LOAN AGREEMENT
(Water and Wastewater Refunding)
This Loan Agreement (this “Loan Agreement”), dated as of November __, 2022, is between J.P. Morgan Chase Bank, N.A., a national banking association (including its successors and assigns, the “Lender”), as lender, and the City of Manteca, a general law city and municipal corporation duly organized and existing under the laws of the State of California (the “City”), as borrower.
RECITALS:
WHEREAS, the City owns and operates a system for the supply, treatment and distribution of water within the service area of the City (as further defined herein, the “Water System”); and WHEREAS, to refinance improvements to the Water System, the City previously executed an Indenture, dated as of December 1, 2012, between the City and U.S. Bank National Association (now succeeded by U.S. Bank Trust Company, National Association), as trustee, in the principal amount of $35,840,000 (the “Prior Water Obligation”); and WHEREAS, the City owns and operates a system for the collection, treatment and disposal of wastewater within the service area of the City (as further defined herein, the “Wastewater System”); and WHEREAS, to finance and refinance improvements to the Wastewater System, the City previously executed (1) Amendment No. 1 to Installment Sale Agreement, dated as of June 1, 2009, in the principal amount of $19,000,000, which amended that certain Installment Sale Agreement, dated as of December 1, 2003, between the City and the Manteca Financing Authority (the “Authority”), and (2) an Indenture, dated as of December 1, 2012, between the City and U.S. Bank National Association (now succeeded by U.S. Bank Trust Company, National Association), as trustee, in the principal amount of $22,690,000 (together, the “Prior Wastewater Obligations”); and WHEREAS, the Prior Water Obligation and the Prior Wastewater Obligations are sometimes collectively referred to herein as the “Prior Obligations”; and WHEREAS, the City has determined that it is in its best interests at this time to refinance, in full, the Prior Obligations and thereby realize interest rate savings, by borrowing funds from the Lender under this Loan Agreement, the repayment of which shall be secured by a pledge of, and lien on, the net revenues of the Water System and the Wastewater System, as and to the extent described herein; and WHEREAS, the City is authorized to borrow amounts for the purpose of refinancing the Prior Obligations under the laws of the State of California, including the provisions of Articles 10 and 11, Chapter 3, Part 1, Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code.
AGREEMENT:
In consideration of the foregoing and the material covenants hereinafter contained, the City and the Lender formally covenant, agree and bind themselves as follows:
ARTICLE I
Definitions and Appendices
Section 1.1. Definitions. All terms defined in this Section have the respective meanings herein specified for all purposes of this Loan Agreement. In addition, all terms defined in the recitals of this Loan Agreement and not otherwise defined in this Section shall have the respective meanings given such terms in the recitals hereof. “Additional Revenues” means, with respect to the issuance of any Parity Obligations for a System, an allowance for Net Revenues of the System arising from any increase in the charges made for service from the System which has become effective prior to the incurring of such Parity Obligations but which, during all or any part of the latest Fiscal Year or more recent period of 12 consecutive months, was not in effect, in an amount equal to the total amount by which the Net Revenues would have been increased if such increase in charges had been in effect during the whole of such Fiscal Year or such 12-month period, all as shown by the certificate or opinion of an independent certified public accountant selected by the City. “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the City from time to time concerning or relating to bribery or corruption. “Anti-Terrorism Laws” means any of the Laws relating to terrorism or money laundering, including Executive Order No. 13224, the PATRIOT Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by OFAC. “Bank Secrecy Act” means the Bank Secrecy Act of 1970 as codified in 31 U.S.C. 5311-5314e, as now and hereafter in effect, or any successor statute. “City” means the City of Manteca, a general law city and municipal corporation duly organized and existing under the laws of the State of California. “Closing Date” means November __, 2022, being the date of execution and delivery of this Loan Agreement by the parties hereto, as first set forth above. “Default Rate” means the then-applicable interest rate plus 4.00%. “Determination of Taxability” means and shall be deemed to have occurred on the first to occur of the following:
(i) on the date when the City files any statement, supplemental statement or other tax schedule, return or document which discloses that an Event of Taxability shall have occurred; (ii) on the date when the Lender notifies the City that it has received a written opinion from Special Counsel to the effect that an Event of Taxability has occurred, which notice shall be accompanied by a copy of such opinion of Special Counsel, unless, within 180 days after receipt by the City of such notification and copy of such opinion from the Lender, the City shall deliver to the Lender a ruling or determination letter issued to or on behalf of the City by the Commissioner or any District Director of the Internal Revenue Service (or any other governmental official exercising the same or a substantially similar function from time to time) to the effect that, after taking into consideration such facts as form the basis for the opinion that an Event of Taxability has occurred, an Event of Taxability shall not have occurred; (iii) on the date when the City shall be advised in writing by the Commissioner or any District Director of the Internal Revenue Service (or any other government official or agent exercising the same or a substantially similar function from time to time) that, based upon any review or audit or upon any other ground whatsoever, an Event of Taxability has occurred; or (iv) on the date when the City shall receive notice from the Lender that the Internal Revenue Service (or any other government official or agency exercising the same or a substantially similar function from time to time) has assessed the interest on the Loan Repayments as includable in the gross income of the Lender due to the occurrence of an Event of Taxability, provided that the Lender has provided a copy of document(s) received from the Internal Revenue Service to the City; provided, however, that no Determination of Taxability shall occur under subparagraph (iii) or subparagraph (iv) above unless the City has been afforded the opportunity, at its expense, to contest any such assessment, and, further, no Determination of Taxability shall occur until such contest, if made, has been finally determined; provided further, however, that upon demand from the Lender following an event listed in subparagraphs (i), (ii), (iii) or (iv), the City shall reimburse the Lender for any payments, including any taxes, interest, penalties or other charges, Lender shall be obligated to make to the Internal Revenue Service as a result of the Determination of Taxability. “Event of Default” means any of the events of default as defined in Section 5.1. “Event of Taxability” means any action taken or not taken by the City which has the effect of causing interest paid or payable on the Loan Repayments to be includable, in whole or in part, in the gross income of the holder of the Loan Repayments for federal income tax purposes. “Environmental