HomeMy WebLinkAboutResolutions - No. LPFA2016-01RESOLUTION NO. LPFA2016-01
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
LODI PUBLIC FINANCING AUTHORITY AUTHORIZING
THE ISSUANCE AND SALE OF REFUNDING
WASTEWATER REVENUE BONDS TO REFINANCE AN
INSTALLMENT PAYMENT OBLIGATION OF THE CITY OF
LODI, AND APPROVING RELATED DOCUMENTS AND
OFFICIAL ACTIONS
WHEREAS, the City of Lodi (the "City") owns and operates facilities and property
for the collection, treatment and disposal of wastewater within the service area of the
City (the "System"); and
WHEREAS, the City previously entered into an Installment Purchase Agreement,
dated as of December 1, 2007 (the "2007 Installment Purchase Agreement") with the
Lodi Public Improvement Corporation (the "Corporation"), pursuant to which the City
agreed to make certain installment payments in the aggregate principal amount of
30,320,000 (the "2007 Installment Payments"), and caused execution and delivery of
Wastewater System Revenue Certificates of Participation, 2007 Series A (the "2007
Certificates"), pursuant to a Trust Agreement, dated as of December 1, 2007 (the "2007
Trust Agreement"), between the Corporation and MUFG Union Bank, N.A., as
successor trustee (the "2007 Trustee"), all for the purpose of (i) financing the costs of
certain improvements to the System (the "2007 Improvements") and (ii) refinancing, on a
current basis, all outstanding installment payments under an Installment Sale
Agreement, dated as of December 1, 1991, with the Corporation, and certain
outstanding Certificates of Participation (1991 Wastewater Treatment Plant Expansion
Refunding Project) (the "1991 Certificates"); and
WHEREAS, the 1991 Certificates were executed and delivered to (i) finance
certain capital improvements to the System (the "1991 Improvements") and (ii) prepay,
on an advance basis, certain certificates of participation that were executed and
delivered to finance the expansion of the City's White Slough Water Pollution Control
Facility; and
WHEREAS, under current economic conditions, it is possible for the City to
refinance on a tax-exempt basis the portion of the 2007 Installment Payments
attributable to the financing of the 2007 Improvements and the 1991 Improvements (the
Refinanced 2007 Installment Payments") for the purpose of achieving savings for the
benefit of the customers of the System, and to cause an advance prepayment of the
related 2007 Certificates (the "Refunded 2007 Certificates of Participation"); and
WHEREAS, in order to provide funds to refinance the Refinanced 2007
Installment Payments and cause an advance prepayment of the Refunded 2007
Certificates, the City wishes to ask the Lodi Public Financing Authority (the "Authority")
to issue its 2016 Refunding Wastewater Revenue Bonds (the "Bonds") under 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 (the "Bond Law"); and
WHEREAS, in order to provide revenues that are sufficient to pay debt service
on the Bonds, the City proposes to enter into an Installment Purchase Agreement with
the Authority; and
WHEREAS, the obligations of the City under the proposed Installment Purchase
Agreement will be secured by a pledge of and lien on the net revenues of the System,
on a parity with a pledge of and lien on the net revenues securing a 2004 installment
payment obligation, the continuing obligation to pay the portion of the 2007 Installment
Payments that is not being refunded and a 2012 installment payment obligation; and
WHEREAS, the Authority proposes to sell the Bonds on a negotiated basis to JP
Morgan Securities LLC (the "Underwriter"); and
WHEREAS, the Board of Directors of the Authority wishes at this time to take
action approving such financing transactions and all related documents and actions;
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Lodi
Public Financing Authority as follows:
Section 1. Approval of Refinancing Plan; Authorization of Bonds. The Board of
Directors hereby approves the refinancing plan described in the recitals of this
Resolution. To that end, the Board of Directors hereby authorizes the issuance of the
Bonds under the Bond Law in the aggregate principal amount of not to exceed
21,000,000.
Section 2. Approval of Related Financing Agreements. The Board of Directors
hereby approves each of the following agreements required to implement the financing
plan to be accomplished by the Bonds, in substantially the respective forms attached
hereto together with any changes therein or additions thereto deemed advisable by the
Chair, the Executive Director, the Treasurer or the General Counsel (each, an
Authorized Officer"), and the execution thereof by an Authorized Officer shall be
conclusive evidence of the approval of any such changes or additions.
a) Indenture of Trust between the Authority and MUFG Union Bank,
N.A., as trustee, prescribing the terms and conditions upon which
the Bonds will be issued. The form of the Indenture of Trust is
attached to this Resolution as Exhibit A.
b) Installment Purchase Agreement between the Authority and the
City, under which the City agrees to make semiannual installment
payments. The form of the Installment Purchase Agreement is
attached to this Resolution as Exhibit B.
c) Bond Purchase Agreement among the Authority, the City and the
Underwriter, under which the Underwriter agrees to purchase the
Bonds from the Authority. The form of the Bond Purchase
Agreement is attached to this Resolution as Exhibit C.
An Authorized Officer is hereby authorized and directed for and in the name and
on behalf of the Authority to execute, and the Secretary is hereby authorized and
directed to attest the final form of each of the foregoing agreements, and such execution
shall be conclusive evidence of the approval of the final form thereof.
Section 3. Sale of Bonds. The Board of Directors hereby approves the
negotiated sale of the Bonds to the Underwriter. The Bonds shall be sold upon the
terms and conditions set forth in the Bond Purchase Agreement that is approved under
Section 2. The Bonds shall be sold at such price and shall bear interest at such rates as
shall produce a minimum net present value savings to the City of at least 5% of the
principal component of the Refinanced 2007 Installment Payments, as such savings
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shall be verified and conclusively determined by the City's financial advisor (the
Minimum Savings Requirement"). The Underwriter's discount shall not exceed 1.0%.
The final form of the Bond Purchase Agreement shall be executed in the name and on
behalf of the Authority by an Authorized Officer.
Section 4. Official Statement. The Board of Directors hereby approves and
deems nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of
1934, the Preliminary Official Statement describing the Bonds in the form on file with the
Secretary, together with such modifications thereof as may be approved by an
Authorized Officer. An Authorized Officer is hereby authorized and directed to (a)
execute and deliver to the purchaser of the Bonds a certificate deeming the Preliminary
Official Statement to be nearly final as of its date within the meaning of such Rule, (b)
approve any changes in or additions to cause the Official Statement to be put in final
form, and (c) execute the Final Official Statement for and in the name and on behalf of
the Authority. The Board of Directors hereby authorizes the distribution of the
Preliminary Official Statement and the Final Official Statement by the Underwriter.
Section 5. Official Actions. The Authorized Officers, the Secretary and all other
officers of the Authority are each authorized and directed in the name and on behalf of
the Authority to make any and all assignments, certificates, requisitions, agreements,
notices, consents, instruments of conveyance, warrants and other documents, which
they or any of them might deem necessary or appropriate in order to consummate any
of the transactions contemplated by the agreements and documents approved under
this Resolution, including any documentation relating to municipal bond insurance if an
Authorized Officer concludes, after consultation with the Authority's bond counsel, the
Authority's financial advisor and the Underwriter, that it would be cost-effective to
purchase such insurance. Whenever in this Resolution any officer of the Authority is
authorized to execute or countersign any document or take any action, such execution,
countersigning or action may be taken on behalf of such officer by any person
designated by such officer to act on his or her behalf in the case such officer is absent
or unavailable.
Section 6. Effective Date. This Resolution shall take effect immediately upon its
passage and adoption.
Dated: February 17, 2016
I hereby certify that Resolution No. LPFA2016-01 was passed and adopted by
the Board of Directors of the Lodi Public Financing Authority in a regular/special joint
meeting held February 17, 2016, by the following vote:
AYES: BOARD MEMBERS — Kuehne, Mounce, Nakanishi, and
Chairperson Chandler
NOES: BOARD MEMBERS — None
ABSENT: BOARD MEMBERS — Johnson
ABSTAIN: BOARD MEMBERS — None
PAMELA M. FARRIS
DEPUTY CITY CLERK
For: JENNIFER M. FERRAIOLO
Secretary
LPFA2016-01
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EXHIBIT A
FORM OF INDENTURE OF TRUST
50863-03 J H: C KL 1-29-16
2-7-16
2-10-16
2-11-16
INDENTURE OF TRUST
Dated as of March 1, 2016
between
MUFG UNION BANK, N.A.,
as Trustee
and the
LODI PUBLIC FINANCING AUTHORITY
Authorizing the Issuance of
Lodi Public Financing Authority
2016 Refunding Wastewater Revenue Bonds,
Series A
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01. Definitions 3
SECTION 1.02. Authorization 3
SECTION 1.03 Interpretation 3
ARTICLE II
The Bonds
SECTION 2.01. Authorization of Bonds 3
SECTION 2.02. Terms of the Bonds 4
SECTION 2.03. Transfer and Exchange of Bonds 5
SECTION 2.04. Book -Entry System 5
SECTION 2.05. Registration Books 7
SECTION 2.06. Form and Execution of Bonds 7
SECTION 2.07. Bonds Mutilated, Lost, Destroyed or Stolen 8
ARTICLE III
Issuance of Bonds; Application of Proceeds
SECTION 3.01. Issuance of the Bonds 8
SECTION 3.02. Application of Proceeds of Sale of the Bonds 8
SECTION 3.03. Establishment and Application of Costs of Issuance Fund 9
SECTION 3.04. Validity of Bonds 9
ARTICLE IV
Redemption of Bonds
SECTION 4.01. Terms of Redemption 9
SECTION 4.02. Selection of Bonds for Redemption 10
SECTION 4.03. Notice of Redemption; Rescission 10
SECTION 4.04. Partial Redemption of Bonds 11
SECTION 4.05. Effect of Redemption 11
ARTICLE V
Authority Revenues; Funds and Accounts; Payment of
Principal and Interest
SECTION 5.01. Security for the Bonds; Bond Fund 11
SECTION 5.02. Allocation of Authority Revenues 12
SECTION 5.03. Interest Account 12
SECTION 5.04. Principal Account 12
SECTION 5.05. Reserved 12
SECTION 5.06. Application of Redemption Fund 12
SECTION 5.07. Investments 13
SECTION 5.08. Valuation and Disposition of Investments 14
ARTICLE VI
Covenants of the Authority
SECTION 6.01. Punctual Payment 15
SECTION 6.02. Extension of Payment of Bonds 15
SECTION 6.03 Against Encumbrances 15
SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment 15
SECTION 6.05. Accounting Records 15
SECTION 6.06. Limitation on Additional Obligations 16
SECTION 6.07. Tax Covenants 16
SECTION 6.08. Reserved 16
SECTION 6.09. Waiver of Laws 16
SECTION 6.10. Further Assurances 16
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ARTICLE VII
Events of Default and Remedies
SECTION 7.01, Events of Default 17
SECTION 7.02 Remedies Upon Event of Default ..17
SECTION 7.03. Application of Authority Revenues Other Funds After Default 18
SECTION 7.04. Trustee to Represent Bond Owners 19
SECTION 7.05. Limitation on Bond Owners' Right to Sue 19
SECTION 7.06. Absolute Obligation of Authority 20
SECTION 7.07. Termination of Proceedings 20
SECTION 7.08. Remedies Not Exclusive 20
SECTION 7.09. No Waiver of Default 20
SECTION 7.10. Notice to Bond Owners of Default 20
ARTICLE VIII
The Trustee
SECTION 8.01. Appointment of Trustee . 21
SECTION 8.02. Acceptance of Trusts; Removal and Resignation of Trustee 21
SECTION 8.03. Merger or Consolidation 22
SECTION 8.04. Liability of Trustee 23
SECTION 8.05. Right to Rely on Documents 25
SECTION 8.06. Preservation and Inspection of Documents 26
SECTION 8.07. Compensation and Indemnification 26
ARTICLE IX
Modification or Amendment Hereof
SECTION 9.01. Amendments Permitted 27
SECTION 9.02. Effect of Supplemental Indenture 28
SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds 28
SECTION 9.04. Amendment of Particular Bonds 29
ARTICLE X
Defeasance
SECTION 10.01. Discharge of Indenture 29
SECTION 10.02. Discharge of Liability on Bonds 29
SECTION 10.03. Deposit of Money or Securities with Trustee 30
SECTION 10.04. Unclaimed Funds 31
ARTICLE XI
Miscellaneous
SECTION 11.01. Liability of Authority Limited to Authority Revenues 31
SECTION 11.02. Limitation of Rights to Parties and Bond Owners 31
SECTION 11.03. Funds and Accounts 31
SECTION 11.04. Waiver of Notice; Requirement of Mailed Notice 32
SECTION 11.05. Destruction of Bonds 32
SECTION 11.06. Severability of Invalid Provisions 32
SECTION 11.07. Notices 32
SECTION 11.08. Evidence of Rights of Bond Owners . - . 33
SECTION 11.09. Disqualified Bonds 33
SECTION 11.10. Money Held for Particular Bonds 33
SECTION 11.11. Waiver of Personal Liability 34
SECTION 11.12. Successor Is Deemed Included in All References to
Predecessor 34
SECTION 11.13. Execution in Several Counterparts ... 34
SECTION 11.14. Payment on Non -Business Day 34
SECTION 11.15. Governing Law 34
APPENDIX A DEFINITIONS
APPENDIX B FORMS OF BONDS
INDENTURE OF TRUST
This INDENTURE OF TRUST (this "Indenture"), dated for convenience as of
March 1, 2016, 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
Authority"), and MUFG UNION BANK, N.A., 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 a public enterprise for the collection, treatment
and disposal of wastewater within the service area of the City (as defined more
completely below, the "System").
2. The City previously entered into an Installment Purchase Agreement, dated
as of December 1, 2007 (the "2007 Installment Purchase Agreement") with the Lodi
Public Improvement Corporation (the "Corporation"), pursuant to which the City agreed
to make certain installment payments in the aggregate principal amount of $30,320,000
the "2007 Installment Payments"), and caused execution and delivery of Wastewater
System Revenue Certificates of Participation, 2007 Series A (the "2007 Certificates"),
pursuant to a Trust Agreement, dated as of December 1, 2007 (the "2007 Trust
Agreement"), between the Corporation and The Bank of New York Mellon Trust
Company, N.A., as trustee (the "2007 Trustee"), all for the purpose of (i) financing the
costs of certain improvements to the System (the "2007 Project") and (ii) refinancing, on
a current basis, all outstanding installment payments under an Installment Sale
Agreement, dated as of December 1, 1991, with the Corporation, and certain
outstanding Certificates of Participation (1991 Wastewater Treatment Plant Expansion
Refunding Project) (the "1991 Certificates").
3. The 1991 Certificates were executed and delivered to (i) finance certain
capital improvements to the System (the "1991 Improvements") and (ii) prepay, on an
advance basis, certain certificates of participation that were executed and delivered to
finance the expansion of the City's White Slough Water Pollution Control Facility (the
White Slough Certificates").
4. Under current economic conditions, it is possible for the City to refinance on
a tax-exempt basis the portion of the 2007 Installment Payments attributable to the
financing of the 2007 Project and the 1991 Improvements (the "Refinanced 2007
Installment Payments") for the purpose of achieving savings for the benefit of the
customers of the System, and to cause an advance prepayment of the related 2007
Certificates (the "Refunded 2007 Certificates of Participation"). The Refinanced 2007
Installment Payments and the Refunded 2007 Certificates are the portion of the 2007
Installment Payments and the 2007 Certificates, respectively, that are attributable to the
financing of the 2007 Project and the 1991 Improvements. The City is not refinancing
the portion of the 2007 Installment Payments and the 2007 Certificates that are
attributable to the White Slough Certificates.
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5. 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
refinancing described in the previous paragraph, the Authority and the City have entered
into an Installment Purchase Agreement dated as of March 1, 2016 (the "Installment
Purchase Agreement"), under which the City will sell the 2007 Project to the Authority
and the Authority will sell the 2007 Project to the City in consideration of the agreement
by the City to pay the purchase price thereof in semiannual installment payments, in
each case subject to the continuing obligation of the City under the 2007 Installment
Purchase Agreement.
6. For the purpose of obtaining funds to refinance the Refinanced 2007
Installment Payments, the Authority has authorized the issuance of its Lodi Public
Financing Authority 2016 Refunding Wastewater Revenue Bonds, Series A in the
aggregate principal amount of (the "Bonds") under this Indenture and
under 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 (the "Bond
Law").
7. In 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 has authorized the execution and delivery of this Indenture.
8. The Authority has found and determines, and hereby affirms, that all acts
and proceedings required by law necessary to make the Bonds, when executed by the
Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding
and legal special obligations of the Authority, and to constitute this Indenture a valid and
binding agreement for the uses and purposes herein set forth in accordance with its
terms, have been done and taken, and the execution and delivery of this Indenture have
been in all respects duly authorized.
AGREEMENT:
In order to secure the payment of the principal of and the interest and
redemption premium (if any) on all the Outstanding Bonds under this Indenture
according to their tenor, and to secure the performance and observance of all the
covenants 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
purchase and acceptance of the Bonds by the Owners thereof, and for other valuable
considerations, the receipt of which is hereby acknowledged, the Authority and the
Trustee do hereby covenant 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
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01. Definitions. Unless the context clearly otherwise requires or
unless otherwise defined herein, the capitalized terms defined in Appendix A attached to
this Indenture have the respective meanings specified in that Appendix when used in
this Indenture. Capitalized terms in this Indenture and not otherwise defined in this
Section 1.01 have the respective meanings given them in Section 1.1 of the Installment
Purchase Agreement.
SECTION 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
Indenture, and has taken all actions necessary to authorize the execution hereof by the
officers and persons signing it.
SECTION 1.03. Interpretation.
a) Unless the context otherwise indicates, words expressed in the singular
shall include the plural and vice versa and the use of the neuter, masculine, or feminine
gender is for convenience only and shall be deemed to 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 convenience 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 Indenture; the words
herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
THE BONDS
SECTION 2.01. Authorization of Bonds. The Authority has reviewed all
proceedings heretofore taken and has found, as a result of such review, and hereby
finds and determines 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 Indenture.
The Authority hereby authorizes the issuance of a series of Bonds, designated
the "Lodi Public Financing Authority 2016 Refunding Wastewater Revenue Bonds,
Series A" in the aggregate principal amount of under the Bond Law for
the purposes of providing funds to refinance the Refinanced 2007 Installment Payments.
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The Bonds are authorized and issued under, and are subject to the terms of, this
Indenture and the Bond Law.
SECTION 2.02. Terms of the Bonds.
a) Payment 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 October 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 Interest
October 1) Amount Rate
Interest on the Bonds is payable from the Interest Payment Date next preceding
the date of authentication thereof unless:
a) a Bond is authenticated on or before an Interest Payment Date and
after the close of business on the preceding Record Date, in which
event it will bear interest from such Interest Payment Date,
b) a Bond is authenticated on or before the first Record Date, in which
event interest thereon will be payable from the Closing Date, or
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 Interest
Payment Date.
Interest is payable on each Interest 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.
