financing the costs of the Program in order to fulfill the City's obligations under
the Cooperative Agreement, and to enforce laws and ordinances which compel responsible
parties to assume the cost and responsibility for the necessary remediation work to clean up the
City's water supply and preserve and enhance the City's water system;
WHEREAS, the costs of environmental litigation under the Program may be significant;
WHEREAS, the City has determined, after extensive investigation and consultation with
the City's financial advisor, that the most feasible means of financing Program costs is through
the implementation of a certificate of participation financing, which financing will facilitate the
effective and expeditious abatement of an existing or threatened Environmental Nuisance (as
defined in the City's Comprehensive Municipal Environmental Response and Liability
Ordinance, described below) within or affecting the City;
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WHEREAS, pursuant to Sections 37350 and 7158 of the California Government Code,
Section 17 of the California Code of Civil Procedure, and Sections 953 and 954 of the California
Civil Code, the City may sell all or a portion of its right to receive recoveries arising from the
Program;
WHEREAS, pursuant to Sections 37350 and 7158 of the California Government Code,
Section 17 of the California Code of Civil Procedure, and Sections 953 and 954 of the California
Civil Code, the City may purchase all or a portion of its right to receive recoveries arising from
the Program;
WHEREAS, to implement this certificate of participation financing, the City proposes to
irrevocably sell and convey to the Corporation its right to receive Program Receipts (as defined
herein), and simultaneously therewith the Corporation desires to resell and reconvey such
Program Receipts back to the City in consideration of receipt of the Repurchase Payments (as
defined herein), all pursuant to this Agreement;
WHEREAS, the Corporation and U.S. Bank Trust National Association, as trustee (the
"Trustee"), will enter into a Trust Agreement, dated as of the date hereof (the "Trust
Agreement"), pursuant to which (i) the Corporation will assign and pledge to the Trustee its
interests in and to the Repurchase Payments and (ii) the Trustee will agree to execute and
deliver, from time to time, a principal amount not to exceed $16,000,000 of certificates of
participation (the "Certificates");
WHEREAS, each Certificate will evidence an undivided, proportionate interest in
Repurchase Payments, consisting of a principal component and an interest component, to be
made by the City, as provided herein and in the Trust Agreement;
WHEREAS, the purchase price to be paid by the Corporation for each portion of
Program Receipts purchased from the City pursuant to this Agreement will be payable solely
from proceeds from the sale of the Certificates;
WHEREAS, the City's obligation to make Repurchase Payments (and certain other
payments under this Agreement) will be a special obligation of the City payable solely from
Program Receipts;
WHEREAS, the City has adopted its Comprehensive Municipal Environmental Response
and Liability Ordinance (more fully described below) pursuant to which the City, among other
things, has created in favor of Certificate Holders a first lien on the Program Receipts, and the
City acknowledges that such first lien is superior to all other uses of Program Receipts, except
with regard to certain Permitted Deductions as provided herein;
WHEREAS, the Program Receipts may be pledged to and deposited in the Municipal
Fund (as defined herein) created under the Ordinance as proceeds of the City's environmental
abatement program;
WHEREAS, being payable solely from Program Receipts, the receipt by Certificate
Holders of any amounts hereunder and under the Trust Agreement is unpredictable and
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uncertain, and accordingly there is significant risk inherent in purchasing and holding the
Certificates;
WHEREAS, in view of the risks and uncertainties associated with the Certificates, the
City acknowledges that the interest cost of the Certificates is significantly higher than in
traditional municipal finance transactions;
WHEREAS, pursuant to Section 5900, et seq. of the California Government Code, the
City, through the Corporation, is authorized to issue Certificates the interest component of which
is subject to federal income taxation, and the City has determined that the interest component of
the Repurchase Payments made hereunder and represented by the Certificates will be subject to
federal income taxation;
WHEREAS, pursuant to Section 5906 of the California Government Code, the
Certificates and the purchasers thereof will be exempt from the usury provisions of Section 1 of
Article XV of the California Constitution;
WHEREAS, the City and the Corporation propose to execute and deliver a Certificate
Purchase Contract (the "Certificate Purchase Contract") with Environmental Restoration
Company Ltd. (the "Original Purchaser"), pursuant to which the Original Purchaser agrees to
purchase, from time to time, the Certificates in an amount up to an aggregate principal amount
not to exceed $16,000,000;
WHEREAS, Lehman Brothers Inc. has acted as Placement Agent for the Certificates;
WHEREAS, the City has retained Public Financial Management as its financial advisor
to evaluate the efficacy and cost effectiveness of entering into this financing and issuing the
Certificates on the terms specified in this Agreement and in the Trust Agreement;
WHEREAS, the DTSC has provided in writing that the execution of this Sale and
Repurchase Agreement, the Trust Agreement and the Certificate Purchase Contract and the
execution and delivery of the Certificates do not violate or conflict with the Cooperative
Agreement;
WHEREAS, the City and the Corporation have determined that all acts and proceedings
required by law to exist, to have happened and to have been performed precedent to and in
connection with the execution and entering into of this Agreement and the consummation of the
transactions authorized hereby do exist, have happened and have been performed in regular and
due time, form and manner as required by law, and the City and the Corporation are now duly
authorized and empowered to execute and enter into this Agreement and to consummate such
transactions for the purpose, in the manner and upon the terms herein provided;
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto hereby formally covenant, agree and bind themselves as
follows:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the terms defined in this
Section shall, for all purposes of this Agreement, the Trust Agreement and of any agreement
supplemental hereto and of any statement, opinion or other document herein mentioned, have the
meanings herein specified, to be equally applicable to both the singular and plural forms of any
of the terms herein defined. Words of any gender shall be deemed and construed to include all
genders.
Accreted Value
"Accreted Value" means Outstanding Principal and all unpaid Compounded Interest
thereon, calculated in accordance with Section 2.04 of the Trust Agreement.
Additional Payments
"Additional Payments" means all amounts payable by the City as Additional Payments
pursuant to Section 6.7(b) hereof.
Aueement or Sale and Repurchase Agreement
"Agreement" or "Sale and Repurchase Agreement" means this Program Receipts Sale and
Repurchase Agreement, dated as of [Dated Date], between the City and the Corporation, as
originally executed and as it may from time to time be supplemented, modified, or amended in
accordance with the terms hereof or of the Trust Agreement.
Authorized Representative
"Authorized Representative" means, (1) with respect to the Corporation, the President of
the Corporation or the Secretary of the Corporation or any other person designated as an
Authorized Representative of the Corporation by a Statement of the Corporation signed by said
President and filed with the Trustee, and (2) with respect to the City, the Mayor, the City
Manager, or the City Attorney of the City or any other person designated as an Authorized
Representative of the City by a Statement of the City signed by said Mayor, said City Manager,
or said City Attorney and filed with the Trustee.
Budgeted Program Costs
"Budgeted Program Costs" means those fees, expenses, and costs as allocated and
described in the Program Budget as shown in Exhibit A to this Agreement.
Business Day
"Business Day" means a day of the year on which banks located in the city where the
Corporate Trust Office is located are not required or authorized to be closed.
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Calculation and Verification Agent
"Calculation and Verification Agent" means a financial institution, investment banking
firm or accounting firm with a national reputation and capable of performing the functions
assigned to the Calculation and Verification Agent herein and in the Trust Agreement, as
selected or consented to by the Original Purchaser, together with such other Certificate Holders
as are necessary to constitute, in the aggregate, at least 51% of outstanding Accreted Value.
Certificate Holder or Holder
"Certificate Holder" or "Holder," whenever used herein with respect to a registered
Certificate, means the Person in whose name such Certificate is registered.
Certificate Purchase Contract
"Certificate Purchase Contract" means that certain Certificate Purchase Contract, dated as
of , between the Original Purchaser, the City and the Corporation regarding the
purchase of the Certificates by the Original Purchaser.
Certificates
"Certificates" means the certificates of participation evidencing the undivided,
proportionate interests of the Holders thereof in Program Receipts to be sold and Repurchase
Payments to be made by the City pursuant to this Agreement.
City
"City" means the City of Lodi, a municipal corporation organized and existing under the
laws of the State of California.
Closing Date
"Closing Date" means ,
Commitment Period
"Commitment Period" means the period beginning on the date of the Certificate Purchase
Contract and ending on the Commitment Period Ending Date or the earlier occurrence of a
Commitment Termination Event.
Commitment Period Ending Date
"Commitment Period Ending Date" means that date which is four years after the Closing
Date.
Commitment Termination Event
"Commitment Termination Event" means the occurrence, prior to the Commitment
Period Ending Date, of (a) the City's delivery of a Termination Notice to the Trustee and the
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Original Purchaser, stating that it will make no further Issuance Requests; (b) the reduction of the
Purchase Commitment to zero as described in the Certificate Purchase Contract; (c) the Original
Purchaser's decision to terminate the Purchase Commitment in the event the City substitutes its
Outside Counsel or modifies the terms of engagement of its Outside Counsel in a manner which,
in the sole determination of the Original Purchaser, results in a materially prejudicial change; or
(d) in the sole discretion of the Original Purchaser, an uncured Event of Default hereunder or
under the Trust Agreement, or a violation by the City or the Corporation of any covenant,
representation or warranty made herein or in the Certificate Purchase Contract or in the Trust
Agreement, including but not limited to the occurrence of any of the proceedings or actions
described in Section 9.1(e) hereof relating to bankruptcy or insolvency of the City or the
Corporation or other actions described therein.
Compounded Interest
"Compounded Interest" means all unpaid and accrued interest with respect to the
Certificates which has been added to Accreted Value. On December 31 of each year, all Current
Interest will become Compounded Interest and will be added to Accreted Value in accordance
with Section 2.04 of the Trust Agreement,
Cooperative Agreement
"Cooperative Agreement" means the Comprehensive Joint Cooperative Agreement,
executed in May 1997, between DTSC and the City regarding the investigation of and
remediation of contamination in the Lodi Area of Contamination.
Corporation
"Corporation" means the Lodi Financing Corporation, a California nonprofit corporation.
Cornorate Trust Office
"Corporate Trust Office" or "corporate trust office" means the corporate trust office of the
Trustee in San Francisco, California, provided that, with regard to execution, delivery, transfer,
exchange, registration, surrender and payment of Certificates, "Corporate Trust Office" means
the corporate trust office of U.S. Bank Trust National Association in St. Paul, Minnesota, or such
other or additional offices as may be designated by the Trustee.
Covered Subject
"Covered Subject" means a single potentially responsible party or tortfeasor that is or
may be liable for the abatement of environmental conditions within the Lodi Area of
Contamination as a result of that party's ownership or operation, for a certain period of time, of a
facility or that party's contribution to the environmental conditions requiring abatement.
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Current Interest
"Current Interest" means all unpaid interest with respect to the Certificates which has
accrued but has not yet been compounded in accordance with Section 2.04 of the Trust
Agreement.
Deferred Commitment Fee
"Deferred Commitment Fee" means $2.25 million, or such lesser amount as may be
payable by the City to the Original Purchaser from time to time in accordance with the terms of
the Certificate Purchase Contract and the Trust Agreement.
Deferred Commitment Fee Reserve Account
"Deferred Commitment Fee Reserve Account" means the account by that name under the
Revenue Fund established by Section 5.03 of the Trust Agreement.
Delivery Date
"Delivery Date," when used with respect to a particular Series of Certificates, means the
date of delivery of such Series of Certificates to the Original Purchaser (as defined below)
thereof. The Delivery Date for the first Series of Certificates shall be the Closing Date. The
Delivery Date for each subsequent Series of Certificates shall be the first Business Day of any
January, April, July, or October on or before the Commitment Period Ending Date as specified
by the City in the applicable Issuance Request.
Distribution Date
"Distribution Date" means the first Business Day following each Repurchase Payment
Date on which it is reasonably practicable for the Trustee to send payments of Accreted Value
and Current Interest to Certificate Holders.
DTSC
"DTSC" means the California Environmental Protection Agency, Department of Toxic
Substances Control, which entered into the Cooperative Agreement with the City.
DTSC Settlement Payments
"DTSC Settlement Payments" means those amounts used to reimburse the City for
settlement payments it has previously made to DTSC for certain previously incurred response
costs pursuant to Section 4.a of the Cooperative Agreement.
Event of Default
"Event of Default" means any of the events specified in Section 9.1 hereof.
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Final Payment Date
"Final Payment Date" means, with respect to all Certificates, January 1, 2029.
Independent Accountant
"Independent Accountant" means a certified public accountant or firm of certified public
accountants specializing in providing financial statements and audits for business and
governmental entities and who has acted as such an accountant in California for at least three
years.
Independent Consultant
"Independent Consultant " means a reputable specialist or firm of specialists, including
but not limited to an environmental consultant or an insurance consultant, qualified to evaluate a
particular aspect of the Program.
Interest Period
"Interest Period" means a calendar quarter, being January 1 through March 31, April 1
through June 30, July 1 through September 30, and October 1 through December 31 (or shorter
period for the initial period).
Investment Securities
"Investment Securities" means investments in a money market fund rated "AAAm" or
"ARAM -G" or better by S&P or a money market fund collateralized by direct obligations of
(including obligations issued or held in book entry form on the books of) the Department of the
Treasury of the United States of America. Such money market funds may include funds for
which the Trustee, its affiliates or subsidiaries provide investment advisory or other management
services. The Trustee shall be entitled to rely upon any written investment direction from the
City or the Corporation as a certification that such investment constitutes an Investment Security.
Issuance Request
"Issuance Request" means a written Request and Certificate of the City, in substantially
the form set forth in Exhibit B hereto, for the Trustee to execute and deliver a Series of
Certificates in accordance with the provisions of Section 2.01 of the Trust Agreement.
Legal Disbursements
"Legal Disbursements" means those amounts invoiced by Outside Counsel for out-of-
pocket direct expenses at the actual cost charged by the provider of such materials or services,
including postage, copying, overnight delivery services, messengers, long-distance telephone,
expert witness fees and costs, and reasonable and customary travel expenses.
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Le ag 1 Fees
"Legal Fees" means those amounts invoiced by Outside Counsel for professional legal
services rendered on an hourly basis, in accordance with the Retainer and Fee Agreement in
connection with the Program, and as further limited and described under Exhibit A hereto.
LIBOR and 3 -month LIBOR Rate
"LIBOR" means, as of the second London banking day immediately preceding the
beginning of an Interest Period (the "LIBOR Determination Date"), the rate for deposits in
United States dollars for a period equal to the relevant Interest Period which appears on Telerate
Page 3750 as of 11:00 a.m. , London time, on such date. If such rate does not appear on Telerate
page 3750, the rate for that LIBOR Determination Date will be determined by the Calculation
and Verification Agent on the basis of the rates at which deposits in United States dollars are
offered by the Reference Banks at approximately 11:00 a.m., London time, on that day to prime
banks in the London interbank market for a period equal to the relevant Interest Period. For
purposes of this definition, "Telerate Page 3750" means the display page currently so designated
on the Dow Jones Market Service or any successor service (or such other page as may replace
that page on that service or any successor service for the purpose of displaying comparable rates
or prices), and "Reference Banks" means four major banks in the London interbank market
selected by the Calculation and Verification Agent.
"3 -month LIBOR Rate" means the LIBOR Rate in effect for the 3 -month period
beginning on each Rate Adjustment Date.
Lien
"Lien" means a security interest, lien, charge, pledge or encumbrance of any kind.
Lodi Area of Contamination
"Lodi Area of Contamination" means an area of approximately 600 acres encompassing
the City's central business area, which is the area described in the Cooperative Agreement as the
area of the City located within the county of San Joaquin, California bordered approximately by
the Mokelumne River to the north, Beckman Road to the east, Harney Lane to the south, and
Mills Avenue to the west and the surrounding commercial and residential area from which
hazardous substances have been, or are threatened to be, released or where hazardous substances
have or may come to be located.
Municipal Fund
"Municipal Fund" means the Lodi Area of Contamination Environmental Nuisance
Abatement Fund, which is a restricted account within the Comprehensive Municipal
Environmental Response Fund created under the Ordinance, or a successor or alternate fund
created for substantially the same or similar purposes. Such Municipal Fund will contain two
separate accounts, the Program Account and the Recovery Account, monies in which will be
segregated, held and invested separately from other assets of the City.
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Moody's
"Moody's" means Moody's Investors Service, a corporation organized and existing under
the laws of the State of Delaware, its successors and assigns.
Notice of Reallocation
"Notice of Reallocation" means the City's written notice to the Trustee, in the form of
Exhibit D hereto, with regard to reallocation among items and categories in the Program Budget.
Ongoing Obligations
"Ongoing Obligations" when used in connection with the Program Budget, refers to a
category of funds to be expended by the City for obligations arising out of, and limited to, DTSC
Settlement Payments, computer document management, technical activities, project management
activities, and Legal Disbursements (but not including any Legal Fees) as further described in
Exhibit A hereto.
Opinion of Counsel
"Opinion of Counsel" means a written opinion of counsel (who may be counsel for the
City) selected by the City. If and to the extent required by the provisions of Sections 2.1 and 2.2
of this Agreement and Section 1.03 of the Trust Agreement, each Opinion of Counsel shall
include the statements provided for in Sections 2.1 and 2.2 of this Agreement and Section 1.03 of
the Trust Agreement.
Optional Payment Date
"Optional Payment Date" means each date of transfer of funds, other than Program
Receipts, by the City to the Trustee for deposit into the Revenue Fund in accordance with
Section 6.7(a)(v) hereof.
Ordinance
"Ordinance" means the City's Comprehensive Municipal Environmental Response and
Liability Ordinance (Ordinance No. 1650, An Ordinance of the City Council of the City of Lodi
Amending Chapter 8.24 (Health and Sanitation) of Title 8 (Health and Safety) of the Lodi
Municipal Code), as amended by Ordinance No. _ and as it may be subsequently amended.
Oriuinal Purchaser
"Original Purchaser" means Environmental Restoration Company Ltd. and its successors
and assigns.
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Outside Counsel
"Outside Counsel" means Envision Law Group LLP, San Mateo, California, which has
been selected by the City to represent the City for all matters relating to the Program, in
accordance with the Retainer and Fee Agreement.
Outstanding
"Outstanding," when used as of any particular time with reference to Certificates, (subject
to the provisions of Section 11.09 of the Trust Agreement) means all Certificates theretofore, or
thereupon being, executed and delivered by the Trustee under the Trust Agreement except
(1) Certificates theretofore cancelled by the Trustee or surrendered to the Trustee for
cancellation; (2) Certificates with respect to which all liability shall have been discharged in
accordance with Section 10.01 of the Trust Agreement, including Certificates (or portions of
Certificates) referred to in Section 11.10 of the Trust Agreement; and (3) Certificates for the
transfer or exchange of or in lieu of or in substitution for which other Certificates shall have been
executed and delivered by the Trustee pursuant to the Trust Agreement.
Outstanding Certificate Obligations
"Outstanding Certificate Obligations" means, as of any date, the sum of the Accreted
Value and Current Interest components of the Certificates.
Outstanding_ Principal
"Outstanding Principal" means the sum of principal amounts of all Series of Certificates
issued, less any amounts representing the principal component of such Certificates which have
been repaid to Certificate Holders.
Permitted Deductions
"Permitted Deductions" are amounts which the City may deduct from Program Receipts,
up to 25% of Program Receipts collected at any time, as described in Section 6.4 hereof, prior to
remittance of such Program Receipts to the Trustee and includes (a) first, certain payments to
DTSC for oversight costs pursuant to Section 4.b of the Cooperative Agreement and amounts to
create a reserve balance for such payments in an amount up to $300,000 and (b) second,
reimbursement to the City, up to $2,000,000 in the aggregate over the term of this Agreement,
for expenditures that were incurred by the City in connection with the Program in an amount up
to $1,000,000 prior to and in an amount up to an additional $1,000,000 for
expenditures incurred by the City on or after ,
Person
"Person" means an individual, corporation, firm, association, partnership, trust, or other
legal entity or group of entities, including a governmental entity or any agency or political
subdivision thereof.
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Placement Agent
"Placement Agent" means Lehman Brothers Inc. and its successors and assigns.
Placement Fee
"Placement Fee" means the amount of $1,000,000 payable to the Placement Agent on the
Closing Date.
Program
"Program" means the City's environmental abatement program for the Lodi Area of
Contamination, including all Abatement Actions (as defined in the Ordinance,) undertaken in
connection therewith, which include but are not limited to study, investigation, abatement,
removal, remediation or response to an Environmental Nuisance (as defined in the Ordinance) or
threat of Environmental Nuisance, monitoring and assessment or evaluation of an Environmental
Nuisance, prevention or mitigation of an Environmental Nuisance and enforcement activity in
response to an Environmental Nuisance, including litigation and other actions against potentially
responsible parties, their indemnitors or insurers, and shall also include all activities related
thereto, whether or not expressly described in the Ordinance, including litigation and other
actions against potential tortfeasors, their indemnitors or insurers.
Program Account
"Program Account" means the account by that name established under the Municipal
Fund.
Program Budget
"Program Budget" means the authorized disbursements of the City from the Program
Account, as described in Exhibit A hereto.
Program Receipts
"Program Receipts" means all amounts, proceeds and recoveries from, or in
contemplation of, or in connection with, the potential liability of responsible parties or
potentially responsible parties, their insurers or indemnitors, or of tortfeasors or potential
tortfeasors, their insurers or indemnitors, received by the City (or by any other Person on its
behalf) on or after July 30, 1999, or received by the City's Outside Counsel after the Closing
Date, in connection with the Program, whether in cash or non-cash form and regardless of how
such amounts, proceeds, or recoveries may be characterized, labeled or allocated in any
judgment, award, settlement or other agreement or payment, including but not limited to all
amounts, proceeds or recoveries characterized or labeled as legal fees or disbursements or as tort
claim recoveries, proceeds or settlements.
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Purchase Commitment
"Purchase Commitment" means the total sum of up to $16,000,000 for the purchase of
various series of Certificates by the Original Purchaser or by any successor, or lesser amount as
provided herein or in the Certificate Purchase Contract.
Quarterly Budget ReportingForm
"Quarterly Budget Reporting Form" means that report, a form of which appears in
Appendix A hereto, which the City is required to submit to the Calculation and Verification
Agent within 20 Business Days after the beginning of each calendar quarter (except the first
quarter) to reconcile the prior quarter's expenditures with the Program Budget and to demonstrate
the City's compliance with the Program Budget for the prior quarter.
Rate Adjustment Date
"Rate Adjustment Date" means the first Business Day of each January, April, July and
October.
Record Date
"Record Date" means, with respect to any Distribution Date, the Business Day
immediately preceding such Distribution Date.
Recovery Account
"Recovery Account" means the account by that name established under the Municipal
Fund.
Remittance Report
"Remittance Report" means the City's written report to the Trustee, in the form of
Exhibit C hereto, required to be delivered as provided under Section 6.4(b) of this Agreement.
Repurchase Payment Date
"Repurchase Payment Date" means 1) each date of transfer of Program Receipts by the
City to the Trustee (net of Permitted Deductions) for deposit into the Revenue Fund in
accordance with Section 6.4 hereof and 2) the Final Payment Date.
Repurchase Payments
"Repurchase Payments" means all amounts payable by the City as Repurchase Payments
pursuant to Section 6.7(a) hereof.
Repurchase Price
"Repurchase Price" means the sum of (i) the principal amount of all Certificates, together
with all interest (whether Current Interest or Compounded Interest) on the Certificates, (ii) the
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amount required to pay or fund the Deferred Commitment Fee, and (iii) all Additional Payments
required to be made by the City pursuant to Section 6.7(b) hereof.
Retainer and Fee Agreement
"Retainer and Fee Agreement" means the Professional Services Agreement and Scope of
Services Statement, dated , between Outside Counsel and the City, in which the
terms of Outside Counsel's engagement in connection with the Program are set forth.
Revenue Fund
"Revenue Fund" means the fund by that name established under the Trust Agreement,
Section 5.02.
S&P
"S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc., a
corporation organized and existing under the laws of the state of New York, its successors and
assigns.
Series
"Series" means each series of the Certificates executed and delivered pursuant to the
Trust Agreement, as often as on a quarterly basis until the Commitment Period Ending Date.
State
"State" means the State of California.
Statement. Reauest. Reauisition, or Order
"Statement," "Request," "Requisition," and "Order" of the City, the Corporation, the
Trustee or the Calculation and Verification Agent mean, respectively, a written statement,
request, requisition, certificate, or order signed in the name of the City, the Corporation the
Trustee or the Calculation and Verification Agent by an Authorized Representative of the City,
the Corporation, the Trustee or the Calculation and Verification Agent, respectively. Any such
instrument and supporting opinions or representations, if any, may, but need not, be combined in
a single instrument with any other instrument, opinion, or representation, and the two or more so
combined shall be read and construed as a single instrument. If and to the extent required by
Article II of this Agreement, each such instrument shall include the statements provided for in
Article II of this Agreement.
Supplemental Agreement
"Supplemental Agreement" means any agreement hereafter duly authorized and entered
into between the Corporation and the City supplementing, modifying, or amending this
Agreement; but only if and to the extent that such Supplemental Agreement is specifically
authorized hereunder.
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Sunnlemental Trust Agreement
"Supplemental Trust Agreement" means any trust agreement hereafter duly authorized
and entered into between the Corporation and the Trustee supplementing, modifying, or
amending the Trust Agreement; but only if and to the extent that such Supplemental Trust
Agreement is specifically authorized under the Trust Agreement.
Termination Notice
"Termination Notice" means that written notice from the City to the Trustee and the
Original Purchaser, a form of which is attached hereto as Exhibit F, as provided under the
Certificate Purchase Contract and the Trust Agreement, that the City has permanently and
irrevocably discontinued making Issuance Requests.
Trust Agreement
"Trust Agreement" means that certain trust agreement, dated as of [Dated Date], between
the Corporation and the Trustee, as originally executed and as it may from time to time be
supplemented, modified, or amended in accordance with the terms thereof.
Trustee
"Trustee" means U.S. Bank Trust National Association, a national banking association
organized and existing under the laws of the United States of America, or its successor, as
Trustee hereunder as provided in Section 8.01 of the Trust Agreement.
Variable Rate
"Variable Rate" means the variable interest rate evidenced by the Certificates and
determined from time to time in accordance with Section 2.04 of the Trust Agreement.
ARTICLE II
CONTENT OF CERTIFICATES AND OPINIONS
Section 2.1. Content of Statements and Opinions. Every statement or opinion provided
for in this Agreement with respect to compliance with any provision hereof shall include (1) a
statement that the individual making or giving such statement or opinion has read such provision
and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion is based; (3) a statement that,
in the opinion of such individual, he has made or caused to be made such examination or
investigation as is necessary to enable him to express an informed opinion with respect to the
subject matter referred to in the instrument to which his signature is affixed; and (4) a statement
as to whether, in the opinion of such individual, such provision has been complied with.
Section 2.2. Reasonable Basis for Statements and Opinions. Any such statement or
opinion made or given by an officer of the City may be based, insofar as it relates to legal,
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accounting, or environmental matters, upon a statement or opinion of or representation by
counsel, an Independent Accountant or an Independent Consultant selected by the City, unless
such officer knows, or in the exercise of reasonable care should have known, that the statement,
opinion or representation regarding the matters upon which such statement or opinion may be
based, as aforesaid, is erroneous. Any such statement or opinion made or given by such counsel,
Independent Accountant or Independent Consultant may be based, insofar as it relates to factual
matters (with respect to which information is in the possession of the City) upon a statement or
opinion of or representation by an officer of the City, unless such counsel, Independent
Accountant or Independent Consultant knows, or in the exercise of reasonable care should have
known, that the certificate or opinion or representation regarding the matters upon which such
individual's statement or opinion or representation may be based, as aforesaid, is erroneous. The
same officer of the City, or the same counsel, Independent Accountant or Independent
Consultant, as the case may be, need not certify to all of the matters required to be certified under
any provision of this Agreement, but different officers, counsel, Independent Accountants or
Independent Consultants may certify to different matters, respectively.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Reoresentations and Warranties of the CitX. The City makes the following
representations and warranties to the Corporation as of the date of the execution of this
Agreement and as of the Closing Date (such representations and warranties to remain operative
and in full force and effect regardless of delivery of the Certificates or any investigations by or
on behalf of the Corporation or the results thereof):
(a) The City is a municipal corporation duly organized and existing under the
laws of the State, has full legal right, power and authority to enter into this Agreement
and to carry out and consummate all transactions contemplated by this Agreement.
(b) This Agreement has been duly authorized, executed, and delivered by the
City and constitutes the legal, valid and binding agreement of the City, enforceable
against the City in accordance with its terms; except as enforcement may be limited by
bankruptcy, insolvency, or other laws affecting the enforcement of creditors' rights
generally and by the application of such equitable principles as the court having
jurisdiction may impose, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(c) The execution and delivery of this Agreement, the consummation of the
transactions herein and therein contemplated, and the fulfillment of or compliance with
the terms and conditions hereof, will not conflict with or constitute a violation or breach
of or default (with due notice or the passage of time or both) under any indenture,
mortgage, deed of trust, agreement, lease, contract, the Cooperative Agreement, or other
agreement or instrument to which the City is a party or by which it or its properties are
otherwise subject or bound, or, to the knowledge of the City, after reasonable inquiry and
investigation, any applicable law or administrative rule or regulation, the Ordinance or
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any other applicable ordinance, or any applicable court or administrative decree or order,
or result in the creation or imposition of any prohibited Lien, charge, or encumbrance of
any nature whatsoever upon any of the property or assets of the City, which conflict,
violation, breach, default, lien, charge, or encumbrance might have consequences that
would materially and adversely affect the consummation of the transactions contemplated
by this Agreement.
(d) No consent or approval of any trustee or holder of any indebtedness of the
City, and no consent, permission, authorization, order or license of, or filing or
registration with, any governmental authority is necessary in connection with the
execution and delivery of this Agreement, the consummation of any transaction herein
contemplated, or the fulfillment of or compliance with the terms and conditions hereof
except as have been obtained or made and as are in full force and effect.
(e) There is no action, suit, proceeding, inquiry or investigation, before or by
any court or federal, state, municipal or other governmental authority, pending, or to the
knowledge of the City after reasonable inquiry and investigation, threatened, against or
affecting the City or the assets, properties or operations of the City which, if determined
adversely to the City or its interests, could have a material adverse effect upon the
consummation of the transactions contemplated by or the fulfillment of or compliance
with the terms and conditions of or the validity of this Agreement, and the City is not in
material default (and no event has occurred and is continuing which, with the giving of
notice or the passage of time or both, could constitute a material default) with respect to
any order or decree of any court or any order, regulation or demand of any federal, state,
municipal or other governmental authority, which default might have consequences that
would materially and adversely affect the consummation of the transactions contemplated
by this Agreement.
(f) No representation made, nor any information, exhibit or report furnished
to, the Corporation by the City in connection with the negotiation of this Agreement or
the Trust Agreement contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. There is no fact
that the City has not disclosed to the Corporation or the Trustee in writing that materially
and adversely affects or in the future may (so far as the City can now reasonably foresee)
materially and adversely affect the ability of the City to perform its obligations under this
Agreement or any documents or transactions contemplated hereby.
(g) The Program Receipts are free and clear of all Liens and encumbrances,
other than Permitted Deductions and may be deposited in the Municipal Fund created
under the Ordinance as proceeds of the City's environmental abatement program.
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ARTICLE IV
CONVEYANCE OF PROGRAM RECEIPTS
Section 4.1. Sale and Repurchase of Program Receipts. Effective on the Closing Date,
(a) the City does hereby and irrevocably sell and convey to the Corporation, without recourse, all
Program Receipts in consideration of the receipt from the Corporation of the proceeds of the
Certificates executed and delivered on the Closing Date and on each subsequent Delivery Date
and the Corporation's agreement hereunder to deliver the same, and (b) the Corporation hereby
resells and reconveys to the City all Program Receipts in consideration of the City's agreement
hereunder to make payment of the Repurchase Price. The delivery of the proceeds of the
Certificates (less, in the case of the initial Series of Certificates, an amount equal to the
Placement Fee) by the Corporation shall constitute full consideration for the sale of the Program
Receipts by the City.
Section 4.2. Sale Effected Without Further Action. The City and the Corporation agree
that, effective on the Closing Date, the Corporation will acquire, upon delivery of the proceeds of
the initial Series of Certificates executed and delivered on the Closing Date, a perfected
ownership interest in the Program Receipts, and simultaneously therewith the City will reacquire
such ownership interest, subject, however, to the lien and pledge on the Program Receipts
created pursuant to this Agreement and the Trust Agreement, and that no further action will be
required by either party hereto (other than the transfer of the proceeds of the Certificates) to
effect the absolute sale and conveyance of the Program Receipts to the Corporation and the
resale and reconveyance of the Program Receipts to the City.
Section 4.3. Protective Filings. The City shall take all necessary actions to execute and
deliver, or cause to be executed and delivered, to the Corporation and the Trustee all such other
and further instruments, documents, and assurances, including the filing of any financing
statements under the Uniform Commercial Code as of each Delivery Date and as of each date of
settlement or other receipt of Program Receipts, as may be necessary or reasonably required by
the Corporation in order to perfect and protect the Corporation's or the Trustee's security interest
in the Program Receipts created pursuant to this Agreement and the Trust Agreement. Upon
such execution and delivery, the City shall deliver, or cause to be delivered, a copy of all such
instruments and documents to the Original Purchaser.
ARTICLE V
TERM OF THE AGREEMENT
Section 5.1. Term. This Agreement shall commence on the Closing Date, and shall
terminate upon the payment or discharge by the Corporation of all Certificates in accordance
with Article X of the Trust Agreement and the payment in full of the Deferred Commitment Fee
and any other amounts authorized or required to be paid by the City hereunder or under the
Certificate Purchase Contract and, if full payment of such amounts is made or provided for prior
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to the Commitment Period Ending Date, the delivery by the City to the Trustee of a Termination
Notice pursuant to the Certificate Purchase Contract.
ARTICLE VI
COVENANTS AND SECURITY PROVISIONS REGARDING PROGRAM RECEIPTS
Section 6.1. Pledge of Program Receipts. In order to secure its obligation to make
payment in full of the Repurchase Price of all Program Receipts, the City hereby grants, pledges
and assigns to the Corporation a first, prior and perfected security interest in all Program
Receipts received by the City (or any other Person on its behalf) or received by the City's
Outside Counsel, subject only to the right of the City to make Permitted Deductions from such
Program Receipts. Accordingly, the City shall not be entitled to retain any Program Receipts,
other than Permitted Deductions, until the Repurchase Price for all Program Receipts has been
paid in full.
Section 6.2. No Liens. Except for the conveyances hereunder or any Lien for the benefit
of the Corporation, the City will not sell, pledge, assign or transfer, or grant, create, or incur any
Lien on, any of the Program Receipts, or any interest therein, and the City shall defend the right,
title and interest of the Corporation and the Trustee in, to and under the Program Receipts against
all claims of third parties claiming through or under the City.
Section 6.3. Notice of Liens. The City will notify the Corporation and the Trustee
promptly after becoming aware of any Lien on any of the Program Receipts, other than the
conveyances hereunder. In the event any Lien attaches to or is filed against the Program
Receipts, the City, at its own expense, shall cause each such Lien to be fully discharged and
released.
Section 6.4. Collection and Remittance of Program Receipts.
(a) The City will deposit all Program Receipts upon receipt thereof in the
Recovery Account and, within two Business Days after receipt thereof, will transfer such
Program Receipts, net of Permitted Deductions, to the Trustee for deposit into the
Revenue Fund held by the Trustee under Section 5.02 of the Trust Agreement. In no
event will the City be obligated to transfer Program Receipts to the Trustee in excess of
amounts necessary to pay the Outstanding Certificate Obligations, deposits to the
Deferred Commitment Fee Reserve Account, and any other payments due hereunder.
The City hereby covenants that it will maintain the Recovery Account as a separate
account under the Municipal Fund and that amounts in the Recovery Account will be
segregated, held and invested separately from other assets of the City.
(b) The City shall accompany each remittance of Program Receipts to the
Trustee with a Remittance Report in the form of Exhibit C hereto, detailing the source(s)
of the total Program Receipts received, the date the Program Receipts were received,
their total amount, and the City's calculation of any Permitted Deductions and deposits to
the Deferred Commitment Fee Reserve Account. Simultaneously with the City's delivery
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of each Remittance Report to the Trustee, the City shall deliver a copy of the Remittance
Report to the Calculation and Verification Agent. In accordance with such Remittance
Report, the City shall direct the Trustee to return to the City any amounts which the
Calculation and Verification Agent determines to be in excess of the amounts required to
be transferred to the Trustee under Section 6.4(a) above.