Laws” means any and all federal, state and local statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the clean-up or other remediation thereof. “Federal Securities” means any direct general non-callable 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), or obligations the timely payment of principal of and interest on which are directly guaranteed by the United States of America. “Fiscal Year” means the period of 12 months terminating on June 30 of any year, or any other annual period hereafter selected and designated by the City as its Fiscal Year in accordance with applicable law. “Governmental Authority” means any governmental or quasi-governmental entity, including any court, department, commission, board, bureau, agency, administration, central bank, service, district or other instrumentality of any governmental entity or other entity exercising executive, legislative, judicial, taxing, regulatory, fiscal, monetary or administrative powers or functions of or pertaining to government, or any arbitrator, mediator or other person with authority to bind a party at law. “Law” means any treaty or any Federal, regional, state and local law, statute, rule, ordinance, regulation, code, license, authorization, decision, injunction, interpretation, policy, guideline, supervisory standard, order or decree of any court or other Governmental Authority. “Lender” means J.P. Morgan Chase Bank, N.A., a national banking association, and its successors and assigns. “Loan” means the loan which is made hereunder by the Lender to the City in the principal amount of $_________, of which $_________ is allocable to the Water System and $_________ is allocable to the Wastewater System. “Loan Agreement” means this Loan Agreement, as it may be amended in accordance with its terms. “Loan Repayment Date” means July 1 and January 1 in each year, commencing July 1, 2023 and continuing to and including the date on which the Loan Repayments are paid in full. “Loan Repayments” means all payments required to be paid by the City under Section 3.4. “Material Adverse Effect” means an event or occurrence which adversely affects in a material manner (i) either System or the other assets, liabilities, condition (financial or otherwise), business, facilities or operations of the City, (ii) the ability of the City to carry out its business in the manner conducted as of the date of this Loan Agreement or to meet or perform its obligations under this Loan Agreement on a timely basis, or (iii) the validity or enforceability of this Loan Agreement. “Maximum Annual Debt Service” means, as of the date of any calculation for either System, the maximum sum obtained for the current or any future Fiscal Year during the Term by totaling the aggregate amount of (i) the Loan Repayments coming due in such Fiscal Year allocable to the applicable System, and (ii) the principal and interest coming due and payable in such Fiscal Year on any Parity Obligations which are payable from the Net Revenues of such System, including the principal amount coming due and payable by operation of mandatory sinking fund redemption. “Net Revenues” means, for each Fiscal Year for each System, the Revenues of the applicable System for the applicable Fiscal Year, less the Operations and Maintenance Costs of such System for the applicable Fiscal Year. “OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control, and any successor thereto. “OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224 and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable executive orders. “Operations and Maintenance Costs” means, for each Fiscal Year for each System, the reasonable and necessary costs paid or incurred by the City for maintaining and operating the applicable 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 such System in good repair and working order, and including all reasonable and necessary administrative costs of the City that are charged directly or apportioned to the operation of such System, such as salaries and wages of employees, overhead, taxes (if any), the cost of permits, licenses and charges to operate such System and insurance premiums; but excluding, in all cases, debt service, depreciation, replacement and obsolescence charges or reserves therefor, amortization of intangibles and other non-cash charges (such as pension and other post-employment benefits (OPEB) charges). “Parity Obligations” means any bonds, notes or other obligations of the City payable from and secured by a pledge of and lien on the Net Revenues of a System on a parity with the portion of the Loan Repayments allocable to such System. “Prior Obligations” is defined in the recitals.
“Prior Trustee” mean U.S. Bank Trust Company, National Association, as trustee with respect to the Prior Obligations. “Prior Wastewater Obligations” is defined in the recitals. “Prior Water Obligation” is defined in the recitals.
“Revenues” means, for each Fiscal Year and for each System, all gross income and revenue received or receivable by the City from the ownership or operation of the applicable System, determined in accordance with generally accepted accounting principles, including all rates, fees and charges (including connection fees and charges except Public Facilities Implementation Plan (PFIP) Fees) as received by the City for the services of 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, including all income from the deposit or investment of any money of the System, and any refundable deposits made to establish credit, and advances or contributions in aid of construction. “Special Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any other attorney or firm of attorneys of nationally recognized expertise with respect to legal matters relating to obligations the interest on which is excludable from gross income under Section 103 of the Tax Code. “System” means the Wastewater System or the Water System, as applicable. “Taxable Rate” means, (i) with respect to the principal components attributable to the Water System, ___%, and (ii) with respect to the principal components attributable to the Wastewater System, ___%. “Tax Code” means the Internal Revenue Code of 1986 as 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 the Tax Code. “Term” means the time during which this Loan Agreement is in effect, as provided in Section 3.3. “Wastewater Enterprise Fund” means the “Wastewater Enterprise Fund” or “Sewer Enterprise Fund,” which the City has previously established and will maintain pursuant to Section 3.6(a) for the receipt and deposit of Revenues derived from the Wastewater System. “Wastewater System” means all wastewater collection, transport, treatment, storage and disposal facilities, including land and easements thereof, owned by the City, and all other properties, structures or works hereafter acquired and constructed by the City and determined to be a part of the Wastewater System, together with all additions, betterments, extensions or improvements to such facilities, properties, structures or works or any part thereof hereafter acquired and constructed. “Water Enterprise Fund” means the “Water Enterprise Fund,” which the City has previously established and will maintain pursuant to Section 3.6(a) for the receipt and deposit of Revenues derived from the Water System. “Water System” means all water collection, transport, treatment and storage facilities, including land and easements thereof, owned by the City, and all other properties, structures or works hereafter acquired and constructed by the City and determined to be a part of the Water System, together with all additions, betterments, extensions or improvements to such facilities, properties, structures or works or any part thereof hereafter acquired and constructed.