Interest on any Bond which is not punctually paid or duly provided for on any Interest
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
for the payment of such defaulted interest to be fixed by the Trustee, notice of which is
given to such 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 prepaid, on each Interest Payment Date to the Owners of the Bonds
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at their respective 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 principal amount 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 Interest Payment Date by wire transfer in immediately available funds
to such account of a financial institution 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
United States 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 the Registration Books, by the person in whose name it is registered, in person or
by a duly authorized attorney of such person, upon surrender of such Bond to the
Trustee at its Office for cancellation, 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 governmental charge on the transfer of any Bonds under this Section
2.03. Whenever any Bond or Bonds shall be surrendered for transfer, the Authority
shall execute and the 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 incurred by the Trustee in connection with any transfer of Bonds.
b) Exchange. The Bonds may be exchanged at the Office of the Trustee for a
like aggregate principal amount of Bonds of other authorized denominations and of the
same series, 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
Authority 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
provisions of this Section 2.03, any Bonds selected by the Trustee for redemption under
Article IV, or any Bonds during the period established by the Trustee for the selection of
Bonds for redemption.
SECTION 2.04. Book -Entry System.
a) Original Delivery. The Bonds will be initially delivered in the form of a
separate single fully registered bond (which may be typewritten) for each maturity of the
Bonds. Upon initial delivery, the Trustee shall register the ownership of each Bond on
the Registration Books in the name of the Nominee. Except as provided in subsection
c), the ownership of all of the Outstanding Bonds shall be registered in the name of the
Nominee on the Registration Books.
With respect to Bonds the ownership of which shall be registered in the name of
the Nominee, the Authority and the Trustee has 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 has no responsibility or obligation with respect
to (i) the accuracy of the records of the Depository, the Nominee or any Depository
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System Participant 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 in the Registration Books, of any notice with respect to the Bonds, including any
notice of redemption, (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
Owner as shown in the Registration Books, of any amount with respect to principal,
premium, if any, or interest on the Bonds or (v) any consent given or other action taken
by the Depository as Owner of the Bonds. The Authority and the Trustee may treat and
consider the person in whose name each Bond is registered as the absolute owner of
such Bond for the 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, for the purpose of registering transfers of ownership of such
Bond, and for all other purposes whatsoever. 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 authorized in writing, and all such payments shall be valid and
effective to fully satisfy and 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 other than a Bond Owner shall receive a Bond evidencing the
obligation of the Authority to make payments of principal, interest and premium, if any,
under this Indenture. 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 provisions 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. In order to qualify the Bonds for the Depository's
book -entry system, the Authority shall execute and deliver to such Depository a letter
representing such matters as shall be necessary to so qualify the Bonds. The execution
and delivery 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 reasonably necessary for all representations of the Trustee in such letter with
respect to the Trustee to at all times be complied with. In addition to the execution and
delivery of such letter, the Authority may take any other actions, not inconsistent with
this Indenture, to qualify the Bonds for the Depository's book -entry program.
c) Transfers Outside Book -Entry System. If either (i) the Depository
determines not to continue 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. In such event, the Depository
shall cooperate with the Authority and the Trustee in the issuance of replacement Bonds
by providing the Trustee with a list showing the interests of the Depository System
Participants in the Bonds, and by surrendering the Bonds, registered in the name of the
Nominee, to the Trustee on or before the date such replacement Bonds are to be
issued. The Depository, by accepting delivery of the Bonds, agrees to be bound by the
provisions of this subsection (c). If, 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
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name or names the Owners transferring or exchanging Bonds shall designate, in
accordance with the provisions hereof.
If 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
Depository. In 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 with the 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
Indenture to the 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
otherwise instructed by the Depository.
SECTION 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
regulations as it may prescribe, register or transfer or cause to be registered or
transferred, on such records, the ownership of the Bonds as hereinbefore provided.
SECTION 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
Indenture.
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. If any officer whose signature appears on any Bond ceases
to be such 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 the 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.
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 Indenture, 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 Indenture.
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SECTION 2.07. Bonds Mutilated, Lost, Destroyed or Stolen. If 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
Trustee 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.
If 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
Bond issued 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 contractual obligation on the part of the Authority whether or not the Bond so
alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall
be equally and proportionately entitled to the benefits of this Indenture with all other
Bonds issued under this Indenture.
Notwithstanding any other provision of this Section 2.07, in lieu of delivering a
new Bond for which principal has become due for a Bond which has been mutilated,
lost, destroyed or stolen, the Trustee may make payment of such Bond in accordance
with its terms upon receipt of indemnity satisfactory to the Trustee.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF
PROCEEDS
SECTION 3.01. Issuance of the Bonds. At any time after the execution of this
Indenture, 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. Application 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 principal amount ( ), plus a net original issue
premium of $ , less an underwriter's discount of $ , the
Trustee shall apply the proceeds of sale thereof as follows:
a) The Trustee will deposit the amount of $ in the
Costs of Issuance Fund.
b) The Trustee will transfer the amount of $ ,
constituting the remainder of such proceeds, to the 2007 Trustee
for deposit into the Escrow Fund established under the Escrow
Agreement.
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SECTION 3.03. Establishment and Application of Costs of Issuance Fund. The
Trustee shall establish, maintain and hold in trust a separate fund designated as the
Costs of Issuance 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 Issuance Fund from time to time to pay the Costs of Issuance of the Bonds
upon submission of a Written Requisition of the Authority stating the person 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
Requisitions 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
May 1, 2016, or upon the earlier Written Request of the Authority, the Trustee shall
transfer all amounts remaining in the Costs of Issuance Fund to the Interest Account,
and the Trustee shall thereupon close the Costs of Issuance Fund.
SECTION 3.04. Validity 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 and of compliance with the provisions of law in their
issuance.
ARTICLE IV
REDEMPTION OF BONDS
SECTION 4.01. Terms of Redemption.
a) Optional Redemption. The Bonds maturing on or before October 1, 2026,
are not subject to optional redemption prior to their respective stated maturity dates.
The Bonds maturing on or after October 1, 2027, 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 October 1, 2026, 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.
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, in
sufficient time to enable the Trustee to give notice of such redemption in accordance
with Section 4.03.
c) Mandatory Sinking Fund Redemption. The Term Bonds are subject to
mandatory redemption in part by lot, at a redemption price equal to 100% of the
principal amount thereof to be redeemed, without premium, in the aggregate respective
principal amounts and on October 1 in the respective years as set forth in the following
tables; provided, however, that if some but not all of the Term Bonds have been
redeemed under subsection (a) of this Section, the total amount of all future sinking fund
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payments shall be reduced by the aggregate principal amount of the Term Bonds so
redeemed, to be allocated among such sinking fund payments on a pro rata basis in
integral multiples of $5,000 (as set forth in a schedule provided by the Authority to the
Trustee).
Bonds Maturing October 1,
Sinking Fund
Redemption Date
October 1)
Principal Amount
To Be Redeemed
SECTION 4.02. Selection of Bonds for Redemption. Whenever provision is
made in this Indenture 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.
SECTION 4.03. Notice of Redemption; Rescission. 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 one 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 Bonds 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.
The Authority has the right to rescind any notice of the redemption of Bonds
under Section 4.01(a) by written notice to the Trustee on or prior to the date fixed for
redemption. Any notice of redemption shall be cancelled 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
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shall mail notice of such rescission of redemption in the same manner as the original
notice of redemption was sent under this Section.
SECTION 4.04. Partial 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 Owner 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.
SECTION 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 redemption date designated in such notice, the Bonds (or portions thereof) so called
for redemption 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 Indenture, 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.
ARTICLE V
AUTHORITY REVENUES; FUNDS AND
ACCOUNTS; PAYMENT OF PRINCIPAL AND
INTEREST
SECTION 5.01. Security for the Bonds; Bond Fund.
a) Pledge of Authority Revenues and Other Amounts. Subject only to the
provisions of this Indenture permitting the application thereof for the purposes and on
the 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 Indenture 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 Indenture. Said pledge constitutes a lien on and security interest in
the 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) Assignment to Trustee. The Authority hereby irrevocably transfers, assigns
and sets over to the Trustee, without recourse to the Authority, all of its rights in the
Installment Purchase Agreement (excepting only the Authority's rights under Sections
4.8, 5.2 and 6.4 thereof), including but not limited to all of the Authority's rights to
receive and collect all of the Installment Payments. The Trustee is entitled to collect and
receive all of the Installment Payments, and any Installment Payments collected or
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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 Trustee is also entitled to and shall, subject to the
provisions of Article VIII, 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 Installment Purchase Agreement.
c) Deposit of Authority Revenues in Bond Fund. All Authority Revenues shall
be promptly deposited by the Trustee upon receipt thereof in a special fund designated
as the "Bond 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 Installment
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
held, disbursed, allocated and applied by the Trustee only as provided in this Indenture.
Any surplus remaining in the Bond Fund, after payment in full of (i) the principal of and
interest 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.
SECTION 5.02. Allocation of Authority Revenues. On or before each Interest
Payment Date, the Trustee shall transfer from the Bond Fund and deposit into the
following 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 Interest Account. The Trustee shall deposit in the
Interest Account an amount required to cause the aggregate
amount on deposit in the Interest Account to be at least equal to the
amount of interest becoming due and payable on such Interest
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 Interest
Payment Date.
SECTION 5.03. Interest Account. All amounts in the Interest 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).
SECTION 5.04. Principal Account. All amounts in the Principal Account shall be
used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at
their respective maturity dates, and the principal amount of Term Bonds which are
subject to mandatory sinking fund redemption on such Interest Payment Date under
Section 4.01(c).
SECTION 5.05. Reserved.
SECTION 5.06. Application 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
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Authority Revenues received, in accordance with a Written Request of the Authority,
amounts in which 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
4.01(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 payable from the Interest Account) as shall be directed under a Written
Request of the Authority, 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.
SECTION 5.07. Investments. Except as otherwise set forth in this Indenture,
moneys in any of the funds or accounts established with the Trustee under this
Indenture shall be invested by the Trustee solely in Permitted Investments. 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. In the absence of any such directions from the Authority, the Trustee shall
invest any such moneys in Permitted Investments 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 Investments purchased as an investment
of moneys in any fund shall be deemed to be part of such fund or account. To the extent
Permitted Investments are registrable, such Permitted Investments must be registered
in the name of the Trustee.
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 Trustee 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 deal 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's 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
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as they occur, to the extent permitted by law. The Authority further understands that
trade confirmations 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 otherwise provided in subsection (b) of this Section, the Authority
covenants that all investments of amounts deposited in any fund or account created by
or under this Indenture, or otherwise containing gross proceeds of the Bonds (within the
meaning of Section 148 of the Tax Code) shall be acquired, disposed of and valued at
the Fair 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) Investments in funds or accounts (or portions thereof) that are subject to a
yield restriction under applicable provisions of the Tax Code; provided that the Authority
shall inform 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 Investments credited to such fund shall be valued by the Trustee at least
annually on or before September 15. The Trustee may sell or present for redemption,
any Permitted Investment 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 Investment is credited, and the
Trustee shall not be liable or responsible for any loss resulting from any such Permitted
Investment.
d) For purposes of this Section 5.09, the term "Fair Market Value" means the
price at which a willing buyer would purchase the investment from a wilting 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 (i) 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 forward 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.
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ARTICLE VI
COVENANTS OF THE AUTHORITY
SECTION 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 Indenture, 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 Indenture.
SECTION 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 Indenture, 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.
SECTION 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 Indenture while any of the
Bonds are Outstanding, except the pledge and assignment created by this Indenture.
Subject to this limitation, the Authority expressly reserves the right to enter into one or
more other indentures for any of its corporate purposes, and reserves the right to issue
other obligations for such purposes.
SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment. The
Authority is duly authorized under law to issue the Bonds and to enter into this Indenture
and to pledge and assign the Authority Revenues and other amounts purported to be
pledged and assigned, respectively, under this Indenture in the manner and to the
extent provided in this Indenture. The Bonds and the provisions of this Indenture 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 VIII 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 Indenture against all claims and demands of all persons
whomsoever.
SECTION 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 Indenture. 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.
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SECTION 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 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 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 Arbitrage. The Authority shall not take, or permit or suffer to be taken
by the Trustee or otherwise, 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 assure the exclusion of interest 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 Investment Earnings 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 148(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 manner 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 4.8(e) of the Installment Purchase Agreement.
The Authority 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.
SECTION 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 Indenture or in the Bonds, and all benefit or
advantage of any such law or laws is hereby expressly waived by the Authority to the
extent permitted by law.
SECTION 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
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of this Indenture and for the better assuring and confirming unto the Owners of the
Bonds of the rights and benefits provided in this Indenture.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. Events of Default. 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 otherwise.
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
Indenture 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
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 Installment Purchase Agreement.
SECTION 7.02. Remedies Upon Event of Default.
a) Only as long as Section 6.2(a) is an available remedy under the
Installment 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 Indenture or in the Bonds contained to
the contrary notwithstanding .
b) The Trustee may, subject to the receipt of indemnity as provided herein:
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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
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, may, 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.
SECTION 7.03. Application of Authority Revenues and Other Funds After
Default. If 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 Indenture 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 Indenture;
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 Indenture, 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
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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;
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; and
SECTION 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 Indenture and
applicable provisions of any law. All rights of action under this Indenture or the Bonds or
otherwise 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
such suit, action or proceeding instituted by the Trustee shall be brought in the name of
the Trustee for the benefit and protection of all the Owners of such Bonds, subject to the
provisions of this Indenture.
SECTION 7.05. Limitation on Bond Owners' Right to 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 Indenture, the Installment 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 Indenture or the rights of
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any other Owners of Bonds, or to enforce any right under the Bonds, this Indenture, the
Installment 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 Indenture.
SECTION 7.06. Absolute Obligation of Authority. Nothing in Section 7.06 or in
any other provision of this Indenture 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.
SECTION 7.07. Termination of Proceedings. In 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.
SECTION 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.
SECTION 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 Indenture 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.
SECTION 7.10. Notice to Bond Owners of Default. Immediately upon becoming
aware of the occurrence of an Event of Default, but in no event later than five Business
Days following becoming aware 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.
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ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Appointment of Trustee. MUFG Union Bank, N.A., 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 Indenture. The Authority will maintain a Trustee which is qualified under
the provisions of the foregoing provisions of this Article VIII 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 Indenture, 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 Indenture and no
implied duties or covenants shall be read into this Indenture against the Trustee. In
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.
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. In the event of the removal or resignation of the Trustee under
subsections (b) or (c), respectively, the Authority shall promptly appoint a successor
Trustee.
If 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
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appointed under this Indenture, 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. If 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 Indenture 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
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. If 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. If 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 Indenture, 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 notwithstanding.
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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 Indenture, the Bonds or the Installment 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
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this Indenture 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
Indenture.
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 25% in aggregate
principal amount of the Outstanding Bonds. Except as otherwise 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 Installment 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 Installment Purchase Agreement,
other than the covenants of the City to make Installment Payments to the Trustee when
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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 Indenture requires the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers.
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 Indenture at the request or direction of the Bond Owners under this
Indenture, 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
Indenture 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.
j) The Trustee is not accountable to anyone for the subsequent 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. In no event shall the
Trustee be liable for incidental, indirect, special or consequential damages in connection
with or arising from the Installment Purchase Agreement or this Indenture for the
existence, furnishing or use of the Project.
I) 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 Indenture 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. If the Authority
or the City elects to give the Trustee e-mail or facsimile instructions (or instructions by a
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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.
SECTION 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 Indenture
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 Indenture in reliance upon such Written Certificate, Written Request or
VVritten 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.
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SECTION 8.06. Preservation and Inspection of Documents. All documents
received by the Trustee under the provisions of this Indenture 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.
SECTION 8.07. Compensation and Indemnification. The Authority shall pay to
the Trustee from time to time, on demand, the compensation for all services rendered
under this Indenture 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 Indenture.
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 Indenture, 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 Installment Purchase Agreement. As security for the
performance of the obligations of the Authority under this Section 8.07, the Trustee shall
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 Indenture and the Installment Purchase Agreement.
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ARTICLE IX
MODIFICATION OR AMENDMENT HEREOF
SECTION 9.01. Amendments Permitted.
a) Amendments With Owner Consent. This Indenture 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 Indenture,
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 Indenture
prior to or on a parity with the lien created by this Indenture except as permitted herein,
or deprive the Owners of the Bonds of the lien created by this Indenture on such
Authority Revenues and other assets (except as expressly provided in this Indenture),
without the consent of the Owners of all of the Bonds then Outstanding. It is not
necessary for the consent of the Bond Owners to approve the particular form of any
Supplemental Indenture, but it is sufficient if such consent approves the substance
thereof.
b) Amendments Without Owner Consent. This Indenture 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 Indenture,
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 Indenture 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
Indenture 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 Indenture, or in
regard to matters or questions arising under this Indenture, as the
Authority deems necessary or desirable, provided that such
modification or amendment does not materially adversely affect the
interests of the Bond Owners, in the opinion of Bond Counsel filed
with the Trustee;
iii) to modify, amend or supplement this Indenture in such manner as
to permit the qualification hereof under the Trust Indenture Act of
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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 Indenture 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
Indenture 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 Indenture or
otherwise.
d) Borid Counsel Opinion Requirement. Prior to the Trustee entering into any
Supplemental Indenture hereunder, the Authority shall deliver to the Trustee an opinion
of Bond Counsel stating, in substance, that such Supplemental Indenture has been
adopted in compliance with the requirements of this Indenture and that the adoption of
such Supplemental Indenture 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 Indenture to each rating agency which then maintains a rating
on the Bonds, at least 10 days prior to the effective date of such Supplemental
Indenture under this Section 9.01.
SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any
Supplemental Indenture under this Article IX, this Indenture shall be deemed to be
modified and amended in accordance therewith, and the respective rights, duties and
obligations under this Indenture 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 Indenture shall be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds
delivered after the execution of any Supplemental Indenture under this Article may, and
if the Authority so determines shall, bear a notation by endorsement or otherwise in form
approved by the Authority as to any modification or amendment provided for in such
Supplemental Indenture, 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. If the
Supplemental Indenture 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 Indenture, shall be prepared and executed by the Authority and
authenticated by the Trustee, and upon demand on the Owners of any Bonds then
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.
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SECTION 9.04. Amendment of Particular Bonds. The provisions of this Article
IX do not prevent any Bond Owner from accepting any amendment as to the particular
Bonds held by such Owner.
ARTICLE X
DEFEASANCE
SECTION 10.01. Discharge of Indenture. 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.
If 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 Indenture), and notwithstanding
that any of such Bonds shall not have been surrendered for payment, this Indenture and
the pledge of Authority Revenues and other assets made under this Indenture with
respect to such Bonds and all covenants, agreements and other obligations of the
Authority under this Indenture with respect to such Bonds shall cease, terminate,
become void and be completely discharged and satisfied, subject to Section 10.02. In
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 Indenture 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 IV or provision satisfactory to the Trustee shall have been
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
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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.
SECTION 10.03. Deposit of Money or Securities with Trustee. Whenever in this
Indenture 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 Indenture 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 IV 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 Independent
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 IV or provision satisfactory to the Trustee has been made for
the giving of such notice;
provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the
terms of this Indenture 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,
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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 Indenture
which opinion may rely upon and assume the accuracy of the Independent
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.