(c) The City covenants, represents and agrees that it will use its best efforts to
give the Trustee and the Calculation and Verification Agent, as soon as practicable,
notice of the date that any recoveries, payments settlements or judgments are anticipated
to be received in the Recovery Account, together with the approximate amount of any
such receipts. The City agrees that the duty to deposit Program Receipts into the
Recovery Account and to transfer Program Receipts to the Trustee is a ministerial
obligation that can be enforced against the City in a suit by mandamus.
(d) The City agrees that the amount of Program Receipts transferred to the
Trustee hereunder shall include the amount necessary, as calculated by the Calculation
and Verification Agent, to fund the Deferred Commitment Fee Reserve Account created
under Section 5.03 of the Trust Agreement, which amount shall be the then outstanding
balance of the Deferred Commitment Fee as calculated in accordance with Section 3 of
the Certificate Purchase Contract.
(e) Notwithstanding the foregoing, if, on or before the Commitment Period
Ending Date, there are no Certificates Outstanding, the Deferred Commitment Fee
Reserve Account is fully funded, and no Commitment Termination Event has occurred,
then the City may retain all Program Receipts and, subject to payment of Permitted
Deductions, may deposit such Program Receipts into the Program Account. All amounts
so retained pursuant to this subsection (e), will reduce, dollar for dollar, the amount of
any Purchase Commitment under the Certificate Purchase Contract, unless the Original
Purchaser (which may withhold its approval in its sole discretion) agrees that no
reduction of the Purchase Commitment will occur. Program Receipts deposited to the
Program Account in accordance with this subsection (e) may then be used to pay
(1) Budgeted Program Costs and (2) the remainder, if any, of Permitted Deductions.
When there are no Certificates outstanding, and all other obligations under this
Agreement have been fully satisfied and the Purchase Commitment has been terminated,
all of the foregoing limitations will be of no further force and effect.
Section 6.5. Subordination of Claims under Retainer and Fee Agreement. The City
covenants, represents and warrants that it has entered into the Retainer and Fee Agreement with
Outside Counsel whereby Outside Counsel agrees that any claims it might have against the
Program Receipts and any other amounts payable in connection with the Program are fully
subordinate to any and all claims of the Original Purchaser and any other Certificate Holders,
including the right of the Original Purchaser to receive the Deferred Commitment Fee. The City
hereby assigns all rights under any subordination agreement with Outside Counsel to the
Original Purchaser and any other Certificate Holders, as well as, to the extent permitted by law,
the City's rights to any claims which the City could raise against such counsel as a result of any
error or omission in connection with services rendered by such counsel to the City. If the City
substitutes its Outside Counsel or modifies the terms of engagement of its Outside Counsel, it
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shall promptly notify the Original Purchaser and, if such substitution or modification, in the sole
determination of the Original Purchaser, results in a materially prejudicial change, the Original
Purchaser may terminate the Purchase Commitment. The City covenants that all fees and
disbursements incurred by Outside Counsel and any other law firms that have provided services
to the City in connection with the Program prior to the date hereof have either been paid in full
or are subordinated in accordance with this Section 6.5.
Section 6.6. Settlements.
(a) The City may, in its sole discretion, accept cash or non-cash settlements of
legal actions under the Program, including but not limited to administrative orders and
proceedings and judicial proceedings, in accordance with subparagraphs (i) and (ii) below
when a defendant, potentially responsible party, potential tortfeasor, indemnitor or
insurer wishes to settle, make payment or otherwise resolve its liabilities in connection
with the Program.
(i) If the City accepts a non-cash settlement when any Certificates are
Outstanding, the City will deposit into the Recovery Account, as Program
Receipts, from any available funds of the City, an amount sufficient to pay
Certificates with an Accreted Value equivalent to the dollar value of the non-cash
settlement, as determined and certified to by an Independent Consultant; and
(ii) If there is any remaining dollar value after the payment under
subparagraph (i) above (i.e., the dollar value of the non-cash settlement is greater
than the Accreted Value of the Outstanding Certificates) or if there are no
Outstanding Certificates, the City's acceptance of a non-cash settlement will
reduce the Purchase Commitment by the remaining dollar value of the non-cash
settlement, as determined by an Independent Consultant.
(b) Provisions (i) and (ii) of paragraph (a) above do not apply with respect to a
maximum of two Covered Subjects for which the City accepts non-cash settlements that
resolve or release the defendants' or potentially responsible parties' or potential
tortfeasors' insurers' duty to defend, if:
(i) Policy or coverage limits are not reduced, eroded, or otherwise
affected by the settlement; and
(ii) With respect to each defendant, potentially responsible party or
potential tortfeasor, there remains at least one "highly rated insurer," with a duty
to defend, with which the City has not settled such duty to defend on a non-cash
basis. A "highly rated insurer" means an insurer with a claims paying ability
rating of A3 or greater by Moody's or A- or greater by S&P at the date of the
settlement in question.
(c) The Trustee may waive in writing provisions (i) and (ii) under paragraph
(a) above in advance of a settlement upon the written direction of the Original Purchaser,
together with such other Certificate Holders as are necessary to constitute, in the
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aggregate, at least 51% of the Outstanding Accreted Value. The Original Purchaser and
Certificate Holders shall be reasonable in considering a request for such a waiver.
(d) Prior to the finalization of any settlement under this Section 6.6, the City
will provide detailed reports to the Trustee, the Original Purchaser and all Certificate
Holders regarding all cash and non-cash settlements, including information sufficient to
demonstrate that the requirements of this Section 6.6 have been met and including
information requested by the Independent Consultant in order to establish the dollar value
of the settlement.
Section 6.7. Payments.
(a) Repurchase Payments. The Accreted Value component and the Current
Interest component of Repurchase Payments made hereunder shall be assigned to the
Trustee and shall constitute the source of payment with respect to the Certificates issued
under the Trust Agreement. For each Series of Certificates issued as of any Delivery
Date pursuant to the Trust Agreement, the City shall make Repurchase Payments at the
time and in the amounts set forth below.
(i) Mandatory Payment of Repurchase Payments. The Accreted
Value and Current Interest components of the Repurchase Payment with respect
to any Series of Certificates will be due and payable on each Repurchase Payment
Date, in an amount which totals the amount of Program Receipts transferred to the
Revenue Fund (rounded to the nearest $1,000 denomination), to be applied as
provided in Section 6.7(a)(vi) below.
(ii) Calculation and Accrual of Current Interest. The Current Interest
component of the Repurchase Payment for each Interest Period or portion thereof
preceding a Repurchase Payment Date shall equal the sum of interest accruing at
the Variable Rate in effect during each such Interest Period on the outstanding
Accreted Value of such Series of Certificate on each day during such Interest
Period, as provided in Section 2.04 of the Trust Agreement. In no event shall the
Variable Rate exceed 30 percent per annum. The sum of all unpaid Current
Interest for all Interest Periods or portions thereof during any calendar year shall
be added to Accreted Value of the Certificates as of each December 31, after
which date such Accreted Value will bear interest at the Variable Rate.
(iii) Cessation of Interest Accrual. If as a result of one or more final
judgments of a court, including courts of appeal and the California and United
States supreme courts, the City concludes and informs the Original Purchaser and
the Trustee in writing that it will no longer engage in activities in pursuit of
Program Receipts, then the Original Purchaser will enter into a written agreement
(the "Cessation Agreement") thereby causing interest to cease to accrue on the
Certificates thirty-six months after the date of such Cessation Agreement. The
Cessation Agreement shall be null and void if the City for any reason continues to
engage in activities in pursuit of Program Receipts subsequent to the date of the
Cessation Agreement.
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(iv) Source and Use of Repurchase Payments. As provided in
Article VI hereof, the City and the Corporation agree that all Repurchase
Payments required to be made hereunder shall be paid by the City exclusively
from Program Receipts, shall be secured by a first and prior lien on all Program
Receipts, and shall be used to pay Outstanding Certificate Obligations.
(v) Optional Payment From Other Funds. In addition to its obligation
to pay Repurchase Payments from Program Receipts as provided herein, the City
shall have the option, at any time and from time to time, to make Repurchase
Payments from any other legally available funds. To exercise such option, the
City shall transfer such other funds to the Trustee, as assignee of the Corporation,
and provide the Trustee with an Order of the City directing that such funds be
applied to the payment of Outstanding Certificate Obligations in accordance with
Section 4.02 of the Trust Agreement. Amounts transferred to the Trustee
pursuant to this Section shall be deposited in the Revenue Fund and will be
credited against the Outstanding Certificate Obligations in accordance with
Section 6.4 hereof.
(vi) Application of PgMents. All Program Receipts deposited into the
Revenue Fund shall be applied: first, to the costs of indemnification of the
Placement Agent, the Calculation and Verification Agent, the Original Purchaser
and Certificate Holders under Section 8.2 hereof; second, to the Current Interest
component of the Repurchase Payments due hereunder; third, to the Compounded
Interest portion of the Accreted Value component of the Repurchase Payments
due hereunder; fourth, to the Outstanding Principal portion of the Accreted Value
component of the Repurchase Payments due hereunder; fifth, to fully fund the
Deferred Commitment Fee Reserve Account; and sixth, to pay any portion of the
Deferred Commitment Fee, if and when due, to the Original Purchaser. Any
Repurchase Payment not paid when due shall bear interest from the date such
payment is first due at the Variable Rate, as adjusted from time to time and as
compounded in accordance with the terms hereof and of the Trust Agreement.
Any interest paid on the Certificates (either Current Interest or Compounded
Interest) will reduce the Deferred Commitment Fee, and the required balance in
the Deferred Commitment Fee Reserve Account, dollar for dollar.
(b) Additional Payments. The City will pay, within 10 Business Days after
receipt of an invoice therefor, (i) all taxes and assessments of any type or character
charged to the Corporation or the Trustee as a result of the sale or repurchase of Program
Receipts or in any way arising due to the transactions contemplated hereby, (ii) all costs
and expenses incurred by the Corporation, the Trustee and the Calculation and
Verification Agent in connection with the execution, performance or enforcement of this
Agreement and of the Trust Agreement, including but not limited to payment of all fees,
costs and expenses and all administrative costs of the Corporation, the Trustee and the
Calculation and Verification Agent in connection with the execution and delivery of each
Series of Certificates and collection and distribution of the Program Receipts, together
with all salaries and wages of employees, all expenses, compensation and
indemnification of the Trustee payable by the Corporation under the Trust Agreement,
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fees of auditors, accountants, attorneys or taxes and all other necessary administrative
costs of the Corporation or charges required to be paid by it in order to maintain its
existence or to comply with the terms of the Certificates or the Trust Agreement, (iii) all
costs of indemnification of the Corporation and the Trustee under Section 8.2 hereof,
(iv) the Deferred Commitment Fee (including required deposits to the Deferred
Commitment Fee Reserve Account) and (v) all costs of indemnification of the Placement
Agent, the Calculation and Verification Agent, the Original Purchaser and Certificate
Holders under Section 8.2 hereof. The City reserves the right to audit billings for such
Additional Payments although exercise of such right shall in no way affect the duty of the
City to make full and timely payment for all such Additional Payments.
The City will make payments described in the preceding paragraph (except for
payments under clauses (iv) or (v) above) from any lawfully available moneys of the
City. The City will make payments described in clause (iv) solely from Program
Receipts. The City will make payments described in clause (v) from Program Receipts
and any proceeds of insurance or self-insurance programs in which the City has
participated or will participate.
Section 6.8. Obligations of the City Unconditional. Except as otherwise provided herein,
the obligation of the City to make payments hereunder and to perform and observe other
agreements on its part contained herein is absolute and unconditional, and shall not be abated,
rebated, setoff, reduced, abrogated, terminated, waived, diminished, postponed, or otherwise
modified in any manner or to any extent whatsoever while any Certificates remain Outstanding
or any other payments required hereunder remain unpaid, regardless of any acts or circumstances
that may constitute failure of consideration, commercial frustration of purpose, any change in the
laws of the United States of America or of the State or any political subdivision thereof or in the
rules or regulations of any governmental authority, or any failure of the Corporation to perform
and observe any agreement, whether express or implied, or any duty, liability, or obligation
arising out of or connected with this Agreement or the Trust Agreement. The City shall pay over
and transfer all Program Receipts and all other payments required hereunder, regardless of any
rights of set-off, recoupment, abatement, or counterclaim that the City might otherwise have
against the Corporation or any other party or parties.
Notwithstanding the above, the obligations of the City to pay Repurchase Payments, the
Deferred Commitment Fee and the indemnity obligations to the Special Indemnified Parties
described in Section 8.2 hereof are special obligations of the City payable solely from the
Program Receipts (or insurance proceeds or self-insurance as described in Section 6.7(b) above)
as provided herein and in the Trust Agreement. Neither the general fund nor any enterprise fund
of the City is liable (except to the extent that Program Receipts are credited thereto), and neither
the credit nor the taxing power of the City is pledged for the payment of the Repurchase
Payments or the Deferred Commitment Fee. To the extent that the City is unsuccessful in
recovering sufficient amounts to make the Repurchase Payments required to be made hereunder
(representing the Accreted Value and Current Interest components of the Certificates) from
Program Receipts designated as Abatement Action Costs (as defined in the Ordinance) or "clean
up costs" from responsible parties or tortfeasors, Certificate Holders will be entitled to be paid
from any Program Receipts, notwithstanding the manner in which such receipts are labeled or
described in any judgment, settlement agreement or insurance payment.
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Section 6.9. Payment of the Deferred Commitment Fee. If on any date all Certificates
have been paid or discharged in accordance with the Trust Agreement and, if such date is prior to
the Commitment Period Ending Date, either (i) the maximum aggregate principal amount of
Certificates, subject to certain reductions as permitted by the Certificate Purchase Contract and
the Trust Agreement, has been issued and delivered under the Trust Agreement, or (ii) any other
Commitment Termination Event has occurred, then the City shall direct the Trustee to apply all
amounts in the Deferred Commitment Fee Reserve Account and all other Program Receipts to
the payment of the Deferred Commitment Fee, as provided under Sections 5.03 and 5.04 of the
Trust Agreement.
Section 6.10. Taxes, Other Governmental Charges. The City covenants, warrants and
agrees that the Program Receipts will be exempt from all taxes of any kind, and if the Program
Receipts are subject to taxation in any form, the City will pay, as the same become due and in
accordance with Section 6.7(b), all taxes and governmental charges of any kind whatsoever that
may at any time be lawfully assessed or levied against or with respect to the Program.
Section 6.11. Application of Moneys in the Program Account. The City will deposit all
proceeds of the Certificates, upon receipt, into the Program Account and will invest all such
amounts, until they are applied to the payment of Budgeted Program Costs, in Investment
Securities which mature by the date they are expected to be used. The City hereby covenants
that it will maintain the Program Account as a separate account under the Municipal Fund and
that amounts in the Program Account will be segregated, held and invested separately from other
assets of the City.
The City will apply moneys in the Program Account for the sole purpose of paying
Budgeted Program Costs in accordance with the Program Budget, attached hereto as Exhibit A,
and will comply with all expenditure limitations by category (Legal Fees and Ongoing
Obligations) and applicable sub -categories (Legal Fees by tier and Ongoing Obligations
consisting of DTSC Settlement Payments, computer document management, technical activities,
project management and Legal Disbursements), except as such limitations are modified pursuant
to Section 6.12 below. Within 20 Business Days after the end of each calendar quarter during
the Commitment Period, or thereafter while any Certificates are Outstanding and the Deferred
Commitment Fee has not been paid in full, the City shall prepare and transmit to the Calculation
and Verification Agent a Quarterly Budget Reporting Form, in the form attached to Exhibit A,
and will submit an amended Quarterly Budget Reporting Form to the Calculation and
Verification Agent when invoices for services rendered during a quarter are received or paid
after the filing of the Quarterly Budget Reporting Form for that quarter. The Calculation and
Verification Agent, as directed in the Quarterly Budget Reporting Form, shall verify the City's
calculations, shall determine whether the application of amounts in the Program Account is in
compliance with the Program Budget, and shall promptly transmit a report describing the result
of its review to the City, the Original Purchaser, other Certificate Holders and the Trustee. Upon
receipt of notice that the City's calculations were erroneous or that any disbursements were not in
compliance with the Program Budget, the City shall, as applicable, promptly correct its
calculations and take all necessary actions to comply with the Program Budget. The City shall
promptly transmit to the Calculation and Verification Agent an amended Quarterly Budget
Reporting form showing all recalculations and any actions taken to comply with the Program
Budget, and the Calculation and Verification Agent shall follow the procedures described above
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with respect to the initial submission of the applicable Quarterly Budget Form. The Trustee shall
receive copies of all Quarterly Budget Reporting Forms, amendments thereto and reports issued
thereunder and shall transmit copies to the Original Purchaser and Certificate Holders but shall
have no duty to review such reports filed with it hereunder and shall not be responsible for the
application of or allocation of amounts in the Program Account.
Section 6.12. Prop -ram Budizet: Reallocation of Certain Amounts. The City may
reallocate funds in the Program Account subject to the guidelines and limitations provided in the
Program Budget, attached hereto as Exhibit A. In the event that the City elects to reallocate
amounts deposited into the Program Account from Ongoing Obligations to Legal Fees or from
Legal Fees to Ongoing Obligations, then the City, prior to such reallocation and expenditure, will
file a Reallocation Notice Regarding Amounts in Program Account with the Trustee in the form
of Exhibit D hereto and will certify that such reallocation is consistent with the provisions of this
Section and the Program Budget. Within 5 Business Days after the receipt thereof, the Trustee
shall transmit a copy of any Reallocation Notice to the Original Purchaser, other Certificate
Holders, and the Calculation and Verification Agent.
Any request for an increase to the Ongoing Obligation Payment Limits set forth in
Exhibit A hereto must be delivered by the City to the Trustee in the form of the Ongoing
Obligation Payment Limit Increase Approval Form, attached hereto as Exhibit E, for transmittal
to the Original Purchaser and Certificate Holders within 5 Business Days after the Trustee's
receipt thereof and must be approved by the Original Purchaser and Certificate Holders within 5
Business Days after the Original Purchaser's and Certified Holders' receipt thereof. If such
approval is not received by the Trustee within 5 Business Days, the request shall be deemed
denied. In accordance with the Ongoing Obligation Payment Limit Increase Approval Form, the
Trustee shall send a report of the Original Purchaser's and other Certificate Holders' response to
the City, the Calculation and Verification Agent, and the Original Purchaser and other Certificate
Holders. The Trustee shall deliver to the Original Purchaser, the Certificate Holders, the City
and the Calculation and Verification Agent, as the case may be, but shall have no duty to review,
such notices, reports, requests or certifications filed with it under this Section 6.12 and shall not
be responsible for the application or allocation of amounts in the Program Account.
Section 6.13. Delivery of Reports and Records. The City agrees to deliver, or to cause to
be delivered, reports to the Trustee, to the Calculation and Verification Agent, to the Corporation
and to the Original Purchaser and any other Certificate Holder on a quarterly basis, or more often
as reasonably requested, regarding the application of amounts in the Program Account, including
statements of Legal Fees, classified by individual attorney, task performed and time devoted to
task, and a detailed report of Ongoing Obligations, including Legal Disbursements, subject to the
assertion of any privilege or protection of any nature, including but not limited to the attorney-
client privilege and the attorney work -product protection, available to the City or its attorneys.
Subject to the assertion of any such privilege or protection, the City will allow the Trustee (who
will have no duty to review or inspect such records and documents), the Calculation and
Verification Agent, the Original Purchaser, any Certificate Holder and any auditor on behalf of
the Corporation, access to all records and documents detailing receipt of amounts into the
Program Account and disbursements from the Program Account. Reports and records required
by this Section 6.13 will include the information required by Sections 6.4(b), 6.6(d), 6.11 and
6.12 hereof.
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Section 6.14. Annual Certification and Audit. As soon as practicable but in no event
later than April 30 of each year, the City shall file with the Trustee and the Calculation and
Verification Agent a written statement of an Independent Accountant and a certificate from an
Authorized Representative of the City, having reviewed the City's records and the provisions of
this Agreement, including but not limited to Section 6.13 and Exhibit A, Exhibit D, and
Exhibit E hereof, stating that nothing has come to the attention of such Independent Accountant
or Authorized Representative that would lead such Independent Accountant or Authorized
Representative to believe that (i) amounts in the Program Account have been applied in violation
of this Agreement, such as moneys being expended for Legal Fees and Ongoing Obligations in
violation of the Program Budget, moneys being reallocated in a manner violating the Program
Budget, or any budget cap or limitation being exceeded, (ii) the receipt and remittance of
Program Receipts or the calculation, retention and payment of Permitted Deductions are in
violation of the terms of this Agreement or the Program Budget, or (iii) any settlement entered or
proposed to be entered is not in accordance with the terms of Section 6.6 hereof, or (iv) any other
Event of Default hereunder shall have occurred and be continuing.
Section 6.15. Diligent Pursuit of Program Receipts, Engagement of Outside Counsel.
The City hereby covenants that, until all Outstanding Certificates and the Deferred Commitment
Fee have been fully paid and the Purchase Commitment has been reduced to zero, it will
diligently pursue collection of Program Receipts, will at all times have engaged competent legal
counsel with recognized expertise in matters involving environmental litigation, and will not
terminate the Cooperative Agreement or cause the Cooperative Agreement to be terminated.
Section 6.16. Singlerpose Corporation. The City hereby covenants that it will not use
the Corporation for, and the Corporation hereby covenants that it will not participate in, any
other financing or other arrangement in addition to the sale and repurchase of Program Receipts
and issuance of the Certificates hereunder and under the Trust Agreement.
Section 6.17. Cooperation With Removal or Replacement of Trustee. The City hereby
covenants that it will cooperate with the Corporation as needed in connection with the removal
or replacement of the Trustee in accordance with Section 8.01(d) of the Trust Agreement.
ARTICLE VII
ASSIGNMENT OF AGREEMENT TO TRUSTEE
Section 7.1. Assignment by City and Corporation. The parties understand that this
Agreement and certain rights of the Corporation hereunder will be assigned to the Trustee
pursuant to an assignment provision in the Trust Agreement. The City hereby transfers in trust,
grants a security interest in and assigns to the Trustee, for the benefit of the Holders from time to
time of the Certificates and for the benefit of the Original Purchaser (to the extent of its interest
in the Deferred Commitment Fee) all of its right, title, and interest in this Agreement and all of
its interest in the Program Receipts, net of Permitted Deductions. The City agrees to execute all
documents, including notices of assignment and chattel mortgages or financing statements that
may be reasonably requested by the Corporation, the Trustee, the Original Purchaser or any
Holder to protect their interests in the Program Receipts during the term hereof, and to provide
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copies thereof to the Corporation, the Trustee, the Calculation and Verification Agent, the
Original Purchaser, and upon request therefor, to any Certificate Holder so requesting.
ARTICLE VIII
NON -LIABILITY OF CORPORATION; INDEMNIFICATION
Section 8.1. Non -Liability of Corporation. The Corporation shall not be obligated to pay
Repurchase Payments or the Deferred Commitment Fee or to make any other payments or
advance any moneys or be liable for any other costs or expenses hereunder.
Section 8.2. Indemnification.
(a) General Indemnity. The City shall, to the extent permitted by law,
indemnify and hold harmless the Corporation, the Trustee (as the assignee of the
Corporation's rights hereunder), the Placement Agent, the Calculation and Verification
Agent, the Original Purchaser, each Certificate Holder and their members, directors,
officers, employees, and agents from and against any and all losses, claims, damages,
liabilities, or expenses of every kind, character, and nature whatsoever (excepting
therefrom only such losses, claims, damages, liabilities, or expenses arising from the
negligence of the Corporation or the Trustee), including, but not limited to, losses,
claims, damages, liabilities, or expenses arising out of, resulting from, or in any way
connected with (1) the City's interest in, or use of, the Program Receipts or any portion
thereof; (2) the sale of the Certificates and the carrying out of any of the transactions
contemplated by the Certificates, the Certificate Purchase Contract, the Trust Agreement,
this Agreement or any related document; (3) the carrying out of the Program; or (4) the
acceptance of and administration by the Trustee of the Trustee's duties under the Trust
Agreement. The City shall, to the extent permitted by law and, with respect to the
indemnification of the Placement Agent, the Calculation and Verification Agent, the
Original Purchaser and each Certificate Holder, (each a "Special Indemnified Party"), to
the extent permitted by clause (b) below, pay or reimburse the Corporation, the Trustee,
the Special Indemnified Parties and their members, directors, officers, employees and
agents for any and all costs, reasonable attorneys fees, liabilities or expenses incurred in
connection with investigating, defending against or otherwise in connection with any
such losses, claims, damages, liabilities, expenses or actions. Notwithstanding anything
to the contrary in this Agreement or the Trust Agreement, the Trustee and the
Corporation shall not be entitled to payment, reimbursement or indemnification for
actions involving willful misconduct, default or negligence on the part of the Trustee or
the Corporation, respectively.
(b) Limited Source Indemnity. The obligation of the City to defend,
indemnify, and hold harmless the Special Indemnified Parties for any suits or claims
arising from the sale of the Certificates or the City's pursuit of the Program (as described
in the preceding paragraph), shall be payable solely from (i) Program Receipts, and
(ii) any proceeds of insurance or self-insurance programs in which the City has
participated or will participate. With regard to item (i), if currently available Program
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Receipts are insufficient to pay attorney fees and expenses and other litigation related
costs at the time they are incurred, the Special Indemnified Parties may fund the excess of
such fees and expenses, and any future Program Receipts will be used to reimburse the
Special Indemnified Parties for such amounts. With regard to item (ii), the City agrees to
cooperate fully with the Special Indemnified Parties in submitting and pursuing claims
against such City insurers, although the City will have no obligation to maintain any
insurance coverage.
(c) Special Conditions. The City's indemnity obligation to the Special
Indemnified Parties under section (b) above is subject to the following conditions:
(1) The City will pay attorneys' fees and costs of a single law firm
chosen by the Special Indemnified Parties to collectively represent the Special
Indemnified Parties, and such counsel shall, to the extent consistent with the
Special Indemnified Parties' interests, cooperate with the City and avoid
duplication and wastefulness in the assertion of defenses;
(2) The City will pay attorneys' fees and costs of additional law firms
to represent an individual Special Indemnified Party where (i) the counsel
retained under (c)(1) above could not, as a result of applicable law or code of
professional responsibility, assert a defense on behalf of such an individual
Special Indemnified Party while simultaneously representing the other Special
Indemnified Parties for reasons including, but not limited to, a situation in which
the use of counsel chosen by the Special Indemnified Parties to represent the
Special Indemnified Party or Parties would present such counsel with a conflict of
interest, or in which the actual or potential defendants in, or targets of, any such
action include the Special Indemnified Party or Parties and the City and the
Special Indemnified Party or Parties shall have reasonably concluded that there
may be legal defenses available to it and/or other Special Indemnified Parties that
are different from or additional to those available to the City; or (ii) the City
otherwise authorizes the Special Indemnified Parties to employ separate counsel
at the expense of the City; and
(3) The City will not, without the prior written consent of the Special
Indemnified Parties, settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit or proceeding in
which indemnification or contribution may be sought hereunder (whether or not
the Special Indemnified Parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an unconditional
release of each Special Indemnified Party from all liability arising out of such
claim, action, suit or proceeding.
The provisions of this Article VIII shall survive the discharge of the City's obligations
under the Trust Agreement.
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ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default. The following events shall be "Events of Default":
(a) Failure of the City to remit Program Receipts to the Trustee when required
hereunder.
(b) Failure by the City to pay or cause to be paid in full any payment required
hereunder when due, on a Repurchase Payment Date, on the Final Payment Date, or
otherwise pursuant to the terms hereof; provided, however it shall not be a default
hereunder if there is a failure to make such payments on a timely basis if such failure is
caused solely by the insufficiency of Program Receipts so long as the City is not
otherwise in default hereunder and any such payment is required to be made solely from
Program Receipts;
(c) If any material representation or warranty made by the City herein or in
the Certificate Purchase Agreement Contract or made by the City in any other document,
instrument, or certificate furnished to the Trustee or the Corporation in connection with
the execution and delivery of any Series of the Certificates shall at any time be shown to
have been incorrect in any respect as of the time made;
(d) If the City shall fail to observe or perform any covenant, condition,
agreement, or provision in this Agreement on its part to be observed or performed, other
than as referred to in subsection (a), (b) or (c) of this Section, or shall breach any
warranty by the City herein contained, for a period of 30 days after written notice,
specifying such failure or breach and requesting that it be remedied, has been given to the
City by the Corporation or the Trustee; except that, if such failure or breach can be
remedied but not within such thirty (30) day period and if the City has taken all action
reasonably possible to remedy such failure or breach within such 30 day period, such
failure or breach shall not become an Event of Default for so long as the City shall
diligently proceed to remedy the same in accordance with and subject to any directions or
limitations of time established by the Trustee;
(e) Any proceeding under the United States Bankruptcy Code or any federal
or state bankruptcy, insolvency, or similar law or any law providing for the appointment
of a receiver, liquidator, trustee or similar official of the City or the Corporation or of all
or substantially all of either the City's or the Corporation's assets, is instituted by or with
the consent of the City or the Corporation, or is instituted without the City's or the
Corporation's consent and is not permanently stayed or dismissed within sixty (60) days,
or if the City or the Corporation offers to the City's or the Corporation's creditors to effect
a composition or extension of time to pay the City's or the Corporation's debts or asks,
seeks or prays for a reorganization or to effect a plan of reorganization, or for a
readjustment of the City's or the Corporation's debts, or if the City or Corporation shall
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make a general or any assignment for the benefit of the City's or the Corporation's
creditors.
(f) Any assertion in any proceeding, forum or action by the City or on its
behalf to the effect that performance of the City's obligations under this Agreement are
unlawful or of the City's intention to disavow or repudiate any such obligations.
(g) If an Event of Default occurs under the Trust Agreement.
Section 9.2. Remedies on Default. In each and every such case during the continuance
of such an Event of Default, the Corporation and the Trustee may, at their option, take whatever
action, at law or in equity, as may appear necessary or desirable to collect the Program Receipts
and to cause to be paid any other payments then due and thereafter to become due under this
Agreement or to enforce the performance and observance of any obligation, covenant,
agreement, or provision contained in this Agreement to be observed or performed by the City.
The Original Purchaser may, in its sole discretion and without any liability for liquidated
damages, terminate the Purchase Commitment upon the occurrence of an Event of Default.
Section 9.3. Remedies Not Exclusive, No Waiver of Rights. No remedy herein
conferred upon or reserved to the Corporation or the Trustee is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy, to the extent permitted by
law, shall be cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or otherwise. In order to entitle the
Corporation and the Trustee to exercise any remedy, to the extent permitted by law, reserved to it
in this Agreement, it shall not be necessary to give any notice, other than such notice as may be
herein expressly required. Such rights and remedies as are given to the Corporation hereunder
shall also extend to the Trustee, and the Trustee may exercise any rights and will be charged with
the obligations of the Corporation under this Agreement, and the Trustee and the Certificate
Holders shall be deemed third party beneficiaries of all covenants and conditions herein
contained.
No delay in exercising or omitting to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a waiver of any such
default or an acquiescence therein, and every such right and power may be exercised from time
to time and as often as may be deemed expedient.
Section 9.4. Expenses on Default. In the event the City should default under any of the
provisions of this Agreement and the Corporation or the Trustee should employ attorneys or
incur other expenses of the collection of the payments due hereunder, the City agrees that it will
on demand therefor pay to the Corporation or the Trustee the reasonable fee of such attorneys
and such other expenses so incurred by the Corporation or the Trustee.
Section 9.5. Notice of Default. The City agrees that as soon as is practicable, and in any
event within 10 days after such event, the City will furnish the Trustee and the Corporation
notice of any event that is an Event of Default, or that with the giving of notice or the passage of
time or both could constitute an Event of Default, that has occurred and is continuing on the date
of such notice, which notice shall set forth the nature of such event and the action that the City
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proposes to take with respect thereto. Upon having actual notice of the existence of an Event of
Default, the Trustee shall serve written notice thereof upon the City (unless the City has
expressly acknowledged the existence of such Event of Default in a writing delivered by the City
to the Trustee or filed by the City in any court).
Section 9.6. Survival of Obligations. The City covenants and agrees with the
Corporation that, until all obligations hereunder have been met and all obligations have been
discharged in accordance with the Trust Agreement, its obligations hereunder shall survive the
cancellation and termination of this Agreement, for any cause, and that the City shall continue to
make all payments, and perform all other obligations provided for in this Agreement, all at the
time or times provided in this Agreement. Notwithstanding the above, as the provisions of
Section 8.2 hereof shall survive the discharge of the City's obligations under the Trust
Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. All notices or communications herein required or permitted to be
given shall be in writing mailed or delivered to it as follows:
(i) If to the Corporation:
(ii) If to the City:
Lodi Financing Corporation
c/o City of Lodi
221 West Pine Street
Lodi, California 95240
Attention: President
City of Lodi
221 West Pine Street
Lodi, California 95240
Attention: City Attorney
(iii) If to the Trustee:
U.S. Bank Trust National Association
One California Street, Fourth Floor
San Francisco, California 94111
Attention: Corporate Trust Services
Reference: Lodi Financing Corporation
(iv) If the Calculation and Verification Agent:
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Lehman Brothers Inc.
Attention:
The Corporation, the City, the Trustee and the Calculation and Verification Agent may,
by notice given hereunder, designate any further or different address to which subsequent
notices, certificates and other communications shall be sent.
Section 10.2. Goveming Law. This Agreement shall be construed in accordance with
and governed by the Constitution and laws of the State of California.
Section 10.3. Binding Effect. This Agreement shall inure to the benefit of and shall be
binding upon the Corporation, the City and their respective successors and assigns, including the
Original Purchaser and any subsequent Certificate Holders subject, however, to the limitations
contained herein.
Section 10.4. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, then such provision or provisions shall be deemed severable from the remaining
provisions contained in this Agreement and such invalidity, illegality, or unenforceability shall
not affect any other provision of this Agreement, and this Agreement shall be construed as if
such invalid, illegal, or unenforceable provision had never been contained herein. The
Corporation and the City each hereby declares that they would have entered into this Agreement
and each and every other section, paragraph, sentence, clause, or phrase hereof irrespective of the
fact that any one or more sections, paragraphs, sentences, clauses, or phrases of this Agreement
may be held illegal, invalid, or unenforceable.
Section 10.5. Article and Section Headings and References. The headings or titles of the
several articles and sections hereof, and any table of contents appended to copies hereof, shall be
solely for convenience of reference and shall not affect the meaning, construction, or effect of
this Agreement. All references herein to "Articles," "Sections," and other subsections are to the
corresponding articles, sections, or subsections of this Agreement; the words "herein," "hereof,"
"hereby," "hereunder," and other words of similar import refer to this Agreement as a whole and
not to any particular article, section, or subsection hereof; and words of the masculine gender
shall mean and include words of the feminine and neuter genders.
Section 10.6. Agreement Represents Complete Agreement: Amendments. This
Agreement represents the entire contract between the parties hereto. This Agreement may not be
effectively amended, changed, modified, altered, or terminated except by the written agreement
of the Corporation and the City, given in accordance with the provisions of the Trust Agreement.
Section 10.7. Trustee Third Party Beneficiary. The Trustee is hereby designated a third
party beneficiary hereunder for the purpose of enforcing any of the rights hereunder assigned to
the Trustee. In accordance with Section 9.3 hereof, the Trustee and the Certificate Holders shall
be deemed third party beneficiaries of all covenants and conditions contained herein.
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Section 10.8. Waiver of Personal Liability. No governing body member, officer, agent,
or employee of the Corporation or of the City shall be individually or personally liable for the
payment of Repurchase Payments or any other sum hereunder or be subject to any personal
liability or accountability by reason of the execution and delivery of this Agreement; but nothing
herein contained shall relieve any such governing body member, officer, agent, or employee
from the performance of any official duty provided by law or by this Agreement.
Section 10.9. Execution of Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall for all purposes be deemed to be an original and all
of which shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the City and the Corporation have caused this Agreement to
be executed in their respective corporate names, all as of the date first above written.