Section 1.2. Appendix. The following Appendices are attached to, and by reference made a part of, this Loan Agreement:
Appendix A: The schedule of Loan Repayments to be paid by the City hereunder, showing the date and amount of each Loan Repayment.
Appendix B: The schedule showing the allocation of each Loan Repayment between the Water System and the Wastewater System.
ARTICLE II
Representations, Covenants and Warranties
Section 2.1. Representations, Covenants and Warranties of City. The City represents, covenants and warrants to the Lender as follows:
(a) Due Organization and Existence. The City is a general law city and municipal corporation, duly organized and existing under the laws of the State of California. (b) Authorization. The laws of the State of California authorize the City to enter into this Loan Agreement, to enter into the transactions contemplated hereby, and to carry out its obligations hereunder, and the City Council of the City has duly authorized the execution and delivery of this Loan Agreement as provided herein. (c) No Violations. Neither the execution and delivery of this Loan Agreement, nor the fulfillment of or compliance with the terms and conditions hereof, nor the consummation of the transactions contemplated hereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the City is now a party or by which the City is bound, or constitutes a default under any such agreement or instrument, or results in the creation or imposition of any lien, charge or encumbrances whatsoever upon any of the property or assets of the City, other than as set forth herein. (d) Prior Indebtedness. The City has not previously issued, incurred or entered into any obligations which are currently outstanding that are payable from (i) the Revenues or the Net Revenues of the Water System, except the Prior Water Obligation that is being refunded by this Loan Agreement, or (ii) the Revenues or the Net Revenues of the Wastewater System, except the Prior Wastewater Obligations that are being refunded by this Loan 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 Loan 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 Fiduciary Relationship. Inasmuch as this Loan Agreement represents a negotiated transaction, the City understands, and hereby confirms, that the Lender is not acting as a fiduciary of the City, but rather is acting solely in its capacity as lender, for its own account. The City acknowledges and agrees that (i) the transaction contemplated herein is an arm’s length commercial transaction between the City and the Lender and its affiliates, (ii) in connection with such transaction, the Lender and its affiliates are acting solely as a principal and not as an advisor including, without limitation, a “Municipal Advisor” as such term is defined in Section 15B of the Securities and Exchange Act of 1934, as amended, and the related final rules (the “Municipal Advisor Rules”), (iii) the Lender and its affiliates are relying on the bank exemption in the Municipal Advisor Rules, (iv) the Lender and its affiliates have not provided any advice or assumed any advisory or fiduciary responsibility in favor of the City with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (whether or not the Lender, or any affiliate of the Lender, has provided other services or advised, or is currently providing other services or advising the City on other matters), (v) the Lender and its affiliates have financial and other interests that differ from those of the City, and (vi) the City has consulted with its own financial, legal, accounting, tax and other advisors, as applicable, to the extent it deemed appropriate. (g) Financial Condition. The financial statements of the City for the year ended June 30, 2021, supplied to the Lender (i) were prepared in accordance with generally accepted accounting principles, consistently applied, and (ii) fairly present the City’s financial condition as of the date of the statements. Other than as described in such financial statements or otherwise disclosed to the Lender, there has been no material adverse change in the City’s financial condition subsequent to June 30, 2021. (h) No Litigation. To the best knowledge of the undersigned, there is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, educational or other governmental authority pending or, to the knowledge of the City, 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 Loan 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, educational or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by this Loan Agreement or the financial conditions, assets, properties or operations of the City. (i) No Defaults. To the best knowledge of the City, the City has never not appropriated or defaulted under any of its payment or performance obligations or covenants, either under any loan agreement of the same general nature as this Loan Agreement, or under any of its bonds, notes, or other debt obligations. (j) Fee Title. The City is the owner in fee of title, or has necessary rights of access, to the property where each System is located. No lien or encumbrance on such property materially impairs the City’s use of the property for the purposes for which it is, or may reasonably be expected to be, used. (k) Accuracy of Information. All information, reports and other papers and data furnished by the City to the Lender were, at the time the same were so furnished, complete and accurate in all material respects and insofar as necessary to give the Lender a true and accurate knowledge of the subject matter and were provided in expectation of the Lender’s reliance thereon in entering into the transactions contemplated by this Loan Agreement. No fact is known to the City which has had or, so far as the City can now reasonably foresee, may in the future have a material adverse effect on the City, which has not been set forth in the financial statements previously furnished to the Lender or in other such information, reports, papers and data or otherwise disclosed in writing to the Lender prior to the Closing Date. Any financial, budget and other projections furnished to the Lender by the City or its or their agents were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair and reasonable in light of the conditions existing at the time of delivery of such financial, budget or other projections, and represented, and as of the date of this representation, represent the City’s best estimate of its future financial performance. (l) Rate Setting. The City is empowered to set rates, fees and charges for the services and facilities furnished by each System without review or approval by any state or local government agency. (m) Environmental Laws. In the ordinary course of its business, the City conducts an ongoing review of Environmental Laws on the business, operations and the condition of its property, in the course of which it identifies and evaluates associated liabilities and costs (including, but not limited to, any capital or operating expenditures required for clean-up or closure of properties currently or previously owned or operated, any capital or operating expenditures required to achieve or maintain compliance with environmental protection standards imposed by law or as a condition of any license, permit or contract, any related constraints on operating activities, including any periodic or permanent shutdown of any facility or reduction in the level of or change in the nature of operations conducted thereat and any actual or potential liabilities to third parties, including employees, and any related costs and expenses). On the basis of such review, the City does not believe that Environmental Laws are likely to have a Material Adverse Effect. (n) No Sovereign Immunity. The City is not entitled to claim immunity on the grounds of sovereignty or other similar grounds (including, without limitation, governmental immunity) with respect to itself or its revenues (irrespective of their use or intended use) from (i) any action, suit or other proceeding arising under or relating to this Loan Agreement, (ii) relief by way of injunction, order for specific performance or writ of mandamus or for recovery of property or (iii) execution or enforcement of any judgment to which it or its revenues might otherwise be made subject in any action, suit or proceeding relating to this Loan Agreement, and no such immunity (whether or not claimed) may be attributed to the City or its revenues. (o) Insurance. As of the Closing Date, the City maintains such insurance, including self-insurance, as is required by this Loan Agreement. (p) Anti-Corruption Laws. The City and its respective officers and directors and to the knowledge of the City, its employees and agents, are in compliance with Anti-Corruption Laws in all material respects. None of (a) the City, any of its directors or officers or employees, or (b) to the knowledge of the City, any agent of the City that will act in any capacity in connection with or benefit from the credit facility established hereby, is a sanctioned person (as defined in the Anti-Corruption Laws). The transaction contemplated by this Loan Agreement does not violate Anti-Corruption Laws. (q) Compliance with Laws, Etc. The City is in compliance with its investment policy and all laws applicable to the City, non-compliance with which could reasonably be expected to have a Material Adverse Effect.