SECTION 10.04. Unclaimed Funds. Notwithstanding any provisions of this
Indenture, any moneys held by the Trustee in trust for the payment of the principal of, or
interest on, any 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 Indenture), if such moneys were so held at such date, or two years after
the date of deposit of such moneys if deposited after said date when all of the Bonds
became due and payable, shall be repaid to the Authority free from the trusts created by
this Indenture, 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
Trustee 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
SECTION 11.01. Liability of Authority Limited to Authority Revenues .
Notwithstanding anything in this Indenture 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 Indenture for any of the purposes in this
Indenture mentioned, whether for the payment of the principal of or interest on the
Bonds or for any other purpose of this Indenture. Nevertheless, the Authority may, but
is not required to, advance for any of the purposes hereof any funds of the Authority
which may be made available to it for such purposes.
SECTION 11.02. Limitation of Rights to Parties and Bond Owners. Nothing in
this Indenture 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 Indenture
or any covenant, condition or provision therein or herein contained; and all such
covenants, conditions and provisions are and shall be held to be for the sole and
exclusive benefit of the Authority, the Trustee, the City and the Owners of the Bonds.
SECTION 11.03. Funds and Accounts. Any fund or account required by this
Indenture to be established and maintained by the Trustee may be established and
maintained in the accounting records of the Trustee, either as a fund or an account, and
may, for the purposes of such records, any audits thereof and any reports or statements
with respect thereto, be treated either as a fund or as an account; but all such records
with respect to all such funds and accounts shall at all times be maintained in
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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
Indenture.
SECTION 11.04. Waiver of Notice; Requirement of Mailed Notice. Whenever in
this Indenture the giving of notice by mail or otherwise is required, the giving of such
notice may be waived in writing by the person entitled to receive such notice and in any
such case the giving or receipt of such notice shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver. Whenever in this Indenture
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.
SECTION 11.05. Destruction of Bonds. Whenever in this Indenture 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.
SECTION 11.06. Severability of Invalid Provisions. If any one or more of the
provisions contained in this Indenture 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 severable from the remaining provisions contained in this Indenture and such
invalidity, illegality or unenforceability shall not affect any other provision of this
Indenture, and this Indenture 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 Indenture 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 Indenture may be held illegal, invalid
or unenforceable.
SECTION 11.07. Notices. All notices or communications to be given under this
Indenture 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, confirmed by
telephone, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c) in
the case of personal delivery to any person, 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.
If to the Authority
or the City:
City of Lodi
P.O. Box 3006
Lodi, California 95241-1910
Attention: Deputy City Manager/
Internal Services Director
Fax: 209-333-6807
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If to the Trustee: MUFG Union Bank, N.A.
350 California St., 11th Floor
San Francisco, California 94104
Attention: Corporate Trust Department
SECTION 11.08. Evidence of Rights of Bond Owners. Any request, consent or
other instrument required or permitted by this Indenture 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, consent or other instrument
acknowledged to him the execution thereof, or by an affidavit of a witness of such
execution duly sworn to before such notary public or other officer.
The ownership of 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.
SECTION 11.09. Disqualified Bonds. In determining whether the Owners of the
requisite aggregate principal amount of Bonds have concurred in any demand, request,
direction, consent or waiver under this Indenture, 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
purpose 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 establish to 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 indirect common control with, the Authority or the City or any other
obligor on the Bonds. In case of a dispute as to such right, the Trustee shall be entitled
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.
SECTION 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
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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, subject,
however, to the provisions of Section 10.04 but without any liability for interest thereon.
SECTION 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
liability or accountability by reason of the issuance thereof; but nothing herein contained
shall relieve any such member, officer, agent or employee from the performance of any
official duty provided by law or by this Indenture.
SECTION 11.12. Successor Is Deemed Included in All References to
Predecessor. Whenever in this Indenture 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 Indenture contained by or
on behalf 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.
SECTION 11.13. Execution in Several Counterparts. This Indenture may be
executed in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original; and all such counterparts, or as many of them as
the Authority and the Trustee shall preserve undestroyed, shall together constitute but
one and the same instrument.
SECTION 11.14. Payment on Non -Business Day. In 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 Indenture shall be governed by and
construed in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the LODI PUBLIC FINANCING AUTHORITY has caused
this Indenture to be signed in its name by its Executive Director and attested to by its
Secretary, and MUFG UNION BANK, N.A., in token of its acceptance of the trusts
created hereunder, has caused this Indenture to be signed in its corporate name by its
officer thereunto duly authorized, all as of the day and year first above written.
Attest:
Secretary
LODI PUBLIC FINANCING AUTHORITY
By
Executive Director
MUFG UNION BANK, N.A., as Trustee
By
Authorized Officer
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APPENDIX A
DEFINITIONS
Authority" means the Lodi Public Financing Authority, a joint exercise of powers
authority duly organized and existing under the laws of the State of California.
Authority Revenues" means: (a) all of the Installment Payments, and (b) all
interest, profits or other income derived from the investment of amounts in any fund or
account established under this Indenture.
Authorized Representative" means: (a) with respect to the Authority, its
Executive Director, Treasurer, Secretary or any other person designated as an
Authorized Representative of the Authority by a Written Certificate of the Authority
signed by its Executive Director, General Counsel or Treasurer and filed with the City
and the Trustee; and (b) with respect to the City, its City Manager, Deputy City
Manager/Internal Services Director, City Attorney or any other person designated as an
Authorized Representative of the City by a Written Certificate of the City signed by its
City Manager or Deputy City Manager/Internal Services Director and filed with the
Authority and the Trustee.
Bond Counsel" means (a) Jones Hall, A Professional Law Corporation, 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 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.
Bond Year" means each twelve-month period extending from October 2 in one
calendar year to October 1 of the succeeding calendar year, both dates inclusive;
except that the first Bond Year commences on the Closing Date and extends to and
including October 1, 2016.
Bonds" means the aggregate principal amount of Lodi Public
Financing Authority 2016 Refunding Wastewater Revenue Bonds, Series A authorized
by and at any time Outstanding under this Indenture.
Business Day" 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.
Closing Date" means the date of delivery of the Bonds to the Original
Purchaser.
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Costs of Issuance" 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 Issuance Fund" means the fund by that name established and held by
the Trustee under Section 3.03.
Depository" means (a) initially, DTC, and (b) any other Securities Depositories
acting as Depository under Section 2.04.
Depository System Participant" means any participant in the Depository's book -
entry system.
City" means the City of Lodi, a municipal corporation organized and existing
under the laws of the State of California.
DTC" means The Depository Trust Company, New York, New York, and its
successors and assigns.
Escrow Agreement" means the Escrow Deposit and Trust Agreement, dated as
of March 1, 2016, by and between the City and The Bank of New York Mellon Trust
Company, N.A., as escrow bank.
Event of Default" means any of the events specified in Section 7.01.
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.
Fiscal Year" 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.
Fitch" means Fitch Ratings and its successors and assigns
Indenture" means this Indenture of Trust, as originally executed or as it may
from time to time be supplemented, modified or amended by any Supplemental
Indenture under the provisions hereof.
Interest Account" means the account by that name established and held by the
Trustee in the Bond Fund under Section 5.02.
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Installment Purchase Agreement" means the Installment Purchase Agreement
dated as of March 1, 2016, between the City and the Authority, together with any duly
authorized and executed amendments thereto.
Installment Payments" means all payments required to be paid by the City on
any date under Section 4.4 of the Installment Purchase Agreement, including any
amounts payable upon delinquent installments and including any prepayment thereof
under Sections 7.2 of the Installment Purchase Agreement.
Interest Payment Date" means each April 1 and October 1, commencing April 1,
2016, so long as any Bonds remain unpaid.
Moody's" means Moody's Investors Service, its successors and assigns.
Nominee" means (a) initially, Cede & Co. as nominee of DTC, and (b) any other
nominee of the Depository designated under Section 2.04(a).
Office" 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
Indenture; 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.
Original Purchaser" means JP Morgan Securities LLC , as the original
purchaser of the Bonds upon their delivery by the Trustee on the Closing Date.
Outstanding", 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 Indenture 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 Indenture.
Owner", 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.
Permitted Investments" means any of the following which at the time of
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) Federal Securities.
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.
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c) Money market funds registered under the Federal Investment
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).
d) 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
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 Insurance
Corporation or secured at all times by collateral described in (a) or
b) above.
f) Investment agreements with a financial institution the long-term
debt or claims paying ability of which, or in the case of a guaranteed
corporation the long-term 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 (104%) 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
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amount equal to such required level and the Trustee shall be
entitled to rely on each such undertaking.
h) The Local Agency Investment 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.
Record Date" means, with respect to any Interest Payment Date, the
15th
calendar day of the month preceding such Interest Payment Date, whether or not such
day is a Business Day.
Registration Books" means the records maintained by the Trustee under
Section 2.05 for the registration and transfer of ownership of the Bonds.
Securities Depositories" means DTC; and, in accordance with then current
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.
S&P" means Standard & Poor's, a division of the McGraw Hill Companies, of
New York, New York, its successors and assigns.
Supplemental Indenture" means any indenture hereafter duly authorized and
entered into between the Authority and the Trustee, supplementing, modifying or
amending this Indenture; but only if and to the extent that such Supplemental Indenture
is specifically authorized hereunder.
Tax Code" means the Internal Revenue Code of 1986 in effect on the Closing
Date or (except as otherwise referenced herein) as it may be amended to apply to
obligations issued on the Closing Date, together with applicable proposed, temporary
and final regulations promulgated, and applicable official public guidance published,
under said Code.
Term" means, when used with respect to the Installment Purchase Agreement,
the time during which the Installment Purchase Agreement is in effect, as provided in
Section 4.2 thereof.
Term Bonds" means the Bonds maturing on October 1,
Trustee" means MUFG Union Bank, N.A., 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 VIII.
Written Certificate," "Written Request" 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
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single instrument with any other instrument, opinion or representation, and the two or
more so combined shall be read and construed as a single instrument.
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APPENDIX B
BOND FORM
NO. R- ***$
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
LODI PUBLIC FINANCING AUTHORITY
2016 REFUNDING WASTEWATER REVENUE BOND,
SERIES A
1
INTEREST RATE: MATURITY DATE: ORIGINAL ISSUE'IDATE: `, OUSIP:
0/0 October 1, March"1, 201.6 -' ' 540255_
t
f. i r. i i
REGISTERED OWNER: CEDE & CO.. {. j` '3:
y
PRINCIPAL AMOUNT;*" _
The LOD1, POLIC. FliNAKING.rilUfTHORITY, a joint exercise of powers
authority duly organized; and existing under the laws of the State of California (the
Authority"), fci• vdlue 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 Interest Payment
Date (as hereinafter defined) next preceding the date of authentication of this Bond
unless (i) this Bond is authenticated on or before an Interest Payment Date and after the
close of business on the 15th day of the month preceding such interest payment date, in
which event it shall bear interest from such Interest Payment Date, or (ii) this Bond is
authenticated on or before March 15, 2016, in which event it shall bear interest from the
Original Issue 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 Interest Payment Date to which interest has previously been paid or
made available for payment on this Bond, at the Interest Rate per annum specified
above, payable semiannually on April 1 and October 1 in each year, commencing April
1, 2016 (the "Interest 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.A., as trustee (the "Trustee"), in San
Francisco, California, or such other place as designated by the Trustee (the "Trust
B-1
Office"). Interest hereon is payable by check of the Trustee mailed on the applicable
Interest Payment Date to the Registered Owner hereof at the Registered Owner's
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 Interest 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 2016 Refunding Wastewater Revenue Bonds,
Series A (the "Bonds"), in an aggregate principal amount of , all of like
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 Titlel of the California Governrnent Code (the
Bond Law"), and under an Indenture of Trust dated.:a4 of March. 2016,; between the
Authority and the Trustee (the "Indenture") .and a...resolution of the Authority adopted on
February _, 2016, authorizing the issOnce;of the Bonds:` Reference<i hereby made to
the Indenture (copies ,of which fie: on file at the office f the Authority) and all
supplements thereto for a desc 'iptiori of the terms; on WNf igh :thy Bozos are issued, the
provisions with` regard tofhe nature o0andextent the security for the Bonds, and the
rights thereunder of the own0r ..of the Bonds and the rights, duties and immunities of
the Trustee and...tnet ri6hts and obl gattorjs .of. -.the. Authority thereunder, to all of the
provisions of 'which the. -F egistered. Ownef of this Bond, by acceptance hereof, assents
and agrees.
The Bonds maturing on or before October 1, 2026, are not subject to optional
redemption prior to their respective stated maturity dates. The Bonds maturing on or
after October 1, 2027, 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 October 1, 2026, 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 maturing on October 1, 20_, are subject to mandatory redemption in
part by lot, at a redemption price equal to 100% of the principal amount thereof to be
redeemed, without premium, in the aggregate respective principal amounts and on
October 1 in the respective years as set forth in the following tables; provided, however,
that if some but not all of the Term Bonds have been redeemed under the optional
redemption provisions of the Indenture, the total amount of all future sinking fund
payments shall be reduced by the aggregate principal amount of the Term Bonds so
redeemed, to be allocated among such sinking fund payments on a pro rata basis in
integral multiples of $5,000 (as set forth in a schedule provided by the Authority to the
Trustee).
B-2
Bonds Maturing October 1,
Sinking Fund
Redemption Date
October 1)
Principal Amount
To Be Redeemed
The Bonds have been issued by the Authority to refinance an installment
payment obligation incurred by the City to finance improvements to the wastewater
collection, treatment and disposal system of the City (the "Wastewater System"). The
Bonds are special obligations of the Authority which are payable from and secured by a
charge and lien on the Authority Revenues as defined in the Indenture, consisting
principally of installment payments made by the City under an Installment Purchase
Agreement dated as of March 1, 2016, between the Authority and the City (the
Installment Purchase Agreement"). As and to the extent set forth in the Indenture, all of
the Authority Revenues are exclusively and irrevocably pledged in accordance with the
terms of the Indenture to the payment of the principal of and interest and premium (if
any) on the Bonds.
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 Indenture, 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 Indenture, and upon
surrender and cancellation of this Bond. Upon registration of such transfer, a new
Series A 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
B-3
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
It is hereby certified by the Authority that all of the.,thing$, cc:41014ms and acts
required to exist, to have happened or to have been perfOrtilesicirecedeOl to and in the
issuance of this Bond do exist, have happened or have lbe,n.,pOripriliOd in due and
regular time, form and manner as requirecliby the Bond Lov!:! 4rid#10)Awi of the State of
California and that the amount of WO poho, tOgOtkieflith all other Hebtedness of the
Authority, does not exceed s any...lirOitstreScrIbOdi*, ariSe laws of. the State of California,
and is not in excess of the r.9ount..1of Bonds perrpittect obe isued Under the Indenture
This Bond is pot ehtitled-to thider the Indenture or valid or obligatory
for any p!urioose until the icertificate of authehtication hereon endorsed has been
manually Signed:by the'Trustee:1
N WI NESS WHtREOF, the Lodi Public Financing Authority has caused this
Bond to pe executed in its name and on its behalf with the facsimile signature of its
Chair andattested to by the facsimile signature of its Secretary, all as of the Original
Issue Date specified above.
LODI PUBLIC FINANCING AUTHORITY
By:
Chair
Attest:
Dated:
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within -mentioned Indenture.
MUFG UNION BANK, N.A., as Trustee
By:
Authorized Signatory
B-4
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
whose address and sacial security Or other
tax identifying number is . the within-mentioriedt:, Band and
hereby irrevocably constitute(s) . f....'.... arnd: appoint(s)
attorney,; to transfe? the se on the
registration books of the Trustee with full power of substitutror, in th:e,.premises.
Dated:
Signature Guaranteed;
Note: Signature guarantee Stiap be made by a
guarantor institution participating in the,Securities
Transfer Agents Medalksi ryFfrogram or in such other
guarantee programs accgptabl'e to the Trustee.
B-5
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.
EXHIBIT B
FORM OF INSTALLMENT PURCHASE AGREEMENT
50863-03 J H: CKL 1-29-16
2-7-16
2-10-16
2-11-16
INSTALLMENT PURCHASE AGREEMENT
Dated as of March 1, 2016
between the
LODI PUBLIC FINANCING AUTHORITY,
as Seller
and the
CITY OF LODI,
as Purchaser
Relating to
Lodi Public Financing Authority
2016 Refunding Wastewater Revenue Bonds,
Series A
SECTION 1.1.
SECTION 1.2.
SECTION 2.1.
SECTION 2.2.
SECTION 3.1.
SECTION 3.2.
SECTION 3.3.
TABLE OF CONTENTS
Page
ARTICLE I
Definitions; Rules of Interpretation
Definitions 3
Interpretation 8
ARTICLE II
Representations, Covenants and Warranties
Representations, Covenants and Warranties of the City 8
Representations, Covenants and Warranties of Authority .... .....10
ARTICLE III
Issuance of Bonds;
Refinancing of the Refinanced 2007 Installment Payments
Issuance of Bonds; Deposit of Proceeds. 11
Payment and Prepayment of the Refinanced 2007 Installment
Payments; Defeasance and Prepayment of the Refunded
2007 Certificates. 11
No Debt Service Reserve Fund. 12
ARTICLE IV
Sale of 2007 Project;
Installment Payments
SECTION 4.1. Term
SECTION 4.2. Sale of 2007 Project
SECTION 4.3. Title
SECTION 4.4. Installment Payments
SECTION 4.5. Pledge and Application of System Net Revenues
SECTION 4.6. Establishment of Rate Stabilization Fund
SECTION 4.7. Special Obligation of the City; Obligations Absolute
SECTION 4.8. Additional Payments
12
12
12
12
13
15
15
16
ARTICLE V
Covenants of the City
SECTION 5.1. Disclaimer of Warranties 17
SECTION 5.2. Release and Indemnification Covenants 17
SECTION 5.3. Sale or Eminent Domain of System 17
SECTION 5.4. Insurance 18
SECTION 5.5. Records and Accounts 19
SECTION 5.6. Rates and Charges 19
SECTION 5.7. Superior and Subordinate Obligations 20
SECTION 5.8. Issuance of Parity Obligations 20
SECTION 5.9. Operation of System in Efficient and Economical Manner 21
SECTION 5.10. Assignment and Amendment Hereof 21
SECTION 5.11. Tax Covenants 22
SECTION 5.12. Continuing Disclosure 22
ARTICLE VI
Events of Default
SECTION 6.1. Events of Default Defined 23
SECTION 6.2. Remedies on Default 24
SECTION 6.3. No Remedy Exclusive 24
SECTION 6.4. Agreement to Pay Attorneys' Fees and Expenses 25
SECTION 6.5. No Additional Waiver Implied by One Waiver 25
SECTION 6.6.
SECTION 7.1.
SECTION 7.2.
SECTION 7.3.
