HomeMy WebLinkAboutResolutions - No. LPFA2018-01EXHIBIT A
GOVERNMENT CODE SECTION 5852.1 DISCLOSURE
The following information consists of estimates that have been provided by the Underwriter,
which has been represented by such party to have been provided in good faith:
(A) True lnterest Cost of the Bonds: 3.15%.
(B) Finance Charge of the Bonds (Sum of all fees paid to third parties): $385,152.
(C) Net Proceeds to be Received (net of finance charges, reserves and capitalized interest, if
any): $47,853,391.
(D) Total Payment Amount Through Maturity: $60,933,154
The foregoing estimates constitute good faith estimates only. The principal amount of the
Bonds, the true interest cost of the Bonds, the finance charges thereof, the amount of proceeds
received therefrom and total payment amount with respect thereto may differ from such good
faith estimates due to (a) the actual date of the sale of the Bonds being different than the date
assumed for purposes of such estimates, (b) the actual principal amount of Bonds sold being
different from the estimated amount used for purposes of such estimates, (c) the actual
amortization of the Bonds being different than the amortization assumed for purposes of such
estimates, (d) the actual market interest rates at the time of sale of the Bonds being different
than those estimated for purposes of such estimates, (e) other market conditions, or (f)
alterations in the City's financing plan, or a combination of such factors. The actual date of sale
of the Bonds and the actual principal amount of Bonds sold will be determined by the City
based on the timing of the need for proceeds of the Bonds and other factors. The actual
interest rates borne by the Bonds will depend on market interest rates at the time of sale
thereof. The actual amortization of the Bonds will also depend, in part, on market interest rates
at the time of sale thereof. Market interest rates are affected by economic and other factors
beyond the control of the City.
EXHIBIT B
FORM OF INDENTURE OF TRUST
Jones Hall, APLC Draft 4110118
OPEN ITEMS: Necessity of reserve requirement and bond insurance
INDENTURE OF TRUST
Dated as ofJune 1,2018
between
MUFG UNION BANK, N.4.,
as lrusfee
and the
LODI PUBL¡C FINANCING AUTHOR¡TY
Authorizing the lssuance of
Lodi Public Financing AuthoritY
2018 Electric System Revenue Refunding Bonds
sEcïoN 1.01
SECTTON 1.02
SECTTON 1.03
SECTTON 2.01.
sEcTroN 2.02.
SECTTON 2.03.
sEcTloN 2.04.
SECTTON 2.05.
SECTTON 2.06.
SECTTON 2.07.
SECTTON 3.01
SECTTON 3.02
sEcïoN 3.03
SECTTON 3.04
SECTTON 4.01.
SECTTON 4.02.
sEcïoN 4.03.
sEcïoN 4.04.
SECTTON 4.05.
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Definitions
Authorization..........,..
lnterpretation ............
ARTICLE II
The Bonds
Authorization of 8onds...............
Terms of the Bonds
Transfer and Exchange of Bonds
Book-Entry System
Registration Books
Form and Execution of Bonds...
Bonds Mutilated, Lost, Destroyed or Stolen
ARTICLE III
lssuance of Bonds; Application of Proceeds
lssuance of the Bonds
Application of Proceeds of Sale of the Bonds
Establishment and Application of Costs of lssuance Fund...
Validity of Bonds
ARTICLE IV
Redemption of Bonds
Terms of Redemption .........,.
Selection of Bonds for Redemption .........
Notice of Redemption; Rescission ........
Partial Redemption of Bonds
Effect of Redemption ...........
ARTICLE V
Authority Revenues; Funds and Accounts; Payment of
Principal and lnterest
Security for the Bonds; Bond Fund
Allocation of Authority Revenues
lnterest Account....
Principal Account
Reserved
Application of Redemption Fund
lnvestments .........,.....
Valuation and Disposition of lnvestments ...............
ARTICLE VI
Covenants of the AuthoritY
Punctual Payment...
Extension of Payment of Bonds.
Against Encumbrances..........,
Power to lssue Bonds and Make Pledge and Assignment..'
Accounting Records....
Limitation on Additional Obligations.............
Tax Covenants ..........
Reserved
Waiver of Laws
Further Assurances ...............
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SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
5.01.
5.02.
5.03.
5.04.
5.05.
5.06.
5.07.
5.08.
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12
13
13
13
13
13
14
6.01
6.02
6.03
6.04
6.05
6.06
6.07
6.08
6.09
6.10
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SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
7.01
7.02
7.03
7.04
7.05
7.06
7.07
7.08
7.09
7.10
ARTICLE VII
Events of Default and Remedies
Events of Default
Remedies Upon Event of Default
Application of Authority Revenues Other Funds After Default
Trustee to Represent Bond Owners
Limitation on Bond Owners' Right to Sue...........
Absolute Obligation of Authority
Termination of Proceedings
Remedies Not Exclusive............
No Waiver of Default
Notice to Bond Owners of Default..
ARTICLE VIII
The Trustee
SECTION 8.01. Appointment of Trustee
SECTION 8.02. Acceptance of Trusts; Removal and Resignation of Trustee
SECTION 8.03. Merger or Consolidation
SECTION 8.04. Liability of Trustee
SECTION 8.05. Right to Rely on Documents............
SECTION 8.06. Preservation and lnspection of Documents
SECTION 8.07. Compensation and lndemnification...
ARTICLE IX
Modification or Amendment Hereof
SECTION 9.01. Amendments Permitted
SECTION 9.02. Effect of Supplemental lndenture ..........
SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds
SECTION 9.04. Amendment of Particular Bonds
ARTICLE X
Defeasance
SECTION 10.01. Discharge of lndenture ..............
SECTION 10.02. Discharge of Liability on Bonds..
SECTION 10.03. Deposit of Money or Securities with Trustee
SECTION 10.04. Unclaimed Funds.......
ARTICLE XI
Miscellaneous
SECTION 11.01. Liability of Authority Limited to Authority Revenues
SECTION 11.02. Limitation of Rights to Parties and Bond Owners
SECTION 1 1.03. Funds and Accounts............
SECTION 11.04. Waiver of Notice; Requirement of Mailed Notice.......
SECTION 11.05. Destruction of Bonds
SECTION 11.06. Severability of lnvalid Provisions.
SEcTloN 11.07. Notices
SECTION 11.08. Evidence of Rights of Bond Owners
SECTION 11.09. Disqualified Bonds
SECTION 11.10. Money Held for Particular Bonds
SECTION 11.11. Waiver of Personal Liability
SECTION 11.12. Successor ls Deemed lncluded in All References to
Predecessor..............
SECTION 11.13. Execution in Several Counterparts.............
SECTION 11.14. Payment on Non-Business Day..........
SECTION 11.15. Governing Law ..........
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APPENDIX A
APPENDIX B
DEFINITIONS
FORM OF BOND
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INDENTURE OF TRUST
This INDENTURE OF TRUST (this "lndenture"), dated for convenience as of June
1, 2018, is between the LODI PUBLIC FINANCING AUTHORITY, a joint exercise of powers
authority organized and existing under the laws of the State of California (the
"Authoritv"), and MUFG UNION BANK, N.4., a national banking association organized
and existing under the laws of the United States of America, with a corporate trust office
in San Francisco, California, being qualified to accept and administer the trusts hereby
created (the "Trustee").
BACKGROUND:
1. The City owns and operates facilities and property for the distribution of
electricity within the service area of the City (the "E!-ec!Ig Svstem.").
2. The City previously entered into an lnstallment Purchase Contract, dated as
of July 1,2008 (the "2008 lnstallment Purchase Contract") with the Lodi Public
lmprovement Corporation (the "@Ia.þ.n"), pursuant to which the City agreed to
make certain installment payments in the aggregate principal amount of $60,685,000
(the "2008 lnstallment Pavments"), and caused execution and delivery of Electric
System Revenue Certificates of Participation, 2008 Series A (the "2908 Çertificates"),
púrsuant to a Trust Agreement, dated as of July 1, 2008 (the "2008 Trust Aqreement"),
between the Corporation and The Bank of New York Mellon Trust Company, N.4., as
trustee (the "2008 Trustee"), all for the purpose of (i) currently refunding the then-
outstanding $+qZOO,OOO principal amount of Electric System Revenue Certificates of
Participatioi 2002 Series A Variable Rate Certificates (the "2002 Certificates'), (i¡)
paying costs of delivery of the 2008 Certificates, (iii) funding certain costs relating to
ter:miñat¡on of the swap agreement relating to the 2002 Certificates, (iv) purchasing a
financial guaranty insurance policy for the 2008 Certificates, and (v) funding a reserve
fund for the 2008 Certificates.
3. The proceeds of the 2002 Certificates were used to refund, on an advance
basis, the 1999 Series A Current lnterest Certificates and the 1999 Series B Capital
Appreciation Certificates (together, the "l999tQÞIg!jqg"). The proceeds of the 1999
Obligations were used to finance the Existing Facilities relating to the Electric System.
4. Pursuant to Section 3.02 of the 2008 lnstallment Purchase Contract, the City
has the right to prepay all or any part of the 2008 lnstallment Payments. Pursuant to
Section Z.Oq of the 2008 Trust Agreement, the 2008 Certificates with a maturity date of
July 1 , 2O1g and thereafter are subject to prepayment from prepayments of 2008
lnsiallment Payments made at the option of the City on and after July 1 , 2018, at a
prepayment price equal to the principal amount of the 2008 Certificates to be prepaid
plus accrued but unpaid interest thereon to the prepayment date, without premium.
5. Under current economic conditions, it is possible for the City to refinance on a
tax-exempt basis the 2008 lnstallment Payments and the related 2008 Certificates
maturing on and after July 1,2019 for the purpose of achieving savings for the benefit of
the customers of the Electric System.
6. pursuant to Section 9.01 of the 2008 lnstallment Purchase Contract, all
obligations of the City with respect to 2008 lnstallment Payments shall cease and
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terminate (except for the obligation to make payment from deposited funds and
Defeasance Securities (as definêd in the 2008 Trust Agreement) as provided in Article
Vlll of the 2008 Trust Agreement) when the 2008 Certificates have been paid or
deemed paid in accordance with Article Vlll of the 2008 Trust Agreement.
7. The Authority has been formed for the purpose of assisting the City in the
financing and refinancing of public capital improvements, and in order to accomplish the
refinaniing described in-tfre þrevious paragraph, the Authority and the^City have entered
into an lnstallment Purchase Agreement dated as of June 1, 2018 (the "lnstallment
purchase Aqreement"), under wnicn the City will sell the Existing Facilities to the
@ritywillselltheExistingFacilitiestotheCityinconsiderationof
the agréement by the City to pay the purchase price thereof in semiannual installment
payments.
L For the purpose of obtaining funds that are sufficient (along with other
available City funds) to refinance the 2008 lnstallment Paymen_ts, the Authority has
authorized the issuánce of its Lodi Public Financing Authority 2018 Electric System
Revenue Refunding Bonds in the aggregate principal amount of $- (the
;'Bonds") under thislndenture and undéi thê provisio_ns of Article 4 of Chapter 5, Division
ili1e i of the Government Code of the State of California, commencing with Section
6584 of said Code (the "Bond Law").
g. ln order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued
and to secure the payment of the principal thereof, premium (if any) and interest
thereon, the Authority hãs authorized the execution and delivery of this lndenture.
10.The Authority has found and determines, and hereby affirms, that all acts
and proceedings requiréd by law necessary to make the.Bonds, when executed by the
Àuthãrity, authénticated and delivered by the Trustee and duly issued, the valid, binding
rnà r"gáíspecial obligations of the Authôrity, and to constitute this lndenture a valid and
bindin! agieement fır the uses and purposes herein set forth in accordance with its
termslrraíe been done and taken, and the execution and delivery of this lndenture have
been in all respects duly authorized.
AGREEMENT:
ln order to secure the payment of the principal of and the interest and
redemption premium (if any) on all the Outstanding Bonds under this lndenture
ac"ord'ing to their tenôr, and to secure the performance and observance of all the
couenanä and conditions therein and herein set forth, and to declare the terms and
conditions upon and subject to which the Bonds are to be issued and received, and in
consideration of the premises and of the mutual covenants herein contained and of the
furchase and accepiance of the Bonds by the Owners thereof, and for other valuable
bonsiderations, the receipt of which is hereby acknowledged, the Authority and the
Trustee do hereby covénant and agree with one another, for the benefit of the
respective Owners from time to time of the Bonds, as follows:
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ARTICLE I
DEFIN¡TIONS; RULES OF CONSTRUCTION
SECTTON 1.01. Definitions. Unless the context clearly otherwise requires or
unless otherwise defined herein, the capitalized terms defined in Appendix A attached to
this lndenture have the respective meanings specified in that Appendix when used in
this lndenture.
SECTTON 1.02. Authorization. Each of the parties hereby represents and
warrants that it has full legal authority and is duly empowered to enter into this
lndenture, and has taken all actions necessary to authorize the execution hereof by the
officers and persons signing it.
SECTION 1.03. lnterPretation.
(a) Unless the context othenruise 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 include the neuter, masculine or
feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof
are solely for conveiience of reference, do not constitute a part hereof and shall not
affect the meaning, construction or effect hereof.
(c) All references herein to "Articles," "sections" and other subdivisions are to
the corresponding Articles, Sections or subdivisions of this lndenture; the words
"hefein," "hefegf," "hefeby," "hefeundef" and Othef wOfdS Of Similaf impOft fefef tO this
lndenture as a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
THE BONDS
SECTTON 2.01. Authorization of Bonds. The Authority has reviewed all
proceedings heretofore taken and has found, as a result of such review, and hereby
iinds and ðetermines that all things, conditions and acts required by law to exist, happen
or be performed precedent to and in connection with the issuance of the Bonds do exist,
have happened and have been performed in due time, form and manner as required by
law, and the Authority is now duly empowered, under each and every requirement of
law, to issue the Bonds in the manner and form provided in this lndenture.
The Authority hereby authorizes the issuance of a series of Bonds, designated
the "Lodi Public Financing Authority 2018 Electric System Revenue Refunding Bonds" in
theaggregateprincipalamountof$-undertheBondLawforthepurposes
of pròviOiñg funds to refinance the 2008 lnstallment Payments and refund the 2008
Certificates. The Bonds are authorized and issued under, and are subject to the terms
of, this lndenture and the Bond Law.
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SECTION 2.02. Terms of the Bonds.
(a) Pavment Provisions. The Bonds shall be issued in fully registered form
without coupons in denominations of $5,000 or any integral multiple thereof, so long as
no Bond has more than one maturity date. The Bonds shall mature on September 1 in
each of the years and in the amounts, and bear interest (calculated on the basis of a
360-day year of twelve 30-day months) at the rates, as follows:
Maturity Date Principal
(September 1) Amount
$
lnterest
Rate
o/o
lnterest on the Bonds is payable from the lnterest Payment Date next preceding
the date of authentication thereof unless:
(a) a Bond is authenticated on or before an lnterest Payment Date and
after the close of business on the preceding Record Date, in which
event it will bear interest from such lnterest Payment Date,
a Bond is authenticated on or before the first Record Date, in which
event interest thereon will be payable from the Closing Date, or
(b)
(c)interest on any Bond is in default as of the date of authentication
thereof, in which event interest thereon will be payable from the
date to which interest has been paid in full, payable on each lnterest
Payment Date.
lnterest is payable on each lnterest Payment Date to the persons in whose
names the ownership of the Bonds is registered on the Registration Books at the close
of business on the immediately preceding Record Date, except as provided below.
lnterest on any Bond which is not punctually paid or duly provided for on any lnterest
payment Date is payable to the person in whose name the ownership of such Bond is
registered on the Registration Books at the close of business on a special record date
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for the payment of such defaulted interest to be fixed by the Trustee, notice of which is
given to súch Owner by first-class mail not less than 10 days prior to such special record
date.
The Trustee will pay interest on the Bonds by check of the Trustee mailed by first
class mail, postage prepaið, on each lnterest Payment Date to the Owners of the Bonds
at their reåpectiùe
'addresses shown on the Registration Books as of the close of
business on the preceding Record Date. At the written request of the Owner of Bonds
in an aggregate þrincipalãmount of at least $1,000,000, which written request is on file
with the Trustee as of any Record Date, the Trustee will pay interest on such Bonds on
each succeeding lnterest Payment Date by wire transfer in immediately available funds
to such account of a financiaiinstitution within the United States of America as specified
in such written request, which written request will remain in effect until rescinded in
writing by the Owner, The Trustee will pay principal of the Bonds in lawful money of the
Uniteð dtates of America by check of the Trustee upon presentation and surrender
thereof at the Office of the Trustee.
SECTION 2.03. Transfer and Exchange of Bonds.
(a) Transfer. Any Bond may, in accordance with its terms, be transferred,
upon thà ne$stration Books, by the person in whose name it is registered, in person or
Oy a Ouly aüthorized attorney-of such person, upon.surrender of such Bond to the
Tiustee át ¡ts on¡ce for cancejlation, accompanied by delivery of a written instrument of
transfer in a form acceptable to the Trustee, duly executed. The Trustee shall collect
any tax or other gouernmental charge on the transfer of any Bonds under.this Section
2.03. Whenever any Bond or Bonãs shall be surrendered for transfer, the Authority
shall execute and th'e Trustee shall authenticate and deliver to the transferee a new
Bond or Bonds of like series, interest rate, maturity and aggregate principal amount.
The Authority shall pay the cost of printing Bonds and any services rendered or
expenses inclrred by'the Trustee in connection with any transfer of Bonds.
(b) Exchanse. The Bonds may be exchanged at the Office of the Trustee for a
like aggrégate pffial amount of Bonðs of other authorized denominations and of the
same-ãer'lés, interest rate and maturity. The Trustee shall collect any tax or other
governmental charge on the exchange- of any Bonds under this subsection (b)' The
Ãuthority shall pay the cost of printing Bonds and any services rendered or expenses
incurred by the Trustee in connection with any exchange of Bonds.
(c) Limitations. The Trustee may refuse to transfer or exchange, under the
provisioiá oflt{sffin 2.03, any Bonds selected by the Trustee for redemption under
nrt¡.1" lV, or any Bonds during thé period established by the Trustee for the selection of
Bonds for redemPtion.
SECTION 2.04. Book-Entry SYsfem.
(a) Orioinal Delivery. The Bonds will be initially deliv-ered in the form of a
separatà i¡n!¡g-rullv registered bond (which may be typewritten) for each maturity of the
Bonds. Upo-n in¡tiál de'iivery, the Trustee shall register the ownership of each Bond on
tnè negistration Books in tñe name of the Nominee. Except as provided in subsection
(c), thiownership of all of the Outstanding Bonds shall be registered in the name of the
Nominee on the Registration Books'
Ã
With respect to Bonds the ownership of which shall be registered in the name of
the Nominee, the Authority and the Trustee have no responsibility or obligation to any
Depository System Participant or to any person on behalf of which the Nominee holds
an'interest in the Bonds. Without limiting the generality of the immediately preceding
sentence, the Authority and the Trustee have no responsibility or obligation with respect
to (i) the accuracy of the records of the Depository, the Nominee or any Depository
Sydtêm Participani with respect to any ownership interest in the Bonds, (ii) the delivery
to any Depository System Participant or any other person, other than a Bond Owner as
shown ln ine Reglstiation Books, of any notice with respect to the Bonds, including any
notice of redemplion, (iii) the selection by the Depository of the beneficial interests in the
Bonds to be redeemed if the Authority elects to redeem the Bonds in part, (iv) the
payment to any Depository System Participant or any other person, other than a Bond
bwner as shown ¡Å tne Regístration Books, of any amount with respect to principal,
premium, if any, or interest on tne Bonds or (v) any consent given or other action taken
by the Depositóry as Owner of the Bonds. The Authority and the Trustee may treat and
cónsider the person in whose name each Bond is registered as the absolute owner of
such Bond tor tne purpose of payment of principal of and premium, if any, and interest
on such Bond, for'the purpose of giving notices of redemption and other matters with
respect to such Bond, toi tfre purpose of registering transfers of ownership of such
Bond, and for all other purposes'wlratsoever. The Trustee shall pay the principal of and
the interest and premium,'if any, on the Bonds only to the respective Owners or their
respective attorneys duly authorjzed in writing, and all such payments shall be valid and
efféctive to fully sátisty ãnd discharge all obligations with respect to payment of principal
of and interest and premium, if any, on the Bonds to the extent of the sum or sums so
paid. No person bther than a -Bond Owner shall receive a Bond evidencing the
äOligation oi tne Authority to make payments of principal, interest and premium, if any,
undér this lndenture. Upon delivery by the Depository to the Authority of written notice
to the effect that the Depository has determined to substitute a new Nominee in its
place, and subject to the proviðions herein with respect to Record Dates, such new
nominee shall become the Nominee hereunder for all purposes; and upon receipt of
such a notice the Authority shall promptly deliver a copy of the same to the Trustee.
(b) Representation Letter. ln order to qualify the Bonds for the Depository's
book-entry@shallexecuteanddelivertosuchDepositoryaletter
representíng such matters as shâll be necessary to so qualify the Bonds. The execution
and deliver! of such letter shall not in any way limit the provisions of subsection (a)
above or in any other way impose upon the Authority or the Trustee any obligation
whatsoever with respect to persons having interests in the Bonds other than the Bond
Owners. Upon the written acceptance by the Trustee, the Trustee shall agree to take all
action reas'onably necessary for all representations of the Trustee in such letter with
respect to the Trústee to at âll times be complied with. ln addition to the execution and
delivery of such letter, the Authority may take any other actions, not inconsistent with
this lndenture, to qualify the Bonds for the Depository's book-entry program.
(c) Transfers Outside Book-Entrv Svster-n. lf either (i) the Depository
determines not to conttnue to act as Depository for the Bonds, or (ii) the Authority
determines to terminate the Depository as such, then the Authority shall thereupon
discontinue the book-entry system with such Depository. ln such event, the Depository
shall cooperate with the Authority and the Trustee in the issuance of replacement Bonds
by providing the Trustee with á list showing the interests of the Depository System
eâriicipants-in the Bonds, and by surrendering the Bonds, registered in the name of the
Nominêe, to the Trustee on oi before the date such replacement Bonds are to be
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issued. The Depository, by accepting delivery of the Bonds, agrees to be bound by the
provisions of this subsection (c). lf, prior to the termination of the Depository acting as
such, the Authority fails to identify another Securities Depository to replace the
Depository, then the Bonds shall no longer be required to be registered in the
Registration Books in the name of the Nominee, but shall be registered in whatever
name or names the Owners transferring or exchanging Bonds shall designate, in
accordance with the provisions hereof.
lf the Authority determines that it is in the best interests of the beneficial owners
of the Bonds that they be able to obtain certificated Bonds, the Authority may notify the
Depository System Participants of the availability of such certificated Bonds through the
Deþository. ln such event, the Trustee will issue, transfer and exchange Bonds as
required by the Depository and others in appropriate amounts; and whenever the
Depository requests, the Trustee and the Authority shall cooperate with the Depository
in taking
-appropriate
action (i) to make available one or more separate certificates
evidencing the Bonds to any Depository System Participant having Bonds credited to its
account wittr tne Depository, or (ii) to arrange for another Securities Depository to
maintain custody of a single certificate evidencing such Bonds, all at the Authority's
expense.
(d) Payments to the Nominee. Notwithstanding any other provision of this
lndentuie to tfre contrary, so long as any Bond is registered in the name of the
Nominee, all payments with respect to principal of and interest and premium, if any, on
such Bond and all notices with respect to such Bond shall be made and given,
respectively, as provided in the letter described in subsection (b) of this Section or as
otheruvise instructed by the Depository.
SECTTON 2.05. Registration Books. The Trustee will keep or cause to be kept,
at the Office of the Trustee, sufficient records for the registration and transfer of
ownership of the Bonds, which shall upon reasonable notice as agreed to by the
Trustee, be open to inspection during regular business hours by the Authority; and,
upon presentation for such purpose, the Trustee shall, under such reasonable
régulatìons as it may prescribe, register or transfer or cause to be registered or
tra-nsferred, on such records, the ownership of the Bonds as hereinbefore provided.
SECTTON 2.06. Form and Execution of Bonds. The Bonds, the form of Trustee's
certificate of authentication, and the form of assignment to appear thereon, are set forth
in Appendix B attached hereto and by this reference incorporated herein, with necessary
or appropriate variations, omissions and insertions, as permitted or required by this
lndenture.
The Chair of the Authority shall execute, and the Secretary of the Authority shall
attest each Bond. Either or both of such signatures may be made manually or may be
affixed by facsimile thereof. lf any officer whose signature appears on any Bond ceases
to be súch officer before the Closing Date, such signature will nevertheless be as
effective as if the officer had remained in office until the Closing Date. Any Bond may
be signed and attested on behalf of the Authority by such persons as at the actual date
of thð execution of such Bond are the proper officers of the Authority, duly authorized to
execute debt instruments on behalf of the Authority, although on the date of such Bond
any such person was not an officer of the Authority.
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Only those Bonds bearing a certificate of authentication in the form set forth in
Appendix B, manually executed and dated by the Trustee, are valid or obligatory for any
purpose or entitled to the benefits of this lndenture, and such certificate of the Trustee is
conclusive evidence that such Bonds have been duly authenticated and delivered
hereunder and are entitled to the benefits of this lndenture.
SECTTON 2.07. Bonds Mutilated, Lost, Destroyed or Stolen. lf any Bond is
mutilated, the Authority, at the expense of the Owner of such Bond, shall execute, and
the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in
exchange and substitution for the Bond so mutilated, but only upon surrender to the
TrusteJ of the Bond so mutilated. The Trustee shall cancel every mutilated Bond
surrendered to it and deliver such mutilated Bond to, or upon the order of, the Authority.
lf any Bond is lost, destroyed or stolen, evidence of such loss, destruction or theft may
be submitted to the Trustee and, if such evidence is satisfactory and if indemnity
satisfactory to the Trustee is given, the Authority, at the expense of the Owner, shall
execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like
tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen. The Trustee
may require payment of a sum not exceeding the actual cost of preparing each new
Boñd ¡ssued under this Section and of the expenses which may be incurred by the
Trustee in connection therewith. Any Bond issued under the provisions of this Section in
lieu of any Bond alleged to be lost, destroyed or stolen will constitute an original
additional òontractual obligation on the part of the Authority whether or not the Bond so
alleged to be lost, destroyêd or stolen be at any time enforceable by anyone, and shall
be équally and proportionately entitled to the benefits of this lndenture with all other
Bonds issued under this lndenture.
Notwithstanding any other provision of this Section 2.07, in lieu of delivering a
new Bond for which p-rincipal has become due for a Bond which has been mutilated,
lost, destroyed or stoien, the Trustee may make payment of such Bond in accordance
with its terms upon receipt of indemnity satisfactory to the Trustee.
ARTICLE III
lssulucE oF BoNDS; App¡-lcnrloN oF
PROCEEDS
SECTTON 3.01. /ssuance of the Bonds. At any time after the execution of this
lndenture, the Authority may execute and the Trustee shall authenticate and, upon the
Written Request of the Authority, deliver the Bonds to the Original Purchaser.
SECTION 3.02. Applica tion of Proceeds of Sale of the Bonds. Upon the receipt
of payment for the Bonds on the Closing Date, in the amount of $-,
representing the aggregate princi pal amount ($-), plus an original issue
premium of $-, less an undenrvriter's discount of the
Trustee shall deposit the proceeds of sale thereof into the Bond Proceeds Fund, which
shall be established and held bY th e Trustee in trust, and such amount shall be applied
as follows
(a)TheTrusteewilldeposittheamountof$-intheCosts
of lssuance Fund.
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(b)The Trustee will transfer the amount of $-,
constituting the rernainder of such proceeds, to the Escrow Bank for
deposit into the Escrow Fund established under the Escrow
Agreement.
After moneys in the Bond Proceeds Fund have been applied as described
above, the Trustee shall close the Bond Proceeds Fund.
SECTTON 3.03. Estabtishment and Application of Cosfs of lssuance Fund. The
Trustee shall establish, maintain and hold in trust a separate fund designated as the
"Costs of lssuance Fund" into which the Trustee shall deposit a portion of the proceeds
of sale of the Bonds under Section 3.02. The Trustee shall disburse amounts in the
Costs of lssuance Fund from time to time to pay the Costs of lssuance of the Bonds
upon submission of a Written Requisition of the Authority stating the perso_n to whom
payment is to be made, the amount to be paid, the purpose for which the obligation was
incurred and that such payment is a proper charge against said fund. The Trustee may
conclusively rely on the representations and certifications set forth in such Written
Requisitioni and shall be fully protected in relying thereon. All such payments shall be
made by check or wire transfer in accordance with payment instructions contained in the
Written Requisition or in any invoice attached thereto, and the Trustee has no duty or
obligation to authenticate such payment instructions or the authorization thereof. On
sl'tall transfer all amounts remaining in the Costs of lssuance Fund to the lnterest
Account, and the Trustee shall thereupon close the Costs of lssuance Fund.
SECTTON 3.04. Vatidity of Bonds. The recital contained in the Bonds that the
same are issued under the Constitution and laws of the State of California shall be
conclusive evidence of their validity ànd of compliance with the provisions of law in their
issuance.
ARTICLE IV
RCOEMPTION OF BONDS
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SECTION 4.01. Terms of Redemption.l
(a) Optional Redemption, The Bonds maturing on or before September 1,
2O--, are not subject to optional redemption prior to their respective stated maturity
dates. The Bonds maturing on or after September 1, 20_-, are subject to redemption in
whole, or in part at the Written Request of the Authority among maturities on such basis
as the Authority may designate and within a maturity as set forth in Section 4.02, at the
option of the Authority, on any date on or after September 1, 20-, from any available
source of funds, at a redemption price equal to 10Oo/o of the principal amount of the
Bonds to be redeemed, plus accrued interest to the date of redemption, without
premium.
(b) Notice of Optional Redemption to the Trustee. The Authority shall give the
Trustee written notice of its intention to redeem Bonds under subsection (a), and the
manner of selecting such Bonds for redemption from among the maturities thereof, at
least 45 days prior to the redemption date.
SECTTON 4.02. Selection of Bonds for Redemption. Whenever provision is
made in this lndenture for the redemption of less than all of the Bonds of a single
maturity, the Trustee shall select the Bonds of that maturity to be redeemed by lot in any
manner which the Trustee in its sole discretion deems appropriate. For purposes of
such selection, the Trustee shall treat each Bond as consisting of separate $5,000
portions and each such portion shall be subject to redemption as if such portion were a
separate Bond.
SECTTON 4.03. Notice of Redempfion; Rescrssion. The Trustee shall mail notice
of redemption of the Bonds by first class mail, postage prepaid, not less than 30 nor
more than 60 days before any redemption date, to the respective Owners of any Bonds
designated for redemption at their addresses appearing on the Registration Books and
to oñe or more Securities Depositories and to the Municipal Securities Rulemaking
Board. Each notice of redemption shall state the date of the notice, the redemption
date, the place or places of redemption, whether less than all of the Bonds (or all Bonds
of a single maturity) are to be redeemed, the CUSIP numbers and (in the event that not
all Bond! within a maturity are called for redemption) Bond numbers of the Bonds to be
redeemed and the maturity or maturities of the Bonds to be redeemed, and in the case
of Bonds to be redeemed in part only, the respective portions of the principal amount
thereof to be redeemed. Each such notice shall also state that on the redemption date
there will become due and payable on each of said Bonds the redemption price thereof,
and that from and after such redemption date interest thereon shall cease to accrue,
and shall require that such Bonds be then surrendered. Neither the failure to receive
any notice nor any defect therein shall affect the sufficiency of the proceedings for such
redemption or the cessation of accrual of interest from and after the redemption date.
Notice of redemption of Bonds shall be given by the Trustee, at the expense of the
Authority, for and on behalf of the Authority. Any notice of an optional redemption may
state that redemption is conditioned on funds being available on the selected
redemption date.