Section 2.2. Representations, Covenants and Warranties of Lender. The Lender represents, covenants and warrants to the City as follows:
(a) Due Organization and Existence. The Lender is a corporation duly organized and existing under the laws of its jurisdiction of formation; has power to enter into this Loan Agreement; is possessed of full power to make the Loan as provided herein; and has duly authorized the execution and delivery of this Loan Agreement. (b) Assignment. The Lender will not assign the Loan Repayments or its other rights under this Loan Agreement, except as provided under the terms of this Loan Agreement. (c) Diligence. The Lender is not acting as a municipal advisor or fiduciary to the City in connection with the entrance into this Loan Agreement, and the Lender has conducted all the due diligence on the City, the Water System and the Wastewater System that it has deemed necessary prior to entering into this Loan Agreement.
ARTICLE III
Terms of Loan
Section 3.1. Obligation to Make Loan; Amount of Loan. The Lender hereby agrees to lend to the City, and the City hereby agrees to borrow from the Lender, the Loan in the principal amount of $_________, under the terms and provisions set forth in this Loan Agreement. The Loan shall be made by the Lender to the City in immediately available funds on the Closing Date. The Loan shall be funded in a single installment, and shall be applied as set forth in Section 3.2.
Section 3.2. Application of Loan Proceeds.
(a) The Lender hereby agrees on the Closing Date to apply the proceeds of the Loan (being the amount of $_________) as follows:
Deposit with Prior Trustee. The Lender shall wire $_______ in immediately available funds to the Prior Trustee for the defeasance and refinancing, in full, of the Prior Obligations in accordance with irrevocable refunding instructions provided by the City. (ii) Payment of Costs of Issuance. The Lender shall wire the remaining $________ in immediately available funds to the payment of costs of issuance related to the Loan. On the Closing Date, the Lender shall pay such costs directly to the payees and in the amounts as set forth in a written request filed with the Lender by an authorized officer of the City, upon which the Lender may conclusively rely. Any amount of Loan proceeds not required for payment of such costs on the Closing Date shall be remitted to the City and used for the payment of the Loan Repayments. (b) Payment of Fees. The fees and disbursements of counsel to the City, the fees and disbursements of the placement agent, fees of the California Debt and Investment Advisory Commission (“CDIAC”), fees of Lender’s counsel, and other miscellaneous expenses of the City incurred in connection with this Loan Agreement (if any) shall all be the obligation of the City. The Lender shall have no responsibility for any expenses incurred by the City associated with this Loan Agreement, including, but not limited to, the expenses identified above as the obligation of the City.
Section 3.3. Term. The Term of this Loan Agreement commences on the Closing Date, and ends on the date on which the Loan is paid in full or provision for such payment is made as provided herein.
Section 3.4. Loan Repayments; No Cross-Collateralization. (a) Initial Tax-Exempt Interest Rates. Subject to the provisions of Article VI, the City hereby agrees to repay the principal amount the Loan attributable to the Water System ($_________) at an interest rate of ____% on the basis of a 360-day year of twelve 30-day months on the unpaid principal balance thereof, and to repay the principal amount the Loan attributable to the Wastewater System ($_________) at an interest rate of ____% on the basis of a 360-day year of twelve 30-day months on the unpaid principal balance thereof. Such payments shall be made in the respective amounts and on the respective Loan Repayment Dates specified in Appendix A and in Appendix B. (b) Allocation of Loan Repayments. It is understood and agreed by the City and the Lender that of the total amount of the Loan, (i) $_________ is allocable to the Water System and payable in accordance with the amounts specified on Appendix B solely from the Net Revenues of the Water System and no other funds or accounts of the City and (ii) $_________ is allocable to the Wastewater System and payable in accordance with the amounts specified on Appendix B solely from the Net Revenues of the Wastewater System and no other funds or accounts of the City. There is no cross-collateralization of the amounts payable by the Water System and amounts payable by the Wastewater System. (c) Taxable Rates; Revised Payment Schedule. From and during the occurrence of an Event of Taxability, following a Determination of Taxability, interest on the unpaid principal balance of the Loan shall be payable at the Taxable Rate, calculated on the basis of a 360-day year of twelve 30-day months. In such event, the Loan Repayment schedule shall be updated in Appendix A and Appendix B. (d) Default Rate; Revised Payment Schedule. From and during the occurrence of an Event of Default, interest on the unpaid principal balance of the Loan shall be payable at the Default Rate, calculated on the basis of a 360-day year of twelve 30-day months. In such event, the Loan Repayment schedule shall be updated in Appendix A and Appendix B.