Trustee and Bond Owners to Exercise Rights
ARTICLE VII
Prepayment of Installment Payments
Security Deposit
Optional Prepayment
Credit for Amounts on Deposit
ARTICLE VIII
Miscellaneous
SECTION 8.1. Further Assurances
SECTION 8.2. Notice
SECTION 8.3. Governing Law
SECTION 8.4. Binding Effect
SECTION 8.5. Severability of Invalid Provisions
SECTION 8.6. Article and Section Headings and References
SECTION 8.7. Payment on Non -Business Days
SECTION 8.8. Execution of Counterparts
SECTION 8.9. Waiver of Personal Liability
SECTION 8.10. Trustee as Third Party Beneficiary
25
25
26
26
26
26
27
27
27
27
27
APPENDIX A Schedule of Installment Payments
27
28
28
INSTALLMENT PURCHASE AGREEMENT
This INSTALLMENT PURCHASE AGREEMENT (this "Agreement"), dated as of
March 1, 2016, is between 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"), as seller, and the CITY OF LODI, a municipal corporation duly
organized and existing under the laws of the State of California (the "City"), as
purchaser.
BACKGROUND:
1. The City owns and operates a public enterprise for the collection, treatment
and disposal of wastewater within the service area of the City (as defined more
completely below, the "System").
2. The City previously entered into an Installment Purchase Agreement, dated
as of May 1, 2004 (the "2004 Installment Purchase Agreement") with the Lodi Public
Improvement Corporation (the "Corporation"), pursuant to which the City agreed to
make certain installment payments in the aggregate principal amount of $27,360,000
the "2004 Installment Payments") and caused execution and delivery of Wastewater
System Revenue Certificates of Participation, 2004 Series A (the "2004 Certificates"),
pursuant to a Trust Agreement, dated as of May 1, 2004 (the "2004 Trust Agreement"),
between the Corporation and MUFG Union Bank, N.A., as successor trustee (the "2004
Trustee"), all for the purpose of financing certain additions, betterments, extensions,
replacements and improvements to the System (the "2004 Project").
3. The City previously entered into an Installment Purchase Agreement, dated
as of December 1, 2007 (the "2007 Installment Purchase Agreement") with the
Corporation, pursuant to which the City agreed to make certain installment payments in
the aggregate principal amount of $30,320,000 (the "2007 Installment Payments") and
caused execution and delivery of Wastewater System Revenue Certificates of
Participation, 2007 Series A (the "2007 Certificates"), pursuant to a Trust Agreement,
dated as of December 1, 2007 (the "2007 Trust Agreement"), between the Corporation
and The Bank of New York Mellon Trust Company, N.A., as trustee, all for the purpose
of (i) financing certain additions, betterments, extensions, replacements and
improvements to the System (the "2007 Project") and (ii) prepaying on a current basis
all outstanding installment payments under an Installment Purchase Agreement, dated
as of December 1, 1991, and certain outstanding Certificates of Participation (1991
Wastewater Treatment Plant Expansion Refunding Project) (the "1991 Certificates").
4. The 1991 Certificates were executed and delivered to (i) finance certain
capital improvements to the Wastewater System (the "1991 Project") and (ii) prepay, on
an advance basis, certain certificates of participation that were executed and delivered
to finance the expansion of the City's White Slough Water Pollution Control Facility (the
White Slough Certificates").
5. The City wishes to refinance a portion of the 2007 Installment Payments (the
Refinanced 2007 Installment Payments") and corresponding maturities of the
outstanding 2007 Certificates (the "Refunded 2007 Certificates"). The Refinanced
2007 Installment Payments and the Refunded 2007 Certificates are the portion of the
2007 Installment Payments and the 2007 Certificates, respectively, that are attributable
to the financing of the 2007 Project and the 1991 Project. The City is not refinancing the
portion of the 2007 Installment Payments and the 2007 Certificates that are attributable
to the White Slough Certificates.
6. 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
refunding plan described in the previous paragraph, the Authority has proposed to enter
into this Agreement with the City.
7. Pursuant to Section 7.1 of the 2007 Installment Purchase Agreement, the
City has the right to prepay all or a portion of the 2007 Installment Payments on any
date, provided that any prepayment of a principal component of the 2007 Installment
Payments to be applied to the prepayment or defeasance of the 2007 Certificates must
be in an amount sufficient to provide for the prepayment or defeasance of the 2007
Certificates in Authorized Denominations (as defined in the 2007 Trust Agreement) and
must be otherwise in accordance with the provisions of the 2007 Trust Agreement.
8. Under Section 9.1 of the 2007 Installment Purchase Agreement, the
Refinanced 2007 Installment Payments will be deemed paid and all obligations of the
City with respect to the Refinanced 2007 Installment Payments will cease and terminate
except for the obligation to make payment from deposited funds and Defeasance
Securities (as defined in the 2007 Trust Agreement) as provided in Article IX of the 2007
Trust Agreement) when the Refunded 2007 Certificates have been paid or deemed paid
in accordance with Article IX of the 2007 Trust Agreement.
9. The 2007 Certificates maturing on and after October 1, 2018, are subject to
prepayment, in whole or in part, on October 1, 2017, at a prepayment price equal to the
principal amount of the 2007 Certificates plus unpaid accrued interest to the prepayment
date, without premium.
10. Under Article IX of the 2007 Trust Agreement, the obligations of the
Corporation, the Trustee and the City with respect to the Refunded 2007 Certificates will
cease and terminate when cash and/or Defeasance Securities have been deposited with
the 2007 Trustee in an amount sufficient to pay the Refunded 2007 Certificates when
they become due, whether at maturity or earlier prepayment.
11. The City wishes at this time to make such deposit of funds for the purpose of
paying and prepaying the Refinanced 2007 Installment Payments and thereby
discharging its obligations under the 2007 Installment Purchase Agreement with respect
to the Refinanced 2007 Installment Payments.
12. The City and the Authority previously refinanced a portion of the 2004
Installment Payments and the 2004 Certificates pursuant to an Installment Purchase
Agreement, dated as of September 1, 2012 (the "2012 Installment Purchase
Agreement") and the Authority's Lodi Public Financing Authority 2012 Refunding
Wastewater Revenue Bonds, Series A (the "2012 Bonds") under an Indenture of Trust,
dated as of September 1, 2012, by and between the Authority and MUFG Union Bank,
N.A.
13. The Authority will raise funds for the payment and prepayment of the
Refinanced 2007 Installment Payments and, as a result, the defeasance and
2-
prepayment of the Refunded 2007 Certificates, by issuing its Lodi Public Financing
Authority 2016 Refunding Wastewater Revenue Bonds, Series A in the aggregate
principal amount of (the "Bonds") under an Indenture of Trust dated as
of March 1, 2016 (the "Indenture"), between the Authority and MUFG Union Bank, N.A.,
as trustee (the "Trustee"), which are payable from revenues consisting primarily of
installment payments payable by the City hereunder.
14. In order to provide revenues which are sufficient to pay the principal of and
interest on the Bonds when due, the Authority and the City wish to enter into this
Agreement under which the Authority agrees to sell the 2007 Project to the City (subject
to the City's continuing obligation under the 2007 Installment Purchase Agreement), in
consideration of which the City agrees to pay the Installment Payments (the
Installment Payments") which are secured by a pledge of and lien on the System Net
Revenues of the System.
AGREEMENT:
In consideration of the foregoing and the material covenants hereinafter
contained, the City and the Authority formally agree as follows:
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
SECTION 1.1. Definitions. Unless the context clearly otherwise requires or
unless otherwise defined herein, the capitalized terms in this Agreement have the
respective meanings given such terms in this Section 1.1. Capitalized terms used in this
Agreement and not otherwise defined in this Section 1.1 have the respective meanings
given them in Appendix A to the Indenture.
Additional Payments" means the amounts payable by the City under Section
4.8.
Annual Debt Service" means, for any Fiscal Year, the sum of (1) the interest
accruing on all Parity Debt during such Fiscal Year, assuming that all such Parity Debt is
retired as scheduled, plus (2) the principal amount (including principal due as sinking
fund installment payments) allocable to all Parity Debt in such Fiscal Year, calculated as
if such principal amounts were deemed to accrue daily during such Fiscal Year in equal
amounts from, in each case, the immediately preceding payment date for such principal
or, with respect to the initial principal payment date for such Parity Debt, the date of
delivery of such Parity Debt (provided that principal shall not be deemed to accrue for
greater than a 365 -day period prior to any principal payment date), as the case may be,
to the next succeeding payment date for principal, provided, that the following
adjustments shall be made to the foregoing amounts in the calculation of Annual Debt
Service:
A) with respect to any Parity Debt bearing or comprising interest at other
than a fixed interest rate, the rate of interest used to calculate Annual Debt Service shall
be (i) with respect to such Parity Debt then outstanding, one hundred ten per cent
110%) of the greater of (1) the daily average interest rate on such Parity Debt during
3-
the twelve (12) calendar months next preceding the date of such calculation (or the
portion of such twelve (12) calendar months that such Parity Debt has borne interest) or
2) the most recent effective interest rate on such Parity Debt prior to the date of such
calculation or (ii) with respect to Parity Debt then proposed to be issued, the then
current Municipal Market Data General Obligation Yield for a maturity comparable to the
maturity of the applicable Parity Debt as published in The Bond Buyer (or if The Bond
Buyer or such yield is no longer published, such other published similar index as shall be
selected by the City);
B) with respect to any issue or series of Parity Debt having twenty-five per
cent (25%) or more of the aggregate principal amount thereof due in any one Fiscal
Year, Annual Debt Service shall be calculated as if the interest on and principal of the
Parity Debt of such issue or series were being paid in substantially equal annual
amounts over the term of such Parity Debt; provided, however that the full amount of
scheduled payments of interest and principal of such Parity Debt shall be included in
Annual Debt Service if the date of calculation is within 24 months of the date on which
such twenty-five percent (25%) or more of aggregate principal amount becomes due;
C) with respect to any Parity Debt or portions thereof bearing no interest but
which are sold at a discount and which discount accretes with respect to such Parity
Debt or portions thereof, such accreted discount shall be treated as due when
scheduled to be paid;
D) Annual Debt Service shall not include interest on Parity Debt which is to
be paid from amounts constituting capitalized interest;
E) if an interest rate swap agreement is in effect with respect to, and is
payable on a parity with, any Parity Debt, no amounts payable under such interest rate
swap agreement in addition to debt service payable with respect to such Parity Debt
shall be included in the calculation of Annual Debt Service unless, in the applicable
Fiscal Year, the sum of (i) the interest payable on such Parity Debt, plus (ii) the amounts
payable by the City under such interest rate swap agreement, less (iii) the amounts
receivable by the City under such interest rate swap agreement, is greater than the
interest payable on such Parity Debt, in which case the net amount of payments to be
made by the City under such interest rate swap agreement that exceed the interest to
be paid on such Parity Debt shall be included in such calculation, and for this purpose,
the variable amount under any such interest rate swap agreement shall be determined
in accordance with the procedure set forth in subparagraph (A) of this definition; and
F) Repayment Obligations payable on a parity with Parity Debt shall be
deemed to be payable at the scheduled amount due under such Repayment Obligation
and for this purpose, the variable interest amount included in any such Repayment
Obligation shall be determined in accordance with the procedure set forth in
subparagraph (A) of this definition.
Certificate of the City" means an instrument in writing signed by the Mayor, the
City Manager, the Deputy City Manager/Internal Services Director, or the City Attorney
of the City, or by any other officer of the City duly authorized by the City for that
purpose, such authorization to be evidenced by a certificate verifying the specimen
signatures of such officers at the request of the Trustee.
4-
City Administrative Costs" means those costs and expenses of the City that are
charged directly or apportioned to the operation of the 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 System
Revenues).
Continuing Disclosure Certificate" means the Continuing Disclosure Certificate
which is executed and delivered by the City on the Closing Date.
Corporation" means the Lodi Public Improvement Corporation.
Event of Default" means any of the events specified in Section 6.1.
Generally Accepted Accounting Principles" means the uniform accounting and
reporting procedures set forth in publications of the American Institute of Certified Public
Accountants or its successor, or by any other generally accepted authority on such
procedures, and includes, as applicable, the standards set forth by the Governmental
Accounting Standards Board or its successor.
Independent 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
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 regularly retained to make annual or other
audits of the books of or reports to the Authority or the City.
Installment Payment Date" means, with respect to any Interest Payment Date,
the Business Day immediately preceding such Interest Payment Date.
Installment Payments" means the payments the City is required to pay pursuant
to Section 4.4(a) as the purchase price of the 2007 Project.
Maximum Annual Debt Service" means, as of any date of calculation, the largest
Annual Debt Service during the period from the date of such calculation through the final
maturity date of all Parity Debt.
Net Proceeds' means, when used with respect to any casualty insurance or
condemnation award, the proceeds from such insurance or condemnation award
remaining after payment of all expenses (including attorneys' fees) incurred in the
collection of such proceeds.
Operation and Maintenance Costs" means the reasonable and necessary costs
paid or incurred by the City for maintaining and operating the System, determined in
accordance with Generally Accepted Accounting Principles, including all reasonable
expenses of management and repair and all other expenses necessary to maintain and
preserve the System in good repair and working order, including 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 Supplemental Agreement or of any resolution authorizing the
execution of any Parity Obligations, such as compensation, reimbursement and
indemnification of the Trustee and the Authority, fees and expenses of Independent
Certified Public Accountants and deposits to the Rebate Fund; but excluding in all cases
5-
i) payment of Parity Debt and Subordinate Obligations, (ii) costs of capital additions,
replacements, betterments, extensions or improvements which under Generally
Accepted Accounting Principles are chargeable to a capital account, (iii) depreciation,
replacement and obsolescence charges or reserves therefor and amortization of
intangibles, (iv) City Administrative Costs, and (v) transfers from the System Revenue
Fund to other funds or accounts of the City.
Overdue Rate" means the highest rate of interest on any of the Outstanding
Bonds.
Parity Debt" means the Installment Payments and any Parity Obligations.
Parity Obligation Payments" means the payments scheduled to be paid by the
City under and pursuant to the Parity Obligations, which payments are secured by a
pledge of System Net Revenues on a parity with the Installment Payments.
Parity Obligations" means all obligations of the City authorized and executed by
the City, other than the Installment Payments, the Parity Obligation Payments under
which are secured by a pledge of the System Net Revenues on a parity with the
Installment Payments, including but not limited to any Repayment Obligations secured
by System Net Revenues on a parity with the Installment Payments. On the date of
issuance of the Bonds, Parity Obligations consist of the 2004 Installment Payments, the
Remaining 2007 Installment Payments and the 2012 Installment Payments.
Rate Stabilization Fund" means any fund established and held by the City as a
fund for the stabilization of rates and charges imposed by the City with respect to the
System, which fund is established, held and maintained in accordance with Section 4.6.
Refinanced 2007 Installment Payments" means the 2007 Installment Payments
that are refinanced with proceeds of the Bonds, which correspond to the Refunded 2007
Certificates.
Refunded 2007 Certificates" means all of the outstanding 2007 Certificates
except the 2007 Certificates maturing on
Remaining 2007 Installment Payments" means
Repayment Obligation" means the reimbursement obligation or any other
payment obligation of the City under a written agreement between the City and a credit
provider to reimburse the credit provider for amounts paid pursuant to a credit facility for
the payment of the principal amount or purchase price of and/or interest on any Parity
Debt.
Subordinate Obligations" means the obligations of the City that are payable
from System Net Revenues on a basis that is subordinate to the payment of Parity Debt.
System" means the whole and each and every part of the system of the City for
the collection, treatment and disposal of wastewater, including the portion thereof
existing on the date hereof, and including all additions, betterments, extensions and
improvements to such system or any part thereof hereafter acquired or constructed.
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System Net Revenues" means for any period System Revenues less Operation
and Maintenance Costs for such period; provided that certain adjustments in the amount
of System Net Revenue for a Fiscal Year may be made in connection with amounts
deposited in and transferred from the Rate Stabilization Fund as provided in Section 4.6
of the Agreement.
System Revenue Fund" means the fund established and held by the City
pursuant to Section 4.5 of this Agreement.
System Revenues" means all gross income and revenue received or receivable
by the City from the ownership or operation of the System, determined in accordance
with Generally Accepted Accounting Principles, including all fees (including connection
fees), rates, charges and all amounts paid under any contracts received by or owed to
the City in connection with the operation of the System and all proceeds of insurance
relating to the System and investment income allocable to the System and all other
income and revenue howsoever derived by the City from the ownership or operation of
the System or arising from the System. System Revenues for any Fiscal Year shall
include, for the purposes permitted by the Agreement, amounts transferred to the
System Revenue Fund from the Rate Stabilization Fund during such Fiscal Year.
2004 Certificates" means the Wastewater System Revenue Certificates of
Participation, 2004 Series A.
2004 Installment Payments" means the installment payments made by the City
under the 2004 Installment Purchase Agreement.
2004 Installment Purchase Agreement" means the Installment Purchase
Agreement, dated as of May 1, 2004, between the Corporation and the City.
2004 Trust Agreement" means the Trust Agreement, dated as of May 1, 2004,
between the Corporation and the 2004 Trustee.
2004 Trustee" means MUFG Union Bank, N.A., as successor trustee.
2007 Certificates" means the Wastewater System Revenue Certificates of
Participation, 2007 Series A.
2007 Installment Payments" means the installment payments made by the City
under the 2007 Installment Purchase Agreement.
2007 Installment Purchase Agreement" means the Installment Purchase
Agreement, dated as of December 1, 2007, between the Corporation and the City.
2007 Trust Agreement" means the Trust Agreement, dated as of December 1,
2007, between the Corporation and the 2007 Trustee.
2007 Trustee" means The Bank of New York Mellon Trust Company, N.A.
2012 Certificates" means the Lodi Public Financing Authority 2012 Refunding
Wastewater Revenue Bonds, Series A.
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2012 Installment Payments" means the installment payments made by the City
under the 2012 Installment Purchase Agreement.
2012 Installment Purchase Aareement" means the Installment Purchase
Agreement, dated as of September 1, 2012, between the Authority and the City.
2012 Indenture of Trust" means the Indenture of Trust, dated as of
September 1, 2012, between the Authority and the 2012 Trustee.