The Authority has the right to rescind any notice of the redemption of Bonds
under Section a.ü@) by written notice to the Trustee on or prior to the date fixed for
t Sinking fund mandatory redemption to be added if required
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redemption. Any notice of a redemption pursuant to Section 4.01(a) may provide that it
is subject to rescission as described in this paragraph. Any notice of redemption shall
be cañcelled and annulled if for any reason funds will not be or are not available on the
date fixed for redemption for the payment in full of the Bonds then called for redemption,
and such cancellation shall not constitute an Event of Default. The Authority and the
Trustee have no liability to the Bond Owners or any other party related to or arising from
such rescission of redemption. The Trustee shall mail notice of such rescission of
redêmption in the same manner as the original notice of redemption was sent under this
Section.
SECTTON 4.04, Partiat Redemption of Bonds. Upon surrender of any Bonds
redeemed in part only, the Authority shall execute and the Trustee shall authenticate
and deliver to the Owñer thereof, at the expense of the Authority, a new Bond or Bonds
of authorized denominations equal in aggregate principal amount to the unredeemed
portion of the Bonds surrendered.
SECTTON 4.05. Effect of Redemption. Notice of redemption having been duly
given as aforesaid, and moneys for payment of the redemption price of, together with
interest accrued to the date fixed for redemption on, including any applicable premium,
the Bonds (or portions thereof) so called for redemption being held by the Trustee, on
the redempiion date designated in such notice, the Bonds (or portions thereof) so called
for redemþtion shall beCome due and payable, interest on the Bonds so called for
redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be
entitled to any benefit or security under this lndenture, and the Owners of said Bonds
shall have no rights in respect thereof except to receive payment of the redemption price
thereof.
All Bonds redeemed under the provisions of this Article shall be canceled by the
Trustee upon surrender thereof and destroyed in accordance with the retention policy of
the Trustee then in effect.
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ARTIGLE V
AurnoRtrY REVENUES; FUNDs AND
AccouNrs; PlvmENT oF PRllrlclpAL AND
INTEREST
SECTION 5.01. Securityforthe Bonds; Bond Fund.
(a) Pledqe of Authoritv Revenues and Other Amounts. Subject only to the
provisions of this lndenture permitting the application thereof for the purposes and on
ihe terms and conditions set forth herein, all of the Authority Revenues and all amounts
(including proceeds of the sale of the Bonds) held in any fund or account established
under this lndenture are hereby pledged to secure the payment of the principal of and
interest and premium (if any) on the Bonds in accordance with their terms and the
provisions of this lndenture. Said pledge constitutes a lien on and security interest in
ihe Authority Revenues and such amounts and shall attach, be perfected and be valid
and binding from and after the Closing Date, without the need for any physical delivery
thereof or further act.
(b) Assiqnment to Trustee. The Authority hereby irrevocably transfers, assigns
and sets'over to ihe Trustee, without recourse to the Authority, all of its rights in the
lnstallment Purchase Agreement (excepting only the Authority's rights under Section
10.11 thereof), including nut not limited to all of the Authority's rights to receive and
collect all of the lnstallment Payments. The Trustee is entitled to collect and receive all
of the lnstallment Payments, and any lnstallment Payments collected or received by the
Authority shall be deemed to be held, and to have been collected or received, by the
Authority as the agent of the Trustee and shall forthwith be paid by the Authority to the
Trustee. The Trultee is also entitled to and shall, subject to the provisions of Article
Vlll, take all steps, actions and proceedings which the Trustee determines to be
reasonably necessary in its judgment to enforce, either jointly with the_ Authority or
separately, all of the rights of the Authority and all of the obligations of the City under the
I nstallment Purchase Agreement.
(c) Deposit of Authoritv Revenues in Bond Fund. All Authority Revenues shall
be promptly OepositeO by the Trustee upon receipt thereof in a special fund designated
as ihe "Boñd Fund" which the Trustee shall establish, maintain and hold in trust; except
that all moneys received by the Trustee and required hereunder or under the lnstallment
Purchase Agreement to be deposited in the Redemption Fund shall be promptly
deposited in such funds. All Authority Revenues deposited with the Trustee shall be
heid, disbursed, allocated and applied by the Trustee only as provided in this lndenture.
Any surplus remaining in the Bond Fund, after payment in full of (i) the principal of and
intérest on the Bonds or provision therefore under Article X, and (ii) any applicable fees
and expenses to the Trustee, shall be withdrawn by the Trustee and remitted to the City.
SECTTON 5.02. Atlocation of Authority Revenues. On or before each lnterest
Payment Date, the Trustee shall transfer from the Bond Fund and deposit into the
foll'owing respective accounts (each of which the Trustee shall establish and maintain
within the Bond Fund), the following amounts in the following order of priority:
(a) Deposit to lnterest Account. The Trustee shall deposit in the
lnterest Account an amount required to cause the aggregate
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amount on deposit in the lnterest Account to be at least equal to the
amount of interest becoming due and payable on such lnterest
Payment Date on all Bonds then Outstanding.
(b) Deposit to Principal Account. The Trustee shall deposit in the
Principal Account an amount required to cause the aggregate
amount on deposit in the Principal Account to equal the principal
amount of the Bonds coming due and payable on such lnterest
Payment Date.
SECTTON 5,03. lnterest Account. All amounts in the lnterest Account shall be
used and withdrawn by the Trustee solely for the purpose of paying interest on the
Bonds as it comes due and payable (including accrued interest on any Bonds purchased
or redeemed prior to maturity).
SECTTON 5.04. Principat Account. All amounts in the PrincipalAccount shall be
used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at
their respective maturity dates.
SECTION 5.05. Reserved.
SECTTON 5.06. Apptication of Redemption Fund. Upon the determination by the
Authority to redeem any Bonds under Section 4.01(a), the Trustee shall establish and
maintain the "Redemption Fund", into which the Trustee shall deposit a portion of the
Authority Revenues received, in accordance with a Written Request of the Authority,
and whiôh shall be used and withdrawn by the Trustee solely for the purpose of paying
the principal and premium (if any) of the Bonds to be redeemed under Section a.01(a).
At any time prior to the selection of Bonds for redemption, the Trustee may apply such
amounts to the purchase of Bonds at public or private sale, when and at such prices
(including brokerage and other charges, but excluding accrued interest, which is
iayable irom the lñterest Account) as shall be directed under a Written Request of the
Âuihority, except that the purchase price (exclusive of accrued interest) may not exceed
the redemption price then applicable to the Bonds. The Trustee is entitled to
conclusively rely on any Written Request of the Authority received under this Section
5.06, and is fully protected in relying thereon.
SECTTON 5.07. lnvestments. Except as otherwise set forth in this lndenture,
moneys in any of the funds or accounts established with the Trustee under this
lndeniure shall be invested by the Trustee solely in Permitted lnvestments. Such
investments shall be directed by the Authority under a Written Request of the Authority
filed with the Trustee at least two Business Days in advance of the making of such
investments. ln the absence of any such directions from the Authority, the Trustee shall
invest any such moneys in Permitted lnvestments designated in paragraph (c) of the
definition, provided, however, that any such investment shall be made by the Trustee
only if, prior to the date on which such investment is to be made, the Trustee shall have
received directions from the Authority specifying a specific money market fund and, if no
such directions from the Authority is so received, the Trustee shall hold such moneys
uninvested. The Trustee shall notify the Authority in writing within five business days if it
is holding any moneys uninvested. Permitted lnvestments purchased as an investment
of moneys in any fund shall be deemed to be part of such fund or account. To the extent
permitted lnvesiments are registrable, such Permitted lnvestments must be registered
in the name of the Trustee.
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All interest or gain derived from the investment of amounts in any of the funds or
accounts established hereunder shall be retained in such fund or account. For
purposes of acquiring any investments hereunder, the Trustee may commingle funds
held by it hereunder. The Trustee or any of its affiliates may act as principal or agent in
the acquisition or disposition of any investment and may impose its customary charges
therefor. The Trustee shall incur no liability for losses arising from any investments
made under this Section 5.07.
The Trustee may make any investments hereunder through its own bond or
investment department or trust investment department, or those of its parent or any
affiliate. The irustee or any of its affiliates may act as sponsor, advisor or manager in
connection with any investments made by the Trustee hereunder. The Trustee is
hereby authorized, in making or disposing of any investment permitted by this Section,
to deål with itself (in its individual capacity) or with any one or more of its affiliates,
whether it or such affiliate is acting as an agent of the Trustee or for any third person or
is dealing as a principal for its own account.
The Trustee shall furnish the Authority periodic cash transaction statements
which include detail for all investment transactions effected by the Trustee or brokers
selected by the Authority. Upon the Authority's election, such statements will be
delivered via the Trustee'ê Online Trust and Custody service and upon electing such
service, paper statements will be provided only upon request. The Authority waives the
right to receive brokerage confirmations of security transactions effected by the Trustee
aı ttrey occur, to the extent permitted by law. The Authority further understands that
trade ðonfirmations for securities transactions effected by the Trustee will be available
upon request and at no additional cost and other trade confirmations may be obtained
from the applicable broker.
SECTION 5.08. Valuation and Disposition of Investments.
(a) Except as othenruise provided in subsection (b) of this Section, the Authority
covenants that ail investments of amounts deposited in any fund or account created by
or under this lndenture, or othenruise containing gross proceeds of the Bonds (within the
meaning of Section 148 oÍ the Tax Code) shall be acquired, disposed of and valued at
the Faii Market Value thereof as such term is defined in subsection (d) below. The
Trustee shall have no duty in connection with the determination of Fair Market Value
other than to follow the investment directions of the Authority in any Written Request of
the Authority.
(b) lnvestments in funds or accounts (or portions thereof) that are subject to a
yield reètiiction under applicable provisions of the Tax Code; provided that the Authority
àhall ¡nform the Trustee which funds are subject to a yield restriction.
(c) Except as provided in the preceding subsection (b), for the purpose of
determining the amount in any fund or account established hereunder, the value of
Permitted lnvestments credited to such fund shall be valued by the Trustee at least
annually on or before June 15. The Trustee may sell or present for redemption, any
permittäd lnvestment so purchased by the Trustee whenever it shall be necessary in
order to provide moneys to meet any required payment, transfer, withdrawal or
disbursement from the fund to which such Permitted lnvestment is credited, and the
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Trustee shall not be liable or responsible for any loss resulting from any such Permitted
lnvestment.
(d) For purposes of this Section 5.08, the term "Fair Market Value" means the
price at which a willing buyer would purchase the investment from a willing seller in a
bona fide, arm's length transaction (determined as of the date the contract to purchase
or sell the investment becomes binding) if the investment is traded on an established
securities market (within the meaning of Section 1273 of the Tax Code) and, otherwise,
the term "Fair Market Value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if (¡) the investment is a certificate of deposit that is
acquired in accordance with applicable regulations under the Tax Code, (ii) the
investment is an agreement with specifically negotiated withdrawal or reinvestment
provisions and a specifically negotiated interest rate (for example, a guaranteed
investment contract, a foruvard supply contract or other investment agreement) that is
acquired in accordance with applicable regulations under the Tax Code, or (iii) the
investment is a United States Treasury Security -- State and Local Government Series
which is acquired in accordance with applicable regulations of the United States Bureau
of Public Debt.
(e) To the extent of any valuations made by the Trustee hereunder, the Trustee
may utilize and rely upon computerized securities pricing services that may be available
to it, including those available through its regular accounting system.
ARTICLE VI
Coveru¡NTS OF THE AUTHORITY
SECTTON 6.01. Punctual Payment. The Authority shall punctually pay or cause
to be paid the principal of and interest and premium (if any) on all the Bonds in strict
conformity with the terms of the Bonds and of this lndenture, according to the true intent
and meaning thereof, but only out of the Authority Revenues and other amounts
pledged for such payment as provided in this lndenture.
SECTTON 6.02. Extension of Payment of Bonds. The Authority shall not directly
or indirectly extend or assent to the extension of the maturity of any of the Bonds or the
time of payment of any claims for interest by the purchase of such Bonds or by any
other arrangement, and in case the maturity of any of the Bonds or the time of payment
of any such claims for interest shall be extended, such Bonds or claims for interest shall
not be entitled, in case of any default hereunder, to the benefits of this lndenture, except
subject to the prior payment in full of the principal of all of the Bonds then Outstanding
and of all claims for interest thereon which have not been so extended, Nothing in this
Section 6.02 limits the right of the Authority to issue Bonds for the purpose of refunding
any Outstanding Bonds, and such issuance does not constitute an extension of maturity
of the Bonds.
SECTTON 6.03. Against Encumbrances. The Authority shall not create, or permit
the creation of, any pledge, lien, charge or other encumbrance upon the Authority
Revenues and other assets pledged or assigned under this lndenture while any of the
Bonds are Outstanding, except the pledge and assignment created by this lndenture.
Subject to this limitation, the Authority expressly reserves the right to enter into one or
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more other indentures for any of its corporate purposes, and reserves the right to issue
other obligations for such purposes.
SECTTON 6.04. Powerfo /ssue Bonds and Make Ptedge and Assignment. The
Authority is duly authorized under law to issue the Bonds and to enter into this lndenture
and to pledge and assign the Authority Revenues and other amounts purported to be
pledged and assigned, respectively, under this lndenture in the manner and to the
äxteñt provided in this lndenture. Íhe Bonds and the provisions of this lndenture are
and will be the legal, valid and binding special obligations of the Authority in accordance
with their terms, and the Authority and the Trustee shall at all times, subject to the
provisions of Article Vlll and to the extent permitted by law, defend, preserve and protect
said pledge and assignment of Authority Revenues and other assets and all the rights of
the Bond Owners under this lndenture against all claims and demands of all persons
whomsoever.
SECTTON 6.05. Accounting Records. The Trustee shall at all times keep, or
cause to be kept, proper books of record and account, prepared in accordance with
corporate trust industry standards, in which complete and accurate entries shall be
made of all transactions made by it relating to the proceeds of Bonds and all funds and
accounts established under this lndenture. The Trustee shall make such books of
record and account available for inspection by the Authority and the City, during
business hours, upon reasonable notice, and under reasonable circumstances.
SECTTON 6.06. Limitation on Additional Obligations. The Authority covenants
that no additional bonds, notes or other indebtedness shall be issued or incurred which
are payable out of the Authority Revenues.
SECTION 6.07. Tax Covenants.
(a) Private Business Use Limitation. The Authority shall lssure that the
proceeds.of the Bonds are not used in a manner which would cause the Bonds to satisfy
ihe private business tests of Section 141(b) of the Tax Code or the private loan
financing test of Section ß1(c) of the Tax Code.
(b) Federal Guarantee Prohibition. The Authority shall not take any action or
permit or suffer any action to be taken if the result of the same would be to cause the'Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Tax
Code.
(c) No Arbitraqe. The Authority shall not take, or permit or suffer !o be taken
by the Trustee or othenruise, any action with respect to the proceeds of the Bonds or of
any other obligations which, if such action had been reasonably expected to have been
taken, or had been deliberately and intentionally taken, on the Closing Date, would have
caused the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the
Tax Code.
(d) Maintenance of Tax Exemption, The Authority shall take all actions
necessary to assr¡re ttre exclusion of interest on the Bonds from the gross income of the
Owners ót ttre Bonds to the same extent as such interest is permitted to be excluded
from gross income under the Tax Code as in effect on the Closing Date.
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(e) Rebate of Excess lnvestment Earninos to United States. The Authority
shall calculate or cause to be calculated all amounts of excess investment earnings
which are required to be rebated to the United States of America under Section 1a8(f) of
the Tax Code, at the times and in the manner required under the Tax Code. The
Authority shall pay when due an amount equal to excess investment earnings to the
United States of America in such amounts, at such times and in such manher as may be
required under the Tax Code, such payments to be made from any amounts provided by
the City for that purpose under Section 7.03(e) of the lnstallment Purchase Agreement.
The Aúthority shall keep or cause to be kept, and retain or cause to be retained for a
period of six years following the retirement of the Bonds, records of the determinations
made under this subsection (e).
SECTION 6.08. Reserved.
SECTTON 6.09. Waiver of Laws. The Authority shall not at any time insist upon
or plead in any manner whatsoever, or claim or take the benefit or advantage of, any
stay or extension law now or at any time hereafter in force that may affect the covenants
and agreements contained in this lndenture or in the Bonds, and all benefit or
advantãge of any such law or laws is hereby expressly waived by the Authority to the
extent permitted by law.
SECTTON 6.10. Further Assurances. The Authority will 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 lndenture and for the better assuring and confirming unto the Owners of the
Bonds of the rights and benefits provided in this lndenture.
ARTICLE VII
EVENTS OF DEFAULT AND REMEOICS
SECTTON 7.01. Events of Defautt. The following events constitute Events of
Default hereunder:
(a) Failure to pay any installment of the principal of any Bonds when
due, whether at maturity as therein expressed, by proceedings for
redemption, by acceleration, or othenuise.
(b) Failure to pay any installment of interest on the Bonds when due.
(c) Failure by the Authority to observe and perform any of the other
covenants, agreements or conditions on its part contained in this
lndenture or in the Bonds, if such failure has continued for a period
of 30 days after written notice thereof, specifying such failure and
requiring the same to be remedied, has been given to the Authority
by the Trustee; provided, however, if in the reasonable opinion of
the Authority the failure stated in the notice can be corrected, but
not within such 30-day period, such failure shall not constitute an
Event of Default if the Authority institutes corrective action within
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such 30-day period and thereafter diligently and in good faith cures
the failure in a reasonable period of time.
(d)The commencement by the Authority of a voluntary case under Title
11 of the United States Code or any substitute or successor statute.
(e)The occurrence and continuation of an event of default under and
as defined in the lnstallment Purchase Agreement.
SECTION 7.02. Remedres Upon Event of Default.
(a) Only as long as Section 8.02 is an available remedy under the lnstallment
Purchase Agreement, if any Event of Default occurs, then, and in each and every such
case during the continuance of such Event of Default, the Trustee may, and at the
written direction of the Owners of a majority in aggregate principal amount of the Bonds
at the time Outstanding shall, in each case, upon receipt of indemnification satisfactory
to Trustee against the costs, expenses and liabilities to be incurred in connection with
such action, upon notice in writing to the Authority, declare the principal of all of the
Bonds then Outstanding, and the interest accrued thereon, to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this lndenture or in the Bonds contained to the
contrary notwithstanding.
(b) The Trustee may, subject to the receipt of indemnity as provided herein:
(i) by mandamus or other action or proceeding or suit at law or in
equity enforce its rights against the Authority, or any board member, officer or
employee thereof, and compel the Authority or any such board member, officer
or employee to perform and carry out its or his or her duties under applicable law
and the agreements and covenants contained herein required to be performed
by it or him;
(ii) by suit in equity enjoin any acts or things which are unlawful or
violate the rights of the Trustee or the owners of the Bonds hereunder;
(iii) intervene in judicial proceedings that affect the Bonds or the
security therefor or hereunder; or
(iv) by suit in equity upon the happening of an Event of Default require
the Authority and its officers and employees to account as the trustee of an
express trust.
(c) Except with respect to an Event of Default under Section 7.01(d) above,
if, at any time after such declaration and before any judgment or decree for the payment
of the moneys due shall have been obtained or entered, the Authority deposits with the
Trustee a sum sufficient to pay all the principal of and installments of interest on the
Bonds payment of which is overdue, with interest on such overdue principal at the rate
borne by the respective Bonds to the extent permitted by law, and the reasonable fees,
charges and expenses (including those of its legal counsel, including the allocated costs
of internal attorneys) of the Trustee, and any and all other Events of Default known to
the Trustee (other than in the payment of principal of and interest on the Bonds due and
payable solely by reason of such declaration) have been made good or cured to the
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satisfaction of the Trustee or provision deemed by the Trustee to be adequate has been
made therefor, then, and in every such case, the Trustee, ffiây, on behalf of the Owners
of all of the Bonds, rescind and annul such declaration and its consequences and waive
such Event of Default; but no such rescission and annulment shall extend to or shall
affect any subsequent Event of Default, or shall impair or exhaust any right or power
consequent thereon.
SECTTON 7.03. Apptication of Authority Revenues and Other Funds After
Defautt. lf an Event of Default occurs and is continuing, all Authority Revenues and any
other funds then held or thereafter received by the Trustee under any of the provisions
of this lndenture shall be applied by the Trustee in the following order of priority:
(a) To the payment of reasonable fees, charges and expenses of the
Trustee (including reasonable fees and disbursements of its legal
counsel including outside counsel and the allocated costs of internal
attorneys) incurred in and about the performance of its powers and
duties under this lndenture;
(b) To the payment of the principal of and interest then due on the
Bonds (upon presentation of the Bonds to be paid, and stamping or
otherwise noting thereon of the payment if only partially paid, or
surrender thereof if fully paid) in accordance with the provisions of
this lndenture, as follows:
First: To the payment to the persons entitled thereto of all
installments of interest then due in the order of the maturity of
such installments, and, if the amount available shall not be
sufficient to pay in full any installment or installments maturing
on the same date, then to the payment thereof ratably,
according to the amounts due thereon, to the persons entitled
thereto, without any discrimination or preference; and
second: To the payment to the persons entitled thereto of the
unpaid principal of any Bonds which shall have become due,
whether at maturity or by acceleration or redemption, with
interest on the overdue principal at the rate borne by the
respective Bonds (to the extent permitted by law), and, if the
amount available shall not be sufficient to pay in full all the
Bonds, together with such interest, then to the payment
thereof ratably, according to the amounts of principal due on
such date to the persons entitled thereto, without any
discrimination or Preference.
SECTTON 7.04. Trustee to Represent Bond Owners. The Trustee is hereby
irrevocably appointed (and the successive respective Owners of the Bonds, by taking
and holding the same, shall be conclusively deemed to have so appointed the Trustee)
as trustee and true and lawful attorney-in-fact of the Owners of the Bonds for the
purpose of exercising and prosecuting on their behalf such rights and remedies as may
be'available to such Owners under the provisions of the Bonds, this lndenture and
applicable provisions of any law. All rights of action under this lndenture or the Bonds or
oihenvise may be prosecuted and enforced by the Trustee without the possession of
any of the Bonds or the production thereof in any proceeding relating thereto, and any
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such sult, action or proceeding instituted by the Trustee shall be brought in the name of
the Trustee for the benefit and protection of all the Owners of such Bonds, subject to the
provisions of this lndenture.
SECTION 7.05. Limitation on Bond Owners' Right fo Sue. Notwithstanding any
other provision hereof, no Owner of any Bonds has 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 lndenture, the lnstallment Purchase Agreement or any other
applicable law with respect to such Bonds, unless (a) such Owner has given to the
Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a
majority in aggregate principal amount of the Bonds then Outstanding have requested
the Trustee in writing to exercise the powers hereinbefore granted or to institute such
suit, action or proceeding in its own name; (c) such Owner or Owners have tendered to
the Trustee reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request; (d) the Trustee has failed to comply with such
request for a period of 60 days after such written request has been received by, and
said tender of indemnity has been made to, the Trustee; and (e) no direction
inconsistent with such written request has been given to the Trustee during such 60-day
period by the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding.
Such notification, request, tender of indemnity and refusal or omission are
hereby declared, in every case, to be conditions precedent to the exercise by any Owner
of Bonds of any remedy hereunder or under law; it being understood and intended that
no one or more Owners of Bonds shall have any right in any manner whatever by his or
their action to affect, disturb or prejudice the security of this lndenture or the rights of
any other Owners of Bonds, or to enforce any right under the Bonds, this lndenture, the
lnstallment Purchase Agreement or other applicable law with respect to the Bonds,
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 Owners of the Outstanding Bonds,
subject to the provisions of this lndenture.
SECTTON 7.06. A;,bsolute Obligation of Authority. Nothing in Section 7.06 or in
any other provision of this lndenture or in the Bonds contained affects or impairs the
obligation of the Authority, which is absolute and unconditional, to pay the principal of
and interest and premium (if any) on the Bonds to the respective Owners of the Bonds
at their respective dates of maturity, or upon acceleration or call for redemption, as
herein provided, but only out of the Authority Revenues and other assets herein pledged
therefor, or affect or impair the right of such Owners, which is also absolute and
unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.
SECTTON 7.07. Termination of Proceedings. ln case any proceedings taken by
the Trustee or by any one or more Bond Owners on account of any Event of Default
have been discontinued or abandoned for any reason or have been determined
adversely to the Trustee or the Bond Owners, then in every such case the Authority, the
Trustee and the Bond Owners, 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 Authority, the Trustee and the Bond
Owners shall continue as though no such proceedings had been taken.
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SECTTON 7.08. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee or the Owners of the Bonds 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.
SECTTON 7.09. No Waiver of Default. No delay or omission of the Trustee or
any Owner of the Bonds to exercise any right or power arising upon the occurrence of
any default or Event of Default shall impair any such right or power or shall be construed
to be a waiver of any such default or Event of Default or an acquiescence therein; and
every power and remedy given by this lndenture to the Trustee or to the Owners of the
Bonds may be exercised from time to time and as often as may be deemed expedient
by the Trustee or the Bond Owners.
SECTTON 7.10. Notice to Bond Owners of Default. lmmediately upon obtaining
actual knowledge of the occurrence of an Event of Default, but in no event later than five
Business Days after obtaining actual knowledge of such occurrence, the Trustee shall
promptly give written notice thereof by first class mail, postage prepaid, to the Owner of
each Outstanding Bond, unless such Event of Default has been cured before the giving
of such notice; provided, however that except in the case of an Event of Default
described in Sections 7.01(a) or 7.01(b), the Trustee may elect not to give such notice to
the Bond Owners if and so long as the Trustee in good faith determines that it is in the
best interests of the Bond Owners not to give such notice.
ARTICLE VIII
THE TRUSTEE
SECTTON 8.01. Appointment of Trustee. MUFG Union Bank, N.4., is hereby
appointed Trustee by the Authority for the purpose of receiving all moneys required to
be deposited with the Trustee hereunder and to allocate, use and apply the same as
provided in this lndenture. The Authority will maintain a Trustee which is qualified under
the provisions of the foregoing provisions of this Article Vlll so long as any Bonds are
Outstanding.
SECTION 8.02. Acceptance of Trusts; Removal and Resignation of Trustee.
The Trustee hereby accepts the express trusts imposed upon it by this lndenture, and
agrees to perform said trusts, but only upon and subject to the following express terms
and conditions:
(a) The Trustee shall, prior to an Event of Default, and after the curing or
waiver of all Events of Default which may have occurred, perform such duties and
only such duties as are expressly and specifically set forth in this lndenture and no
implied duties or covenants shall be read into this lndenture against the Trustee. ln
case an Event of Default has occurred (which has not been cured) the Trustee shall
exercise such of the rights and powers vested in it by the Trust Agreement, and use
the same degree of care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs.
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(b) The Authority may remove the Trustee at any time, unless an Event of
Default has occurred and is then continuing, and shall remove the Trustee (a) if at
any time requested to do so by the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding (or their attorneys duly authorized in writing)
or (b) if at any time the Trustee ceases to be eligible in accordance with Section
8.02, or becomes incapable of acting, or is adjudged a bankrupt or insolvent, or a
receiver of the Trustee or its property is appointed, or any public officer takes control
or charge of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation. Any such removal shall be made upon at least 30 days'
prior written notice to the Trustee.
(c) The Trustee may at any time resign by giving written notice of such
resignation to the Authority and the City, and by giving the Bond Owners notice of
such resignation by mail at the addresses shown on the Registration Books.
(d) Any removal or resignation of the Trustee and appointment of a
successor Trustee shall become effective upon acceptance of appointment by the
successor Trustee. ln the event of the removal or resignation of the Trustee under
subsections (b) or (c), respectively, the Authority shall promptly appoint a successor
Trustee.
lf no successor Trustee has been appointed and accepted appointment within 45
days of giving notice of removal or notice of resignation as aforesaid, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of a
successor Trustee, and such court may thereupon, after such notice (if any) as it
may deem proper, appoint such successor Trustee. Any successor Trustee
appointed under this lndenture, must signify its acceptance of such appointment by
executing and delivering to the Authority and to its predecessor Trustee a written
acceptance thereof, and after payment by the Authority of all unpaid fees and
expenses of the predecessor Trustee, and thereupon such successor Trustee,
without any further act, deed or conveyance, shall become 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. At the
Written Request of the Authority or the request of the successor Trustee, such
predecessor Trustee 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 Authority 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 Authority
shall promptly mail or cause the successor trustee to mail a notice of the succession
of such Trustee to the trusts hereunder to each rating agency which is then rating
the Bonds and to the Bond Owners at the addresses shown on the Registration
Books. lf the Authority fails to mail such notice within 15 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Authority.
(e) Any Trustee appointed under this lndenture shall be a corporation or
association organized and doing business under the laws of any state or the United
States of America or the District of Columbia, shall be authorized under such laws to
exercise corporate trust powers, shall have (or, in the case of a corporation or
22
association that is a member of a bank holding company system, the related bank
holding company has) a combined capital and surplus of at least $50,000,000, and
shall be subject to supervision or examination by a federal or state agency, so long
as any Bonds are Outstanding. lf such corporation or association publishes a report
of condition at least annually under law or to the requirements of any supervising or
examining agency above referred to, then for the purpose of this subsection (e), the
combined capital and surplus of such corporation or association shall be deemed to
be its combined capital and surplus as set forth in its most recent report of condition
so published. lf the Trustee at any time ceases to be eligible in accordance with the
provisions of this subsection (e), the Trustee shall resign immediately in the manner
and with the effect specified in this Section.
(f) Notwithstanding any other provision of this lndenture, the Trustee may be
removed at any time for any breach of the trust set forth herein.
SECTION 8.03. Merger or Consolidation. Any national banking association,
bank, federal savings association, or trust company into which the Trustee may be
merged or converted or with which it may be consolidated or any national banking
association, bank, federal savings association, or trust company resulting from any
merger, conversion or consolidation to which it shall be a party or any national banking
association, bank, federal savings association, or trust company to which the Trustee
may sell or transfer all or substantially all of its corporate trust business, provided such
national banking association, bank, federal savings association, or trust company shall
be eligible under subsection (e) of Section 8.02 shall be the successor to such Trustee,
without the execution or filing of any paper or any further act, anything herein to the
contrary notwithstand ing.
SECTION 8.04. Liability of Trustee
(a) The recitals of facts herein and in the Bonds contained shall be taken as
statements of the Authority, and the Trustee shall not assume responsibility for the
correctness of the same, or make any representations as to the validity or sufficiency of
this lndenture, the Bonds or the lnstallment Purchase Agreement, nor shall the Trustee
incur any responsibility in respect thereof, other than as expressly stated herein in
connection with the respective duties or obligations of Trustee herein or in the Bonds
assigned to or imposed upon it. The Trustee shall, however, be responsible for its
representations contained in its certificate of authentication on the Bonds. The Trustee
shall not be liable in connection with the performance of its duties hereunder, except for
its own negligence. The Trustee may become the Owner of Bonds 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 Bond
Owners, whether or not such committee shall represent the Owners of a majority in
principal amount of the Bonds then Outstanding.
(b) The Trustee is not liable for any error of judgment made by a responsible
officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent
facts.
(c) The Trustee is not liable with respect to any action taken or omitted to be
taken by it in accordance with the direction of the Owners of a majority in aggregate
principal amount of the Bonds at the time Outstanding relating to the time, method and
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place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this lndenture or
assigned to it hereunder.
(d) The Trustee is not liable for any action taken by it and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by this
lndenture.
(e) The Trustee shall not be deemed to have knowledge of any Event of Default
hereunder, or any other event which, with the passage of time, the giving of notice, or
both, would constitute an Event of Default hereunder unless and until it shall have actual
knowledge thereof, or a corporate trust officer shall have received written notice thereof
at its Office from the City, the Authority or the Owners of at least 25o/o in aggregate
principal amount of the Outstanding Bonds. Except as othenryise expressly provided
herein, the Trustee shall not be bound to ascertain or inquire as to the performance or
observance by the Authority or the City of any of the terms, conditions, covenants or
agreements herein, under the lnstallment Purchase Agreement or the Bonds or of any
of the documents executed in connection with the Bonds, or as to the existence of a
default or an Event of Default or an event which would, with the giving of notice, the
passage of time, or both, constitute an Event of Default. The Trustee is not responsible
for the validity, effectiveness or priority of any collateral given to or held by it. Without
limiting the generality of the foregoing, the Trustee shall not be required to ascertain or
inquire as to the performance or observance by the City or the Authority of the terms,
conditions, covenants or agreements set forth in the lnstallment Purchase Agreement,
other than the covenants of the City to make lnstallment Payments to the Trustee when
due and to file with the Trustee when due, such reports and certifications as the City is
required to file with the Trustee thereunder.