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
CITY OF LODI
LOU
City Manager
LODI FINANCING CORPORATION
UN
President
ATTEST:
Secretary
APPROVED AS TO FORM:
Corporation Counsel
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EXHIBIT A
PROGRAM DISBURSEMENT BUDGET
The Program Disbursement Budget sets out the amount, timing and limitations for
amounts to be deposited into the Program Account and consists of. (a) caps on disbursements for
(i) professional fees of Outside Counsel ("Legal Fees") and (ii) "Ongoing Obligations,"
consisting of City reimbursement payments for previously made DTSC settlement payments for
certain previously incurred response costs pursuant to Section 4.a of the Cooperative Agreement
("DTSC Settlement Payments"), computer document management, technical activities, project
management and amounts invoiced by Outside Counsel for out-of-pocket direct expenses
("Legal Disbursements"), (b) a methodology for paying Legal Fees, (c) a methodology for
reallocating budget items to provide flexibility for unforeseen events and (d) a methodology for
handling Purchase Commitment reductions. Legal fees, Legal Disbursements, and all other costs
incurred in connection with the Program prior to the Closing Date, except up to $610,899 in
DTSC Settlement Payments, are not included within this Program Disbursement Budget and
shall not be paid from Certificate proceeds, Program Receipts or any other source until no
Certificates are outstanding, the Purchase Commitment has ended or has been terminated and all
other obligations under the Sale and Repurchase Agreement have been fully satisfied.
The City is required to submit the attached Quarterly Budget Reporting Form ("QBRF")
to the Calculation and Verification Agent within 20 Business Days after the beginning of each
calendar quarter (except the first quarter) to reconcile the prior quarter's expenditures with this
Program Disbursement Budget and to demonstrate the City's compliance with this Program
Disbursement Budget for the prior quarter. The City must submit an amended QBRF when
invoices for services rendered during a quarter are received or paid after the filing of the QBRF
for that quarter or when the Calculation and Verification Agent, in accordance with Section 6.11
of the Program Receipts Sale and Repurchase Agreement, dated , (the "Sale
and Repurchase Agreement") between the City of Lodi and the Lodi Financing Corporation,
determines that the City's calculations were erroneous or that any disbursements were not in
compliance with the Program Budget. If there are any ambiguities or discrepancies between the
description of the Program Disbursement Budget in this Exhibit A and the QBRF, the latter will
govern.
All capitalized terms used herein that are not otherwise defined shall have the meanings
as set forth in the Sale and Repurchase Agreement.
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A-1
(a) Disbursement Caps
Table I: Cumulative Disbursement Cap
Cumulative
Beginning of Disbursement
Quarter Cap
1
$ 1,500,000
2
3,000,000
3
4,500,000
4
6,000,000
5
7,125,000
6
8,250,000
7
9,375,000
8
10,500,000
9
11,250,000
10
12,000,000
11
12,750,000
12
13,500,000
13
13,875,000
14
14,250,000
15
14,625,000
16
15,000,000
The maximum amount that may be transferred to the Program Account within the
Municipal Fund from Certificate proceeds in each quarter is (x) the Cumulative Disbursement
Cap for that quarter (from Table I) less (y) all amounts transferred previously.
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A-2
Table II: Program Budget for Ongoing Obligations
Cumulative
Beginning of Ongoing
Quarter Obligations Cap
1
$922,250
2
1,842,600
3
2,761,100
4
3,679,600
5
4,250,150
6
4,820,700
7
5,384,800
8
5,948,900
9
6,203,000
10
6,457,100
11
6,711,200
12
6,968,350
13
7,096,950
14
7,225,550
15
7,354,150
16
7,482,750
The maximum amount that may be disbursed for Ongoing Obligations at any time is
(x) the Cumulative Ongoing Obligations Cap for the quarter (from Table II) less (y) all amounts
previously disbursed for Ongoing Obligations. However, additional funds may be reallocated
from the Program Budget for Legal Fees in a given quarter to pay Ongoing Obligations in
accordance with the reallocation provisions of this Exhibit A.
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A-3
Table III: Ongoing Obligations Payment Limits
The amount disbursed for Ongoing Obligations may be used to pay for expenses in any
of the sub -categories of Ongoing Obligations. However, each sub -category will have a
maximum cumulative expenditure cap per quarter (from Table III), and Program monies may not
be expended in excess of these sub -category caps unless (a) the City reallocates the difference
from the Program Budget for Legal Fees in accordance with the reallocation provisions of this
Exhibit A and; (b) the City, prior to exceeding the maximum cap in any quarter, provides written
notice to the Trustee and receives approval from the Original Purchaser and the Certificate
Holders of the change in the Ongoing Obligation sub -category maximum cumulative expenditure
cap, as provided in Exhibit E. The DTSC Settlement Payments amounts may not be exceeded
under any circumstances, however.
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A-4
Computer
Beginning of
DTSC
Document
Technical
Project
Legal
Quarter
Settlement
Management
Activities
Management
Disbursements
1
$ 250,000
$ 310,596
$ 386,010
$ 52,519
$ 124,800
2
500,000
619,899
712,227
163,654
249,600
3
610,899
839,714
1,357,095
224,052
374,400
4
610,899
1,143,710
2,077,371
269,030
499,200
5
610,899
1,361,125
2,388,443
315,858
665,600
6
610,899
1,601,766
2,678,692
360,283
832,000
7
610,899
1,872,326
2,941,761
393,584
998,400
8
610,899
2,181,475
3,151,981
441,145
1,164,800
9
610,899
2,277,991
3,207,516
453,024
1,331,200
10
610,899
2,380,448
3,256,379
465,634
1,497,600
11
610,899
2,487,003
3,300,640
478,748
1,664,000
12
610,899
2,596,134
3,342,615
495,538
1,830,400
13
610,899
2,650,266
3,378,421
507,780
1,895,400
14
610,899
2,709,352
3,411,493
517,802
1,960,400
15
610,899
2,770,851
3,445,220
524,755
2,025,400
16
610,899
2,832,772
3,478,478
531,757
2,090,400
The amount disbursed for Ongoing Obligations may be used to pay for expenses in any
of the sub -categories of Ongoing Obligations. However, each sub -category will have a
maximum cumulative expenditure cap per quarter (from Table III), and Program monies may not
be expended in excess of these sub -category caps unless (a) the City reallocates the difference
from the Program Budget for Legal Fees in accordance with the reallocation provisions of this
Exhibit A and; (b) the City, prior to exceeding the maximum cap in any quarter, provides written
notice to the Trustee and receives approval from the Original Purchaser and the Certificate
Holders of the change in the Ongoing Obligation sub -category maximum cumulative expenditure
cap, as provided in Exhibit E. The DTSC Settlement Payments amounts may not be exceeded
under any circumstances, however.
1073224/28/13350/00495/October 13, 1999 - 1:58
A-4
Table IV: Program Budget for Legal Fees
Beginning of Cumulative Legal
Quarter Fee Cap
1
$ 577,750
2
1,157,400
3
1,738,900
4
2,320,400
5
2,874,850
6
3,429,300
7
3,990,200
8
4,551,100
9
5,047,000
10
5,542,900
11
6,038,800
12
6,531,650
13
6,778,050
14
7,024,450
15
7,270,850
16
7,517,250
The maximum amount that may be disbursed at any time to pay Legal Fees is (x) the
amount specified in the Program Budget for Legal Fees for that quarter (from Table IV), less
(y) all amounts previously disbursed for Legal Fees. However, additional funds may be
reallocated from the Program Budget for Ongoing Obligations for a given quarter to pay Legal
Fees in accordance with the reallocation provisions of this Exhibit A.
(b) Legal Fee Payment Methodology
Legal professional fees billed for services performed during a quarter will be paid subject
to a three-tier methodology. As discussed more fully below, payments under Tier 1 and Tier 2
are made quarterly and are based on a percentage (90% and 30% respectively) of legal billings in
a quarter subject to quarterly caps. Payments under Tier 3 are based on billings which exceed
the amounts payable under Tier 1 and Tier 2 and are accumulated quarterly but paid only when
and to the extent that excess funds are available. Invoices received after a quarter for services
performed during that quarter must be compared to the caps in place for the quarter when
services were performed. The Tiers are as follows:
TIER 1 Fees billed for services performed in a quarter ("Quarterly Billings") subject to the
Tier 1 Billings Cap (from Table V) for the quarter in which the services were
performed, will be paid at 90% of the amounts billed.
TIER 2 Quarterly Billings in excess of the Tier 1 Billings Cap (from Table V) subject to the
Tier 2 Billings Cap (from Table V), for the quarter in which the services were
performed will be paid at 30% of the amounts billed in excess of the Tier 1 Billings
Cap.
1073224/28/13350/00495/October 13, 1999 -1:58
A-5
TIER 3 Certain Quarterly Billings which are not paid will qualify for accumulation under
Tier 3. Tier 3 accumulated billings, as described below, will be paid only from either
(a) amounts reallocated from Ongoing Obligations in accordance with the reallocation
provisions of this Exhibit A, (b) amounts not utilized in the Legal Fee budget for
payment of Tier 1 and Tier 2 billings in future quarters, or (c) Program Receipts
retained by the City as described in Section 6.4(e) of the Sale and Repurchase
Agreement. Tier 3 accumulated billings are comprised of the following:
(a) Quarterly Billings in excess of the Tier 1 Billings Cap (from Table V) subject
to the Tier 2 Billings Cap (from Table V), for the quarter in which the services
were performed which will be paid at 50% of the amounts billed in excess of
the Tier 1 Billings Cap.
(b) Quarterly Billings in excess of the Tier 2 Billings Cap (from Table V) for the
quarter in which the services were performed which will be paid at 80% of the
amounts billed in excess of the Tier 2 Billings Cap.
(c) Quarterly Billings which qualify for payment under Tier 1 or Tier 2 (as
described above) but are not paid due to insufficient funds within the Program
Account.
Table V: Legal Fee Tiers
Beginning Tier 1 Billings Tier 2
of Quarter Cap(l) Billings Cap(2)
1
$544,444
$836,944
2
544,445
843,278
3
544,444
849,444
4
544,445
849,445
5
516,666
814,833
6
516,667
814,834
7
516,667
836,333
8
516,666
836,333
9
450,000
753,000
10
450,000
753,000
11
450,000
753,000
12
450,000
742,833
13
227,778
365,778
14
227,778
365,778
15
227,778
365,778
16
227,778
365,778
(1) As explained above, up to 90% of this amount may be paid.
(2) As explained above, up to 30% of the difference between the Tier 2 Billings Cap and the Tier 1 Billings Cap may be paid,
and up to an additional 50% of that difference may accumulate in Tier 3.
1073224/28/13350/00495/October 13, 1999 - 1:58
A-6
(c) Reallocation Between Legal Fees and Ongoing Obligations
The City may choose to reallocate up to $1.3 million from Legal Fees to Ongoing
Obligations or vice versa in order to exceed the maximum disbursement limits within each of
these categories or within the Ongoing Obligations sub -categories. The reallocation can take
place during any quarter.
The reallocation of funds to the Legal Fee budget can only be used to pay the unpaid
portion of Legal Fees accrued under Tier 3.
(d) Purchase Commitment Reductions
Under certain circumstances discussed in sections 6.4 and 6.5 of the Sale and Repurchase
Agreement, the remaining Purchase Commitment of the Original Purchaser can be decreased. In
these circumstances, the Disbursement Caps for all future quarters will be reduced by the amount
of the Purchase Commitment decrease.
1073224/28/13350/00495/October 13, 1999 - 1:58
A-7
Quarterly Budget Reporting Form
Filing Date: ,
Quarter Number:
Quarter Beginning ,
and Ending (the "Reporting Period")
Definitions:
The "Next Period" means the three-month period beginning on the day following the
ending date of the Reporting Period.
The "Previous Period" means the three-month period (or part thereof in the case of the
first period) ending on the day before the beginning date of the Reporting Period.
Other capitalized terms used below are defined either by the instructions and formulas to
which they refer, or in the Program Receipts Sale and Repurchase Agreement dated as of [Dated
Date] between the City of Lodi, as Seller and Repurchaser, and the Lodi Financing Corporation,
as Purchaser (the "Sale and Repurchase Agreement").
Note regarding Line References: Numbers in parentheses refer to line numbers on this
Quarterly Budget Reporting Form, except where numbers are followed by "P." A number
followed by "P" refers to the line of the same number on the Quarterly Budget Reporting Form
for the Previous Period. (e.g. (17P) refers to Line 17 of the Quarterly Budget Reporting Form for
the Previous Period.)
Calculation and Verification Agent Instructions: Instructions for the Calculation and
Verification Agent's use of this Form are specified by the letter code to the right of each line
below. The actions corresponding to the letter codes are as follows:
1073224/29/13350/00495/October 13, 1999 - 1:58
A-8
No action on the part of the Calculation and Verification Agent is necessary; City of Lodi
L
is responsible for accuracy of reported numbers.
The Calculation and Verification Agent should check correctness of mathematical
M
calculations.
The Calculation and Verification Agent should check compliance according to italicized
C
instructions.
The Calculation and Verification Agent should refer to appropriate table to check
V
correctness of numbers.
If an Ongoing Obligation Payment Limit Increase Approval Form (an "Approval Form")
has been submitted and approved, the Calculation and Verification Agent should compare
F
each amount given on this form with its respective approved increase on the most recent
Approval Form.
1073224/29/13350/00495/October 13, 1999 - 1:58
A-8
In accordance with Section 6.11 of the Sale and Repurchase Agreement, if this form
contains any errors in calculation (Calculation and Verification Agent Instructions M, V, and F), the
Calculation and Verification Agent must immediately notify the City of any corrections needed.
The Calculation and Verification Agent must immediately notify the City, the Original Purchaser,
other Certificate Holders and the Trustee if the City fails to comply with the Program Budget
(Calculation and Verification Agent Instruction Q.
Line Instructions
A. Reporting Period Expenditures
(1) Amount of Certificates issued during Reporting Period. (1) L
(2) Amount of Certificates issued during Next Period (2) L
Lines (3) through (7) and Line (9) — Record the amounts expended
for services performed during the Reporting Period for the
following budget categories:
(3)
DTSC Settlement Payments
(3) L
(4)
Computer Document Management
(4) L
(5)
Technical Activities
(5) L
(6)
Project Management
(6) L
(7)
Legal Disbursements
(7) L
(8)
Total Ongoing Obligations
M
(14) Technical Activities = (5) + (14P)
= Sum of Lines (3) through (7)
(8) M
(9)
Legal Fees
(9) L
(10)
Legal Fees expended for services performed before the
M
(17) Total Ongoing Obligations
Reporting Period (For first quarter, use 0)
(10) L
(11)
Total Legal Fees
M
(18) Legal Fees = (11) + (18P)
= (9) + (10)
(11) M
B. Cumulative Expenditures
Lines (12) through (16) and Line (18) — Compute the new
Cumulative Expenditures by adding Reporting Period Expenditures
to Previous Period's Cumulative Expenditures. For the first quarter,
copy the Reporting Period Expenditures from Lines (3) through (9):
(12) DTSC Settlement = (3) + (12P)
(12)
M
(13) Computer Document Management = (4) + (13P)
(13)
M
(14) Technical Activities = (5) + (14P)
(14)
M
(15) Project Management = (6) + (15P)
(15)
M
(16) Legal Disbursements = (7) + (16P)
(16)
M
(17) Total Ongoing Obligations
= Sum of Lines (12) through (16)
(17)
M
(18) Legal Fees = (11) + (18P)
(18)
M
1073224/28/13350/00495/October 13, 1999 - 1:58
A-9
Line
C. Purchase Commitment Reduction
(19)
Program Receipts deposited into the Program Account
during the Reporting Period
(19)
(20)
Record the cash value, as determined by an Independent
Consultant, of all non-cash settlements received during the
Reporting Period in excess of the limits set forth in §6.6 of
the Sale and Repurchase Agreement.
(20)
(21)
Record the amount of any Certificate payment by the City
during the Reporting Period as a result of non-cash
settlements pursuant to §6.6 (a) (i).
(21)
(22)
[(19) + (20) — (21)]
This is the Purchase Commitment Reduction for the
Reporting Period.
(22)
(23)
[(23P) — (1) — (22)] (For the first quarter, use $15,000,000
in place of (23P).)
This is the Purchase Commitment for the Next Period
(23)
(24)
[(1) + (24P)] (For the first quarter, use 0 in place of (24P).)
Total Certificate purchases through Reporting Period
(24)
(25)
Referring to Table I, copy the Cumulative Disbursement
Cap for the Next Period.
(25)
(26)
[(25) — (22) — (24)]
This is the maximum Certificate issuance amount for the
Next Period. Line (2) must be less than or equal to this
amount.
(26)
D. Reallocation from Legal Fees to Ongoing Obligations:
(27) Referring to Table II, copy the Cumulative Ongoing
Obligations Cap for the Reporting Period. (27)
(28) [(17) — (27)]
Ifpositive, this is the total amount reallocated to Ongoing
Obligations. In accordance with Exhibit A of the Sale and
Repurchase Agreement, this amount must be less than or
equal to $1,300,000. (28)
E. Reallocation from Ongoing Obligations to Legal Fees:
(29) Referring to Table IV, copy the Cumulative Legal Fee Cap
for the Reporting Period. (29)
(30) [(18) — (29)]
If positive, this is the total amount reallocated to Legal
Fees. In accordance with Exhibit A of the Sale and
Repurchase Agreement, this amount must be less than or
equal to $1,300,000. (30)
1073224/28/13350/00495/October 13, 1999 -1:58
A-10
Instructions
L
L
L
M
M
M
M
EO
V
M, C
V
IM
Line Instructions
F. On2oin2 Obligation Subcategory Limits
Lines (31) through (35) — Ongoing Obligation Payment Limits —
Referring to Table III, copy the Ongoing Obligation Payment
Limits for the following subcategories for the Reporting Period:
(31) DTSC Settlement Payment
(31)
V
(32) Computer Document Management
(32)
V
(33) Technical Activities
(33)
V
(34) Project Management
(34)
V
(35) Legal Disbursements
(35)
V
(36) Sum Lines (3 1) through (35).
(36)
M
Lines (3 7) through (40) —Approved Increases in Subcategory
Ongoing Obligation Payment Limits — Record any Ongoing
Obligation Payment Limit increases that have been approved in
writing by the Original Purchaser and Certificate Holders, and that
are in effect as of the end of the Reporting Period:
(37) Computer Document Management
(37)
F
(38) Technical Activities
(38)
F
(39) Project Management
(39)
F
(40) Legal Disbursements
(40)
F
Lines (41) through (44) — Revised Ongoing Obligation Payment
Limits — Add each Ongoing Obligation Payment Limit increase
from Lines (37) through (40) to its respective Ongoing Obligation
Payment Limit, recorded in Lines (3 1) through (35):
(41) Computer Document Management: [(32) + (37)]
(41)
M
(42) Technical Activities: [(33) + (38)]
(42)
M
(43) Project Management: [(34) + (39)]
(43)
M
(44) Legal Disbursements: [(35) + (40)]
(44)
M
Lines (45) through (49) — Payment in excess of Revised Ongoing
Obligation Payment Limits:
(45) DTSC Settlement Payment: Greater of [(12) — (3 1)] or 0 (45)
(46) Computer Document Management: Greater of [(13) — (41)]
or 0 (46)
(47) Technical Activities: Greater of [(14) — (42)] or 0 (47)
(48) Project Management: Greater of [(l 5) — (43] or 0 (48)
(49) Legal Disbursements: Greater of [(16) — (44)] or 0 (49)
(50) Sum (45) through (49). In accordance with Exhibit A of the
Sale and Repurchase Agreement, Line (50) must be zero. (50)
1073224/28/13350/00495/October 13, 1999 - 1:58
A-11
M
M
M
M
M
M, C
Line Instructions
G. Legal Tier Structure
(51)
Legal Fee Expenditures: (9)
(51)
M
(52)
Amount paid for Legal Fees for services performed before
(64)
M
(65)
the Reporting Period, for which bills were received after
(65)
M
(66)
submission of the applicable Quarterly Budget Reporting
Form. If this amount is positive, please request the City to
submit a revised Quarterly Budget Reporting Form for the
(66)
M
(67)
period in which these legal services were performed and
for all subsequent periods.
(52)
C
(53)
[(51) — (52)]
(53)
M
(54)
Amount billed for Legal Fees for services performed in the
DTSC Reserve
Reporting Period.
(54)
L
Lines
(55) and (56) — Referring to Table V, copy the following
M
(69)
items
for the Reporting Period:
L
(70)
(55)
Tier 1 Billings Cap
(55)
V
(56)
Tier 2 Billings Cap
(56)
V
(57)
[(56) — (55)]
(57)
M
(58)
Lesser of (54) or (55).
(58)
M
(59)
[(58) x 90%]
This is the Tier 1 expenditure.
(59)
M
(60)
Greater of [(54) — (55)] or 0
(60)
M
(61)
Lesser of (60) or (57)
(61)
M
(62)
[(61) x 30%]
This is the Tier 2 expenditure.
(62)
M
Tier 3 Accrual:
(63)
1(61) x 50%]
(63)
M
(64)
Greater of [(54) — (56)] or 0
(64)
M
(65)
[(64) x 80%]
(65)
M
(66)
[(59) + (62) + (63) + (65) — (53)]
This is the change in Tier 3 balance for the Reporting
Period.
(66)
M
(67)
[(67P) + (66)] (For the first quarter, use 0 in place of
(67P).)
This is the Tier 3 balance.
(67)
M
H.
Permitted Deductions
DTSC Reserve
(68)
[(71P)] (For the first quarter, use 0 in place of (71P).)
(68)
M
(69)
Additions to DTSC Reserve during Reporting Period
(69)
L
(70)
Payments to DTSC during Reporting Period
(70)
L
1073224/28/13350/00495/October 13, 1999 - 1:58
A-12
Line Instructions
(71) [(68) + (69) — (70)]
DTSC Reserve balance at end of Reporting Period. By the
definition of Permitted Deductions in the Sale and
Repurchase Agreement, Line (71) must be less than or
equal to $300,000. (71) M, C
City Reimbursement
(72) [(74P)] (For the first quarter, use 0 in place of (74P).) (72) M
(73) Amount paid to City during Reporting Period to reimburse
for prior expenditures (73) L
(74) [(72) + (73)]
By the definition of Permitted Deductions in the Sale and
Repurchase Agreement, Line (74) must be less than or
equal to $2,000,000. (74) M, C
1073224/28/13350/00495/October 13, 1999 -1:58
A-13
Quarterly Budget Reporting Form — Table I
Cumulative Disbursement Caps
Cumulative
Disbursement
Quarter Cap
1
$ 1,500,000
2
3,000,000
3
4,500,000
4
6,000,000
5
7,125,000
6
8,250,000
7
9,375,000
8
10,500,000
9
11,250,000
10
12,000,000
11
12,750,000
12
13,500,000
13
13,875,000
14
14,250,000
15
14,625,000
16
15,000,000
1073224/28/13350/00495/October 13, 1999 - 1:58
A-14
Quarterly Budget Reporting Form — Table II
Cumulative Ongoing Obligations Caps
1073224/28/13350100495/October 13, 1999 - 1:58
A-15
Cumulative
Ongoing
Quarter
Obligations Cap
1
$ 922,250
2
1,842,600
3
2,761,100
4
3,679,600
5
4,250,150
6
4,820,700
7
5,384,800
8
5,948,900
9
6,203,000
10
6,457,100
11
6,711,200
12
6,968,350
13
7,096,950
14
7,225,550
15
7,354,150
16
7,482,750
1073224/28/13350100495/October 13, 1999 - 1:58
A-15
Quarterly Budget Reporting Form - Table III
Ongoing Obligation Payment Limits
Quarter
DTSC
Settlement
Computer
Document
Management
Technical
Activities
Project
Management
Legal
Disbursements
1
$250,000
$ 310,596
$ 386,010
$ 52,519
$ 124,800
2
500,000
619,899
712,227
163,654
249,600
3
610,899
839,714
1,357,095
224,052
374,400
4
610,899
1,143,710
2,077,371
269,030
499,200
5
610,899
1,361,125
2,388,443
315,858
665,600
6
610,899
1,601,766
2,678,692
360,283
832,000
7
610,899
1,872,326
2,941,761
393,584
998,400
8
610,899
2,181,475
3,151,981
441,145
1,164,800
9
610,899
2,277,991
3,207,516
453,024
1,331,200
10
610,899
2,380,448
3,256,379
465,634
1,497,600
11
610,899
2,487,003
3,300,640
478,748
1,664,000
12
610,899
2,596,134
3,342,615
495,538
1,830,400
13
610,899
2,650,266
3,378,421
507,780
1,895,400
14
610,899
2,709,352
3,411,493
517,802
1,960,400
15
610,899
2,770,851
3,445,220
524,755
2,025,400
16
610,899
2,832,772
3,478,478
531,757
2,090,400
1073224/28/13350/00495/October 13, 1999 - 1:58
A-16
Quarterly Budget Reporting Form — Table IV
Cumulative Legal Fee Caps
Cumulative
Quarter Legal Fee Cap
1
$ 577,750
2
1,157,400
3
1,738,900
4
2,320,400
5
2,874,850
6
3,429,300
7
3,990,200
8
4,551,100
9
5,047,000
10
5,542,900
11
6,038,800
12
6,531,650
13
6,778,050
14
7,024,450
15
7,270,850
16
7,517,250
1073224/28/13350/00495/October 13, 1999 -1:58
A-17
Quarterly Budget Reporting Form - Table V
Legal Fee Tiers
1073224/28/13350/00495/October 13, 1999 - 1:58
A-18
Tier 1
Tier 2
Billings
Billings
Quarter
Cap
Cap
1
$544,444
$836,944
2
544,445
843,278
3
544,444
849,444
4
544,445
849,445
5
516,666
814,833
6
516,667
814,834
7
516,667
836,333
8
516,666
836,333
9
450,000
753,000
10
450,000
753,000
11
450,000
753,000
12
450,000
742,833
13
227,778
365,778
14
227,778
365,778
15
227,778
365,778
16
227,778
365,778
1073224/28/13350/00495/October 13, 1999 - 1:58
A-18
EXHIBIT B
[FORM OF ISSUANCE REQUEST]
REQUEST AND CERTIFICATE OF THE CITY
Lodi Financing Corporation
Not to Exceed $16,000,000
Aggregate Principal Amount of
City of Lodi, California
Variable Rate Certificates of Participation
(Environmental Abatement Program)
To: U.S. Bank Trust National Association
Corporate Trust Services
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Sue Vargas, Vice President
Relationship Specialist
The City of Lodi, California (the "City") hereby requests and directs the Trustee, on
behalf of the Lodi Financing Corporation (the "Corporation"), to execute and deliver
$ of the Corporation's Variable Rate Certificates of Participation ("Certificates")
(Environmental Abatement Program), Series to [Purchaser] on [Delivery
Date].
We, the City Attorney and Finance Director [City Manager], respectively, of the City,
hereby certify as follows:
1. The representations and warranties of the City contained in (a) the Certificate
Purchase Contract, dated , 1999 (the "Certificate Purchase Contract"), among the
City, the Corporation and Environmental Restoration Company Ltd. with respect to the sale,
execution, and delivery of not to exceed $16,000,000 aggregate principal amount of the
Certificates and (b) the Program Receipts Sale and Repurchase Agreement, dated ,
1999 (the "Sale and Repurchase Agreement") between the City and the Corporation are true and
correct in all material respects on and as of the date hereof as if made on this date.
2. There is no action, suit, proceeding, inquiry, or investigation, at law or in equity
before or by any court, government agency, public board, or body, pending or, to the best of my
knowledge, threatened against the City, affecting the existence of the City or the titles of its
officers to their respective offices, or affecting or seeking to prohibit, restrain, or enjoin the sale,
execution, or delivery of the Certificates or the collection of the Program Receipts (as defined in
the Sale and Repurchase Agreement) to be used to pay the principal and interest components of
the Certificates, or the pledge of funds and accounts pursuant to the Trust Agreement (as defined
in the Sale and Repurchase Agreement), or contesting the powers of the Trustee thereunder with
respect to the execution of the Certificates; nor, to the best of our knowledge, is there any basis
for any such action, suit, proceeding, inquiry, or investigation, wherein an unfavorable decision,
1073224/28/13350/00495/October13, 1999 -1:58
B-1
ruling, or finding would materially adversely affect the authorization, execution, delivery, or
performance by the City of the obligations on its part contained in the Program Documents, as
defined in the Certificate Purchase Contract.
3. After investigation and review of the Program Documents, no event of default,
nor any event which, after the passage of time or the giving of notice would constitute an event
of default under a Program Document has occurred and is continuing.
4. The City has complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the date hereof pursuant to the Program
Documents, including compliance with the Program Budget and including any reallocation of
amounts therein.
5. The City represents that it will use the proceeds of this issuance in conformance
with the Program Budget set forth in Exhibit A to the Sale and Repurchase Agreement. The
principal amount of Certificates to be executed and delivered hereunder does not exceed the
Cumulative Disbursement Cap for the calendar quarter immediately following the Delivery Date,
as set forth in the Program Budget, less the principal amount of any Certificates previously
executed and delivered.
6. Between the date of the Certificate Purchase Contract and the date hereof, the
City has not, without the prior written consent of the Original Purchaser, together with such other
Certificate Holders as are necessary to constitute, in the aggregate, at least 51% of outstanding
Accreted Value, offered or issued any bonds, notes, or other obligations for borrowed money, or
incurred any material liabilities, direct or contingent, payable from Program Receipts.
7. All capitalized terms used herein that are not otherwise defined shall have the
same meanings as in the Certificate Purchase Contract and the Sale and Repurchase Agreement.
8. The City hereby requests and directs the Trustee, after the Trustee's review of this
Request and Certificate, to deliver a copy of this Request and Certificate to the Purchaser under
the Certificate Purchase Contract at least 10 Business Days prior to the Delivery Date.
[Delivery Date]
CITY OF LODI
[Name]
[City Attorney]
[Name]
[City Manager or Finance Director]
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EXHIBIT C
[FORM OF REMITTANCE REPORT]
NOTICE OF REMITTANCE OF PROGRAM RECEIPTS
U.S. Bank Trust National Association
Corporate Trust Services
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Sue Vargas, Vice President
Relationship Specialist
Pursuant to Sections 6.4 and 6.11 of the Program Receipts Sale and Repurchase
Agreement dated (the "Sale and Repurchase Agreement") between the City of Lodi,
California (the "City") and the Lodi Financing Corporation (the "Corporation"), the City hereby
notifies, certifies and warrants to you, as Trustee, that it has received Program Receipts (in the
amounts and from the sources described below) and is remitting such moneys (net of deductions
described below) to you in compliance with said Sections 6.4 and 6.11:
Total amount of Program Receipts received: $
Date received: ("Receipt Date")
Source(s) of Program Receipts (including caption of action and moneys received from insurers
or other payors; riders attached as necessary):
Caption:
Payor:
(1) Total amount of Program Receipts received:
(2) Amount of Program Receipts available for Permitted
Deductions: (1) x 25%
(3) DTSC Reserve balance as of Receipt Date:
(4) Amount of Program Receipts applied to DTSC Reserve:
Lesser of (2) or [$300,000 — (3)]
(5) Amount of Program Receipts available for City
reimbursement: (2) — (4)
(6) Total City reimbursement as of Receipt Date:
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(1)
(2)
(3)
(4)
(7) Amount of Program Receipts applied to City reimbursement:
Lesser of (5) or [$2,000,000 — (6)]
(8) Total amount of Program Receipts applied to Permitted
Deductions: (4) + (7)
(9) Amount of Program Receipts remaining after Permitted
Deductions: (1) — (8)
(10) Deferred Commitment Fee Reserve Account Balance as of
the Receipt Date (Obtain from Calculation and Verification
Agent)
(11) Amount required to pay Accreted Value and Current Interest
on Certificates as of the Receipt Date:
(12) Amount required to pay Current Interest and Compounded
Interest on Certificates as of the Receipt Date:
(8)
(9)
(10)
(13) Payment of Current Interest and Compounded Interest from
funds in Deferred Commitment Fee Reserve Account:
Lesser of (10) or (11) (13
(14) Amount required to pay Accreted Value and Current Interest
after payment from funds in Deferred commitment Fee
Reserve Account: (11) — (13)
(15) Amount of Program Receipts remitted to Trustee from
Recovery Account to pay Accreted Value and Current
Interest on Certificates: Lesser of (9) or (14)
(16) Amount required to fund Deferred Commitment Fee Reserve
Account after payment of Current and Compounded Interest
under (15):
(17) Amount of Program Receipts remitted to Trustee from
Recovery Account to fund Deferred Commitment Fee
Reserve Account: Lesser of [(9) — (15)] or (16)
(14)
(15)
(18) Total Amount of Program Receipts remitted to Trustee from
Recovery Account: (15) + (17) (18)
(19) Amount of Program Receipts permitted to be transferred
from the Recovery Account to the Program Account:
(9) -(18)
The undersigned hereby certifies that this remittance is in compliance with Sections 6.4
and 6.11 of the Sale and Repurchase Agreement. The Trustee is hereby directed to return to the
undersigned any amounts which the Calculation and Verification Agent determines to be in excess
1073224/28/13350/00495/October 13, 1999 - 1:58
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of the amounts required to be transmitted to the Trustee under Section 6.4(a) of the Sale and
Repurchase Agreement.
All capitalized terms used herein that are not otherwise defined shall have the same
meanings as in the Sale and Repurchase Agreement.
CITY OF LODI
L -In
[Name]
[Title]
cc: Calculation and Verification Agent
Original Purchaser
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EXHIBIT D
[FORM OF NOTICE OF REALLOCATION]
REALLOCATION NOTICE
REGARDING AMOUNTS IN PROGRAM ACCOUNT
U.S. Bank Trust National Association
Corporate Trust Services
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Sue Vargas, Vice President
Relationship Specialist
Dear
Pursuant to Section 6.12 of the Program Receipts Sale and Repurchase Agreement dated
(the "Sale and Repurchase Agreement") between the City of Lodi, California (the
"City") and the Lodi Financing Corporation (the "Corporation"), the City hereby notifies you of
the following reallocation of moneys in the Program Account.
Reallocation as of
Total amount reallocated by budget category (Legal Fees or Ongoing Obligations ) in
current quarter:
$ reallocated from to
(budget category)
If moneys reallocated from Ongoing Obligations to Legal Fees, total percentage of
accrued billings after closing in comparison to total billings after closing:
Accrued billings to date: $
Total billings to date: $
If moneys reallocated from Legal Fees to Ongoing Obligations, total percentage of
cumulative expenditures in comparison with the Ongoing Obligation Payment Limit for the
applicable quarter (from Table III of the Quarterly Budget Reporting Form) for the subcategory
to which moneys would be reallocated (i.e., Computer Document Management, Technical
Activities, Project Management, or Legal Disbursements):
Ongoing obligation category:
Subcategory expenditures to date: $
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D-1
Ongoing Obligation Payment Limit for subcategory: S
A written explanation of the reason for this reallocation is attached to this Reallocation
Notice.
The undersigned hereby certifies that this notice of reallocation is in conformance with
Section 6.11 and Exhibit A (the Program Budget) of the Sale and Repurchase Agreement, and
that any moneys so reallocated will be used exclusively for purposes permitted under the Sale
and Repurchase Agreement and Program Budget.
You are hereby instructed to deliver a copy of this Reallocation Notice to the Original
Purchaser, all other Certificate Holders, and the Calculation and Verification Agent within 5
Business Days after your receipt hereof.
Capitalized terms used herein not otherwise defined shall have the meaning set forth in
the Sale and Repurchase Agreement.
CITY OF LODI
[Name]
[Title]
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D-2
EXHIBIT E
ONGOING OBLIGATION PAYMENT LIMIT INCREASE APPROVAL FORM
Filing Date: ,
Limit Increase to Take Effect the Quarter Beginning ,
U.S. Bank Trust National Association
Corporate Trust Services
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Sue Vargas, Vice President
Relationship Specialist
Pursuant to Section 6.12 of the Program Receipts Sale and Repurchase Agreement dated
(the "Sale and Repurchase Agreement") between the City of Lodi, California (the
"City") and the Lodi Financing Corporation, the City hereby requests the following increase(s) to
the Ongoing Obligation Payment Limits set forth in Exhibit A of the Sale and Repurchase
Agreement, and instructs you, as Trustee, to forward a copy of this Ongoing Obligation Payment
Limit Increase Approval Form (the "Approval Form") to the Original Purchaser (as defined in
the Sale and Repurchase Agreement) and all other Certificate Holders within 5 Business Days
after your receipt hereof and to ascertain within 5 Business Days after the receipt of such
transmittal whether the Original Purchaser, together with such other Certificate Holders as are
necessary to constitute, in the aggregate, at least 51% of outstanding Accreted Value, approves
or denies this request. Upon such determination, you are instructed to inform the City, the
Calculation and Verification Agent, the Original Purchaser and the other Certificate Holders of
the response.