2012 Trustee" means MUFG Union Bank, N.A.
SECTION 1.2. Interpretation.
a) Unless the context otherwise indicates, words expressed in the singular
include the plural and vice versa and the use of the neuter, masculine, or feminine
gender is for convenience only and 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 convenience of reference, do not constitute a part hereof and do 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 Agreement; the words
herein," "hereof," "hereby," "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
REPRESENTATIONS, COVENANTS AND
WARRANTIES
SECTION 2.1. Representations, Covenants and Warranties of the City. The
City represents, covenants and warrants to the Authority as follows:
a) Due Organization and Existence. The City is a municipal
corporation duly organized and validly existing under the laws of the
State of California, has full legal right, power and authority under
said laws to enter into this Agreement and to carry out and
consummate all transactions contemplated hereby and thereby, and
by proper action the City Council of the City has duly authorized the
execution and delivery of this Agreement.
b) Due Execution. The representatives of the City executing this
Agreement are fully authorized to execute the same.
c) Valid, Binding and Enforceable Obligations. This Agreement has
been duly authorized, executed and delivered by the City and
constitutes the legal, valid and binding agreement of the City
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enforceable against the City in accordance with its terms; except as
the enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting
creditors' rights heretofore or hereafter enacted and except as such
enforceability may be subject to the exercise of judicial discretion in
accordance with principles of equity.
d) No Conflicts. The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and the
fulfillment of or compliance with the terms and conditions hereof, do
not and will not conflict with or constitute a violation or breach of or
default (with due notice or the passage of time or both) under any
applicable law or administrative rule or regulation, or any applicable
court or administrative decree or order, or any indenture, mortgage,
deed of trust, lease, contract or other agreement or instrument to
which the City is a party or by which it or its properties are otherwise
subject or bound, or result in the creation or imposition of any
prohibited lien, charge or encumbrance of any nature whatsoever
upon any of the property or assets of the City, which conflict,
violation, breach, default, lien, charge or encumbrance would have
consequences that would materially adversely affect the
consummation of the transactions contemplated by this Agreement
or the financial condition, assets, properties or operations of the
City, including but not limited to the performance of the City's
obligations under this Agreement.
e) Consents and Approvals. No consent or approval of any trustee or
holder of any indebtedness of the City or of the voters of the City,
and no consent, permission, authorization, order or license of, or
filing or registration with, any governmental authority is necessary in
connection with the execution and delivery of this Agreement, or the
consummation of any transaction herein contemplated, except as
have been obtained or made and as are in full force and effect.
f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or
other governmental authority pending or, to the knowledge of the
City after reasonable investigation, threatened against or affecting
the City or the assets, properties or operations of the City which, if
determined adversely to the City or its interests, would have a
material and adverse effect upon the consummation of the
transactions contemplated by or the validity of this Agreement, or
upon the financial condition, assets, properties or operations of the
City, and the City is not in default with respect to any order or
decree of any court or any order, regulation or demand of any
federal, state, municipal or other governmental authority, which
default might have consequences that would materially adversely
affect the consummation of the transactions contemplated by this
Agreement, or the financial conditions, assets, properties or
operations of the City, including but not limited to the payment and
performance of the City's obligations under this Agreement.
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g) Prior Indebtedness. Upon issuance of the Bonds, the City will
remain obligated to make the 2004 Installment Payments, the
Remaining 2007 Installment Payments and the 2012 Installment
Payments on a parity with the Installment Payments.
SECTION 2.2. Representations, Covenants and Warranties of Authority. The
Authority represents, covenants and warrants to the City as follows:
a) Due Organization and Existence. The Authority is a joint exercise
of powers authority organized and existing under the laws of the
State of California, and has power to enter into this Agreement and
the Indenture and to perform the duties and obligations imposed on
it hereunder and thereunder. The Board of Directors of the
Authority has duly authorized the execution and delivery of this
Agreement and the Indenture.
b) Due Execution. The representatives of the Authority executing this
Agreement and the Indenture are fully authorized to execute the
same.
c) Valid. Binding and Enforceable Obligations. This Agreement and
the Indenture have been duly authorized, executed and delivered by
the Authority and constitute the legal, valid and binding agreements
of the Authority with the Authority, enforceable against the Authority
in accordance with their respective terms; except as the
enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting
creditors' rights heretofore or hereafter enacted and except as such
enforceability may be subject to the exercise of judicial discretion in
accordance with principles of equity.
d) No Conflicts. The execution and delivery hereof and of the
Indenture, the consummation of the transactions herein and therein
contemplated and the fulfillment of or compliance with the terms
and conditions hereof and thereof, do not and will not conflict with
or constitute a violation or breach of or default (with due notice or
the passage of time or both) under any applicable law or
adrninistrative rule or regulation, or any applicable court or
administrative decree or order, or any indenture, mortgage, deed of
trust, lease, contract or other agreement or instrument to which the
Authority is a party or by which it or its properties are otherwise
subject or bound, or result in the creation or imposition of any
prohibited lien, charge or encumbrance of any nature whatsoever
upon any of the property or assets of the Authority, which conflict,
violation, breach, default, lien, charge or encumbrance would have
consequences that would materially adversely affect the
consummation of the transactions contemplated hereby and by the
Indenture or the financial condition, assets, properties or operations
of the Authority, including but not limited to the performance of the
Authority's obligations under this Agreement and the indenture.
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e) Consents and Approvals. No consent or approval of any trustee or
holder of any indebtedness of the Authority, and no consent,
permission, authorization, order or license of, or filing or registration
with, any governmental authority is necessary in connection with the
execution and delivery hereof or of the Indenture, or the
consummation of any transaction herein or therein contemplated,
except as have been obtained or made and as are in full force and
effect.
f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or
other governmental authority pending or, to the knowledge of the
Authority after reasonable investigation, threatened against or
affecting the Authority or the assets, properties or operations of the
Authority which, if determined adversely to the Authority or its
interests, would have a material and adverse effect upon the
consummation of the transactions contemplated by or the validity of
this Agreement or the Indenture, or upon the financial condition,
assets, properties or operations of the Authority, and the Authority
is not in default with respect to any order or decree of any court or
any order, regulation or demand of any federal, state, municipal or
other governmental authority, which default might have
consequences that would materially adversely affect the
consummation of the transactions contemplated by this Agreement
or the Indenture or the financial conditions, assets, properties or
operations of the Authority, including but not limited to the
performance of the Authority's obligations hereunder and under the
Indenture.
ARTICLE III
ISSUANCE OF BONDS;
REFINANCING OF THE REFINANCED 2007
INSTALLMENT PAYMENTS
SECTION 3.1. Issuance of Bonds; Deposit of Proceeds. The Authority shall
cause the Bonds to be issued under the Indenture in the aggregate principal amount set
forth in the Indenture. The Trustee shall deposit the proceeds of sale of the Bonds
received by it on the Closing Date in accordance with the Indenture. The City hereby
approves the Indenture, the assignment thereunder to the Trustee of certain rights of
the Authority, and the issuance of the Bonds.
SECTION 3.2. Payment and Prepayment of the Refinanced 2007 Installment
Payments; Defeasance and Prepayment of the Refunded 2007 Certificates. The
proceeds received by the Trustee from the sale of the Bonds to the Original Purchaser
shall be deposited in the respective funds and accounts, and in the respective amounts,
as set forth in Section 3.02 of the Indenture.
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SECTION 3.3. No Debt Service Reserve Fund. The City and the Authority
acknowledge that no debt service reserve fund has been established for the Bonds or
the Installment Payments, and that the owners of the Bonds shall have no right to the
benefit of any debt service reserve fund established for other Parity Debt.
ARTICLE IV
SALE OF 2007 PROJECT;
INSTALLMENT PAYMENTS
SECTION 4.1. Term. The Term of this Agreement commences on the Closing
Date, and ends on October 1, [2037], or such later or earlier date on which the Bonds
cease to be Outstanding under and within the meaning of the Indenture.
SECTION 4.2. Sale of 2007 Project In consideration of the Authority's
assistance with the refinancing of the Refinanced 2007 Installment Payments, the City
hereby sells the 2007 Project to the Authority (subject to the City's continuing obligation
under the 2007 Installment Purchase Agreement), and the Authority, subject to the
terms and conditions hereof, hereby sells the 2007 Project back to the City.
SECTION 4.3. Title. Title to the 2007 Project, and each component thereof, will
be deemed conveyed by the Authority to and vested in the City upon execution and
delivery of this Agreement. The Authority and the City will execute, deliver and cause to
be recorded any and all documents reasonably required by the City to consummate the
transfer of title to the 2007 Project, subject to the City's continuing obligation under the
2007 Installment Purchase Agreement.
SECTION 4.4. Installment Payments.
a) Obligation to Pay Installment Payments to Purchase the 2007 Project. The
City hereby agrees to pay to the Authority, as the purchase price of the 2007 Project
hereunder, the aggregate principal amount of together with interest
calculated on the basis of a 360 -day year of twelve 30 -day months) on the unpaid
principal balance thereof, payable in semiannual installment payments in the respective
amounts and on the respective Installment Payment Dates specified in Appendix A.
b) Payment Provisions. The City shall deposit the Installment Payment coming
due and payable on any Interest Payment Date with the Trustee, as assignee of the
Authority under the Indenture, on the related Installment Payment Date. In determining
the amount required to be deposited with the Trustee on any Installment Payment Date,
all amounts then held by the Trustee in the Bond Fund and the accounts therein shall
be credited towards the Installment Payment then due. The Installment Payments are
secured by and payable solely from the sources specified in Section 4.5.
c) Effect of Prepayment. If the City prepays all remaining Installment
Payments in full under Section 7.2, the City's obligations under this Agreement will
thereupon cease and terminate, including but not limited to the City's obligation to pay
Installment Payments therefor under this Section 4.4; provided, however, that the City's
obligations to compensate and indemnify the Trustee under Sections 4.8 and 5.2 will
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survive such prepayment. If the City prepays the Installment Payments in part but not in
whole under Section 7.2, the principal component of each succeeding Installment
Payment will be reduced as provided in such Sections, and the interest component of
each remaining Installment Payment will be reduced by the aggregate corresponding
amount of interest which would otherwise be payable with respect to the Bonds thereby
redeemed under the applicable provisions of Section 4.01 of the Indenture.
d) Rate on Overdue Payments. If the City fails to make any of the payments
required under this Section 4.4 and Section 4.8, the payment in default will continue as
an obligation of the City until fully paid, and the City agrees to pay the same with interest
thereon, from the date of default to the date of payment, at the Overdue Rate.
e) Assignment. Certain rights of the Authority, including but not limited to the
right of the Authority to receive payment of the Installment Payments, have been
assigned by the Authority to the Trustee in trust under the Indenture, for the benefit of
the Owners of the Bonds, and the City hereby consents to such assignment. The
Authority hereby directs the City, and the City hereby agrees, to pay to the Trustee at its
Trust Office, all payments payable by the City under this Section 4.4 and all amounts
payable by the City under Article VII.
SECTION 4.5. Pledge and Application of System Net Revenues.
a) Pledge. All System Net Revenues and all amounts on deposit in the
System Revenue Fund are, pursuant to Section 5451 of the Government Code of the
State of California and all laws amendatory thereof or supplemental thereto, hereby
irrevocably pledged to the payment of the Installment Payments and may not be used
for any other purpose until all Installment Payments have been fully paid or provision
has been made for such payment in accordance with Section 7.1; provided that out of
the System Revenues and amounts on deposit in the System Revenue Fund there may
be apportioned such sums for such purposes as are expressly permitted in this
Agreement. This pledge, together with the pledge of System Net Revenues and
amounts in the System Revenue Fund securing all other Parity Obligations, shall,
subject to application as permitted herein, constitute a first lien on System Net
Revenues and amounts on deposit in the System Revenue Fund.
b) Deposit of System Revenues Into System Revenue Fund; Transfers to
Make Payments. In order to carry out and effectuate the pledge and lien contained in
this Agreement, the City agrees and covenants that all System Revenues shall be
received by the City in trust hereunder and, except for Net Proceeds, shall be deposited
when and as received in a special fund designated as the "System Revenue Fund",
which fund the City has previously established and which fund the City agrees and
covenants to maintain and to hold separate and apart from other funds until all
Installment Payments have been fully paid or provision has been made therefor in
accordance with Section 7.1. To the extent the City has an existing fund which satisfies
the foregoing requirements, then such fund shall be deemed to be the "System
Revenue Fund" and the City shall not be required to create a new fund. The City may
maintain separate accounts within the System Revenue Fund. The amounts in the
System Revenue Fund shall be invested in Permitted Investments. Moneys in the
System Revenue Fund shall be used and applied by the City as provided in this
Agreement.
The City shall, from the moneys in the System Revenue Fund, pay all Operation
and Maintenance Costs (including amounts reasonably required to be set aside in
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contingency reserves for Operation and Maintenance Costs, the payment of which is not
then immediately required) as such Operation and Maintenance Costs become due and
payable. Thereafter, all remaining moneys in the System Revenue Fund shall be set
aside by the City at the following times for the transfer to the following respective special
funds in the following order of priority; and all moneys in each of such funds shall be
held in trust and shall be applied, used and withdrawn only for the purposes set forth in
this Section and, as to funds held under the Indenture, the Indenture:
i) Installment Payment. Not later than each Installment Payment
Date, the City shall, from the. moneys in the System Revenue Fund, transfer to
the Trustee the Installment Payment due and payable on that Installment
Payment Date. The City shall also, from the moneys in the System Revenue
Fund, transfer when due to the applicable trustee for deposit in the respective
payment fund, without preference or priority, and in the event of any insufficiency
of such moneys ratably without any discrimination or preference, any Parity
Obligation Payments in accordance with the provisions of the applicable Parity
Obligations.
ii) Debt Service Reserve Funds. On or before the first Business Day
of each month, the City shall, from the remaining moneys in the System
Revenue Fund, without preference or priority, and in the event of any
insufficiency of such moneys ratably without any discrimination or preference,
transfer to the applicable trustee for such debt service reserve funds, if any, as
may have been established in connection with Parity Obligations that sum, if any,
necessary to restore such debt service reserve funds for Parity Obligations to an
amount equal to the amount required to be maintained therein (including to
reimburse the provider for a draw on a reserve account credit instrument).
iii) Surplus. Moneys on deposit in the System Revenue Fund not
necessary to make any of the payments required above in a Fiscal Year may be
expended by the City at any time for any purpose permitted by law, including but
not limited to payments with respect to Subordinate Obligations and deposits to
the Rate Stabilization Fund.
c) No Preference or Priority. Payment of the Installment Payments and Parity
Obligation Payments will be made without preference or priority among the Installment
Payments and such Parity Obligation Payments. If the amount of System Net
Revenues on deposit in the System Revenue Fund is at any time insufficient to enable
the City to pay when due the Installment Payments and any Parity Obligation Payments,
such payments will be made on a pro rata basis.
d) Other Uses of System Net Revenues Permitted. The City shall manage,
conserve and apply the System Net Revenues on deposit in the System Revenue Fund
in such a manner that all deposits required to be made under the preceding subsection
b) will be made at the times and in the amounts so required. Subject to the foregoing
sentence, so long as no Event of Default has occurred and is continuing, the City may
use and apply moneys in the System Revenue Fund for (i) the payment of any
Subordinate Obligations or any unsecured obligations, (ii) the acquisition and
construction of improvements to the System, (iii) the prepayment of any other
obligations of the City relating to the System, or (iv) any other lawful purposes of the
City.
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e) Budget and Appropriation of Installment Payments. During the Term of this
Agreement, the City shall adopt all necessary budgets and make all necessary
appropriations of the Installment Payments from the System Net Revenues. If any
Installment Payment requires the adoption by the City of any supplemental budget or
appropriation, the City shall promptly adopt the same. The covenants on the part of the
City contained in this subsection (e) constitute duties imposed by law and it is the duty of
each and every public official of the City to take such actions and do such things as are
required by law in the performance of the official duty of such officials to enable the City
to carry out and perform the covenants and agreements in this subsection (e).
SECTION 4.6. Establishment of Rate Stabilization Fund. The City previously
established a special fund known as the "Rate Stabilization Fund" which shall be held
and maintained by the City until all Installment Payments have been fully paid or
provision has been made therefor in accordance with, Section 7.1. The City may,
subject to the provisions of Section 4.5, during or within 210 days after a Fiscal Year,
transfer surplus System Net Revenues attributable to such Fiscal Year (on the basis of
Generally Accepted Accounting Principles) from the System Revenue Fund to the Rate
Stabilization Fund. The City may at any time transfer moneys from the Rate Stabilization
Fund to the System Revenue Fund.
Notwithstanding anything to the contrary provided in this Agreement, for
purposes of the calculations required under Sections 5.8 and 5.6(b), (1) System Net
Revenues deposited into the Rate Stabilization Fund shall not be taken into account as
System Revenues for the Fiscal Year to which such deposited System Net Revenues
are attributable and (ii) amounts withdrawn from the Rate Stabilization Fund and
deposited into the System Revenue Fund may be taken into account as System
Revenues for the Fiscal Year in which such deposit into the System Revenue Fund is
made; provided that, for purposes of the calculation required under Section 5.6(b), the
amount of System Net Revenues before any credits for transfers from the Rate
Stabilization Fund to the System Revenue Fund may not be less than 100% of Annual
Debt Service for such Fiscal Year. The amounts in the Rate Stabilization Fund shall be
invested in Permitted Investments.
SECTION 4.7. Special Obligation of the City; Obligations Absolute. The City's
obligation to pay the Installment Payments and any other amounts coming due and
payable hereunder is a special obligation of the City limited solely to the System Net
Revenues. Under no circumstances is the City required to advance moneys derived
from any source of income other than the System Net Revenues and other sources
specifically identified herein for the payment of the Installment Payments and such other
amounts. No other funds or property of the City are liable for the payment of the
Installment Payments and any other amounts coming due and payable hereunder.
The obligations of the City to pay the Installment Payments from the System Net
Revenues and to perform and observe the other agreements contained herein are
absolute and unconditional and are not subject to any defense or any right of set-off,
counterclaim or recoupment arising out of any breach by the Authority or the Trustee of
any obligation to the City or otherwise with respect to the System, whether hereunder or
otherwise, or out of indebtedness or liability at any time owing to the City by the
Authority or the Trustee. Until all of the Installment Payments, all of the Additional
Payments and all other amounts coming due and payable hereunder are fully paid or
prepaid, the City (a) will not suspend or discontinue payment of any Installment
Payments, Additional Payments or such other amounts, (b) will perform and observe all
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other agreements contained in this Agreement, and (c) will not terminate this Agreement
for any cause, including, without limiting the generality of the foregoing, the occurrence
of any acts or circumstances that may constitute failure of consideration, eviction or
constructive eviction, destruction of or damage to the System, sale of the System, the
taking by eminent domain of title to or temporary use of any component of the System,
commercial frustration of purpose, any change in the tax or law other laws of the United
States of America or the State of California or any political subdivision of either thereof
or any failure of the Authority or the Trustee to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation arising out of or connected
with the Indenture or this Agreement.
The foregoing provisions of this Section 4.7 do not release the Authority from the
performance of any of the agreements on its part contained herein or in the Indenture,
and if the Authority fails to perform any such agreements, the City may institute such
action against the Authority as the City deems necessary to compel performance, so
long as such action does not abrogate the obligations of the City contained in the
preceding paragraph. The City may, however, at its cost and expense and in its name
or in the name of the Authority, prosecute or defend any action or proceeding or take
any other action involving third persons which the City deems reasonably necessary in
order to secure or protect the City's rights hereunder, and in such event the Authority
shall cooperate fully with the City and shall take such action necessary to effect the
substitution of the City for the Authority in such action or proceeding if the City may
request.
SECTION 4.8. Additional Payments. In addition to the Installment Payments,
the City shall pay when due the following amounts to the following parties:
a) to the Authority, all costs and expenses incurred by the Authority to
comply with the provisions of this Agreement and the Indenture;
and
b) to the Trustee upon request therefor, all of its costs and expenses
payable as a result of the performance of and compliance with its
duties hereunder or under the Indenture or any related documents;
c) to the Authority and the Trustee, all amounts required to indemnify
the Authority and the Trustee under Section 5.2 hereof and Section
8.07 of the Indenture;
d) all costs and expenses of auditors, engineers and accountants for
professional services relating to the System or the Bonds; and
e) all Excess Investment Earnings payable under Section 5.11(e).