Section 3.5. Nature of the City’s Obligations.
(a) Special Obligation. The City’s obligation to pay the Loan Repayments is a special obligation of the City limited solely to the Net Revenues of each System and amounts on deposit in the Water Enterprise Fund and Wastewater Enterprise Fund, as applicable, solely to the extent the Loan Repayments are allocable to each System as set forth in Appendix B. There is no cross-collateralization of amounts payable from the Net Revenues of the Water System and amounts payable from the Net Revenues of the Wastewater System. Except as provided in subsection (b) of this Section, the City is not required to advance moneys derived from any source of income other than the Net Revenues of each System and other sources specifically identified herein for the payment of the Loan Repayments, and no other funds or property of the City are liable for the payment of the Loan Repayments. (b) Obligations Absolute. The obligation of the City to pay the Loan Repayments from the Net Revenues of each System and the obligation of the City to perform and observe the other agreements contained herein, are absolute and unconditional and are not subject to any defense or any right of setoff, counterclaim or recoupment arising out of any breach of the City or the Lender 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 Lender. Until such time as all of the Loan Repayments have been fully paid or prepaid, the City:
(i) will not suspend or discontinue payment of any Loan Repayments, (ii) will perform and observe all other agreements contained in this Loan Agreement, and (iii) will not terminate this Loan 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 a System, the sale of a System, the taking by eminent domain of title to or temporary use of any component of a System, commercial frustration of purpose, any change in the tax or 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 Lender to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Loan Agreement.
Section 3.6. Pledge and Application of Net Revenues.
(a) Enterprise Funds. The City has previously established the Water Enterprise Fund, which the City agrees to hold and maintain for the purposes and uses set forth herein during the Term of this Loan Agreement. The City shall deposit all Revenues of the Water System in the Water Enterprise Fund promptly upon the receipt thereof.
The City has previously established the Wastewater Enterprise Fund, which the City agrees to hold and maintain for the purposes and uses set forth herein during the Term of this Loan Agreement. The City shall deposit all Revenues of the Wastewater System in the Wastewater Enterprise Fund promptly upon the receipt thereof. (b) Pledge. All of the Net Revenues of the Water System are hereby irrevocably pledged to the punctual payment of the Loan Repayments allocable to the Water System and any Parity Obligations of the Water System. The Net Revenues on deposit in the Water Enterprise Fund may not be used for any other purpose so long as the Loan Repayments allocable to the Water System remain unpaid; except that out of the Net Revenues of the Water System there may be apportioned such sums, for such purposes, as are expressly permitted by this Section.
Pursuant to Section 5451 of the Government Code of the State of California, the pledge of the Net Revenues of the Water System by the City for the repayment of the principal and interest components of the Loan Repayments allocable to the Water System constitutes a first lien and security interest which immediately attaches to the Net Revenues of the Water System, and is effective and binding against the City and its successors and creditors and all others asserting rights therein irrespective of whether those parties have notice of the pledge, irrespective of whether such amounts are or may be deemed to be a fixture and without the need for physical delivery, recordation, filing or further act.
All of the Net Revenues of the Wastewater System are hereby irrevocably pledged to the punctual payment of the Loan Repayments allocable to the Wastewater System and any Parity Obligations of the Wastewater System. The Net Revenues on deposit in the Wastewater Enterprise Fund may not be used for any other purpose so long as the Loan Repayments allocable to the Wastewater System remain unpaid; except that out of the Net Revenues of the Wastewater System there may be apportioned such sums, for such purposes, as are expressly permitted by this Section.
Pursuant to Section 5451 of the Government Code of the State of California, the pledge of the Net Revenues of the Wastewater System by the City for the repayment of the principal and interest components of the Loan Repayments allocable to the Wastewater System constitutes a first lien and security interest which immediately attaches to the Net Revenues of the Wastewater System, and is effective and binding against the City and its successors and creditors and all others asserting rights therein irrespective of whether those parties have notice of the pledge, irrespective of whether such amounts are or may be deemed to be a fixture and without the need for physical delivery, recordation, filing or further act. (c) Transfers to Make Loan Repayments and Pay Parity Obligations. All Net Revenues of the Water System will be held by the City in the Water Enterprise Fund in trust for the benefit of the Lender and the holder of any Parity Obligations of the Water System and for the security of the Loan Repayments allocable to the Water System and any Parity Obligations of the Water System. The City shall withdraw from the Water Enterprise Fund and transfer to the Lender an amount of Net Revenues of the Water System equal to the aggregate amount of the Loan Repayments allocable to the Water System due to the Lender in accordance with Appendix B, and transfer to the appropriate payee thereof the debt service on any Parity Obligations of the Water System when due and payable, and, in the event of a deficiency, on a pro rata basis between them.
All Net Revenues of the Wastewater System will be held by the City in the Wastewater Enterprise Fund in trust for the benefit of the Lender and the holder of any Parity Obligations of the Wastewater System and for the security of the Loan Repayments allocable to the Wastewater System and any Parity Obligations of the Wastewater System. The City shall withdraw from the Wastewater Enterprise Fund and transfer to the Lender an amount of Net Revenues of the Wastewater System equal to the aggregate amount of the Loan Repayments allocable to the Wastewater System due to the Lender in accordance with Appendix B, and transfer to the appropriate payee thereof the debt service on any Parity Obligations of the Wastewater System when due and payable, and, in the event of a deficiency, on a pro rata basis between them. (d) Other Uses Permitted. The City shall manage, conserve and apply the Net Revenues of each System in such a manner that all deposits required to be made under the preceding provisions of this Section 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 hereunder, the City may at any time and from time to time use and apply Net Revenues of each System for (i) the acquisition and construction of improvements to the System, (ii) the prepayment of the Loan and any Parity Obligations of the System, or (iii) any other lawful purpose of the City.
ARTICLE IV
Covenants of City
Section 4.1. Release and Indemnification Covenants. To the extent permitted by law, the City shall indemnify the Lender and its officers, agents, successors and assigns harmless from and against all claims, losses and damages, including legal fees and expenses, arising out of the following:
(a) the use, maintenance, condition or management of, or from any work or thing done on or about the Systems by the City, (b) any breach or default on the part of the City in the performance of any of its obligations under this Loan Agreement, (c) any intentional misconduct or negligence of the City or of any of its agents, contractors, servants, employees or licensees with respect to the Systems, and (d) any intentional misconduct or negligence of any lessee of the City with respect to the Systems.
No indemnification is made under this Section or elsewhere in this Loan Agreement for willful misconduct, gross negligence, or breach of duty under this Loan Agreement by the Lender, its officers, agents, employees, successors or assigns. The provisions of this Section shall survive the termination of this Loan Agreement.
Section 4.2. Sale or Eminent Domain of Systems. Except as provided herein, the City covenants that the Systems will not be encumbered, sold, leased, pledged, or otherwise disposed of, as a whole or substantially as a whole, if such encumbrance, sale, lease, pledge, or other disposition would materially impair the ability of the City to pay the Loan Repayments or any Parity Obligations, or would materially adversely affect its ability to comply with the terms of this Loan Agreement or the documents authorizing the issuance of any Parity Obligations. The City shall not enter into any agreement which impairs the operation of the Systems or any part of them necessary to secure adequate Net Revenues to pay the Loan Repayments or any Parity Obligations, or which otherwise would impair the rights of the Lender with respect to the Net Revenues. If any substantial part of the Systems is sold, the payment therefor must either (a) be used for the acquisition or construction of improvements and extensions or replacement facilities or (b) be applied to prepay outstanding obligations of the City relating to the Systems, as determined in the City’s sole discretion.
Any amounts received as awards as a result of the taking of all or any part of a System by the lawful exercise of eminent domain, if and to the extent that such right can be exercised against such property of the City, shall either (a) be used for the acquisition or construction of improvements and extension of the System, or (b) be applied to prepay the Loan Repayments allocable to the System and/or Parity Obligations of the System, as determined in the City’s sole discretion.
Section 4.3. Insurance. The City shall at all times maintain with responsible insurers all such insurance on the Systems as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to the Systems. If any useful part of the Systems is damaged or destroyed, such part shall be restored to usable condition. All amounts collected from insurance against accident to or destruction of any portion of a System shall be used to repair or rebuild such damaged or destroyed portion of the System, and to the extent not so applied, shall be used to prepay the Loan Repayments allocable to the System and/or Parity Obligations of the System, as determined in the City’s sole discretion. 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 and the Lender. Any insurance required to be maintained hereunder may be maintained by the City in the form of self-insurance or in the form of participation by the City in a program of pooled insurance.
Section 4.4. Records and Accounts; Other Reporting Obligations. (a) Books and Records. The City shall keep proper books of records and accounts of the Systems, separate from all other records and accounts, in which complete and correct entries are made of all transactions relating to the Systems. Said books shall, upon prior request, be subject to the reasonable inspection of the Lender. (b) Audited Financial Statements; Annual Budget. The City shall keep proper books of records and accounts of each System, separate from all other records and accounts, 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 Lender. The City shall cause the books and accounts of each System to be audited annually by an independent certified public accountant or firm of certified public accountants, not more than 270 days after the close of each Fiscal Year, and shall furnish a copy of such report to the Lender; provided, that the audit of the accounts of each System may be included as part of a general City-wide audit. In addition, the City shall provide to the Lender (a) a copy of the City’s annual budget, as adopted or amended, within 30 days of such adoption or amendment and (b) in a reasonably timely manner, such other financial or operational information of the City as requested by the Lender from time-to-time (for example, long-term capital improvement plans).
Section 4.5. Rates and Charges; Liquidity.
(a) Covenant Regarding Revenues. Subject to the requirements of subsection (b) of this Section, the City shall fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by each System during each Fiscal Year which (together with existing unencumbered fund balances which are maintained in the form of cash or cash equivalents, and which are lawfully available to the City for payment of any of the following amounts during such Fiscal Year) are at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order:
(i) All Operations and Maintenance Costs of the System estimated by the City to become due and payable in such Fiscal Year; (ii) The Loan Repayments allocable to the System and all principal of and interest on any Parity Obligations of the System which are payable from the Net Revenues of the System as they become due and payable during such Fiscal Year, without preference or priority; and (iii) All payments required to meet any other obligations of the City which are charges, liens, encumbrances upon or payable from the Revenues of the System during such Fiscal Year. (b) Covenant Regarding Net Revenues. In addition to the covenant set forth in the preceding clause (a) of this Section, the City shall fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by each System during each Fiscal Year which are sufficient to yield Net Revenues of the System which are at least equal to 125% of the Loan Repayments allocable to the System and any Parity Obligations of the System which are payable from the Net Revenues of the System, when and as the same come due and payable during such Fiscal Year.
Section 4.6. No Priority for Additional Obligations. The City may not issue or incur any bonds or other obligations having any priority in payment of principal or interest out of the Net Revenues of a System over the Loan Repayments.
Section 4.7. Issuance of Parity Obligations of a System. Except for obligations incurred to prepay or post a security deposit for the entirety of the Loan Repayments allocable to a System, the City may not issue or incur any Parity Obligation for a System unless:
(a) The City is not then in default under the terms of this Loan Agreement or the documents authorizing any Parity Obligations for the System, (b) The amount of the Net Revenues of the System, as shown in the audited financial statements of the City for the latest Fiscal Year or as shown by the books of the City for any more recent period of 12 consecutive months selected by the City, plus (at the option of the City), the Additional Revenues, are at least equal to 125% of the amount of Maximum Annual Debt Service for the System, and (c) The City provides to the Lender written evidence of compliance with all covenants set forth in the Loan Agreement for the immediately preceding Fiscal Year.
For clarity, the test for the issuance or incurrence of Parity Obligations of a System in this Section 4.7 shall be evaluated on a System-by-System basis.
Section 4.8. Assignment by the Lender. The Lender has the right to make an assignment of all or a portion of its interests herein, without the prior consent of the City, to affiliates of the Lender or to banks, insurance companies or other financial institutions and other affiliates (including participation arrangements among such entities), but no such assignment will be effective as against the City unless and until the Lender files with the City written notice thereof and each such assignment shall be to an “accredited investor” or “qualified institutional buyer,” as such terms are defined in the Securities Act of 1933. The City shall pay all Loan Repayments hereunder under the written direction of the Lender named in the most recent assignment or notice of assignment filed with the City. During the Term, the City shall keep a complete and accurate record of all such notices of assignment.
Section 4.9. Assignment by City. Neither the Loan nor this Loan Agreement may be assigned by the City, other than to a public agency which succeeds to the interests of the City in and to a System and which (by operation of law, by contract or otherwise) becomes legally bound to all of the terms and provisions hereof.
Section 4.10. Amendment of this Loan Agreement. This Loan Agreement may be amended by the City and the Lender by a written instrument evidencing such amendment.
Section 4.11. Tax Covenants.
(a) Generally. The City shall not take any action or permit to be taken any action within its control which would cause or which, with the passage of time if not cured would cause, the interest components of the Loan Repayments to become includable in gross income for federal income tax purposes. (b) Private Activity Bond Limitation. The City shall assure that the proceeds of the Loan are not so used as to cause the Loan 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. (c) Federal Guarantee Prohibition. The City 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 Loan Repayments to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code. (d) No Arbitrage. The City shall not take, or permit or suffer to be taken, any action with respect to the proceeds of the Loan Repayments 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 Loan Repayments to be “arbitrage bonds” within the meaning of Section 148(a) of the Tax Code. (e) [Reserved]
(f) Arbitrage Rebate. The City shall take any and all actions necessary to assure compliance with section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Loan. (g) Acquisition, Disposition and Valuation of Investments. Except as otherwise provided in the following sentence, the City covenants that all investments of amounts deposited in any fund or account created by or pursuant to this Loan Agreement, or otherwise containing gross proceeds of the Loan (within the meaning of Section 148 of the Tax Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Loan Agreement or the Tax Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Tax Code shall be valued at their present value (within the meaning of section 148 of the Tax Code).
For purposes of this subsection (g), the term “Fair Market Value” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Tax Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (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, (iii) the investment is a United States Treasury Security – State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the City and related parties do not own more than 10% beneficial interest therein if the return paid by the fund is without regard to the source of the investment.
ARTICLE V
Events of Default and Remedies
Section 5.1. Events of Default Defined. The following are Events of Default under this Loan Agreement:
(a) Failure by the City to pay any Loan Repayment or other payment required hereunder when due. (b) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed hereunder, other than as referred to in the preceding clause (a) of this Section, for a period of 60 days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Lender; provided, that such cure must occur within 60 days of the initial written notice, except that with respect to a failure to meet the coverage requirement set forth in Section 4.5, such cure must occur within 180 days after the City becomes aware that it will not be able to meet such coverage requirement and is taking reasonable steps to cure such default. (c) 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. (d) The occurrence of any event of default under and as defined in any documents authorizing the issuance of any Parity Obligations that are issued and outstanding during the Term. (e) Any statement, representation or warranty of a material nature made by the District in or pursuant to this Loan Agreement or its execution, delivery or performance shall have been false, incorrect, misleading or breached in any material respect on the date when made.
Section 5.2. Remedies on Default. Upon the occurrence and during the continuation of an Event of Default, the Default Rate shall apply and the Lender may, at its option and without any further demand or notice:
(a) declare all principal components of the unpaid Loan Repayments, together with accrued interest thereon, to be immediately due and payable, whereupon the same will immediately become due and payable; and (b) take whatever action at law or in equity may appear necessary or desirable to collect the Loan Repayments then due or thereafter to become due during the Term, or enforce performance and observance of any obligation, agreement or covenant of the City under this Loan Agreement.
The provisions of the preceding clause (a) are subject to the condition that if, at any time after the principal components of the unpaid Loan Repayments have been so declared due and payable under the preceding clause (a), and before any judgment or decree for the payment of the moneys due have been obtained or entered, the City deposits with the Lender a sum sufficient to pay all principal components of the Loan Repayments coming due prior to such declaration and all matured interest components (if any) of the Loan Repayments, with interest on such overdue principal and interest components calculated at the rate set forth in Section 3.4(c), and a sum sufficient to pay all reasonable costs and expenses incurred by the Lender in the exercise of its rights and remedies hereunder, and any and all other defaults known to the Lender (other than in the payment of the principal and interest components of the Loan Repayments due and payable solely by reason of such declaration) have been made good, then, and in every such case, the Lender may, by written notice to the City, rescind and annul such declaration and its consequences. However, no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.
Section 5.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Lender is exclusive, and every such remedy is cumulative and in addition to every other remedy given under this Loan 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 Lender to exercise any remedy reserved to it in this Article V it is not necessary to give any notice, other than such notice as may be required in this Article V or by law.
Section 5.4. Agreement to Pay Attorneys’ Fees and Expenses. If the City defaults under any of the provisions hereof and the Lender employs attorneys (including in-house counsel) 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 City herein contained, the City will on demand therefor pay to the Lender the reasonable fees of such attorneys (including those of in-house counsel) and such other expenses so incurred by the Lender.
Section 5.5. No Additional Waiver Implied by One Waiver. If any agreement contained in this Loan Agreement is breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.
ARTICLE VI
Prepayment of Loan
Section 6.1. No Optional Prepayment. Except as set forth in Section 6.2, the Loan Repayments are not subject to prepayment at the option of the City.
Section 6.2. Prepayment From Net Proceeds of Insurance or Eminent Domain. The City may prepay the unpaid principal balance of the Loan in whole or in part on any Loan Repayment Date from and to the extent the City determines to apply any proceeds of insurance award or condemnation award with respect to the System for such purpose under Sections 4.2 or 4.3 at a price equal to the principal amount to be prepaid, without premium. The City and the Lender hereby agree that such proceeds, to the extent remaining after payment of any delinquent Loan Repayments, shall be credited towards the City’s obligations under this Section 6.2.
Section 6.3. Security Deposit. Notwithstanding any other provision of this Loan Agreement, the City may on any date secure the payment of the Loan Repayments in whole (or in part, on a System-by-System basis), by irrevocably depositing with a fiduciary an amount of cash which, together with other available amounts, is either:
(a) sufficient to pay all such Loan Repayments, including the principal and interest components thereof, when due under Section 3.4(a), or (b) invested in whole or in part in Federal Securities in such amount as will, in the opinion of an independent certified public accountant, together with interest to accrue thereon and together with any cash which is so deposited, be fully sufficient to pay all such Loan Repayments when due under Section 3.4(a) or, if such amounts are sufficient to prepay the Loan Repayments in full, as the City instructs at the time of the deposit.
In the event of a security deposit under this Section for the payment in full of all remaining Loan Repayments, the pledge of Net Revenues from each System (as applicable) and all other security provided by this Loan Agreement for said obligations, will cease and terminate, excepting only the obligation of the City to make, or cause to be made, all of Loan Repayments from such security deposit.
ARTICLE VII
Miscellaneous
Section 7.1. Notices. Any notice, request, complaint, demand or other communication under this Loan Agreement shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by facsimile or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by facsimile or other form of telecommunication, (b) 48 hours after deposit in the United States of America first class mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Lender or the City may, by written notice to the other party, from time to time modify the address or number to which communications are to be given hereunder.
If to the City: City of Manteca
1001 W Center Street
Manteca, California 95337
Attention: City Manager
If to the Lender: J.P. Morgan Chase Bank, N.A.
560 Mission Street, Floor 20
San Francisco, California 94105
Attention: ___________
SECTION 7.2. Jury and Judicial Reference. To the fullest extent permitted by law, the City will agree to waive any right to trial by jury in any action, proceeding and/or hearing on any matter whatsoever arising out of, or in any way connected with, this Loan Agreement or any documents relating to this Loan Agreement, or the enforcement of any remedy under any law, statute, or regulation. To the extent such waiver is not enforceable, the City consents to the adjudication of any and all such matters pursuant to Judicial Reference as provided in Section 638 of the California Code of Civil Procedure, and the judicial referee shall be empowered to hear and determine any and all issues in such Judicial Reference whether fact or law. The City represents that it does not possess and will not invoke a claim of sovereign immunity for disputes arising out of contractual claims relating to this Loan Agreement or the related documents.
Section 7.3. Binding Effect. This Loan Agreement inures to the benefit of and is binding upon the Lender and the City and their respective successors and assigns.
Section 7.4. Severability. If any provision of this Loan Agreement is held invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate or render unenforceable any other provision hereof.
Section 7.5. Net-net-net Contract. This Loan Agreement is a “net-net-net” contract, and the City hereby agrees that the Loan Repayments are an absolute net return to the Lender, free and clear of any expenses, charges or set-offs whatsoever.
Section 7.6. Further Assurances and Corrective Instruments. The Lender and the City shall, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the expressed intention of this Loan Agreement.
Section 7.7. Execution in Counterparts. This Loan Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
Section 7.8. Applicable Law. This Loan Agreement shall be governed by and construed in accordance with the laws of the State of California.
Section 7.9. Captions. The captions or headings in this Loan Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Section of this Loan Agreement. [Remainder of page intentionally left blank. Signatures on next page.] IN WITNESS WHEREOF, the Lender has caused this Loan Agreement to be executed in its corporate name by its duly authorized officer and the City has caused this Loan Agreement to be executed in its name by its duly authorized officer, as of the date first above written.
J.P. MORGAN CHASE BANK, N.A.,
as Lender
By
_______
______________
CITY OF MANTECA
By
Toni Lundgren
Interim City Manager
ATTEST:
Cassandra Candini-Tilton
City Clerk
APPENDIX A
SCHEDULE OF LOAN REPAYMENTS (COMBINED)
Loan Repayments
Loan
Repayment Date
Loan
Principal
Loan
Interest*
Total Loan
Repayment*
TOTALS:
* Interest payments based on initial tax-exempt interest rate; subject to increase if Event of Taxability or Event of Default occurs.
APPENDIX B
SCHEDULE OF ALLOCATIONS BETWEEN
WATER SYSTEM AND WASTEWATER SYSTEM
Water System
Wastewater System
Loan
Repayment Date
Loan
Principal
Loan
Interest*
Loan
Principal
Loan
Interest*
Total Loan
Repayment*
TOTALS:
* Interest payments based on initial tax-exempt interest rate; subject to increase if Event of Taxability or Event of Default occurs. - 23 -
[Signature Page - Loan Agreement]
A-1
B-1
B-1
ATTACHMENT 2