Subcategory
Cumulative
Maximum for
uarter
Expected
Expenditure
Amount Exceeding
Maximum
Computer Document
Management
Technical Activities
Project Management
Legal Disbursements
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Explanation
CITY OF LODI
0
[Name]
[Title]
TRUSTEE'S REPORT TO THE CITY
We have forwarded a copy of the Approval Form to the Original Purchaser and Certificate
Holders on , and the Original Purchaser and Certificate Holders have
responded to this request as follows:
The Original Purchaser, together with such other Certificate Holders as are necessary
to constitute, in the aggregate, at least 51 % of outstanding Accreted Value, approves
the Ongoing Obligation Payment Limit increase(s) requested on the Approval Form.
The Original Purchaser, together with such other Certificate Holders as are necessary
to constitute, in the aggregate, at least 51% of outstanding Accreted Value, approves
the Ongoing Obligation Payment Limit increase(s) requested on the Approval Form,
with the following exceptions:
The Original Purchaser, together with such other Certificate Holders as are necessary
to constitute, in the aggregate, at least 51% of outstanding Accreted Value, does not
approve any Ongoing Obligation Payment Limit increase(s) requested on the
Approval Form.
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The Original Purchaser, together with such other Certificate Holders as are necessary
to constitute, in the aggregate, at least 51 % of outstanding Accreted Value, has not
responded within 5 Business Days after receipt of our transmittal of the Approval
From to them and, in accordance with Section 6.11 of the Sale and Repurchase
Agreement, are deemed to have denied the requested increase(s).
U.S. BANK TRUST NATIONAL ASSOCIATION
[Name]
Trustee
Date:
cc: Calculation and Verification Agent
Original Purchaser and other Certificate Holders
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EXHIBIT F
[FORM OF TERNIINATION NOTICE]
Lodi Financing Corporation
Not to Exceed $16,000,000
Aggregate Principal Amount of
City of Lodi, California
Variable Rate Certificates of Participation
(Environmental Abatement Program)
U.S. Bank Trust National Association
Corporate Trust Services
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Sue Vargas, Vice President
Relationship Specialist
1. Pursuant to the Certificate Purchase Contract dated (the
"Certificate Purchase Contract"), among the City of Lodi, California (the "City"), the Lodi
Financing Corporation (the "Corporation") and Environmental Restoration Company Ltd., the
City hereby certifies, represents and warrants that it will make no additional Issuance Requests to
the Trustee and is hereby irrevocably and permanently discontinuing all Issuance Requests.
Last Issuance Request made on:
Last Issuance Request amount:
Date of Delivery of Certificates under last Issuance Request:
2. The undersigned hereby certifies that this Notice is in compliance with the
Certificate Purchase Agreement and the Program Receipts Sale and Repurchase Agreement,
dated between the City and the Corporation (the "Sale and Repurchase
Agreement").
3. All capitalized terms used herein that are not otherwise defined shall have the
same meanings as in the Certificate Purchase Contract and the Sale and Repurchase Agreement.
1073224/28/13350/00495/October 13, 1999 - 1:58
F-1
4. The City has delivered a copy of this Termination Notice to the Purchaser under
the Certificate Purchase Contract and to the Calculation and Verification Agent.
CITY OF LODI
[Name]
[Title]
cc: Original Purchaser
Calculation and Verification Agent
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F-2
LODI FINANCING CORPORATION
AND
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
TRUST AGREEMENT
Dated as of [Dated Date]
Lodi Financing Corporation
Not to Exceed $16,000,000
Aggregate Principal Amount of
Variable Rate Certificates of Participation
(Environmental Abatement Program)
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION1.01. Definitions............................................................................................................ 4
SECTION1.02. Interpretation........................................................................................................ 4
SECTION 1.03. Content of Certificates and Opinions................................................................... 4
ARTICLE II
THE CERTIFICATES
SECTION 2.01. Execution and Delivery of Certificates................................................................ 5
SECTION 2.02. Denominations; Accreted Value and Interest Components ................................. 5
SECTION 2.03. Payment of Accreted Value and Current Interest Components of
Certificates....................................................................................................... 6
SECTION 2.04. Determination of Interest Rate; Calculation of Current Interest .......................... 6
SECTION 2.05. Form of Certificates............................................................................................. 6
SECTION 2.06. Execution of Certificates...................................................................................... 7
SECTION 2.07. Transfer of Certificates; Limited Transferability................................................. 7
SECTION 2.08. Cooperation with Transfers.................................................................................. 8
SECTION 2.09. Exchange of Certificates...................................................................................... 8
SECTION 2.10. Registration Books............................................................................................... 8
SECTION 2.11. Certificates Mutilated, Lost, Destroyed or Stolen ................................................ 8
ARTICLE III
DELIVERY OF CERTIFICATES; APPLICATION OF PROCEEDS
SECTION 3.01. Execution and Delivery of Certificates................................................................ 9
SECTION 3.02. Application of Proceeds of the Certificates......................................................... 9
SECTION 3.03. Validity of Certificates....................................................................................... 10
ARTICLE IV
PAYMENT OF CERTIFICATES
SECTION 4.01. Mandatory Payment of Accreted Value and Current Interest with
Respectto Certificates................................................................................... 10
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Page
SECTION 4.02. Optional Payment of Accreted Value and Current Interest with Respect
toCertificates................................................................................................. 10
SECTION 4.03. Selection of Certificates for Payment................................................................ 10
SECTION 4.04. Notice of Payment.............................................................................................. 10
SECTION 4.05. Effect of Payment............................................................................................... I I
ARTICLE V
FUNDS AND ACCOUNTS
SECTION 5.01. Pledge and Assignment...................................................................................... 12
SECTION 5.02. Revenue Fund.................................................................................................... 12
SECTION 5.03. Deferred Commitment Fee Reserve Account .................................................... 13
SECTION 5.04. Application of Amounts in Revenue Fund ........................................................ 13
SECTION 5.05. Investment of Moneys in Funds......................................................................... 14
ARTICLE VI
PARTICULAR COVENANTS
SECTION 6.01. Protection Against Encumbrances; Single Purpose Corporation ....................... 15
SECTION 6.02. Power to Enter Into the Agreement and Make Pledge and Assignment............ 15
SECTION 6.03. Accounting Records of Trustee; Functions of Calculation
and Verification Agent............................................................................... 15
SECTION 6.04. Covenants Under Sale and Repurchase Agreement ........................................... 16
SECTION 6.05. Further Assurances............................................................................................. 18
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. Events of Default............................................................................................... 18
SECTION 7.02. Application of Program Receipts and Other Funds After Default ..................... 19
SECTION 7.03. Trustee to Represent Certificate Holders........................................................... 19
SECTION 7.04. The Certificate Holders' Direction of Proceedings ............................................ 20
SECTION 7.05. Limitation on Certificate Holders' Right to Sue ................................................ 20
SECTION 7.06. Termination of Proceedings............................................................................... 21
SECTION 7.07. Remedies Not Exclusive.................................................................................... 21
SECTION 7.08. No Waiver of Default......................................................................................... 21
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ii
Page
ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Duties, Immunities and Liabilities of Trustee .................................................... 22
SECTION 8.02. Merger or Consolidation.................................................................................... 23
SECTION 8.03. Liability of Trustee............................................................................................. 23
SECTION 8.04. Right of Trustee to Rely on Documents............................................................. 25
SECTION 8.05. Preservation and Inspection of Documents........................................................ 26
SECTION 8.06. Compensation and Indemnification................................................................... 26
ARTICLE IX
MODIFICATION OR AMENDMENT OF AGREEMENTS
SECTION 9.01. Amendments Permitted...................................................................................... 26
SECTION 9.02. Effect of Supplemental Trust Agreement and Supplemental Sale and
Repurchase Agreement.................................................................................. 28
SECTION 9.03. Endorsement of Certificates; Preparation of New Certificates .......................... 28
SECTION 9.04. Amendment of Particular Certificates................................................................ 29
ARTICLE X
DEFEASANCE
SECTION 10.01. Discharge of Trust Agreement......................................................................... 29
SECTION 10.02. Payment of Certificates After Discharge of Trust Agreement ......................... 29
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Liability of Corporation Limited...................................................................... 30
SECTION 11.02. Successor Is Deemed Included in All References to Predecessor ................... 30
SECTION 11.03. Limitation of Rights to Parties and Certificate Holders ................................... 30
SECTION11.04. Waiver of Notice.............................................................................................. 30
SECTION 11.05. Destruction of Certificates............................................................................... 30
SECTION 11.06. Severability of Invalid Provisions.................................................................... 31
SECTION11.07. Notices............................................................................................................. 31
SECTION 11.08. Evidence of Rights of Certificate Holders....................................................... 32
SECTION 11.09. Disqualified Certificates.................................................................................. 32
SECTION 11.10. Money Held for Particular Certificates............................................................ 33
1073225/16113350/00495/October 13, 1999 -1:42
iii
Page
SECTION 11. 11. Funds and Accounts......................................................................................... 33
SECTION 11.12. Waiver of Personal Liability............................................................................ 33
SECTION 11.13. Execution in Several Counterparts................................................................... 33
SECTION11.14. Governing Law................................................................................................ 33
SECTION11.15. Business Days.................................................................................................. 34
SECTION 11.16. Original Purchaser as Third Party Beneficiary ................................................ 34
EXHIBIT A - Form of Certificate of Participation...........
EXHIBIT B - Form of Issuance Request ..........................
EXHIBIT C - Form of Termination Notice ......................
EXHIBIT D - Form of Calculation Worksheet .................
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iv
TRUST AGREEMENT
THIS TRUST AGREEMENT, dated as of [Dated Date], (the "Trust Agreement") is
hereby entered into by and among the LODI FINANCING CORPORATION, a nonprofit
corporation organized and existing under the laws of the State of California (the "Corporation"),
and U.S. Bank Trust National Association, a national banking association organized and existing
under the laws of the United States of America, as trustee (the "Trustee");
WITNESSETH:
WHEREAS, there exists in the City of Lodi, California (the "City") a significant water
contamination problem threatening the City's water supply and the health and safety of the City's
inhabitants;
WHEREAS, in May 1997, the City executed a Comprehensive Joint Cooperative
Agreement (Including Related Delegation and Settlement Agreements) with the California
Department of Toxic Substances Control ("DTSC") Relating to the Investigation and Abatement
of the Hazardous Substance Contamination In and Affecting the City (the "Cooperative
Agreement");
WHEREAS, under the Cooperative Agreement, the City is committed to act as lead
agency in initiating and prosecuting environmental enforcement actions (the "Program") to
compel responsible parties to investigate and clean up all actual or potential dangers to public
health and the environment arising from or related to hazardous substance contamination of
portions of the City's groundwater and soil located within an area of approximately 600 acres and
encompassing the City's central business area (the "Lodi Area of Contamination") as described in
the Cooperative Agreement;
WHEREAS, the Cooperative Agreement fully resolved the City's liability, if any, for the
contamination arising, in whole or in part, from the design, construction, operation or
maintenance of the City's sewer systems;
WHEREAS, it is in the public interest and welfare of the City's inhabitants that the City
find a means of financing the costs of the Program in order to fulfill the City's obligations under
the Cooperative Agreement, and to enforce laws and ordinances which compel responsible
parties to assume the cost and responsibility for the necessary remediation work to clean up the
City's water supply and preserve and enhance the City's water system;
WHEREAS, the costs of environmental litigation under the Program may be significant;
WHEREAS, the City has determined, after extensive investigation and consultation with
the City's financial advisor, that the most feasible means of financing Program costs is through
the implementation of a certificate of participation financing; which financing will facilitate the
effective and expeditious abatement of an existing or threatened Environmental Nuisance (as
defined in the City's Comprehensive Municipal Environmental Response and Liability
Ordinance, described below) within or affecting the City.
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WHEREAS, pursuant to Sections 37350 and 7158 of the California Government Code,
Section 17 of the California Code of Civil Procedure, and Sections 953 and 954 of the California
Civil Code, the City may sell all or a portion of its right to receive recoveries arising from the
Program;
WHEREAS, pursuant to Sections 37350 and 7158 of the California Government Code,
Section 17 of the California Code of Civil Procedure, and Sections 953 and 954 of the California
Civil Code, the City may purchase all or a portion of its right to receive recoveries arising from
the Program;
WHEREAS, to implement this certificate of participation financing, the City proposes to
irrevocably sell and convey to the Corporation its right to receive Program Receipts, as defined
in, and pursuant to, a Program Receipts Sale and Repurchase Agreement, dated ,
1999 (the "Sale and Repurchase Agreement"), between the City and the Corporation, and
simultaneously therewith the Corporation desires to resell and reconvey such Program Receipts
back to the City in consideration of receipt of the Repurchase Payments (as defined in the Sale
and Repurchase Agreement), all pursuant to the Sale and Repurchase Agreement;
WHEREAS, for the purpose of financing the Program, and to secure their obligations
hereunder, the City and the Corporation have agreed to assign and transfer certain of their rights
under the Sale and Repurchase Agreement to the Trustee;
WHEREAS, in consideration of the execution of this Trust Agreement the Trustee has
agreed to execute and deliver, from time to time on a quarterly basis if requested, a principal
amount not to exceed $16,000,000 of certificates of participation (the "Certificates"), each
Certificate evidencing an undivided, proportionate interest in Repurchase Payments, consisting
of a principal component and an interest component (the "Repurchase Payments") to be made by
the City under the Sale and Repurchase Agreement;
WHEREAS, the purchase price to be paid by the Corporation for each portion of
Program Receipts purchased from the City pursuant to the Sale and Repurchase Agreement will
be payable solely from proceeds from the sale of the Certificates;
WHEREAS, the City's obligation to make Repurchase Payments (and certain other
payments under the Sale and Repurchase Agreement) will be a special obligation of the City
payable solely from Program Receipts, as defined in the Sale and Repurchase Agreement;
WHEREAS, the City has adopted its Comprehensive Municipal Environmental Response
and Liability Ordinance, as amended, pursuant to which the City, among other things, has
created in favor of Certificate Holders a first lien on the Program Receipts, and the City
acknowledges that such first lien is superior to all other uses of Program Receipts, except with
regard to certain Permitted Deductions as provided in the Sale and Repurchase Agreement;
WHEREAS, the Program Receipts may be pledged to and deposited in the Municipal
Fund (as defined in the Sale and Repurchase Agreement) created under the Ordinance as
proceeds of the City's environmental abatement program;
1073225/16113350100495/October 13, 1999 - 1:42
K
WHEREAS, being payable solely from Program Receipts, the receipt by Certificate
Holders of any amounts hereunder and under the Sale and Repurchase Agreement is
unpredictable and uncertain, and accordingly there is significant risk inherent in purchasing and
holding the Certificates;
WHEREAS, in view of the risks and uncertainties associated with the Certificates, the
City has acknowledged that the interest cost of the Certificates is significantly higher than in
traditional municipal finance transactions;
WHEREAS, pursuant to Section 5900 et M. of the California Government Code, the
City, through the Corporation, is authorized to issue Certificates the interest component of which
is subject to federal income taxation, and the City has determined that the interest component of
the Repurchase Payments made under the Sale and Repurchase Agreement and represented by
the Certificates will be subject to federal income taxation;
WHEREAS, pursuant to Section 5906 of the California Government Code, the
Certificates and the purchasers thereof will be exempt from the usury provisions of Section 1 of
Article XV of the California Constitution;
WHEREAS, the City and the Corporation propose to execute and deliver a Certificate
Purchase Contract (the "Certificate Purchase Contract") with Environmental Restoration
Company Ltd. (the "Original Purchaser"), pursuant to which the Original Purchaser agrees to
purchase, from time to time, the Certificates in an aggregate principal amount not to exceed
$16,000,000;
WHEREAS, Lehman Brothers Inc. has acted as Placement Agent for the Certificates;
WHEREAS, the City has retained Public Financial Management as its financial advisor
to evaluate the efficacy and cost effectiveness of entering into this financing and issuing the
Certificates on the terms specified herein and in the Sale and Repurchase Agreement;
WHEREAS, the DTSC has provided in writing that the execution of the Sale and
Repurchase Agreement, this Trust Agreement and the Certificate Purchase Contract and the
execution and delivery of the Certificates do not violate or conflict with the Cooperative
Agreement, as defined in the Sale and Repurchase Agreement;
WHEREAS, the Corporation has determined that all acts and proceedings required by
law to exist, to have happened and to have been performed precedent to and in connection with
the execution and entering into of this Trust Agreement and the consummation of the
transactions authorized hereby do exist, have happened and have been performed in regular and
due time, form and manner as required by law, and the Corporation and the Trustee are now duly
authorized and empowered to execute and enter into this Trust Agreement and to consummate
such transactions for the purpose, in the manner and upon the terms herein provided;
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto hereby formally covenant, agree, and bind themselves as
follows:
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3
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Unless the context clearly otherwise requires, all capital-
ized terms used herein shall have the meanings assigned to such terms in the Sale and
Repurchase Agreement, as originally executed or as it may from time to time be supplemented,
modified, or amended.
SECTION 1.02. Interpretation. Unless the context otherwise indicates, words expressed
in the singular shall include the plural and vice versa and the use of the neuter, masculine, or
feminine gender is for convenience only and shall be deemed to mean and include the neuter,
masculine or feminine gender, as appropriate.
Headings of articles and sections herein and the table of contents hereof are solely for
convenience of reference, do not constitute a part hereof, and shall not affect the meaning,
construction or effect hereof.
SECTION 1.03. Content of Certificates and Opinions. Every certificate or opinion
provided for in this Trust Agreement with respect to compliance with any provision hereof shall
include (1) a statement that the person making or giving such certificate or opinion has read such
provision and the definitions herein relating thereto; (2) a brief statement as to the nature and
scope of the examination or investigation upon which the certificate or opinion is based; (3) a
statement that, in the opinion of such person, he has made or caused to be made such examina-
tion or investigation as is necessary to enable him to express an informed opinion on the subject
matter referred to in the instrument to which his signature is affixed; and (4) a statement as to
whether, in the opinion of such person, such provision has been complied with.
Any such certificate or opinion made or given by an officer of the Corporation or the City
may be based, insofar as it relates to a legal, accounting, or environmental matter, upon a certifi-
cate or opinion of or representation by counsel, an Independent Accountant or an Independent
Consultant selected by the City, unless such officer knows, or in the exercise of reasonable care
should have known, that the certificate, opinion, or representation with respect to the matters
upon which such certificate or statement may be based, as aforesaid, is erroneous. Any such
certificate or opinion made or given by such counsel, Independent Accountant or Independent
Consultant may be based, insofar as it regards factual matters (with respect to which information
is in the possession of the Corporation or the City, as the case may be) upon a certificate or
opinion of or representation by an officer of the Corporation or the City, unless such counsel,
Independent Accountant, or Independent Consultant knows, or in the exercise of reasonable care
should have known, that the certificate or opinion or representation with respect to the matters
upon which such person's certificate or said opinion or representation may be based, as aforesaid,
is erroneous. The same officer of the Corporation or the City, or the same counsel, Independent
Accountant or Independent Consultant, as the case may be, need not certify to all of the matters
required to be certified under any provision of this Trust Agreement, but different officers,
counsel, Independent Accountants, or Independent Consultants may certify to different matters.
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ARTICLE II
THE CERTIFICATES
SECTION 2.01. Execution and Delivery of Certificates. The Trustee is authorized and
directed to execute and deliver the Certificates in Series at the times and in the principal amounts
specified in Issuance Requests, in substantially the form attached hereto as Exhibit B, to be
delivered by the City from time to time until the Commitment Period Ending Date, but no more
often than quarterly, on each January 1, April 1, July 1 and October 1; provided, however, that
the aggregate principal amount of the Certificates to be prepared, executed, and delivered
hereunder shall not exceed Fifteen Million Seven Hundred Fifty Thousand Dollars
($16,000,000), and the principal amount of Certificates to be executed and delivered under any
Issuance Request shall not exceed the Cumulative Disbursement Cap for the calendar quarter
immediately following the Delivery Date, as set forth in the Program Budget, less the principal
amount of Certificates previously executed and delivered. The Certificates shall evidence
undivided, proportionate ownership interests in the Repurchase Payments to be paid by the City
under and pursuant to the Sale and Repurchase Agreement.
Pursuant to recommendations promulgated by the Committee on Uniform Security
Identification Procedures, "CUSIP" numbers may be printed on the Certificates. The City shall
notify the Trustee if it determines to obtain CUSIP numbers for the Certificates. The Certificates
may bear such endorsement or legend relating thereto as may be satisfactory to the Trustee and
as may be required to conform to usage or law with respect thereto.
SECTION 2.02. Denominations, Accreted Value and Interest Components. The
Certificates shall be designated "Lodi Financing Corporation Variable Rate Certificates of
Participation (Environmental Abatement Program)," with the Certificates of each Series being
further designated by the year of their initial execution and delivery and by a letter indicating the
number of Series executed and delivered in such year. The Certificates of each Series shall be
numbered in such manner as shall be determined by the Trustee. The Certificates shall be
delivered in the form of fully registered Certificates, without coupons, in minimum
denominations of $250,000 or any increment of $1,000 in excess thereof, and shall be payable in
lawful money of the United States of America. The Certificates of each Series shall be dated as
of their Delivery Date and shall be initially registered in the name of the purchaser thereof, such
purchaser to be specified in the applicable Issuance Request. Certificates of any Series shall be
on a parity with Certificates of all other Series issued hereunder with respect to the right to
receive a proportionate interest in Repurchase Payments made by the City under the Sale and
Repurchase Agreement.
Accreted Value due with respect to the Certificates on the Final Payment Date or upon
prior payment shall represent the sum of the Accreted Value components of the Repurchase
Payments. The Current Interest component of the Certificates shall represent the sum of the
Current Interest components of the Repurchase Payments. The Certificates of each Series shall
represent the right to receive Current Interest from the later of (i) the Delivery Date for such
Series or (ii) the date to which Current Interest has previously been paid or made available for
payment with respect to the Outstanding Certificates of such Series. On December 31 of each
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year, all Current Interest will become Compounded Interest and will be added to Accreted Value
in accordance with Section 2.04 hereof.
SECTION 2.03. Payment of Accreted Value and Current Interest Components of
Certificates. Payment of the Accreted Value and Current Interest components with respect to
any Certificate shall be made to the Person whose name appears on the registration books of the
Trustee as the Holder thereof as of the close of business on the Record Date for each Distribution
Date, such amount to be paid by check mailed by first class mail on the Distribution Date to such
Holder at its address as it appears on such registration books, or, upon the written request of any
Holder of at least $1,000,000 in aggregate principal amount of Certificates, submitted to the
Trustee at least one Business Day prior to the Record Date, by wire transfer in immediately
available funds to an account within the United States designated by such Holder. If CUSIP
numbers shall have been obtained for the Certificates, then CUSIP number identification shall
accompany all payments of interest, principal, and premiums, whether by check or by wire
transfer.
Partial payments of Accreted Value and Current Interest due with respect to the
Certificates shall be applied pro rata, in accordance with Section 4.03, based upon the ratio of the
Accreted Value of each Series of Certificates to the aggregate Accreted Value of all Outstanding
Series of Certificates, and then the ratio of the Accreted Value of each Certificate within a Series
to the total aggregate Accreted Value of all Outstanding Certificates of such Series.
SECTION 2.04. Determination of Interest Rate: Calculation of Current Interest. Current
Interest on the Accreted Value components of the Repurchase Payments (which is the interest
evidenced and represented by the Certificates) shall accrue at the Variable Rate. The Variable
Rate shall be determined by the Calculation and Verification Agent as of each Rate Adjustment
Date and shall be a per annum interest rate equal to the 3 -month LIBOR Rate as of the applicable
Rate Adjustment Date, plus 20 percentage points, but in no event shall the Variable Rate exceed
30 percent per annum. Each Variable Rate shall be in effect for the applicable Interest Period,
which shall be a calendar quarter. Current Interest shall be calculated on the basis of a 360 -day
year and the number of days elapsed. The sum of all unpaid Current Interest for all Interest
Periods or portions thereof during any calendar year shall be added to Accreted Value of the
Certificates as of each December 31, after which date such Accreted Value will bear interest at
the Variable Rate.
If as a result of one or more final judgments of a court, including courts of appeal and the
California and United States supreme courts, the City concludes and informs the Original
Purchaser and the Trustee in writing that it will no longer engage in activities in pursuit of
Program Receipts, then the Original Purchaser will enter into a written agreement (the
"Cessation Agreement") thereby causing interest to cease to accrue on the Certificates thirty-six
months after the date of such Cessation Agreement. The Cessation Agreement shall be null and
void if the City for any reason continues to engage in activities in pursuit of Program Receipts
subsequent to the date of the Cessation Agreement.
SECTION 2.05. Form of Certificates. The Certificates and the form of assignment to
appear thereon may be printed, lithographed, or typewritten and shall be in substantially the form
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appearing in Exhibit A hereto, with such necessary or appropriate variations, omissions, and
insertions as permitted or required hereby.
SECTION 2.06. Execution of Certificates. The Certificates shall be executed by and in
the name of the Trustee, as trustee hereunder, by the manual signature of an authorized signatory
of the Trustee.
SECTION 2.07. Transfer of Certificates, Limited Transferability. Any Certificate may
be transferred only upon the books required to be kept pursuant to the provisions of Section 2. 10,
by the Person in whose name it is registered, in person or by his duly authorized attorney, upon
surrender of such Certificate for cancellation, accompanied by delivery of a duly executed
written instrument of transfer in a form acceptable to the Trustee.
Whenever any Certificate or Certificates shall be surrendered for transfer, the Trustee
shall execute and deliver a new Certificate or Certificates of the same Series, in an authorized
denomination or denominations, for a like aggregate principal amount. The Trustee shall also
require the payment by any Certificate Holder requesting any such transfer of any tax or other
governmental charge required to be paid with respect to such transfer, but there shall otherwise
be no charge to the Certificate Holder for each such transfer. The cost of printing Certificates
and any services rendered or expenses incurred by the Trustee in connection with any transfer
shall be paid by the City.
The Trustee shall not be required to transfer any Certificate after such Certificate has
been selected for payment.
Notwithstanding the above provisions of this Section 2.07, no resale or transfer of a
Certificate shall be made unless the registration requirements of the Securities Act of 1933 (the
"Securities Act") and any applicable state securities laws are complied with, or such registration
of transfer is exempt from the registration requirements under the Securities Act and such state
securities laws. In the event that a transfer is to be made in reliance upon an exemption from the
Securities Act and such state securities laws in connection with such registration of such transfer,
such resale, pledge or transfer may only be made in minimum denominations of $500,000 or any
increment of $1,000 in excess thereof and may be made only to a person whom the transferor
reasonably believes is a "qualified institutional buyer" within the meaning of Rule 144A under
the Securities Act that purchases for its own account or for the account of a qualified institutional
buyer who is aware that the resale or other transfer is being made in reliance on Rule 144A. The
transferor will, and each subsequent transferor is required to, notify any purchaser from it of the
resale restrictions set forth above. The Holder of a Certificate desiring to effect such registration
of transfer shall, and does hereby agree to, indemnify the Trustee, the Corporation and the City
and their respective officers, directors, agents and employees against any liability that may result
if the transfer is not so exempt from, or is not made in accordance with, the Securities Act and
such state laws. The preceding sentence shall survive the termination of this Trust Agreement
and the earlier removal or resignation of the Trustee. None of the Corporation, the Trustee or the
City is under any obligation to register the Certificates under the Securities Act or any state
securities laws.
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SECTION 2.08. Cooperation with Transfers. Subject to the conditions and requirements
of Section 2.07, the Corporation covenants that it will cooperate, and will request the City to
cooperate, with any Certificate Holder in connection with any such transfer. As provided in the
Certificate Purchase Contract, the Deferred Commitment Fee shall be .payable to the Original
Purchaser regardless of any transfer of all or a portion of the Certificates.
SECTION 2.09. Exchange of Certificates. Certificates may be exchanged at the
Corporate Trust Office for a like aggregate principal amount of Certificates of other authorized
denominations of the same Series. The Trustee shall also require the payment by the Holder
requesting such exchange of any tax or other governmental charge required to be paid with
respect to such exchange, but there shall otherwise be no charge to the Certificate Holder for
each such exchange. The cost of printing Certificates and any services rendered or expenses
incurred by the Trustee in connection with any exchange shall be paid by the City.
The Trustee shall not be required to exchange any Certificate after such Certificate has
been selected for payment.
SECTION 2.10. Registration Books. The Trustee will keep or cause to be kept, at its
Corporate Trust Office, sufficient books for the registration and transfer of the Certificates,
which shall at all times during business hours be open to inspection by the Corporation, the City,
the Original Purchaser and other Certificate Holders and, upon presentation for such purpose, the
Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause
to be registered or transferred, on said books, Certificates as hereinbefore provided.
The Person in whose name any Certificate shall be registered shall be deemed the Holder
thereof for all purposes hereof, and payment of or on account of the Accreted Value or Current
Interest represented by such Certificate shall be made only to or upon the order in writing of such
registered Holder, which payments shall be valid and effectual to satisfy and discharge the
liability upon such Certificate to the extent of the sum or sums so paid.
SECTION 2.11. Certificates Mutilated, Lost. Destroyed or Stolen. If any Certificate
shall become mutilated, the Trustee, at the expense of the Holder of said Certificate, shall
execute and deliver a new Certificate of like tenor and Series and numbered as the Trustee shall
determine in exchange and substitution for the Certificate so mutilated, but only upon surrender
to the Trustee of the Certificate so mutilated. Every mutilated Certificate so surrendered to the
Trustee shall be cancelled by it and destroyed. If any Certificate shall be lost, destroyed, or
stolen, evidence of such loss, destruction, or theft may be submitted to the Trustee, and, if such
evidence is satisfactory to the Trustee and the City and indemnity satisfactory to the Trustee and
the City shall be given, the Trustee, at the expense of the Certificate Holder, shall execute and
deliver a new Certificate of like tenor and Series, and numbered as the Trustee shall determine,
in lieu of and in substitution for the Certificate so lost, destroyed, or stolen. The Trustee may
require payment of a sum not exceeding the actual cost of preparing each new Certificate
delivered under this Section and of the expenses which may be incurred by the Trustee under this
Section. Any Certificate executed and delivered under the provisions of this Section in lieu of
any Certificate alleged to be lost, destroyed, or stolen shall be equally and proportionately
entitled to the benefits of this Trust Agreement with all other Certificates secured by this Trust
Agreement. The Trustee shall not be required to treat both the original Certificate and any
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replacement Certificate as being Outstanding for the purpose of determining the Accreted Value
of Certificates which may be executed and delivered hereunder or for the purpose of determining
any percentage of Accreted Value of Certificates Outstanding hereunder, and both the original
and replacement Certificate shall be treated as one and the same. Notwithstanding any other
provision of this Section, in lieu of delivering a new Certificate for a Certificate which has been
mutilated, lost, destroyed, or stolen and the Final Payment Date of which has passed or is about
to pass, the Trustee may make payment of such Certificate upon receipt of indemnity as provided
herein.
ARTICLE III
DELIVERY OF CERTIFICATES; APPLICATION OF PROCEEDS
SECTION 3.01. Execution and Delivery of Certificates. The Trustee is authorized and
directed to execute and deliver the Certificates in Series from time to time, but no more often
than quarterly on each January 1, April 1, July 1 and October 1 until the Commitment Period
Ending Date, upon the Trustee's receipt of. (i) an Issuance Request, directing the execution and
delivery of such Series of Certificates, in the minimum amount of $250,000, which Issuance
Request shall be substantially in the form of Exhibit B hereto and shall include, as shown in
Exhibit B hereto, a certification by the City, dated as of the applicable Delivery Date, that the
representations and warranties of the City set forth in the Certificate Purchase Contract and in the
Sale and Repurchase Agreement are true and correct as of such Delivery Date as if made on such
Delivery Date; and (ii) the purchase price for such Series of Certificates (which purchase price
shall be the par amount of such Certificates) in immediately available funds. The Trustee shall
execute and deliver each Series of Certificates on the Delivery Date, in the aggregate principal
amount, and to the purchaser specified in the applicable Issuance Request. Each Issuance
Request shall be delivered by the City to the Trustee at least 15 Business Days prior to the
applicable Delivery Date, and a copy of such Issuance Request shall be delivered by the Trustee
to the Original Purchaser at least 10 Business Days prior to the applicable Delivery Date. Upon
the execution and delivery of each Series of Certificates, the Trustee shall, in the accounting
records kept pursuant to Section 6.03 hereof, record the principal amount of the Certificates
executed and delivered and, after consultation with the Calculation and Verification Agent,
indicate a corresponding reduction in the Purchase Commitment as calculated by the Calculation
and Verification Agent. Upon receipt of a Termination Notice substantially in the form of
Exhibit C hereto, the Trustee shall cease execution and delivery of any additional Certificates.
SECTION 3.02. Annlication of Proceeds of the Certificates. The proceeds received from
the sale of each Series of Certificates shall be transferred by the Trustee, on the Delivery Date for
such Series of Certificates, to the City, in the manner directed by the City, for deposit in the
Program Account established under the City's Municipal Fund. Such proceeds shall represent
the consideration provided by the Corporation in exchange for the sale and conveyance by the
City of Purchased Program Receipts for such Series of Certificates in accordance with the Sale
and Repurchase Agreement. Amounts in the Program Account shall be expended and accounted
for in accordance with the terms of the Sale and Repurchase Agreement.
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SECTION 3.03. Validity of Certificates. The validity of the authorization, execution,
and delivery of the Certificates is not dependent on and shall not be affected in any way by any
proceedings taken by the Corporation or the City with respect to or in connection with the Sale
and Repurchase Agreement. The recital contained in the Certificates that all acts, conditions,
and things required by the Constitution and statutes of the State of California to exist, to have
happened, and to have been performed precedent to and in the delivery thereof shall be
conclusive evidence of their validity and of compliance with the provisions of law in their
execution and delivery.
ARTICLE IV
PAYMENT OF CERTIFICATES
SECTION 4.01. Mandatory Payment of Accreted Value and Current Interest with
Respect to Certificates. The Accreted Value component of the Certificates, in whole or in part
(rounded to the nearest $1,000 denomination), and the Current Interest component of the
Certificates shall become due and payable on the earlier of 1) the Distribution Date immediately
following the date on which sufficient amounts are transferred by the City from the Recovery
Account to the Trustee for deposit in the Revenue Fund to pay the Outstanding Certificate
Obligations on all or a part of the Certificates, or 2) the Final Payment Date.
SECTION 4.02. Optional Payment of Accreted Value and Current Interest with Respect
to Certificates. The Certificates are also subject to payment prior to the Final Payment Date, in
whole or in part on any date, at the option of the City, from optional payments of Repurchase
Payments made by the City from any legally available funds, other than Program Receipts, under
Section 6.7(a)(v) of the Sale and Repurchase Agreement and transferred by the City to the
Trustee for deposit in the Revenue Fund under Section 5.02 hereof at a payment price equal to
the Outstanding Certificate Obligations with respect to the Certificates or portion thereof, so
paid.
SECTION 4.03. Selection of Certificates for Payment. Whenever provision is made in
this Trust Agreement for the payment of less than all of the Certificates, either from Program
Receipts or from optional City payments from other City funds, the Trustee shall select the
Certificates or portions thereof to be paid first, from all Certificates pro rata among all Series
based upon the ratio of the aggregate Accreted Value of such Series of Certificates to the
aggregate Accreted Value of all Outstanding Series of Certificates, and then pro rata among all
Certificates within a Series, based upon the ratio of the Accreted Value of such Certificate to the
aggregate Accreted Value of all Outstanding Certificates of that Series. The Trustee shall
promptly notify the Corporation and the City in writing of any payment of Certificates and of the
Certificates, or portions thereof so selected for payment.
SECTION 4.04. Notice of Payment. Notice of mandatory payment of Certificates from
Program Receipts as provided in Section 4.01 hereof shall be given to Certificate Holders as
early as practicable prior to or, if necessary, on the applicable Distribution Date. Notice of
optional payment of Certificates from other City funds, as provided in Section 4.02 hereof, shall
be given to Certificate Holders at least five days but not more than 30 days prior to the date fixed
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for such payment of Certificates and shall be mailed by the Trustee, at the expense of the City,
by first class mail, postage prepaid, to the respective Holders of any Certificates designated for
such payment at their addresses appearing on the registration books of the Trustee as of the close
of business on the day before such notice of payment is given.
Each notice of payment shall state (i) the date of such notice, (ii) the Series and the
distinctive Certificate numbers of the Certificates of such Series to be paid, (iii) the Distribution
Date, (iv) the payment price, (v) the place or places of payment (including the name and
appropriate address or addresses of the Trustee), (vi) the CUSIP numbers (if any) of the
Certificates to be paid, and (vii) in the case of Certificates to be paid in part only, the respective
portions of the Accreted Value thereof to be paid. Each such notice shall also state that on said
Distribution Date there will become due and payable with respect to each of said Certificates the
payment price represented thereby or of said specified portion of the Accreted Value thereof in
the case of a Certificate to be paid in part only, together with Current Interest accrued with
respect thereto through the day immediately preceding the Distribution Date, and that from and
after such date interest with respect thereto shall cease to accrue. In the case of a Certificate
which is to be paid in full, the notice shall require that such Certificate be then surrendered at the
address of the Trustee specified in the notice. In the case of a Certificate which is paid in part
only, the Trustee shall maintain records of such partial payment, which records shall be
indisputable evidence of such payment, and the Certificate Holder shall make a notation of such
partial payment on the payment history table attached to each Certificate.
Failure by the Trustee to mail notice of payment pursuant to this Section 4.04 to any one
or more of the respective Holders of any Certificates designated for payment shall not affect the
sufficiency of the proceedings for payment with respect to the Holder or Holders to whom such
notice was mailed.
SECTION 4.05. Effect of Payment. Notice of payment having been duly given as
aforesaid, and moneys for payment of the payment price, including interest accrued through the
day immediately preceding the Distribution Date, with respect to the Certificates, and the
Certificates (or portions thereof) so designated for payment being held by the Trustee, on the
Distribution Date designated in such notice, the Certificates (or portions thereof) so designated
for payment shall become due and payable at the payment price specified in such notice,
including interest accrued with respect thereto through the day immediately preceding the
Distribution Date. On and after the Distribution Date, interest with respect to the Certificates so
called for payment shall cease to accrue, said Certificates (or portions thereof) shall cease to be
entitled to any benefit or security under this Trust Agreement, and the Holders of said
Certificates shall have no rights in respect thereof except to receive payment of said payment
price, including accrued interest through the day immediately preceding the Distribution Date.
All Certificates paid in whole pursuant to the provisions of this Article shall be cancelled
by the Trustee upon surrender thereof by the Holder thereof to the Trustee.
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ARTICLE V
FUNDS AND ACCOUNTS
SECTION 5.01. Pledge and Assignment.
(a) Pledge. Subject only to the provisions of this Trust Agreement permitting the
application thereof for the purposes and on the terms and conditions set forth herein, there are
hereby pledged to secure the payment of the Certificates, in accordance with their terms and the
provisions of this Trust Agreement, all of the interest of the Corporation in the Repurchase
Payments and any other amounts held in any fund or account established pursuant to this Trust
Agreement. Said pledge shall constitute a first and exclusive lien on and security interest in such
assets and shall attach, be perfected, and be valid and binding from and after execution and
delivery by the Trustee of the initial Series of the Certificates, without any physical delivery
thereof or further act. In accordance with Sections 6.01 and 6.02 hereof, the Corporation
covenants and warrants that it will not permit Repurchase Payments from any source, or any
other amounts held in any fund or account established pursuant to this Trust Agreement, to be
attached by, or otherwise made available to, any other entity.
(b) Assignment.. The Corporation hereby transfers in trust, grants a security interest
in and assigns to the Trustee (i) for the benefit of the Holders from time to time of the
Certificates (a) all of its interests in the Repurchase Payments and other assets pledged in the
preceding paragraph and (b) all of its right, title, and interest in the Sale and Repurchase
Agreement, except for the rights of the Corporation under Section 8.2 of the Sale and
Repurchase Agreement, and (ii) for the benefit of the Original Purchaser, all of its right, title and
interest in the right to receive Program Receipts in an amount equal to the Deferred Commitment
Fee. Pursuant to Section 7.1 of the Sale and Repurchase Agreement, the City has transferred in
trust, granted a security interest in and assigned to the Trustee, for the benefit of the Holders
from time to time of the Certificates and for the benefit of the Original Purchaser (to the extent of
its interest in the Deferred Commitment Fee) all of its right, title, and interest in the Sale and
Repurchase Agreement and all of its interest in the Program Receipts transferred to the Trustee
for deposit into the Revenue Fund pursuant to Section 5.02 below. Such assignment is made to
the Trustee solely in its capacity as Trustee hereunder and is subject to the provisions of this
Trust Agreement.
The Trustee shall be entitled to and shall collect and receive all of the Repurchase
Payments. The Trustee also shall be entitled to and shall take all steps, actions, and proceedings
following an Event of Default under the Sale and Repurchase Agreement reasonably necessary
in its judgment to enforce all of the rights of the Corporation which have been assigned to the
Trustee and all of the obligations of the City under the Sale and Repurchase Agreement.
SECTION 5.02. Revenue Fund. The Trustee shall establish, maintain, and hold in trust a
separate fund designated as the Lodi Environmental Abatement Program Revenue Fund (the
"Revenue Fund"). In accordance with Section 6.4 of the Sale and Repurchase Agreement, within
two Business Days after receipt of and deposit of Program Receipts in the Recovery Account
established under the City's Municipal Fund and held by the City, the City is required to transfer
the Program Receipts to the Trustee. The Program Receipts, and any other amounts received by
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the Trustee from the City hereunder or under the Sale and Repurchase Agreement (including but
not limited to optional payment of Repurchase Payments from other City funds and transfer of
City funds to the Trustee upon the City's acceptance of non-cash settlements under Section 6.6(a)
of the Sale and Repurchase Agreement) shall be immediately deposited by the Trustee into the
Revenue Fund. Upon receipt of its copy of each Remittance Report from the City in connection
with the transfer of Program Receipts, as provided in Section 6.4(b) of the Sale and Repurchase
Agreement, the Calculation and Verification Agent shall review such Remittance Report and
confirm the calculations contained in each such Remittance Report. The Trustee shall promptly
deliver a copy of each such Remittance Report to the Original Purchaser and to each Certificate
Holder, as well as any amended Remittance Report which may result from the Calculation and
Verification Agent's review. In accordance with the Remittance Report, the Trustee shall return
to the City any amounts which the Calculation and Verification Agent determines to be in excess
of the amounts required to be transmitted to the Trustee under Section 6.4(a) of the Sale and
Repurchase Agreement.
SECTION 5.03. Deferred Commitment Fee Reserve Account. The Trustee shall
establish, maintain and hold in trust, as escrow agent for the City, a separate account within the
Revenue Fund designated as the Lodi Environmental Abatement Program Deferred Commitment
Fee Reserve Account (the "Deferred Commitment Fee Reserve Account"). Amounts remaining
in the Revenue Fund after payment of Outstanding Certificate Obligations of all Certificates
when due will be transferred to the Deferred Commitment Fee Reserve Account until the balance
in said account equals the then current Deferred Commitment Fee, as described in the Certificate
Purchase Contract and as calculated by the Calculation and Verification Agent. The amounts in
the Deferred Commitment Fee Reserve Account shall be used to pay the Current Interest and
Compounded Interest components of outstanding Certificates when due, thereby reducing the
required Deferred Commitment Fee Reserve Account balance by the same amount by which the
Deferred Commitment Fee is reduced. Program Receipts shall be used to fund the Deferred
Commitment Fee Reserve Account in full prior to any retention by the City of Program Receipts
pursuant to Section 6.4(e) of the Sale and Repurchase Agreement. Amounts in the Deferred
Commitment Fee Reserve Account shall be invested by the Trustee in Investment Securities
which mature by the date the invested amounts are expected to be used, and any earnings thereon
shall also be used to pay the Current Interest and Compounded Interest components on
Certificates when due.
If on any date all Certificates have been paid or discharged in accordance with Article X
hereof and, if such date is prior to the Commitment Period Ending Date, either (i) the maximum
aggregate principal amount of Certificates, subject to certain reductions as permitted by the
Certificate Purchase Contract and this Trust Agreement, has been executed and delivered
hereunder, or (ii) any other Commitment Termination Event has occurred, then the City will
direct the Trustee to apply all amounts in the Deferred Commitment Fee Reserve Account and all
other Program Receipts in the Revenue Fund to the payment of the Deferred Commitment Fee,
as provided under Section 6.9 of the Sale and Repurchase Agreement.
SECTION 5.04. Application of Amounts in Revenue Fund. Any moneys on deposit in
the Revenue Fund shall be applied immediately upon receipt for the following purposes in the
following order of priority: first, to pay the costs of indemnification of the Placement Agent, the
Calculation and Verification Agent, the Original Purchaser and Certificate Holders under
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Section 8.2 of the Sale and Repurchase Agreement; second, from amounts in the Deferred
Commitment Fee Reserve Account and then from other amounts in the Revenue Fund, to pay
unpaid accrued Current Interest with respect to the Certificates through such date, and each such
payment to the Certificate Holders shall be credited against the City's obligation to pay the
Current Interest component of the Repurchase Payments; third, from amounts in the Deferred
Commitment Fee Reserve Account and then from other amounts in the Revenue Fund, to pay the
Compounded Interest portion of the Accreted Value component of the Repurchase Payments,
and each such payment to the Certificate Holders shall be credited against the City's obligation to
pay the Compounded Interest portion of the Accreted Value component of the Repurchase
Payments; fourth, to pay the Outstanding Principal portion of the Accreted Value component of
the Repurchase Payments, and each such payment to the Certificate Holders shall be credited
against the City's obligation to pay the Outstanding Principal portion of the Accreted Value
component of the Repurchase Payments; fifth, to fund the Deferred Commitment Fee Reserve
Account in an amount up to the then current balance of the Deferred Commitment Fee; and sixth,
to pay any portion of the Deferred Commitment Fee, if and when due, to the Original Purchaser.
Any remaining amounts in the Revenue Fund shall be returned by the Trustee to the City in
accordance with Section 6.4(b) of the Sale and Repurchase Agreement and the Remittance
Report. For purposes of applying amounts hereunder and for preparing records and accounts
required by Section 6.03 hereof, the Trustee shall be entitled to rely on calculations performed by
the Calculation and Verification Agent in accordance with the Calculation Worksheet
substantially in the form provided in Exhibit D hereto.
SECTION 5.05. Investment of Moneys in Funds. Subject to the limitations provided
herein, all moneys in any of the funds and accounts established under this Trust Agreement shall
be invested by the Trustee solely in Investment Securities which mature on or before the date the
invested amounts are expected to be used. All Investment Securities shall be acquired subject to
the limitations set forth in this Section, and such additional limitations or requirements consistent
with the foregoing as may be established by Request of the City or the Corporation. In the
absence of written investment directions from the City or the Corporation, the Trustee shall
invest solely in Investment Securities.
All interest, profits and other income received from the investment of moneys in any fund
or account established under this Trust Agreement shall be deposited when received in such fund
or account. Notwithstanding anything to the contrary contained in this paragraph, an amount of
interest received with respect to any Investment Security equal to the amount of accrued interest,
if any, paid as part of the purchase price of such Investment Security shall be credited to the fund
or account for the credit of which such Investment Security was acquired.
Investment Securities acquired as an investment of moneys in any fund or account
established under this Trust Agreement shall be credited to that fund or account. For the purpose
of determining the amount in any such fund or account, all Investment Securities credited to such
fund or account shall be valued at the lesser of cost or market value plus, prior to the first
payment of interest following purchase, the amount of accrued interest, if any, paid as a part of
the purchase price.
The Trustee may commingle any of the funds or accounts established under this Trust
Agreement in a separate fund or funds for investment purposes only, provided that all funds or
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accounts held by the Trustee hereunder shall be accounted for separately as required by this
Trust Agreement, and provided further that the Trustee shall not be liable or responsible for any
loss resulting from such commingling. The Trustee may act as principal or agent in the making
or disposing of any investment. The Trustee may sell or present for prepayment any Investment
Securities so purchased whenever it shall be necessary to provide moneys to meet any required
payment, transfer, withdrawal or disbursement from the fund or account to which such
Investment Security is credited, and the Trustee shall not be liable or responsible for any loss
resulting from such investment. The Trustee shall not be responsible for any tax, fee or other
charge related to any investment, reinvestment or the liquidation thereof. The Corporation and
the City acknowledge that to the extent regulations of the Comptroller of the Currency or other
applicable regulatory entity grant the Corporation and the City the right to receive brokerage
confirmations of security transactions as they occur, the Corporation and the City specifically
waive receipt of such confirmations to the extent permitted by law. The Trustee will furnish the
Corporation and the City periodic transaction statements that include detail for all investment
transactions made by the Trustee hereunder.
ARTICLE VI
PARTICULAR COVENANTS
SECTION 6.01. Protection Against Encumbrances, Single Purpose Corporation. The
Corporation shall not create, or permit the creation of, any pledge, Lien, charge or other
encumbrance upon the Repurchase Payments and other assets pledged or assigned under this
Trust Agreement while any of the Certificates are Outstanding, except the pledge and assignment
created by this Trust Agreement. The Corporation shall not participate in any other financing or
other arrangement in addition to the sale and repurchase of Program Receipts and the issuance of
the Certificates hereunder and under the Sale and Repurchase Agreement.
SECTION 6.02. Power to Enter Into the Agreement and Make Pledge and Assignment.
The Corporation represents and warrants that it is duly authorized under law to enter into the
Sale and Repurchase Agreement and this Trust Agreement and to pledge and assign all of the
Repurchase Payments and other assets pledged and assigned under this Trust Agreement in the
manner and to the extent provided in this Trust Agreement. The Corporation and the Trustee,
subject to the provisions of this Trust Agreement, shall at all times, to the extent permitted by
law, defend, preserve, and protect said pledge and assignment of all of their respective interests
in the Repurchase Payments and other assets and all the rights of the Certificate Holders under
this Trust Agreement against all claims and demands of all persons whomsoever.
SECTION 6.03. Accounting Records of Trustee; Functions of Calculation and
Verification Agent. The Trustee shall at all times keep, or cause to be kept, proper books of
record and account, prepared in accordance with industry standards in which complete and
accurate entries shall be made of all transactions relating to (a) Issuance Requests and the
execution and delivery of all Certificates, (b) the application of Certificate proceeds, including
all reports, records, notices and requests submitted by the City under the Sale and Repurchase
Agreement, (c) the receipt and application of Program Receipts, and amounts on deposit in the
funds and accounts established hereunder and under the Ordinance, (d) the calculation of the
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Variable Rate and Accreted Value of each Certificate, (e) the payment of Accreted Value and
Current Interest component of each Certificate, (f) the maintenance of the Deferred Commitment
Fee Reserve Account, the calculation of the outstanding Deferred Commitment Fee and the
payment of the Deferred Commitment Fee, (g) the filing of financing statements and
continuation statements under the UCC in accordance with Section 4.3 of the Sale and
Repurchase Agreement and Section 6.04(a) hereof, (h) settlements pursuant to Section 6.6 of the
Sale and Repurchase Agreement, (i) optional payments of Certificates from other City funds, and
0) transaction statements detailing investment transactions made by the Trustee in accordance
with Section 5.05 hereof.
Such books of record and account shall be available for inspection by the Corporation,
the City, the Calculation and Verification Agent, the Original Purchaser and any other Certificate
Holder, or their respective agents or representatives duly authorized in writing, at reasonable
hours and under reasonable circumstances upon reasonable notice. During each month during
the term of this Trust Agreement, the Trustee shall furnish to the City, to the Original Purchaser
and to each Certificate Holder who shall have filed his name and address with the Trustee for
such purpose, a Trustee Statement for the then preceding month. The Trustee shall also comply
with all requirements of the Internal Revenue Code with respect to the withholding from any
payments made by the Trustee on any Certificates of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting requirements in connection therewith.
For purposes of assisting the Trustee in calculating amounts to be paid under this Trust
Agreement and in preparing records and accounts required by this section, the Calculation and
Verification Agent shall review and confirm the City's calculations in each Quarterly Budget
Reporting Form (and any amendments thereto submitted in accordance with the Program
Budget) and in each Remittance Report, Reallocation Notice, and Ongoing Obligation Payment
Limit Increase Form, and shall prepare and keep a Calculation Worksheet substantially in the
form described in Exhibit D hereto. In performing such functions and all other functions
assigned to it hereunder and under the Sale and Repurchase Agreement, the Calculation and
Verification Agent shall be subject to the same standards of conduct and shall be entitled to the
same protection from liability as is applicable to the Trustee hereunder, including but not limited
to the provisions of Section 8.03.
The Calculation and Verification Agent may at an time resign by giving at least 30 days
written notice to the City, the Trustee, the Original Purchaser and the Certificate Holders. The
Original Purchaser, together with such other Certificate Holders as are necessary to constitute, in
the aggregate, at least 51% of outstanding Accreted Value, may remove the Calculation and
Verification Agent at any time. Upon any such resignation or removal, the Original Purchaser,
together with such other Certificate Holders as are necessary to constitute, in the aggregate, at
least 51% of outstanding Accreted Value, shall appoint a successor Calculation and Verification
Agent, which shall be a financial institution, investment banking firm or accounting firm with a
national reputation and capable of performing the functions assigned to the Calculation and
Verification Agent herein and in the Sale and Repurchase Agreement.
SECTION 6.04. Covenants Under Sale and Repurchase Agreement. The Trustee shall
promptly collect all amounts due from the City pursuant to the Sale and Repurchase Agreement
and this Trust Agreement and, subject to the provisions of this Trust Agreement, shall diligently
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enforce, and take all steps, actions, and proceedings reasonably necessary for the enforcement of
all of the obligations of the City in and under the Sale and Repurchase Agreement and this Trust
Agreement that have been assigned to it pursuant to Section 5.01(b) hereof. Included among
these actions, but not exclusive of other actions, are the following:
(a) The Trustee shall file continuation statements under the Uniform Commercial
Code with regard to any financing statements originally filed by or on behalf of the City as
described in Section 4.3 of the Sale and Repurchase Agreement, and the Trustee shall provide a
copy of all such statements to the City and the Original Purchaser.
(b) As provided in Section 6.6 of the Sale and Repurchase Agreement, if the City
accepts non-cash settlements with regard to more than two Sites, it will engage an Independent
Consultant to determine the dollar value of such non-cash settlements. The City's selection of
such an Independent Consultant shall be transmitted to the Trustee, who shall request the
consent, which shall not be unreasonably withheld, of the Original Purchaser, together with such
other Certificate Holders as are necessary to constitute, in the aggregate, at least 51% of
outstanding Accreted Value. Upon receipt of such Independent Consultant's valuation of the
non-cash settlement, the City will remit to the Trustee, for deposit into the Revenue Fund, from
any available funds of the City, an amount equal to the lesser of the valuation or the Outstanding
Certificate Obligations on all Certificates. The Trustee shall treat this remittance like the
remittance of any other Program Receipts hereunder. If the dollar value of the non-cash
settlement, as determined by the Independent Consultant, is greater than the Outstanding
Certificate Obligations, or if there are no Outstanding Certificates, the City's acceptance of a
non-cash settlement will reduce the Purchase Commitment by the remaining dollar value of the
non-cash settlement. Upon the written direction of the Original Purchaser, together with such
other Certificate Holders as are necessary to constitute, in the aggregate, at least 51% of
outstanding Accreted Value, the Trustee shall waive the provisions of this paragraph (b) in
advance of a settlement.
(c) In accordance with Section 6.5 of the Sale and Repurchase Agreement, if the City
substitutes its Outside Counsel or modifies the terms of its engagement of its Outside Counsel,
the City shall submit a description of such substitution or modification to the Trustee. The
Trustee shall forward this information to the Original Purchaser so that the Original Purchaser
may determine, in its sole discretion, whether such substitution or modification results in a
materially prejudicial change which would permit the Original Purchaser to terminate the
Purchase Commitment. If the Purchase Commitment is so terminated, the Original Purchaser
shall so notify the Trustee, who shall notify the City of such termination, and the Trustee, on
behalf of the City, will pay the Deferred Commitment Fee to the Original Purchaser in
accordance with the terms of this Trust Agreement.
(d) As provided in Section 6.4(e) of the Sale and Repurchase Agreement, if, on or
before the Commitment Period Ending Date, there are no Certificates Outstanding, the Deferred
Commitment Fee Reserve Account is fully funded, and no Commitment Termination Event has
occurred, then the City may retain all Program Receipts and, subject to payment of Permitted
Deductions, may deposit such Program Receipts into the Program Account. The Trustee shall
notify the Original Purchaser of the amount so retained, and the Original Purchaser will
determine if it chooses to reduce the Purchase Commitment by such an amount. If the Purchase
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Commitment is so reduced, the Original Purchaser shall so notify the Trustee and the Calculation
and Verification Agent. The Trustee shall notify the City of the Original Purchaser's
determination, and the Calculation and Verification Agent shall revise its records to reflect the
resulting adjustments to the Purchase Commitment and the principal amount of Certificates
remaining to be executed and delivered hereunder.
(e) The Trustee shall not deliver any consent requested by the City under the Sale and
Repurchase Agreement unless (i) the Original Purchaser has consented in writing to the giving of
such consent, and (ii) if any action requested to be taken or agreement waived by the City could
have a material adverse effect on Certificate Holders, the Holders of at least 51% of outstanding
Accreted Value of Certificates, including the Original Purchaser, shall have given their written
consent.
SECTION 6.05. Further Assurances. The Corporation shall make, execute, and deliver
any and all such further indentures, instruments, and assurances as may be reasonably necessary
or proper to carry out the intention or to facilitate the performance of this Trust Agreement and
for the better assuring and confirming unto the Holders of the Certificates of the rights and
benefits provided in this Trust Agreement.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. Events of Default. The following events shall be Events of Default:
(a) default in the due and punctual payment of the Outstanding Certificate
Obligations with respect to the Certificates when and as the same shall become due and payable;
(b) default by the Corporation in the observance of any of the other covenants,
agreements or conditions on its part contained in this Trust Agreement, if such default shall have
continued for a period of thirty (30) days after written notice thereof, specifying such default and
requiring the same to be remedied, shall have been given to the Corporation by the Trustee, or to
the Corporation and the Trustee by the Holders of not less than fifty-one percent (51%) in
aggregate Accreted Value of the Certificates (including the Original Purchaser) at the time
outstanding;
(c) Any assertion in any proceeding, forum or action by the Corporation or on its
behalf to the effect that performance of the Corporation's obligations under the Sale and
Repurchase Agreement or this Trust Agreement are unlawful or of the Corporation's intention to
disavow or repudiate any such obligations; or
(d) an Event of Default under the Sale and Repurchase Agreement shall have
occurred and shall not have been remedied or waived.
Upon actual knowledge by a vice president, assistant vice president or trust officer of the
Trustee of the existence of any Event of Default, the Trustee shall notify the City and the
Corporation in writing as soon as practicable; provided, however, that the Trustee need not
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provide notice of any Event of Default under the Sale and Repurchase Agreement if the City has
expressly acknowledged the existence of Event of Default in a writing delivered to the Trustee
and the Corporation.
SECTION 7.02. Application of Program Receipts and Other Funds After Default. If an
Event of Default shall occur and be continuing, all Program Receipts, Repurchase Payments, and
any other funds then held or thereafter received by the Trustee under any of the provisions of this
Trust Agreement (subject to Section 11.10) shall be applied by the Trustee as follows and in the
following order:
(a) To the payment of any expenses necessary in the opinion of the Trustee to protect
the interests of the Holders of the Certificates and payment of reasonable fees, charges, and
expenses of the Trustee and the Calculation and Verification Agent (including reasonable fees
and disbursements of their respective counsel) incurred in and about the performance of their
powers and duties under this Trust Agreement;
(b) To the payment of the Outstanding Certificate Obligations and Deferred
Commitment Fee then due (upon presentation of the Certificates to be paid, and stamping
thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the
provisions of this Trust Agreement, as follows:
First: To the payment to the Persons entitled thereto of all payments of
Current Interest then due, calculated in accordance with Section 2.04 hereof, and,
if the amount available shall not be sufficient to pay in full any payment or
payments due on such date, then to the payment thereof ratably, according to the
amounts due thereon, to the Persons entitled thereto, without any discrimination
or preference;
Second: To the payment to the Persons entitled thereto of all payments of
the Compounded Interest portion of the Accreted Value then due, calculated in
accordance with Section 2.04 hereof, and, if the amount available shall not be
sufficient to pay in full any payment or payments due on such date, then to the
payment thereof ratably, according to the amounts due thereon, to the Persons
entitled thereto, without any discrimination or preference;
Third: To the payment to the Persons entitled thereto of the unpaid
Outstanding Principal portion of the Accreted Value with respect to any
Certificates that shall have become due and, if the amount available shall not be
sufficient to pay in full all the Certificates due on any date, then to the payment
thereof ratably, according to the amounts of original principal due on such date to
the Persons entitled thereto, without any discrimination or preference; and
Fourth: To the payment of the Deferred Commitment Fee to the Original
Purchaser.
SECTION 7.03. Trustee to Represent Certificate Holders. The Trustee is hereby irrevo-
cably appointed (and the successive respective Holders of the Certificates, by taking and holding
the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and
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lawful attorney-in-fact of the Holders of the Certificates for the purpose of exercising and
prosecuting on their behalf such rights and remedies as may be available to such Holders under
the provisions of the Certificates, this Trust Agreement, the Sale and Repurchase Agreement and
applicable provisions of law. Upon the occurrence and continuance of an Event of Default or
other occasion giving rise to a right in the Trustee to represent the Certificate Holders, the
Trustee in its discretion may, and upon the written request of the Original Purchaser, together
with such other Certificate Holders as are necessary to constitute, in the aggregate, at least 51 %
of outstanding Accreted Value, and upon being indemnified to its satisfaction therefor, shall
proceed to protect or enforce its rights or the rights of the Original Purchaser and such Holders
by such appropriate action, suit, mandamus or other proceedings as it shall deem most effectual
to protect and enforce any such right, at law or in equity, either for the specific performance of
any covenant or agreement contained herein, or in aid of the execution of any power herein
granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested
in the Trustee or in such Holders under this Trust Agreement, the Sale and Repurchase
Agreement or any law; and upon instituting such proceeding, the Trustee shall be entitled, as a
matter of right, to the appointment of a receiver of the Program Receipts, Repurchase Payments,
and other assets pledged under this Trust Agreement pending such proceedings. All rights of
action under this Trust Agreement or the Certificates or otherwise may be prosecuted and
enforced by the Trustee without the possession of any of the Certificates or the production
thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by
the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the
Holders of such Certificates, subject to the provisions of this Trust Agreement.
SECTION 7.04. The Certificate Holders' Direction of Proceedings. Anything in this
Trust Agreement to the contrary notwithstanding, the Original Purchaser, together with such
other Certificate Holders as are necessary to constitute, in the aggregate, at least 51% of
outstanding Accreted Value, shall have the right, by an instrument or concurrent instruments in
writing executed and delivered to the Trustee, to direct the method of conducting all remedial
proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise
than in accordance with law and the provisions of this Trust Agreement, and that the Trustee
shall have the right to decline to follow any such direction that in the opinion of the Trustee
would be unjustly prejudicial to the Certificate Holders not parties to such direction or the
Trustee.
SECTION 7.05. Limitation on Certificate Holders' Right to Sue. Neither the Original
Purchaser nor any Holder of any Certificate shall have the right to institute any suit, action or
proceeding at law or in equity, for the protection or enforcement of any right or remedy under
this Trust Agreement, the Sale and Repurchase Agreement or any applicable law with respect to
such Certificate, unless (1) the Original Purchaser or such Holder shall have given to the Trustee
written notice of the occurrence of an Event of Default; (2) the Original Purchaser, together with
such other Certificate Holders as are necessary to constitute, in the aggregate, at least 51% of
outstanding Accreted Value, shall have made written request upon the Trustee to exercise the
powers hereinbefore granted or to institute such suit, action or proceeding in its own name;
(3) the Original Purchaser and such Holders shall have tendered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in compliance with such
request; (4) the Trustee shall have refused or omitted to comply with such request for a period of
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sixty (60) days after such written request shall have been received by, and said tender of
indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by the Original Purchaser or
any Holder of Certificates of any remedy hereunder or under law; it being understood and
intended that no one or more Holders of Certificates or the Original Purchaser shall have any
right in any manner whatever by his or their action to affect, disturb or prejudice the security of
this Trust Agreement or the rights of any other Holders of Certificates, or to enforce any right
under this Trust Agreement, the Sale and Repurchase Agreement or other applicable law
regarding the Certificates, except in the manner herein provided, and that all proceedings at law
or in equity to enforce any such right shall be instituted, had and maintained in the manner herein
provided and for the benefit and protection of all Holders of the Outstanding Certificates, subject
to the provisions of this Trust Agreement.
Subject to the provisions of this Trust Agreement, each Certificate Holder shall have the
right to receive payment of the Outstanding Certificate Obligation represented by said Certificate
Holder's Certificate at the respective dates on which the same become due and payable in
accordance with the terms, from the source and in the manner provided in such Certificate, in the
Sale and Repurchase Agreement and in this Trust Agreement, and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without the consent of
such Certificate Holder.
SECTION 7.06. Termination of Procegdina. In case any proceedings taken by the
Trustee or the Original Purchaser and any one or more Certificate Holders on account of any
Event of Default shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Trustee or the Original Purchaser and the Certificate Holders, then in
every such case the Corporation, the City, the Trustee, the Original Purchaser and the Certificate
Holders, subject to any determination in such proceedings, shall be restored to their former
positions and rights hereunder, severally and respectively, and all rights, remedies, powers and
duties of the Corporation, the Trustee, the City, the Original Purchaser and the Certificate
Holders shall continue as though no such proceedings had been taken.
SECTION 7.07. Remedies Not Exclusive. No remedy herein conferred upon or reserved
to the Trustee or to the Original Purchaser or the Holders of the Certificates is intended to be
exclusive of any other remedy or remedies, and each and every such remedy, to the extent
permitted by law, shall be cumulative and in addition to any other remedy given hereunder or
now or hereafter existing at law or in equity or otherwise.
SECTION 7.08. No Waiver of Default. No delay or omission of the Trustee or of any
Holder of the Certificates to exercise any right or power arising upon the occurrence of any
default shall impair any such right or power or shall be construed to be a waiver of any such
default or an acquiescence therein; and every power and remedy given by this Trust Agreement
to the Trustee or to the Original Purchaser or the Holders of the Certificates may be exercised
from time to time and as often as may be deemed expedient.
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ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Duties. Immunities and Liabilities of Trustee.
(a) The Corporation hereby appoints U.S. Bank Trust National Association as
Trustee. The Trustee shall, prior to an Event of Default, and after the curing or waiving of all
Events of Default that may have occurred, perform such duties and only such duties as are
specifically set forth in this Trust Agreement. The Trustee shall, during the existence of any
Event of Default (which has not been cured or waived), exercise such of the rights and powers
vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise,
as a reasonable person would exercise or use under the circumstances in the conduct of his or her
own affairs.
(b) The Corporation may, and upon written request of the City, shall, remove the
Trustee at any time unless an Event of Default shall have occurred and then be continuing, and
shall remove the Trustee if at any time requested to do so by an instrument or concurrent
instruments in writing signed by the Original Purchaser, together with such other Certificate
Holders as are necessary to constitute, in the aggregate, at least 51% of outstanding Accreted
Value (or their attorneys duly authorized in writing), or if at any time the Trustee shall cease to
be eligible in accordance with subsection (e) of this Section, or shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be
appointed, or any public officer shall take control or charge of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving
written notice of such removal to the Trustee, and thereupon shall appoint a successor Trustee by
an instrument in writing.
(c) The Trustee may at any time resign by giving written notice of such resignation to
the Corporation and the City and by giving notice of such resignation by mail, first-class postage
prepaid, to the Original Purchaser at the address specified herein and to the Certificate Holders at
the addresses listed on the registration books kept by the Trustee. Upon receiving such notice of
resignation, the City and the Corporation shall promptly appoint a successor Trustee by an
instrument in writing.
(d) The Trustee shall not be relieved of its duties until such successor Trustee has
accepted appointment. Any removal or resignation of the Trustee and appointment of a
successor Trustee shall become effective upon acceptance of appointment by the successor
Trustee. If no successor Trustee shall have been appointed and have accepted appointment
within thirty (30) days after giving notice of removal or notice of resignation as provided herein,
the resigning Trustee, the Original Purchaser or any Certificate Holder (on behalf of himself and
all other Certificate Holders) may petition any court of competent jurisdiction for the
appointment of a successor Trustee, and such court may, after such notice (if any) as it may
deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Trust
Agreement shall signify its acceptance of such appointment by executing and delivering to the
Corporation and the City and to its predecessor Trustee a written acceptance of the appointment,
and thereupon such successor Trustee, without any further act, deed or conveyance, shall become
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vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of
such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless
at the Request of the City or Corporation or the request of the successor Trustee, such
predecessor Trustee shall execute and deliver any and all instruments of conveyance or further
assurance and do such other things as may reasonably be required for more fully and certainly
vesting in and confirming to such successor Trustee all the right, title and interest of such
predecessor Trustee in and to any property held by it under this Trust Agreement and shall pay
over, transfer, assign and deliver to the successor Trustee any money or other property subject to
the trusts and conditions herein set forth. Upon request of the successor Trustee, the Corporation
and the City shall execute and deliver any and all instruments as may be reasonably required for
more fully and certainly vesting in and confirming to such successor Trustee all such moneys,
estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment
by a successor Trustee as provided in this subsection, the successor Trustee shall cause such notice
to be mailed, first-class postage prepaid, to the Holders at the addresses listed on the registration
books kept by the Trustee.
(e) Any successor Trustee shall be a trust company, corporation or bank having the
powers of a trust company, having a combined capital and surplus (or the parent holding
company of which has a combined capital and surplus) of at least seventy-five million
dollars ($75,000,000), and be subject to supervision and examination by a federal or state
authority. If such bank, corporation or trust company publishes a report of condition at least
annually, pursuant to law or to the requirements of any supervising or examining authority above
referred to, then for the purpose of this subsection, the combined capital and surplus of such
bank, corporation or trust (or holding) company shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this subsection, the Trustee
shall resign immediately in the manner and with the effect specified in this Section.
SECTION 8.02. Merger or Consolidation. Any company into which the Trustee may be
merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the
Trustee may sell or transfer all or substantially all of its corporate trust business, provided such
company shall be eligible under subsection (e) of Section 8.01, shall be the successor to such
Trustee, without the execution or filing of any paper or any further act, anything herein to the
contrary notwithstanding.
SECTION 8.03. Liability of Trustee.
(a) The recitals of facts herein and in the Certificates contained shall be taken as
statements of the Corporation, and the Trustee does not assume any responsibility for the
correctness of the same or make any representations about the validity or sufficiency of this
Trust Agreement or of the Certificates, and the Trustee shall not incur any responsibility for
them, other than in connection with the duties or obligations herein or in the Certificates assigned
to or imposed upon it except for any recital or representation specifically relating to the Trustee
or its powers. The Trustee shall be responsible, however, for its representations contained in the
sentence preceding its signature on the Certificates. The Trustee shall not be liable in connection
with the performance of its duties hereunder, except for its own negligence or willful default;
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provided, that this shall not be construed to limit the effect of subsection (e) hereof. The Trustee
may become the owner of Certificates with the same rights it would have if it were not Trustee,
and, to the extent permitted by law, may act as depository for and permit any of its officers or
directors to act as a member of, or in any other capacity with respect to any committee formed to
protect the rights of Certificate Holders, whether or not such committee shall represent the
Holders of a majority in Accreted Value of the Certificates then Outstanding (including the
Original Purchaser).
(b) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts.
(c) The Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Original Purchaser, together with
such other Certificate Holders as are necessary to constitute, in the aggregate, at least 51% of
outstanding Accreted Value (or such lesser Accreted Value as is provided hereby) of the
Certificates at the time Outstanding, relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee under this Trust Agreement.
(d) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Trust Agreement at the request, order or direction of the Original Purchaser or
any of the Certificate Holders under the provisions of this Trust Agreement unless the Original
Purchaser or such Certificate Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred therein or thereby.
(e) The Trustee shall not be liable for any action taken by it in good faith and
believed by it to be authorized or within the discretion or rights or powers conferred upon it by
this Trust Agreement.
(f) No provision of this Trust Agreement shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(g) Whether or not expressly so provided, every provision of this Trust Agreement,
the Sale and Repurchase Agreement or other documents relating to the execution and delivery of
the Certificates, or relating to the conduct of, affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this Article.
(h) Subject to the other provisions of this Trust Agreement, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture,
coupon or other paper or document, but the Trustee, in its discretion, may make such further
investigation or inquiry into such facts of matters as it may deem fit, and, if the Trustee shall
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determine to make such further inquiry or investigation, the Trustee shall be entitled to examine
the books, records and premises of the City, personally or by agent or attorney.
(i) The Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents, co -trustees or attorneys, and the Trustee
shall not be responsible for any misconduct or negligence on the part of any agent, co -trustee or
attorney appointed with due care by it hereunder.
0) The Trustee shall have no responsibility or liability for any information,
statements or recital in any offering memorandum or other disclosure material prepared or
distributed with respect to the execution and delivery of the Certificates.
(k) In acting as Trustee hereunder, the Trustee acts solely in its capacity as Trustee
hereunder and not in its individual or personal capacity, and all Persons, including without
limitation the Original Purchaser, the Holders, the City and the Corporation, having any claim
against the Trustee shall look only to the funds and accounts held by the Trustee hereunder for
payment, except as otherwise provided herein. Under no circumstances shall the Trustee be
liable in its individual or personal capacity for the obligations evidenced by the Certificates.
(1) Before taking any action under Article VII hereof the Trustee may require
indemnity satisfactory to the Trustee be furnished for any expenses and to protect it against any
liability it may incur hereunder.
(m) The immunities and indemnities extended to the Trustee also extend to its
directors, officers, employees and agents.
(n) The permissive rights of the Trustee to do things enumerated in this Trust
Agreement shall not be construed as a duty.
SECTION 8.04. Right of Trustee to Rely on Documents. The Trustee shall be protected
in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond or
other paper or document believed by it to be genuine and to have been signed or presented by the
proper party or parties. The Trustee may consult with counsel, who may be counsel of or to the
Corporation or the City, with regard to legal questions, and the opinion of such counsel shall be
full and complete authorization and protection for any action taken or suffered by it hereunder in
good faith and in accordance therewith.
With the exception of persons in whose names Certificates are registered on the books
maintained by the Trustee for such purpose, the Trustee shall not be bound to recognize any
Person as the Holder of a Certificate unless and until such Certificate is submitted for inspection,
if required, and his title thereto is satisfactorily established, if disputed.
Whenever in the administration of the trusts imposed upon it by this Trust Agreement the
Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking
or suffering any action hereunder, such matter (unless other evidence thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established by a
Statement of the Corporation, and such Statement shall be full warrant to the Trustee for any
action taken or suffered in good faith under the provisions of this Trust Agreement in reliance
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upon such Statement, but in its discretion the Trustee may, in lieu thereof, accept other evidence
of such matter or may require such additional evidence as to it may deem reasonable.
SECTION 8.05. Preservation and Inspection of Documents. All documents received by
the Trustee under the provisions of this Trust Agreement shall be retained in its possession and
shall be subject at all reasonable times to the inspection of the Corporation, the City, the
Calculation and Verification Agent, the Original Purchaser and any Certificate Holder, and their
agents and representatives duly authorized in writing, at reasonable hours and under reasonable
conditions.
SECTION 8.06. Compensation and Indemnification. The City, pursuant to
Sections 6.7(b) of the Sale and Repurchase Agreement, is obligated to:
(1) pay the Trustee from time to time reasonable compensation for all services
rendered by it hereunder in accordance with an agreement between the City and
the Trustee (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any provision of this Trust Agreement
(including the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance as may be
attributable to the Trustee's negligence or bad faith; and
(3) indemnify the Trustee for, and hold it harmless against, any loss, liability or
expense (including, without limitation, fees and expenses of its attorneys)
incurred without negligence or bad faith on the Trustee's part, arising out of or in
connection with the acceptance or administration of this trust or the performance
of its duties hereunder, or in connection with the Sale and Repurchase Agreement,
including the costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder or in connection with the Sale and Repurchase Agreement.
The provisions of this Subsection 8.06 shall survive the termination of this Trust Agreement and
the resignation and removal of the Trustee.
ARTICLE IX
MODIFICATION OR AMENDMENT OF AGREEMENTS
SECTION 9.01. Amendments Permitted.
(a) This Trust Agreement, the Sale and Repurchase Agreement and the rights and
obligations of the Corporation, the City, the Original Purchaser, the Holders of the Certificates,
the Trustee and the Calculation and Verification Agent may be modified or amended from time
to time and at any time by a Supplemental Trust Agreement or Supplemental Sale and
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Repurchase Agreement, which the Corporation, the City and the Trustee may enter into when the
written consent of the Original Purchaser, together with such other Certificate Holders as are
necessary to constitute, in the aggregate, at least 51% of outstanding Accreted Value, has been
filed with the Trustee; provided that if such modification or amendment will, by its terms, not
take effect so long as any Certificates of any particular Series remain outstanding, the consent of
the Holders of such Certificates shall not be required, and such Certificates shall not be deemed
to be Outstanding for the purpose of any calculation of Certificates Outstanding under this
Section. No such modification or amendment shall (1) extend the Final Payment Date of any
Certificate, or reduce the amount of Accreted Value represented thereby, or reduce the rate of
interest represented thereby, or extend the time of payment of Outstanding Certificate
Obligations, without the written consent of the Original Purchaser and the Holder of each
Certificate so affected, or (2) reduce the aforesaid percentage of Certificates the consent of the
Holders of which is required to effect any such modification or amendment, or permit the
creation of any Lien on the Program Receipts, Repurchase Payments and other assets pledged
under this Trust Agreement prior to or on a parity with the lien created by this Trust Agreement,
or deprive the Holders of the Certificates of the lien created by this Trust Agreement on such
Program Receipts, Repurchase Payments, and other assets (except as expressly provided in this
Trust Agreement), without the consent of the Original Purchaser and the Holders of all of the
Certificates then outstanding, and no such modification or amendment shall adversely affect the
rights of the Original Purchaser without the consent of the Original Purchaser. Promptly after
the execution by the Corporation, the City, and the Trustee of any Supplemental Trust
Agreement or Supplemental Sale and Repurchase Agreement pursuant to this subsection (a), the
Trustee shall mail a notice, first-class postage prepaid, setting forth in general terms the
substance of such Supplemental Trust Agreement or Supplemental Sale and Repurchase
Agreement, to any rating agency then rating the Certificates, and to the Holders at the addresses
listed on the registration books kept by the Trustee pursuant to Section 2.10 hereof. Any failure
to give such notice, or any defect therein, shall not, however, in any way impair or affect the
validity of any such Supplemental Trust Agreement or Supplemental Sale and Repurchase
Agreement.
(b) This Trust Agreement, the Sale and Repurchase Agreement and the rights and
obligations of the Corporation, the City, the Trustee and the Holders of the Certificates may also
be modified or amended from time to time and at any time by a Supplemental Trust Agreement
or Supplemental Sale and Repurchase Agreement, respectively, which the Corporation, the City
and the Trustee may enter into for any one or more of the following purposes when the written
consent of the Original Purchaser, together with such other Certificate Holders as are necessary
to constitute, in the aggregate, at least 51% of outstanding Accreted Value, has been filed with
the Trustee; provided that if such modification or amendment will, by its terms, not take effect so
long as any Certificates of any particular Series remain outstanding, the consent of the Holders of
such Certificates shall not be required and such Certificates shall not be deemed to be
Outstanding for the purpose of any calculation of Certificates Outstanding under this Section:
(1) to add to the covenants and agreements of the Corporation or the City contained
in this Trust Agreement or the Sale and Repurchase Agreement other covenants
and agreements thereafter to be observed, to pledge or assign additional security
for the Certificates (or any portion thereof), or to surrender any right or power
herein reserved to or conferred upon the Corporation or the City, provided, that no
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such covenant, agreement, pledge, assignment or surrender shall materially
adversely affect the interests of the Original Purchaser or the Holders of the
Certificates;
(2) to make such provisions for the purpose of curing any ambiguity, inconsistency or
omission, or of curing or correcting any defective provision contained in this
Trust Agreement or the Sale and Repurchase Agreement, or in regard to matters
or questions arising under this Trust Agreement or the Sale and Repurchase
Agreement, or to make any other revisions or additions to this Trust Agreement or
the Sale and Repurchase Agreement as the Corporation or the City may deem
necessary or desirable, and which, in the opinion of the Trustee shall not
materially adversely affect the interests of the Original Purchaser or the Holders
of the Certificates; or
(3) to modify, amend or supplement this Trust Agreement in such manner as to
permit the qualification hereof under the Trust Indenture Act of 1939, as
amended, or any similar federal statute hereafter in effect, and to add such other
terms, conditions and provisions as may be permitted by said act or similar federal
statute, and which shall not materially adversely affect the interests of the
Original Purchaser or the Holders of the Certificates.
(c) The Trustee may in its discretion, but shall not be obligated to, enter into any
Supplemental Trust Agreement or Supplemental Sale and Repurchase Agreement authorized by
subsections (a) or (b) of this Section that adversely affects the Trustee's own rights, duties or
immunities under this Trust Agreement or otherwise. In executing, or accepting the additional
trusts created by, any Supplemental Trust Agreement permitted by this Article or the
modifications thereby of the trusts created by this Trust Agreement, the Trustee shall be entitled
to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such Supplemental Trust Agreement is authorized by and in compliance with this
Trust Agreement.
SECTION 9.02. Effect of Supplemental Trust Agreement and Supplemental Sale and
Repurchase Agreement. Upon the execution of any Supplemental Trust Agreement or
Supplemental Sale and Repurchase Agreement under this Article, said agreements shall be
deemed to be modified and amended in accordance therewith, and the respective rights, duties
and obligations under said agreements of the Corporation, the City, the Trustee, the Calculation
and Verification Agent, the Original Purchaser and all Holders of Outstanding Certificates shall
thereafter be determined, exercised and enforced hereunder and thereunder subject in all respects
to such modification and amendment, and all the terms and conditions of any such Supplemental
Trust Agreement or Supplemental Sale and Repurchase Agreement shall be deemed to be part of
the terms and conditions of this Trust Agreement and the Sale and Repurchase Agreement,
respectively, for any and all purposes.
SECTION 9.03. Endorsement of Certificates; Preparation of New Certificates. Certifi-
cates delivered after the execution of any Supplemental Trust Agreement pursuant to this Article
may, and if the Trustee so determines shall, bear a notation by endorsement or otherwise in form
approved by the Trustee as to any modification or amendment provided for in such Supplemental
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Trust Agreement, and, in that case, upon demand of the Holder of any Outstanding Certificate at
the time of such execution and presentation of his or her Certificate for such purpose at the
Corporate Trust Office of the Trustee or at such additional offices as the Trustee may select and
designate for that purpose, a suitable notation shall be made on such Certificate. If the
Supplemental Trust Agreement shall so provide, new Certificates so modified as to conform, in
the opinion of the Corporation, to any modification or amendment contained in such
Supplemental Trust Agreement shall be prepared and executed by the Trustee and, upon demand
of the Holders of any Certificates then Outstanding, shall be exchanged at the Corporate Trust
Office of the Trustee, without cost to any Certificate Holder, for Certificates then Outstanding,
upon surrender for cancellation of such Certificates in equal aggregate principal amounts having
the same Final Payment Date.
SECTION 9.04. Amendment of Particular Certificates. The provisions of this Article
shall not prevent any Certificate Holder from accepting any amendment on the particular
Certificates held by him, provided that due notation thereof is made on such Certificates.
ARTICLE X
DEFEASANCE
SECTION 10.01. Discharge of Trust Agreement. When the Outstanding Certificate
Obligations on all of the Certificates have been paid in full and no additional Certificates may be
executed and delivered hereunder, and when the Deferred Commitment Fee has been paid to the
Original Purchaser, then and in that case, the obligations created by this Trust Agreement shall
thereupon cease, determine and become void, and the Trustee shall release and discharge the
City's obligations under the Sale and Repurchase Agreement and shall turn over to the City upon
its written request, as an overpayment of Repurchase Payments, all balances remaining in funds
or accounts, and after such payment, this Trust Agreement shall become void. Upon Request of
the Corporation, the Trustee shall cause an accounting for such period or periods as may be
requested by the Corporation to be prepared and filed with the Corporation and shall execute and
deliver to the Corporation all such instruments as may be necessary or desirable to evidence the
discharge and satisfaction of the Sale and Repurchase Agreement and the Trust Agreement.
SECTION 10.02. Payment of Certificates After Discharge of Trust Agreement. Not-
withstanding any provisions of this Trust Agreement, any moneys held by the Trustee in trust for
the payment of Outstanding Certificate Obligations with respect to any Certificates and
remaining unclaimed for two years after the Outstanding Certificate Obligations with respect to
all of the Certificates have become due and payable (whether on their Final Payment Date or
upon an earlier Distribution Date), if such moneys were so held at such date, or two years after
the date of deposit of such moneys if deposited after said date when all of the Certificates
became due and payable, shall be repaid to the City free from the trusts created by this Trust
Agreement, and all liability of the Trustee with respect to such moneys shall thereupon cease;
provided, however, that before the repayment of such moneys to the City as aforesaid, the City
or the Trustee, as the case may be, may (at the cost of the City) first mail a notice, in such form
as may be deemed appropriate by the Trustee, to the Holders of the Certificates so payable and
not presented and with respect to the provisions relating to the repayment to the City of the
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moneys held for the payment thereof at the addresses shown on the registration books maintained
by the Trustee. In the event of the repayment of any such moneys to the City as aforesaid, the
Holders of the Certificates with respect to which such moneys were deposited shall thereafter be
deemed to be general unsecured creditors of the City for amounts equivalent to the respective
amounts deposited for the payment of such Certificates and so repaid to the City (without interest
thereon), subject to any applicable statute of limitations.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Liability of Corporation Limited. Notwithstanding anything contained.
in this Trust Agreement, the Sale and Repurchase Agreement, or in the Certificates, the
Corporation shall not be required to advance any moneys derived from any source other than the
Program Receipts, the Repurchase Payments, and the other assets pledged under this Trust
Agreement for any of the purposes mentioned in this Trust Agreement, whether for the payment
of the Outstanding Certificate Obligations with respect to the Certificates or for any other
purpose of this Trust Agreement.
SECTION 11.02. Successor Is Deemed Included in All References to Predecessor.
Whenever in this Trust Agreement either the Corporation, the City, the Trustee or the
Calculation and Verification Agent is named or referred to, such reference shall be deemed to
include the successors or assigns thereof, and all the covenants and agreements in this Trust
Agreement contained by or on behalf of the Corporation, the City, the Trustee or the Calculation
and Verification Agent shall bind and inure to the benefit of the respective successors and
assigns thereof whether so expressed or not.
SECTION 11.03. Limitation of Rights to Parties and Certificate Holders. Subject to
Section 11.16 hereof, nothing in this Trust Agreement or in the Certificates expressed or implied
is intended or shall be construed to give to any Person other than the Corporation, the City, the
Trustee, the Calculation and Verification Agent, the Original Purchaser and the Holders of the
Certificates, any legal or equitable right, remedy or claim under or in respect of this Trust
Agreement, the Certificates or any covenant, condition or provision therein or herein contained;
and all such covenants, conditions and provisions are and shall be held to be for the sole and
exclusive benefit of the Corporation, the City, the Trustee, the Calculation and Verification
Agent, the Original Purchaser and the Holders of the Certificates.
SECTION 11.04. Waiver of Notice. Whenever in this Trust Agreement the giving of
notice by mail or otherwise is required, the giving of such notice may be waived in writing by the
person entitled to receive such notice, and in any such case the giving or receipt of such notice
shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
SECTION 11.05. Destruction of Certificates. Whenever in this Trust Agreement
provision is made for the cancellation by the Trustee and the delivery to the Corporation of any
Certificates, the Trustee may, in lieu of such cancellation and delivery, destroy such Certificates
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(in the presence of an officer of the Corporation, if the Corporation shall so require) and deliver a
certificate of such destruction to the Corporation.
SECTION 11.06. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Trust Agreement or in the Certificates shall for any reason be held to be invalid,
illegal or unenforceable in any respect, then such provision or provisions shall be deemed
severable from the remaining provisions contained in this Trust Agreement and such invalidity,
illegality or unenforceability shall not affect any other provision of this Trust Agreement, and this
Trust Agreement shall be construed as if such invalid or illegal or unenforceable provision had
never been contained herein. The Corporation and the Trustee each hereby declares that it would
have entered into this Trust Agreement and each and every other Section, paragraph, sentence,
clause or phrase hereof and authorized the execution and delivery of the Certificates pursuant
thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or
phrases of this Trust Agreement may be held illegal, invalid or unenforceable.
SECTION 11.07. Notices.
Any notice to or demand upon the Corporation, the City, the Trustee or the Original
Purchaser shall be deemed to have been sufficiently given or served for all purposes by being
deposited, first-class postage prepaid, in a post office letter box, addressed, as the case may be:
(i) If to the Corporation:
Lodi Financing Corporation
c/o City of Lodi
221 West Pine Street
Lodi, California 95240
Attention: President
(ii) If to the City:
City of Lodi
221 West Pine Street
Lodi, California 95240
Attention: City Attorney
(iii) If to the Trustee:
U.S. Bank Trust National Association
One California Street, 4th Floor
San Francisco, California 94111
Attention: Lodi Financing Corporation
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(iv) If to the Calculation and Verification Agent:
Lehman Brothers Inc.
Attention:
(v) If to the Original Purchaser:
Attention:
The Corporation, the City, the Trustee, the Calculation and Verification Agent and the
Original Purchaser may, by notice given hereunder, designate any further or different address to
which subsequent notices, certificates and other communications shall be sent.
SECTION 11.08. Evidence of Rights of Certificate Holders. Any request, consent or
other instrument required or permitted by this Trust Agreement to be signed and executed by
Certificate Holders may be in any number of concurrent instruments of substantially similar
tenor and shall be signed or executed by such Certificate Holders in person or by an agent or
agents duly appointed in writing. Proof of the execution of any such request, consent or other
instrument or of a writing appointing any such agent, or of the holding by any person of
Certificates transferable by delivery, shall be sufficient for any purpose of this Trust Agreement
and shall be conclusive in favor of the Trustee, of the City and of the Corporation if made in the
manner provided in this Section.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the certificate of any notary public or other officer of
any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying
that the person signing such request, consent or other instrument acknowledged to him the
execution thereof, or by an affidavit of a witness of such execution duly sworn to before such
notary public or other officer.
The ownership of Certificates shall be proved by the Certificate registration books held
by the Trustee.
Any request, consent, or other instrument or writing of the Holder of any Certificate shall
bind every future Holder of the same Certificate and the Holder of every Certificate executed and
delivered in exchange therefor or in lieu thereof, in respect of anything done or suffered to be
done by the Trustee or the Corporation in accordance therewith or reliance thereon.
SECTION 11.09. Disqualified Certificates. In determining whether the Holders of the
requisite aggregate Accreted Value of Certificates have concurred in any demand, request,
direction, consent or waiver under this Trust Agreement, Certificates which are owned or held by
or for the account of the Corporation or by any other obligor on the Certificates, or by any
Person directly or indirectly controlling or controlled by, or under direct or indirect common
1073225/16/13350/00495/October 13, 1999 -1:42
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control with, the Corporation or any other obligor on the Certificates, shall be disregarded and
deemed not to be Outstanding for the purpose of any such determination; provided, however, that
the Trustee shall not be deemed to have knowledge that any Certificate is owned or held by or
for the account of the Corporation unless the Corporation or the City is the registered Holder or
the Trustee has received written notice that any other registered Holder is the owner or is holding
for the account of the Corporation. Certificates so owned which have been pledged in good faith
may be regarded as outstanding for the purposes of this Section if the pledgee shall establish to
the satisfaction of the Trustee the pledgee's right to vote such Certificates and that the pledgee is
not a Person directly or indirectly controlling or controlled by, or under direct or indirect
common control with, the Corporation or any other obligor on the Certificates. In case of a
dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be
full protection to the Trustee.
SECTION 11.10. Money Held for Particular Certificates. The money held by the
Trustee for the payment of the Outstanding Certificate Obligations due on any date with respect
to particular Certificates (or portions of Certificates in the case of registered Certificates prepaid
in part only) shall, on and after such date and pending such payment, be set aside on its books
and held in trust by it for the Holders of the Certificates entitled thereto, subject, however, to the
provisions of Section 10.02.
SECTION 11.11. Funds and Accounts. Any fund required by this Trust Agreement to be
established and maintained by the Trustee may be established and maintained in the accounting
records of the Trustee, either as a fund or an account, and may, for the purposes of such records,
any audits thereof and any reports or statements with respect thereto, be treated either as a fund
or as an account; but all such records with respect to all such funds shall at all times be
maintained in accordance with standard trust procedures, to the extent practicable, and with due
regard for the requirements of Section 6.03 and for the protection of the security of the
Certificates and the rights of every Holder thereof.
SECTION 11.12. Waiver of Personal Liabilitv. No governing body member, officer,
agent, or employee of the Corporation or of the City shall be individually or personally liable for
the payment of the principal or payment price or interest with respect to the Certificates or be
subject to any personal liability or accountability by reason of the issuance thereof; but nothing
herein contained shall relieve any such governing body member, officer, agent, or employee
from the performance of any official duty provided by law or by this Trust Agreement.
SECTION 11.13. Execution in Several Counterparts. This Trust Agreement may be
executed in any number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original; and all such counterparts, or as many of them as the Corporation, the
City and the Trustee shall preserve undestroyed, shall together constitute but one and the same
instrument.
SECTION 11.14. Governing Law. This Trust Agreement shall be construed in
accordance with and governed by the Constitution and laws of the State California.
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SECTION 11.15. Business Days. Except as herein provided, if any date specified herein
shall not be a Business Day, any action required on such date may be made on the next
succeeding Business Day with the same effect as if made on such date.
SECTION 11.16. Original Purchaser as Third PgM Beneficiga. The Original Purchaser
shall be an express, intended third party beneficiary of the agreements, covenants and all other
provisions of this Trust Agreement. The City's obligations hereunder shall survive termination
of the Sale and Repurchase Agreement and shall continue until the unpaid Deferred Commitment
Fee has been paid to the Original Purchaser.
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IN WITNESS WHEREOF, LODI FINANCING CORPORATION has caused this Trust
Agreement to be signed in its name by one of its duly authorized officers and U.S. Bank Trust
National Association, in token of its acceptance of the trusts created hereunder, has caused this
Trust Agreement to be signed in its corporate name by its duly authorized officers, all as of the
day and year first above written.
(SEAL)
ATTEST:
Secretary
APPROVED AS TO FORM:
Corporation Counsel
LODI FINANCING CORPORATION
President
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
Authorized Officer
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EXHIBIT A
[FORM OF CERTIFICATE OF PARTICIPATION]
THIS CERTIFICATE OF PARTICIPATION HAS NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS
IN RELIANCE ON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND SUCH
STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
CERTIFICATE OF PARTICIPATION, AGREES FOR THE BENEFIT OF THE LODI
FINANCING CORPORATION (THE "CERTIFICATE OF PARTICIPATION ISSUER")
THAT SUCH CERTIFICATE OF PARTICIPATION IS BEING ACQUIRED FOR ITS OWN
ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND THAT SUCH
CERTIFICATE OF PARTICIPATION MAY BE RESOLD, PLEDGED OR TRANSFERRED
ONLY IF SUCH RESALE, PLEDGE OR TRANSFER (A) IS MADE IN ACCORDANCE
WITH SECTION 2.07 OF THE TRUST AGREEMENT REFERRED TO HEREIN AND (B) IS
MADE (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (2) TO A PERSON WHOM THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER WHO
IS AWARE THAT THE RESALE OR OTHER TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE RESALE RESTRICTIONS
SET FORTH ABOVE.
Lodi Financing Corporation
(Environmental Abatement Program)
Variable Rate Certificates of Participation, Series
Evidencing a Proportionate Interest of the Holder hereof
in Repurchase Payments to be Paid by the
CITY OF LODI
FINAL
CERTIFICATE
PAYMENT DATE
January 1, 2029
REGISTERED HOLDER:
PRINCIPAL AMOUNT:
DATED DATE CUSIP NO.
[Delivery Date]
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A-1
THIS IS TO CERTIFY that the registered holder identified above of this Certificate of
Participation (herein called the "Certificate") is the owner of an undivided proportionate interest
in the right to receive certain Repurchase Payments under and defined in that certain Program
Receipts Sale and Repurchase Agreement, dated as of [Dated Date] (the "Sale and Repurchase
Agreement"), by and between the City of Lodi, a municipal corporation organized and existing
under the laws of the State of California (the "City"), and the Lodi Financing Corporation, a
nonprofit corporation organized and existing under the laws of the State of California (the
"Corporation"), which Repurchase Payments have been assigned without recourse to U.S. Bank
Trust National Association, as trustee (together with any successor trustee, the "Trustee"), in
accordance with that certain Trust Agreement, dated as of [Dated Date] (the "Trust
Agreement"), by and among the Corporation and the Trustee.
All capitalized terms used herein that are not otherwise defined shall have the same
meanings as in the Sale and Repurchase Agreement and the Trust Agreement.
The registered holder of this Certificate is entitled to receive, subject to the terms of the
Trust Agreement, on the certificate payment date stated above (the "Final Payment Date"), the
principal amount specified above (and, together with Compounded Interest, the Accreted Value,
as described below), representing a portion of the Repurchase Payments designated as Accreted
Value coming due on the Final Payment Date, and to receive from the later of (i) the date of
initial delivery of the Certificates of the Series of which this Certificate is a part or (ii) the date to
which Current Interest has previously been paid or made available for payment on Outstanding
Certificates of such Series, and continuing to the Final Payment Date or the date of prior
payment hereof, whichever is earlier, the registered holder's proportionate share of the
Repurchase Payments designated as Current Interest. Said proportionate share is the result of the
multiplication of the aforesaid portion of the Repurchase Payment designated as Accreted Value
by the Variable Rate per annum determined from time to time in accordance with the Trust
Agreement. Current Interest shall be calculated on the basis of a 360 -day year and the number of
days elapsed. Current Interest shall continue to accrue at the Variable Rate, as adjusted from
time to time in accordance with the Trust Agreement, and such amount will become
Compounded Interest and will be added to outstanding principal or Accreted Value each
December 31. The sum of principal and such Compounded Interest shall constitute the Accreted
Value of this Certificate.
Said Accreted Value and Current Interest are payable in lawful money of the United
States of America by check mailed on each Distribution Date, as such term is defined in the Sale
and Repurchase Agreement, to the person whose name appears on the registration books of the
Trustee as the registered holder hereof as of the close of business on the Business Day
immediately preceding such Distribution Date (the "Record Date") at the address appearing on
the registration books maintained by the Trustee, or by wire transfer within the United States to
any registered holder of at least $1,000,000 in aggregate principal amount of Certificates if such
registered holder has submitted a written request for such wire transfer to the Trustee for such
purpose.
This Certificate has been executed by the Trustee under the terms of the Trust
Agreement. Copies of the Trust Agreement are on file at the Corporate Trust Office of the
Trustee in San Francisco, California (or, in the case of a successor Trustee, at the principal
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corporate trust office of such successor Trustee), and reference is made to the Trust Agreement
and any and all amendments thereof for a description of the pledges and covenants securing the
Certificates, the nature, extent and manner of enforcement of such pledges and covenants, the
rights and remedies of the registered holders of the Certificates with respect thereto and the other
terms and conditions upon which the Certificates are delivered thereunder. Copies of the Sale
and Repurchase Agreement are on file at the principal corporate trust office of the Trustee.
The Certificates each evidence a proportionate interest in the Repurchase Payments
which, in the aggregate, equal the aggregate Accreted Value and Current Interest components
represented by Certificates of a Series executed and delivered from time to time by the Trustee
under the Trust Agreement. The obligation of the City to make Repurchase Payments is a
limited obligation of the City, payable solely from Program Receipts (as that term is defined in
the Sale and Repurchase Agreement) and secured by a pledge and assignment of all of the
interests of the Corporation and the City in said Repurchase Payments and Program Receipts and
of amounts held in the funds and accounts established pursuant to the Trust Agreement, subject
to the provisions of the Trust Agreement permitting the application thereof for or to the purposes
and on the terms and conditions set forth therein.
The Certificates are subject to payment prior to the Final Payment Date, in whole or in
part on any date, to the extent that moneys are available in the Recovery Account and from
optional additional payments of Repurchase Payments made by the City under the Sale and
Repurchase Agreement and deposited in the Revenue Fund under the Trust Agreement, at a
payment price equal to the Accreted Value of the Certificates called for payment, plus Current
Interest accrued through the day immediately preceding the Distribution Date.
This Certificate shall be on a parity with all other Certificates of this Series and
Certificates of all other Series. Whenever provision is made for the payment of less than all of
the Certificates, the Trustee shall select the Certificates or portions thereof, in $1,000 increments,
to be paid first, from all Certificates pro rata among all Series based upon the ratio of the
aggregate Accreted Value of such Series of Certificates to the aggregate Accreted Value of all
Outstanding Series of Certificates, and then pro rata among all Certificates within a Series, based
upon the ratio of the Accreted Value of such Certificate to the aggregate Accreted Value of all
Outstanding Certificates of that Series.
As provided in the Trust Agreement, notice of optional payment of Certificates by the
City from funds other than Program Receipts shall be given by mail, first-class postage prepaid,
not less than five or more than 30 days prior to the Distribution Date, to the registered holder of
each Certificate to be paid in whole or in part at the address shown on the registration books held
by the Trustee. Notice of mandatory payment of Certificates from Program Receipts shall be
given to Certificate holders as early as practicable before or, if necessary, on such Distribution
Date. Failure by the Trustee to mail such notice shall not affect the sufficiency of the
proceedings for payment for the holders to whom such notice was mailed. If this Certificate is
called for payment and payment is duly provided herefor as specified in the Trust Agreement,
interest shall cease to accrue hereon from and after the Distribution Date.
The Certificates shall be executed and delivered in the form of fully registered Certifi-
cates in the minimum denomination of $250,000 or any increment of $1,000 in excess thereof.
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Subject to the limitations and conditions and upon payment of the charges, if any, provided in the
Trust Agreement, Certificates may be exchanged for a like aggregate principal amount of fully
registered Certificates of other authorized denominations of the same Series.
This Certificate is transferable by the registered holder hereof, in person or by the
registered holder's attorney duly authorized in writing, at the principal corporate trust office of
the Trustee or such other place as designated by the Trustee, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Trust Agreement, and upon
surrender and cancellation of this Certificate. Upon such transfer a new Certificate or Certifi-
cates of the same Series, in an authorized denomination or denominations, and for the same
aggregate principal amount, will be executed and delivered to the transferee in exchange herefor.
The Trustee may treat the registered holder hereof as the absolute owner hereof for all purposes.
The Trustee shall not be required to transfer or exchange any Certificate after such
Certificate has been selected for payment.
To the extent and in the manner permitted by the terms of the Trust Agreement, the
provisions of the Trust Agreement may be amended or supplemented by the parties thereto, but
no such amendment or supplement shall (1) extend the Final Payment Date of this Certificate, or
reduce the amount of Accreted Value represented hereby, or reduce the rate of interest
represented hereby, or extend the time for payment of Accreted Value hereof or Current Interest
hereon, without the written consent of the registered holder hereof, or (2) reduce the percentage
of holders of Certificates whose consent is required for the execution of any amendment of or
supplement to the Trust Agreement, or permit the creation of any Lien on the Program Receipts,
Repurchase Payments and other assets pledged under the Trust Agreement prior to or on a parity
with the lien created by the Trust Agreement, or deprive the holders of the Certificates of the lien
created by the Trust Agreement on the Program Receipts, Repurchase Payments and other such
assets (except as expressly provided in the Trust Agreement), without the consent of the Original
Purchaser and holders of all Certificates then outstanding, all as more fully set forth in the Trust
Agreement.
The Trustee has no obligation or liability to the holders of the Certificates to make
payments of the Accreted Value or Current Interest payable on the Certificates, except from
amounts on deposit for such purposes with the Trustee. The Trustee's sole obligations are to
administer the Revenue Fund established under the Trust Agreement for the benefit of the
holders of the Certificates and to perform the other duties expressly provided in the Trust
Agreement. The Trustee has executed this Certificate solely in its capacity as Trustee under the
Trust Agreement.
THE CITY SHALL NOT BE OBLIGATED TO PAY THE REPURCHASE
PAYMENTS INCLUDING THE ACCRETED VALUE OR CURRENT INTEREST
COMPONENTS OF THE CERTIFICATES, EXCEPT FROM PROGRAM RECEIPTS (AS
DEFINED IN THE SALE AND ASSIGNMENT AGREEMENT) RECEIVED BY THE CITY,
AND THE FAITH AND CREDIT OF THE CITY IS NOT PLEDGED TO THE PAYMENT OF
THE REPURCHASE PAYMENTS OR OTHERWISE TO THE PAYMENT OF THE
PRINCIPAL OR INTEREST ON THE CERTIFICATES.
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IN WITNESS WHEREOF, the Certificates have been executed by the manual signature
of an authorized signatory of the Trustee.
Date of Execution:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
Ulm
Authorized Signatory
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ASSIGNMENT
For value received the undersigned does hereby sell, assign and transfer unto
the within -mentioned Certificate and hereby irrevocably
constitute(s) and appoint(s) attorney, to transfer the same on the books
of the Trustee with full power of substitution in the premises.
Dated:
Note: The signature(s) to this Assignment must
correspond with the name(s) as written on the face
of the within Certificate in every particular, without
alteration or enlargement or any change whatsoever.
Signature Guaranteed:
NOTE: Signature(s) must be guaranteed by an eligible guarantor institution.
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Date
CERTIFICATE PAYMENT HISTORY
Current Interest Compounded
Paid Interest Paid
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Outstanding Total Amount
Principal Paid Paid
EXHIBIT B
FORM OF ISSUANCE REQUEST
REQUEST AND CERTIFICATE OF THE CITY
Lodi Financing Corporation
Not to Exceed $16,000,000
Aggregate Principal Amount of
City of Lodi, California
Variable Rate Certificates of Participation
(Environmental Abatement Program)
To: U.S. Bank Trust National Association
Corporate Trust Services
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Sue Vargas, Vice President
Relationship Specialist
The City of Lodi, California (the "City") hereby requests and directs the Trustee, on
behalf of the Lodi Financing Corporation (the "Corporation"), to execute and deliver
$ of the Corporation's Variable Rate Certificates of Participation ("Certificates")
(Environmental Abatement Program), Series to [Purchaser] on [Delivery Date].
We, the City Attorney and Finance Director [City Manager], respectively, of the City,
hereby certify as follows:
1. The representations and warranties of the City contained in (a) the Certificate
Purchase Contract, dated , 1999 (the "Certificate Purchase Contract"), among the
City, the Corporation and Environmental Restoration Company Ltd. with respect to the sale,
execution, and delivery of not to exceed $16,000,000 aggregate principal amount of the
Certificates and (b) the Program Receipts Sale and Repurchase Agreement, dated ,
1999 (the "Sale and Repurchase Agreement") between the City and the Corporation are true and
correct in all material respects on and as of the date hereof as if made on this date.
2. There is no action, suit, proceeding, inquiry, or investigation, at law or in equity
before or by any court, government agency, public board, or body, pending or, to the best of my
knowledge, threatened against the City, affecting the existence of the City or the titles of its
officers to their respective offices, or affecting or seeking to prohibit, restrain, or enjoin the sale,
execution, or delivery of the Certificates or the collection of the Program Receipts (as defined in
the Sale and Repurchase Agreement) to be used to pay the principal and interest components of
the Certificates, or the pledge of funds and accounts pursuant to the Trust Agreement (as defined
in the Sale and Repurchase Agreement), or contesting the powers of the Trustee thereunder with
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respect to the execution of the Certificates; nor, to the best of our knowledge, is there any basis
for any such action, suit, proceeding, inquiry, or investigation, wherein an unfavorable decision,
ruling, or finding would materially adversely affect the authorization, execution, delivery, or
performance by the City of the obligations on its part contained in the Program Documents, as
defined in the Certificate Purchase Contract.
3. After investigation and review of the Program Documents, no event of default,
nor any event which, after the passage of time or the giving of notice would constitute an event
of default under a Program Document has occurred and is continuing.
4. The City has complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the date hereof pursuant to the Program
Documents, including compliance with the Program Budget and including any reallocation of
amounts therein.
5. The City represents that it will use the proceeds of this issuance in conformance
with the Program Budget set forth in Exhibit A to the Sale and Repurchase Agreement. The
principal amount of Certificates to be executed and delivered hereunder does not exceed the
Cumulative Disbursement Cap for the calendar quarter immediately following the Delivery Date,
as set forth in the Program Budget, less the principal amount of any Certificates previously
executed and delivered.
6. Between the date of the Certificate Purchase Contract and the date hereof, the
City has not, without the prior written consent of the Original Purchaser, together with such other
Certificate Holders as are necessary to constitute, in the aggregate, at least 51% of outstanding
Accreted Value, offered or issued any bonds, notes, or other obligations for borrowed money, or
incurred any material liabilities, direct or contingent, payable from Program Receipts.
7. All capitalized terms used herein that are not otherwise defined shall have the
same meanings as in the Certificate Purchase Contract and the Sale and Repurchase Agreement.
8. The City hereby requests and directs the Trustee, after the Trustee's review of this
Request and Certificate, to deliver a copy of this Request and Certificate to the Purchaser at least
10 Business Days prior to the Delivery Date.
[Delivery Date]
CITY OF LODI
0
[Name]
[City Attorney]
[Name]
[City Manager or Finance Director]
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EXHIBIT C
FORM OF TERMINATION NOTICE
Lodi Financing Corporation
Not to Exceed $16,000,000
Aggregate Principal Amount of
City of Lodi, California
Variable Rate Certificates of Participation
(Environmental Abatement Program)
To: U.S. Bank Trust National Association
Corporate Trust Services
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Sue Vargas, Vice President
Relationship Specialist
1. Pursuant to the Certificate Purchase Contract dated (the "Certificate
Purchase Contract"), between the City of Lodi, California (the "City"), the Lodi Financing
Corporation (the "Corporation") and Environmental Restoration Company, Ltd., the City hereby
certifies, represents and warrants that it will make no additional Issuance Requests to the Trustee
and is hereby irrevocably and permanently discontinuing all Issuance Requests.
Last Issuance Request made on:
Last Issuance Request amount:
Date of Delivery of Certificates under last Issuance Request:
2. The undersigned hereby certifies that this Notice is in compliance with the
Certificate Purchase Agreement and the Program Receipts Sale and Repurchase Agreement,
dated , between the City and the Corporation (the "Sale and Repurchase
Agreement").
3. All capitalized terms used herein that are not otherwise defined shall have the
same meanings as in the Certificate Purchase Contract and the Sale and Repurchase Agreement.
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4. The City has delivered a copy of this Termination Notice to the Purchaser under
the Certificate Purchase Contract and to the Calculation and Verification Agent.
CITY OF LODI
[Name]
[Title]
cc: Original Purchaser
Calculation and Verification Agent
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EXHIBIT D
Calculation Worksheet for Lodi Financing Corporation Certificates of Participation
Purpose of Worksheet
The Calculation and Verification Agent should maintain a spreadsheet, database, or
similarly organized record ("Worksheet") of all Events (as defined below) relative to the
Certificates of Participation. A sample Worksheet in Microsoft Excel format has been provided
to the Calculation and Verification Agent. The Worksheet's columns or categories should
contain substantially the same items and formulas as those described below under "Worksheet
Categories".
The Worksheet should allow the Calculation and Verification Agent to track activity
related to the Lodi Financing Corporation Certificates of Participation. The Calculation and
Verification Agent should add a new line to the Worksheet (in chronological order) for each
Event. An "Event" is defined as any of the following:
1. Closing
2. Issuance of additional Series of Certificates
3. City's receipt of Program Receipts
4. City's payment of principal and interest of Certificates from sources other than
Program Receipts
5. The conclusion of any Interest Period
6. Transfer of funds out of the Deferred Commitment Fee Reserve Account to pay
Interest
7. December 31 ("Compounding of Interest Event")
Worksheet Categories
Note regarding formulas: Numbers in parentheses in the formulas below refer to the
corresponding amounts for the current Event, except where numbers are followed by "P". A
number followed by "P" refers to the corresponding amount for the prior Event. For example,
"(14)" refers to the new Accreted Value resulting from the Event currently being recorded,
whereas "(14P)" refers to the Accreted Value that resulted from the prior Event.
1. Event Date: Record the date on which the corresponding Event takes place.
2. Days Elapsed since Prior Event: Calculate the number of actual calendar days elapsed
since the prior Event Date
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D-1
3. Interest Rate for Period: 20% plus LIBOR as of the last LIBOR Determination Date
effective for the period up to and including the Event Date
4. Interest for Period: (14P) x (3) x [(2) - 360] (Zero at Closing)
5. Program Receipts (Net of Permitted Deductions) or Other Payment: Record the full
amount of any Program Receipts, net of Permitted Deductions, from which Certificates are
paid. If the Event involves payment of Certificates from a source other than Program
Receipts, record this payment amount.
6. Transfer Out of Deferred Commitment Fee Reserve Account: Record any amount
transferred out of the Deferred Commitment Fee Reserve Account to pay interest.
7. Payment of Current Interest: The lesser of.-
(a)
f:(a) If a Compounding of Interest Event, (4), otherwise (4) + (8P); or
(b) (5) + (6)
8. New Current Interest: If a Compounding of Interest Event, (4) — (7),
otherwise (4) + (8P) — (7)
(Zero at Closing)
9. Payment of Compounded Interest: The lesser of:
(a) (5) — (7), or
(b) (IOP);
not less than zero
10. New Compounded Interest: If a Compounding of Interest Event, (10P) + (8P) — (9),
otherwise (1 OP) — (9) (Zero at Closing)
11. New Issuance: Record the amount of new Certificates issued.
12. Payment of Outstanding Principal: The lesser of
(a) (5) — (7) — (9), or
(b) (13P) + (11);
not less than zero
13. New Outstanding Principal: (13P) + (11) — (12) ((11) at Closing)
14. New Accreted Value: (10) + (13) ((11) at Closing)
15. Deposit in Deferred Commitment Fee Reserve Account: The lesser of
(a) $2,250,000 minus cumulative paid Current Interest (i.e. the sum of (7) for all Events
through Current Event) minus cumulative paid Compounded Interest (i.e. the sum of (9) for
all Events through Current Event), or
(b) (5) — (7) — (9) — (12);
not less than zero
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D-2
16. Deferred Commitment Fee Reserve Account Balance: (16P) + (15) — (6) (Zero at
Closing)
17. Deferred Commitment Fee Reserve Account Excess (Shortfall): (16) minus the greater
of
(a) zero, or
(b) $2,250,000 minus the cumulative Interest (i.e. the sum of all (4) for all Events through
Current Event)
18. Program Receipts Available for Program Account: (5) — (7) — (9) — (12) — (15); not less
than zero
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D-3
Lodi Financing Corporation
Not to Exceed $16,000,000
Aggregate Principal Amount of
Variable Rate Certificates of Participation
(Environmental Abatement Program)
CERTIFICATE PURCHASE CONTRACT
[Date of Contract]
City of Lodi
221 West Pine Street
Lodi, California 95240
Lodi Financing Corporation
221 West Pine Street
Lodi, California 95240
Ladies and Gentlemen:
The undersigned (the "Purchaser") offers to enter into this Certificate Purchase Contract
(the "Purchase Contract") with the City of Lodi, California (the "City") and the Lodi Financing
Corporation (the "Corporation") which, upon the City's and the Corporation's acceptance of this
offer, will be binding upon the City and the Corporation and upon the Purchaser. This offer is
made subject to the City's and the Corporation's written acceptance hereof on or before 5:00
P.M., San Francisco time, on the date hereof or such other time as the parties hereto mutually
agree upon and, if not so accepted, will be subject to withdrawal by the Purchaser upon written
notice (by facsimile or otherwise) delivered to the City and the Corporation at any time prior to
the acceptance hereof by the City and the Corporation.
Capitalized terms used herein and not otherwise defined shall have the meanings assigned
to such terms in the Sale and Repurchase Agreement (hereinafter defined).
1. Purchase and Sale. Upon the terms and conditions and upon the basis of the
representations, warranties, and agreements set forth herein, the Purchaser hereby agrees to
purchase, and the City and the Corporation hereby agree to cause the sale, execution, and
delivery to the Purchaser of, not to exceed $16,000,000 aggregate principal amount (the
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"Purchase Commitment") of Variable Rate Certificates of Participation (Environmental
Abatement Program) (the "Certificates") evidencing and representing interests of the owners
thereof in the Repurchase Payments to be made by the City under the Program Receipts Sale and
Repurchase Agreement, dated as of [Dated Date] (the "Sale and Repurchase Agreement"), by
and between the City and the Corporation. Under the provisions of the Sale and Repurchase
Agreement, the City will irrevocably sell and convey to the Corporation its right to receive
amounts, proceeds and recoveries from, or in contemplation of, or in connection with, the
potential liability of responsible parties or potentially responsible parties, their insurers or
indemnitors, or of tortfeasors or potential tortfeasors, their insurers or indemnitors ("Program
Receipts") received by the City in connection with its Environmental Abatement Program (the
"Program"), as described in the Sale and Repurchase Agreement and in the City's
Comprehensive Municipal Environmental Response and Liability Ordinance, as amended (the
"Ordinance"), and the Corporation will irrevocably resell and reconvey undivided interests in the
Program Receipts in consideration of the payment by the City of the Repurchase Payments under
the Sale and Repurchase Agreement.
The Certificates shall be executed and delivered in Series from time to time pursuant to a
Trust Agreement, dated as of [Dated Date] (the "Trust Agreement"), by and among the
Corporation and U.S. Bank National Trust Association, as trustee (the "Trustee"), and shall
represent undivided proportionate interests in the Corporation's right to receive Repurchase
Payments under the Sale and Repurchase Agreement. The City's obligation to make Repurchase
Payments under the Sale and Repurchase Agreement is a limited obligation of the City, payable
solely from Program Receipts. The City has authorized the execution of this Purchase Contract,
the Sale and Repurchase Agreement, and a Placement Agent Agreement, dated
(the "Placement Agent Agreement") between the City and Lehman Brothers Inc., as Placement
Agent, as well as related matters, pursuant to the terms of a resolution adopted by the City
Council of the City on , 1999 (the "City Resolution"). The Corporation has
authorized the execution of this Purchase Contract and the Trust Agreement, as well as related
matters, pursuant to the terms of a resolution adopted by the Board of Directors of the
Corporation on _, 1999 (the "Corporation Resolution"). This Purchase Contract,
the Sale and Repurchase Agreement, the Placement Agent Agreement, the Trust Agreement, the
Ordinance, the City Resolution and the Corporation Resolution are herein referred to as the
"Program Documents." This Purchase Contract, the Trust Agreement, the Sale and Repurchase
Agreement and the Placement Agent Agreement are collectively referred to herein as the "Legal
Documents."
The initial Series of the Certificates shall be executed and delivered on [Closing Date] in
the aggregate principal amount of $ . Each subsequent Series of the Certificates shall
be executed and delivered on the applicable Delivery Date (as defined in the Sale and
Repurchase Agreement) and in the aggregate principal amount specified by the City in an
Issuance Request (as defined in the Sale and Repurchase Agreement and in substantially the
form attached hereto as Exhibit D) submitted by the City in accordance with the terms of the
Trust Agreement. The maximum principal amount of Certificates that may be executed and
delivered on any Delivery Date is an amount equal to the Cumulative Disbursement Cap for the
immediately succeeding calendar quarter (as set forth in Exhibit A to the Sale and Repurchase
Agreement), less any principal amount of Certificates previously executed and delivered. The
purchase price for each Series of the Certificates shall be equal to the aggregate principal amount
1073602/12/13350/00495/October 13, 1999 - 2:14
2
of such Series of the Certificates, and no Series of Certificates will be executed and delivered in
an aggregate amount of less than $250,000. No Delivery Date shall occur after the
"Commitment Period Ending Date," which shall be four years after the initial Closing Date.
If the City has determined to permanently and irrevocably discontinue Issuance Requests,
it shall deliver to the Trustee a Termination Notice (as defined in the Sale and Repurchase
Agreement and in substantially the form attached hereto as Exhibit E) in accordance with the
terms of the Trust Agreement.
2. Purchase Commitment and Commitment Period. On the first Business Day of
each January, April, July and October after the date hereof and prior to the Commitment Period
Ending Date, the Purchaser shall purchase a Series of Certificates in an amount, if any, specified
by the Trustee upon acceptance of an Issuance Request received from the City as provided in the
Trust Agreement. The Purchase Commitment shall be reduced, dollar for dollar, without further
action on the part of the Purchaser, by 1) the principal amount of Certificates executed and
delivered under the Trust Agreement and 2) the City's receipt of Program Receipts, whether cash
or non-cash, and whether or not there are any Certificates Outstanding at the time, in an amount
up to the full amount of the Purchase Commitment, including but not limited to (i) the City's
retention of Program Receipts as provided in Section 6.4(e) of the Sale and Repurchase
Agreement and (ii) the value of non-cash settlements accepted by the City as provided in Section
6.6(a) of the Sale and Repurchase Agreement.
The Purchase Commitment shall terminate on the earlier of the Commitment Period
Ending Date or the occurrence of any of the following "Commitment Termination Events:"
1) the City's delivery of a Termination Notice to the Trustee and the Original Purchaser, in
substantially the form attached hereto as Exhibit E, stating that it will make no further Issuance
Requests, 2) the reduction of the Purchase Commitment to zero by one or more of the events
described in the preceding paragraph, 3) the Original Purchaser's decision to terminate the
Purchase Commitment, in accordance with Section 6.5 of the Sale and Repurchase Agreement, if
the City substitutes its Outside Counsel or modifies the terms of engagement of its Outside
Counsel in a manner which, in the sole determination of the Original Purchaser, results in a
materially prejudicial change; or 4) in the sole discretion of the Original Purchaser, an uncured
Event of Default under the Sale and Repurchase Agreement or under the Trust Agreement, or a
violation by the City or the Corporation of any covenant, representation or warranty made herein,
in the Sale and Repurchase Agreement or in the Trust Agreement, including but not limited to
the occurrence of any of the proceedings or actions described in Section 9.1(e) of the Sale and
Repurchase Agreement relating to bankruptcy or insolvency of the City or the Corporation or
other actions described therein. The City may terminate the Purchase Commitment in whole or
in part, at any time, provided that such termination will in no way diminish the City's obligation
to pay the Deferred Commitment Fee or the Outstanding Certificate Obligations of all
Certificates.
3. Deferred Commitment Fee. The City shall pay to the Original Purchaser, in
consideration for its commitment hereunder to purchase the Certificates from time to time and to
assume the substantial risks attendant thereto, a deferred commitment fee equal to $2.25 million
(the "Deferred Commitment Fee"). The Deferred Commitment Fee shall be due and payable on
the date on which all of the Certificates are paid in full or discharged in accordance with the
1073602/12/13350/00495/October13, 1999 -2:14
Trust Agreement, and if such date is prior to the Commitment Period Ending Date, a
Commitment Termination Event (as defined in Section 2 above and in the Sale and Repurchase
Agreement) has occurred. The Deferred Commitment Fee shall be equal to the difference
between $2.25 million and the cumulative portion of Repurchase Payments representing interest
(including Compounded Interest and Current Interest) paid with respect to the Certificates on or
prior to such date as the Deferred Commitment fee is due; thus the Deferred Commitment Fee
will be reduced dollar for dollar for each dollar of interest paid with respect to the Certificates.
The Deferred Commitment Fee shall be payable in accordance with Sections 6.4(d) and 6.9 of
the Sale and Repurchase Agreement and Sections 5.03 and 5.04 of the Trust Agreement (it being
understood and agreed that the Original Purchaser shall be an express third party beneficiary of
the agreements and covenants made by the Corporation under the Trust Agreement), and the sole
source of payment of such Deferred Commitment Fee shall be Program Receipts.
A Deferred Commitment Fee Reserve Account shall be established and maintained by the
Trustee under the Trust Agreement from Program Receipts, in an amount which, after payment
of Accreted Value and Current Interest components on all Outstanding Certificates when due,
equals the then current Deferred Commitment Fee.
The City acknowledges and agrees that the City's obligation to pay the Deferred
Commitment Fee shall survive the payment of the Certificates or termination of the Purchase
Commitment. The Deferred Commitment Fee shall be payable to the Original Purchaser
executing this Purchase Contract irrespective of the fact that the Original Purchaser may have
sold or transferred its ownership interest in all or a portion of the Certificates by the time the
payment of the Deferred Commitment Fee so made hereunder and under the Trust Agreement.
4. Closing. At 8:00 a.m., San Francisco time, on [Closing Date] (the "Closing
Date"), and at 8:00 a.m., San Francisco time, on each Delivery Date thereafter with respect to
which the City has submitted an Issuance Request, the City, subject to the terms and conditions
hereof, will cause the sale and delivery of the applicable Series of the Certificates to the
Purchaser, duly executed, together with the other documents hereinafter mentioned, and, subject
to the terms and conditions hereof, the Purchaser will accept such delivery and pay the purchase
price of such Series of the Certificates as set forth in Section 1 hereof by wire transfer of
immediately available funds. Such delivery and payment on the Closing Date is referred to
herein as the "Initial Closing," such delivery and payment on each subsequent Delivery Date is
referred to herein as a "Subsequent Closing," and the Initial Closing or any Subsequent Closing
is referred to herein as a "Closing." Delivery and payment as aforesaid shall be made at the
offices of the City, 221 West Pine Street, Lodi, California, or at such other place as shall have
been mutually agreed upon by the City and the Purchaser.
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5. The Certificates. The Certificates of each Series shall be dated the date of
delivery thereof, shall have a Final Payment Date of January 1, 2029, and shall evidence and
represent an undivided proportional interest in Repurchase Payments payable under the Sale and
Repurchase Agreement. The Certificates shall be payable as provided in the Sale and
Repurchase Agreement and the Trust Agreement. Current Interest payable with respect to the
Certificates shall accrue at the Variable Rate determined from time to time pursuant to the Sale
and Repurchase Agreement and the Trust Agreement, but in no event shall the Variable Rate
exceed 30% per annum. Accreted Value and Current Interest payable with respect to the
Certificates shall be payable as and when Program Receipts are received by the City and
transferred to the Trustee for deposit in the Revenue Fund, as described in the Trust Agreement.
The sum of all Current Interest accruing during any calendar year shall be added to the Accreted
Value of the Certificates as of each December 31, after which date such Accreted Value will bear
interest at the Variable Rate.
6. Representations, Warranties and Agreements. Each of the City and the
Corporation (but only to the extent of its own representations set forth below) hereby and
respectively represent, warrant and agree respectively as of the Initial Closing, and by delivery of
an Issuance Request and by the Trustee's execution and delivery, on behalf of the Corporation, of
the Certificates so requested, will have been deemed to have represented, warranted and agreed
respectively as of each Subsequent Closing as follows:
(a) The City and the Corporation have full legal right, power and authority to
(i) enter into the Legal Documents, (ii) cause the sale, execution, and delivery of each
Series of the Certificates to the Purchaser as provided herein and (iii) carry out and
consummate the transactions contemplated by the Program Documents;
(b) By all necessary official action of the City and the Corporation, as the case
may be, prior to or concurrently with the acceptance hereof, the City and the Corporation
have duly authorized and approved the execution and delivery of, and the performance by
the City and the Corporation of, the obligations ' on the part of each contained in, the
Legal Documents, and the consummation by them of all other transactions contemplated
by the Legal Documents;
(c) The City and the Corporation, as the case may be, have complied and are
in compliance, in all material respects with the obligations on its part contained in the
Program Documents;
(d) Neither the City nor the Corporation is in any material respect in breach of
or default under any applicable constitutional provision, law, ordinance or administrative
regulation to which it is subject or any applicable judgment or decree or any loan
agreement, indenture, bond, note, resolution, agreement (including the Cooperative
Agreement) or other instrument to which the City or the Corporation is a party or to
which the City or the Corporation or any of its property or assets is otherwise subject, and
no event has occurred and is continuing which with the passage of time or the giving of
notice, or both, would constitute such a default or event of default under any such
instrument; and the execution and delivery of the Certificates and the Legal Documents,
and compliance with the provisions on the City's part or the Corporation's part, as the
1073602/12/13350/00495/October13, 1999-2:14
case may be, contained therein, will not conflict with or constitute a breach of or a default
under any constitutional provision, law, ordinance, administrative regulation, judgment,
decree, loan agreement, indenture, bond, note, resolution, agreement, or other instrument
to which the City or the Corporation, as this case may be, is a party or to which the City
or the Corporation, as the case may be, or any of its property or assets is otherwise
subject, nor will any such execution, delivery, adoption, or compliance result in the
creation or imposition of any lien, charge, or other security interest or encumbrance of
any nature whatsoever upon any of the property or assets of the City or the Corporation,
as the case may be, or under the terms of any such constitutional provision, law,
ordinance, administrative regulation or instrument, except as provided in the Sale and
Repurchase Agreement and the Trust Agreement;
(e) All authorizations, approvals, licenses, permits, consents, and orders of
any governmental authority, legislative body, board, agency, or commission having
jurisdiction of the matter which are required for the due authorization by, or which would
constitute a condition precedent to or the absence of which would materially adversely
affect the due performance by, the City or the Corporation, as the case may be, of their
respective obligations in connection with the execution and delivery of the Certificates
under the Trust Agreement have been duly obtained, except for such approvals, consents,
and orders as may be required under the Blue Sky or securities laws of any state in
connection with the offering and sale of the Certificates; and all authorizations,
approvals, licenses, permits, consents, and orders of any governmental authority, board,
agency, or commission having jurisdiction of the matter which are required for the due
authorization by, or which would constitute a condition precedent to or the absence of
which would materially adversely affect the due performance by, the City or the
Corporation of their respective obligations under the Program Documents have been duly
obtained;
(f) Between the date of this Purchase Contract and the date on which no
Certificates are outstanding and no additional Series of Certificates may be executed and
delivered hereunder and under the Trust Agreement, neither the City nor the Corporation
will, without the prior written consent of the Purchaser, offer or issue any bonds, notes, or
other obligations for borrowed money, or incur any material liabilities, direct or
contingent, payable from Program Receipts;
(g) There is no action, suit, proceeding, inquiry, or investigation, at law or in
equity, before or by any court, government agency, public board or body, pending or, to
the best knowledge of the City and the Corporation, as the case may be, after reasonable
investigation, threatened against the City or the Corporation, as the case may be, affecting
the existence of the City or the Corporation, as the case may be, or the titles of their
officers to their respective offices, or affecting or seeking to prohibit, restrain, or enjoin
the sale, execution, or delivery of the Certificates or the collection of the Program
Receipts to be used to pay the Repurchase Payments, or the pledge of and lien on the
funds and accounts established pursuant to the Trust Agreement, or contesting or
affecting the validity or enforceability of the Certificates or the Legal Documents, or
contesting the powers of the City or the Corporation, as the case may be, or any authority
of either entity for the execution and delivery of the Certificates, or in any way contesting
1073602/12/13350/00495/October l3, 1999 - 2:14
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or challenging the consummation of the transactions contemplated hereby, or which
might materially adversely affect the ability of the City or the Corporation, as the case
may be, to collect Program Receipts; nor is there any known basis for any such action,
suit, proceeding, inquiry, or investigation, wherein an unfavorable decision, ruling, or
finding would materially adversely affect the authorization, execution, delivery, or
performance by the City or the Corporation, as the case may be, of the Legal Documents
or the execution by the Trustee of the Certificates;
(h) At any time prior to the date on which no Certificates are outstanding and
no additional Series of Certificates may be executed and delivered hereunder and under
the Trust Agreement, the City and the Corporation, as the case may be, will furnish such
information, execute such instruments, and take such other action in cooperation with the
Purchaser as the Purchaser may request in order (i) to qualify the Certificates for offer
and sale under the Blue Sky or other securities laws and regulations of such states and
other jurisdictions of the United States as the Purchaser may designate, and (ii) to
determine the eligibility of the Certificates for investment under the laws of such states
and other jurisdictions, and will use its best efforts to continue such qualifications in
effect so long as required for the distribution of the Certificates; provided, however, that
neither the City nor the Corporation shall be required to qualify to do business or consent
to service of process in connection with any such qualification or determination in any
jurisdiction;
(i) No filing or other action, other than the execution of the Legal Documents,
is required to create for the benefit of the Trustee and the Certificate Holders a first and
perfected lien and security interest on Program Receipts and, upon execution of the Legal
Documents, such a first lien shall exist.
0) The City and the Corporation will apply the proceeds from the sale of the
Certificates solely for the purposes specified in the Sale and Repurchase Agreement and
the Trust Agreement.
(k) The City and the Corporation are aware that the Original Purchaser
hereunder is an affiliate of the Placement Agent, and the City and the Corporation hereby
consent to such affiliation and waive any objection thereto.
(1) The City and the Corporation will assist the Original Purchaser and the
Placement Agent in preparing materials for use in any private placement of the
Certificates which the Original Purchaser or the Placement Agent may determine to offer,
which assistance shall include but not be limited to the preparation of a private placement
memorandum. At the time of any such private placement, the City and the Corporation
will represent and warrant that the information provided by each of them, respectively, is
true and correct, and the City and the Corporation shall provide the same indemnification
and opinions as are provided hereunder and shall be subject to the same obligations, as
applicable, as hereunder. The provisions of this Section 6(1) shall survive the termination
of this Purchase Contract and discharge of the City's obligations under the Trust
Agreement.
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7. Indemnification.
(a) General Indemnity. The City shall, to the extent permitted by law,
indemnify and hold harmless the Corporation, the Trustee (as the assignee of the
Corporation's rights under the Sale and Repurchase Agreement), the Placement Agent,
the Calculation and Verification Agent, the Original Purchaser, each Certificate Holder
and their members, directors, officers, employees, and agents from and against any and
all losses, claims, damages, liabilities, or expenses of every kind, character, and nature
whatsoever (excepting therefrom only such losses, claims, damages, liabilities, or
expenses arising from the negligence of the Corporation or the Trustee), including, but
not limited to, losses, claims, damages, liabilities, or expenses arising out of, resulting
from, or in any way connected with (1) the City's interest in, or use of, the Program
Receipts or any portion thereof; (2) the sale of the Certificates and the carrying out of any
of the transactions contemplated by the Certificates, this Purchase Contract, the Trust
Agreement, the Sale and Repurchase Agreement or any related document; (3) the
carrying out of the Program; or (4) the acceptance of and administration by the Trustee of
the Trustee's duties under the Trust Agreement. The City shall, to the extent permitted by
law and, with respect to the indemnification of the Placement Agent, the Calculation and
Verification Agent, the Original Purchaser and each Certificate Holder (each a "Special
Indemnified Party"), to the extent permitted by clause (b) below, pay or reimburse the
Corporation, the Trustee, the Special Indemnified Parties and their members, directors,
officers, employees and agents for any and all costs, reasonable attorneys fees, liabilities
or expenses incurred in connection with investigating, defending against or otherwise in
connection with any such losses, claims, damages, liabilities, expenses or actions.
Notwithstanding anything to the contrary in the Sale and Repurchase Agreement or the
Trust Agreement, the Trustee and the Corporation shall not be entitled to payment,
reimbursement or indemnification for actions involving willful misconduct, default or
negligence on the part of the Trustee or the Corporation, respectively.
(b) Limited Source Indemnity. The obligation of the City to defend,
indemnify, and hold harmless the Special Indemnified Parties for any suits or claims
arising from the sale of the Certificates or the City's pursuit of the Program (as described
in the preceding paragraph), shall be payable solely from (i) Program Receipts, and
(ii) any proceeds of insurance or self-insurance programs in which the City has
participated or will participate. With regard to item (i), if currently available Program
Receipts are insufficient to pay attorney fees and expenses and other litigation related
costs at the time they are incurred, the Special Indemnified Parties may fund the excess of
such fees and expenses, and any future Program Receipts will be used to reimburse the
Special Indemnified Parties for such amounts. With regard to item (ii), the City agrees to
cooperate fully with the Special Indemnified Parties in submitting and pursuing claims
against such City insurers, although the City will have no obligation to maintain any
insurance coverage.
(c) Special Conditions. The City's indemnity obligation to the Special
Indemnified Parties under section (b) above is subject to the following conditions:
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(1) The City will pay attorneys' fees and costs of a single law firm
chosen by the Special Indemnified Parties to collectively represent the Special
Indemnified Parties, and such counsel shall, to the extent consistent with the
Special Indemnified Parties' interests, cooperate with the City and avoid
duplication and wastefulness in the assertion of defenses;
(2) The City will pay attorneys' fees and costs of additional law firms
to represent an individual Special Indemnified Party where (i) the counsel
retained under (c)(1) above could not, as a result of applicable law or code of
professional responsibility, assert a defense on behalf of such an individual
Special Indemnified Party while simultaneously representing the other Special
Indemnified Parties for reasons including, but not limited to, a situation in which
the use of counsel chosen by the Special Indemnified Parties to represent the
Special Indemnified Party or Parties would present such counsel with a conflict of
interest, or in which the actual or potential defendants in, or targets of, any such
action include the Special Indemnified Party or Parties and the City and the
Special Indemnified Party or Parties shall have reasonably concluded that there
may be legal defenses available to it and/or other Special Indemnified Parties that
are different from or additional to those available to the City, or (ii) the City shall
authorize the Special Indemnified Parties to employ separate counsel at the
expense of the City; and
(3) The City will not, without the prior written consent of the Special
Indemnified Parties, settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit or proceeding in
which indemnification or contribution may be sought hereunder (whether or not
the Special Indemnified Parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an unconditional
release of each Special Indemnified Party from all liability arising out of such
claim, action, suit or proceeding.
The provisions of this Section 7 shall survive the termination of this Purchase Contract
and the discharge of the City's obligations under the Trust Agreement.
8. Closing Conditions. The Purchaser has entered into this Purchase Contract in
reliance upon the representations and warranties of the City and the Corporation contained
herein, upon the representations and warranties to be contained in the documents and instruments
to be delivered at each Closing, and upon the performance by the City and the Corporation of
their respective obligations hereunder, both as of the date hereof and as of each Delivery Date.
Accordingly, the Purchaser's obligations under this Purchase Contract to purchase, to accept
delivery of, and to pay for each Series of the Certificates shall be conditioned, at the option of the
Purchaser, upon the performance by the City and the Corporation, as the case may be, of their
respective obligations to be performed hereunder and under such documents and instruments at
or prior to the applicable Closing, and shall also be subject to the following additional
conditions:
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(a) The representations and warranties of the City and the Corporation, as the
case may be, contained herein shall be true, complete, and correct on the date hereof and
on and as of the applicable Delivery Date, as if made on such Delivery Date, and the
statements of the officers and other officials of the City, the Corporation, and the Trustee
made in any certificate or other document furnished pursuant to the provisions hereof
shall be accurate;
(b) At the time of the applicable Closing, the Sale and Repurchase Agreement
and the Trust Agreement shall have been duly authorized, executed, and delivered by the
respective parties thereto, all in substantially the forms heretofore submitted to the
Purchaser, with only such changes as shall have been agreed to in writing by the
Purchaser, and shall be in full force and effect; the Cooperative Agreement and the
Ordinance shall be in full force and effect and shall not have been amended in any
manner that adversely affects the interests of the Purchaser or the Certificate Holders, and
there shall be in full force and effect such resolution or resolutions of the City Council of
the City and the Board of Directors of the Corporation as, in the opinion of counsel to the
Purchaser ("Purchaser's Counsel"), shall be necessary or appropriate in connection with
the transactions contemplated hereby;
(c) Between the date hereof and the applicable Delivery Date, the marketa-
bility of the Certificates shall not have been materially adversely affected, in the
judgment of the Purchaser (evidenced by a written notice to the City, the Corporation and
the Trustee terminating the obligation of the Purchaser to accept delivery of and make
any payment for any additional Series of the Certificates), by reason of any of the
following:
(1) legislation enacted, introduced in the Congress, or recommended
for passage by the President of the United States, or a decision rendered by a court
established under Article III of the Constitution of the United States, or an order,
ruling, regulation (final, temporary, or proposed), or official statement issued or
made by or on behalf of the Securities and Exchange Commission, or any other
governmental agency having jurisdiction of the subject matter, shall have been
made or issued to the effect that obligations of the general character of the
Certificates, or the Certificates, including any or all underlying arrangements, are
not exempt from registration under the Securities Act of 1933, as amended, or that
the Trust Agreement is not exempt from qualification under the Trust Indenture
Act of 1939, as amended;
(2) the declaration of war or engagement in major military hostilities
by the United States or the occurrence of any other national emergency or
calamity relating to the effective operation of the government of, or the financial
community in, the United States;
(3) the declaration of a general banking moratorium by federal,
New York, or California authorities, or the general suspension of trading on any
national securities exchange;
1073602/12/13350100495/October 13,1999 - 2:14
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(4) the imposition by the New York Stock Exchange or other national
securities exchange, or any governmental authority, of any material restrictions
not now in force with respect to the Certificates or obligations of the general
character of the Certificates or securities generally, or the material increase of any
such restrictions now in force, including those relating to the extension of credit
by, or the charge to the net capital requirements of, the Purchaser; or
(5) an order, decree, or injunction of any court of competent jurisdic-
tion, or order, ruling, regulation, or official statement by the Securities and
Exchange Commission, or any other governmental agency having jurisdiction of
the subject matter, issued or made to the effect that the issuance, offering, or sale
of obligations of the general character of the Certificates, or the execution,
offering, or sale of the Certificates, including any or all underlying obligations, as
contemplated hereby, is or would be in violation of the federal securities laws as
amended and then in effect.
(d) With respect to the Initial Closing, the Purchaser shall have received the
following documents at or prior to the Closing Date, in each case satisfactory in form and
substance to the Purchaser:
(1) Copies of the Trust Agreement, the Sale and Repurchase
Agreement and the PIacement Agent Agreement, each duly executed and
delivered by the respective parties thereto;
(2) An opinion, dated the Closing Date and addressed to the City, the
Purchaser and the Placement Agent, of counsel to the Corporation, in
substantially the form attached hereto as Exhibit A;
(3) An opinion, dated the Closing Date and addressed to the Purchaser,
the Placement Agent and the Corporation, of the City Attorney of the City, in
substantially the form attached hereto as Exhibit B;
(4) An opinion of Purchaser's counsel, dated the Closing Date and
addressed to the Purchaser, to the effect that the Certificates are exempt from
registration under the Securities Act of 1933, as amended, and the Trust
Agreement is exempt from qualification under the Trust Indenture Act of 1939, as
amended, and addressing such other matters as the Purchaser shall determine;
(5) A signature and incumbency certificate of the Corporation and a
certificate, dated the Closing Date, signed by an authorized officer of the Corpora-
tion, in substantially the form attached hereto as Exhibit C;
(6) A signature and incumbency certificate of the City and a certifi-
cate, dated the Closing Date, signed by an authorized officer of the City, in
substantially the form attached hereto as Exhibit D;
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(7) A certified copy of the general resolution of the Trustee autho-
rizing the execution and delivery of the Trust Agreement and the Certificates,
together with a certificate to the effect that:
(i) the Trustee is a national banking association duly organized
and existing under the laws of the United States of America;
(ii) the Trustee has full corporate trust powers and authority to
serve as Trustee under the Trust Agreement; and
(iii) the Trustee's action in executing and delivering the Trust
Agreement is in full compliance with, and does not conflict with, any
applicable law or governmental regulation currently in effect, and does not
conflict with or violate any contract to which the Trustee is a party or any
administrative or judicial decision by which the Trustee is bound;
(8) An opinion of counsel to the Trustee, dated the date of Closing and
addressed to the City, the Corporation and the Purchaser, to the effect that:
(i) the Trust Agreement has been duly authorized, executed
and delivered by the Trustee and, assuming due authorization, execution
and delivery by the other parties thereto, constitutes a legal, valid and
binding obligation of the Trustee enforceable in accordance with its terms
except that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws in
effect from time to time affecting the rights of creditors generally and
except to the extent that the enforceability thereof may be limited by the
application of general principles of equity; and
(ii) the Certificates have been duly executed and delivered by
the Trustee;
(9) A certified copy of the resolution of the Corporation authorizing
the execution and delivery of the Legal Documents;
(10) A certified copy of the resolution of the City authorizing the
execution and delivery of the Legal Documents;
(11) A certified copy of the Ordinance;
(12) A certified copy of the Comprehensive Joint Cooperative Agree-
ment, executed in May 1997, together with a certification by the Department of
Toxic Substances Control of the State Environmental Protection Agency
("DTSC") stating that the Legal Documents and the issuance of the Certificates do
not violate or conflict with the Cooperative Agreement, and stating the amount
then owing from the City to DTSC under the Cooperative Agreement;
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(13) A final and non -appealable court judgment in a validation action
commenced under California Code of Civil Procedure Section 860, in form and
substance satisfactory to the Purchaser;
(14) Evidence that the City's Outside Counsel has subordinated its right
to payment of legal fees and disbursements consistent with the terms of the Sale
and Repurchase Agreement;
(15) A certification by the City (a) describing all amounts it has
expended in connection with the Program to the date of Closing, describing all
outstanding amounts owed to Outside Counsel or other predecessor firm, whether
or not on a contingency basis, and certifying that all fees and disbursements
incurred by Outside Counsel in connection with the Program prior to the Closing
Date have either been paid in full or have been subordinated to the rights of the
Purchaser hereunder; (b) stating the outstanding balance in the Municipal Fund,
(c) stating the amount of Program Receipts received since July 30, 1999 through
the date of Closing and (d) stating the amounts of DTSC Settlement Payments
paid through the date of Closing;
(16) A certified copy of the Program Budget;
(17) A certificate of the Calculation and Verification Agent, stating that
it is capable of performing the functions assigned to it under the Sale and
Repurchase Agreement and the Trust Agreement and stating that it accepts its
duties thereunder; and
(18) Such additional legal opinions, certificates, proceedings,
instruments, and other documents as the Purchaser or Purchaser's counsel may
reasonably request to evidence the truth and accuracy, as of the date hereof and as
of the Closing Date, of the City's or Corporation's representations and warranties
contained herein and the due performance or satisfaction by the City, the
Corporation, and the Trustee on or prior to the Closing Date of all material
agreements then to be performed and conditions then to be satisfied by any of
them in connection with the transactions contemplated hereby and by the Trust
Agreement and the Sale and Repurchase Agreement.
If the City, the Corporation or the Trustee shall be unable to satisfy the conditions set forth
in this Purchase Contract to the obligation of the Purchaser to purchase, accept delivery of,
and pay for the initial Series of the Certificates, or if the obligation of the Purchaser to
purchase, accept delivery of, and pay for the initial Series of Certificates shall be
terminated for any reason permitted by this Purchase Contract, then this Purchase Contract
and all obligations of the Purchaser hereunder may be terminated by the Purchaser at, or at
any time prior to, the Closing Date by written notice to the Trustee, the Corporation and
the City, and neither the Purchaser nor the City shall have any further obligations
hereunder.
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(e) With respect to each Subsequent Closing, which shall occur no more often
than quarterly, on the first Business Day of any January, April, July or October on or
before the Commitment Period Ending Date, the Purchaser shall have received the
following documents at or prior to the applicable Delivery Date, in each case satisfactory
in form and substance to the Purchaser:
(1) An Issuance Request of the City, as provided in the Trust
Agreement, dated the applicable Delivery Date, signed by an authorized officer of
the City, and delivered to the Purchaser and the Trustee at least 15 Business Days
prior to such Subsequent Closing Date, in substantially the form attached hereto
as Exhibit D, requesting the Trustee to execute and deliver and requesting the
Purchaser to purchase an amount of Certificates with a minimum principal
component of $250,000 and specifying the Delivery Date;
(2) Certificates of authorized officers of the City and the Corporation,
respectively, dated the applicable Delivery Date, stating that, after investigation
and review of the Program Documents, no event of default, nor any event which,
after the passage of time or the giving of notice would constitute an event of
default under a Program Document has occurred and is continuing;
(3) An opinion, dated the Delivery Date and addressed to the
Purchaser and the Corporation, of the City Attorney of the City, in substantially
the form attached hereto as Exhibit B;
(4) An opinion of Purchaser's counsel, dated the Delivery Date and
addressed to the Purchaser, to the effect that the Certificates are exempt from
registration under the Securities Act of 1933, as amended, and the Trust
Agreement is exempt from qualification under the Trust Indenture Act of 1939, as
amended;
(5) An opinion of counsel to the Trustee, dated the Delivery Date and
addressed to the City, the Purchaser and the Corporation, to the effect that the
Certificates have been duly executed and delivered by the Trustee;
(6) A certified copy of a revised Program Budget; and
(7) Such additional legal opinions, certificates, proceedings, instru-
ments, and other documents as the Purchaser or Purchaser's counsel may
reasonably request to evidence the truth and accuracy, as of the date of the
applicable Delivery Date, of the City's or Corporation's representations and
warranties contained herein and the due performance or satisfaction by the City,
the Corporation, and the Trustee on or prior to the applicable Delivery Date of all
material agreements then to be performed and conditions then to be satisfied by
any of them in connection with the transactions contemplated hereby and by the
Trust Agreement and the Sale and Repurchase Agreement.
If the City, the Corporation or the Trustee shall be unable to satisfy the conditions set forth
in this Purchase Contract to the obligation of the Purchaser to purchase, accept delivery of,
1073602/12/13350/00495/October 13, 1999 - 2:14
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and pay for any subsequent Series of the Certificates, or if the obligation of the Purchaser
to purchase, accept delivery of, and pay for any subsequent Series of Certificates shall be
terminated for any reason permitted by this Purchase Contract, then this Purchase Contract
and all obligations of the Purchaser hereunder may be terminated by the Purchaser at, or at
any time prior to, the Delivery Date applicable to such subsequent Series of Certificates by
written notice to the Trustee, to the Corporation and to the City, and neither the Purchaser
nor the City shall have any further obligations hereunder.
9. Liquidated Damages. In the event that the Purchaser fails (other than for a reason
permitted by this Purchase Contract) to accept and pay for any Series of Certificates on the
applicable Delivery Date, the amount of ten percent (10%) of the aggregate principal amount of
the Certificates authorized to be executed and delivered under the Trust Agreement but which
have not yet been issued shall constitute liquidated damages for such failure and for any and all
defaults hereunder on the part of the Purchaser, and the Purchaser's payment of such amount to
the City shall constitute a full release and discharge of all claims and rights of the City against
the Purchaser.
10. Expenses.
(a) The Purchaser shall be under no obligation to pay, and the City shall pay, any
expenses incident to the performance of the City's obligations hereunder including, but not
limited to: (i) the cost of preparation and printing of each Series of Certificates; (ii) the fees and
expenses of counsel to the City and the Corporation; (iii) the Placement Fee, (iv) all legal fees,
court costs, and all other expenses in connection with the validation action to be conducted under
California Code of Civil Procedure Section 860 with respect to the Certificates; (iv) all fees and
expenses of the Trustee and the Calculation and Verification Agent and (v) the fees and
disbursements of any engineers, accountants, and other experts, consultants, or advisors retained
by the City.
(b) The Purchaser shall pay (i) fees, if any, payable to the California Debt and
Investment Advisory Commission in connection with the execution and delivery of each Series
of Certificates; and (ii) all other expenses incurred by the Purchaser in connection with the sale,
execution, and delivery of each Series of Certificates, including the fees and disbursements of
Purchaser's counsel.
11. Notices. Any notice or other communication to be given to the City under this
Purchase Contract may be given by delivering the same in writing at the City's address set forth
above, Attention: City Attorney, and to the Purchaser under this Purchase Contract may given by
delivering the same in writing to , Attention:
12. Parties in Interest. This Purchase Contract is made solely for the benefit of the
City, the Corporation and the Purchaser (including the successors or assigns of the Purchaser),
and no other person shall acquire or have any right hereunder or by virtue hereof. All of the
City's and the Corporation's representations, warranties, and agreements contained in this
Purchase Contract shall remain operative and in full force and effect regardless of (i) any
investigations made by or on behalf of the Purchaser; (ii) delivery of and payment for any Series
1073602/12/13350/00495/October 13, 1999 -2:14
15
of Certificates pursuant to this Purchase Contract; and (iii) any termination of this Purchase
Contract.
13. Effectiveness and Counterpart Signatures. This Purchase Contract shall become
effective upon the execution of the acceptance by authorized officers of the City and the
Corporation and shall be valid and enforceable at the time of such acceptance. This Purchase
Contract may be executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
14. Headinu. The headings of the sections of this Purchase Contract are inserted for
convenience only and shall not be deemed to be a part hereof.
15. Severability of Invalid Provisions. If any one or more of the provisions contained
in this Purchase Contract shall for any reason be held to be invalid, illegal, or unenforceable in
any respect, then such provision or provisions shall be deemed severable from the remaining
provisions contained in this Purchase Contract and such invalidity, illegality, or unenforceability
shall not affect any other provision of this Purchase Contract, and this Purchase Contract shall be
construed as if such invalid, illegal, or unenforceable provision had never been contained herein.
The City, the Corporation and the Purchaser each hereby declares that they would have entered
into this Purchase Contract and each and every other section, paragraph, sentence, clause, or
phrase hereof irrespective of the fact that any one or more sections, paragraphs, sentences,
clauses, or phrases of this Purchase Contract may be held illegal, invalid, or unenforceable.
1073602/12/13350/00495/October 13, 1999 - 2:14
16
16. Governing Law. This Purchase Contract shall be construed in accordance with
the laws of the State of California.
Very truly yours,
ENVIRONMENTAL RESTORATION
COMPANY LTD.
La
Name:
Title:
Accepted:
CITY OF LODI
City Manager
Approved as to Form
City Attorney
LODI FINANCING CORPORATION
By:
President
Approved as to Farm
Corporation Counsel
1073602/12/13350/00495/October13, 1999 -2:14
17
FORM OF OPINION OF COUNSEL TO THE CORPORATION
[Closing Date]
Environmental Restoration Company Ltd.
Lehman Brothers Inc.
City of Lodi
221 West Pine Street
Lodi, California 95240
Lodi Financing Corporation
Not to Exceed $16,000,000
Aggregate Principal Amount of
City of Lodi, California
Variable Rate Certificates of Participation
(Environmental Abatement Program)
Ladies and Gentlemen:
EXHIBIT A
I have acted as counsel to the Lodi Financing Corporation, a California nonprofit public
benefit corporation (the "Corporation"), in connection with the execution, delivery and sale of
not to exceed $16,000,000 aggregate principal amount of Lodi Financing Corporation Variable
Rate Certificates of Participation (the "Certificates") pursuant to the terms of a Certificate
Purchase Contract dated as of , 1999 (the "Certificate Purchase Contract) among
the Corporation, the City of Lodi (the "City") and Environmental Restoration Company Ltd. The
Certificates represent undivided proportionate interests in payments made pursuant to a Program
Receipts Sale and Repurchase Agreement, dated as of [Dated Date] (the "Sale and Repurchase
Agreement"), between the City and the Corporation and are executed and delivered pursuant to a
Trust Agreement, dated as of [Dated Date] (the "Trust Agreement"), between the Corporation
and U.S. Bank Trust National Association, as trustee thereunder (the "Trustee"). Unless
otherwise defined herein, the terms defined in the Sale and Repurchase Agreement have the
same meanings when used in this opinion.
In connection with the foregoing, I have examined originals, or copies certified or other-
wise identified to my satisfaction, of such documents, corporate records, and other instruments as
1073602/12/13350/00495/October 13,1999 - 2:14
A-1
I have deemed necessary or appropriate for the purposes of this opinion, including (a) the
Certificate Purchase Contract, (b) the Sale and Repurchase Agreement, (c) the Placement Agent
Agreement, dated as of [Dated Date], between the City and Lehman Brothers Inc., (d) the Trust
Agreement (collectively, the "Legal Documents") and (e) the Articles of Incorporation and
Bylaws of the Corporation.
Based upon such examination, I am of the opinion that:
1. The Corporation is duly organized and validly existing under the laws of the State
of California;
2. The Corporation has full corporate power and authority to execute and deliver the
Legal Documents; and
3. The Legal Documents have each been duly authorized and delivered by the
Corporation, and each constitutes a legally valid and binding obligation of the Corporation
enforceable against the Corporation in accordance with its respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or other
laws or equitable principles relating to or affecting the enforcement of creditors' rights generally
and to the application of equitable principles if equitable remedies are sought.
Respectfully submitted,
1073602/12/13350/00495/October 13, 1999 - 2:14
A-2
FORM OF OPINION OF CITY ATTORNEY
[Closing Date]
Environmental Restoration Company Ltd.
Lehman Brothers Inc.
Lodi Financing Corporation
221 West Pine Street
Lodi, California 95240
Lodi Financing Corporation
Not to Exceed $16,000,000
Aggregate Principal Amount of
City of Lodi, California
Variable Rate Certificates of Participation
(Environmental Abatement Program)
Ladies and Gentlemen:
EXHIBIT B
I have served as counsel to the City of Lodi (the "City") in connection with the execution,
delivery, and sale of not to exceed $16,000,000 aggregate principal amount of Lodi Financing
Corporation Variable Rate Certificates of Participation (Environmental Abatement Program) (the
"Certificates").
In connection with the foregoing, I have examined originals, or copies certified or
otherwise identified to my satisfaction, of such documents, corporate records, and other
instruments as I have deemed necessary or appropriate for the purposes of this opinion, including
(a) the Program Receipts Sale and Repurchase Agreement, dated as of [Dated Date] (the "Sale
and Repurchase Agreement"), between the Lodi Financing Corporation (the "Corporation") and
the City, (b) the Placement Agent Agreement, dated as of [Dated Date] between the City and
Lehman Brothers Inc., (c) the Trust Agreement, dated as of [Dated Date] (the "Trust
Agreement"), between the Corporation and U.S. Bank Trust National Association, as trustee
thereunder (the "Trustee"), and (d) the Certificate Purchase Contract, dated as of ,
1999 (the "Certificate Purchase Contract"), among the City, the Corporation and Environmental
Restoration Company Ltd. The Sale and Repurchase Agreement, the Trust Agreement, and the
Certificate Purchase Contract are collectively referred to herein as the "Legal Documents."
1073602/12113350/00495/October 13, 1999 - 2:14
B-1
Terms used herein that are defined in the Sale and Repurchase Agreement shall have the
meanings specified therein.
Based upon such examination, I am of the opinion that:
1. The City is a general law city, duly created, organized, and existing under the
laws of the State of California and duly qualified to implement and carry out the Program.
2. The City has the authority and right to execute, deliver, and perform the Legal
Documents and the City has complied with the provisions of applicable law in all matters
relating to the transactions contemplated by the Legal Documents.
3. The Legal Documents have been duly authorized, executed, and delivered by the
City, are in full force and effect, and, assuming that the other parties thereto have all the requisite
power and authority and have taken all the requisite action to execute and deliver the Legal
Documents to which they are a party, constitute the legal, valid, and binding agreements of the
City enforceable against it in accordance with their respective terms, subject in each case to laws
relating to bankruptcy, insolvency, or other laws affecting the enforcement of creditors' rights
generally and to the application of equitable principles if equitable remedies are sought.
4. No approval, consent, or authorization of any governmental or public agency,
authority, or person is required for the execution and delivery by the City of the Legal
Documents, or the performance by the City of its obligations thereunder, or the execution and
delivery of the Certificates. The California Department of Toxic Substances Control has stated
in writing that the execution of the Legal Documents and the execution and delivery of the
Certificates do not violate or conflict with the Cooperative Agreement, as defined in the Sale and
Repurchase Agreement.
5. The execution and delivery of the Legal Documents by the City and compliance
with the provisions thereof will not conflict with or constitute a breach of, or default under, any
instrument relating to the organization, existence, or operation of the City, any commitment,
agreement, or other instrument to which the City is a party or by which it or its property is bound
or affected, or any ruling, regulation, ordinance, judgment, order, or decree to which the City (or
any of its officers in their respective capacities as such) is subject, or any provision of the laws of
the State of California relating to the City and its affairs.
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B-2
7. There is no action, suit, proceeding, inquiry, or investigation at law or in equity,
or before any court, public board, or body, pending or, to the best of my knowledge, threatened
against or affecting the City or any entity affiliated with the City or any of its officers in their
respective capacities as such (nor to the best of my knowledge is there any basis therefor), which
questions the powers of the City referred to in paragraph 2 above or in connection with the
transactions contemplated by, or the validity of the proceedings taken by the City in connection
with the authorization, execution, or delivery of, the Legal Documents, or wherein any
unfavorable decision, ruling, or finding would adversely affect the transactions contemplated by
the Legal Documents, or which, in any way, would adversely affect the validity or enforceability
of the Legal Documents or, in any material respect, the ability of the City to perform its
obligations under the Legal Documents.
Very truly yours,
Randall A. Hays, Esq.
City Attorney
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B-3
EXHIBIT C
FORM OF CERTIFICATE OF THE CORPORATION
Lodi Financing Corporation
Not to Exceed $16,000,000
Aggregate Principal Amount of
City of Lodi, California
Variable Rate Certificates of Participation
(Environmental Abatement Program)
I, , the of the Lodi Financing Corporation (the "Corporation"), hereby
certify as follows:
1. This certificate is provided pursuant to Section 8(d)(5) of that certain Certificate
Purchase Contract, dated as of '1999, by and among the City of Lodi, the
Corporation and Environmental Restoration Company Ltd. All capitalized terms used herein
that are not otherwise defined shall have the same meanings as in such Certificate Purchase
Contract.
2. The Corporation has full legal right, power, and authority (i) to enter into the Sale
and Repurchase Agreement, the Certificate Purchase Contract and the Trust Agreement
(together, the "Legal Documents") and (ii) to carry out and consummate the transactions
contemplated by the Legal Documents;
3. By all necessary corporate action of the Corporation prior to or concurrently
herewith, the Corporation has duly authorized and approved the execution and delivery of, and
the performance by the Corporation of the obligations on its part contained in, the Legal
Documents, and the consummation by it of all other transactions contemplated by the Legal
Documents;
4. The Corporation has complied with all the agreements and satisfied all of the con-
ditions on its part to be performed or satisfied at or prior to the date hereof pursuant to the Legal
Documents;
5. The Corporation is not in any material respect in breach of or default under any
applicable law or administrative regulation to which it is subject or any applicable judgment or
decree or any loan agreement, indenture, bond, note, resolution, agreement (including, without
limitation, the Trust Agreement), or other instrument to which the Corporation is a party or to
which the Corporation or any of its property or assets is otherwise subject, and no event has
occurred and is continuing which with the passage of time or the giving of notice, or both, would
constitute such a default or event of default under any such instrument; and the execution and
delivery of the Legal Documents, and compliance with the provisions on the Corporation's part
contained therein, will not conflict with or constitute a breach of or a default under any
constitutional provision, law, administrative regulation, judgment, decree, loan agreement,
1073602/12/13350/00495/October 13, 1999 - 2:14
C-1
indenture, bond, note, resolution, agreement, or other instrument to which the Corporation is a
party or to which the Corporation or any of its property or assets is otherwise subject, nor will
any such execution, delivery, adoption, or compliance result in the creation or imposition of any
lien, charge, or other security interest or encumbrance of any nature whatsoever upon any of the
property or assets of the Corporation or under the terms of any such provision, law, regulation, or
instrument, except as provided in the Trust Agreement;
6. There is no action, suit, proceeding, inquiry, or investigation, at law or in equity,
before or by any court, government agency, public board, or body, pending or, to the best know-
ledge of the Corporation after reasonable investigation, threatened against the Corporation,
affecting the existence of the Corporation or the titles of its officers to their respective offices, or
contesting or affecting, as to the Corporation, the validity or enforceability of the Legal
Documents; nor is there any known basis for any such action, suit, proceeding, inquiry, or
investigation, wherein an unfavorable decision, ruling, or finding would materially adversely
affect the authorization, execution, delivery, or performance by the Corporation of the Legal
Documents;
[Closing Datel
LODI FINANCING CORPORATION
President
Approved as to Form:
Corporation Counsel
1073602112/13350/00495/October 13, 1999 -2:14
C-2
EXHIBIT D
FORM OF ISSUANCE REQUEST
REQUEST AND CERTIFICATE OF THE CITY
Lodi Financing Corporation
Not to Exceed $16,000,000
Aggregate Principal Amount of
City of Lodi, California
Variable Rate Certificates of Participation
(Environmental Abatement Program)
To: U.S. Bank Trust National Association
Corporate Trust Services
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Sue Vargas, Vice President
Relationship Specialist
The City of Lodi, California (the "City") hereby requests and directs the Trustee, on
behalf of the Lodi Financing Corporation (the "Corporation"), to execute and deliver
$ of the Corporation's Variable Rate Certificates of Participation ("Certificates")
(Environmental Abatement Program), Series to [Purchaser] on [Delivery Date].
We, the City Attorney and Finance Director [City Manager], respectively, of the City,
hereby certify as follows:
1. The representations and warranties of the City contained in (a) the Certificate
Purchase Contract, dated , 1999 (the "Certificate Purchase Contract"), among the
City, the Corporation and Environmental Restoration Company Ltd. with respect to the sale,
execution, and delivery of not to exceed $16,000,000 aggregate principal amount of the
Certificates and (b) the Program Receipts Sale and Repurchase Agreement, dated ,
1999 (the "Sale and Repurchase Agreement") between the City and the Corporation are true and
correct in all material respects on and as of the date hereof as if made on this date.
2. There is no action, suit, proceeding, inquiry, or investigation, at law or in equity
before or by any court, government agency, public board, or body, pending or, to the best of my
knowledge, threatened against the City, affecting the existence of the City or the titles of its
officers to their respective offices, or affecting or seeking to prohibit, restrain, or enjoin the sale,
execution, or delivery of the Certificates or the collection of the Program Receipts (as defined in
the Sale and Repurchase Agreement) to be used to pay the principal and interest components of
the Certificates, or the pledge of funds and accounts pursuant to the Trust Agreement (as defined
1073602/12/13350/00495/October 13, 1999 - 2:14
D-1
in the Sale and Repurchase Agreement), or contesting the powers of the Trustee thereunder with
respect to the execution of the Certificates; nor, to the best of our knowledge, is there any basis
for any such action, suit, proceeding, inquiry, or investigation, wherein an unfavorable decision,
ruling, or finding would materially adversely affect the authorization, execution, delivery, or
performance by the City of the obligations on its part contained in the Program Documents, as
defined in the Certificate Purchase Contract.
3. After investigation and review of the Program Documents, no event of default,
nor any event which, after the passage of time or the giving of notice would constitute an event
of default under a Program Document has occurred and is continuing.
4. The City has complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the date hereof pursuant to the Program
Documents, including compliance with the Program Budget and including any reallocation of
amounts therein.
5. The City represents that it will use the proceeds of this issuance in conformance
with the Program Budget set forth in Exhibit A to the Sale and Repurchase Agreement. The
principal amount of Certificates to be executed and delivered hereunder does not exceed the
Cumulative Disbursement Cap for the calendar quarter immediately following the Delivery Date,
as set forth in the Program Budget, less the principal amount of any Certificates previously
executed and delivered.
6. Between the date of the Certificate Purchase Contract and the date hereof, the
City has not, without the prior written consent of the Original Purchaser, together with such other
Certificate Holders as are necessary to constitute, in the aggregate, at least 51% of outstanding
Accreted Value, offered or issued any bonds, notes, or other obligations for borrowed money, or
incurred any material liabilities, direct or contingent, payable from Program Receipts.
7. All capitalized terms used herein that are not otherwise defined shall have the
same meanings as in the Certificate Purchase Contract and the Sale and Repurchase Agreement.
8. The City hereby requests and directs the Trustee, after the Trustee's review of this
Request and Certificate, to deliver a copy of this Request and Certificate to the Purchaser under
the Certificate Purchase Contract at least 10 Business Days prior to the Delivery Date.
[Delivery Date]
CITY OF LODI
in
[City Attorney]
[City Manager or Finance Director]
1073602/12/13350/00495/October 13, 1999 -2:14
D-2
IWAU: twi
FORM OF TERMINATION NOTICE
Lodi Financing Corporation
Not to Exceed $16,000,000
Aggregate Principal Amount of
City of Lodi, California
Variable Rate Certificates of Participation
(Environmental Abatement Program)
To: U.S. Bank Trust National Association
Corporate Trust Services
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Sue Vargas, Vice President
Relationship Specialist
1. Pursuant to the Certificate Purchase Contract dated (the "Certificate
Purchase Contract"), among the City of Lodi, California (the "City"), the Lodi Financing
Corporation (the "Corporation") and Environmental Restoration Company Ltd., the City hereby
certifies, represents and warrants that it will make no additional Issuance Requests to the Trustee
and is hereby irrevocably and permanently discontinuing all Issuance Requests.
Last Issuance Request made on:
Last Issuance Request amount:
Date of Delivery of Certificates under last Issuance Request:
2. The undersigned hereby certifies that this Notice is in compliance with the
Certificate Purchase Agreement and the Program Receipts Sale and Repurchase Agreement,
dated between the City and the Corporation (the "Sale and Repurchase
Agreement").
3. All capitalized terms used herein that are not otherwise defined shall have the
same meanings as in the Certificate Purchase Contract and the Sale and Repurchase Agreement.
1073602/12/13350/00495/October 13, 1999 - 2:14
E-1
4. The City has delivered a copy of this Termination Notice to the Purchaser under
the Certificate Purchase Contract and to the Calculation and Verification Agent.
CITY OF LODI
IIn
[Title]
cc: Original Purchaser
Calculation and Verification Agent
1073602/12/13350/00495/October 13, 1999 - 2:14
E-2
[Closing Date]
The City of Lodi
221 West Pine Street
Lodi, California 95241-1910
Re: Placement A eg nt Agreement
Ladies and Gentlemen:
The purpose of this letter (the "Agreement") is to confirm the engagement of Lehman
Brothers Inc. ("Lehman") by the City of Lodi (the "City") to act as the exclusive placement agent
on behalf of the City to use its best efforts in placing with Environmental Restoration Company
Ltd. (the "Investor") the Lodi Financing Corporation (Environmental Abatement Program)
Variable Rate Certificates of Participation (the "Certificates") in an aggregate principal amount
not to exceed $16,000,000, to be purchased in several Series from time to time in accordance
with the terms of the Certificate Purchase Contract, dated as of (the "Purchase
Contract"), by and among the City, the Lodi Financing Corporation (the "Corporation") and
Environmental Restoration Company Ltd., as Purchaser (the "Original Purchaser"). Capitalized
terms not otherwise defined herein shall have the meanings assigned to such terms in the
Purchase Contract and the Program Receipts Sale and Repurchase Agreement, dated as of
[Dated Date] (the "Sale and Repurchase Agreement"), by and between the City and the
Corporation. This letter does not obligate Lehman or the Investor to purchase any Certificates
issued in conjunction with this financing for any reason.
1. Description of Financing. The Certificates will evidence and represent interests
of the owners thereof in the Repurchase Payments to be made by the City under the Sale and
Repurchase Agreement. Under the provisions of the Sale and Repurchase Agreement, the City
will irrevocably sell and convey to the Corporation its right to receive all amounts, proceeds and
recoveries from, or in contemplation of, or in connection with, the potential liability of
responsible parties or potentially responsible parties, their insurers or indemnitors or of
tortfeasors or potential tortfeasors, their insurers or indemnitors ("Program Receipts") received
by the City in connection with its Environmental Abatement Program (the "Program"), as
described in the City's Comprehensive Municipal Environmental Response and Liability
Ordinance, as amended (the "Ordinance"), and the Corporation will irrevocably resell and
reconvey, undivided interests in the Program Receipts in consideration of the payment by the
City of the Repurchase Payments under the Sale and Repurchase Agreement.
1082247/3/13350/00495/October 13, 1999 - 2:12
The City of Lodi
[Closing Date]
Page 2
The Certificates shall be executed and delivered in Series from time to time pursuant to a
Trust Agreement, dated as of [Dated Date] (the "Trust Agreement"), by and among the
Corporation and U.S. Bank National Trust Association, as trustee (the "Trustee"), and shall
represent undivided proportionate interests in the Corporation's right to receive Repurchase
Payments under the Sale and Repurchase Agreement. The City's obligation to make Repurchase
Payments under the Sale and Repurchase Agreement is a limited obligation of the City, payable
solely from Program Receipts. The Purchase Contract, the Trust Agreement and the Sale and
Repurchase Agreement are collectively referred to herein as the "Legal Documents."
Each Series of the Certificates shall be executed and delivered on the applicable Delivery
Date and in the aggregate principal amount specified by the City in an Issuance Request
submitted by the City in accordance with the terms of the Trust Agreement. The maximum
principal amount of Certificates that may be executed and delivered on any Delivery Date is an
amount equal to the Cumulative Disbursement Cap for the immediately succeeding calendar
quarter as set forth in the Program Budget, less any principal amount of Certificates previously
executed and delivered. The purchase price for each Series of the Certificates shall be equal to
the aggregate principal amount of such Series of the Certificates, and no Series of Certificates
will be executed and delivered in an aggregate amount of less than $250,000. No Delivery Date
shall occur after the Commitment Period Ending Date.
2. Obligations of Lehman. Subject to the negotiation of final terms and conditions
and acceptable documentation, and the satisfaction of other customary closing conditions,
including the receipt of acceptable legal opinions, all to be set forth in the Certificate Purchase
Contract, Lehman will use its best efforts to place the Certificates with the Investor. The City
acknowledges that neither Lehman nor any of its affiliates has acted as an advisor to the City in
connection with the financing plan, and the City represents that it has received independent
financial and legal advice with respect to the transaction.
3. Representations. Warranties and Agreements. The City and the Corporation have
made numerous representations, warranties and agreements in the Legal Documents. Lehman is
entitled to rely upon such representations, warranties and agreements as if such statements were
incorporated in their entirety herein as of the date of the Initial Closing and of each Subsequent
Closing.
4. Compensation, Payment of Placement Fee. The City acknowledges that the
structuring of the financing plan and the negotiation and preparation of final documentation have
and will continue to involve the expenditure of a substantial amount of time and resources by
Lehman and its counsel. Both Lehman and the City further acknowledge that the financing plan
may, at any time, be abandoned by the City. Finally, other contingencies may arise that may
prevent the Certificates from being issued or prevent Lehman from successfully placing the
Certificates. Regardless of any such abandonment or other such contingencies, the Placement
Fee referred to in the next paragraph will be payable to Lehman.
1082247/3/13350100495/October 13, 1999 - 2:12
The City of Lodi
[Closing Date]
Page 3
In consideration of the significant expenditures and efforts made to date by Lehman and
its counsel, and the commitment of Lehman to work with the City toward the negotiation of
mutually agreeable documentation, and notwithstanding the risks described above, the City
agrees to pay to Lehman a placement fee of $1,000,000 (the "Placement Fee"). The Placement
Fee will be paid to Lehman at closing from the first proceeds of the Certificates. If for any
reason no Certificates are issued on or before February 1, 2000, or if for any reason the City
should abandon its efforts to issue the Certificates prior to such date, the City agrees to pay the
Placement Fee to Lehman, but solely from any Program Receipts theretofore or thereafter
collected by the City. Such payment will be made by the City within five business days after
February 1, 2000 or the date of abandonment, whichever date occurs first (the "Due Date"). If
the City has not received any Program Receipts, or has received insufficient Program Receipts to
make such payment in full by the Due Date, the City shall make a partial payment from any
Program Receipts on hand and shall apply the first Program Receipts it receives thereafter to
payment of the unpaid portion of the Placement Fee until the total amount of the Placement Fee
has been paid to Lehman. The Placement Fee shall in any event be nonrefundable, and the
obligation to pay the Placement Fee shall survive the termination of this Agreement.
Indemnification.
(a) General Indemnity. The City shall, to the extent permitted by law,
indemnify and hold harmless the Corporation, the Trustee (as the assignee of the
Corporation's rights under the Sale and Repurchase Agreement), Lehman, the Calculation
and Verification Agent, the Original Purchaser, each Certificate Holder and their
members, directors, officers, employees, and agents from and against any and all losses,
claims, damages, liabilities, or expenses of every kind, character, and nature whatsoever
(excepting therefrom only such losses, claims, damages, liabilities, or expenses arising
from the negligence of the Corporation or the Trustee), including, but not limited to,
losses, claims, damages, liabilities, or expenses arising out of, resulting from, or in any
way connected with (1) the City's interest in, or use of, the Program Receipts or any
portion thereof; (2) the sale of the Certificates and the carrying out of any of the
transactions contemplated by the Certificates, the Purchase Contract, the Trust
Agreement, the Sale and Repurchase Agreement or any related document; (3) the
carrying out of the Program; or (4) the acceptance of and administration by the Trustee of
the Trustee's duties under the Trust Agreement. The City shall, to the extent permitted by
law and, with respect to the indemnification of Lehman, the Calculation and Verification
Agent, the Original Purchaser and each Certificate Holder (each a "Special Indemnified
Party"), to the extent permitted by clause (b) below, pay or reimburse the Corporation,
the Trustee, the Special Indemnified Parties and their members, directors, officers,
employees and agents for any and all costs, reasonable attorneys fees, liabilities or
expenses incurred in connection with investigating, defending against or otherwise in
connection with any such losses, claims, damages, liabilities, expenses or actions.
Notwithstanding anything to the contrary in the Sale and Repurchase Agreement or the
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The City of Lodi
[Closing Date]
Page 4
Trust Agreement, the Trustee and the Corporation shall not be entitled to payment,
reimbursement or indemnification for actions involving willful misconduct, default or
negligence on the part of the Trustee or the Corporation, respectively.
(b) Limited Source Indemnitv. The obligation of the City to defend,
indemnify, and hold harmless the Special Indemnified Parties for any suits or claims
arising from the sale of the Certificates or the City's pursuit of the Program (as described
in the preceding paragraph), shall be payable solely from (i) Program Receipts, and
(ii) any proceeds of insurance or self-insurance programs in which the City has
participated or will participate. With regard to item (i), if currently available Program
Receipts are insufficient to pay attorney fees and expenses and other litigation related
costs at the time they are incurred, the Special Indemnified Parties may fund the excess of
such fees and expenses, and any future Program Receipts will be used to reimburse the
Special Indemnified Parties for such amounts. With regard to item (ii), the City agrees to
cooperate fully with the Special Indemnified Parties in submitting and pursuing claims
against such City insurers, although the City will have no obligation to maintain any
insurance coverage.
(c) Special Conditions. The City's indemnity obligation to the Special
Indemnified Parties under section (b) above is subject to the following conditions:
(1) The City will pay attorneys' fees and costs of a single law firm
chosen by the Special Indemnified Parties to collectively represent the Special
Indemnified Parties, and such counsel shall, to the extent consistent with the
Special Indemnified Parties' interests, cooperate with the City and avoid
duplication and wastefulness in the assertion of defenses;
(2) The City will pay attorneys' fees and costs of additional law fines
to represent an individual Special Indemnified Party where (i) the counsel
retained under (c)(1) above could not, as a result of applicable law or code of
professional responsibility, assert a defense on behalf of such an individual
Special Indemnified Party while simultaneously representing the other Special
Indemnified Parties for reasons including, but not limited to, a situation in which
the use of counsel chosen by the Special Indemnified Parties to represent the
Special Indemnified Party or Parties would present such counsel with a conflict of
interest, or in which the actual or potential defendants in, or targets of, any such
action include the Special Indemnified Party or Parties and the City and the
Special Indemnified Party or Parties shall have reasonably concluded that there
may be legal defenses available to it and/or other Special Indemnified Parties that
are different from or additional to those available to the City, or (ii) the City shall
authorize the Special Indemnified Parties to employ separate counsel at the
expense of the City; and
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The City of Lodi
[Closing Date]
Page 5
(3) The City will not, without the prior written consent of the Special
Indemnified Parties, settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit or proceeding in
which indemnification or contribution may be sought hereunder (whether or not
the Special Indemnified Parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an unconditional
release of each Special Indemnified Party from all liability arising out of such
claim, action, suit or proceeding.
The provisions of this Section 5 shall survive the termination of this Agreement, the
Certificate Purchase Contract and the discharge of the City's obligations under the Trust
Agreement.
6. Cool2eration with Private Placement. The City and the Corporation agree to assist
the Investor and Lehman in preparing materials for use in any private placement of the
Certificates which the Investor or Lehman may determine to offer, which assistance shall include
but not be limited to the preparation of a private placement memorandum. At the time of any
such private placement, the City and the Corporation will represent and warrant that the
information provided by each of them, respectively, is true and correct, and the City and the
Corporation shall provide the same indemnification and opinions as are provided under the
Certificate Purchase Contract and shall be subject to the same obligations, as applicable, as
thereunder. The provisions of this Section 6 shall survive the termination of this Agreement and
the discharge of the City's obligations under the Trust Agreement.
7. Agreement Supersedes Letter of July 30, 1999. This agreement shall supersede
and replace the letter agreement dated July 30, 1999, as amended on , 1999, which
upon execution hereof shall be of no further force and effect.
8. Governing Law. The terms of this agreement will be govemed by and construed
in accordance with the laws of the State of California.
9. Termination, Survival. This Agreement shall terminate one year from the date of
acceptance hereof unless extended by the mutual written consent of the City and Lehman. In
addition, this agreement may be terminated any time at the option of Lehman if, in the opinion of
Lehman, circumstances exist which adversely affect the marketability of the Certificates. The
provisions of Sections 4 and 5 hereof shall survive any termination of this agreement. The City
shall be obligated to pay Lehman the Placement Fee described above, from Program Receipts,
for any placement of Certificates with parties introduced to the City by Lehman if such
placement, either in preliminary or final form, occurs within one year after termination of this
Agreement.
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The City of Lodi
[Closing Date]
Page 6
Should the City agree with the above terms, Lehman requests that the City execute a copy
of this letter and return the same to us at the address indicated below.
Sincerely,
Lehman Brothers Inc.
555 California Street
30th Floor
San Francisco, California 94104
Agreed to this day of '1999:
THE CITY OF LODI
Mayor
[Attest]
LODI FINANCING CORPORATION
LI -A
President
[Attest]
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