The Additional Payments are payable from, but are not secured by a pledge or
lien upon, the System Net Revenues. The rights of the Trustee and the Authority under
this Section 4.8, and the obligations of the City under this Section 4.8, shall survive the
termination of this Agreement.
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ARTICLE V
COVENANTS OF THE CITY
SECTION 5.1. Disclaimer of Warranties. The Authority makes no warranty or
representation, either express or implied, as to the value, design, condition,
merchantability or fitness for any particular purpose or fitness for the use contemplated
by the City of the 2007 Project or any component thereof, or any other representation or
warranty with respect to the 2007 Project or any component thereof. In no event is the
Authority liable for incidental, indirect, special or consequential damages, in connection
with or arising out of this Agreement or the Indenture for the existence, furnishing,
functioning or use of the 2007 Project.
SECTION 5.2. Release and Indemnification Covenants. The City agrees to
indemnify the Authority, the Trustee and their respective officers, agents, successors
and assigns, against all claims, losses and damages, including legal fees and expenses,
arising out of (a) the use, maintenance, condition or management of, or from any work
or thing done on or about the System by the City, (b) any breach or default on the part
of the City in the performance of any of its obligations under this Agreement or the
Indenture, (c) any act or omission of the City or of any of its agents, contractors,
servants, employees or licensees with respect to the System, (d) any act or omission of
any lessee of the City with respect to the System, and (e) the Trustee's exercise and
performance of its powers and duties hereunder, under the Indenture, and any other
document or transaction contemplated in connection herewith or therewith. No
indemnification is made under this Section 5.2 or elsewhere in this Agreement for willful
misconduct or negligence under this Agreement by the Authority, the Trustee or their
respective officers, agents, employees, successors or assigns. The provisions of this
Section 5.2 shall survive the expiration of the Term of this Agreement.
SECTION 5.3. Sale or Eminent Domain of System. Except as provided herein,
the City covenants that the System will not be encumbered, sold, leased, pledged, any
charge placed thereon, or otherwise disposed of, as a whole or substantially as a whole
if such encumbrance, sale, lease, pledge, charge or other disposition would materially
impair the ability of the City to pay the Installment Payments or the principal of or
interest on any Parity Debt, or would materially adversely affect its ability to comply with
the terms of this Agreement or any Parity Debt. The City may not enter into any
agreement which impairs the operation of the System or any part of it necessary to
secure adequate System Net Revenues to pay the Installment Payments or any Parity
Debt, or which otherwise would impair the rights of the Bond Owners or the Trustee with
respect to the System Net Revenues.
If all or any part of the System shall be taken by eminent domain proceedings,
the Net Proceeds realized by the City therefrom shall be deposited by the City with the
Trustee in a special fund which the Trustee shall establish as needed in trust and
applied by the City to the cost of acquiring and constructing additions, betterments,
extensions or improvements to the System if (A) the City first secures and files with the
Trustee a Certificate of the City showing (i) the Toss in annual System Revenues, if any,
suffered, or to be suffered, by the City by reason of such eminent domain proceedings,
ii) a general description of the additions, betterments, extensions or improvements to
the System then proposed to be acquired and constructed by the City from such
proceeds, and (iii) an estimate of the additional System Revenues to be derived from
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such additions, betterments, extensions or improvements; and (B) the Trustee has
been furnished a Certificate of the City, certifying that such additional System
Revenues will sufficiently offset on a timely basis the loss of System Revenues resulting
from such eminent domain proceedings so that the ability of the City to pay all Parity
Debt when due will not be substantially impaired, and such Certificate of the City shall
be final and conclusive, and any balance of such proceeds not required by the City of
such purpose shall be deposited in the System Revenue Fund and applied as provided
in Section 4.5, provided, that if the foregoing conditions are not met, then such proceeds
shall be deposited with the Trustee and applied to make Installment Payments and
Parity Obligation Payments as they shall become due ratably without any discrimination
or preference; provided further that the foregoing procedures for the application of Net
Proceeds consisting of awards under eminent domain proceedings shall be subject to
any similar provisions for Parity Debt on a pro rata basis.
If such eminent domain proceedings have had no effect, or at most an
immaterial effect, upon the System Revenues and the security of the Parity Debt, and a
Certificate of the City to such effect has been filed with the Trustee, then the City shall
forthwith deposit such proceeds in the System Revenue Fund, to be applied as provided
in Section 4.5.
SECTION 5.4. Insurance. The City shall at all times maintain with responsible
insurers all such insurance on the System as is customarily maintained with respect to
works and properties of like character against accident to, loss of or damage to the
System.
The City shall also maintain, with responsible insurers, worker's compensation
insurance and insurance against public liability and property damage to the extent
reasonably necessary to protect the City, the Authority, the Trustee and the Owners of
the Bonds.
Any policy of insurance required under this Section 5.4 may be maintained as
part of or in conjunction with any other insurance coverage carried by the City, and may
be maintained in 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 insurance.
If all or any part of the System shall be damaged or destroyed, the Net Proceeds
realized by the City as a result thereof shall be deposited by the City with the Trustee in
a special fund which the Trustee shall establish as needed in trust and applied by the
City to the cost of acquiring and constructing repairs, replacements, additions,
betterments, extensions or improvements to the System if (A) the City first secures and
files with the Trustee a Certificate of the City showing (i) the loss in annual System
Revenues, if any, suffered, or to be suffered, by the City by reason of such damage or
destruction, (ii) a general description of the repairs, replacements, additions,
betterment, extensions or improvements to the System then proposed to be acquired
and constructed by the City from such proceeds, and (iii) an estimate of the System
Revenues to be derived after• the completions of such repairs, replacements, additions,
betterment, extensions or improvements; and (B) the Trustee has been furnished a
Certificate of the City, certifying that the System Revenues after such repair,
replacement, addition, betterment, extension or improvement of the System will
sufficiently offset on a timely basis the loss of System Revenues resulting from such
damage or destruction so that the ability of the City to pay all Parity Debt when due will
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not be substantially impaired, and such Certificate of the City shall be final and
conclusive, and any balance of such proceeds not required by the City for such purpose
shall be deposited in the System Revenue Fund and applied as provided in Section 4.5;
provided, that if the foregoing conditions are not met, then such proceeds shall be
deposited with the Trustee and applied to make Installment Payments and Parity
Obligation Payments as they shall become due ratably without any discrimination or
preference; provided further that the foregoing procedures for the application of Net
Proceeds- consisting of insurance payments shall be subject to any similar provisions
for Parity Debt on a pro rata basis.
If such damage or destruction has had no effect, or at most an immaterial effect,
upon the System Revenues and the security of the Parity Debt, and a Certificate of the
City to such effect has been filed with the Trustee, then the City shall forthwith deposit
such proceeds in the System Revenue Fund, to be applied as provided in Section 4.5.
SECTION 5.5. Records and Accounts. The City shall keep proper books of
record and accounts of the System in which complete and correct entries are made of
all transactions relating to the System. Said books shall, upon prior request, be subject
to the reasonable inspection of the Owners of not less than 10% of the Outstanding
Bonds, or their representatives authorized in writing, upon not less than two Business
Days' prior notice to the City.
The City shall cause the books and accounts of the System to be audited
annually by an Independent Accountant not more than nine months after the close of
each Fiscal Year, and shall make a copy of such report available for inspection by the
Bond Owners at the office of the City and at the Trust Office of the Trustee. Such report
may be part of a combined financial audit or report covering all or part of the City's
finances.
SECTION 5.6. Rates and Charges.
a) The City will, at all times until all Installment Payments have been fully
paid or provision has been made therefor in accordance with Section 7.1, fix, prescribe
and collect rates, fees and charges and manage the operation of the System for each
Fiscal Year so as to yield System Revenues at least sufficient, after making reasonable
allowances for contingencies and errors in the estimates, to pay the following amounts
during such Fiscal Year:
i) All current Operation and Maintenance Costs.
ii) The Installment Payments, all other Parity Obligation Payments
and all payments on Subordinate Obligations as they become due and payable.
iii) All payments required for compliance with the terms of the
Indenture and this Agreement.
iv) All payments to meet any other obligations of the City which are
charges, liens or encumbrances upon, or payable from, the System Revenues.
b) In addition to the requirements of the foregoing subsection (a) of this
Section, the City will, at all times until all Installment Payments have been fully paid or
provision has been made therefor in accordance with Section 7.1, to the maximum
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extent permitted by law, fix, prescribe and collect rates, fees and charges and manage
the operation of the System for each Fiscal Year so as to yield System Net Revenues
during such Fiscal Year equal to at least 110% per cent of the Annual Debt Service in
such Fiscal Year; provided, an adjustment shall be made to the amount of System Net
Revenues as provided in Section 4.6.
The City may make or permit to be made adjustments from time to time in such
rates, fees and charges and may make or permit to be made such classification thereof
as it deems necessary, but shall not reduce or permit to be reduced such rates, fees
and charges below those then in effect unless the System Revenues from such reduced
rates, fees and charges will at all times be sufficient to meet the requirements of this
Section.
SECTION 5.7. Superior and Subordinate Obligations. The City may not issue or
incur any additional bonds or other obligations during the Term of this Agreement having
any priority in payment of principal or interest out of the System Revenues or the
System Net Revenues over the Installment Payments.
Nothing herein limits or affects the ability of the City to issue or incur (a) Parity
Obligations under Section 5.8, or (b) Subordinate Obligations.
SECTION 5.8. Issuance of Parity Obligations. The City may at any time enter
into or otherwise incur Parity Obligations in addition to the obligations under this
Agreement and the Parity Payment Obligations under the 2004 Installment Purchase
Agreement, the 2007 Installment Purchase Agreement and the 2012 Installment
Purchase Agreement; provided:
a) The City shall be in compliance with all agreements, conditions,
covenants and terms contained in this Agreement required to be observed or
performed by it, and a Certificate of the City to that effect shall have been filed
with the Trustee.
b) Any debt service reserve fund established for such Parity Debt
shall satisfy the following criteria: (i) such debt service reserve fund shall be held
by an independent trustee (who may be other than the Trustee); (ii) the required
amount of such debt service reserve fund shall not exceed the lesser of the
maximum annual debt service of such Parity Debt (calculated on the basis of a
year ending on the principal payment date of such Parity Debt) or the maximum
amount permitted under the Code, provided that, if such Parity Debt is a loan
from a governmental agency, then a debt service reserve fund shall be
established in the amount, if any, required or permitted by such governmental
agency; and (iii) the City shall not be required to replenish withdrawals from
such debt service reserve fund in greater than monthly installments equal to 1/12
of the aggregate amount needed to restore the debt service reserve fund to the
required level.
c) The System Net Revenues for the last completed Fiscal Year or
any 12 consecutive months within the last 18 months preceding the date of entry
into or incurrence of such Parity Debt, as shown by a Certificate of the City on
file with the Trustee, plus an allowance for increased System Net Revenues
arising from any increase in the rates, fees and charges of the System which
was duly adopted by the City Council of the City prior to the date of the entry
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into or incurrence of such Parity Debt but which, during all or any part of such 12
month period was not in effect in an amount equal to the amount by which the
System Net Revenues would have been increased if such increase in rates,
fees and charges had been in effect during the whole of such 12 month period,
as shown by a Certificate of the City on file with the Trustee, shall have
produced a sum equal to at least 110% of the Maximum Annual Debt Service as
calculated after the entry into or incurrence of such Parity Debt; provided that in
the event that all or a portion of such Parity Debt is to be issued for the purpose
of refunding and retiring any Parity Debt then outstanding, interest and principal
payments on the Parity Debt to be so refunded and retired from the proceeds of
such Parity Debt being issued shall be excluded from the foregoing computation
of Maximum Annual Debt Service; provided further, that the City may at any
time enter into or incur Parity Debt without compliance with the foregoing
conditions if the Annual Debt Service for each Fiscal Year during which such
Parity Debt is outstanding will not be increased by reason of the entry into or
incurrence of such Parity Debt; and provided further, an adjustment shall be
made in the amount of System Net Revenues as provided in Section 4.6.
Nothing contained in this Section shall limit the issuance of any revenue bonds,
notes or other evidences of indebtedness or the entry into any installment purchase
agreement by the City payable from the System Net Revenues and secured by a lien
and charge on the System Net Revenues if, after the issuance of such revenue bonds or
entry into such installment purchase agreement, all of the Installment Payments shall
have been fully paid or provision has been made therefor in accordance with Section
7.1. Furthermore, nothing contained in this Section shall limit the issuance or incurrence
of any Subordinate Obligations.
SECTION 5.9. Operation of System in Efficient and Economical Manner. The
City covenants and agrees to operate the System in an efficient and economical manner
and to operate, maintain and preserve the System in good repair and working order.
SECTION 5.10. Assignment and Amendment Hereof. 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 the 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, but only if such amendment or modification is for any one or more of
the following purposes:
i) 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;
ii) 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;
iii) 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
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iv) in any other respect whatsoever as the Authority and the City deem
necessary 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.
No such modification or amendment may (a) extend or have the effect of
extending any Installment Payment Date or reducing any Installment Payment or any
premium payable upon the prepayment thereof, without the express consent of the
Owners of the affected Bonds, or (b) modify any of the rights or obligations of the
Trustee without its written assent thereto.
SECTION 5.11. 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 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 Arbitrage. The City may not take, or permit or suffer to be taken by the
Trustee or otherwise, 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 City shall take all actions necessary
to assure the exclusion of interest 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 Investment Earnings to United States. The City shall
calculate or cause to be calculated 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, and shall constitute Additional Payments hereunder.
The City 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). In order to provide for the administration of this
subsection (e), the City may provide for the employment of independent attorneys,
accountants and consultants 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).
SECTION 5.12. Continuing Disclosure The City hereby covenants and agrees
that it will comply with and carry out all of the provisions of the Continuing Disclosure
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Certificate. Notwithstanding any other provision of this Agreement, failure of the City to
comply with the Continuing Disclosure Certificate does not constitute an Event of
Default. However, any Participating Underwriter (as that term is defined in the
Continuing Disclosure Certificate) or any holder or beneficial owner of the Bonds may
take such actions as may be necessary and appropriate to compel the City to perform
its obligations under the Continuing Disclosure Certificate, including seeking mandate or
specific performance by court order.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. Events of Default Defined. The following events constitute
Events of Default hereunder:
a) Failure by the City to pay any Installment Payment when due and
payable hereunder.
b) Failure by the City to pay any Additional Payment when due and
payable hereunder, and the continuation of such failure for a period
of 30 days.
c) 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 preceding clauses (a) or (b), for a period of 30
days after written notice specifying such failure and requesting that
it be remedied has been given to the City by the Authority or the
Trustee; provided, however, that if the City notifies the Authority and
the Trustee that in its reasonable 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 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.
d) Only as long as it is an event of default under and as defined with
respect to any Parity Debt, the filing by the City of a voluntary
petition in bankruptcy, or failure by the 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.
e) The occurrence of any event of default under and as defined with
respect to any Parity Debt.
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SECTION 6.2. Remedies on Default. If an Event of Default occurs and is
continuing, the Trustee as assignee of the Authority has the right, at its option and
without any 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 to any Parity Debt, declare all principal components of the
unpaid Installment Payments, together with accrued interest
thereon at the Overdue Rate from the immediately preceding
Interest Payment Date on which payment was made, to be
immediately due and payable, 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 Installment Payments coming due prior to such declaration and
all matured interest components (if any) of the Installment
Payments, with interest on such overdue principal and interest
components calculated at the Overdue Rate, and (ii) the City pays
the reasonable expenses of the Trustee (including any fees and
expenses of its attorneys), and (iii) any and all other defaults known
to the Trustee (other than in the payment of the principal and
interest components of the Installment Payments due and payable
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 Installment Payments then due or thereafter
to become due during the Term of this Agreement, or enforce
performance and observance of any obligation, agreement or
covenant of the City under this 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 System Revenues and other amounts
pledged hereunder, with such powers as the court making such
appointment may confer.
SECTION 6.3. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Authority is intended to be exclusive. Every such remedy is cumulative
and in addition to every other remedy given under this Agreement or now or hereafter
existing at law or in equity. No delay or omission to exercise any right or power accruing
upon any default impairs any such right or power or operates as a waiver thereof, but
any such right and power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it
in this Article VI, it is not necessary to give any notice, other than such notice as may be
required in this Article VI or by law.
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SECTION 6.4. Agreement to Pay Attorneys' Fees and Expenses. If either party
to this Agreement defaults under any of the provisions hereof and the nondefaulting
party, the Trustee or the Owner of any Bonds employs attorneys or incurs other
expenses for the collection of moneys or the enforcement or performance or
observance of any obligation or agreement on the part of the defaulting party herein
contained, the defaulting party agrees that it will on demand therefor pay to the
nondefaulting party, the Trustee or such Owner, as the case may be, the reasonable
fees of such attorneys and such other expenses so incurred. The provisions of this
Section 6.4 survive the expiration of the Term of this Agreement.
SECTION 6.5. No Additional Waiver Implied by One Waiver. If any agreement
contained in this Agreement is breached by either party and thereafter waived by the
other party, such waiver is limited to the particular breach so waived and does not waive
any other breach hereunder.
SECTION 6.6. Trustee and Bond Owners to Exercise Rights. Such rights and
remedies as are given to the Authority under this Article VI have been assigned by the
Authority to the Trustee under the Indenture, to which assignment the City hereby
consents. Such rights and remedies will be exercised by the Trustee and the Owners of
the Bonds as provided in the Indenture.
ARTICLE VII
PREPAYMENT OF INSTALLMENT PAYMENTS
SECTION 7.1. Security Deposit. Notwithstanding any other provision hereof,
the City may on any date secure the payment of Installment Payments, in whole or in
part, by irrevocably depositing with the Trustee an amount of cash which, together with
other available amounts, is either:
a) sufficient to pay all such Installment Payments, including the
principal and interest components thereof, when due under Section
4.4(a), or
b) invested in whole or in part in non -callable Federal Securities in
such amount as will, in the opinion of an Independent 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 Installment
Payments when due under Section 4.4(a) or when due on any
optional prepayment date under Section 7.2, as the City instructs at
the time of said deposit.
If the City makes a security deposit under this Section for the payment of all
remaining Installment Payments, all obligations of the City hereunder, and the pledge of
System Net Revenues and all other security provided by this Agreement for said
obligations, will thereupon cease and terminate, excepting only the obligation of the City
to make, or cause to be made, all Installment Payments from the security deposit. The
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security deposit will be deemed to be and will constitute a special fund for the payment
of the Installment Payments in accordance with the provisions hereof.
SECTION 7.2. Optional Prepayment. The City may exercise its option to prepay
the principal components of the Installment Payments in whole or in part on any date on
or after the Installment Payment Date relating to the October 1, 2026 Interest Payment
Date. The City may exercise such option by payment of a prepayment price equal to
the sum of (a) the aggregate principal components of the Installment Payments to be
prepaid, (b) the interest component of the Installment 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 Section 4.01(a) of the Indenture. The
Trustee shall deposit the prepayment price in the Installment Payment Fund to be
applied to the redemption of Bonds under Section 4.01(a) of the Indenture. If the City
prepays the Installment Payments in part but not in whole, the principal components will
be prepaid among such maturities and in such integral multiples of $5,000 as the City
designates in written 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 Indenture.