(f) No provision of this lndenture requires the Trustee to expend or risk its own
funds or othen¡vise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers.
(g) The Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or through agents, receivers or attorneys and the
Trustee shall not be responsible for any misconduct or negligence on the part of any
agent, receiver or attorney appointed with due care by it hereunder.
(h) The Trustee has no obligation to exercise any of the rights or powers vested
in it by this lndenture at the request or direction of the Bond Owners under this
lndenture, unless such Owners have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities (including but not limited to fees
and expenses of its attorneys) which might be incurred by it in compliance with such
request or direction. No permissive power, right or remedy conferred upon the Trustee
hereunder shall be construed to impose a duty to exercise such power, right or remedy.
(i) Whether or not therein expressly so provided, every provision of this
lndenture relating to the conduct or affecting the liability of or affording protection to the
Trustee is subject to the provisions of Section 8.02(a), this Section 8.04 and Section
8.05, and shall be applicable to the assignment of any rights to the Trustee hereunder.
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0) The Trustee is not accountable to anyone for the subgequent use or
application of any moneys which are released or withdrawn in accordance with the
provisions hereof.
(k) The Trustee makes no representation or warranty, expressed or implied as
to the title, value, design, compliance with specifications or legal requirements, quality,
durability, operation, condition, merchantability or fitness for any particular purpose for
the use contemplated by the Authority or the City of the Project. ln no event shall the
Trustee be liable for incidental, indirect, special or consequential damages in connection
with or arising from the lnstallment Purchase Agreement or this lndenture for the
existence, furnishing or use of the Project.
(l) The Trustee has no responsibility with respect to any information, statement,
or recital in any official statement, offering memorandum or any other disclosure
material prepared or distributed with respect to the Bonds.
(m) The Trustee agrees to accept and act upon instructions or directions
pursuant to this lndenture sent by unsecured e-mail (provided, that for purposes of this
Agreement, an e-mail does not constitute a notice, request or other communication
hereunder but rather the portable document format or similar attachment attached to
such e-mail shall constitute a notice, request or other communication hereunder),
facsimile transmission or other similar unsecured electronic methods, provided,
however, that, the Trustee shall have received an incumbency certificate listing persons
designated to give such instructions or directions and containing specimen signatures of
such designated persons, which such incumbency certificate shall be amended and
replaced whenever a person is to be added or deleted from the listing. lf the Authority
or the City elects to give the Trustee e-mail or facsimile instructions (or instructions by a
similar electronic method) and the Trustee in its discretion elects to act upon such
instructions, the Trustee's understanding of such instructions shall be deemed
controlling. The Trustee shall not be liable for any losses, costs or expenses arising
directly or indirectly from the Trustee's reliance upon and compliance with such
instructions notwithstanding such instructions conflict or are inconsistent with a
subsequent written instruction. The Authority and the City agree to assume all risks
arising out of the use of such electronic methods to submit instructions and directions to
the Trustee, including without limitation the risk of the Trustee acting on unauthorized
instructions, and the risk of interception and misuse by third parties.
(n) The Trustee shall not be considered in breach of or in default in its
obligations hereunder or progress in respect thereto in the event of enforced delay
("unavoidable delay") in the performance of such obligations due to unforeseeable
causes beyond its control and without its fault or negligence, including, but not limited to,
Acts of God or of the public enemy or terrorists, acts of a government, acts of the other
party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes,
earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or
rationing of labor, equipment, facilities, sources of energy, material or supplies in the
open market, litigation or arbitration involving a party or others relating to zoning or other
governmental action or inaction pertaining to the Project, malicious mischief,
condemnation, and unusually severe weather or delays of suppliers or subcontractors
due to such causes or any similar event and/or occurrences beyond the control of the
Trustee.
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SECTTON 8.05. Right to Rely on Documents. The Trustee shall be protected
and shall incur no liability in acting or refraining from acting in reliance upon any notice,
resolution, request, consent, order, certificate, report, opinion, bonds or other paper or
document believed by them to be genuine and to have been signed or presented by the
proper party or parties. The Trustee is under no duty to make any investigation or
inquiry as to any statements contained or matter referred to in any paper or document
but may accept and conclusively rely upon the same as conclusive evidence of the truth
and accuracy of any such statement or matter and shall be fully protected in relying
thereon. The Trustee may consult with counsel, who may be counsel of or to the
Authority, with regard to legal questions, and the opinion of such counsel shall be full
and complete authorization and protection in respect of any action taken or suffered by it
hereunder in good faith and in accordance therewith.
The Trustee may treat the Owners of the Bonds appearing in the Registration
Books as the absolute owners of the Bonds for all purposes and the Trustee shall not be
affected by any notice to the contrary.
Whenever in the administration of the trusts imposed upon it by this lndenture
the Trustee deems it necessary or desirable that a matter be proved or established prior
to taking or suffering any action hereunder, such matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a Written Certificate, Written Request or Written Requisition
of the Authority or the City, and such Written Certificate, Written Request or Written
Requisition shall be full warrant to the Trustee for any action taken or suffered under the
provisions of this lndenture in reliance upon such Written Certificate, Written Request or
Written Requisition, and the Trustee shall be fully protected in relying thereon, 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.
SECTTON 8.06. Preservation and lnspection of Documents. All documents
received.by the Trustee under the provisions of this lndenture shall be retained in its
respective possession and in accordance with its retention policy then in effect and
shall, upon reasonable notice to Trustee, be subject to the inspection of the Authority,
the City and any Bond Owner, and their agents and representatives duly authorized in
writing, during business hours and under reasonable conditions as agreed to by the
Trustee.
SECTTON 8.07. Compensation and lndemnification. The Authority shall pay to
the Trustee from time to time, on demand, the compensation for all services rendered
under this lndenture and also all reasonable expenses, advances (including any interest
on advances), charges, legal (including outside counsel and the allocated costs of
internal attorneys) and consulting fees and other disbursements, incurred in and about
the performance of its powers and duties under this lndenture.
The Authority shall indemnify the Trustee, its officers, directors, employees and
agents against any cost, loss, liability or expense whatsoever (including but not limited
to fees and expenses of its attorneys) incurred without negligence or willful misconduct
on its part, arising out of or in connection with the acceptance or administration of this
trust and this lndenture, including costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its powers
hereunder or under the lnstallment Purchase Agreement. As security for the
performance of the obligations of the Authority under this Section 8.07, the Trustee shall
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have a lien prior to the lien of the Bonds upon all property and funds held or collected by
the Trustee as such. The rights of the Trustee and the obligations of the Authority
under this Section 8.07 shall survive the resignation or removal of the Trustee or the
discharge of the Bonds and this lndenture and the lnstallment Purchase Agreement.
ARTICLE IX
MooIpICATION OR AMENDMENT HCNCOT
SECTION 9.01. Amendments Permitted.
(a) Amendments With Owner Consent. This lndenture and the rights and
obligations of the Authority and of the Owners of the Bonds and of the Trustee may be
modified or amended from time to time and at any time by Supplemental lndenture,
which the Authority and the Trustee may enter into when the written consents of the
Owners of a majority in aggregate principal amount of all Bonds then Outstanding are
filed with the Trustee. No such modification or amendment may (i) extend the fixed
maturity of any Bonds, or reduce the amount of principal thereof or extend the time of
payment, or change the method of computing the rate of interest thereon, or extend the
time of payment of interest thereon, without the consent of the Owner of each Bond so
affected, or (ii) reduce the aforesaid percentage of Bonds the consent of the Owners of
which is required to effect any such modification or amendment, or permit the creation
of any lien on the Authority Revenues and other assets pledged under this lndenture
prior to or on a parity with the lien created by this lndenture except as permitted herein,
or deprive the Owners of the Bonds of the lien created by this lndenture on such
Authority Revenues and other assets (except as expressly provided in this lndenture),
without the consent of the Owners of all of the Bonds then Outstanding. lt is not
necessary for the consent of the Bond Owners to approve the particular form of any
Supplemental lndenture, but it is sufficient if such consent approves the substance
thereof.
(b) Amendments Without Owner Consent. This lndenture and the rights and
obligations of the Authority, of the Trustee and the Owners of the Bonds may also be
modified or amended from time to time and at any time by a Supplemental lndenture,
which the Authority and the Trustee may enter into without the consent of any Bond
Owners, if the Trustee has been furnished an opinion of counsel that the provisions of
such Supplemental lndenture shall not materially adversely affect the interests of the
Owners of the Bonds, including, without limitation, for any one or more of the following
purposes:
(i) to add to the covenants and agreements of the Authority in this
lndenture contained, other covenants and agreements thereafter to
be observed, to pledge or assign additional security for the Bonds
(or any portion thereof), or to surrender any right or power herein
reserved to or conferred upon the Authority;
(ii) to cure any ambiguity, inconsistency or omission, or to cure or
correct any defective provision, contained in this lndenture, or in
regard to matters or questions arising under this lndenture, as the
Authority deems necessary or desirable, provided that such
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modification or amendment does not materially adversely affect the
interests of the Bond Owners, in the opinion of Bond Counsel filed
with the Trustee;
(¡ii) to modify, amend or supplement this lndenture in such manner as
to permit the qualification hereof under the Trust lndenture 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
(iv) to modify, amend or supplement this lndenture in such manner as
to assure that the interest on the Bonds remains excluded from
gross income under the Tax Code.
(c) Limitation. The Trustee is not obligated to enter into any Supplemental
lndenture authorized by subsections (a) or (b) of this Section 9.01 which materially
adversely affects the Trustee's own rights, duties or immunities under this lndenture or
othenryise.
(d) Bond Counsel Opinion Requirement. Prior to the Trustee entering into any
Supplemental lndenture hereunder, the Authority shall deliver to the Trustee an opinion
of Bond Counsel stating, in substance, that such Supplemental lndenture has been
adopted in compliance with the requirements of this lndenture and that the adoption of
such Supplemental lndenture will not, in and of itself, adversely affect the exclusion of
interest on the Bonds from gross income for purposes of federal income taxes.
(e) Notice of Amendments. The Authority shall deliver or cause to be delivered a
draft of any Supplemental lndenture to each rating agency which then maintains a rating
on the Bonds, at least 10 days prior to the effective date of such Supplemental
lndenture under this Section 9.01.
SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any
Supplemental lndenture under this Article lX, this lndenture shall be deemed to be
modified and amended in accordance therewith, and the respective rights, duties and
obligations under this lndenture of the Authority, the Trustee and all Owners of Bonds
Outstanding shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modification and amendment, and all the terms and conditions of
any such Supplemental lndenture shall be deemed to be part of the terms and
conditions of this lndenture for any and all purposes,
SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds
delivered after the execution of any Supplemental lndenture under this Article may, and
if the Authority so determines shall, bear a notation by endorsement or othenryise in form
approved by the Authority as to any modification or amendment provided for in such
Supplemental lndenture, and, in that case, upon demand on the Owner of any Bonds
Outstanding at the time of such execution and presentation of his Bonds for the purpose
at the 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 Bonds. lf the
Supplemental lndenture shall so provide, new Bonds so modified as to conform, in the
opinion of the Authority, to any modification or amendment contained in such
Supplemental lndenture, shall be prepared and executed by the Authority and
authenticated by the Trustee, and upon demand on the Owners of any Bonds then
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Outstanding shall be exchanged at the Office of the Trustee, without cost to any Bond
Owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in
equal aggregate principal amount of the same maturity.
SEcTION 9.04. Amendment of Particutar Bonds. The provisions of this Articte
lX do not prevent any Bond Owner from accepting any amendment as to the particular
Bonds held by such Owner.
ARTICLE X
DEFEASANCE
SECTTON 10.01. Discharge of lndenture. Any or all of the Outstanding Bonds
may be paid by the Authority in any of the following ways, provided that the Authority
also pays or causes to be paid any other sums payable hereunder by the Authority:
(a) by paying or causing to be paid the principal of and interest and
premium (if any) on such Bonds, as and when the same become
due and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money
or securities in the necessary amount (as provided in Section 10.03)
to pay or redeem such Bonds; or
(c) by delivering all of such Bonds to the Trustee for cancellation
lf the Authority also pays or causes to be paid all other sums payable hereunder
by the Authority, then and in that case, at the election of the Authority (evidenced by a
Written Certificate of the Authority, filed with the Trustee, signifying the intention of the
Authority to discharge all such indebtedness and this lndenture), and notwithstanding
that any of such Bonds shall not have been surrendered for payment, this lndenture and
the pledge of Authority Revenues and other assets made under this lndenture with
respect to such Bonds and all covenants, agreements and other obligations of the
Authority under this lndenture with respect to such Bonds shall cease, terminate,
become void and be completely discharged and satisfied, subject to Section 10.02. ln
such event, upon the Written Request of the Authority, the Trustee shall execute and
deliver to the Authority all such instruments as may be necessary or desirable to
evidence such discharge and satisfaction, and the Trustee shall pay over, transfer,
assign or deliver to the Authority all moneys or securities or other property held by it
under this lndenture which are not required for the payment of any of such Bonds not
theretofore surrendered for such payment. The Trustee is entitled to conclusively rely
on any such Written Certificate or Written Request and, in each case, is fully protected
in relying thereon.
SEcTION 10.02. Discharge of Liability on Bonds. Upon the deposit with the
Trustee, in trust, at or before maturity, of money or securities in the necessary amount
(as provided in Section 10.03) to pay or redeem any Outstanding Bonds (whether upon
or prior to the maturity or the redemption date of such Bonds), provided that, if such
Bonds are to be redeemed prior to maturity, notice of such redemption shall have been
given as provided in Article lV or provision satisfactory to the Trustee shall have been
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made for the giving of such notice, then all liability of the Authority in respect of such
Bonds shall cease, terminate and be completely discharged, and the Owners thereof
shall thereafter be entitled only to payment out of such money or securities deposited
with the Trustee as aforesaid for their payment, subject, however, to the provisions of
Section 10.04.
Notwithstanding anything to the contrary in this Article X, in the event of
defeasance of all Outstanding Bonds, such defeasance will not operate to discharge any
of the following:
(a) the obligation of the Trustee to transfer and exchange Bonds
hereunder,
(b) the obligation of the Authority to pay or cause to be paid to the
Owners of such Bonds, from the amounts so deposited with the
Trustee, all sums due thereon, and
(c) the obligations of the Authority to compensate and indemnify the
Trustee under Section 8.07.
The Authority may at any time surrender to the Trustee, for cancellation by
Trustee, any Bonds previously issued and delivered, which the Authority may have
acquired in any manner whatsoever, and such Bonds, upon such surrender and
cancellation, shall be deemed to be paid and retired.
SECTTON 10.03. Deposit of Money or Securities with Trustee. Whenever in this
lndenture it is provided or permitted that there be deposited with or held in trust by the
Trustee money or securities in the necessary amount to pay or redeem any Bonds, the
money or securities so to be deposited or held may include money or securities held by
the Trustee in the funds and accounts established under this lndenture and shall be:
(a) lawful money of the United States of America in an amount equal to
the principal amount of such Bonds and all unpaid interest thereon
to maturity, except that, in the case of Bonds which are to be
redeemed prior to maturity and in respect of which notice of such
redemption shall have been given as provided in Article lV or
provision satisfactory to the Trustee shall have been made for the
giving of such notice, the amount to be deposited or held shall be
the principal amount of such Bonds, premium, if any, and all unpaid
interest thereon to the redemption date; or
(b) non-callable Federal Securities, the principal of and interest on
which when due will, in the written opinion of an lndependent
Accountant filed with the City, the Authority and the Trustee, provide
money sufficient to pay the principal of and interest and premium (if
any) on the Bonds to be paid or redeemed, as such principal,
interest and premium become due, provided that in the case of
Bonds which are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as provided in
Article lV or provision satisfactory to the Trustee has been made for
the giving of such notice;
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provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the
terms of this lndenture or by Written Request of the Authority) to apply such money to
the payment of such principal, interest and premium (if any) with respect to such Bonds,
and (ii) the Authority shall have delivered to the Trustee an opinion of Bond Counsel to
the effect that such Bonds have been discharged in accordance with this lndenture
(which opinion may rely upon and assume the accuracy of the lndependent
Accountant's opinion referred to above). The Trustee shall be entitled to conclusively
rely on such Written Request or opinion and shall be fully protected, in each case, in
relying thereon.
SECTTON 10.04. tJnclaimed Funds. Notwithstanding any provisions of this
lndenture, any moneys held by the Trustee in trust for the payment of the principal of, or
interest on, añy Bonds and remaining unclaimed for two years after the principal of all of
the Bonds has become due and payable (whether at maturity or acceleration as
provided in this lndenture), if such moneys were so held at such date, or two years after
ihe date of deposit of such moneys if deposited after said date when all of the Bonds
became due and payable, shall be repaid to the Authority free from the trusts created by
this lndenture, 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
Authority as aforesaid, the Trustee shall (at the cost of the Authority) first mail to the
Owners of Bonds which have not yet been paid, at the addresses shown on the
Registration Books, a notice, in such form as may be deemed appropriate by the
Trultee with respect to the Bonds so payable and not presented and with respect to the
provisions relating to the repayment to the Authority of the moneys held for the payment
thereof.
ARTICLE XI
MISCELLANEOUS
SECT|ON 11.01. Liability of Authority Limited to Authority Revenues.
Notwithstanding anything in this lndenture or in the Bonds contained, the Authority is not
required to advance any moneys derived from any source other than the Authority
Revenues and other assets pledged under this lndenture for any of the purposes in this
lndenture mentioned, whether for the payment of the principal of or interest on the
Bonds or for any other purpose of this lndenture. Nevertheless, the Authority may, but
is not required io, advance for any of the purposes hereof any funds of the Authority
which may be made available to it for such purposes.
SECTTON 11.02. Limitation of Rightsto Parties and Bond Owners. Nothing in
this lndenture or in the Bonds expressed or implied is intended or shall be construed to
give to any person other than the Authority, the Trustee, the City and the Owners of the
Bonds, any legal or equitable right, remedy or claim under or in respect of this lndenture
or any covenãnt, condition or provision therein or herein contained; and all such
covenânts, conditions and provisions are and shall be held to be for the sole and
exclusive benefit of the Authority, the Trustee, the City and the Owners of the Bonds.
SECTTON 11.03. Funds and Accounts. Any fund or account required by this
lndenture 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
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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 and accounts shall at all times be maintained in
accordance with corporate trust industry standards to the extent practicable, and with
due regard for the requirements of Section 6.05 and for the protection of the security of
the Bonds and the rights of every Owner thereof. The Trustee may establish such funds
and accounts as it deems necessary or appropriate to perform its obligations under this
lndenture.
SECTTON 11.04. Waiver of Notice; Requirement of Mailed Notice. Whenever in
this lndenture the giving of notice by mail or othenruise 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. Whenever in this lndenture
any notice is required to be given by mail, such requirement may be satisfied by the
deposit of such notice in the United States mail, postage prepaid, by first class mail.
SECTTON 11.05. Destruction of Bonds. Whenever in this lndenture provision is
made for the cancellation by the Trustee, and the delivery to the Authority, of any
Bonds, the Trustee shall destroy such Bonds as may be allowed by law and deliver a
certificate of such destruction to the Authority.
SECTTON 11.06. Severabitity of tnvalid Provisions. lf any one or more of the
provisions contained in this lndenture or in the Bonds shall for any reason be held to be
invalid, illegal or unenforceable in any respect, then such provision or provisions shall be
deemed sèverable from the remaining provisions contained in this lndenture and such
invalidity, illegality or unenforceability shall not affect any other provision of this
lndenture, anO th¡s lndenture shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein. The Authority hereby
declares that it would have entered into this lndenture and each and every other
Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of
the Bonds pursuant thereto irrespective of the fact that any one or more Sections,
paragraphs, sentences, clauses or phrases of this lndenture may be held illegal, invalid
or unenforceable.
SECTTON 11.07. Nofices. All notices or communications to be given under this
lndenture shall be given by first class mail or personal delivery to the party entitled
thereto at its address set forth below, or at such address as the party may provide to the
other party in writing from time to time. Notice shall be effective either (a) upon
transmission by facsimile transmission or other form of telecommunication, (b) 48 hours
after deposit in ttre United States mail, postage prepaid, or (c) in the case of personal
delivery to any person, including overnight mail and courier, upon actual receipt. The
Authority, the City or the Trustee may, by written notice to the other parties, from time to
time modify the address or number to which communications are to be given hereunder.
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lf to the Authority
or the City:
City of Lodi
221 West Pine Street
P.O. Box 333-6700
Lodi, Califo rnia 95241 -1 91 0
Attention: City Manager
lf to the Trustee:MUFG Union Bank, N.A.
350 California Street
17th Floor
San Francisco, CA 94104
Attention: Corporate Trust
Fax: 415-273-2492
E mai I : Ad m in istration-CorporateTrust@union ban k.com
SECTTON 11.08. Evidence of Rights of Bond Owners. Any request, consent or
other instrument required or permitted by this lndenture to be signed and executed by
Bond Owners may be in any number of concurrent instruments of substantially similar
tenor and shall be signed or executed by such Bond Owners 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 Bonds transferable by delivery, shall be sufficient for any purpose of this
indenture and shall be conclusive in favor of the Trustee and the Authority if made in the
manner provided in this Section 11.08.
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, Qonsent or other instrument
acknowledged io h¡m tne 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 Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond
shall bind every future Owner of the same Bond and the Owner of every Bond issued in
exchange therefor or in lieu thereof, in respect of anything done or suffered to be done
by the Trustee or the Authority in accordance therewith or reliance thereon.
SECTTON 11.09. Disquatified Bonds. ln determining whether the Owners of the
requisite aggregate principal amount of Bonds have concurred in any demand, request,
direction, consent or waiver under this lndenture, Bonds which are known by the Trustee
to be owned or held by or for the account of the Authority or the City, or by any other
obligor on the Bonds, or by any person directly or indirectly controlling or controlled by,
or under direct or indirect common control with, the Authority or the City or any other
obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the
pur[ose of any such determination. Bonds so owned which have been pledged in good
faith may be regarded as Outstanding for the purposes of this Section if the pledgee
shall estâblish tı the satisfaction of the Trustee the pledgee's right to vote such Bonds
and that the pledgee is not a person directly or indirectly controlling or controlled by, or
under direct or iñdirect common control with, the Authority or the City or any other
obligor on the Bonds. ln case of a dispute as to such right, the Trustee shall be entitled
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to rely upon the advice of counsel in any decision by Trustee and shall be fully protected
in relying thereon.
Upon request, the Authority and the City shall specify to the Trustee those Bonds
disqualified under this Section 11.09 and the Trustee may conclusively rely upon such
certificate.
SECTTON 11.10. Money Held for Particular Bonds. The money held by the
Trustee for the payment of the interest, premium, if any, or principal due on any date
with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed 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 Owners of the Bonds entitled thereto, subiect,
however, to the provisions of Section 10.04 but without any liability for interest thereon.
SECTTON 11.11. Waiver of Personal Liability. No member, officer, agent or
employee of the Authority shall be individually or personally liable for the payment of the
principal of or interest or premium (if any) on the Bonds or be subject to any personal
iianitity or accountability by reason of the issuance thereof; but nothing herein contained
shall ielieve any such member, officer, agent or employee from the performance of any
official duty provided by law or by this lndenture.
SECTTON 11.12. Successor /s Deemed lncluded in All References to
Predecessor. Whenever in this lndenture either the Authority, the City or the Trustee 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 lndenture contained by or
on bãnalf of the Authority, the City or the Trustee shall bind and inure to the benefit of
the respective successors and assigns thereof whether so expressed or not.
SECTTON 11.13. Execution in Several Counterparts. This lndenture 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
ihe'Authority and the Trustee shall preserve undestroyed, shall together constitute but
one and the same instrument.
SECTION 11.14. Payment on Non-Busrness Day. ln the event any payment is
required to be made hereunder on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and with the same effect as if
made on such preceding non-Business Day.
SECTION 11.15. Governing Law. This lndenture shall be governed by and
construed in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, thc LODI PUBLIC FINANCING AUTHORITY hAS CAUSEd
this lndenture to be signed in its name by its Executive Director and attested to by the
City Clerk, and MUFG UNION BANK, N.4., in token of its acceptance of the trusts
created hereunder, has caused this lndenture to be signed in its corporate name by its
officer thereunto duly authorized, all as of the day and year first above written.
LODI PUBLIC FINANCING AUTHORITY
By
Stephen Schwabauer, Executive Director
Attest:
Jennifer M. Ferraiolo, City Clerk
Approved as to form
Janice D. Magdich, City AttorneY
MUFG UNION BANK, N.4., as Trustee
Authorized Officer
By
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APPENDIX A
DEFINITIONS
..,'meanS,foranyFiscalYearoranydesignated
twelve-month period in question, the Annual Debt Service for such Fiscal Year or
twelve-month period minus the sum of the amount of the Annual Debt Service with
respect to Outstanding Parity Obligations to be paid during such Fiscal Year or twelve-
month period from thé proceeds of Parity Obligations or interest earned thereon (other
than inierest deposited into the Electric Revenue Fund), all as set forth in a Written
Certificate of the City.
..,,meanS,foranyFiscalYearoranydesignated
twelve-rnonth period in question, the Adjusted Annual Revenues during such Fiscal Year
or twelve-month period less the Maintenance and Operation Costs during such Fiscal
Year or twelve-month period.
..@,,mean,foranyFiscalYearoranydesignated
twelve-m@n,theRevenuesduringsuchFiscalYearortwelve-month
period plus (i) GHG Revenues during such Fiscal Year or twelve-month period, (ii) for
itre purposes of determining compliance with Section 7.13(b) of the lnstallment
purchase Agreement only, the amount of Available Reserves on deposit, or which the
City has aut-horized to bsdeposited, in the Electric Revenue Fund as of the first day of
suóh Fiscal Year or twelve-month period and (iii) for the purposes of determining
compliance with Section 7.13(b) of the lnstallment Purchase Agreement only, the
amount of Available Reserves on deposit in the Electric Utility Environmental
Compliance Fund (or a successor fund) as of the first day of such Fiscal Year or twelve-
month period.
"MdB.Ud.æ!" means, for each Fiscal Year, the budget for the Electric System
for such Fiscal Yrar prepared by the City pursuant to Section7.07 of the lnstallment
Purchase Agreement.
,.@',meanS,foranyFiscalYearoranydesignatedtwelve-
monthffi)withrespecttothelnstallmentPayments,therequired
payments scheduled to be made with respect to all Outstanding lnstallment Payments in
bucn fiscal Year or twelve-morith period, provided that for the purpose of determining
the Reserve Requirement, compliance with Section 7.13 of the lnstallment Purchase
Agreement, and ihe conditions for the execution of Parity Obligations, clauses (C) and
1O¡ Oetow shall apply if any Payment Agreement is in effect with respect to any
òútstanding lnstallmeht Payments; or (ii) with respect to Parity Obligations, the required
payments ıcheduled to be made with respect to all Outstanding Parity Obligations in
iuón f¡scal Year or twelve-month period provided, that for the purposes of determining
compliance with Section7.13 of the lnstallment Purchase Agreement and conditions for
the execution of Parity Obligations:
(A) Generatty. Except as otheruvise provided by subparagraph (B)
with respect to Variable lnterest Rate Parity Obligations, by subparagraph (C)
with respect to Parity Obligations as to which a Payment Agreement is in force,
and by subparagraph (D) with respect to certain Parity Payment Agreements,
interest on any Parity Obligation shall be calculated based on the actual amount
of interest that is payable under that Parity Obligation;
A-1
(B) lnterest on Variable lnterest Rate Parity Obligations. The amount
of interest deemed to be payable on any Variable lnterest Rate Parity Obligation
shall be calculated on the assumption that the interest rate on that Parity
Obligation would be equal to the Assumed RB|-based Rate;
(C) lnterest on lnstallment Payments or Parity Obligations with
Respecf to Which a Payment Agreement is in Force. The amount of interest
deemed to be payable on any Payment Agreement or Parity Obligations with
respect to which a Payment Agreement is in force shall, so long as the Qualified
Counterparty thereto is not in default thereunder, be based on the net economic
effect on the City expected to be produced by the terms of such Payment
Agreement or Parity Obligation and such Payment Agreement, including but not
limited to the effects that (i) any such Parity Obligation which would, but for such
Payment Agreement, be treated as an obligation bearing interest at a Variable
lnterest Rate instead shall be treated as an obligation bearing interest at a fixed
interest rate, and (ii) any such Payment Agreement or Parity Obligation which
would, but for such Payment Agreement, be treated as an obligation bearing
interest at a fixed interest rate instead shall be treated as an obligation bearing
interest at a Variable lnterest Rate; and accordingly, the amount of interest
deemed to be payable on any Payment Agreement or Parity Obligation with
respect to which a Payment Agreement is in force shall, so long as the Qualified
Counterparty thereto is not in default thereunder, be an amount equal to the
amount of interest that would be payable at the rate or rates stated in such
Payment Agreement or Parity Obligation plus the Payment Agreement Payments
minus the Payment Agreement Receipts, and for the purpose of calculating
Payment Agreement Receipts and Payment Agreement Payments under such
Payment Agreement, the following assumptions shall be made:
(1) Counterparty Obligated to pay Actual Variable lnterest
Rate on Variable lnterest Rate Parity Obligations. lf the Payment
Agreement obligates a Qualified Counterparty to make payments to the
City based on the actualVariable lnterest Rate on a Parity Obligation that
would, but for the Payment Agreement, be treated as a Variable lnterest
Rate Parity Obligation and obligates the City to make payments to the
Qualified Counterparty based on a fixed rate, payments by the City to the
Qualified Counterparty shall be assumed to be made at the fixed rate
specified by the Payment Agreement and payments by the Qualified
Counterparty to the City shall be assumed to be made at the actual
Variable lnterest Rate on such Parity Obligation, without regard to the
occurrence of any event that, under the provisions of the Payment
Agreement, would permit the Qualified Counterparty to maKe payments
on any basis other than the actual Variable lnterest Rate on such Parity
Obligation, and such Parity Obligation shall set forth a debt service
schedule based on that assumPtion;
(2) Variable lnterest Rate Parity Obligations and Payment
Agreements Having the Same Variable lnterest Rate Component. lf both
a Payment Agreement and the related Parity Obligation that would, but
for the Payment Agreement, be treated as a Variable lnterest Rate Parity
Obligation include a variable interest rate payment component that is
required to be calculated on the same basis (including, without limitation,
A-2
on the basis of the same variable interest rate index), it shall be assumed
that the variable interest rate payment component payable pursuant to
the Payment Agreement is equal in amount to the variable interest rate
component payable on such Parity Obligation;
(3) Variable lnterest Rate Parity Obligations and Payment
Agreements Having Different Variable Interest Rate Components. lf a
Payment Agreement obligates either the City or the Qualified
Counterparty to make payments of a variable interest rate component on
a basis that is different (including, without limitation, on a different
variable interest rate index) from the basis that is required to be used to
calculate interest on the Parity Obligation that would, but for the Payment
Agreement, be treated as a Variable lnterest Rate Parity Obligation, it
shall be assumed:
(a) City Obligated to Make Payments Based on
Variable lnterest Rate lndex. lf payments by the City under the
Payment Agreement are based on a variable interest rate index
and payments by the Qualified Counterparty are based on a fixed
interest rate, payments by the City to the Qualified Counterparty
will be based upon an interest rate equal to the Assumed RBI-
based Rate, and payments by the Qualified Counterparty to the
City will be based on the fixed rate specified by the Payment
Agreement; and
(b) City Obtigated to Make Payments Based on Fixed
lnterest Rate. lf payments by the City under the Payment
Agreement are based on a fixed interest rate and payments by
the Qualified Counterparty are based on a variable interest rate
index, payments by the City to the Qualified Counterparty will be
based on an interest rate equal to the rate that is one hundred
percent (100%) of the fixed interest rate specified by the Payment
Agreement to be paid by the City, and payments by the Qualified
Counterparty to the City will be based on a rate equal to the
Assumed RB|-based Rate as the variable interest rate deemed to
apply to the Variable lnterest Rate Parity Obligation.
(4) Certain Payment Agreements May be Disregarded.
Notwithstanding the provisions of subparagraphs (CX1), (2) and (3) of
this definition, the City shall not be required to (but may at its option) take
into account as set forth in subparagraph (C) of this definition (for the
purpose of determining Annual Debt Service) the effects of any Payment
Agreement that has a remaining term of ten (10) years or less;
(D) Debt Service on Parity Payment Agreemenfs. No interest shall be
taken into account with respect to a Parity Payment Agreement for any period
during which Payment Agreement Payments on that Parity Payment Agreement
are taken into account in determining Annual Debt Service on a related Parity
Obligation under subparagraph (C) of this definition; provided, that for any period
during which Payment Agreement Payments are not taken into account in
calculating Annual Debt Service on any Parity Obligation because the Parity
A-3
Payment Agreement is not then related to any other Parity Obligation, interest on
that Parity Payment Agreement shall be taken into account by assuming:
(1) City Obligated to Make Payments Based on Fixed Interest
Rate. lf the City is obligated to make Payment Agreement Payments
based on a fixed interest rate and the Qualified Counterparty is obligated
to make payments based on a variable interest rate index, payments by
the City will be based on the specified fixed rate, and payments by the
Qualified Counterparty will be based on a rate equal to the average rate
determined by the variable interest rate index specified by the Payment
Agreement during the calendar quarter preceding the calendar quarter in
which the calculation is made; and
(2) City Obligated to Make Payments Based on Variable
lnterest Rate lndex. lf the City is obligated to make Payment Agreement
Payments based on a variable interest rate index and the Qualified
Counterparty is obligated to make payments based on a fixed interest
rate, payments by the City will be based on an interest rate equal to the
average rate determined by the variable interest rate index specified by
the Payment Agreement during the calendar quarter preceding the
calendar quarter in which the calculation is made, and the Qualified
Counterparty will make payments based on the fixed rate specified by the
Parity Payment Agreement; and
(3) Certain Payment Agreements May be Disregarded'
Notwithstanding the provisions of subparagraphs (D)(1) and (2) of this
definition, the City shall not be required to (but may at its option) take into
account (for the purpose of determining Annual Debt Service) the effects
of any Payment Agreement that has a remaining term of ten (10) years or
less;
(E) Balloon Parity Obligations. For purposes of calculating Annual
Debt Service on any Balloon Parity Obligations, it shall be assumed that the
principal of those Balloon Parity Obligations shall be amortized in amounts which
produce, together with interest thereon at a rate equal to the Assumed RBI-
based Rate, equal annual installments of principal and interest over a term of
thirty (30) years from the date of issuance.
..@,,meanS,asofanydateofcalculation,anassumed
interest rate equal to ninety percent (90%) of the average RBI during the twelve (12)
calendar months immediately preceding the month in which the calculation is made.
"Mj!y" means the Lodi Public Financing Authority, a joint exercise of powers
authority duly organized and existing under the laws of the State of California.
"Authoritv Revenues" means: (a) all of the lnstallment Payments, and (b) all
interest, profits or other income derived from the investment of amounts in any fund or
account established under this lndenture.
.,@,meanS:(a)withrespecttotheAuthority,itsChair,
Executive Director, Treasurer, or Secretary, or any other person designated as an
Authorized Representative of the Authority by a Written Certificate of the Authority
A-4
signed by its Chair, Executive Director, Treasurer, or Secretary and filed with the City
and the Trustee; and (b) with respect to the City, its Mayor, City Manager, Deputy City
Manager, City Attorney, or any other person designated as an Authorized
Representative of the City by a Written Certificate of the City signed by its Mayor, City
Manager, Deputy City Manager, City Attorney and filed with the Authority and the
Trustee.
,.@,,means,asofanydateofcalculation,thesumofthe
following:
(i) The amount of unrestricted funds in the Electric Revenue Fund
designated as "Available Reserves" for purposes of the lnstallment Purchase
Agreement by the City and then available to pay Maintenance and Operation Costs
and/or Annual Debt Service, which may include any funds which are legally available for
deposit in the Electric Revenue Fund; and
(¡i) The amount of unrestricted funds in the Electric Utility Environmental
Compliance Fund (or any successor fund) designated as "Available Reserves" for
purposes of the lnstallment Purchase Agreement by the City and then available to pay
Maintenance and Operation Costs and/or Annual Debt Service.
"Balloon P Oblioation"means any Parity Obligation described as such in
such Parity Obligation.
..E.9@],,means(a)JonesHall,AProfessionalLawCorporation,or(b)
any other attorney or firm of attorneys appointed by or acceptable to the City or the
Authority of nationally-recognized experience in the issuance of obligations the interest
on which is excludable from gross income for federal income tax purposes under the
Tax Code.
"Bond Fund" means the fund by that name established and held by the Trustee
under Section 5.01.
["Bond lnsurance PolicV" means the _ issued by the Bond lnsurer
insuring the payment when due of the principal of and interest on the Bonds as provided
therein.l
["Bond lnsurer" means _r as issuer of the Bond lnsurance Policy or any
successor or assign.]
"Bond Law" means the provisions of Article 4 of Chapter 5, Division 7, Title 1 of
the Government Code of the State of California, commencing with Section 6584 of said
Code, as in effect on the Closing Date or as thereafter amended in accordance with its
terms.
Proceed means the fund established and held by the Trustee
pursuant to Section 3.02.
"Bond Year" means each twelve-month period extending from September 2 in
one calendar year to September 1 of the succeeding calendar year, both dates
A-5
inclusive; except that the first Bond Year commences on the Closing Date and extends
to and including September 1,2018.
llBoJ1dS'meansthe$-aggregateprincipalamountofLodiPublic
Financing Authority 2018 Electric System Revenue Refunding Bonds authorized by and
at any time Outstanding under this lndenture.
"Business Dav" means a day (other than a Saturday or a Sunday) on which
banks are not required or authorized to remain closed in the City in which the Office of
the Trustee is located.
"Çj!y" means the City of Lodi, a municipal corporation organized and existing
under the laws of the State of California.
"Citv Transfers" means any payments from Revenues to the City for payments-
in-lieu of taxes, transfers to the General Fund or similar payments but shall not include
any item constituting a Maintenance and Operation Cost.
"Closinq Date" means the date of delivery of the Bonds to the Original
Purchaser.
"Continuing Disclosure Aqreement" means the Continuing Disclosure
Agreement, dated as of June 1,2018, between the City and
-
with respect to
the Bonds.
"@|]W," means all items of expense directly or indirectly payable by
or reimbursable to the City or the Authority relating to the authorization, issuance, sale
and delivery of the Bonds, including but not limited to: printing expenses; rating agency
fees; filing and recording fees; initial fees, expenses and charges of the Trustee and its
counsel, including the Trustee's first annual administrative fee; fees, charges and
disbursements of attorneys, financial advisors, accounting firms, consultants and other
professionals; fees and charges for preparation, execution and safekeeping of the
Bonds; and any other cost, charge or fee in connection with the original issuance of the
Bonds.
"Costs of lssuance Fund" means the fund by that name established and held by
the Trustee under Section 3.03.
"Credit Aqreement" means an agreement to reimburse a bank, bond insurance
company or other provider of credit enhancement for the payment of the lnstallment
Payments or Parity Obligations for amounts drawn under such credit enhancement and
the interest thereon.
"Depositorv" means (a) initially, DTC, and (b) any other Securities Depositories
acting as Depository under Section 2.04.
"Depository Svstem P " means any participant in the Depository's book-
entry system.
'Dl-q' means The Depository Trust Company, New York, New York, and its
successors and assigns.
A-6
"Electric Revenue Fund" means the Electric Utility Fund (or any successor fund)
previously established by the City.
"Elec1¡¡iq-jservice" means the services, commodities, and products furnished,
made available, or provided by the Electric System.
"Escrow Agent" means The Bank of New York Mellon Trust Company, N.4., as
escrow agent under the Escrow Agreement.
"Escrow Agreement" means the Escrow Deposit and Trust Agreement, dated as
of June 1,2018, by and between the City and the Escrow Agent.
"Event of Default" means any of the events specified in Section 7'01.
"Existinq Facilities" means the additions, betterments, modifications and
improvements to the Electric System generally described in Exhibit 1 to the lnstallment
Purchase Agreement.
"Federal Securities" means: (a) any direct general obligations of the United
States of America (including obligations issued or held in book entry form on the books
of the Department of the Treasury of the United States of America), the payment of
principal of and interest on which are unconditionally and fully guaranteed by the United
States of America; and (b) any obligations the principal of and interest on which are
unconditionally guaranteed by the United States of America'
"&a¡J'eal" means any twelve-month period extending from July 1 in one
calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any
other twelve-month period selected and designated by the City as its official fiscal year
period.
"Eiþh" means Fitch Ratings and its successors and assigns.
'GHG Reve¡ueg" means amounts received by the City from the California Air
Resources Board pursuant to the State of California's cap-and-trade program.
"Generallv Accepted Accountinq Principles" means the uniform accounting and
reportingprocedures set forth in publications of the American lnstitute of Certified Public
Accountants or its successor, or by any other generally accepted authority on such
procedures selected by the Authority or City, and includes, as applicable, the standards
set forth by the GovernmentalAccounting Standards Board or its successor.
"b@nj!re" means this lndenture of Trust, as originally executed or as it may
from timã to time be supplemented, modified or amended by any Supplemental
lndenture under the provisions hereof.
"lndependent Accountant" means any certified public accountant or firm of
certified public accountants appointed and paid by the Authority or the City, and who, or
each of whom (a) is in fact independent and not under domination of the Authority or the
C¡ty; (b) does not have any substantial interest, direct or indirect, in the Authority or the
Citi; and (c) is not connected with the Authority or the City as an officer or employee of
the Authority or the City, but who may be regularly retained to make annual or other
audits of the þooks of or reports to the Authority or the City.
A-7
"lndependent Enqineer" means any registered engineer or firm of registered
engineers of national reputation generally recognized to be well qualified in engineering
matters relating to public electric utility systems, appointed and paid by the City, and
who or each of whom (a) is in fact independent and not under the domination of the
Authority or City; (b) does not have any substantial interest, direct or indirect, in the
Authority or the City; and (c) is not connected with the Authority or the City as an officer
or employee of the Authority or the City but who may be regulady retained to make
reports to the Authority or the City.
"lnstallment Pavment Date" means, with respect to any lnterest Payment Date,
the date five Business Days preceding such lnterest Payment Date.
"lnstallment Pavments" means all payments required to be paid by the City on
any date under Section 3.01 of the lnstallment Purchase Agreement, including any
amounts payable upon delinquent installments and including any prepayment thereof
under Section 9.02 of the lnstallment Purchase Agreement.
"lnstallment Purchase Aqreement" means the lnstallment Purchase Agreement
dated as of June 1 , 2018, between the City and the Authority, together with any duly
authorized and executed amendments thereto.
"lnterest Account" means the account by that name established and held by the
Trustee in the Bond Fund under Section 5.02.
"lnterest Pa ment Date" means each March 1 and September 1, commencing
September 1,2018, so long as any Bonds remain unpaid.
" " mean the costs paid or incurred by the City
for maintaining and operating the Electric System including, but not limited to, (a) all
costs of electric energy and power generated or purchased by the City for resale, costs
of transmission, fuel supply and water supply in connection with the foregoing, (b) all
expenses of management and repair and other expenses necessary to maintain and
preserve the Electric System in good repair and working order, (c) all administrative
costs of the City that are charged directly or apportioned to the operation of the Electric
System, such as salaries and wages of employees, overhead, taxes (if any) and
insurance premiums (including payments required to be paid into any self-insurance
funds not maintained from Revenues), (d) all other reasonable and necessary costs of
the City or charges required to be paid by it to comply with the terms hereof or of any
resolution authorizing the execution of the lnstallment Purchase Agreement or of any
resolution authorizing the issuance of any Parity Obligations or of such Parity
Obligations, such as compensation, reimbursement and indemnification of the trustee,
remarketing agent fees for Parity Obligations, and fees and expenses of lndependent
Accountants and lndependent Engineers; (e) all amounts required to be paid by the City
under contracts with a joint powers agency for the purchase of capacity, energy,
transmission capability or any other commodity or service in connection with the
foregoing, which contract requires payments to be made by the City thereunder to be
treated ãs maintenance and operation costs of the Electric System; (f) all deposits to be
made for rebate pursuant to the Tax Certificate and all deposits in comparable accounts
established with respect to Parity Obligations required to be deposited pursuant to the
proceedings authorizing such Parity Obligations; and (g) any other cost or expense
which, in ãccordance with Generally Accepted Accounting Principles, is to be treated as
A-8
a cost of operating or maintaining the Electric System; but excluding in all cases
depreciation, replacement and obsolescence charges or reserves therefor, amortization
of intangibles and City Transfers.
"Maximum Annual Debt Service" means, with respect to any Fiscal Year or any
other period of twelve consecutive months, the greatest Annual Debt Service payable
during such Fiscal Year or other period, as applicable, on the Outstanding lnstallment
Payments and any Outstanding Parity Obligations or Parity Obligations then being
issued.
".@,'means Moody's lnvestors Service, its successors and assigns.
"Net Pavments" means the scheduled net payments to be made by the City
pursuant to a Payment Agreement.
"¡¡g! Revenues" means, for any period of time in question, the Revenues during
such period less the Maintenance and Operation Costs during such period.
means (a) initially, Cede & Co. as nominee of DTC, and (b) any other
nominee of the Depository designated under Section 2.0a@).
"Q1|f¡ce" means the corporate trust office of the Trustee in San Francisco,
California, or such other or additional offices as the Trustee may designate in writing to
the Corporation from time to time as the corporate trust office for purposes of this
lndenture; except that with respect to presentation of Bonds for payment or for
registration of transfer and exchange such term means the office or agency of the
Trustee at which, at any particular time, its corporation trust agency business is
conducted.
,.@,,meansJ.P.MorganSecuritiesLLc,astheoriginal
purchaser of the Bonds upon their delivery by the Trustee on the Closing Date.
"Outstandinq" mearìs, (i) when used as of any particular time with reference to
Bonds, means all Bonds theretofore, or thereupon being, authenticated and delivered by
the Trustee under this lndenture except: (a) Bonds theretofore canceled by the Trustee
or surrendered to the Trustee for cancellation; (b) Bonds with respect to which all liability
of the Authority shall have been discharged in accordance with Section 10.02, including
Bonds (or portions thereof) described in Section 11.09; and (c) Bonds for the transfer or
exchange of or in lieu of or in substitution for which other Bonds shall have been
authenticated and delivered by the Trustee under this lndenture, (ii) when used as of
any particular time with reference to lnstallment Payments, all lnstallment Payments
wl"rich have not been paid or othenruise satisfied as provided in Article lX of the
lnstallment Purchase Agreement, and (iii) when used as of any particular time with
reference to Parity Obligations means all Parity Obligations which have not been paid or
otherwise satisfied as provided in the proceedings and instruments pursuant to which
such Parity Obligations have been issued or incurred. For purposes of Section 6.01 and
Section 7.13 of the lnstallment Purchase Agreement only, (i) Parity Payment
Agreements related to other Parity Obligations which are included in determining Annual
Debt Service on such other Parity Obligations, and (ii) Credit Agreements as to which no
amounts have been drawn which have not been reimbursed by the City shall not be
considered Outstanding for purposes of the lnstallment Purchase Agreement.
A-9
"@f", whenever used herein with respect to a Bond, means the person in
whose name the ownership of such Bond is registered on the Registration Books.
"Paritv lioations " means all obligations hereafter issued or incurred by the
City, the payment of which constitutes a charge and lien on the Net
moneys in the Electric Revenue Fund equal to and on a parity basis with
lien upon the Net Revenues and moneys in the Electric Revenue Fund
Revenues and
the charge and
for the payment
of the lnstallment Payments.
"Paritv Pavment Aqreement" means a Payment Agreement that is a Parity
Obligation.
"Pavment Aqreement" means a written agreement for the purpose of managing
or reducing the City's exposure to fluctuations in interest rates or for any other interest
rate, investment, cash flow, asset or liability managing purposes, entered into either on
a current or fonuard basis by the City and a Qualified Counterparty in connection with, or
incidental to, the entering into of any Parity Obligation, that provides for an exchange of
payments based on interest rates, ceilings or floors on such payments, options on such
payments, or any combination thereof or any similar device.
"Pavment Aqreement Pavments" means the amounts required to be paid
periodically by the City to the Qualified Counterparty pursuant to a Payment Agreement.
" " means the amounts required to be paid
periodically by the Qualified Counterparty to the City pursuant to a Payment Agreement.
..@,'meanSanyofthefollowingwhichatthetimeof
investment are determined by the Authority to be legal investments under the laws of
the State of California for the moneys proposed to be invested therein (provided that the
Trustee shall be entitled to rely conclusively upon any such determination by the
Authority):
(a) FederalSecurities.
(b) Bonds, debentures, notes or other evidence of indebtedness issued
or guaranteed by any federal agencies whose obligations are
backed by the full faith and credit of the United States of America'
(c) Money market funds registered under the Federal lnvestment
Company Act of 1940, whose shares are registered under the
Federal Securities Act of 1933, and which are rated in the highest
short-term rating category by S&P (such funds may include funds
for which the Trustee, its affiliates, parent or subsidiaries provide
investment advisory or other management services) but excluding
funds with a floating net asset value.
Certificates of deposit (including those of the Trustee, its parent and
its affiliates) secured at all times by collateral described in (a) or (b)
above, which have a maturity not greater than one year from the
date of investment and which are issued by commercial banks,
savings and loan associations or mutual savings banks whose
short-term obligations are rated A or better by S&P, which collateral
(d)
AJlO
must be held by a third party and provided that the Trustee must
have a perfected first security interest in such collateral.
(e) Certificates of deposit, savings accounts, deposit accounts or
money market deposits (including those of the Trustee and its
affiliates) which are fully insured by the Federal Deposit lnsurance
Corporation or secured at all times by collateral described in (a) or
(b) above.
(f) lnvestment agreements with a financial institution the long{erm
debt or claims paying ability of which, or in the case of a guaranteed
corporation the long{erm debt, or, in the case of a monoline
financial guaranty insurance company, claims paying ability, of the
guarantor or the institution is rated AA or better from S&P, by the
terms of which the Trustee is permitted to withdraw the invested
funds if the rating from S&P falls below AA.
(g) A repurchase agreement with any bank or trust company organized
under the laws of any state of the United States or any national
banking association (including the Trustee) having a minimum
permanent capital of one hundred million dollars ($100,000,000) or
government bond dealer reporting to, trading with, and recognized
as a primary dealer by the Federal Reserve Bank of New York,
which agreement has a term of no more than thirty (30) days and is
secured by any one or more of the securities and obligations
described in clauses (a) or (b) above, which shall have a market
value (inclusive of accrued interest and valued at least weekly)
equal to one hundred four percent (104o/o) of the amount of cash
transferred by the Trustee to the bank, trust company, national
banking association or bond dealer and at a level such that such
repurchase agreement shall have a rating that is equal to or greater
than the rating on the Bonds; such securities shall be lodged with
the Trustee or other fiduciary, as custodian for the Trustee, by the
bank, trust company, national banking association or bond dealer
executing such repurchase agreement, and the entity executing
each such repurchase agreement required to be so secured shall
furnish the Trustee with an undertaking satisfactory to it that the
aggregate market value of all such obligations securing each such
repurchase agreement (as valued at least weekly) will be an
amount equal to such required level and the Trustee shall be
entitled to rely on each such undertaking.
(h) The Local Agency lnvestment Fund which is administered by the
California Treasurer for the investment of funds belonging to local
agencies within the State of California, provided for investment of
funds held by the Trustee, the Trustee is entitled to make
investments and withdrawals in its own name as Trustee.
"Principal Account" means the account by that name established and held by the
Trustee in the Bond Fund under Section 5.02
A-11
"Qualified Counterpartv" means a party (other than the City) who is the other
party to a Payment Agreement and (1) (a) whose senior debt obligations are rated in
one of the three highest rating categories of each of the Rating Agencies then rating the
Bonds or any Parity Obligations (without regard to any gradations within a rating
category), or (b) whose obligations under the Payment Agreement are guaranteed for
the entire term of the Payment Agreement by a bond insurer or other institution which
has been or whose debt service obligations have been assigned a credit rating in one of
the three highest rating categories of each of the Rating Agencies then rating the Bonds
or any Parity Obligations (without regard to any gradations within a rating category), and
(2) who is otherwise qualified to act as the other party to a Payment Agreement with the
City under any applicable laws.
"Ratinq Agencies" means S&P and Moody's and their respective successors or
assigns, or any other nationally recognized securities rating agency or agencies rating
the Bonds or any Outstanding Parity Obligations at the Written Request of the City.
"[Q[" means the Bond Buyer Revenue Bond lndex or comparable index of long-
term municipal obligations chosen by the City, or, if no comparable index can be
obtained, eighty percent (80%) of the LIBOR lndex Rate.
"Record Date" means , with respect to any lnterest Payment Date, the 15th
calendar day of the month preceding such lnterest Payment Date, whether or not such
day is a Business Day.
..@,,meanstherecordsmaintainedbytheTrusteeunder
Section 2.05 for the registration and transfer of ownership of the Bonds.
2["Reserve Requirement" means with respect to the Bonds, as of any date of
determination, the least of (a) ten percent (10o/o) of the initial offering price to the public
of the Bonds as determined under the Code, or (b) the greatest Annual Debt Service
with respect to the lnstallment Payments in any Fiscal Year during the period
commencing with the Fiscal Year in which the determination is being made and
terminating with the last Fiscal Year in which any lnstallment Payment is due, or (c) one
hundred twenty-five percent (125o/o) of the sum of the Annual Debt Service with respect
to the lnstallment Payments for all Fiscal Years during the period commencing with the
Fiscal Year in which such calculation is made (or if appropriate, the first full Fiscal Year
following the execution and delivery of the Bonds) and terminating with the last Fiscal
Year in which any lnstallment Payment is due, divided by the number of such Fiscal
Years, all as computed and determined by the City and specified in writing to the
Trustee.l
"Revenues" mean all gross income and revenue received or receivable by the
City from the ownership or operation of the Electric System, including all rates and
charges for the Electric Service and the other services and facilities of the Electric
System, all proceeds of insurance covering business interruption loss relating to the
Electric System and all other income and revenue howsoever derived by the City from
the ownership or operation of the Electric System or otherwise arising from the Electric
System, including all Payment Agreement Receipts, and all income from the deposit or
investment of any money in the Electric Revenue Fund (provided that all Payment
'To be deleted throughout if not required
A-12
Agreement Receipts and all income from the deposit or investment of any money in the
Electric Revenue Fund shall be excluded from the definition of "Revenues" for purposes
of Section 6.01(a) and Section 7.13 of the lnstallment Purchase Agreement), but
excluding (i) proceeds of taxes and (ii) refundable deposits made to establish credit and
advances or contributions in aid of construction and line extension fees.
uS&P" means Standard & Poor's, a division of the McGraw Hill Companies, of
New York, New York, its successors and assigns.
..@,,meansDTC;and,inaccordancewiththencurrent
guidelines of the Securities and Exchange Commission, such other addresses and/or
such other securities depositories as the Authority designates in written notice filed with
the Trustee.
..@',meansobligationsoftheCityauthorizedandexecuted
by the City under applicable law, the payments under and pursuant to which are payable
from Net Revenues, subject and subordinate to the payment of the lnstallment
Payments hereunder and to the payment of Parity Obligations. Such obligations may be
payable from any fund established for the purpose of paying debt service on such
Subordinate Obligations.
"Suþþleme I lndenture" means an y indenture hereafter duly authorized and
entered into between the Authority and the Trustee, supplementing, mod ifying or
amending this lndenture; but only if and to the extent that such Supplemental lndenture
is specifically authorized hereunder.
"Tax Certificate" means the Certificate as to Arbitrage and Certificate Regarding
Use of Proòèeds, concerning certain matters pertaining to the use and investment of
proceeds of the Bonds, executed and delivered by the Authority on the date of delivery
of the Bonds, including any and all exhibits attached thereto.
"Tax Code" means the lnternal Revenue Code of 1986 in effect on the Closing
Date or (except as othenruise referenced herein) as it may be amended to apply to
obligations issued on the Closing Date, together with applicable temporary and final
regulations promulgated, and applicable official public guidance published, under said
Code.
..@,'meanstheamount,ifany,payablebytheCitypursuant
to a Payment Agreement as the result of the termination of such Payment Agreement
prior to its scheduled expiration date.
"Trustee' means MUFG Union Bank, N.4., a national banking association
organized and existing under the laws of the United States of America, or its successor
or successors, as Trustee hereunder as provided in Article Vlll.
.,@',meansanyvariableinterestrateorratestobepaid
under any Parity Obligations, the method of computing which variable interest rate shall
þe as specified in the applicable Parity Obligation, which Parity Obligation shall also
specify either (i) the payment period or periods or time or manner of determining such
period or periods or time for which each value of such variable interest rate shall remain
in effect, and (ii) the time or times based upon which any change in such variable
interest rate shall become effective, and which variable interest rate may, without
A-13
limitation, be based on the interest rate on certain bonds or may be based on interest
rate, currency, commodity or other indices.
" " mearìs, for any period of time, all in
accordance with the definition of "Annual Debt Service", any Parity Obligations that bear
a Variable lnterest Rate during such period, except that (i) Parity Obligations shall not
be treated as Variable lnterest Rate Parity Obligations if the net economic effect of
interest rates on particular payments of the Parity Obligations and interest rates on other
payments of the same Parity Obligations, as set forth in such Parity Obligations, or the
net economic effect of a Payment Agreement with respect to particular Parity
Obligations, in either case, is to produce obligations that bear interest at a fixed interest
rate, and (ii) lnstallment Payments and Parity Obligations with respect to which a
Payment Agreement is in force shall be treated as Variable lnterest Rate Parity
Obiigations if the net economic effect of the Payment Agreement is to produce
obligations that bear interest at a Variable lnterest Rate.
"@Qertificalg." "WL!1!4Bgg@l!" and "Written Requisition" of the Authority
or the City mean, respectively, a written certificate, request or requisition signed in the
name of the Authority or the City by its Authorized Representative. 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
moie so combined shall be read and construed as a single instrument.
A-14
NO. R-
INTEREST RATE:
o/o
MATURITY DATE:
September 1, _
APPENDIX B
BOND FORM
***$
UruITTO STATES OF AMERICA
STATE OF CALIFORNIA
LODI PUBLIC FINANCING AUTHORITY
2018 EIECTRIC SYSTEM REVENUE REFUNDING BOITIO
ORIGINAL ISSUE DATE: CUSIP
***
2018
REGISTERED OWNER: CEDE & CO
***PRINCIPAL AMOUNT: **"
The LODI PUBLIC FINANCING AUTHORITY, a joint exercise of powers
authority duly organized and existing under the laws of the State of California (the
"Authority"), for value received, hereby promises to pay to the Registered Owner
specified above or registered assigns (the "Registered Owner"), on the Maturity Date
specified, the Principal Amount specified above, in lawful money of the United States of
America, and to pay interest thereon in like lawful money from the lnterest Payment
Date (as hereinafter defined) next preceding the date of authentication of this Bond
unless (i) this Bond is authenticated on or before an lnterest Payment Date and after the
close oi business on the 1sth day of the month preceding such interest payment date, in
which event it shall bear interest from such lnterest Payment Date, or (ii) this Bond is
authenticated on or before August 15,2018, in which event it shall bear interest from the
Original lssue Date specified above; provided, however, that if at the time of
authentication of this Bond, interest is in default on this Bond, this Bond shall bear
interest from the lnterest Payment Date to which interest has previously been paid or
made available for payment on this Bond, at the lnterest Rate per annum specified
above, payable semiannually on March 1 and September 1 in each year, commencing
September 1,2018 (the "lnterest Payment Dates"), calculated on the basis of a 360-day
year composed of twelve 30-day months.
Principal hereof is payable upon presentation and surrender hereof at the
corporate trust office of MUFG UNION BANK, N.4., as trustee (the "Trustee"), in San
Francisco, California, or such other place as designated by the Trustee (the "Trust
Office"). lnterest hereon is payable by check of the Trustee mailed on the applicable
lnterest Payment Date to the Registered Owner hereof at the Registered Owner's
B-1
address as it appears on the registration books of the Trustee as of the close of
business on the fifteenth day of the month preceding each lnterest Payment Date (a
"Record Date"), or, upon written request filed with the Trustee as of such Record Date
by a registered owner of at least $1,000,000 in aggregate principal amount of Bonds, by
wire transfer in immediately available funds to an account in the United States
designated by such registered owner in such written request.
This Bond is not a debt of the City of Lodi (the "City"), the County of San
Joaquin, the State of California, or any of its political subdivisions, and neither the City,
said County, said State, nor any of its political subdivisions, is liable hereon nor in any
event shall this Bond be payable out of any funds or properties of the Authority other
than the Authority Revenues.
This Bond is one of a duly authorized issue of bonds of the Authority designated
as the "Lodi Public Financing Authority 2018 Electric System Revenue Refunding
all of likeBonds" (the "Bonds"), in an aggregate princip al amount of $
tenor and date (except for such variation, if any, as may be required to designate
varying numbers, maturities or interest rates) and all issued under the provisions of
Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the
"Bond Law"), and under an lndenture of Trust dated as of 1,2018, between
the Authority and the Trustee (the "lndenture") and a resolution of the Authority adopted
on 2018, authorizing the issuance of the Bonds. Reference is hereby
made to the lndenture (copies of which are on file at the office of the Authority) and a
supplements thereto for a description of the terms on which the Bonds are issued, the
provisions with regard to the nature and extent of the security for the Bonds, and the
rights thereunder of the owners of the Bon ds and the rights, duties and immunities of
the Trustee and the rights and obligations of the Authority thereunder, to all of the
provisions of which the Registered Owner of this Bond, by acceptance hereof, assents
and agrees,
The Bonds maturing on or before Septembet 1, 20_-, are not subject to optional
redemption prior to their respective stated maturity dates. The Bonds maturing on or
after September 1 , 20-., are subject to redemption in whole, or in part at the Written
Request of the Authority among maturities on such basis as the Authority may designate
and within a maturity as set forth in the lndenture, at the option of the Authority, on any
date on or after September 1, 2O_, from any available source of funds, at a redemption
price equal to 100% of the principal amount of the Bonds to be redeemed, plus accrued
interest to the date of redemption, without premium.
The Bonds have been issued by the Authority to refinance an installment
payment obligation incurred by the City to finance improvements to the electric
distribution system of the City (the "Electric System"). The Bonds are special obl ationsrg
of the Authority which are payable from and secured by a charge and lien on the
Authority Revenues as defined in the lndenture, consisting principally of installment
payments made by the City under an lnstallment Purchase Agreement dated as of
between the Authority and the City (the "lnstallment Purchase
Agreement"). As and to the extent set forth in the lndenture,
Revenues are exclusively and irrevocably pledged in accordance
1,2018,
all of the Authority
with the terms of the
lndenture to the payment of the principal of and interest and premium (if any) on the
Bonds.
B-2
The rights and obligations of the Authority and the owners of the Bonds may be
modified or amended at any time in the manner, to the extent and upon the terms
provided in the lndenture, but no such modification or amendment shall extend the fixed
maturity of any Bonds, or reduce the amount of principal thereof or premium (if any)
thereon, or extend the time of payment, or change the method of computing the rate of
interest thereon, or extend the time of payment of interest thereon, without the consent
of the owner of each Bond so affected.
This Bond is transferable by the Registered Owner hereof, in person or by his
attorney duly authorized in writing, at the Trust Office, but only in the manner, subject to
the limitations and upon payment of the charges provided in the lndenture, and upon
surrender and cancellation of this Bond. Upon registration of such transfer, a new Bond
or Bonds, of authorized denomination or denominations, for the same aggregate
principal amount and of the same maturity will be issued to the transferee in exchange
herefor. This Bond may be exchanged at the Trust Office for of the same tenor,
aggregate principal amount, interest rate and maturity, of other authorized
denominations.
The Authority and the Trustee may treat the Registered Owner hereof as the
absolute owner hereof for all purposes, and the Authority and the Trustee shall not be
affected by any notice to the contrary.
Unless this Bond is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC") to the Authority or the Trustee for
registration of transfer, exchange, or payment, and any Bond issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other entity
as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
lS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
It is hereby certified by the Authority that all of the things, conditions and acts
required to exist, to have happened or to have been performed precedent to and in the
issuance of this Bond do exist, have happened or have been performed in due and
regular time, form and manner as required by the Bond Law and the laws of the State of
California and that the amount of this Bond, together with all other indebtedness of the
Authority, does not exceed any limit prescribed by any laws of the State of California,
and is not in excess of the amount of Bonds permitted to be issued under the lndenture.
This Bond is not entitled to any benefit under the lndenture or valid or obligatory
for any purpose until the certificate of authentication hereon endorsed has been
manually signed by the Trustee.
B-3
lN WITNESS WHEREOF, the Lodi Public Financing Authority has caused this
Bond to be executed in its name and on its behalf with the facsimile signature of its
Chair and attested to by the facsimile signature of its Secretary, all as of the Original
lssue Date specified above.
LODI PUBLIC FINANC¡NG AUTHORITY
By
Chair
Attest
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned lndenture
Dated
MUFG UNION BANK, N.4., AS TruStEE
By:
Authorized Signatory
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
whose address and social security or other
tax identifying number is the within-mentioned Bond and
hereby irrevocably constitute(s)and appoint(s)
attorney, to transfer the same on the
registration books of the Trustee with full power of substitution in the premises
Dated
Signature Guaranteed
Note: Signature guarantee shall be made by a
guarantor institution participating in the Securities
Transfer Agents Medallion Program or in such other
guarantee program acceptable to the Trustee.
Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the face of
the within Bond in every particular without alteration or
enlargement or any change whatsoever.
B-4
B-5
EXHIBIT C
FORM OF INSTALLMENT PURCHASE AGREEMENT
Jones Hall, APLC Draft 4110118
OPEN ITEMS: Necessity of reserve requirement and bond insurance
INSTALLMENT PURGHASE AGREEMENT
by and between the
CITY OF LODI,
and the
LODI PUBLIC FINANCING AUTHORITY
Dated as ofJune 1,2018
Relating to
$_
2018 Electric System Revenue Refunding Bonds
TABLE OF CONTENTS
Paqe
ARTICLE l. DEFINITIONS; RULES OF
INTERPRETATION
SECTION 1.01. Definitions 3
ARTICLE II. REPRESENTATIONS, COVENANTS AND
WARRANTIES
SECTION 2.01. Purchase of Existing Facilities by Authority
SECTION 2.02. Sale of the Bonds
SECTION 2.03. lnvestment of Moneys in Funds Created Under lndenture
ARTICLE III. INSTALLMENT PAYMENTS AND
PREPAYMENTS
SECTION 3.01 . /nsfallment Payments
SECTION 3.02. Effect of Prepayment.......'.. "
SECTION 3.03. Prepayments and Bond lnsurance'
ARTICLE IV. ELECTRIC SYSTEM REVENUES; FUNDS
SECTION 4.01. Ptedge of Net Revenues and Etectric Revenue Fund ."...." ..'.""""'4
SECTION 4.02. Escrow Fund . Error! Bookmark not defined'
SECTION 4.03. tnvesfmenÚs.... """"""'6
ARTICLE V. BOND INSURANCE POLICY
ARTICLE VI. PARITY OBLIGATIONS AND SUBORDINATE OBLIGATIONS
sEcTloN 6.01. Conditions for the Execution of Parity obligations
SECTION 6.02. tnteresf Rafe Exchange Agreements
SECTION 6.03. Subordinate Obligations
ARTICLE VII. COVENANTS OF THE CITY
3
3
3
3
4
4
7II
I
II
SECTION 7
SECTION 7
SECTION 7
SECTION 7
SECTION 7
SECTION 7
SECTION 7
SECTION 7
SECTION 7
SECTION 7
SECTION 7
SECTION 7
01.
02.
03.
04.
05.
06.
07.
08.
09.
10.
11.
12.
Compliance with Contract....
Distribution of Net Revenues.
Tax Covenanfs ..........
Against Encumbrances............
Sale or Other Disposition of Property
Eminent Domain and lnsurance Proceeds ...'........
Maintenance and Operation of the Electric Sysfem; Budgets ....
Comptiance with Contracts for use of the Electric Sysfem.........
lnsurance
Accounting Records; Financial Statements and Other Reporfs
Protection of Security and Rights of the Authority.'.
Payment of Taxes and Compliance with Governmental
Regulations ...............
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12
SECTION 7
SECTION 7
SECTION 7
SECTION 7
SECTION 7
sEcTloN 8.01
sEcÏoN 8.02
sEcTtoN 8.03
sEcTloN 8.04
sEcTtoN 8.05
sEcTroN 10.01.
sEcTtoN 10.02.
sEcÏoN 10.03.
sEcTroN 10.04.
sEcïoN 10.05.
sEcTloN 10.06.
sEcTloN 10.07.
sEcTtoN 10.08.
sEcTloN 10.09.
sEcTroN 10.10.
sEcTloN 10.11.
sEcTloN 10.12.
sEcïoN 10.13.
sEcTloN 10.14.
sEcÏoN 10.15.
13. Amount of Rates and Charges.........
14. Collection of Rates and Charges......
15. Fuñher Assurances...............
16. Continuing Disclosure............
17. City Obligations to pay the Trustee...
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
Events of Default..
Remedies on Default.
Non-Waiver.......... ;....
Remedies Not Exclusive............
Application of Net Revenues Upon Acceleration
Payment Liability of City Limited.....
Amendmenfs ..............
Assignment of Contracf ..............
Benefits of Contracts Limited to Pafties..
Successor is Deemed lncluded in all References to
Predecessor..............
Waiver of Personal LiabilitY
Articte and Section Heading, Gender and References.
Partial lnvalidity
Net Contract ..............
California Law...........
I ndemnification ...........
Funds
Noúices
Effective Date .........
Execution in Counterpart .............
13
14
14
15
15
ARTICLE IX. DISCHARGE OF OBLIGATIONS
SECTION 9.01. Security DePosit
SECTION 9.02. Optional Prepayment............
SECTION 9.03. Accounting and Discharge lnstrumenfs"
ARTICLE X. MISCELLANEOUS
16
16
17
17
17
18
18
18
18
19
19
19
19
19
20
20
20
20
APPENDIX A SCHEDULE OF INSTALLMENT PAYMENTS AS OF DELIVERY DATE
EXHIBIT 1 DESCRIPTION OF EXISTING FACILITIES
-il-
I NSTALLMENT PURCHASE AGREEMENT
ThiS INSTALLMENT PURCHASE AGREEMENT MAdE ANd ENtCTEd iNtO AS Of JUNC
1, 2018 (this "lnstallment Purchase Agreement"), by and between the CITY OF LODI, a
municipâl corporation duiy organized and existing under and by virtue qf t!9laws of the
State óf Cal¡fornia (the "Qj!y"), and the LODI PUBLIC FINANCING AUTHORITY, a joint
exercise of powers auth.iìty organized and existing under the laws of the State of
California (the "Authoritv"),
WITNESSETH:
WHEREAS, the City owns and operates facilities and property for the distribution
of electricity within the service area of the City (the "Electric Svstem") to furnish its
inhabitants with light and power; and
WHEREAS, the City previously entered into an lnstallment Purchase Contract,
dated as of July 1, 2OOg (the "2008 lnstallment Purchase Contract") with the Lodi Public
lmprovement Corporation (the "Corporation"), pursuant to which the City agreed to
make certain installment payments in the aggregate principal amount of $60,685,000
(the "2008 lnstallment Pavments"), and caused execution and delivery of Electric
òystemffiarticipation,2008-SeriesA(the.,20089@ates''),
púrsuant to a Trust Agreement, dated as of July 11 20qq (the "2009 frust Aqreemeil"),
between the Corporatlon and The Bank of New York Mellon Trust Company, N.A', as
trustee (the "20d8 Trustee"), all for the purpose of (i) currently refunding the then-
outstanding $¿O,ZOOpOO principal amount of Electric System Revenue Certificates of
participatioln 2002 Series' A Variable Rate Certificates (the "200? Certificates'), (ii)
paying costs of delivery of the 2008 Certificates, (iii) funding certain costs relating to
ieri-niñat¡on of the swaþ agreement relating to the 2002 Certificates, (iv) purchasing a
financial guaranty insuianCe policy for the 2008 Certificates, and (v) funding a reserve
fund for the 2008 Certificates; and
WHEREAS, the proceeds of the 2002 Certificates were used to refund, on an
advance basis, the 1999 Series A Current lnterest Certificates and the 1999 Series B
Capital Appreciation Certificates (together, the "1999 Obligations")..T|" proceeds of the
lggg ObÍ¡òations were used to finance the Existing Facilities relating to the Electric
System; ánd
WHEREAS, pursuant to Section 3.02 of the 2008 lnstallment Purchase Contract,
the City has the right to prepay the 2008 lnstallment Payments. Pursuant to Section
Z.O¿ of tne 2008 Tiust Agreement, the 2008 Certificates with a maturity date of July 1,
2019 and thereafter are subject to prepayment from prepayments of 2008 lnstallment
payments made at the option of the City on and after July 1 , 2018, at a prepayment
prióe equal to the principal amount of the 2008 Certificates to be prepaid plus accrued
but unpaid interest thereon to the prepayment date, without premium; and
WHEREAS, the City proposes to refinance the City' s obligations to make the
2008 lnstallment Payments and the related 2008 Certificates maturing on and after July
1, 2O1g for the purþose of achieving savings for the benefit of the customers of the
Electric System; and
WHEREAS, pursuant to Section 9.01 of the 2008 lnstallment Purchase Contract,
all obligations of the City with respect to the 2008 lnstallment Payments shall cease and
terminãte (except for the obligation to make payment from deposited funds and
Defeasance Securities (as defined in the 2008 Trust Agreement) as provided in Article
Vlll of the 2008 Trust Agreement) when the 2008 Certificates have been paid or
deemed paid in accordance with Article Vlll of the 2008 Trust Agreement; and
WHEREAS, the Authority has been formed for the purpose of assisting the City
in the financing and refinancing of public capital improvements; and
WHEREAS, the Authority has agreed to assist the City by acquiring the Existing
Facilities as herein provided and selling the Existing Facilities to the City on the terms
and conditions set forth herein; and
WHEREAS, the Authority will raise funds that are sufficient (along with other
available City funds) for the payment and prepayment of the 2008 lnstallment Payments
and, as a reiult, the defeasance and prepayment of the 2008 Certificates, by issuing its
loOi pu5l¡c Financing Authority 2018 Electric System Revenue Refunding Bonds in the
aggregate principal ãmount of $- (the "Bonds") undel an lndenture of
Tiùst ãateO as ót June 1 , 2018 6he "lndenture"), between the Authority and MUFG
Union Bank, N.4., as trustee (the "Trustee"); and
WHEREAS, the Bonds are payable from revenues consisting primarily of
lnstallment Payments payable by the City hereunder; and
WHEREAS, in the City's obligation to make the lnstallment Payments is secured
by a pledge of and lien on the Net Revenues (as defined in the lndenture) of the Electric
System; and
WHEREAS, the City and the Authority have duly authorized the execution of this
lnstallment Purchase Agreement; and
WHEREAS, all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in connection with the
exècution and delivery of this lnstallment Purchase Agreement do exist, have happened
and have been performed in regular and due time, form and manner as required by law,
and the parties hereto are now duly authorized to execute and enter into this lnstallment
Purchase Agreement;
NOW, THEREFORE, IN CONSIDERATION OF THESE PREMISES AND OF
THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR
OTHER VALUABLE CONSIDERATION, THE PARTIES HEREBY AGREE AS
FOLLOWS:
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ARTICLE I
DrrrunoNs; RULES oF INTERPRETATIoN
SECTION 1.01. Definitions. Unless the context othenruise requires, capitalized
terms used in this lnstallment Purchase Agreement shall for all purposes hereof and of
any amendment hereof or supplement hereto and of any report or other document
méntioned herein or therein have the meanings given such terms in the lndenture, such
definitions to be equally applicable to both the singular and plural forms of any of the
defined terms.
ARTICLE II
RepnESCNTATIONS, COVENANTS AND
WARRANT¡ES
SECTION 2.01. Purchase of Existing Facitities by Authority. ln consideration of
the application of the proceeds of the Bonds as provided in Section 3.02 of the
lndeniure, the City hereby sells, assigns, and transfers to the Authority, and the
Authority hereby púrchases from the City, all of the City's right, title and interest in the
Existing Facilities. ln consideration of the agreement of the City to make the lnstallment
payme-nts as provided in Section 3.01 hereof, the Authority hereby sells, assigns, and
trañsfers to the City, and the City hereby purchases from the Authority, all of the
Authority's right, title and interest in the Existing Facilities'
SECTION 2.02. Sale of the Bonds. ln order to provide funds for the refunding of
the 2008 Certificates, the Authority, as soon as practicable after the execution of this
lnstallment Purchase Agreement, will cause the sale and delivery of the Bonds to the
Original Purchaser theréof and pay the proceeds thereof to Trustee who shall deposit
the proceeds of such sale received by the Trustee as provided in Section 3.02 of the
lndenture.
SECTION 2.03. lnvestment of Moneys in Funds Created lJnder lndenture. Any
moneys held as a part of the Bond Fund or any other fund created pursuant to the
lndeniure shall be invested or reinvested by Trustee as provided in Section 5.07 of the
lndenture. The City approves and agrees with the investment provisions of the
lndenture. The City acknowledges that to the extent regulations of the Comptroller of
the Currency or other applicable regulatory entity grant the Authority or the City the right
to receive brokerage confirmations of security transactions as they occur, the City
specifically waives réceipt of such confirmations to the extent permitted by law.
ARTICLE III
IruSTRUIVIENT PAYMENTS AND PREPAYMENTS;
SECTION 3.01. lnstallment Payments. The City shall, subject to any rights of
prepayment provided in Section 9.02 hereof and the exercise of any remedies under
-ó-
Article Vlll hereof, pay the Authority the lnstallment Payments at the times and in the
amounts set forth in Schedule A hereto as the purchase price for the Existing Facilities.
The obligation of the City to pay the lnstallment Payments is, subject to Section
10.01 hereof, ábsolute and unconditional, and until such time as the lnstallment
payments shall have been paid in full (or provision for the payment thereof shall have
beén made pursuant to Article lX hereof), the City will not discontinue or suspend any
lnstallment Payments required to be paid by it under this section when due, whether or
not the Electric System or any part thereof (including the Existing Facilities) is operating
or operable, or its use is suspended, interfered with, reduced, curtailed or terminated in
whoie or in part, and such lnstallment Payments shall not be subject to reduction
whether by offset, abatement or othen¡vise and shall not be conditional upon the
performanóe or nonperformance by any party to any agreement or for any other cause
whatsoever.
SECTION 3.02. Effect of Prepayment. lf the City prepays all remaining
lnstallment Payments in full under Section 9.02, the City's obligations .
under this
lnstallmeñt Purchase Agreement will thereupon cease and terminate, including but not
limited to the City's obligation to pay lnstallment Payments therefor under Section 3.01;
provided, however, that the City's obligations to compensate and indemnify the Trustee
under Section 10.11 will survive such prepayment. lf the City prepays the lnstallment
payments in part but not in whole under Section 9.02, the principal component of each
suóceeding lnstallment Payment will be reduced as provided in such Section, and the
interest cımponent of eaðh remaining lnstallment Payment will be reduced by the
aggregate corresponding amount of iñterest which would othenryise be payable with
rãr.-p"ðt to the goñOs thereby redeemed under the applicable provisions of Section 4.01
of the lndenture.
[SECTION 3.03. Prepayments and Bond lnsurance. ln the event that a draw is
made ón the Bond lnsurance Policy, the City shall not make any prepayments of
lnstallment Payments pursuant to Section 9.02 hereof unless all amounts owed by the
City to the Bónd lnsurer have been paid in full pursuant to the terms of the Bond
lnsurance Policy.l
ARTICLE IV
Euecrnrc SYSTEM REVENUES; FUNDS
SECTION 4.01. Ptedge of Net Revenues and Electric Revenue Fund. (a)
Subject to the application thereof on the terms and conditions and for the purposes
neré¡n provided, all ruet Revenues of the Electric System and all moneys on deposit in
the Elect¡c Revenue Fund are hereby irrevocably pledged to the payment of the
lnstallment Payments and the compensation and indemnification payable to the Trustee
pursuant to Sêction 7.17, which pledge shall be on a parity with any pledge of Net
iìeuenues or of moneys in the Electric Revenue Fund securing Parity Obligations as to
which the provisions of Section 6.01 hereof have been satisfied. This pledge shall
constitute a t¡rst pledge of and charge and lien upon the Net Revenues of the Electric
System and moneys in ttre Electric Revenue Fund for the payment of amounts due with
respect to the lnsiallment Payments and all Parity Obligations in accordance with the
terms hereof and thereof.
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The general fund of the City is not liable for, and neither the faith and credit nor
the taxing pòwer of the City is pledged to, the payment of the lnstallment Payments.
(b) ln order to carry out and effectuate the obligation of the City contained herein
to pay ihe lnstallment Payments, the City agrees and covenants that all Revenues
received by it shall be deposited when and as received in the Electric Revenue Fund
which fund has heretofore been established by the City and which fund the City agrees
and covenants to maintain separate and apart from other funds of the City so long as
any lnstallment Payment remains Outstanding hereunder. All money on deposit in the
Eléctric Revenue Èund shall be applied, transferred and used only as provided below
and in the following order of priority with any deficiency in any required deposit to be
rectified before making any deposit of a lower priority:
(i) To the payment of the Maintenance and Operation Costs then due and
payable and thó establishment of a reasonable contingency reserve for Maintenance
and Operation Costs.
(ii) On or before each lnstallment Payment Date, a sum equal to the
lnstallment Payment becoming due and payable on such date shall be transferred to the
Bond Fund. Oñ or before each date (other than an lnstallment Payment Date) on which
an lnstallment Payment becomes due and payable hereunder (whether by prepayment
pursuant to Sectión 9.02, acceleration pursuant to Section 8.02 or othenrvise), a sum
äqual to the lnstallment Payment becoming due and payable on such.date shall be
tránsferred to the Bond Éund. Notwithstanding the foregoing provisions of this
subsection (ii), no such deposits to the Bond Fund need be made by the City from the
Electric Revenue Fund to t'he extent the Trustee then holds in the Bond Fund sufficient
available funds to pay the lnstallment Payment to be paid with such deposit. ln addition,
on or before each due date therefor under the instruments and proceedings pursuant to
which Parity Obligations have been issued or incurred, the sum or sums required to be
paid or deóositeð in a debt service or other paym_enl fund or account with respect to
þ¡ncipal, premium, if any, and interest on Parity Obligations (or in the case of Parity
Þaym"ni Âgreements, the scheduled Net Payments d.ue) shall be transferred or paid
acóording tı tne terms of such instruments or proceedings. All transfers and payments
to be ma-de pursuant to this subsection (ii) shall be made without preference or priority,
and in the event of any insufficiency of such moneys shall be transferred or paid ratably
without any discrimination or preference.
t(iii) on each lnterest Payment Date, that sum, if any, necessary to
restore the Reserve Fund to an amount equal to the Reserve Fund Requirement' ln
addition,l To the extent required by the instruments and proceedings pursuant to which
parity Obligations have been issued or incurred, to any applicable debt service reserve
fund or aðcount for any Parity Obligations for which a separate reserve has been
established in accordanðe with-Sectión 6.01(e), the sum or sums, if any, equal to the
amount required to be deposited therein in accordance with the terms of such Parity
Obligations (other than interest on draws on debt service reserve fund sureties or
¡nañcial guaiantees for such debt service reserves). All transfers and payments to be
made purluant to this subsection (iii) shall be made without preference or priority, and in
the event of any insufficiency of such moneys shall be transferred or paid ratably without
any discrimination or preference.]
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(iv) To the extent required by the instruments and proceedings pursuant
to which Parity Obligations have been issued or incurred, to the payment when due of
any interest then due on amounts drawn under any debt service reserve fund surety or
guarantee for any Parity Obligations for which a separate debt service reserve has been
established pursuant to Section 6.01 (e). All transfers and payments to be made
pursuant to this subsection (iv) shall be made without preference or priority, and in the
event of any insufficiency of such moneys shall be transferred or paid ratably without
any discrimination or preference.
[(v) To the payment of any amounts due to the Bond lnsurer not provided
by (i), (ii), (i¡i) or (iv) above;l
(vi) To the payment when due of any amounts due under a Credit
Agreement to the extent not required to be paid as principal or interest pursuant to
subsection (ii) above.
(vii) To the payment when due of any Termination Payment payable by
the City upon the termination of a transaction under a Parity Payment Agreement before
its scheduled termination date.
(viii)To the payment of any Subordinate Obligations in accordance
instruments and proceedings pursuant to which such Subordinate Obligations have
been authorized.
(ix) To the making of City Transfers.
(x) To any other lawful purpose of the City.
SECTION 4.02. lnvestments. Any moneys held in the Electric Revenue Fund
shall be invested in any lawful investment, including by not limited to any Permitted
lnvestments, which will, as nearly as practicable, mature on or before the dates when
such moneys are anticipated to be needed for disbursement hereunder. All investment
earnings fróm moneys or deposits in the Electric Revenue Fund shall be credited in
such fund and applied only to the purposes permitted for such fund.
The City may commingle any of the moneys in Electric Revenue Fund with the
moneys held in other funds or accounts (except for moneys held in any rebate fund,
which shall be held separately) for investment purposes only; provided however, that all
moneys in the Electric Revenue Fund shall be accounted for separately notwithstanding
such commingling.
'¡RRlcLE v
BOND I I,ISURRI.ICE POLICYI
' To be added in consultation with lnsurer if insurance will be obtained.
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ARTICLE VI
Plnrrv OeuctloNs eNo SUSoRDINATE
Oeu¡clnoNS
SECTTON 6.01. Conditions for the Execution of Parity Obligations. The City
may at any time execute and deliver any Parity Obligation, the payment of which is
payable from and secured by a lien and charge on the Net Revenues and amounts in
iné ftectr¡c Revenue Fund on a parity with payment of the lnstallment Payments and the
lien and charge on Net Revenues and amounts in the Electric Revenue Fund securing
the lnstallment Payments provided:
(a) With respect to a Parity Obligation other than a Parity Payment Agreement or
a Credit Agreement:
(i) during any twelve (12) consecutive calendar months out of the
immediately prðceding eighteen (18) calendar month period, the Adjusted Annual Net
Revenues were at least equal to one hundred twenty percent (120o/o) of the Maximum
Annual Debt Service for all Outstanding lnstallment Payments and all Outstanding Parity
Obligations; and
(ii) as evidenced by a Certificate of the City or an Engineer' s Report on
file with the City, the projected Adjusted Annual Net Revenues during each of the
succeeding five i5) complete Fiscal Years beginning with the first Fiscal Year following
issuance ú tne Parity Obligation proposed to be executed in which interest thereon is
not capitalized in whole from the proceeds of Parity Obligations, is at least equal to one
hundred twenty percent (120o/o) of the Maximum Annual Debt Service for all Outstanding
lnstallment Payments and all Outstanding Parity Obligations plus the Parity Obligation
proposed to be executed.
(b) lf the Parity Obligation proposed to be executed is not a Parity Payment
Agreement, the proceeds of such Parity Obligation shall be used solely to finance or
refinance (including reimbursement to the City of amounts advanced for such costs) one
or more additions,-betterments, improvements to, or other capital assets of, the Electric
System as designated by the City and to pay any incidental costs and expenses related
th-ereto (including the costs of issuance, execution or delivery of such proposed Parity
Obligation and the funding of a debt service reserve fund).
(c) With respect to any Parity Obligation proposed to be executed which is a
Parity Payment Agreement or a Credit Agreement, there shall have been delivered to
the City êvidence that the incurrence of such Parity Payment Agreement or Credit
Agreement will not in and of itself cause a downgrade of the rating issued by the Rating
Agencies then rating the Bonds or any Parity Obligation then outstanding.
(d) There shall have been delivered to the City an Opinion of Counsel
substaniially to the effect that (1) subject to standard exceptions and qualifications, the
parity Obligation is a valid and binding special obligation of the City, and (2) such Parity
Obligation has been duly and validly authorized, executed and delivered in accordance
herewith.
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(e) lf required by the terms of such Parity Obligation, a separate reserve has
been established for such Parity Obligation and that provision has been made to fund
such reserve.
Notwithstanding the foregoing provisions, neither clause (a) nor clause (b) above
shall limit the ability of the City to execute any Parity Obligations at any time to refund
any Outstanding lnstallment Payments or Outstanding Parity Obligations, in each case
which results in a net present value savings to the City, inclusive of all costs of such
refunding.
SECTION 6.02. lnterest Rate Exchange Agreements. Each interest rate
exchange agreement, including each Parity Payment Agreement (each an "lnterest Rate
Exchanóe A.qreement") entered into by the City shall meet the conditions set forth in this
Section. The lnterest Rate Exchange Agreement (i) must be entered into to manage
interest costs related to, or a hedge against (a) assets then held, or (b) debt then
outstanding, or (c) debt reasonably expected to be issued within the next twelve (12)
months, and (ii) shall not contain any leverage element or multiplier component greater
than 1.0x unless there is a matching hedge arrangement which effectively off-sets the
exposure from any such element or component. So long as the Bond lnsurance Policy
remains in effect ánd the Bond lnsurer is not in default of its obligations thereunder, the
City shall not terminate an lnterest Rate Exchange Agreement unless it demonstrates to
the satisfaction of the Bond lnsurer prior to the payment of any such termination amount
that such payment will not cause the City to be in default under this lnstallment
purchase Agreement, including but not limited to, any monetary obligations hereunder.
All counterpãrties or guarantors to the lnterest Rate Exchange Agreement must have a
rating of ai least ,,A_i or "A3" by S&p and Moodyrs. lf the counterparty or guarantor's
rating falls below "A-" or "43" by either S&P or Moody's, the counterparty or guarantor
shall execute a credit support annex to the lnterest Rate Exchange Agreement, which
credit support annex shail be acceptable to the Bond lnsurer. lf the counterparty or the
guarantor''s long term unsecured rating falls below "Baa1" or "BBB+" by either Moody's
ór S&P, a replaiement counterparty or guarantor, acceptable to the Bond lnsurer, shall
be required.
SECTION 6.03. Subordinate Obligations. The City may incur Subordinate
Obligations without meeting any of the tests set forth in Section 6.01.
ARTICLE VII
COVENANTS OF THE CITY
SECTION 7.01. Compliance with tnstallment Purchase Agreemenf. The City will
punctually pay the lnstallment Payments in strict conformity with the terms hereof, and
will faithfúlly observe and perform all the agreements, conditions, covenants and terms
contained herein required to be observed and performed by it, and will not terminate this
lnstallment Purchase Agreement or fail to make any payment required by this
lnstallment Purchase Agreement for any cause including, without limiting the generality
of the foregoing, any acls or circumstances that may constitute failure of consideration,
destruction of -or damage to all or a portion of the Electric System, commercial
frustration of purpose, any change in the tax or other laws of the United States of
America or of ihe State or any political subdivision of either or any failure of the Authority
to observe or perform any agreement, condition, covenant or term contained in this
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lnstallment Purchase Agreement required to be observed and performed by it, whether
express or implied, or any duty, liability or obligation arising out of or connected with this
lnstallment Purchase Agreement or the insolvency, or deemed insolvency, or
bankruptcy or liquidation of the Authority or any force majeure, including acts of God,
tempest, étorm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies,
blockade or embargo, strikes, industrial disputes, lockouts, lack of transportation
facilities, fire, explosion, or acts or regulations of governmental authorities.
SECTION 7.02. Distribution of Net Revenues for Debt Service, The City hereby
covenants that it will distribute Net Revenues available for Outstanding lnstallment
Payments and debt service on all Outstanding Parity Obligations on a pro rata basis
without regard to whether each such Parity Obligation has a funded debt service reserve
or a surety bond or other similar funding instrument'
SECTION 7.03. Tax Covenants.
(a) Private Business Use Limitation. The City shall assure that the proceeds of
the Bonds are not used in a manner which would cause the Bonds to satisfy the private
business tests of Section 141(b) of the Tax Code or the private loan financing test of
Section 141(c) of the Tax Code.
(b) Federal Guarantee Prohibition. The City may not take any action or permit
or suffei åny action to Oe táken if the result of the same would be to cause the Bonds to
be "federally guaranteed" within the meaning of Section 1a9(b) of the Tax Code.
(c) No Arbitraqe. The City may not take, or permit or suffer to be taken by the
Trustee ór otnerwlse, 'any action with respect to the proceeds of the Bonds or of any
other obligations which, if such action had been reasonably expected to have been
taken, or ñad been deliberately and intentionally taken, on the Closing Date, would have
caused the Bonds to be "arbiirage bonds" within the meaning of Section 148(a) of the
Tax Code.
(d) Maintenance of Tax Exemption. The City shall take all actions necessary
to assuie'tne exerlus¡on of ¡nm,rest on the Bonds from the gross income of the Owners of
the Bonds to the same extent as such interest is permitted to be excluded from gross
income under the Tax Code as in effect on the Closing Date.
(e) Rebate of Excess lnvestment Earninqs to United Stales. The City shall
calculate or cause to Oe caiculated the excess investment earnings in all respects at the
times and in the manner required under the Tax Code. The City shall pay the full
amount of excess investment earnings to the United States of America in such amounts,
at such times and in such manner as may be required under the Tax Code. Such
payments shall be made by the City from any source of legally available funds of the
City.
The City shall keep or cause to be kept and retain or cause to be retained for a
period of six yéars following the retirement of the Bonds, records of the determinations
made under this subsection (e). ln order to provide for the administration of this
subsection (e), the City may provide for the employment of independent attorneys,
accountants'and consuitants compensated on such reasonable basis as the City may
deem appropriate. The Trustee has no duty or obligation to monitor or enforce
compliance by the City of any of the requirements under this subsection (e).
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SECTION 7.04. Against Encumbrances. The City will pay or cause to be paid
when due all sums of money that may become due or purporting to be due for any labor,
services, materials, supplies or equipment furnished, or alleged to have been furnished,
to or for the City in, upon, about or relating to the Electric System and will keep the
Electric System free of any and all liens against any portion of the Electric System. ln
the event any such lien attaches to or is filed against any portion of the Electric System,
the City will cause each such lien to be fully discharged and released at the time the
performance of any obligation secured by any such lien matures or becomes due,
except that if the City desires to contest any such lien it may do so if contesting such lien
will not materially impair operation of the Electric System. lf any such lien shall be
reduced to final judgment and such judgment or any process as may be issued for the
enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter
expires, the City will forthwith pay or cause to be paid and discharged such judgment.
Tlre City will, to the maximum extent permitted by law, indemnify and hold the Authority
harmless from, and defend it against, any claim, demand, loss, damage, liability or
expense (including attorneys' fees) as a result of any such lien or claim of lien against
any portion of the Electric System.
SECTTON 7.05. Sa/e or Other Disposition of Property. The City will not sell,
transfer or othenryise dispose of any of the works, plant, properties, facilities or other
part or rights of the Electric System or any real or personal property comprising a part of
ine etectric System if such sale, transfer or disposition would cause the City to be
unable to satisfy the requirements of Section 7.13 hereof.
SECTION 7.06. Eminent Domain and lnsurance Proceeds. lf all or any part of
the Electric System shall be taken by eminent domain proceedings, or if the City
receives any insurance proceeds resulting from a casualty loss to the Electric System,
the Net Próceeds thereof, at the option of the City, shall be applied either to the
proportional prepayment of Outstanding lnstallment Payments hereunder and
buistanding Parity Obligations or shall be used to substitute other components for the
condemned or destroyed components of the Electric System.
SECTION 7.07. Maintenance and Operation of the Electric System; Budgets.
The City will maintain and preserve the Electric System in good repair and working order
at all times and will operate the Electric System in an efficient and economical manner
and will pay all Maintenance and Operation Costs as they become due and payable. On
or before July 1 of each Fiscal Year, the City Council of the City shall adopt a budget for
the Electric System for such Fiscal Year setting forth the estimated Maintenance and
Operation Costs for such Fiscal Year and all lnstallment Payments required to be made
hereunder and all payments coming due in such Fiscal Year with respect to Parity
Obligations and Subordinate Obligations. lf requested, the City will file with the Authority
and the Bond lnsurer, not later than October 1 of each year, a cover letter, signed by an
authorized officer of the City stating that all lnstallment Payments required by this
lnstallment Purchase Agreement have been included in the Annual Budget for the then
current Fiscal Year. The Annual Budget may be amended at any time during any Fiscal
Year and such amended budget shall be filed by the City with the Authority and the
Bond lnsurer.
SECTION 7.08. Comptiance with Contracts for use of the Electric Sysfem. The
City will comply with, keep, observe and perform all agreements, conditions, covenants
and terms, express or implied, required to be performed by it contained in all contracts
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for the use of the Electric System and all other contracts affecting or involving the
Electric System to the extent that the City is a party thereto.
SECTION 7.09. lnsurance. The City shall maintain insurance covering risks
(including, without limitation, property and casualty, general liability and public officials
èrrors añd omissions) with respect to the Electric System in amounts as customarily
maintained by electric utilities of similar size and conducting similar operations as the
City. All insurers must be rated at least "4" by A.M Best or S&P.
Any policy of insurance required under this Section 7.09 may be maintained as
part of or in'conjúnction with any other insurance coverage carried by the City, and may
be maintained iñ whole or in part in the form of self-insurance by the City or in the form
of the participation by the City in a joint powers agency or other program providing
pooled'insurånce. lf requested, the City shall file evidence of all insurance policies
maintained under this Section at least annually with the Authority and the Trustee.
SECTION 7.10. Accounting Records; Financial Statements and Other Reporfs.
(a) The City will keep appropriate accounting records in which complete and
correct eñtries shait be made of all transactions relating to the Electric System which
records shall be available for inspection by the Authority and the Bond lnsurer at
reasonable hours and under reasonable conditions.
(b) The City will prepare and file with the Authority and the Bond lnsurer annually
within tùó nunOreO ten (Zt0) days after the close of each Fiscal Year (commencing with
the Fiscal Year ending June 30, 2018):
(i) financial statements of the City for such Fiscal Year prepared in
accordance w¡ifr Generally Accepted Accounting Principles, together with an
Accountant's Report thereon; and
(ii) a detailed report as to all insurance policies maintained and self-
insurance programs maintained by the City with respect to the Electric System as of the
close of such-Fiscal Year, including the names of the insurers which have issued the
policies and the amounts thereof and the property or risks covered thereby.
(iii) prior to issuing additional Parity Obligations, any disclosure document
or financing agreement pertaining to such additional Parity Obligations, which disclosure
document or financing agreement shall include, without limitation, the applicable
maturity schedule, inteiestlate or rates, redemption and security provisions pertaining
to any such additional Parity Obligations;
(iv) immediate notice of any draw on the Reserve Fund;
(v) within thirty (30) days following any judgment or administrative ruling
that may have a'material adverse effect on the financial position of the Electric System
notice of such judgment or administrative ruling; and
(vi) copies of all continuing disclosure filings with national recognized
municipal securities repositories with respect to the City.
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SECTION 7.11. Protection of Security and Rights of the Authority. The City will
preserve and protect the security of the lnstallment Payments under this lnstallment
Purchase Agreement and the rights of the Authority to the lnstallment Payments under
this lnstallment Purchase Agreement and will warrant and defend such rights against all
claims and demands of all persons.
SECTION 7.12. Payment of Taxes and Compliance with Governmental
Regutations. The City will pay and discharge all taxes, assessments and other
governmental charges which may hereafter be lavrrfully imposed upon the Electric
System or any part thereof when the same shall become due. The City will duly observe
añd conform w¡tn all valid regulations and requirements of any governmental authority
relative to the operation of the Electric System or any part thereof, but the City shall not
be required to comply with any regulations or requirements so long as the validity or
application thereof shall be contested in good faith and contesting such validity or
application will not materially impair the operations or financial condition of the Electric
System.
SECTION 7.'13. Amount of Rafes and Charges. The City will at all times fix,
prescribe and collect rates and charges for the services, facilities and electricity of the
Êlectric System during each Fiscal Year which will be at least sufficient to yield:
(a) Adjusted Annual Revenues for such Fiscal Year at least equal to the sum of
the following for such Fiscal Year:
(i) Maintenance and Operation Costs;
(ii) Adjusted Annual Debt Service with respect to the lnstallment
Payments and Parity Obligations, and
(iii) all other payments required to meet any other obligations of the City
which are charges, liens or encumbrances upon or payable from the Electric Revenue
Fund, including all amounts owed to any issuer of a surety bond credited to a debt
service reserve for Parity Obligations then in effect;
(b) Adjusted Annual Net Revenues for such Fiscal Year equal to at least one
hundred iweniy percent (120o/o) of Adjusted Annual Debt Service with respect to the
lnstallment Payments and Parity Obligations for such Fiscal Year. For the avoidance of
doubt, as used in this Section 7.13(b) but not for other purposes of this lnstallment
purchase Agreement, the definition of "Adjusted Annual Net Revenues" includes (i) the
amount of Ávailable Reserves on deposit, or which the City has authorized to be
deposited, in the Electric Revenue Fund as of the first day of the .releva¡t Fiscal Year
and (ii) the amount of Available Reserves on deposit in the Electric Utility Environmental
CompÍiance Fund (or successor fund) as of the first day of the relevant Fiscal year.
The City may make adjustments from time to time in such fees and charges and
may make such classifications thereof as it deems necessary but shall not reduce the
ratés and charges then in effect unless the Revenues and the Adjusted Annual Net
Revenues fromluch reduced rates and charges will at all times be sufficient to meet the
requirements of this Section.
SECTION 7.14. Cotlection of Rates and Charges. The City will have in effect at
all times rules and regulations requiring each consumer or customer located on any
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premises connected with the Electric System to pay the rates and charges applicable to
the Electric Service provided to such premises and providing for the billing thereof and
for a due date and a delinquency date for each bill. The City will not permit any part of
the Electric System or any facility thereof to be used or taken advantage of free of
charge by any corporation, firm or person, or by any public agency (including the United
Statãs oï America, the State of California and any city, county, district, political
subdivision, public corporation or agency of any thereof). Nothing herein shall prevent
the City, in iis sole and exclusive discretion, from permitting other parties from selling
electricìty to retail customers within the service area of the Electric System; provided,
however, that permitting such sales shall not relieve the City of its obligations hereunder.
SECTION 7.15. Further Assurances. The City will adopt, deliver, execute and
make any and all further assurances, instruments and resolutions as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this
lnstallmeñt Purchase Agreement and for the better assuring and confirming unto the
Authority of the rights and benefits provided to it in this lnstallment Purchase
Agreement.
SECTION 7.16. Continuing Disclosure. The City hereby covenants and agrees
that it will comply with and carry out all of its obligations under the Continuing Disclosure
Agreement. Nótwithstanding any other provision of this lnstallment Purchase
Alreement, failure of the City to comply with the Continuing Disclosure..Agreement shall
nıt Ue considered an Event of Default hereunder and the Authority shall have no right to
accelerate amounts due hereunder as a result thereof; provided, however, that the Bond
lnsurer or any Owner may take such actions as may be necessary and appropriate,
including seeúing mandate or specific performance by court order, to cause the City or
the Truıtee, as ihe case may be, to comply with its obligations in this Section and the
Continuing Disclosure Agreement.
SECTION 7.17. City Obligations to Pay the Trustee. The City agrees to pay all
amounts payable to the Trustee pursuant to Section 8.07 of the lndenture.
ARTICLE VIII
EveruTS OF DEFAULT AND REMEDIES
SECTION 8.01. Events of Default. The following events constitute Events of
Default hereunder:
(a) Failure by the City to pay any lnstallment Payment when due and payable
hereunder or any Parity Obligation when and as the same shall become due and
payable.
(b) Failure by the City to observe and perform any covenant, condition or
agreement on its part to be observed or performed, other than as referred to in the
pieceding clause (a), for a period of 30 days after written notice specifying such failure
and requésting thàt.it be remedied has been given to the City by the Authority or the
Trustee; provi-ded, however, that if the City notifies the Authority and the Trustee that in
its reasohable opinion the failure stated in the notice can be corrected, but not within
such 30-day period, such failure will not constitute an event of default hereunder if the
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City commences to cure such failure within such 30 day period and thereafter diligently
and in good faith cures the failure in a reasonable period of time.
(c) The filing by the City of a voluntary petition in bankruptcy, or failure by lhe
City promptly to lift any execution, garnishment or attachment, or adjudication of the City
as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the
City into an agreement of composition with creditors, or the approval by a court of
competent jurisdiction of a petition applicable to the City in any proceedings instituted
under the provisions of the Federal Bankruptcy Code, as amended, or under any similar
acts which may hereafter be enacted.
(d) The occurrence of any event of default under and as defined with respect to
any Parity Obligation.
SECTION 8.02. Remedies on Default lf an Event of Default occurs and is
continuing, the Trustee as assignee of the Authority has the right, at its option and
without añy further demand or notice, to take any one or more of the following actions:
(a) Only as long as it is an available remedy under and as defined with
respect'io all Parity Obligations, declare all principal components of the unpaid
lnsiallment Payments, together with accrued interest thereon from the immediately
preceding lnstállment Payment Date on which payment was made, to be immediately
due and þayable, whereupon the same shall immediately become due and payable.
The Trustee shall rescind and annul such declaration and its
consequences if, before any judgment or decree for the payment of the moneys due has
been obtained or entered, (i) the City deposits with the Trustee a sum sufficient to pay
all principal components of the lnstallment Payments coming due prior to such
deciaration and aÍl matured interest components (if any) of the lnstallment Payments,
and (ii) the City pays the reasonable expenses of the Trustee (including any fees and
expenóes of itô attorneys), and (iii) any and all other defaults known to the Trustee
loilrer than in the payment of the principal and interest components of the lnstallment
Þayments due and'páyable solely by reason of such declaration) have been made good.
No such rescission and annulment will extend to or shall affect any subsequent default
or impair or exhaust any right or power consequent thereon.
(b) Take whatever action at law or in equity may appear necessary or
desirable to collect the lnstallment Payments then due or thereafter to become due
during the Term of this lnstallment Payment Agreement, or enforce performance and
observance of any obligation, agreement or covenant of the City under this lnstallment
Payment Agreement.
(c) As a matter of right, in connection with the filing of a suit or other
commencement of judicial proceedings to enforce the rights of the Trustee and the
Bond Owners hereunder, cause the appointment of a receiver or receivers of the Net
Revenues and other amounts pledged hereunder, with such powers as the court making
such appointment may confer.
SECTION 8.03. Other Remedies. Nothing in this Article or in any other
provision hereof shall affect or impair the obligation of the City, which is absolute and
unconditional, to pay the lnstallment Payments from the Net Revenues and amounts in
the Electric Revenu-e Fund available for such payment in accordance herewith at the
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respect¡ve due dates or upon acceleration or prepayment, or shall affect or impair the
right of the Authority, which is also absolute and unconditional, to institute suit to enforce
such payment by virtue of the contract embodied in this lnstallment Purchase
Agreement.
A waiver of any default or breach of duty or contract by the Authority shall not
affect any subsequent default or breach of duty or contract or impair any rights or
remedies on any such subsequent default or breach of duty or contract. No delay or
omission by the Authority to exercise any right or remedy accruing upon any default or
breach of d-uty or contract shall impair any such right or remedy or shall be construed to
be a waiver of any such default or breach of duty or contract or an acquiescence
therein, and every iigtrt or remedy conferred upon the Authority by law or by this article
may be enforced- and exercised from time to time and as often as shall be deemed
expedient by the Authority. lf any action, proceeding or suit to enforce any right or
exercise any remedy is abandoned or determined adversely to the Authority, the City
and the Autihority shall be restored to their former positions, rights and remedies as if
such action, proceeding or suit had not been brought or taken.
SECTION 8.04. Non-Waiver. No remedy herein conferred upon or reserved to
the Authority or the Bond lnsurer, is intended to be exclusive of any other remedy, and
each such iemedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing in law or in equity or by statute or othenruise
ãnd may be exercised without exhausting and without regard to any other remedy
conferred by law.
SECTION 8.05. Apptication of Net Revenues Upon Acceleration. All Net
Revenues available upon tlre date of the declaration of acceleration by the Authority as
provided in Section b.O2 above and all Net Revenues thereafter received shall be
applied in the following order:
First, to the payment of the fees, costs and expenses of the Authority and the
Trustee, if any, in'cârrying out the provisions of this Article, including reasonable
compensation to their agents, accountants and counsel.
Second, to the payment of the interest component of lnstallment Payments then
due and payable anO tné interest then due and payable with respect to unpaid Parity
Obligations (including the interest component of Net Payments due under Parity
payñrent Agreementð); provided that, if the amount available shall not be sufficient to
pay in full ãll the amounts due with respect to such interest component of lnstallment
Þayments and interest on Parity Obligations (including Net Payments), then to the
payment thereof ratably, according to the interest due, without any discrimination or
preference.
Third, to the payment of the principal component of lnstallment Payments then
due and payable, the principal amount of the Parity Obligations which.has become due
and payablé, whether on the original due date or upon acceleration (other than Parity
eayment Agreements), and the frincipal component of Net Payments due under Parity
payment A!reements; provided that, if the amount available shall not be sufficient to
pay in full ãll the amounts due with respect to the lnstallment Payments, the Parity
bOtigations, and the Net Payments due under Parity Payment Agreements, then to the
payrient thereof ratably, acóording to the principal and Net Payments due, without any
discrimination or preference.
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Fourth, to the payment of amounts due to the Bond lnsurer and the bond
insurance for any Parity Obligations not provided for in First, Second, and Third above.
Fifth, to Termination Payments required under any Parity Payment Agreement
that are secured by a pledge of Net Revenues on a parity with the payments under
paragraph Third above, to the extent and in the manner provided by the terms of such
Parity Payment Ag reement.
ARTICLE IX
DISCHARGE OF OELICRTIONS
SECTION 9.01. Security Deposit. Notwithstanding any other provision hereof,
the City may on any date secure the payment of lnstallment Payments, in whole or in
part, by irreúocably depositing with the Trustee an amount of cash which, together with
other available amounts, is either:
(a) sufficient to pay all such lnstallment Payments, including the
principal and interest components thereof, when due under Section
3.01, or
invested in whole or in part in non-callable Federal Securities in
such amount as will, in the opinion of an lndependent Accountant
(which opinion is addressed and delivered to the Trustee), together
with interest to accrue thereon and together with any cash which is
so deposited, be fully sufficient to pay all such lnstallment
Payments when due under Section 3.01 or when due on any
opiional prepayment date under Section 9.02, as the City instructs
at the time of said deposit.
(b)
lf the City makes a security deposit under this Section for the payment of all
remaining lnstallment Payments, all obligations of the City hereunder, and the pledge of
Net Revènues and all other security provided by this lnstallment Purchase Agreement
for said obligations, will thereupon cease and terminate, excepting only the obligation of
the City to make, or cause to be made, all lnstallment Payments from the security
deposit. The security deposit will be deemed to be and will constitute a special fund for
the payment of the lnstaltment Payments in accordance with the provisions hereof.
SECTION 9.02. Optionat Prepaymenf. The City may exercise its option to
prepay the principal components of the lnstallment Payments in whole or in part on any
batà on or after the lnstallment Payment Date relating to the 1,20_ lnterest
payment Date. The City may exercise such option by payment of a prepayment price
eqúal to the sum of (a) the aggregate principal components of the lnstallment Payments
to be prepaid, (b) the interest component of the lnstallment Payment required to be paid
on or'accrued to such date, and (c) the premium (if any) then required to be paid upon
the corresponding redemption of the Bonds under Article lV of the lndenture. The
Trustee shall depósit the prepayment price in the Redemption Fund to be applied to the
redemption of Bonds under Section a.ü@) of the lndenture. lf the City prepays the
lnstallment Payments in part but not in whole, the principal components will be prepaid
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among such maturities and in such integral multiples of $5,000 as the City designates in
writteñ notice to the Trustee. The City shall give the Trustee written notice of its
intention to exercise its option in sufficient time to enable the Trustee to give notice of
redemption as required by the lndenture.
The lnstallment Payments will othenruise be subject to prepayment in the
amounts and at the times necessary to provide for redemption of the Bonds as set forth
in the lndenture.
SECTION 9.03. Accounting and Discharge lnstruments. After the payment, or
provision for the payment as provided in Section 9,01 or Section 9.02, of all lnstallment
Þayments and payment in full of all fees and expenses of the Authority, the Bond
lnsurer and the Trustee, the Authority, upon request of the City, shall cause an
accounting for such period or periods as may be requested by the City to be prepared
and filed w¡tn tne City and the Authority shall execute and deliver to the City all such
instruments as may be necessary or desirable to evidence such total discharge and
satisfaction of this lnstallment Purchase Agreement.
ARTICLE X
MISCEUANEOUS
SECTTON 10.01 . Payment Liabitity of City Limited. Notwithstanding anything
contained herein, the City shall not be required to advance any moneys derived from
any source of income óther than the Net Revenues and amounts in the Electric
Revenue Fund for the payment of the lnstallment Payments or for the performance of
any agreements or covenãnts required to be performed by it contained herein. The City
mãy, lrowever, advance moneys for any such purpose so long as such moneys are
derived from a source legally available for such purpose and may be legally used by the
City for such purpose.
The obligation of the City to make the lnstallment Payments is a special
obligation of the City payable solely from the Net Revenues and amounts in the Electric
Revénue Fund as provided herein. The general fund of the City is not liable, and neither
the faith and credit nor the taxing power of the City is pledged for the payment of the
lnstallment Payments or the performance or satisfaction of any other obligations of the
City hereunder.
SECTION 10.02. Amendments. The Authority and the City may at any time
amend or modify any of the provisions of this Agreement, but only: (a) with the prior
written consent
-of t'he Owners of a majority in aggregate principal amount of the
Outstanding Bonds; or (b) without the consent of the Trustee or any of the Bond
Owners, bùt only if such amendment or modification is for any one or more of the
following purposes:
to add to the covenants and agreements of the City contained in
this Agreement, other covenants and agreements thereafter to be
observed, or to limit or surrender any rights or power herein
reserved to or conferred upon the City;
(i)
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(i i)to make such provisions for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective provision
contained herein, to conform to the original intention of the City and
the Authority;
to modify, amend or supplement this Agreement in such manner as
to assure that the interest on the Bonds remains excluded from
gross income under the Tax Code; and
in any other respect whatsoever as the Authority and the city deem
neceðsary or desirable, if in the opinion of Bond Counsel such
modifications or amendments do not materially adversely affect the
interests of the Owners of the Bonds.
(iii)
No such modification or amendment may (a) extend or have the effect of
extending any lnstallment Payment Date or reducing any lnstallment Payment or any
premiurn- payãOte upon the prepayment thereof, without the express consent of the
bwners of the affected Bonds, or (b) modify any of the rights or obligations of the
Trustee without its written assent thereto.
SECTION 10.03. Assignment of tnstattment Purchase Agreement. The City
hereby acknowledges that the Authority, for good and valuable consideration, has
transferred, assignéd and sent over to the Trustee, pursuant to the provisions of the
lndenture, all of the lnstallment Payments and any and all rights and privileges it has
hereunder with respect to the lnstallment Payments and references herein to the
Authority's rights witlr respect to the lnstallment Payments (but not the obligations of the
Authority heleunder, it being understood that the Trustee shall not assume any
responsibility for any duties oicovenants or warranties of the Authority hereunder) shall
be construed to be references to the Trustee.
SECTION 10.04. Benefits of Contracts Limited to Pa¡úies. Nothing contained in
this lnstallment Purchase Agreement, expressed or implied, is intended to give to any
person other than the Authority, the Trustee (with respect to its rights pursuant to
bections 4.01(b) and 10.12 hereof and as the assignee of the Authority's rights
hereunder), thè 'City, or the Bond lnsurer (so long as the Bond lnsurer is not in default
under a Bônd lnsuiance Policy) any right, remedy or claim under or pursuant thereto,
and any agreement or covenañt required herein to be performed by or on behalf of the
Authoriiy (ãnd the Trustee, as the assignee of the Authority's rights hereunder) or the
city shall be for the sole and exclusive benefit of the other party.
SECTION 10.05. Successor rs Deemed lncluded in all References to
predecessor. Whenever either the Authority or the City is named or referred to herein,
such reference shall be deemed to include the successor to the powers, duties and
functions that are presently vested in the Authority or the City, and all agreements and
covenants required hereby to be performed by or on behalf of the Authority or the City
shall bind and inure to the benefit of the respective successors thereof whether so
expressed or not.
SECTION 10.06. Waiver of Personat Liability. No officer or employee of the City
shall þe individually or personally liable for the payment of the lnstallment Payments or
the performance oi satisfaction of any other obligation of the City hereunder, but nothing
coniained herein shall relieve any officer or employee of the City from the performance
(iv)
-1 8-
of any official duty provided by any applicable provisions of law or by the terms of this
I nstallment Purchase Agreement.
SECTION 10.07. Articte and Section Heading, Gender and References. The
headings or titles of the several articles and sections hereof and the table of contents
appended hereto shall be solely for convenience of reference and shall not affect the
meaning, construction or effect hereof, and words of any gender shall be deemed and
construed to include all genders. All references herein to "Articles," "Sections," "Exhibits"
and other subdivisions or clauses are to the corresponding articles, sections, exhibits,
subdivisions or clauses hereof; and the words "hereby," "herein," "hereof," "hereto,"
"herewith" and other words of similar import refer to this lnstallment Purchase
Agreement as a whole and not to any particular article, section, exhibit, subdivision or
clause hereof.
SECTION 10.08. Partial lnvalidity: lf any one or more of the agreements or
covenants or portions thereof required hereby to be performed by or on the part of the
Authority or the City shall be contrary to law, then such agreement or agreements, such
covenant or covenants or such portions thereof shall be null and void and shall be
deemed separable from the remaining agreements and covenants or portions thereof
and shall in no way affect the validity hereof. The Authority and the City hereby declare
that they would have executed this lnstallment Purchase Agreement, ald each and
every otFrer article, section, paragraph, subdivision, sentence, clause and phrase hereof
irresþective of the fact that anyone or more articles, sections, paragraphs, subdivisions,
sentences, clauses or phrases hereof or the application thereof to any person or
circumstance may be held to be unconstitutional, unenforceable or invalid.
SECTION 10.09. Net Contract. This lnstallment Purchase Agreement shall be
deemed and construed to be a net contract, and the City shall pay absolutely net during
the term hereof the lnstallment Payments and all other payments required under this
Installment Purchase Agreement, free of any deductions and without abatement,
diminution or set-off whatsoever.
SECTION 10.10. Catifornia Law. This lnstallment Purchase Agreement shall be
construed and governed in accordance with the laws of the State of California.
SECTION 10.11. tndemnification. The City shall, to the full extent then
permitted by law, indemnify, protect, hold harmless, save and keep harmless the
Authority, the Bond lnsurer and the Trustee and their directors, officers and employees
from and against any and all liability, obligations, losses, claims and damages
whatsoever, iegardless of the cause thereof, and expenses in connection therewith,
including, without limitation, counsel fees and expenses, penalties and interest arising
out of oi as the result of (i) the entering into of this lnstallment Purchase Agreement, the
use of any of the Existing Facilities or any accident in connection with the operation,
use, condltion or possession of any of the Existing Facilities or any portion thereof
resulting in damage to property or injury to or death to any person including, without
limitatioñ, any claim alleging latent and other defects, whether or not discoverable by the
City or the Authority, (ii) any claim for patent, trademark or copyright infringement, (iii)
any claim arising out of strict liability in tort, (iv) without negligence or willful misconduct,
the Trustee's atceptance or administration of the trust under the lndenture, or the
exercise or performance of any of its powers or duties thereunder or hereunder; or (v)
any untrue statement or alleged untrue statement of any material fact or omission or
alleged omission to state a material fact necessary to make the statements made, in
-1 9-
light of the circumstances under which they were made, not misleading in any official
statement or other offering circular utilized in connection with the sale of any Bonds
executed and delivered under the lndenture. The indemnification arising under this
Section shall continue in full force and effect notwithstanding the full payment of all
obligations hereunder or the termination of the other provisions hereof for any reason.
The City agrees not to withhold or abate any portion of the lnstallment Payments
required pursuant hereto by reason of any defects, malfunctions, breakdowns or
infirmities of any of the Existing Facilities; The City and the Authority mutually agree to
promptly give notice to each other of any claim or liability hereby indemnified against
following either's learning thereof. The rights to indemnification from the City hereunder
shall survive the termination hereof or the resignation or removal of the Trustee.
SECTION 10.12. Funds. Any fund required to be established and maintained
herein by the City may be established and maintained in the accounting records of the
City either as an account or a fund and may, for the purpose of such accounting
records, any audits thereof and any reports or statements with respect thereto, be
treated either as an account or a fund; but all such records with respect to any such
fund shall at all times be maintained in accordance with sound accounting practice.
SECTION 10.13. Nofices. All notices, certificates or other communications
hereunder shall be deemed sufficiently given upon actual receipt thereof when received
by the City, the Authority, the Trustee, the Bond lnsurer, [and the Rating Agencies,] as
the case may be, at the respective address provided pursuant to Section 11.07 of the
lndenture or, if mailed by first class mail, postage prepaid, addressed to the appropriate
address provided pursuant to Section 11.07 of the lndenture, six Business Days after
deposit in the United States mail.
Unless otheruvise requested by the City, the Authority, the Trustee, the Bond
lnsurer, or a Rating Agency, any notice required to be given hereunder in writing may be
given by any form of telephonic or electronic transmission capable of making a written
iecord.
-Eacñ
such party shall file with the Trustee information appropriate to receiving
such form of telephonic or electronic transmission. Any of the parties noted above may,
by notice given hereunder, designate any different addresses to which subsequent
notices, certificates or other communications shall be sent.
SECTION 10.14. Effective Date. This lnstallment Purchase Agreement shall
become effective upon its execution and delivery, and, except as othenruise specifically
provided with respect to particular terms hereof, shall terminate when the lnstallment
Þayments provided herein shall have been fully paid (or provision for the payment
thereof shall have been made pursuant to Article lX hereof).
SECTION 10.15. Execution in Counterpart. This lnstallment Purchase
Agreement may be executed in several counterparts, each of which shall be deemed an
orìginal, and all of which shall constitute but one and the same instrument.
[Remainder of Page lntentionally Left Blank]
-20-
lN WITNESS WHEREOF, the parties hereto have executed and attested this
lnstallment Purchase Agreement by their respective officers thereunto duly authorized,
as of the day and year first written above.
CITY OF LODI, A MUNIC¡PAL
CORPORATION
By
Stephen Schwabauer, City Manager
LODI PUBLIC FINANCING AUTHORITY
By
Stephen Schwabauer, Executive Director
ATTEST:
Jennifer M. Ferraiolo, CitY Clerk
APPROVED AS TO FORM
Janice D. Magdich, City AttorneY
-21-
SCHEDULE A
SCHEDULE OF INSTALLMENT PAYMENTS AS OF DELIVERY DATE
lnstallment Payment
Date
Principal
Component
$
lnterest Component TotAl Payment
$$
A-1
EXHIBIT 1
DESCRIPTION OF EXISTING FACILITIES
The Existing Facilities consist of the following generally described improvements,
facilities and extensions of the Electric System:
. Distribution system improvements including new/enhanced overhead and
underground electric plant such as vaults, conductor, poles, protective devices, etc.;
. Metering system improvements including new meters and ancillary meter
devices, meter reading equipment, etc,;
. Transmission system improvements such as new circuits, conductor poles,
protective devices, etc.;
. Substation system improvements including new/rehabilitated plant, equipment
replacement and upgrades, transformer overhauls, etc.;
. Vehicle and rolling stock acquisition including trucks, cars, cranes, trailers,
polesetting equipment, wire pulling equipment, vacuum units, etc.;
. Communications equipment including fiber optics, remote terminal units, radio
systems and device, etc.;
. Building/structure improvements including property acquisition, lighting, HVAC,
furniture, workspace enhancements, etc,; and/or
. Technology enhancements including new computer hardware/ software
systems, system test and repair devices, etc.
EXH 1-1
EXHIBIT D
FORM OF BOND PURCHASE AGREEMENT
$
LODI PUBLIC FINANCING AUTHORITY
2018 ELECTRIC SYSTEM REVENUE REFUNDING BONDS
BOND PURCHASE AGREEMENT
201 8
Board of Directors
Lodi Public Financing Authority
Lodi, California
City Council
City of Lodi
Lodi, California
Ladies and Gentlemen:
The undersigned, J.P. Morgan Securities LLC (the "Underwriter"), relating to the
Authority's$-2018ElectricSystemRevenueRefundingBonds(the,,20l8Bonds,,),
hereby offers to enter into this Bond Purchase Agreement (the "Purchase Agreement") with you,
the Lodi Public Financing Authority (the "Authority") and you, the City of Lodi (the "City"),
which, upon the Authority's and the City's acceptance of this offer, will be binding upon the
Authority, the City and the Underwriter. This offer is made subject to acceptance by each of you
prior to 11:59 P.M., California time, on the date hereof. If this offer is not so accepted, this offer
will be subject to withdrawal by the Underwriter upon notice delivered to you at any time prior
to acceptance. Upon acceptance, this Purchase Agreement shall be in full force and effect in
accordance with its terms and shall be binding upon the Authority, the Cþ and the Underwriter.
All capitalized terms used herein not otherwise defined herein shall have the respective meanings
ascribed thereto in the Official Statement and the Indenture (each, as herein defined).
1. Purchase. Sale and Delivery of the 2018 Bonds.
(a) Subject to the terms and conditions and in reliance upon 'the
representations, warranties and agreements set forth herein, the Underwriter hereby
agrees to purchase and the Authority agrees to sell and deliver to the Underwriter all (but
not less than all) of the 2018 Bonds.
(b) The 2018 Bonds shall be issued pursuant to the Marks Roos Local Bond
Pooling Act of 1985, consisting of Article 4, Chapter 5, Division 7, TiLle 1 of the
Government Code of the State of California (commencing with Section 6584 (the "Act")
and an Indenture of Trust (the "Indenture"), dated as of 2018, by and between
the Authority and MUFG Union Bank, as trustee (the "Trustee"). The 2018 Bonds shall
be dated the Closing Date (as hereinafter defined). The 2018 Bonds shall have the
maturities and bear interest at the rates per annum and at the prices and yields and shall
be subject to redemption as shown on ExhibitA hereto. The 2018 Bonds are subject to
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2999445.3 042414 AGMT
redemption prior to maturity as set forth in the Official Statement. The 2018 Bonds shall
be substantially in the form described in, and shall be issued and secured under, the
provisions of the Indenture. The 2018 Bonds are special, limited obligations of the
Authority payable solely from and secured by Authority Revenues and certain funds and
accounts held under the Indenture. Authority Revenues consist primarily of installment
payments ('ilnstallment Payments") to be made by the City pursuant to an Installment
Purchase Agreement dated as of 2018 (the "Installment Purchase Agreement").
The obligation of the City to make the Installment Payments is a special obligation of the
City that is secured by a pledge of and payable solely from Net Revenues relating to the
City's electric system. The 2018 Bonds are being issued to provide funds to (i) refinance
$principal amount of City of Lodi (the "City") Electric System Revenue
Certificates of Participation, 2008 Series A (such amount refinanced constituting the
"Refunded Certificates") and the corresponding portion of the related installment
payment obligation of the City; and (ii) pay the costs of issuing the 2018 Bonds.
(c)Theaggregatepurchasepriceforthe2018Bondswillb"$-
(consisting of the aggregate principal amount of the 2018 Bonds less an Underwriter's
discount of $and plus [net] original issue premium of $ )
(d) At 8:00 4.M., California time, on 2018, or at such other time
or on such other date as we mutually agree upon (the "Closing Date"), the Authority and
the City will, subject to the terms and conditions hereof, cause to be delivered to the
Underwriter, at a location or locations to be designated by the Underwriter in New York,
New York, the 2018 Bonds (delivered through the book entry system of The Depository
Trust Company), duly executed, and at the offices of Jones Hall, A Professional Law
Corporation, San Francisco, California, or at such other place as shall have been mutually
agreed upon by the Authority and the Underwriter, and the other documents mentioned
herein. The Underwriter will accept such delivery and pay the Purchase Price in
immediately available funds (such delivery and payment being herein referred to as the
'oClosing") to the order of the Trustee.
(e) The Underwriter agrees to make a bona fide public offering of the 2018
Bonds at the initial offering prices set forth in the Official Statement (as hereinafter
defined), which prices may be changed from time to time by the Underwriter after such
offering.
(Ð The City will undertake, pursuant to a Continuing Disclosure Certificate,
dated as of the Closing Date (the "Continuing Disclosure Certificate") to provide certain
annual financial information and notices of the occurrence of certain events. A
description of this undertaking is set forth in the Preliminary Offrcial Statement (as
hereinafter defined) and will also be set forth in the Official Statement. Except as
described in the Official Statement, the City has not failed to comply in the last five years
in all material respects with any previous undertakings with regard to Rule I5c2-12 (as
defined below) to provide annual reports or notices of material events.
(g) The City and the Authority acknowledge and agree that (i) the purchase
and sale of the Bonds pursuant to this Purchase Agreement is an arm's-length
2
2999445.3 042414 AGMT
commercial transaction among the City, the Authority and the Underwriter, (ii) in
connection therewith and with the discussions, undertakings and procedures leading up to
the consummation of such transaction, the Underwriter is and has been acting solely as a
principal and is not acting as the agent or fiduciary of the City or the Authority, (iii) the
Underwriter has not assumed any advisory or fiduciary responsibilities in favor of the
City and the Authority with respect to the offering contemplated hereby or the
discussions, undertakings and procedures leading thereto (inespective of whcther the
Underwriter has provided other services or is currently providing other services to the
City and the Authority on other matters) and the Underwriter has no obligation to the
City and the Authority with respect to the offering contemplated hereby except the
obligations expressly set forth in this Purchase Agreement and (iv) the City and the
Authority have consulted their own legal, financial and other advisors to the extent they
have deemed appropriate.
2. Use and Preparation of Official Statement. The Authority and the City hereby
ratify, confirm and approve of the use and distribution by the Underwriter prior to the date hereof
of the Preliminary Official Statement dated 2018 relating to the 2018 Bonds
(which, together with all appendices thereto, is referred to herein as the "Preliminary Offrcial
Statement"). The Authority and the City have deemed final the Preliminary Official Statement
as of its date for purposes of Rule I5c2-12 promulgated by the Securities Exchange Act of 1934
("Rule I5c2-I2"), as amended, except for the omission of such information as is specified in
Rule 15c2-12(bx1). The Authority and the City hereby agree to deliver or cause to be delivered
to the Underwriter, within seven (7) business days of the date hereof, conformed copies of the
final Offrcial Statement, dated the date hereof (which shall be in the form of the Preliminary
Official Statement with only the addition of information previously permitted to have been
omitted by Rule I5c2-12) and any amendments or supplements to such Official Statement as
have been approved by the Authority, the City and the Underwriter (the "Official Statement") in
sufficient quantity to enable the Underwriter to comply with the rules of the Securities and
Exchange Commission and the Municipal Securities Rulemaking Board. The Authority and the
City hereby approve of the use and distribution by the Underwriter of the Official Statement in
connection with the offer and sale of the 2018 Bonds. At the time of or prior to the Closing
Date, the Underwriter shall file a copy of the Official Statement with the Municipal Securities
Rulemaking Board.
3. Representations. Warranties and Agreements of the Authority. The Authority
hereby represents, warrants and agrees with the Underwriter as follows:
(a) The Authority is, and will be on the Closing Date, a joint powers entity of
the State of Californía organized and operating pursuant to the laws of the State of
California with the full power and authority to issue the 2018 Bonds pursuant to the Act,
to execute and deliver the Offrcial Statement and to enter into this Purchase Agreement,
the Indenture, and the Installment Purchase Agreement;
(b) By all necessary official action of the Authority prior to or concurrently
with the acceptance hereof, the Authority has duly approved, ratified and confirmed the
distribution of the Preliminary Official Statement and the execution, delivery and
distribution of the Official Statement, and has duly authoñzed and approved the
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299944s.3 042414 AGMT
execution and delivery of, and the performance by the Authority of the obligations on its
part contained in the Indenture, the Installment Purchase Agreement and this Purchase
Agreement and the consummation by it of all other transactions contemplated by the
Official Statement, the Indenture, the Installment Purchase Agreement and this Purchase
Agreement;
(c) The Authority is not in any material respect in breach of or default under
any applicable constitutional provision, law or administrative regulation to which it is
subject or any applicable judgment or decree or any loan agreement, indenture, bond,
note, resolution, agreement or other instrument to which the Authority is a party or to
which the Authority 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 in any material respect under any
such instrument; and the issuance of the 2018 Bonds and the execution and delivery of
the Indenture, the Installment Purchase Agreement, this Purchase Agreement and the
Official Statement, and compliance with the provisions on the Authority's part contained
herein and therein, will not in any material respect conflict with or constitute a breach of
or default under any law, administrative regulation, judgment, decree, loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the Authority is
a party or 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 properties or assets of
the Authority under the terms of any such law, administrative regulation, judgment,
decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument;
(d) To the best knowledge of the Authority after reasonable investigation,
there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, governmental agency, public board or body, pending or threatened against
the Authority in any material respect affecting the existence of the Authority or the titles
of its officers to their respective offices or affecting or seeking to prohibit, restrain or
enjoin the issuance, sale or delivery of the 2018 Bonds or contesting or affecting, as to
the Authority, the validity or enforceability of the 2018 Bonds, the Installment Purchase
Agreement, the Indenture or this Purchase Agreement or contesting the powers of the
Authority or its authority to enter into, adopt or perform its obligations under any of the
foregoing, or contesting in any way the completeness or accuracy of the Preliminary
Official Statement or the Official Statement, or any amendment or supplement thereto,
wherein an unfavorable decision, ruling or finding would materially adversely affect the
validity or enforceability of the Indenture, the Installment Purchase Agreement or this
Purchase 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 authorizationby, or which would
constitute a condition precedent to or the absence of which would materially adversely
affect the due performance by, the Authority of its obligations in connection with the
issuance of the 2018 Bonds under the Indenture have been duly obtained, except for such
approvals, consents and orders as may be required under the Blue Sky or securities laws
4
2999445.3 042414 AGMT
of any state in connection with the offering and sale of the 2018 Bonds; 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
Authority of its obligations under the Indenture, the Installment Purchase Agreement or
this Purchase Agreement have been duly obtained;
(Ð The Authority will frrnish such information, execute such instruments and
take such other action in cooperation with the Underwriter as the Underwriter may
reasonably request in order (i) to qualify the2018 Bonds 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 Undenvriter may designate and (ii) to determine the eligibility of the
2018 Bonds for investment under the laws of such states and other jurisdictions, and will
use its best efforts to continue such qualification in effect so long as required for
distribution of the 2018 Bonds; provided, that in no event shall the Authority be required
to take any action which would subject it to service of process in any jurisdiction in
which it is not now so subject;
(g) As of the date thereof and hereof, the Preliminary Official Statement
(except for the omission of such information as is specihed in Rule 15c2-12(bx1)) did
not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein relating to the Authority, in the light of the
circumstances under which they were made, not misleading (excluding therefrom
information about DTC or the book-entry only system contained in the Preliminary
Official Statement);
(h) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is
hereinafter defined) for the 2018 Bonds, the Official Statement did not and will not
contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements therein, relating to the Authority in the light of the circumstances
under which they were made, not misleading;
(Ð If.between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the 2018 Bonds, an event occurs which might or would cause
the information contained in the Official Statement, as then supplemented or amended, to
contain an untrue statement of a material fact or to omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which they were
made, not misleading, the Authority will notify the Underwriter, and, if in the opinion of
the Authority, the Underwriter or its counsel, such event requires the preparation and
publication of a supplement or amendment to the Official Statement, the Authority will
forthwith prepare and furnish to the Underwriter (at the expense of the Authority) a
reasonable number of copies of an amendment of or supplement to the Official Statement
(in form and substance satisfactory to counsel for the Underwriter) which will amend or
supplement the Official Statement so that it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements
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2999445.3 0424t4 AGMT
therein, in the light of the circumstances under which they were made, not misleading.
For the purposes of this subsection, between the date hereof and the date which is 25 days
after the End of the Underwriting Period for the 2018 Bonds, the Authority will furnish
such information with respect to itself as the Underwriter may from time to time
reasonably request;
ú) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (i) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days after the End of the Underwriting Period for the 2018 Bonds, the portions of the
Official Statement so supplemented or amended (including any financial and statistical
data contained therein) will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(k) After the Closing up to and including the date which is 25 days after the
End of the Underwriting Period for the 2018 Bonds, the Authority will not participate in
the issuance of any amendment of or supplement to the Offrcial Statement to which, after
being furnished with a copy, the Underwriter shall reasonably object in writing or which
shall be disapproved by counsel for the Underwriter;
0) As used herein and for the purposes of the foregoing, the term "End of the
Underwriting Period" forthe 2018 Bonds shall meanthe earlier of (i) the Closing Date,
unless the Authority and the City shall have been notified in writing to the contrary by the
Underwriter on or prior to the Closing Date, or (ii) the date on which the End of the
Underwriting Period for the 2018 Bonds has occurred under Rule 15c2-12; provided, that
the Authority and the City may treat as the End of the Underwriting Period for the 2018
Bonds the date specified as such in a notice from the Underwriter stating the date which
is the End of the Underwriting Period;
(m) The Authority will apply, or cause the application of, the proceeds of the
2018 Bonds in accordance with the Installment Purchase Agreement and the Indenture;
and
(n) Any certificate signed by any authorized official of the Authority, and
delivered to the Underwriter in connection with the execution and delivery of the 2018
Bonds, shall be deemed a representation and warranty by the Authority to the
Underwriter as to the statements made therein.
4. Representations. V/arranties and Agreements of the City. The City hereby
represents, warrants and agrees with the Underwriter as follows:
(a) The City is, and will be on the Closing Date, a municipal corporation and
general law city duly organized and existing under the Constitution and laws of the State
of California (the "State") with the full power and authority to execute and deliver the
Official Statement and to enter into this Purchase Agreement, the Continuing Disclosure
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299944s.3 042414 AGMT
Certificate, the Installment Purchase Agreement and the Escrow Deposit and Trust
Agreement, dated as of
-,
2018 (the "Escrow Agreement"), between the City and
The Bank of New York Mellon Trust Company, N.4., as escrow agent for the Refunded
Certificates (the "Escrow Agent");
(b) By all necessary official action of the City prior to or concurrently with
the acceptance hereof, the City has duly approved, ratified and confirmed the distribution
of the Preliminary Official Statement and the execution, delivery and distribution of the
Official Statement, and has duly authorized and approved the execution and delivery of,
and the performance by the City of the obligations on its part contained in, the
Continuing Disclosure Certificate, the Installment Purchase Agreement, the Escrow
Agreement and this Purchase Agreement and the consummation by it of all other
transactions contemplated by the Official Statement, the Continuing Disclosure
Certihcate, the Installment Purchase Agreement, the Escrow Agreement and this
Purchase Agreement;
(c) The City is not in any material respect in breach of or default under any
applicable constitutional provision, law or administrative regulation to which it is subject
or any applicable judgment or decree or any loan agreement, indenture, bond, note,
resolution, agreement or other instrument to which the City is a party or to which the City
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 in any material respect under any such
instrument; and the execution and delivery of the Continuing Disclosure Certificate, the
Installment Purchase Agreement, this Purchase Agreement, the Escrow Agreement and
the Official Statement, and compliance with the provisions on the City's part contained
herein and therein, will not in any material respect conflict with or constitute a breach of
or default under any law, administrative regulation, judgment, decree, loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the City is a
party or is otherwise subject, nor will any such executioq 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 properties or assets of
the City under the terms of any such law, administrative regulation, judgment, decree,
loan agreement, indenture, bond, note, resolution, agreement or other instrument;
(d) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, pending or, to
the best knowledge of the City after reasonable investigation, threatened against the City
in any material respect affecting the existence of the City or the titles of its offrcers to
their respective offices or contesting or affecting, as to the City, the validity or
enforceability of the Continuing Disclosure Certificate, the Installment Purchase
Agreement, the Escrow Agreement or this Purchase Agreement or contesting the powers
of the City or its authority to enter into, adopt or perform its obligations under any of the
foregoing, or contesting in any way the completeness or accuracy of the Preliminary
Official Statement or the Official Statement, or any amendment or supplement thereto,
wherein an unfavorable decision, ruling or finding would materially adversely affect the
7
2999445.3 042414 AGMT
validity or enforceability of the Continuing Disclosure Certificate, the Installment
Purchase Agreement, the Escrow Agreement or this Purchase 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 of its obligations in connection with the issuance
of the 2018 Bonds 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 2018 Bonds; 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 of its obligations under the
Continuing Disclosure Certificate, the Installment Purchase Agreement, the Escrow
Agreement or this Purchase Agreement have been duly obtained (including to the extent
required, any govemmental permits and approvals);
(Ð The City will furnish such information, execute such instruments and take
such other action in cooperation with the Underwriter as the Underwriter may reasonably
request in order (i) to qualify the 2018 Bonds 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 Underwriter may designate; and (ii) to determine the eligibility of the 2018
Bonds for investment under the laws of such states and other jurisdictions, and will use
its best efforts to continue such qualification in effect so long as required for distribution
of the 2018 Bonds; provided, that in no event shall the City be required to take any action
which would subject it to service of process in any jurisdiction in which it is not now so
subject;
(g) As of the date thereof and hereof, the Preliminary Official Statement
(except for the omission of such information as is specified in Rule 15c2-12(bx1) did
not (excluding therefrom information about DTC or the book-entry only system
contained in the Preliminary Official Statement), contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(h) As of the date thereof and at all times subsequent thereto, to and including
the date which is 25 days following the End of the Underwriting Period for the 2018
Bonds, the Official Statement (excluding therefrom information about DTC or the book-
entry only system contained in the Offrcial Statement), did not and will not contain any
untrue statement of a material fact or omit to state a malerial fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading;
(i) If between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the 2018 Bonds, an event occurs which might or would cause
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299944s3 042414 AGMT
the information contained in the Offrcial Statement, as then supplemented or amended, to
contain an untrue statement of a material fact or to omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which they were
made, not misleading, the City will notify the Underwriter, and, if in the opinion of the
City, the Underwriter or its counsel, such event requires the preparation and publication
of a supplement or amendment to the Official Statement, the City will forthwith prepare
and furnish to the Underwriter (at the expense of the City) a reasonable number of copies
of an amendment of or supplement to the Off,rcial Statement (in form and substance
satisfactory to counsel for the Underwriter) which will amend or supplement the Off,rcial
Statement so that it will not contain an untrue statement of a material lact or omit to state
a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. For the pu{poses of this
subsection, between the date hereof and the date which is 25 days after the End of the
Underwriting Period for the 2018 Bonds, the City will furnish such information with
respect to itself as the Underwriter may from time to time reasonably request;
(j) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (i) hereof, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such subparagraph) at all times subsequent thereto up to and including the date which is
25 days after the End of the Underwriting Period for the 2018 Bonds, the portions of the
Official Statement so supplemented or amended (excluding therefrom information about
DTC or the book-entry only system), will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(k) After the Closing up to and including the date which is 25 days after the
End of the Underwriting Period forthe 2018 Bonds, the City will notparticipate inthe
issuance of any amendment of or supplement to the Official Statement to which, after
being furnished with a copy, the Underwriter shall reasonably object in writing or which
shall be disapproved by counsel for the Underwriter;
(l) The Audited Financial Statements of the City for the Fiscal Year ended
June 30, 2017, as contained in Appendix B to the Official Statement, fairly aird
accurately present the financial condition of the Electric System as of such date and there
has not been, nor does the City anticipate that there will be, any adverse change of a
material nature in the financial position, results of operations or condition, financial or
otherwise, of the Electric System;
(m) Since June 30, 2017, except as referred to in or as contemplated by the
Official Statement, with respect to its Electric System, the City has not incurred any
financial liabilities, direct or contingent, or entered into any transactions and there has not
been any adverse change in the condition, financial or physical, of the Electric System, in
any case that would materially and adversely affect the ability of the City to meet its
obligations under the Installment Purchase Agreement;
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2999445.3 042414 AGMT
(") Between the date of this Purchase Agreement and the Closing Date, except
as described in the Official Statement, the City will not, without the prior written consent
of the Underwriter, offer or issue any bonds, notes or other obligations for borrowed
money, or incur any material liabilities direct or contingent, payable from Electric System
Revenues (as defined in the Indenture), nor does the City reasonably anticipate that there
will be any adverse change of a material nature in the financial position, results of
operations or condition, financial or otherwise, of the City; and
(o) Any certificate signed by any authorized official of the City, and delivered
to the Underwriter in connection with the execution and delivery of the 201 8 Bonds, shall
be deemed a representation and warranty by the City to the Underwriter as to the
statements made therein.
5 ñnnrlifinnc fn fha l^ìhlicrq tions ^f +ho T T-rlcn¡¡rifer The Underwriter hereby enters
into this Purchase Agreement in reliance upon the representations and warranties of the
Authority and the City contained herein and the representations and warranties to be contained in
the documents and instruments to be delivered at the Closing and upon the performance by the
Authority and the City of their obligations both on and as of the date hereof and as of the Closing
Date. Accordingly, the Underwriter's obligations under this Purchase Agreement to purchase, to
accept delivery of and to pay for the 2018 Bonds shall be subject, at the option of the
Underwriter, to the accuracy in all material respects of the representations and warranties of the
Authority and the City contained herein as of the date hereof and as of the Closing Date, to the
accuracy in all material respects of the statements of the officers and other officials of the
Authority and the City made in any certificate or other document furnished pursuant to the
provisions hereof, to the performance by the Authority and the City of their respective
obligations to be performed hereunder and under such documents and instruments at or prior to
the Closing Date, and also shall be subject to the following additional conditions:
(a) The Underwriter shall receive, within seven (7) business days of the date
hereof, copies of the Official Statement (including all information previously permitted to
have been omitted by Rule l5c2-I2 and any amendments or supplements as have been
approved by the Underwriter), in such reasonable quantity as the Underwriter shall have
requested;
(b) The representations and warranties of the Authority and the City contained
herein shall be true and correct on the date hereof and on the Closing Date, as if made on
and at the Closing;
(c) At the Closing, the Indenture, the Installment Purchase Agreement, the
Continuing Disclosure Certificate, the Escrow Agreement and this Purchase Agreement
shall have been duly authorized, executed and delivered by the respective parties thereto,
and the Official Statement shall have been duly authorized, executed and delivered by the
Authority and the City, all in substantially the forms heretofore submitted to the
Underwriter, with only such changes as shall have been agreed to in writing by the
Underwriter, and shall be in full force and effect; and there shall be in full force and
effect such resolution or resolutions of the Board of Directors of the Authority and the
City Council of the City as, in the opinion of Jones Hall, A Professional Law
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299944s3 042414 AGMT
Corporation, Bond Counsel to the Authority ("Bond Counsel"), shall be necessary or
appropriate in connection with the transactions contemplated hereby;
(d) Between the date hereof and the Closing Date, the market price or
marketability, at the initial offering prices set forth in the Official Statement, of the 2018
Bonds shall not have been materially adversely affected, in the reasonable judgment of
the Underwriter (evidenced by a written notice to the Authority and the City terminating
the obligation of the Underwriter to accept delivery of and make any payment for the
2018 Bonds), by,reason of any of the following:
(1) an amendment to the Constitution of the United States or the State
of California shall have been passed or legislation shall have been introduced in
or enacted by the Congress of the United States or the legislature of any state
having jurisdiction of the subject matter or legislation pending in the Congress of
the United States shall have been amended or legislation shall have been
recommended to the Congress of the United States or to any state having
jurisdiction of the subject matter or otherwise endorsed for passage (by press
release, other form of notice or otherwise) by the President of the United States,
the Treasury Department of the United States, the Internal Revenue Service or the
Chairman or ranking minority member of the Committee on Finance of the United
States Senate or the Committee on Ways and Means of the United States House of
Representatives, or legislation shall have been proposed for consideration by
either such Committee by any member thereof or presented as an option for
consideration by either such Committee by the staff of such Committee or by the
staff of the Joint Committee on Taxation of the Congress of the United States, or
legislation shall have been favorably reported for passage to either House of the
Congress of the United States by a Committee of such House to which such
legislation has been referred for consideration, or a decision shall have been
rendered by a court of the United States or of the State of California or the Tax
Court of the United States, or a ruling shall have been made or a regulation or
temporary regulation shall have been proposed or made or any other release or
announcement shall have been made by the Treasury Department of the United
States, the Internal Revenue Service or other federal or State of California
authority, with respect to federal or State of California taxation upon revenues or
other income of the general character to be derived by the Authority or upon
interest received on obligations of the general character of the 2018 Bonds which,
in the reasonable judgment of the Underwriter, may have the purpose or effect,
directly or indirectly, of affecting the tax status of the Authority, its property or
income, its securities (including the 2018 Bonds) or the interest thereon, or any
tax exemption granted or authorized by State of California legislation or, in the
reasonable judgment of the Underwriter, materially and adversely affecting the
market for the 2018 Bonds or the market price generally of obligations of the
general character ofthe 2018 Bonds;
(2) legislation enacted, introduced in the Congress or recommended
for passage by tlte President of the United States, or a decision rendered by a court
established under Article III of the Constitution of the United States or by the Tax
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299944s3 042414 AGMT
Court 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 2018 Bonds, orthe 2018 Bonds, including any or
all underlying arrangements, are not exempt from registration under the Securities
Act of 1933, as amended, or that the Indenture is not exempt from qualification
under the Trust Indenture Act of 1939, as amended;
(3) the declaration of war or engagement or significant escalation in
major military hostilities by the United States or the occuruence of any other
national emergency or calamity relating to the effective operation of the
government of, or the financial community in, the United States;
(4) 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;
(5) 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 2018 Bonds or obligations of the general
character of the 2018 Bonds 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 Underwriter;
(6) an order, decree or injunction of any court of competent
jurisdiction, 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 2018 Bonds, or the issuance, offering
or sale of the 2018 Bonds, including any or all underlying obligations, as
contemplated hereby or by the Offrcial Statement, is or would be in violation of
the federal securities laws as amended and then in effect;
(7) the withdrawal or downgrading or placement on "credit watch" or
"negative outlook" of any rating of the 2018 Bonds by a national rating agency; or
(8) any event occurring, or information becoming known which, in the
judgment of the Underwriter, makes untrue in any material respect any statement
or information contained in the Official Statement, or has the effect that the
Official Statement contains any untrue statement of material fact or omits to state
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(e) At or prior to the ClosingDate, the Underwriter shall have received the
following documents, in each case satisfactory in form and substance to the Underwriter:
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2999445.3 042414 AGMT
(1) The Preliminary Official Statement, the Official Statement and
each supplement or amendment, if any, thereto, executed on behalf of the
Authority and the City;
(2) Copies of the Indenture, the Installment Purchase Agreement, this
Purchase Agreement, the Escrow Agreement and the Continuing Disclosure
Certificate, each duly executed and delivered by the respective parties thereto;
(3) The approving opinion of Bond Counsel, dated the Closing Date
and addressed to the Authority, in substantially the form attached to the Official
Statement as Appendix D thereto, and a letter of such counsel, dated the Closing
Date and addressed to the Underwriter, to the effect that such opinion may be
relied upon by the Underwriter to the same extent as if such opinion were
addressed to it;
(4) The supplemental opinion of Bond Counsel, dated the Closing
Date and addressed to the Underwriter, in substantially the form attached hereto
as Exhibit B;
(5) The opinion of Authority Counsel, dated the Closing Date and
addressed to the Underwriter, in substantially the form attached hereto as Exhibit
C;
(6) The opinion of the City Attorney, dated the Closing Date and
addressed to the Underwriter, in substantially the form attached hereto as Exhibit
D;
(7) The opinion of counsel to the Trustee, dated the Closing Date and
addressed to the Authority, the City and the Underwriter, to the effect that (i) the
Trustee has duly authorized, executed and delivered the Indenture; and (ii) the
Indenture constitutes a legally valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its terms, except that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganizati.on, 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;
(8) The opinion of counsel to the Escrow Agent, dated the Closing
Date and addressed to the Authority, the City and the Underwriter, to the effect
that (i) the Escrow Agent has duly authorized, executed and delivered the Escrow
Agreement; and (ii) the Escrow Agreement constitutes a legally valid and binding
obligation of the Escrow Agent, enforceable against the Escrow Agent 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;
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2999445.3 042414 AGMT
(9) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the Authority satisfactory to the Underwriter, in form
and substance satisfactory to the Underwriter, to the effect that (i) the
representations and warranties of the Authority contained in this Purchase
Agreement are true and correct in all material respects on and as of the Closing
Date with the same effect as if made on the Closing Date; (ii) there is no action,
suit, proceeding, inquiry or investigation pending or to the best knowledge of such
official after reasonable investigation, threatened (a) to restrain or enjoin the
execution, sale or delivery of any of the 2018 Bonds, (b) in any way affecting the
validity of the 2018 Bonds, this Purchase Agreement, the Indenture, the Escrow
Agreement or the Installment Purchase Agreement, or (c) in any way contesting
the existence or powers of the Authority; nor to the best knowledge of such
official after reasonable investigation is there any basis for any such action, suit,
proceeding, inquiry or investigation wherein an unfavorable decision, ruling or
finding would make invalid or materially adversely affect the authorization,
execution, delivery or performance by the Authority of the foregoing and (iii) no
event affecting the Authority has occurred since the date of the Official Statement
which either makes untrue or incorrect in any material respect as of the Closing
Date any statement or information contained in the Official Statement relating to
the Authority or is not reflected in the Official Statement but should be reflected
therein in order to make the statements and information therein relating to the
Authority not misleading in any material respect;
(10) A certificate or certificates, dated the Closing Date, signed by a
duly authorized official of the City satisfactory to the Underwdter, in form and
substance satisfactory to the Underwriter, to the effect that (i) the representations
and warranties of the City contained in this Purchase Agreement are true and
correct in all material respects on and as of the Closing Date with the same effect
as if made on the Closing Date; (ii) there is no action, suit, proceeding, inquiry or
investigation pending or, to the best knowledge of such official, threatened (a) to
restrain or enjoin payments under the Installment Purchase Agreement, (b) in any
way contesting or affecting the validity of the Continuing Disclosure Certificate,
this Purchase Agreement, the Escrow Agreement or the Installment Purchase
Agreement, or (c) in any way contesting the existence or powers of the City; nor
to the best knowledge of such official after reasonable investigation, is there any
basis for any such action, suit, proceeding, inquiry or investigation, wherein an
unfavorable decision, ruling or finding would make invalid or materially
adversely affect the authori zation, execution, delivery or performance by the City
of the foregoing; (iii) no event has occurred since the date of the Official
Statement (excluding therefrom information about DTC or the book-entry only
system contained in the Official Statement) which either makes untrue or
incorrect in any material respect as of the Closing Date any statement or
information contained in the Official Statement or is not reflected in the Official
Statement but should be reflected therein in order to make the statements and
information therein not misleading in any material respect; and (iv) since June 30,
2017, except as referred to in or as contemplated by the Official Statement, with
respect to the Electric System, the City has not incurred any financial liabilities,
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2999445.3 042414 AGMT
direct or contingent, or entered into any transactions and there has not been any
adverse change in the condition, financial or physical, of the Electric System, in
any case that would materially and adversely affect the ability of the City to meet
its obligations under the Installment Purchase Agreement;
(11) A certificate, dated the Closing Date, signed by a duly authorized
official of the Trustee, satisfactory in form and substance to the Underwriter, to
the effect that: (i) the Trustee is a national banking association organized and
existing under and by virtue of the laws of the United States of America; having
the full power and being qualified to enter into and perform its duties under the
Indenture; (ii) the Trustee is duly authorized to enter into the Indenture; (iii) the
execution and delivery of the Indenture and compliance with the provisions on the
Trustee's part contained therein, will not conflict with or constitute a breach of or
default under any law, administrative regulation, judgment, decree, loan
agreement, indenture, bond, note, resolution, agreement or other instrument to
which the Trustee is a party or is otherwise subject (except that no representation,
warranty or agreement is made with respect to any federal or state securities or
Blue Sky laws or regulations), nor will any such execution, delivery, adoption or
compliance result in the creation or imposition of any lien, charge or other
security interest or encumbfance of any nature whatsoever upon any of the
properties or assets held by the Trustee pursuant to the lien created by the
Indenture under the terms of any such law, administrative regulation, judgment,
decree, loan agreement, indenture, bond, note, resolution, agreement or other
instrument, except as provided by the Indenture; (iv) it has not been served with
any action, suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, governmental agency, public board or body, nor is any such action,
to the best of such official's knowledge after reasonable investigation, threatened
against the Trustee, as such but not in its individual capacity, affecting the
existence of the Trustee, or the titles of its offrcers to their respective offices, or
seeking to prohibit, restrain or enjoin the collection of the funds to be applied to
pay the principal, premium, if any, and interest with respect to the 2018 Bonds, or
the pledge thereof, or in any way contesting or affecting the validity or
enforceability of the Indenture, or contesting the powers of the Trustee or its
authority to enter into, adopt or perform its obligations under any of the
foregoing, wherein an unfavorable decision, ruling or finding would materially
adversely affect the validity or enforceability of the Indenture; and (v) subject to
the provisions of the Indenture and applicable law, the Trustee will apply the
proceeds from the 2018 Bonds to the purposes specified in the Indenture;
(12) A certificate, dated the Closing Date, signed by a duly authorized
official of the Escrow Agent, satisfactory in form and substance to the
Underwriter, to the effect that: (i) the Escrow Agent is a national banking
association organized and existing under and by virtue of the laws of the United
States of America; having the full power and being qualified to enter into and
perform its duties under the Escrow Agreement; (ii) the Escrow Agent is duly
authorized to enter into the Escrow Agreement; (iii) the execution and delivery of
the Escrow Agreement and compliance with the provisions on the Escrow
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299944s3 042414 AGMT
Agent's part contained therein, will not conflict with or constitute a breach of or
default under any law, administrative regulation, judgment, dectee, loan
agreement, Escrow Agreement, bond, note, resolution, agreement or other
instrument to which the Escrow Agent is a party or is otherwise subject (except
that no representation, warranty or agreement is made with respect to any federal
or state securities or Blue Sky laws or regulations), 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 properties or assets held by the Escrow Agent pursuant to the lien
created by the Escrow Agreement under the terms of any such law, administrative
regulation, judgment, decree, loan agreement, indenture, bond, note, resolution,
agreement or other instrument, except as provided by the Escrow Agreement; and
(iv) it has not been served with any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, govefnmental agency,
public board or body, nor is any such action, to the best of such official's
knowledge after reasonable investigation, threatened against the Escrow Agent, as
such but not in its individual capacity, affecting the existence of the Escrow
Agent, or the titles of its officers to their respective offices, or the pledge of the
Escrow Agreement, or in any way contesting or affecting the validity or
enforceability of the Escrow Agreement, or contesting the powers of the Escrow
Agent or its authority to enter into, adopt or perform its obligations under any of
the foregoing, wherein aî unfavorable decision, ruling or finding would
materially adversely affect the validity or enforceability of the Esuow
Agreement;
(13) A certified copy of the general resolution of the Trustee
authorizing the execution and delivery of the Indenture;
(14) A certified copy of the general resolution of the Escrow Agent
authorizing the execution and delivery of the Escrow Agreement;
(15) Certified copies of the resolution of the Authority authorizing the
execution and delivery of the Indenture, the Installment Purchase Agreement, this
Purchase Agreement and the Official Statement;
(16) Certified copies of the resolutions of the City authorizing the
execution and delivery of the Installment Purchase Agreement, the Continuing
Disclosure Certificate, this Purchase Agreement, the Escrow Agreement and the
Official Statement;
(I7) A Tax Certificate with respect to the 2018 Bonds, together with
Form 8038-G, in form satisfactory to Bond Counsel, signed by an appropriate
officer of the City and the Authority;
(1S) Evidence that the ratings on the 2018 Bonds as set forth in the
Offrciat Statement are in full force and effect as of the Closing Date;
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2999445.3042414 AGMT
(19) A letter of Disclosure Counsel, dated the Closing Date and
addressed to the Underwriter, to the effect that, without having undertaken to
determine independently, and without assuming any responsibility for, the
accuracy, completeness or fairness of any of the statements contained in the
Preliminary Official Statement or the Official Statement nor making any
representation regarding independent verification of the accuracy, completeness
or fairness of any of the statements contained in the Preliminary Official
Statement or the Official Statement, such counsel advises that no information has
come to the attention of the attorneys in the firm representing the Authority and
the City as Disclosure Counsel which would lead them to believe that the
Preliminary Official Statement or the Official Statement, as of their respective
dates (except for information relating to any financial, statistical or economic data
or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions
or expressions of opinion, any of the Appendices to the Official Statement, or any
information about book-entry or DTC, included therein, as to which no opinion or
view need be expressed; and, with respect to the Preliminary Official Statement,
information permitted to be omitted under Rule l5c2-I2) or the Offrcial
Statement, as of the date of the Closing (except as aforesaid), contained or
contains, any untrue statement of a materialfact or omitted or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(20) An opinion of Underwriter's Counsel, dated the Closing Date and
addressed to the Underwriter, in their capacity as counsel to the Underwriter in
connection with the purchase by the Underwriter of the 2018 Bonds, in form and
substance satisfactory to the Underwriter; which shall contain a statement to the
effect that, without having undertaken to determine independently, and without
assuming any responsibility for, the accuracy, completeness or fairness of any of
the statements contained in the Preliminary Official Statement or the Official
Statement nor making any representation regarding independent verification of
the accuracy, completeness or fairness of any of the statements contained in the
Preliminary Official Statement or the Official Statement, such counsel advises
that no information has come to the attention of the attorneys in the firm
representing the Underwriter in connection with their purchase of the 201 8 Bonds
which would lead them to believe that the Preliminary Official Statement or the
Offrcial Statement, as of their respective dates (except for information relating to
any financial, statistical or economic data or forecasts, numbers, charts, tables,
graphs, estimates, projections, assumptions or expressions of opinion, any of the
Appendices to the Official Statement, or any information about book-entry or
DTC, included therein, as to which no opinion or view need be expressed; and,
with respect to the Preliminary Official Statement, information permitted to be
omitted under Rule 15c2-I2) or the Official Statement, as of the date of the
Closing (except as aforesaid), contained or contains, any untrue statement of a
material fact or omitted or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were made,
not misleading; and
t7
2999445.3 042414 AGMT
(2I) Such additional legal opinions, certificates, proceedings,
instruments, insurance policies or evidences thereof and other documents as the
Underwriter or Bond Counsel may reasonably request to evidence the truth and
accvracy, as of the date hereof and as of the Closing Date, of the representations
of the Authority and the City herein and of the statements and information
contained in the Official Statement, and the due performance or satisfaction by
the Authority and the City at or prior to the Closing of all agreements then to be
performed and all conditions then to be satisfied by the Authority and the City in
connection with the transactions contemplated hereby and by the Indenture and
the Installment Purchase Agreement.
If the Authority and the City shall be unable to satisfy the conditions to the Underwriter's
obligations contained in this Purchase Agreement or if the Underwriter's obligations shall be
terminated for any reason permitted herein, all obligations of the Underwriter hereunder may be
terminated by the Underwriter af, or at any time prior to, the Closing Date by written notice to
the Authority and the City and neither the Underwriter nor the Authority or the City shall have
any further obligations hereunder.
6. Public Offering Price. V/ith respect to the issue price of the 2018 Bonds:
(a) The Underwriter agrees to assist the Authority and the City in establishing
the issue price of the 2018 Bonds and shall execute and deliver to the Authority and the
City at Closing an "issue price" or similar certificate, together with the supporting pricing
wires or equivalent communications, substantially in the form attached hereto as Exhibit
E, with such modifications as may be appropriate or necessary, in the reasonable
judgment of the Underwriter, the Authority, the City and Bond Counsel, to accurately
reflect, as applicable, the sales price or prices or the initial offering price or prices to the
public of the 2018 Bonds.
(b) fExcept as otherwise set forth in Schedule I attached hereto,] [T][t]the
Authority and the City will treat the first price at which l0o/o of each maturity of the 2018
Bonds (the " 100/o test") is sold to the public as the issue price of that maturity (if different
interest rates apply within a maturity, each separate CUSIP number within that maturity
will be subject to the 10% test). At or promptly after the execution of this Bond Purchase
Agreement, the Underwriter shall report to the Authority and the City the price or prices
at which the Underwriter has sold to the public each maturity of 2018 Bonds. If at that
time the l0o/o tesl has not been satisfied as to any maturity of the 2018 Bonds, the
Underwriter agrees to promptly report to the Authority and the City the prices at which
2018 Bonds of that maturity have been sold by the Underwriter to the public. That
reporting obligation shall continue, whether or not the Closing Date has occurred, until
fhe l0o/o test has been satisfied as to fhe2018 Bonds of that maturity or until all 2018
Bonds of that maturity have been sold to the public.
(c) [The Underwriter confirms that it has offered the 2018 Bonds to the public
on or before the date of this Bond Purchase Agreement at the offering price or prices (the
"initial offering price"), or at the corresponding yield or yields, set forth in Schedule I
attached hereto, except as otherwise set forth therein. Schedule I also sets forth, as of the
18
299944s.3 042414 AGI|J{T
date of this Bond Purchase Agreement, the maturities, if any, of the 2018 Bonds for
which the l0o/o test has not been satisfied and for which the Authority and the City and
the Underwriter agree that the restrictions set forth in the next sentence shall apply, which
will allow the Authority and the City to treat the initial offering price to the public of
each such maturity as of the sale date as the issue price of that maturity (the "hold-the-
offering-price rule"). So long as the hold-the-offering-price rule remains applicable to
any maturity of the 2018 Bonds, the Underwriter will neither offer nor sell unsold 2018
Bonds of that maturity to any person at a price that is higher than the initial offering price
to the public during the period starting on the sale date and ending on the earlier of the
following:
(1) the close of the fifth (5th) business day after the sale date; or
(2) the date on which the Underwriter has sold at least 10% of that
maturity of the 2018 Bonds to the public at a price that is no higher than the initial
offering price to the public.
The Underwriter shall promptly advise the Authority and the City when the Underwriter
has sold l\Yo ofthat maturity of the 2018 Bonds to the public at a price that is no higher
than the initial offering price to the public, if that occurs prior to the close of the fifth
(5th) business day after the sale date.
The Authority and the City acknowledge that, in making the representation set forth in
this subsection, the Underwriter will rely on (i) in the event a selling group has been
created in connection with the initial sale of the 2018 Bonds to the public, the agreement
of each dealer who is a member of the selling group to comply with the hold-the-
offering-price rule, as set forth in a selling group agreement and the related pricing wires,
and (ii) in the event that an Underwriter is a party to a retail distribution agreement that
was employed in connection with the initial sale of the 2018 Bonds to the public, the
agreement of each broker-dealer that is a party to such agreement to comply with the
hold-the-offering-price rule, as set forth in the retail distribution agreement and the
related pricing wires. The Authority and the City further acknowledge that each
Underwriter shall be solely liable for its failure to comply with its agreement regarding
the hold-the-offering-price rule and that no Underwriter shall be liable for the failure of
any other Underwriter, or of any dealer who is a member of a selling group, or of any
broker-dealer that is a party to a retail distribution agreement, to comply with its
corresponding agreement regarding the hold-the-offering-price rule as applicable to the
2018 Bonds.l
(d) The Underwriter confirms that:
(1) any agreement among underwriters, any selling group agreement
and each retail distribution agreement (to which the Underwriter is a party)
relating to the initial sale of the 2018 Bonds to the public, together with the
related pricing wires, contains or will contain language obligating each
Underwriter, each dealer who is a member of the selling group, and each broker-
dealer that is a party to such retail distribution agreement, as applicable, to (A)
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report the prices at which it sells to the public the unsold 2018 Bonds of each
maturity allotted to it until it is notified by the Underwriter that either the 10% test
has been satisfied as to the 2018 Bonds of that maturity or all 2018 Bonds of that
maturity have been sold to the public and (B) comply with the hold-the-offering-
price rule, if applicable, in each case if and for so long as directed by the
Underwriter and as set forth in the related pricing wires, and
(2) any agreement among underwriters relating to the initial sale of the
2018 Bonds to the public, together with the related pricing wires, contains or will
contain language obligating each Underwriter that is aparty to a retail distribution
agreement to be employed in connection with the initial sale of the 201 8 Bonds to
the public to require each broker-dealer that is a party to such retail distribution
agreement to (A) report the prices at which it sells to the public the unsold 2018
Bonds of each maturity allotted to it until it is notified by the Underwriter or the
Underwriter that either the ljYo test has been satisfied as to the 2018 Bonds of
that maturity or all 2018 Bonds of that maturity have been sold to the public and
(B) comply with the hold-the-offering-price rule, if applicable, in each case if and
for so long as directed by the Underwriter or the Underwriter and as set forth in
the related pricing wires.
(e) The Underwriter acknowledges that sales of any 2018 Bonds to any
person that is a related party to an Underwriter shall not constitute sales to the public for
purposes of this section. Further, forpurposes of this section:
(1) "public" means any person other than an underwriter or a related
þartY,
(2) "underwriter" means (A) any person that agrees pursuant to a
written contract with the Authority and the City (or with the lead underwriter to
form an underwriting syndicate) to participate in the initial sale of the 2018 Bonds
to the public and (B) any person that agrees pursuant to a written contract directly
or indirectly with a person described in clause (A) to participate in the initial sale
of the 201 8 Bonds to the public (including a member of a selling group or a party
to a retail distribution agreement participating in the initial sale of the 2018 Bonds
to the public),
(3) a purchaser of any of the 2018 Bonds is a "related party" to an
underwriter if the underwriter and the purchaser are subject, directly or indirectly,
to (i) at least 50% common ownership of the voting power or the total value of
their stock, if both entities are corporations (including direct ownership by one
corporation of another), (ii) more than 50Yo common ownership of their capital
interests or profits interests, if both entities are partnerships (including direct
ownership by one partnership of another), or (iii) more than 50olo common
ownership of the value of the outstanding stock of the corporation or the capital
interests or profit interests of the partnership, as applicable, if one entity is a
corporation and the other entity is a partnership (including direct ownership of the
applicable stock or interests by one entity of the other), and
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(4) "sale date" means the date of execution of this Bond Purchase
Agreement by all parties.
7. Expenses. All expenses and costs incident to the authorization, issuance, delivery
and sale of the 2018 Bonds to the Unden¡rriter, including the costs of printing of the 2018 Bonds,
the Preliminary Official Statement and the Offrcial Statement, the cost of duplicating the
Indenture, the Installment Purchase Agreement, the Continuing Disclosure Certificate, the fees of
accountants, financial advisors, consultants and rating agencies, the initial fee of the Trustee and
its counsel in connection with the issuance of the 2018 Bonds, the fees and expenses of Bond
Counsel, shall be paid from the proceeds of the 2018 Bonds. In addition, the fees of counsel to
the Underwriter in the amount of 522, 500 shall be paid from the proceeds of the 201 8 Bonds. In
the event that the 20 I 8 Bonds for any reason are not issued, or to the extent proceeds of the 201 8
Bonds are insufficient or unavailable therefor, any fees, costs and expenses owed by the
Authority or the City, which otherwise would have been paid from the proceeds of the 2018
Bonds, shall be paid by the Authority or the City. All out of pocket expenses of the Underwriter,
including traveling and other expenses, the California Debt and Investment Advisory
Commission fee and the fees and expenses of Underwriter's Counsel (in excess of the amount
paid from the proceeds of the 2018 Bonds) shall be paid by the Underwriter.
L Notices. Any notice or other communication to be given under this Purchase
Agreement may be given by delivering the same in writing to the respective parties at the
following address:
Underwriter: J.P. Morgan Securities LLC
l4l5 L Street, Suite 650
Sacramento, CA 95814
Attention: Juan Fernandez
Authority Lodi Public Financing Authority
c/o the City of Lodi
221West Pine Street
Lodi, CA 95241-1910
Attention: City Manager
City:City of Lodi
221West Pine Street
Lodi, CA 95241-1910
Attention: City Manager
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9. Survival of Representations and Warranties. The representations and warranties
of the Authority and the City set forth in or made pursuant to this Purchase Agreement shall not
be deemed to have been discharged, satisfied or otherwise rendered void by reason of the
Closing or termination of this Purchase Agreement and regardless of any investigations or
statements as to the results thereof made by or on behalf of the Underwriter and regardless of
delivery of and payment for the 2018 Bonds.
10. Effectiveness and Counterpart Signatures. This Purchase Agreement shall
become effective and binding upon the respective parties hereto upon the execution of the
acceptance hereof by duly authorized officers of the Authority and the City and shall be valid
and enforceable as of the time of such acceptance. This Purchase Agreement 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.
I 1. Parties in Interest. This Purchase Agreement is made solely for the benefit of the
Authority, the City and the Underwriter (including the successors or assigns of the Underwriter)
and no other person shall acquire or have any right hereunder or by virtue hereof.
12. Headines. The headings of the sections of this Purchase Agreement are inserted
for convenience only and shall not be deemed to b e apart hereof.
IREMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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13. Governing Law. This Purchase Agreement shall be construed in accordance with
the laws of the State of California.
Very truly yours,
J.P. MORGAN SECURITIES LLC
By
Authorized Signatory
ACCEPTED:
LODI PUBLIC FINANCING AUTHORITY
By:
Stephen Schwabauer, City Manager
CITY OF LODI, A MUNICIPAL CORPORATION
By:
Stephen Schwabauer, City Manager
Approved as to form
By
Janice D. Magdich, City Attorney
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$
EXHIBIT A
MATURITY SCHEDULE
Series 2018 Serial Bonds
Interest
Rate
. o/o
Maturþ Date
(September 1)
Principal
Amount Yield Price
$
*Priced to par call date of September 1,20_.
Redemption
Optional Redemption. The 2018 Bonds maturing on or before September 1,20-, are
not subject to optional redemption prior to their respective stated maturity dates. The 2018
Bonds maturing on or after September 1, 20-_, are subject to redemption in whole, or in part at
the Written Request of the Authority among maturities on such basis as the Authority may
designate and within a maturity as set forth in the Indenture, at the option of the Authority, on
any date on or after September I,20-, from any available source of funds, at a redemption price
equal to I00Yo of the principal amount of the 2018 Bonds to be redeemed, plus accrued interest
to the date of redemption, without premium.
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EXHIBIT B
FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL
City of Lodi
Lodi Public Financing Authority
221 V/est Pine Street
P.O. Box 333-6700
Lodi, Califo rnia 9 5241 -19 I 0
J.P. Morgan Securities LLC
560 Mission St., Suite 2400
San Francisco, California
$Lodi Public Financing Authority
2018 Electric System Revenue Refunding Bonds
Ladies and Gentlemen:
'We have acted as bond counsel to the Lodi Public Financing Authority (the "Authority")
in connection with the issuance by the Authority of the above-referenced bonds (the "Bonds"),
pursuant to Article 4 of Chapter 5, DivisionT, Title I of the Government Code of the State of
California (the "Bond Law") and an Indenture of Trust (the "Indenture"), dated as of _,
2018, by and between the Authority and MUFG Union Bank, N.4., as trustee (the "Trustee").
Capitalized terms not defined herein shall have those meanings assigned to them in the Bond
Purchase Agreement, dated 2018 (the "Purchase Agreement"), among J.P. Morgan
Securities LLC (the "Underwriter"), the Authority and the City of Lodi (the "City").
The Bonds are secured primarily by installment payments to be made by the City under
anInstallmentPurchaseAgreement,datedasof-,2018(theo.InstallmentPurchase
Agreement"), by and between the Authority and the City. We have examined the Bond Law and
such certified proceedings and other papers as we deem necessary to render this opinion.
This letter is being delivered in our capacity as bond counsel to the Authority and not as
counsel to any other addressee hereof.
As to questions of fact material to our opinion, we have relied upon representations of the
Authority and the City contained in the Indenture, the Installment Purchase Agreement, and the
certified proceedings and certifications of public offrcials and others furnished to us without
undertaking to verify the same by independent investigation.
Based upon the foregoing, we are of the opinion, under existing law, as follows:
1. The Authority has duly and validly executed the Purchase Agreement, and the
Purchase Agreement constitutes the legal, valid and binding agreement of the Authority, subject
to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors'
rights generally, and by equitable principles, whether considered at law or in equity.
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2. The statements contained in the Official Statement on the cover page and under
the captions "INTRODUCTION," "THE 2018 BONDS" (other than information relating to DTC
and its book-entry only system, as to which no opinion is expressed)," "SECURITY AND
SOURCES OF PAYMENT FOR THE 2018 BONDS," "TAX MATTERS," and in Appendices
C and D thereto, insofar as such statements purport to summarize certain provisions of the
Bonds, the Indenture, the Installment Purchase Agreement, or to state legal conclusions and the
opinion of Bond Counsel regarding the tax-exempt nature of the Bonds, present a fair and
accurate summary of the provisions thereof.
3. The Bonds are exempt from registration under the Securities Act of 1933, as
amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939,
as amended.
This opinion is rendered solely for your benefit in connection with issuance of the Bonds
and may not be relied upon, used, circulated, quoted or referred to, nor any copies hereof be
delivered to, any other person without our prior written approval. We disclaim any obligation to
supplement this letter to reflect any facts or circumstances that may hereafter come to our
attention or any changes in the law that may hereafter occur, and our engagement with respect to
this matter has terminated as of the date hereof.
Respectfully submitted,
A Professional Law Corporation
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EXHIBIT C
OPINION OF AUTHORITY COUNSEL ADDRESSED TO THE UNDERWRITER
[DATE OF DELIVERY]
J.P. Morgan Securities LLC
San Francisco, California
Lodi Public Financing Authority
2018 Electric System Revenue Refunding Bonds
Dear Ladies and Gentlemen:
Iam , counsel to the Lodi Public Financing
Authority (the "Authority") a joint exercise of powers entity organized and existing pursuant to
the provisions of Title 1, Division 7, Chapter 5 of the Government Code of the State of
California. This opinion is rendered in connection with the issuance of the above-referenced
bonds (the "Bonds"). The Bonds are being issued pursuant to an Indenture of Trust (the
"Indenture"), dated as of _,2018, by and between the Authority and MUFG Union Bank,
as trustee (the "Trustee"). The Bonds were sold to J.P. Morgan Securities LLC (the
"Underwriter"), pursuant to a Bond Purchase Agreement, dated 2018 (the "Purchase
Agreement"), among the Underwriter, the City of Lodi (the "City"; and the Authority. This
letter is being delivered in my capacity as counsel to the Authority and not as counsel to the
Underwriter.
Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto
in the Indenture, or, if not defined in the Indenture, in the Purchase Agreement.
In rendering this opinion, I have examined the following documents
(i) The Indenture;
(ii) The Installment Purchase Agreement, dated as of
Purchase Agreement") between the City and the Authority;
2018 (the "Installment
(iiÐ The Purchase Agreement; and
(iv) The Official Statement (the "Official Statement") dated
relating to the Bonds.
2018,
In addition, I have examined such other documents and instruments, including certificates
of public officials, and have made such investigations of law and of fact as I have deemed
necessary or appropriate for the purpose of rendering the opinions set forth herein.
Based on the foregoing, I am of the opinion that:
The Authority is a joint exercise of powers entity duly organized under the laws of the
State of California.
$
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299944s.3 042414 AG.I/TT
Resolution No. 2018- (the "Resolution") approving and authorizing the issuance of the
2018 Bonds and the execution and delivery of the Indenture, the Installment Purchase
Agreement, the Purchase Agreement and the Official Statement was duly adopted by the
AuthorityataregularmeetingoftheBoardofDirectorsoftheAuthorityheldon-,
20T8, which was called and held pursuant to law and with all public notice required by law and
at which a quorum was present and acting throughout.
There is no action, suit, proceeding, inquiry or investigation at law or in equity, before or
by any court, public board or body pending (with service of process having been accomplished)
or, to my current actual knowledge after reasonable investigation, threatened against or affecting
the Authority in any \ilay contesting or affecting the validity of the Bonds, the Indenture, the
Installment Purchase Agreement or the Purchase Agreement or the sources of payment for the
Bonds.
The issuance of the Bonds and the execution and delivery of the Indenture, the
Installment Purchase Agreement, the Purchase Agreement and the Offrcial Statement by the
Authority, the adoption of the Resolution, and compliance by the Authority with the provisions
of the foregoing, as appropriate, under the circumstances contemplated thereby, does not and will
not in any material respect conflict with or constitute on the part of the Authority a breach or
default under any agreement or other instrument to which the Authority is a party (and of which I
have current actual knowledge after reasonable investigation) or by which it is bound (and of
which I have current actual knowledge after reasonable investigation) or any existing law,
regulation, court order or consent decree to which the Authority is subject.
The Offrcial Statement and the Bonds have been duly autho úzed,executed and delivered
by the Authority, and the Indenture, the Installment Purchase Agreement and the Purchase
Agreement have been duly authorized, executed and delivered by the Authority and, assuming
due authorization, execution and delivery by the other parties thereto, the Indenture, the
Installment Purchase Agreement and the Purchase Agreement constitute legal, valid and binding
agreements of the Authority, enforceable 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 the application of equitable principles; provided, that the
enforceability of the foregoing agreements may be subject or limited by the unenforceability
under certain circumstances of provisions imposing penalties, forfeitures or late payment charges
upon delinquency in payment or the occurrence of a default, and no opinion is expressed as to
any indemnifi cation provisions contained therein.
Except as described in the Offrcial Statement, no authorization, approval, consent or
other order of the State of California or any other governmental authority or agency within the
State of California having jurisdiction over the Authority is required for the valid authorization,
execution, delivery and performance by the Authority of the Bonds, the Indenture, the
Installment Purchase Agreement, the Official Statement or the Purchase Agreement or for the
adoption of the Resolution which has not been obtained; provided, that no opinion is expressed
with respect to qualification under Blue Sky or other state securities laws.
Sincerely,
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EXHIBIT D
OPINION OF THE CITY ATTORNEY
IDATE OF DELIVERY]
J.P. Morgan Securities LLC
San Francisco, California
Lodi Public Financing Authority
2018 Electric System Revenue Refunding Bonds
Dear Ladies and Gentlemen:
I am City Attorney to the City of Lodi (the 'oCity"), a municipal corporation and general
law city duly organized and existing under the Constitution and laws of the State of California
(the "State"). This opinion is rendered in connection with the issuance of the above-referenced
bonds (the "Bonds"). The Bonds are being issued pursuant to an Indenture of Trust (the
"Indenture"), dated as of 2018, by and between the Lodi Public Financing Authority
(the "Authority") and MUFG Union Bank, as trustee (the "Trustee"). The Bonds were sold to
J.P. Morgan Securities LLC (the "Underwriter"), pursuant to a Bond Purchase Agreement, dated
2018 (the "Purchase Agreement"), among the Underwriter, the City of Lodi (the
"City") and the Authority. This letter is being delivered in my capacity as counsel to the City
and not as counsel to the Underwriter.
In rendering this opinion, I have examined the following documents: (i) an Installment
Purchase Agreement, dated as of 2018 (the "Installment Purchase Agreement") between
the City and the Authority; (ii) the Purchase Agreement; (iii) the Escrow Agreement; (iv) the
Official Statement (the "Official Statement") dated 2018, relating to the Bonds; and
(v) the Continuing Disclosure Certificate (the "Continuing Disclosure Certificate"), dated as of
the date hereof, relating to the Bonds.
In addition, I have examined such other documents and instruments, including certificates
of public officials, and have made such investigations of law and of fact as I have deemed
necessary or appropriate for the purpose of rendering the opinions set forth herein.
Based on the foregoing, I am of the opinion that:
The City is a municipal corporation and general law city duly organized under the laws of
the State of California.
Resolution No. 2018-_ (the "Resolution") approving and authorizingthe issuance of
the 2018 Bonds and the execution and delivery of the Installment Purchase Agreement, the
Purchase Agreement, the Continuing Disclosure Certif,rcate, Escrow Agreement and the Offrcial
Statement was duly adopted by the City at a meeting of the City Council of the City held on
2018, which was called and held pursuant to law and with all public notice required
by law and at which a quorum was present and acting throughout.
$
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There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, public board or body pending (with service of process having been accomplished)
or, to my current actual knowledge after reasonable investigation, threatened against or affecting
the City's financial condition or operation or in any way contesting or affecting the validity of
the Installment Purchase Agreement, the Purchase Agreement or the Continuing Disclosure
Certificate or the sources of payment for the Bonds.
The execution and delivery of the Installment Purchase Agreement, the Purchase
Agreement, the Escrow Agreement, the Continuing Disclosure Certificate and the Official
Statement by the City, the adoption of the Resolution, and compliance by the City with the
provisions of the foregoing, as appropriate, under the circumstances contemplated thereby, does
not and will not in any material respect conflict with or constitute on the part of the City a breach
or default under any agreement or other instrument to which the City is a party (and of which I
have current actual knowledge after reasonable investigation) or by which it is bound (and of
which I have current actual knowledge after reasonable investigation) or any existing law,
regulation, court order or consent decree to which the City is subject.
The Official Statement has been duly authorized, executed and delivered by the City, and
the Installment Purchase Agreement, the Purchase Agreement, the Escrow Agreement and the
Continuing Disclosure Certificate have been duly authoized, executed and delivered by the City
and, assuming due authorization, execution and delivery by the other parties thereto, the
Installment Purchase Agreement, the Purchase Agreement and the Continuing Disclosure
Certificate constitute legal, valid and binding agreements of the City, enforceable 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 the application of
equitable principles; provided, that the enforceability of the foregoing agreements may be subject
or limited by the unenforceability under certain circumstances of provisions imposing penalties,
forfeitures or late payment charges upon delinquency in payment or the occurrence of a default,
and no opinion is expressed as to any indemnification provisions contained therein.
Except as described in the Official Statement, no authorization, approval, consent or
other order of the State of California or any other governmental authority or agency within the
State of California having jurisdiction over the City is required for the valid authoÅzaiion,
execution, delivery and performance by the City of the Installment Purchase Agreement, the
Official Statement, the Purchase Agreement, the Escrow Agreement or the Continuing
Disclosure Certificate or for the adoption of the Resolution which has not been obtained;
provided, that no opinion is expressed with respect to qualification under Blue Sky or other state
securities laws.
Under the laws of the State of California, and subject to the requirements of Proposition
218, the City has the authority to fix and collect charges for electricity utility service and is not
presently subject to the regulatory jurisdiction of any state, regional or local governmental
regulatory authority in connection with fixing and collecting such charges.
The Net Revenues (as defined in the Official Statement) are free and clear of and from
any and all liens and encumbrances other than as set forth in the Official Statement.
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299944s.3 0424t4 AGI/{T
I am not passing upon and have not undertaken to determine independently or to verify
the accuracy or completeness of the statements contained in the Official Statement and I am,
therefore, unable to make any representation to you in that regard. However, based on my
ongoing role as City Attorney and my participation in conferences with representatives of the
City, the City's Financial Advisor, and others, during which conferences the content of the
Offrcial Statement and related matters were discussed, and, in reliance thereon and on certain
documents reviewed by me and on the documents, letters, certificates and opinions described
above and my understanding of applicable law, I advise you as a matter of fact, but not opinion,
that no information has come to my attention which caused me to believe that the Official
Statement as of its date contained, or as of the date hereof contains, any untrue statement of a
material fact or as of its date omitted, or as of the date hereof omits, to state any materi al fact
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading (excluding any CUSIP numbers, financial, accounting, statistical,
economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs,
estimates, projections, assumptions or expressions of opinion, the Appendices thereto, and
information regarding DTC and its book- entry only system contained in the Official Statement,
as to which no opinion is expressed).
Sincerely,
City Attorney
By:
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EXHIBIT E
Purchaser's Certificate:
IT IS HEREBY CERTIFIED by the undersigned on behalf of J.P. Morgan Securities
LLC (the "Purchaser"), ur the underwriters for the Lodi Public Financing Authority, 2018
Electric System Revenue Refunding Bonds (the "Bonds"):
1. We acknowledge receipt of the Bonds in the aggregate principal amount of
$bearing interest, maturing, being in such denominations and having such terms
and provisions as provided in the Indenture and the Bond Purchase Agreement.
2. A bona fide public offering was made for all of the Bonds on the Sale Date at the
initial public offering prices shown on the inside cover page of the Official Statement for the
Bonds. Those Prices are the Prices at which the Bonds were initially offered to the Public on or
before the Sale Date. A copy of the pricing wire or similar documentation supporting this
certification is attached as Exhibit 2.
For the pulposes of this certificate:
Capitalized terms not otherwise defined herein shall have the meanings set forth in the
Bond Purchase Agreement (the "Bond Purchase Agreement"), dated _,2018, among the
Purchaser, the Lodi Public Financing Authority and the City of Lodi.
"Maturity" means each group of bonds with the same terms which matures on the same
date and bears interest at the same rate.
"Price" means, if a yield is shown on the inside cover page of the Official Statement for
any maturity, the dollar price that produces that yield.
"Public" means any person (including an individual, trust, estate, partnership, association,
company, or corporation) other than an underwriter or a related party.
"Sale Date" means the date the Purchaser's offer to purchase the Bonds in the Bond
Purchase Agreement was accepted on behalf of the Issuer.
"Substantial amount" is 10% or more of each maturity.
"UnderwriteÍ" means (i) any person that agrees pursuant to a written contract with the
Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial
sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract
directly or indirectly with a person described in clause (i) of this paragraph to participate in the
initial sale of the Bonds to the Public (including a member of a selling group or aparty to a retail
distribution agreement participating in the initial sale of the Bonds to the Public).
3. V/ith respect to the Bonds maturing on _ and the hrst Price at which a
Substantial Amount of such Bonds were sold to the Public is the Price shown on the inside cover
page of the Official Statement and on Exhibit 1.
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4. With respect to the remaining Maturities of the Bonds, as set forth in the Bond
Purchase Agreement, the Underwriter[s] [has][have] agreed in writing that, for each such
Maturity of the Bonds, [it] [they] would neither offer nor sell any of the Bonds of such Maturity
to any person at a Price that is higher than the initial public offering price for such Maturity
during the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth
business day after the Sale Date or (ii) the date on which the Underwriterfs] [has][have] sold a
Substantial Amount of such Maturity of the Bonds to the Public at a Price that is no higher than
the initial public offering price for such Maturity. [No Undenwiter has]fThe Underwriter has
not] offered or sold any such remaining Maturity of the Bonds at a Price that is higher than the
respective initial public offering price for that Maturity of the Bonds during the offering period
applicable to that Maturity described in the preceding sentence.
5. The Issuer and its counsel may rely on these certifications in concluding that the
Bonds meet certain requirements of the Internal Revenue Code of 1986 as amended (the
"Code"), relating to tax-exempt bonds; however, nothing herein represents our interpretation of
any law and we are not providing any interpretations of law or regulations in executing and
delivering this certificate. "
DATED as of _,2018.
J.P. Morgan Securities LLC, as Underwriter
By:
Title
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Exhibit 1
(Offering Prices of Bonds)
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Exhibit 2
(Copy of Pricing Wire or Similar Documentation)
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fSchedule 1]
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