The Installment Payments will otherwise be subject to prepayment in the
amounts and at the times necessary to provide for redemption of the Bonds as set forth
in the Indenture.
SECTION 7.3. Credit for Amounts on Deposit. If the City prepays the Installment
Payments in full under this Article VII, such that the Indenture is discharged by its terms
as a result of the prepayment, and upon payment in full of all Additional Payments and
other amounts then due and payable hereunder, all available amounts then on deposit
in the funds and accounts established under the Indenture will be credited towards the
amounts then required to be so prepaid.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Further Assurances. The City agrees that it will execute and
deliver any and all such further agreements, instruments, financing statements or other
assurances as may be reasonably necessary or requested by the Authority or the
Trustee to carry out the intention or to facilitate the performance of this Agreement,
including, without limitation, to perfect and continue the security interests herein
intended to be created.
SECTION 8.2. Notices. Any notice, request, complaint, demand or other
communication under this Agreement must be given by first class mail or personal
delivery to the party entitled thereto at its address set forth below, or by telecopier or
other form of telecommunication, at its number set forth below. Notice is effective either
a) upon transmission by fax or other form of telecommunication, (b) upon actual receipt
after deposit in the United States of America mail, postage prepaid, or (c) in the case of
personal delivery to any person, upon actual receipt. The Authority, the City or the
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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.
If to the City
or the Authority:
If to the Trustee:
City of Lodi
P.O. Box 3006
Lodi, California 95241-1910
Attention: Deputy City Manager/
Internal Services Director
MUFG Union Bank, N.A.
350 California St., 11th FI.
San Francisco, California 94104
Attention: Corporate Trust Department
SECTION 8.3. Governing Law. This Agreement will be construed in accordance
with and governed by the laws of the State of California.
SECTION 8.4. Binding Effect. This Agreement inures to the benefit of and is
binding upon the Authority, the City and their respective successors and assigns,
subject, however, to the limitations contained herein.
SECTION 8.5. Severability of Invalid Provisions. If any one or more of the
provisions contained in this Agreement are for any reason held to be invalid, illegal or
unenforceable in any respect, then such provision or provisions will be deemed
severable from the remaining provisions contained in this Agreement and such invalidity,
illegality or unenforceability will not affect any other provision of this Agreement, and this
Agreement will be construed as if such invalid or illegal or unenforceable provision had
never been contained herein. The Authority and the City each hereby declares that it
would have entered into this Agreement and each and every other Section, paragraph,
sentence, clause or phrase hereof irrespective of the fact that any one or more
Sections, paragraphs, sentences, clauses or phrases of this Agreement may be held
illegal, invalid or unenforceable.
SECTION 8.6. Article and Section Headings and References. The headings or
titles of the several Articles and Sections hereof, and any table of contents appended to
copies hereof, are solely for convenience of reference and do not affect the meaning,
construction or effect of this Agreement. All references herein to "Articles," "Sections"
and other subdivisions are to the corresponding Articles, Sections or subdivisions of this
Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular Article,
Section or subdivision hereof; and words of the masculine gender mean and include
words of the feminine and neuter genders.
SECTION 8.7. Payment on Non -Business Days. Whenever any payment is
required to be made hereunder on a day which is not a Business Day, such payment will
be made on the immediate preceding Business Day.
SECTION 8.8. Execution of Counterparts. This Agreement may be executed in
any number of counterparts, each of which will for all purposes be deemed to be an
original and all of which together constitute but one and the same instrument.
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SECTION 8.9. Waiver of Personal Liability. No member of the City Council,
officer, agent or employee of the City has any individual or personal liability for the
payment of Installment Payments or Additional Payments or be subject to any personal
liability or accountability by reason of this Agreement; but nothing herein contained
relieves any such member of the City Council, officer, agent or employee from the
performance of any official duty provided by law or by this Agreement.
SECTION 8.10. Trustee as Third Party Beneficiary. The Trustee is hereby
made a third party beneficiary hereof and is entitled to the benefits of this Agreement
with the same force and effect as if the Trustee were a party hereto.
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IN WITNESS WHEREOF, the Authority and the City have caused this
Agreement to be executed in their respective names by their duly authorized officers, all
as of the date first above written.
ATTEST:
By
Secretary
ATTEST:
By
City Clerk
LODI PUBLIC FINANCING AUTHORITY,
as Seller
By
Executive Director
CITY OF LODI, as Purchaser
By
City Manager
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installment
Payment Date
APPENDIX A
SCHEDULE OF INSTALLMENT PAYMENTS
Principal Interest Total
Component Component Payment
TOTALS
1) Installment Payment Dates are the Business Day immediately preceding each
Interest Payment Date shown in the table.
A-1
EXHIBIT C
FORM OF BOND PURCHASE AGREEMENT
LODI PUBLIC FINANCING AUTHORITY
2016 REFUNDING WASTEWATER REVENUE BONDS, SERIES A
BOND PURCHASE AGREEMENT
February _, 2016
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
2016 Refunding Wastewater Revenue Bonds, Series A (the "Series 2016 Bonds"), 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 City
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 Series 2016 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 Series 2016
Bonds.
b) The Series 2016 Bonds shall be issued pursuant to the Marks Roos Local Bond
Pooling Act of 1985, consisting of Article 4, Chapter 5, Division 7, Title 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 March 1, 2016, by and between the Authority and Union
Bank, N.A., as trustee (the "Trustee"). The Series 2016 Bonds shall be dated the Closing Date (as
hereinafter defined). The Series 2016 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 Exhibit A
hereto. The Series 2016 Bonds are not subject to redemption prior to maturity. The Series 2016
Bonds shall be substantially in the form described in, and shall be issued and secured under, the
provisions of the Indenture. The Series 2016 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
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DOCSOC/ 1737631 v2/200121-003 3
Installment Payments") to be made by the City pursuant to an Installment Purchase Agreement
dated as of March 1, 2016 (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 System Net Revenues.. The Series 2016 Bonds are being issued to
provide funds to (i) refinance $ principal amount of City of Lodi (the "City")
Wastewater System Revenue Certificates of Participation, 2007 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 2016 Bonds.
c) The aggregate purchase price for the Series 2016 Bonds will be $
consisting of the aggregate principal amount of the Series 2016 Bonds less an Underwriter's
discount of $ and plus net original issue premium of $ ).
d) At 8:00 o'clock A.M., California time, on March _, 2016, 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 Series
2016 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, 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 "Closing") to the order of the Trustee.
e) The Underwriter agrees to make a bona fide public offering of the Series 2016
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.
f) 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 Official 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 15c2-12 (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 Contract is an arm's-length 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 have been acting solely as principals and is not acting as the agents or fiduciaries of the
City and the Authority, (iii) the Underwriter has not assumed an 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 (irrespective of whether
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 Contract and (iv) the City and the Authority have consulted their own legal,
financial and other advisors to the extent they have deemed appropriate.
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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 February , 2016 relating to the Series 2016 Bonds (which,
together with all appendices thereto, is referred to herein as the "Preliminary Official Statement"). The
Authority and the City have deemed final the Preliminary Official Statement as of its date for purposes
of Rule 15c2-12 promulgated by the Securities Exchange Act of 1934 ("Rule 15c2-12"), as amended,
except for the omission of such information as is specified in Rule 15c2 -12(b)(1). 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 Official 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 15c2-12) 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 Series 2016 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 California organized and operating pursuant to the laws of the State of California with the
full power and authority to issue the Series 2016 Bonds pursuant to the Act, to execute and
deliver the Official Statement and to enter into this Purchase Agreement, the Indenture, and the
Installment Sale 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 authorized and approved the execution and delivery of, and the
performance by the Authority of the obligations on its part contained in the Indenture, the
Installment Sale Agreement and this Purchase Agreement and the consummation by it of all other
transactions contemplated by the Official Statement, the Indenture, the Installment Sale
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 Series 2016
Bonds and the execution and delivery of the Indenture, the Installment Sale 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
DOC SOC/ 1737631 v2/200121-0033
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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 Series 2016 Bonds or contesting or affecting, as to the Authority, the validity or
enforceability of the Series 2016 Bonds, the Installment Sale 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 Sale 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 Authority of its obligations in connection with the issuance of the Series 2016 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 of any state in connection with the offering and
sale of the Series 2016 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 Sale Agreement or this
Purchase Agreement have been duly obtained;
f) The Authority 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 Series 2016 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 Series 2016 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 Series 2016 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 specified in Rule 15c2 -12(b)(1)) did not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
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
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defined) for the Series 2016 Bonds, the Official Statement did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, relating to the Authority 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 Series 2016 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 required to be stated therein
or 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 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 Series 2016 Bonds, the
Authority 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 Series 2016 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 required to be stated
therein or 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 Series 2016 Bonds, the Authority will not participate in the
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;
1) As used herein and for the purposes of the foregoing, the term "End of the
Underwriting Period" for the Series 2016 Bonds shall mean the 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 Series 2016 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 Series 2016 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 Series
2016 Bonds in accordance with the Installment Sale Agreement and the Indenture; and
DOCSOC/1737631 v2/200121-0033
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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 Series 2016 Bonds, shall
be deemed a representation and warranty by the Authority to the Underwriter as to the statements
made therein.
4. Representations. Warranties 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 Certificate, the Installment Sale
Agreement and the Escrow Deposit and Trust Agreement, dated as of March 1, 2016 (the
Escrow Agreement"), between the City and The Bank of New York Mellon Trust Company,
N.A., 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 Sale 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 Certificate, the Installment Sale 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 Sale 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 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 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 officers to their respective offices or
contesting or affecting, as to the City, the validity or enforceability of the Continuing Disclosure
Certificate, the Installment Sale 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
DOC S OC/ 1737631 v2/200121-003 3
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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 Continuing Disclosure Certificate, the Installment Sale
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 Series 2016 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 Series 2016
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 Sale Agreement, the
Escrow Agreement or this Purchase Agreement have been duly obtained (including to the extent
required, any governmental permits and approvals, including demonstration of compliance with
the California Environmental Quality Act, as amended, Division 13 of the California Public
Resources Code ("CEQA"));
f) 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 Series 2016 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 Series 2016 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 Series 2016 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(b)(1)) 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
required to be stated therein or 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 Series 2016 Bonds,
the Official Statement (excluding therefrom information about DTC or the book -entry only
system contained in the Official Statement), did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or 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 Series 2016 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 required to be stated therein
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or 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 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 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 Series 2016 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 Series 2016 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
required to be stated therein or 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 Series 2016 Bonds, the City will not participate in the 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;
1) The Audited Financial Statements of the City for the Fiscal Year ended June 30,
2015, as contained in Appendix B to the Official Statement, fairly and accurately present the
financial condition of the 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 System;
m) Since June 30, 2015, except as referred to in or as contemplated by the Official
Statement, with respect to its 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 System, in any case that would materially and adversely
affect the ability of the City to meet its obligations under the Installment Sale Agreement;
n) 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 System Revenues (as defined in the
Installment Sale Agreement), 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 Series 2016 Bonds, shall be
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deemed a representation and warranty by the City to the Underwriter as to the statements made
therein.
5. Conditions to the Obligations of the Underwriter. 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 Series 2016 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 15c2-12 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 Sale 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
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 Series 2016 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 Series 2016 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
DOCSOC/ 1737631 v2/200121-0033
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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 Series 2016 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 Series 2016
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 Series 2016 Bonds or the market price generally of
obligations of the general character of the Series 2016 Bonds;
2) legislation enacted, introduced in the Congress or recommended for
passage by the President of the United States, or a decision rendered by a court
established under Article III of the Constitution of the United States or by the Tax 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 Series 2016 Bonds, or the Series 2016 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 occurrence of any other national
emergency or calamity relating to the effective operation of the government of, or the
financial community in, the United States;
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 Series 2016 Bonds or obligations of the general character of
the Series 2016 Bonds or securities generally, or the material increase of any such
DOCSOC/ 1737631 v2/200121-003 3
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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 Series 2016 Bonds, or the issuance, offering or sale of the Series
2016 Bonds, including any or all underlying obligations, as contemplated hereby or by
the Official 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 Series 2016 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
required to be stated therein or 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 Closing Date, the Underwriter shall have received the following
documents, in each case satisfactory in form and substance to the Underwriter:
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 Sale 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 Bond 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
DOCSOC/ 1737631 v2/200121-0033
A-11
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, 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;
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;
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 Series 2016 Bonds, (b) in any way
affecting the validity of the Series 2016 Bonds, this Purchase Agreement, the Indenture,
the Escrow Agreement or the Installment Sale 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 Underwriter, 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 Sale Agreement, (b) in any way contesting or affecting the validity of the
Continuing Disclosure Certificate, this Purchase Agreement, the Escrow Agreement or
the Installment Sale 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
DOCSOC/ 173 7631 v2/200121-0033
A-12
the authorization, 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, 2011, except as referred to in or as contemplated by the Official Statement, with
respect to the 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 System, in any case that would materially and
adversely affect the ability of the City to meet its obligations under the Installment Sale
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 encumbrance
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 officers 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 Series 2016 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 Series 2016 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
DOCSOC/ 1737631 v2/200121-0033
A-13
and delivery of the Escrow Agreement and compliance with the provisions on the Escrow
Agent's part contained therein, will not conflict with or constitute a breach of or default
under any law, administrative regulation, judgment, decree, 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, 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 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 an unfavorable decision, ruling or finding would
materially adversely affect the validity or enforceability of the Escrow 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 Sale 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 Sale Agreement, the Continuing Disclosure Certificate,
this Purchase Agreement, the Escrow Agreement and the Official Statement;
17) A Tax Certificate with respect to the Series 2016 Bonds, together with
Form 8038-G, in form satisfactory to Bond Counsel, signed by an appropriate officer of
the City and the Authority;
18) Evidence that the ratings on the Series 2016 Bonds as set forth in the
Official Statement are in full force and effect as of the Closing Date;
19) 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 2016 Bonds, 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 Official
Statement nor making any representation regarding independent verification of the
accuracy, completeness or fairness of any of the statements contained in the Official
DOCSOC/1737631 v2/200121-0033
A-14
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 2016 Bonds which would lead them to believe that the Official Statement (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) as of its date
contained, or as of the date of the Closing, 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
20) 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 accuracy, 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 Sale 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 at, 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. Expenses. All expenses and costs incident to the authorization, issuance, delivery and
sale of the Series 2016 Bonds to the Underwriter, including the costs of printing of the Series 2016
Bonds, the Preliminary Official Statement and the Official Statement, the cost of duplicating the
Indenture, the Installment Sale 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 Series 2016 Bonds and the fees and expenses of Bond
Counsel, shall be paid from the proceeds of the Series 2016 Bonds. In the event that the Series 2016
Bonds for any reason are not issued, or to the extent proceeds of the Series 2016 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 Series 2016 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 shall be paid by the Underwriter.
7. 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
Attention: Juan Fernandez
DOCSOC/ 173 7631 v2/200121-0033
A-15
Authority: Lodi Public Financing Authority
c/o the City of Lodi
221 West Pine Street
Lodi, CA 95241-1910
City: City of Lodi
221 West Pine Street
Lodi, CA 95241-1910
8. 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 Series 2016
Bonds.
9. 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.
10. 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.
11. Headings. The headings of the sections of this Purchase Agreement are inserted for
convenience only and shall not be deemed to b e a part hereof.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
DOCSOC/1737631 v2/200121-0033
A-16
12. Governing Law. This Purchase Agreement shall be construed in accordance with the laws
of the State of California.
DOCSOC/1737631 v2/200121-0033
Very truly yours,
J.P. MORGAN SECURITIES LLC
By:
Authorized Signatory
ACCEPTED:
LODI PUBLIC FINANCING AUTHORITY
By:
Authorized Officer
CITY OF LODI
By:
Authorized Signatory
A-17
EXHIBIT A
MATURITY SCHEDULE
Series 2016 Serial Bonds
Maturity Date Principal Interest
October 1) Amount Rate Yield Price
DOCSOC/1737631 v2/200121-0033
A-1
EXHIBIT B
FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL
City of Lodi
Lodi Public Financing Authority
Lodi, California
J.P. Morgan Securities LLC
San Francisco, California
Lodi Public Financing Authority
2016 Refunding Wastewater Revenue Bonds, Series A
Ladies and Gentlemen:
We have acted as bond counsel to the Lodi Public Financing Authority (the "Authority") in
connection with the issuance by the Issuer of the above -referenced bonds (the "Bonds"), pursuant to
Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the
Law"), and an Indenture of Trust (the "Indenture"), dated as of March 1, 2016, by and between the
Authority and Union Bank, N.A., as trustee (the "Trustee"). The Bonds were sold to J.P. Morgan
Securities LLC (the "Underwriter"), pursuant to a Bond Purchase Agreement, dated February ,
2016 (the "Purchase Contract"), among the Underwriter, the City of Lodi (the "City") and the
Authority. This letter is being delivered in our capacity as bond counsel to the Authority and not as
counsel to the Underwriter.
We have examined the Law and such certified proceedings and other papers as we deem
necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon
representations of the Authority contained in the Indenture and the certified proceedings and
certifications of public officials 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 Contract, and the Purchase
Contract 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.
2. The statements contained in the Official Statement on the cover page and under the
captions "INTRODUCTION," "THE SERIES 2016 BONDS" (other than information relating to
DTC and its book -entry only system, as to which no opinion need be expressed)," "SECURITY
AND SOURCES OF PAYMENT FOR THE SERIES 2016 BONDS," "TAX MATTERS," and in
Appendices C and D thereto, insofar as such statements expressly summarize certain provisions of
the Bonds, the Indenture and our final approving opinion relating to the Bonds, are accurate in all
material respects.
B-1
DOCSOC/1737631 v2/200121-0033
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.
DOCSOC/ 1737631 v2/200121-0033
B-2
Respectfully submitted,
A Professional Law Corporation
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
2016 Refunding Wastewater Revenue Bonds, Series A
Dear Ladies and Gentlemen:
I am [ ], 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 Series 2016 Bonds are being issued pursuant to an Indenture of Trust (the "Indenture"), dated as
of March 1, 2016, by and between the Authority and Union Bank, N.A., as trustee (the "Trustee").
The Bonds were sold to J.P. Morgan Securities LLC (the "Underwriter"), pursuant to a Bond
Purchase Agreement, dated February _, 2016 (the "Purchase Contract"), 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 Contract.
In rendering this opinion, I have examined the following documents:
i) The Indenture;
ii) The Installment Sale Agreement, dated as of March 1, 2016 (the "Installment Sale
Agreement") between the City and the Authority;
iii) The Purchase Contract; and
iv) The Official Statement (the "Official Statement") dated February _, 2016, 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 Authority is a joint exercise of powers entity duly organized under the laws of the State
of California.
Resolution No. 2016- (the "Resolution") approving and authorizing the issuance of the
Series 2016 Bonds and the execution and delivery of the Indenture, the Installment Sale Agreement,
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DOC SOC/ 1737631 v2/200121-0033
the Purchase Contract and the Official Statement was duly adopted by the Authority at a regular
meeting of the Board of Directors of the Authority held on February 17, 2016, 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 way contesting or affecting the validity of the Bonds, the Indenture, the Installment
Sale Agreement or the Purchase Contract or the sources of payment for the Bonds.
The issuance of the Bonds and the execution and delivery of the Indenture, the Installment
Sale Agreement, the Purchase Contract and the Official 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 Official Statement and the Bonds have been duly authorized, executed and delivered by
the Authority, and the Indenture, the Installment Sale Agreement and the Purchase Contract 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 Sale Agreement
and the Purchase Contract 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 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 Authority is required for the valid authorization, execution,
delivery and performance by the Authority of the Bonds, the Indenture, the Installment Sale
Agreement, the Official Statement or the Purchase Contract 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.
DOCSOC/ 1737631 v2/200121-0033
Sincerely,
C-2
EXHIBIT D
OPINION OF THE CITY ATTORNEY
DATE OF DELIVERY]
J.P. Morgan Securities LLC
San Francisco, California
Lodi Public Financing Authority
2016 Refunding Wastewater Revenue Bonds, Series A
Dear Ladies and Gentlemen:
I am City Attorney to the City of Lodi (the "City"), 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 Series 2016 Bonds are being issued pursuant to an Indenture of Trust (the
Indenture"), dated as of March 1, 2016, by and between the Lodi Public Financing Authority (the
Authority") and Union Bank, N.A., as trustee (the "Trustee"). The Bonds were sold to J.P. Morgan
Securities LLC (the "Underwriter"), pursuant to a Bond Purchase Agreement, dated February ,
2016 (the "Purchase Contract"), 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 Sale
Agreement, dated as of March 1, 2016 (the "Installment Sale Agreement") between the City and the
Authority; (ii) the Purchase Contract; (iii) the Escrow Agreement; (iv) the Official Statement (the
Official Statement") dated February , 2016, 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. 2016- (the "Resolution") approving and authorizing the issuance of the
Series 2016 Bonds and the execution and delivery of the Installment Sale Agreement, the Purchase
Contract, the Continuing Disclosure Certificate, Escrow Agreement and the Official Statement was
duly adopted by the City at a meeting of the City Council of the City held on February 17, 2016,
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 City's
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DOC S OC/ 173 7631 v2/200121-003 3
financial condition or operation or in any way contesting or affecting the validity of the Installment
Sale Agreement, the Purchase Contract or the Continuing Disclosure Certificate or the sources of
payment for the Series 2016 Bonds.
The execution and delivery of the Installment Sale Agreement, the Purchase Contract, 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 Sale Agreement, the Purchase Contract, the Escrow Agreement and the Continuing
Disclosure Certificate have been duly authorized, executed and delivered by the City and, assuming
due authorization, execution and delivery by the other parties thereto, the Installment Sale
Agreement, the Purchase Contract 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 authorization, execution, delivery
and performance by the City of the Installment Sale Agreement, the Official Statement, the Purchase
Contract, 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 sewer 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 System 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.
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 Official Statement and related
matters were discussed, and, in reliance thereon and on certain documents reviewed by me and on the
DOCSOC/1737631 v2/200121-0033
D-2
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 material 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).
DOCSOC/1737631 v2/200121-0033
Sincerely,
City Attorney
By:
D-3
Attachment to Council Communication
DRAFT OPINION LETTER OF JONES HALL (Bond Counsel)
1-29-16 Jones Hall Draft
March , 2016
Lodi Public Financing Authority
221 West Pine Street
Lodi, CA 95240
OPINION: $ Lodi Public Financing Authority 2016 Refunding Wastewater
Revenue Bonds, Series A
Members of the Board of Directors of the Authority:
We have acted as bond counsel to the Lodi Public Financing Authority (the
Authority") in connection with the issuance by the Authority of the captioned bonds dated the
date hereof (the "Bonds"). In such capacity, we have examined such law and such certified
proceedings, certifications and other documents as we have deemed necessary to render this
opinion.
The Bonds are issued pursuant to Article 4 of Chapter 5, Division 7, Title 1 of the
Government Code of the State of California (the "Bond Law"), the Indenture of Trust, dated as
of March 1, 2016 (the "Indenture"), by and between the Authority and Union Bank, N.A., as
trustee (the "Trustee "), and a resolution (the "Resolution") of the Board of Directors of the
Authority adopted February , 2016. Under the Indenture, the Authority has pledged certain
revenues (the "Revenues") for the payment of principal, premium (if any), and interest on the
Bonds when due, including installment payments made by the City of Lodi (the "City") under
an Installment Purchase Agreement dated as of March 1, 2016 (the "Installment Purchase
Agreement") between the Authority and the City.
Regarding questions of fact material to our opinion, we have relied on representations
of the Authority contained in the Indenture and the City contained in the Installment Purchase
Agreement, and in the certified proceedings and other certifications of public officials furnished
to us, without undertaking to verify the same by independent investigation.
Based on the foregoing, we are of the opinion that, under existing law:
1. The Authority is a duly created and validly existing joint exercise of powers
authority with the power to adopt the Resolution, enter into the Indenture and perform the
agreements on its part contained therein, and issue the Bonds.
Lodi Public Financing Authority
March , 2016
Page 2
2. The City is a duly created and validly existing general law city with the power to
enter into the Installment Purchase Agreement and perform the agreements on its part
contained therein.
3. The Indenture has been duly authorized, executed and delivered by the
Authority, and constitutes a valid and binding obligation of the Authority, enforceable against
the Authority.
4. The Installment Purchase Agreement has been duly authorized, executed and
delivered by the Authority and the City, and constitutes a valid and binding obligation of the
Authority and the City, enforceable against the Authority and the City.
5. The Indenture creates a valid lien on the Revenues and other funds pledged by
the Indenture for the security of the Bonds, on a parity with other bonds (if any) issued or to be
issued under the Indenture.
6. The Bonds have been duly authorized and executed by the Authority, and are
valid and binding limited obligations of the Authority, payable solely from the Revenues and
other funds provided therefor in the Indenture.
7. Interest on the Bonds is excludable from gross income for federal income tax
purposes and is not an item of tax preference for purposes of the federal alternative minimum
tax imposed on individuals and corporations; it should be noted, however, that for the purpose
of computing the alternative minimum tax imposed on corporations (as defined for federal
income tax purposes), such interest is taken into account in determining certain income and
earnings. The opinions set forth in the preceding sentence are subject to the condition that the
Authority and the City comply with all requirements of the Internal Revenue Code of 1986 that
must be satisfied subsequent to the delivery of the Bonds in order that such interest be, or
continue to be, excluded from gross income for federal income tax purposes. The Authority
and the City have covenanted to comply with each such requirement. Failure to comply with
certain of such requirements may cause the inclusion of interest on the Bonds in gross income
for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We
express no opinion regarding other federal tax consequences arising with respect to the Bonds.
8. Interest on the Bonds is exempt from personal income taxation imposed by the
State of California.
The rights of the owners of the Bonds and the enforceability of the Bonds and the
Indenture are limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally, and by equitable principles, whether considered at
law or in equity.
This opinion is given as of the date hereof, and we assume no obligation to revise or
supplement this opinion to reflect any facts or circumstances that may hereafter come to our
Lodi Public Financing Authority
March , 2016
Page 3
attention, or any changes in law that may hereafter occur. Our engagement with respect to this
matter has terminated as of the date hereof.
Respectfully submitted,
A Professional Law Corporation
Attachment to Council Communication
DRAFT CONTINUING DISCLOSURE CERTIFICATE
2-8-16 Jones Hall Draft
CONTINUING DISCLOSURE CERTIFICATE
LODI PUBLIC FINANCING AUTHORITY
2016 REFUNDING WASTEWATER REVENUE BONDS, SERIES A
This CONTINUING DISCLOSURE CERTIFICATE (this "Disclosure Certificate") is
executed and delivered by the CITY OF LODI (the "City") in connection with the execution and
delivery of the bonds captioned above (the "Bonds"). The Bonds are being executed and
delivered pursuant to an Indenture of Trust, dated as of March 1, 2016 (the "Indenture"), by and
between the City and MUFG Union Bank, N.A., as trustee.
The City covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the City for the benefit of the holders and beneficial owners of the
Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2 -
12(b)(5).
Section 2. Definitions. In addition to the definitions set forth above and in the Indenture,
which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined
in this Section 2, the following capitalized terms shall have the following meanings:
Annual Report" means any Annual Report provided by the City pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Certificate.
Annual Report Date" means the date that is 9 months after the end of the City's fiscal
year (currently March 31 based on the City's fiscal year end of June 30).
Dissemination Agent' means the City, or any successor Dissemination Agent
designated in writing by the City and which has filed with the City a written acceptance of such
designation.
Listed Events" means any of the events listed in Section 5(a) of this Disclosure
Certificate.
MSRB" means the Municipal Securities Rulemaking Board, which has been designated
by the Securities and Exchange Commission as the sole repository of disclosure information for
purposes of the Rule, or any other repository of disclosure information that may be designated
by the Securities and Exchange Commission as such for purposes of the Rule in the future,
Official Statement" means the final official statement executed by the City in connection
with the issuance of the Bonds.
Participating Underwrite" means J.P. Morgan, the original underwriter of the Bonds
required to comply with the Rule in connection with offering of the Bonds.
Rule" means Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as it may be amended from time to time.
Section 3. Provision of Annual Reports.
a) The City shall, or shall cause the Dissemination Agent to, not later than the
Annual Report Date, commencing March 31, 2017, with the report for the 2015-16 fiscal year,
provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that
is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15
Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the
Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report
Date the Dissemination Agent (if other than the City) has not received a copy of the Annual
Report, the Dissemination Agent shall contact the City to determine if the City is in compliance
with the previous sentence. The Annual Report may be submitted as a single document or as
separate documents comprising a package, and may include by reference other information as
provided in Section 4 of this Disclosure Certificate; provided that the audited financial
statements of the City may be submitted separately from the balance of the Annual Report, and
later than the Annual Report Date, if not available by that date. If the City's fiscal year changes,
it shall give notice of such change in the same manner as for a Listed Event under Section 5(c).
The City shall provide a written certification with each Annual Report furnished to the
Dissemination Agent to the effect that such Annual Report constitutes the Annual Report
required to be furnished by the City hereunder.
b) If the City does not provide (or cause the Dissemination Agent to provide) an
Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination
Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in
substantially the form attached as Exhibit A.
c) With respect to each Annual Report, the Dissemination Agent shall:
i) determine each year prior to the Annual Report Date the then -applicable
rules and electronic format prescribed by the MSRB for the filing of annual continuing
disclosure reports; and
ii) if the Dissemination Agent is other than the City, file a report with the City
certifying that the Annual Report has been provided pursuant to this Disclosure
Certificate, and stating the date it was provided.
Section 4. Content of Annual Reports. The City's Annual Report shall contain or
incorporate by reference the following:
a) The City's audited financial statements prepared in accordance with generally
accepted accounting principles as promulgated to apply to governmental entities from time to
time by the Governmental Accounting Standards Board. If the City's audited financial
statements are not available by the Annual Report Date, the Annual Report shall contain
unaudited financial statements in a format similar to the financial statements contained in the
final Official Statement, and the audited financial statements shall be filed in the same manner
as the Annual Report when they become available.
b) Unless otherwise provided in the audited financial statements filed on or before
the Annual Report Date, the following financial information and operating data:
i)
October t
Principal amount of Bonds outstanding as of the immediately preceding
ii) A description of any Parity Debt incurred by the City in the most recently -
completed fiscal year.
iii) Information for the most recently -completed fiscal year in the form of
Table 2 (Number of Connections by User Type).
iv) Information for the most recently -completed fiscal year in the form of
Table 3 (Largest Users by Service Charge Revenues).
v) Information for the most recently -completed fiscal year in the form of
Table 4 (Schedule of Wastewater Service Charges).
vi) Information for the most recently -completed fiscal year in the form of
Table 7 (Historical Operating Results and Debt Service Coverage).
vii) Information for the most recently -completed fiscal year in the form of
Table 9 (Historical Reserve Balances).
c) In addition to any of the information expressly required to be provided under this
Disclosure Certificate, the City shall provide such further material information, if any, as may be
necessary to make the specifically required statements, in the light of the circumstances under
which they are made, not misleading.
d) Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the City or related public entities,
which are available to the public on the MSRB's Internet web site or filed with the Securities and
Exchange Commission. The City shall clearly identify each such other document so included by
reference.
Section 5. Reporting of Significant Events.
a) The City shall give, or cause to be given, notice of the occurrence of any of the
following Listed Events with respect to the Bonds:
1) Principal and interest payment delinquencies.
2) Non-payment related defaults, if material.
3) Unscheduled draws on debt service reserves reflecting financial
difficulties.
4) Unscheduled draws on credit enhancements reflecting financial
difficulties.
5) Substitution of credit or liquidity providers, or their failure to perform.
6) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue
IRS Form 5701-TEB) or other material notices or determinations with
respect to the tax status of the security, or other material events affecting
the tax status of the security.
7) Modifications to rights of security holders, if material.
8) Bond calls, if material, and tender offers.
9) Defeasances.
10) Release, substitution, or sale of property securing repayment of the
securities, if material.
11) Rating changes.
12) Bankruptcy, insolvency, receivership or similar event of the City or other
obligated person.
13) The consummation of a merger, consolidation, or acquisition involving the
City or an obligated person, or the sale of all or substantially all of the
assets of the City or an obligated person (other than in the ordinary
course of business), the entry into a definitive agreement to undertake
such an action, or the termination of a definitive agreement relating to any
such actions, other than pursuant to its terms, if material.
14) Appointment of a successor or additional trustee or the change of name
of a trustee, if material.
b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the
City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such
occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely
manner not in excess of 10 business days after the occurrence of the Listed Event.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9)
above need not be given under this subsection any earlier than the notice (if any) of the
underlying event is given to holders of affected Bonds under the Indenture.
c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7),
a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the
qualifier "if material" and that subparagraph (a)(6) also contains the qualifier "material" with
respect to certain notices, determinations or other events affecting the tax status of the Bonds.
The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any
such event only to the extent that it determines the event's occurrence is material for purposes
of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of
these Listed Events, the City will as soon as possible determine if such event would be material
under applicable federal securities law. If such event is determined to be material, the City will
cause a notice to be filed as set forth in paragraph (b) above.
d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12)
above is considered to occur when any of the following occur: the appointment of a receiver,
fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy
Code or in any other proceeding under state or federal law in which a court or governmental
authority has assumed jurisdiction over substantially all of the assets or business of the City, or
if such jurisdiction has been assumed by leaving the existing governing body and officials or
officers in possession but subject to the supervision and orders of a court or governmental
authority, or the entry of an order confirming a plan of reorganization, arrangement, or
liquidation by a court or governmental authority having supervision or jurisdiction over
substantially all of the assets or business of the City.
Section 6. Identifyinq_lnformation for Filings with the MSRB. All documents provided to
the MSRB under the Disclosure Certificate shall be accompanied by identifying information as
prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The City's obligations under this
Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City
shall give notice of such termination in the same manner as for a Listed Event under Section
5(c).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate,
and may discharge any Dissemination Agent, with or without appointing a successor
Dissemination Agent. The initial Dissemination Agent shall be the City. Any Dissemination
Agent may resign by providing 30 days' written notice to the City.
Section 9. Amendment. Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure
Certificate may be waived, provided that the following conditions are satisfied:
a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or
5(a), it may only be made in connection with a change in circumstances that arises from
a change in legal requirements, change in law, or change in the identity, nature, or
status of an obligated person with respect to the Bonds, or type of business conducted;
b) the undertakings herein, as proposed to be amended or waived, would, in
the opinion of nationally recognized bond counsel, have complied with the requirements
of the Rule at the time of the primary offering of the Bonds, after taking into account any
amendments or interpretations of the Rule, as well as any change in circumstances; and
c) the proposed amendment or waiver either (i) is approved by holders of
the Bonds in the manner provided in the Indenture for amendments to the Indenture with
the consent of holders, or (ii) does not, in the opinion of nationally recognized bond
counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report
is amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto
containing the amended operating data or financial information shall explain, in narrative form,
the reasons for the amendment and the impact of the change in the type of operating data or
financial information being provided.
If an amendment is made to this Disclosure Certificate modifying the accounting
principles to be followed in preparing financial statements, the Annual Report for the year in
which the change is made shall present a comparison between the financial statements or
information prepared on the basis of the new accounting principles and those prepared on the
basis of the former accounting principles. The comparison shall include a qualitative discussion
of the differences in the accounting principles and the impact of the change in the accounting
principles on the presentation of the financial information, in order to provide information to
investors to enable them to evaluate the ability of the City to meet its obligations. To the extent
reasonably feasible, the comparison shall be quantitative.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same
manner as for a Listed Event under Section 5(c).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed
to prevent the City from disseminating any other information, using the means of dissemination
set forth in this Disclosure Certificate or any other means of communication, or including any
other information in any Annual Report or notice of occurrence of a Listed Event, in addition to
that which is required by this Disclosure Certificate. If the City chooses to include any
information in any Annual Report or notice of occurrence of a Listed Event in addition to that
which is specifically required by this Disclosure Certificate, the City shall have no obligation
under this Disclosure Certificate to update such information or include it in any future Annual
Report or notice of occurrence of a Listed Event.
Section 11. Default. If the City fails to comply with any provision of this Disclosure
Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may
take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the City to comply with its obligations under this
Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event
of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the
event of any failure of the City to comply with this Disclosure Certificate shall be an action to
compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers,
directors, employees and agents, harmless against any loss, expense and liabilities which they
may incur arising out of or in the exercise or performance of its powers and duties hereunder,
including the costs and expenses (including attorneys fees) of defending against any claim of
liability, but excluding liabilities due to the Dissemination Agent's negligence or willful
misconduct. The Dissemination Agent shall have no duty or obligation to review any information
provided to it by the City hereunder, and shall not be deemed to be acting in any fiduciary
capacity for the City, the Bond holders or any other party. The obligations of the City under this
Section shall survive resignation or removal of the Dissemination Agent and payment of the
Bonds.
b) The Dissemination Agent shall be paid compensation by the City for its services
provided hereunder in accordance with its schedule of fees as amended from time to time, and
shall be reimbursed for all expenses, legal fees and advances made or incurred by the
Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of
the City, the Dissemination Agent, the Participating Underwriter and the holders and beneficial
owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 14. Counterparts. This Disclosure Certificate may be executed in several
counterparts, each of which shall be regarded as an original, and all of which shall constitute
one and the same instrument.
Date: March _, 2016
CITY OF LODI
By:
Name-
Title:
EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Lodi Public Financing Authority
Name of Issue: Lodi Public Financing Authority 2016 Refunding Wastewater
Revenue Bonds, Series A
Date of Issuance: March _ , 2016
NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with
respect to the above-named Bonds as required by the Continuing Disclosure Certificate dated
March _, 2016. The City anticipates that the Annual Report will be filed by
Dated
DISSEMINATION AGENT
By:
Its: