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IN WITNESS WHEREOF, the Authority and the City have caused this Lease Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written.
CITY OF SANGER
By:
Tim Chapa
City Manager
ATTEST:
Rebecca Ramirez
City Clerk
SANGER FINANCING AUTHORITY
By:
Tim Chapa
Executive Director
ATTEST:
Rebecca Ramirez
Secretary
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CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in the Property conveyed under the foregoing to the City of Sanger, a municipal corporation and a general law city duly organized and existing under the Constitution and laws of the State of California, is hereby accepted by the undersigned officer or agent on behalf of the City Council of the City of Sanger, pursuant to authority conferred by resolutions of the said City Council adopted on __________, 2022 and the grantee consents to recordation thereof by its duly authorized officer.
Dated: __________, 2022 CITY OF SANGER
By:
Tim Chapa
City Manager
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EXHIBIT A
DESCRIPTION OF THE PROPERTY
All that real property situated in the City of Sanger, County of Fresno, State of California, described as follows:
PARCEL 2 OF PARCEL MAP NO. 75-4, RECORDED IN BOOK 16, PAGE 92, OF PARCEL MAPS, RECORDS OF SAID COUNTY.
APN 317-094-35
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EXHIBIT B
BASE RENTAL PAYMENT SCHEDULE
Base Rental Deposit Date Principal Component Interest Component(1) Total Base Rental
(1) At the Taxable Rate and assuming no application of the Default Rate.
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INDENTURE
by and among
SANGER FINANCING AUTHORITY
and
CITY OF SANGER
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Dated as of __________ 1, 2022
Relating to
$__________
SANGER FINANCING AUTHORITY
LEASE REVENUE REFUNDING BONDS, SERIES 2022A
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Page
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ARTICLE I
DEFINITIONS; EQUAL SECURITY
Section 1.01 Definitions ................................................................................................................. 2 Section 1.02 Equal Security .......................................................................................................... 12
ARTICLE II
THE BONDS
Section 2.01 Authorization of Bonds ............................................................................................ 12 Section 2.02 Terms of the Bonds .................................................................................................. 12 Section 2.03 Form of Bonds ......................................................................................................... 13 Section 2.04 Transfer and Exchange of Bonds ............................................................................. 13 Section 2.05 Registration Books ................................................................................................... 14 Section 2.06 Execution of Bonds .................................................................................................. 14 Section 2.07 Authentication of Bonds .......................................................................................... 14 Section 2.08 Temporary Bonds .................................................................................................... 14 Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen ............................................................ 14 Section 2.10 Conversion to Tax-Exempt Interest Rate ................................................................. 15
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01 Issuance of Bonds .................................................................................................... 15 Section 3.02 Application of Proceeds of the Bonds ..................................................................... 16 Section 3.03 Costs of Issuance Fund ............................................................................................ 16 Section 3.04 No Additional Bonds ............................................................................................... 16
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01 Redemption of Bonds .............................................................................................. 16 Section 4.02 Notice of Redemption .............................................................................................. 17 Section 4.03 Selection of Bonds for Redemption ......................................................................... 17 Section 4.04 Partial Redemption of Bonds ................................................................................... 18 Section 4.05 Effect of Notice of Redemption ............................................................................... 18
ARTICLE V
SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS
Section 5.01 Pledge; Special Obligations ..................................................................................... 18 Section 5.02 Flow of Funds .......................................................................................................... 18 Section 5.03 Application of Net Insurance Proceeds.................................................................... 19 Section 5.04 Title Insurance ......................................................................................................... 21 Section 5.05 Rebate Fund ............................................................................................................. 21 Section 5.06 Investment of Moneys ............................................................................................. 21
ARTICLE VI
COVENANTS
Section 6.01 Compliance with Agreements .................................................................................. 22 273
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(continued)
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Section 6.02 Compliance with Ground Lease and Lease Agreement ........................................... 22 Section 6.03 Observance of Laws and Regulations ...................................................................... 23 Section 6.04 Other Liens .............................................................................................................. 23 Section 6.05 Prosecution and Defense of Suits ............................................................................ 23 Section 6.06 Accounting Records and Statements ....................................................................... 23 Section 6.07 Recordation and Filing ............................................................................................. 23 Section 6.08 Tax Covenants ......................................................................................................... 24 Section 6.09 Reporting Requirements .......................................................................................... 24 Section 6.10 Further Assurances .................................................................................................. 24 Section 6.11 No Public Registration ............................................................................................. 25
ARTICLE VII
DEFAULT AND LIMITATIONS OF LIABILITY
Section 7.01 Action on Default ..................................................................................................... 25 Section 7.02 Other Remedies of the Trustee ................................................................................ 25 Section 7.03 Non-Waiver ............................................................................................................. 25 Section 7.04 Remedies Not Exclusive .......................................................................................... 26 Section 7.05 No Liability by the Authority to the Owner............................................................. 26 Section 7.06 No Liability by the City to the Owner ..................................................................... 26 Section 7.07 No Liability of the Trustee to the Owner ................................................................. 26 Section 7.08 Application of Amounts After Default .................................................................... 26 Section 7.09 Trustee May Enforce Claims Without Possession of Bonds ................................... 27 Section 7.10 Limitation on Suits ................................................................................................... 27
ARTICLE VIII
THE TRUSTEE
Section 8.01 Employment of the Trustee ...................................................................................... 27 Section 8.02 Duties, Removal and Resignation of the Trustee..................................................... 27 Section 8.03 Compensation of the Trustee ................................................................................... 28 Section 8.04 Protection of the Trustee .......................................................................................... 29
ARTICLE IX
MODIFICATION OR AMENDMENTS
Section 9.01 Modifications and Amendments Permitted ............................................................. 31 Section 9.02 Effect of Supplemental Indenture ............................................................................ 31 Section 9.03 Endorsement of Bonds; Preparation of New Bonds ................................................ 31
ARTICLE X
DEFEASANCE
Section 10.01 Discharge of Indenture ............................................................................................. 32 Section 10.02 Bonds Deemed To Have Been Paid ......................................................................... 33 Section 10.03 Payment of Bonds After Discharge of Indenture ..................................................... 33 274
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Benefits of Indenture Limited to Parties .................................................................. 33 Section 11.02 Successor Deemed Included in all References to Predecessor ................................ 34 Section 11.03 Execution of Documents by Owner ......................................................................... 34 Section 11.04 Waiver of Personal Liability .................................................................................... 34 Section 11.05 Destruction of Bonds ............................................................................................... 34 Section 11.06 Funds and Accounts ................................................................................................. 34 Section 11.07 Article and Section Headings Gender and References ............................................ 35 Section 11.08 Entire Agreement; Partial Invalidity ........................................................................ 35 Section 11.09 Disqualified Bonds .................................................................................................. 35 Section 11.10 Money Held for Particular Bonds ............................................................................ 36 Section 11.11 Payment on Non-Business Days .............................................................................. 36 Section 11.12 California Law ......................................................................................................... 36 Section 11.13 Notices ..................................................................................................................... 36 Section 11.14 Execution in Counterparts ....................................................................................... 37
Signatures ............................................................................................................................... S-1
EXHIBIT A FORM OF BOND .................................................................................................. A-1 EXHIBIT B FORM OF ELECTION OF CONVERSION TO TAX-EXEMPT RATE ............ B-1 EXHIBIT C FORM OF OPINION AND RELIANCE LETTER OF BOND COUNSEL ........ C-1 EXHIBIT D FORM OF OWNER’S CERTIFICATE ................................................................ D-1 EXHIBIT E FORM OF PURCHASER’S CERTIFICATE ....................................................... E-1
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INDENTURE
THIS INDENTURE (this “Indenture”), executed and entered into as of __________ 1, 2022, is by and among the SANGER FINANCING AUTHORITY , a joint exercise of powers entity duly organized and existing under the laws of the State of California (the “Authority”), the CITY OF SANGER, a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution a nd laws of the State of California (the “City”) and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION , a national banking association duly organized and existing under and by virtue of the laws of the United States, as Trustee (the “Trustee”); WITNESSETH:
WHEREAS, the City and the Authority previously financed the costs of various public improvements (the “Project”) through the issuance of the Sanger Financing Authority Lease Revenue Bonds, Series 2013 (the “2013 Bonds”);
WHEREAS, the City and the Authority desire to refinance the costs of the Project by refunding the 2013 Bonds through the issuance of the Bonds (as defined herein); WHEREAS, in connection with the issuance of the Bonds, the City will lease certain real property and the improvements located thereon (the “Property”) to the Authority pursuant to a Ground Lease, dated as of the date hereof, and the City will sublease the Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof (the “Lease Agreement”); WHEREAS, the City and the Authority have determined that it would be in the best interests of the City and the Authority to provide the funds necessary to refinance the Project through the issuance by the Authority of the Bonds payable from the Base Rental Payments (as defined herein) to be made by the City under the Lease Agreement;
WHEREAS, all rights to receive the Base Rental Payments have been assigned without recourse by the Authority to the Trustee pursuant to an Assignment Agreement, dated as of the date hereof;
WHEREAS, the Authority and the City desire to provide for the issuance by the Authority of the Bonds in the aggregate principal amount of $__________, in order to refinance the Project; WHEREAS, the Bonds will be payable equally and ratably from the Base Rental Payments; WHEREAS, 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 secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Authority and the City have authorized the execution and delivery of this Indenture; and WHEREAS, the Authority and the City have determined 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 s et forth in accordance with its terms, have been done and taken, and the execution and delivery of the Indenture has been in all respects duly authorized;
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NOW THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties do hereby agree as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
Section 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any amendment her eof or supplement hereto and of the Bonds and of any certificate, opinion, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Lease Agreement. “Act” means the Marks -Roos Local Bond Pooling Act of 1985, commencing with Section 6584 of the California Government Code.
“Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.02 of the Lease Agreement. “Assignment Agreement” means the Assignment Agreement, dated as of the date hereof, by and between the Authority and the Trustee.
“Authority” means the Sanger Financing Authority, a joint exercise of powers entity organized and existing under and by virtue of the laws of the State of California. “Authorized Authority Representative ” means the Cha ir, the Vice Chair, the Executive Director or the Treasurer of the Authority, or the City Manager of the City, or any other person authorized by the Board of Directors of the Authority to act on behalf of the Authority under or with respect to this Indenture.
“Authorized City Representative” means the Mayor of the City or the City Manager of the City, or any other person authorized by the City Council of the City to act on behalf of the City under or with respect to this Indenture.
“Authorized Denomination” means, for the Bond, the original principal amount thereof, as reduced by payment or redemption as provided herein.
“Base Rental Payment Fund ” means the fund by that name established in accordance with Section 5.02 hereof.
“Base Rental Payments ” means all amounts payable to the Authority by the City as Base Rental Payments pursuant to Section 3.01 of the Lease Agreement. “Bond” or “Bonds” means the Sanger Financing Authority Lease Revenue Refunding Bonds, Series 2022A issued hereunder.
“Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday, (b) a day on which banking institutions or trust companies in New York, New York, Wilmington, Delaware or the State of California, or in any state in which the Office of the Trustee is located, a re required or 277
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authorized by law (including regulation or executive order) to close, or (c) a day on which the New York Stock Exchange is closed.
“City” means the City of Sanger, a municipal corporation and general law city duly organized and existing under and by virtue of the Constitution and laws of the State of California. “Closing Date” means __________, 2022.
“Code” means the Internal Revenue Code of 1986.
“Costs of Issuance” means all the costs of issuing and delivering the Bonds, including, but not limited to, all printing and document preparation expenses in connection with this Indenture, the Lease Agreement, the Ground Lease, the Assignment Agreement and the Bonds, legal fees and expenses of counsel with the issuance and deliver y of the Bonds, the initial fees and expenses of the Trustee and Escrow Agent and its counsel and other fees and expenses incurred in connection with the issuance and delivery of the Bonds, to the extent such fees and expenses are approved by the City. “Costs of Issuance Fund ” means the fund by that name established in accordance with Section 3.04 hereof.
“Date of Taxability” means the date from and after which interest on the Bonds is subject to federal income taxation as a result of a Determination of Taxability. “Default Rate” means the interest rate then in effect on the Bonds, plus three percent (3.00%) (calculated on the basis of a 365-day year and actual days elapsed). “Determination of Taxability ” means any determination, decision, or decree ma de by the Commissioner or any District Director of the Internal Revenue Service, or by any court of competent jurisdiction, that as a result of any actions or omissions of the Authority with respect to the Bonds the interest payable on the Bonds is includable in the gross income for federal income tax purposes of the Owner of the Bonds, provided, however, that no such Determination of Taxability shall be deemed to have occurred if the Authority is contesting such determination in good faith and is diligentl y proceeding to prosecute such contest until the earliest of (a) a final determination from which no appeal may be taken with respect to such determination, or (b) abandonment of such appeal by the Authority. “Escrow Agent ” means U.S. Bank Trust Company, National Association , and the escrow agent under the Escrow Agreement.
“Escrow Fund” means the fund by that name established under the Escrow Agreement, dated as of __________ 1, 2022, by and among the City, the Authority and the Escrow Agent, relating to the refunding of the Sanger Financing Authority Lease Revenue Bonds, Series 2013. “Federal Securities” means (1) cash, (2) non-callable direct obligations of the United States of America (“Treasuries”), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (4) pre -refunded municipal obligations rated “AAA” and “Aaa” by S&P and Moody's, respectively, or (5) securities eligible for “AAA” defeasance 278
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under then existing criteria of S&P or any combination thereof, shall be used to effect defeasance of the Bonds.
“Ground Lease” means the Ground Lease, dated as of the date hereof, by and between the City and the Authority, as originally exec uted and as it may from time to time be amended in accordance with the provisions thereof and of the Lease Agreement. “Indenture” means this Indenture, as originally executed and as it may be amended or supplemented from time to time by any Supplemental Indenture. “Interest Fund” means the fund by that name established in accordance with Section 5.02 hereof.
“Interest Payment Date ” means June 15 and December 15 of each year, commencing on June 15, 2022.
“Lease Agreement” means the Lease Agreement, dated as of the date hereof, by and between the City and the Authority, as originally executed and as it may be from time to time amended in accordance with the provisions thereof.
“Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, except that if such corporation shall no longer perform the function of a securities rating agency for any reason, the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. “Office of the Trustee ” means the principal corporate trust office of the Trustee in Los Angeles, California, or such other office as may be specified to the Authority and the City by the Trustee in writing, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing.
“Opinion of Counsel” means a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the Authority or the City and which written opinion is satisfactory to the Trustee.
“Original Purchaser” means First Foundation Public Finance, a Delaware statutory trust and wholly owned subsidiary of First Foundation Bank.
“Outstanding,” when used as of any particular time w ith reference to Bonds, means (subject to the provisions of Section 11.09 hereof) all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under this Indenture except:
(a) Bonds theretofore canceled by the Trustee or surrendere d to the Trustee for cancellation;
(b) Bonds with respect to which all liability of the Authority shall have been discharged in accordance with Section 10.01 hereof; and 279
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(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 pursuant to this Indenture. “Owner” means the Person in whose name the Bonds is registered on the Registration Books. “Permitted Investments” means any of the following to the extent the n permitted by the general laws of the State of California:
(1) (a) Direct obligations (other than an obligation subject to —Variation in principal repayment) of the United States of America (“United States Treasury Obligations”), (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of America, (c) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumentality of the United St ates of America when such obligations are backed by the full faith and credit of the United States of America, or (d) evidences of ownership of proportionate interests in future interest and principal payments on obligations described above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated (collectively “United States Obligations”).
These include, but are not necessarily limited to:
-U.S. Treasury obligations
All direct or fully guaranteed obligations
-General Services Administration
Participation certificates
-U.S. Maritime Administration
Guaranteed Title XI financing
-Small Business Administration
Guaranteed participation certificates
Guaranteed pool certificates
-Government National Mortgage Association (GNMA)
GNMA-guaranteed mortgage-backed securities
GNMA-guaranteed participation certificates
-U.S. Department of Housing & Urban Development
Local authority bonds
-Washington Metropolitan Area Transit Authority
Guaranteed transit bonds
(2) Federal Housing Administration debentures.
(3) The listed obligations of government-sponsored agencies which are not backed by the full faith and credit of the United States of America:
-Federal Home Loan Mortgage Corporation (FHLMC)
Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts) Senior debt obligations
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-Farm Credit Banks (formerly: Federal Land Banks, Federal intermediate Credit Banks and Banks for Cooperatives)
Consolidated systemwide bonds and notes
-Federal Home Loan Banks (FHL Banks)
Consolidated debt obligations
-Federal National Mortgage Association (FNMA)
Senior debt obligations
Mortgage-backed securities (excluded are stripped mortgages securities which are purchased at prices exceeding their principal amounts) -Financing Corporation (FICO)
Debt obligations
-Resolution Funding Corporation (REFCORP)
Debt obligations
(4) Unsecured certificates of deposit, time deposits, and bankers’ acceptances (having maturities of not more than 180 days) of any bank, including the Trustee and its affiliates, the short-term obligations of which are rated “A-1+” or better by S&P and “P-1” or better by Moody’s. (5) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation (FDIC), in banks, including the Trustee and its affiliates, which have capital and surplus of at least $5 million.
(6) Commercial paper (having original maturities of not more than 270 days) rated “A-1+” by S&P and “Prime-1” by Moody’s.
(7) Money market funds rated “AAm” or “AAm -G” or better by S&P and “Aa2” or better by Moody’s, including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee provide investment advisory or other management services. (8) Repurchase agreements:
(a) With any domestic bank the long term debt of which is rated “AA” or better by S&P and “Aa” by Moody’s (so long as an opinion is rendered that the repurchase agreement is a “repurchase agreement” as defined in the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) and that such bank is subject to FIRREA), or any foreign bank rated at least “AA” by S&P and “Aaa” by Moody’s or “AA” by S & P and at least “Aa2” by Moody’s; provided the term of such repurchase agreement is for one year or less. (b) With (i) any broker-dealer with “retail customers” which has, or the parent company of which has, long -term debt rated at least “AA” by S&P and “Aa2” by Moody’s, which broker-dealer falls under the jurisdiction of the Securities Investors Protection Corp. (SIPC); provided that:
A. The market value of the collateral is maintained for United States Treasury Obligations, at the levels shown below under “Collateral Levels for United States Treasury Obligations”;
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B. Failure to maintain the requisite collateral percentage will require the City or the Trustee to liquidate the collateral; C. The Trustee, the City or a third party acting solely as agent therefor (the “Holder of the Collateral”) has possession of the collateral or the collateral has been transferred to the Holder of the Collateral in accordance with applicable state and federal laws (other than by means of entries on the transferor’s books);
D. The repurchase agreement states, and an opinion of counsel is rendered to the effect, that the Trustee has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Holder of the Collat eral is in possession);
E. The transferor represents that the collateral is free and clear of any third-party liens or claims;
F. An opinion is rendered that the repurchase agreement is a “repurchase agreement” as defined in the United States Bankruptcy Code; G. There is or will be a written agreement governing every repurchase transaction;
H. The City represents that it has no knowledge of any fraud involved in the repurchase transaction; and
I. The City and the Trustee receive an opinion of counsel (which opinion shall be addressed to the City and the Trustee) that such repurchase agreement is legal, valid and binding and enforceable against the provider in accordance with its terms.
(9) State Obligations
(a) Direct general obligations of any state of the United States or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated “A2” by Moody’s and “A” by S&P, or better, or any obligation fully and unconditionally guara nteed by any state, subdivision or agency whose unsecured general obligation debt is so rated. (b) Direct, general short -term obligations of any state agency or subdivision described in (a) above and rated “A -1+” by S&P and “Prime -1” by Moody’s.
(c) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state, state agency or subdivision described in (a) above and rated “AA” or better by S&P and “Aa2” or better by Moody’s.
(10) Local Agency Investment Fund.
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(11) Investment agreements with a domestic or foreign bank or corporation (other than a life or property casualty insurance company) the long -term debt of which, or, in the case of a guaranteed corporation the long -term debt of the guarantor, or in the case of a monoline financial guaranty insurance company the claims paying ability of the guarantor, is rated at least “AA” by S&P and “Aa2” by Moody’s; provided, that prior written notice of an investment in the investment agreement is provided to S&P and, provided, further, by the terms of the investment agreement:
(a) interest payments are to be made to the Trustee at times and in amounts as necessary to pay debt service (or, if the investment agreement is for the construction fund, construction draws) on the Bonds;
(b) the invested funds are available for withdrawal without penalty or premium, at any time for purposes identified in this Indenture other than acquisition of alternative investment property upon not more than seven days prior notice (which notice may be amended or withdr awn at any time prior to the specified withdrawal date); provided that the Indenture specifically requires the Trustee or the City to give notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid;
(c) the investment agreement shall state that it is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof;
(d) a guaranteed rate of interest is to be paid on invested funds and a ll future deposits, if any, required to be made to restore the amount of such funds to the level specified under the Indenture;
(e) the Trustee and the City receive the opinion of domestic counsel (which opinion shall be addressed to the City) that such in vestment agreement is legal, valid and binding and enforceable against the provider in accordance with its terms and of foreign counsel (if applicable);
(f) the investment agreement shall provide that if during its term (A) the provider’s or the guarantor’ s rating by either Moody’s or S&P is withdrawn or suspended or falls below “AA” or “Aa2”, respectively, or, with respect to a foreign bank, below the ratings of such provider at the delivery date of the investment agreement, the provider must, at the direc tion of the City or the Trustee (acting at the direction of the City) within 10 days of receipt of such direction, either (1) collateralize the investment agreement by delivering or transferring in accordance with applicable state and federal laws (other t han by means of entries on the provider’s books) to the Trustee, the City or a Holder of the Collateral, United States Treasury Obligations which are free and clear of any third -party liens or claims at the Collateral Levels set forth below; or (2) repay t he principal of and accrued but unpaid interest on the investment (the choice of (1) or (2) above shall be that of the City or Trustee (acting at the direction of the City), as appropriate), and (B) the provider’s or the guarantor’s rating by either Moody’ s or S&P is withdrawn or suspended or falls below “A” or “A2,” or, with respect to a foreign bank, below “AA” or “Aa2” by S&P or Moody’s, as appropriate, the provider must, at the direction of the City or the Trustee (acting at the direction of the City), within 10 days of receipt of such direction, repay the principal 283
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of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the City or Trustee;
(g) the investment agreement shall state, and an opinion of counsel sha ll be rendered to the effect, that the Trustee has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Trustee is in possession); and (h) the investment agreement must provide that if during its term (A) the provider shall default in its payment obligations, the provider’s obligation under the investment agreement shall, at the direction of the City or the Trustee, be accelerated and amounts inv ested and accrued but unpaid interest thereon shall be repaid to the City or Trustee, as appropriate, and (B) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. (“event of insolvency”), the provider’s obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the City or Trustee, as appropriate.
(12) Pre-refunded municipal obligations rated “AAA” by S&P and “Aaa” by Moody’s meeting the following requirements:
(a) the municipal obligations are (i) not subject to redemption prior to maturity or (ii) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions;
(b) the municipal obligations are secured by cash or United States Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations;
(c) the principal of and interest on the United States Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certif ied public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations (“Verification”); (d) the cash or United States Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations; and
(e) no substitution of a United States Treasury Obligation shall be permitted except with another United States Treasury Obligation and upon delivery of a new Verification; and
(f) the cash or the United States Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent. 284
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Collateral Levels For United States Treasury Obligations Remaining Maturity
Frequency of
Valuation
1 year
or less
5 years
or less
10 years
or less
15 years
or less
30 years
or less
Daily 102 105 106 108 114
Weekly 103 111 112 114 120
Monthly 105 117 120 125 133
Quarterly 107 120 130 133 140
Further Requirements: (a) On each valuation date, the City, or the custodian who shall confirm to the City and the Trustee, shall value the market value (exclusive of accrued interest) of the collateral, which market value will be an amount equal to the requisite collateral percentage times the principal amount of the investment (including unpaid accrued interest thereon) that is being secured, (b) in the event the collateral level is below its collateral percentage on a valuation date, such percentage shall be re stored within the following restoration periods: one Business Day for daily valuations, two Business Days for weekly and monthly valuations, and one month for quarterly valuations (the use of different restoration periods affect the requisite collateral p ercentage), (c) the City or the Trustee (acting at the direction of the City) shall terminate the repurchase agreement or the investment agreement, as the case may be, upon a failure to maintain the requisite collateral percentage after the restoration period and, if not paid by the counterparty in federal funds against transfer of the collateral, liquidate the collateral.
The Trustee shall have no responsibility to monitor the ratings of Permitted Investments after the initial purchase of such Permitted Investments.
“Person” means an individual, corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof.
“Principal Fund” means the fund by that name established in accordance with Section 5.02 hereof.
“Rebate Fund” means the fund by that name established in accordance with Section 5.05 hereof.
“Rebate Requirement” has the meaning ascribed thereto in the Tax Certificate. “Record Date” means the first day of the month in which an Interest Payment Date occurs, whether or not such day is a Business Day.
“Redemption Fund” means the fund by that name established in accordance with Section 5.02 hereof.
“Redemption Price” means the aggregate amount of principal of and premium, if any, on the Bonds upon the redemption thereof pursuant hereto.
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“Registration Books” means the records maintained by the Trustee for the registration of ownership and registration of transfer of the Bonds pursuant to Section 2.05 hereof. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments.
“Rental Period ” means the period from the Closing Date through June 15, 2022 and, thereafter, the twelve-month period commencing on June 16 of each year during the term of the Lease Agreement.
“S&P” means S&P Global Ratings, its successors and assigns, except that if such entity shall no longer perform the functions of a securities rating agency for any reason, the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. “Supplemental Indenture ” means any supplemental indenture amendatory of or supplemental to this Indenture, but only if and to the extent that such Supplemen tal Indenture is specifically authorized hereunder.
“Tax Certificate” means the tax certificate delivered by the Authority and the City at the Tax- Exempt Reissuance Date, as the same may be amended or supplemented in accordance with its terms. “Taxable Interest” means the interest borne by the Bonds prior to the Tax-Exempt Reissuance Date, which interest shall be included in gross income for federal income tax purposes. “Taxable Rate” means the rate of 3.25% per annum.
“Tax-Exempt Interest” means the inter est to be borne by the Bonds on and after the Tax - Exempt Reissuance Date, which interest is excluded from gross income for federal income tax purposes.
“Tax-Exempt Rate” means the rate of 2.65% per annum.
“Tax-Exempt Reissuance Date” means the date on which the Bonds bearing Taxable Interest is reissued (for federal income tax purposes) for Bonds bearing Tax -Exempt Interest pursuant to Section 2.11 hereof.
“Trustee” means U.S. Bank Trust Company, National Association , a national bank ing association duly organized and existing under and by virtue of the laws of the United States, or any successor thereto as Trustee hereunder, appointed as provided herein. “Written Certificate of the Authority ” and “ Written Request of the Authority ” mea n, respectively, a written certificate or written request signed in the name of the Authority by an Authorized Authority Representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opini on or representation, and the two or more so combined shall be read and construed as a single instrument “Written Certificate of the City” and “Written Request of the City” mean, respectively, a written certificate or written request signed in the name of the City by an Authorized City Representative. Any such certificate or request may, but need, not, be combined in a single instrument 286
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with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.
Section 1.02 Equal Security. In consideration of the acceptance of the Bonds by the Owner thereof, this Indenture shall be deemed to be and shall constitute a contract among the Authority, the City, the Trustee and the Owner from time to time of all B onds authorized, executed, issued and delivered hereunder and then Outstanding to secure the full and final payment of the principal of, premium, if any, and interest on all Bonds which may from time to time be authorized, executed, issued and delivered he reunder, subject to the agreements, conditions, covenants and provisions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Authority or the City shall be for the equal and proportionate benefit, prot ection and security of the Owner of the Bonds without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number or date thereof or the time of authorization, sale, execution, issuance or deliv ery thereof or for any cause whatsoever, except as expressly provided herein or therein.
ARTICLE II
THE BONDS
Section 2.01 Authorization of Bonds. The Authority hereby authorizes the issuance of the Bonds under and subject to the terms of this Indenture and applicable laws of the State of California for the purpose of refinancing the Project.
Section 2.02 Terms of the Bonds.
(a) The Bonds shall be designated the “Sanger Financing Authority Lease Revenue Refunding Bonds, Series 2022A.”
(b) The Bonds shall be issued in the aggregate principal amount of $__________ and shall be dated the Closing Date, with a final maturity of June 15, 2043. From the Closing Date of the Bonds until the Tax -Exempt Reissuance Date, the Bonds shall bear interest at the Taxable Rate (calculated on the basis of a 360 -day year comprised of twelve 30 -day months) and on and after the Tax-Exempt Reissuance Date, if any, the Bonds shall bear interest at the Tax-Exempt Rate (calculated on the basis of a 360 -day year comprised of twelve 30 -day months); provided, however, that so long as any event of default as provided in Section 7.01 shall have occurred and is continuing, the interest rate on the Bonds may, at the option of the Owner of the Bonds, be increased to the Default Rate and interest thereon shall be calculated in accordance with the definition of Default Rate; provided further, however, from and after the Date of Taxability following a Determination of Taxability, the interest rate on the Bonds shall be increased to the Taxable Rate . Interest on the Bonds shall be payable on each Interest Payment Date, commencing June 15, 2022. The Bonds shall be issued in fully registered form, registered in the Registration Books in the name of the Original Purchaser, as a single certificated bond, without coupons.
(c) Interest on the Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the pr eceding Record Date, in which event it shall bear interest from such Interest Payment Date, (ii) a Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the dated date thereof, or (iii) interest on 287
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any Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has been paid in full, payable on each Interest Payment Date.
Interest shall be paid in lawful money of the United States 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 shall be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Bond Owner at its address shown on the Registration Books as of the close of business on the preceding Record Date.
(d) The principal and premium, if any , of the Bond s shall be payable in installments in lawful money of the United States of America without presentation and surrender thereof except upon final maturity or earlier redemption at the Office of the Trustee. (e) Notwithstanding anything herein to t he contrary, so long as the Bond s are owned by the Original Purchaser: (i) the Trustee shall pay principal of and interest and premium on, if any, on the Bonds when due by wire transfer in immediately available funds to the Original Purchaser in accordance with such wire transfer instructions as shall be filed by the Original Purchaser with the Trustee from time to time; (ii) payments of principal on the Bond s shall be made without the requirement for presentation and surrender by the Original Purchaser, provided that principal which is payable at maturity or full redemption shall be made only upon presentation and surrender at the Office of the Trustee; and (iii) the Trustee shall not be required to give notice to the Original Purchaser of the mandatory sinking fund payments described in Section 4.01(d). (f) The Bonds shall be subject to redemption as provided in Article IV.
Section 2.03 Form of Bonds . The Bonds shall be in subs tantially the form set forth in Exhibit A hereto, with appropriate or necessary insertions, omissions and variations as permitted or required hereby.
Section 2.04 Transfer and Exchange of Bonds . Any Bond may, in accordance with its terms, be transferred upon the Regis tration Books by the Person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the T rustee.
Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds in a like aggregate principal amount, in an Authorized Denomination. The Trustee sh all require the Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer.
Notwithstanding anything to the contrary set forth in this Indenture, the Owner of the Bonds may only transfer Bonds, in whole, to a new Owner who is: (i) an affiliate of the Original Purchaser of the Bonds; (ii) a “Bank” as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”); (iii) an “Accredited Investor” as defined in R egulation D under the Securities Act; or (iv) a “Qualified Institutional Buyer” as defined in Rule 144A under the Securities Act.
The Trustee shall not be obligated to make any transfer or exchange of Bonds pursuant to this Section during the period established by the Trustee for the selection of Bonds for redemption, or with respect to any Bonds selected for redemption.
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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 an d transfer of ownership of the Bonds, which shall be open to inspection during regular business hours and upon reasonable notice by the City; 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 Execution of Bonds. The Bonds shall be executed in the name and on behalf of the Authority with the manual or facsimile s ignature of an Authorized Officer of the Authority attested by the manual or facsimile signature of the Secretary of the Authority. The Bonds shall then be delivered to the Trustee for authentication by it. In case any of such officers of the Authority w ho shall have signed or attested any of the Bonds shall cease to be such officers of the Authority before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee, or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as though those who signed and attested the same had continued to be such officers of the Authority, and also any Bonds may be signed and attested on behalf of the Authority by such Persons as at the actual date of execution of such Bonds shall be the proper officers of the Authority although at the nominal date of such Bonds any such Person shall not have been such officer of the Authority.
Section 2.07 Authentication of Bonds . Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form as that set forth in Exhibit A hereto, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of or on behalf of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.08 Temporary Bonds . The Bonds may be issued in temporary form exchangeable for definitive Bonds when ready for delivery. Any temporary Bonds may be printed, lithographed or typewritten, shall be in an Authorized Denomination as may be det ermined by the Authority, shall be in fully registered form without coupons and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds it will execute and deliver definitive Bonds as promptly thereafter as practicable, and thereupon the temporary Bonds, ma y be surrendered, for cancellation, at the Office of the Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds in an Authorized Denomination. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder.
Section 2.09 Bonds Mutilated, Lost, Destroyed or Stolen . If any Bond shall become mutilated, the Authority, at the expense of the Owner of said 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. Every mutilate d Bond so surrendered to the Trustee shall be canceled by it and delivered to, or in accordance with the order of, the Authority. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee a nd, the Owner of said lost, destroyed or stolen Bond shall indemnify the Trustee , 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 replacement for the Bond 289
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so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been selected for redemption, instead of issuing a replacement Bond, the Trustee may pay the same without surrender thereof). The Authority may require payment by the Owner of a sum not exceeding the actual cost of preparing each replacement Bond issued under this Section and of the expenses which may be incurred by the Authority and the Trustee. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall 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 entitled to the benefits of this Indenture with all other Bonds secured by this Indenture.
Section 2.10 Conversion to Tax-Exempt Interest Rate. The Bonds shall initially be issued bearing Taxable Interest. The interest rate on the Bonds shall convert to the Tax-Exempt Rate on any Business Day on or after March 17, 2023, upon the satisfaction of the following conditions precedent to such conversion:
(a) The written election of the Authority and the City to the Owner and the Trustee to convert the interest rate payable with respect to the Bonds to the Tax-Exempt Rate in the form attached hereto as Exhibit B;
(b) The issuance of an opinion of Bond Counsel to the effect that subject to the Authority’s and the City’s compliance with certain covenants, interest payable with respect to the Bonds is excludable from gross income of the Owner thereof for federal income tax purposes, and is not included as an item of tax preference in computing the alternative minimum tax under the Code substantially in the form attached hereto as Exhibit C;
(c) Delivery of a Tax Certificate executed by the Authority and the City with respect to certain tax matters relating to the Bonds after interest payable with respect thereto is converted to a Tax-Exempt Rate;
(d) Delivery of a new Bond to the Owner and the remittance of the prior Bond; (e) The selection by the Owner of one of the four post-conversion optional redemption schedules provided in the form attached hereto as Exhibit D, which shall become applicable to the Bonds on and after the Tax-Exempt Reissuance Date to maturity or prior redemption; and (f) The Authority prepares and executes on the Tax-Exempt Reissuance Date an IRS Form 8038-G (or other required information return) for filing after the Closing Date.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
Section 3.01 Issuance of Bonds . The Authority may, at any time, execute the Bonds for issuance hereunder and deliver the same to the Trustee. The Trustee shall authenticate the Bonds and deliver the Bonds to the Original Purchaser thereof upon receipt of a Written Request of the Authority and upon receipt of the purchase price therefor.
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Section 3.02 Application of Proceeds of the Bonds. On the Closing Date, the proceeds of the sale of the Bonds received by the Trustee in the amount of $__________ shall be deposited and transferred by the Trustee as follows:
(a) The Trustee shall deposit the amount of $__________ in the Costs of Issuance Fund.
(b) The Trustee transfer $ __________ to the Escrow Agent for deposit in the Escrow Fund.
Section 3.03 Costs of Issuance Fund. The Trustee shall establish and maintain a separate fund designated the “Costs of Issuance Fund.” On the Closing Date, there shall be deposited in the Costs of Issuance Fund the amount specified in Section 3.02 hereof.
The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of the Authority stating (a) the Person to w hom payment is to be made, (b) the amount to be paid, (c) the purpose for which the obligation was incurred, (d) that such payment is a proper charge against the Costs of Issuance Fund, and (e) that such amounts have not been the subject of a prior disburs ement from the Costs of Issuance Fund, in each case together with a statement or invoice for each amount requested thereunder.
On June 1, 2022, all amounts, if any, remaining in the Costs of Issuance Fund shall be withdrawn therefrom by the Trustee and tr ansferred to the Interest Fund. Thereafter, the Costs of Issuance Fund shall be closed.
Section 3.04 No Additional Bonds. Other than the Bonds, the Authority shall not issue any bonds or obligations payable from the Base Rental Payments.
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01 Redemption of Bonds.
(a) Extraordinary Redemption . The Bonds shall be subject to redemption, in whole or in part, on any date, from and to the extent of any Net Insurance Proceeds received with respect to all or a portion of the Property, deposited by the Trustee in the Redemption Fund pursuant to Sections 5.03 and 5.04 hereof, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. (b) Optional Redemption. Prior to the Tax -Exempt Reissuance Date, the Bonds shall be subject to optional redemption, in whole or in part, on any Interest Payment Date, from and to the extent of prepaid Base Rental Payments paid pursuant to subsection (a) of Section 7.02 of the Lease Agreement, at a Redemption Price as set forth in the prepayment schedule set forth in the Lease Agreement.
(c) On and after the Tax -Exempt Reissuance Date, if any, the Bonds shall be subject to redemption in accordance with the selection of the Owner as provided in Section 2.10(e) hereof.
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(d) Sinking Fund Redemption. The Bonds maturing on June 15, 2043 are subject to mandatory sinking fund redemption in part (by lot) on each June 15 on and after June 15, 2022, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
Sinking Fund Redemption Date
(June 15)
Principal Amount
To Be Redeemed
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043 (maturity)
In the event of a redemption pursuant to Section 4.01(a), (b) or (c), the City shall provide the Trustee with a revised mandatory sinking fund schedule that is approved by the Owner, giving effect to the redemption so completed.
Section 4.02 Notice of Redemption. At least 20 but not more than 60 days prior to the date fixed for redemption the Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice of any redemption to the Owner of the Bonds designated for redemption at its address appearing on the Registration Books. Such notice shall state the date of the notice, the redemption date, the redemption place and the Redemption Price, and shall require that such Bonds be then surrendered at the Office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Bonds will not accrue from and after the date fixed for redemption. Such notice may state that such redemption is conditioned upon sufficient funds being on deposit on the redemption date to redeem the Bonds so called for redemption. Neither the failure to receive any notice so mailed, nor any defect in such notice, shall affect the validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption.
Section 4.03 Selection of Bonds for Redemp tion. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be 292
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redeemed from all Bonds not previously called for redemption as directed in a Written Request of the Authority.
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 in an Authorized Denomina tion equal in aggregate principal amount representing the unredeemed portion of the Bonds surrendered.
Section 4.05 Effect of Notice of Redemption. Notice having been mailed as aforesaid, and moneys for the Redemption Price, and the interest to the applicable date fixed for redemption, having been set aside in the Redemption Fund, the Bonds shall become due and payable on said date, and, upon presentation and surrender thereof at the Office of the Trustee, said Bonds shall be paid at the Redemption Price thereof, together with interest accrued and unpaid to said date.
If, on said date fixed for redemption, moneys for the Redemption Price of all the Bonds to be redeemed, together with interest to said date, shall be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof shall have been mailed as aforesaid and not canceled, then, from and after said date, interest on said Bonds shall cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the re demption of Bonds shall be held in trust for the account of the Owner of the Bonds so to be redeemed without liability to such Owner for interest thereon.
All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed.
ARTICLE V
SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS
Section 5.01 Pledge; Special Obligations. 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 Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund, the Interest Fund, the Principal Fund and the Redemption Fund are hereby pledged to secure the pay ment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of this Indenture and the Act. Said pledge shall constitute a first lien on such assets.
All obligations of the Authority under this Indent ure shall be special obligations of the Authority, payable solely from Rental Payments and the other assets pledged therefor hereunder; provided, however, that all obligations of the Authority under the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor hereunder. Neither the faith and credit nor the taxing power of the Authority, the City or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds.
Section 5.02 Flow of Funds.
(a) The Trustee shall establish and maintain separate funds designated the “Base Rental Payment Fund,” the “Interest Fund,” the “Principal Fund” and the “Redemption Fund.” Within the Base Rental Payment Fund, the Trustee shall establish the “Prepaid Base Rental Account.” 293
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All Base Rental Payments shall be paid directly by the City to the Trustee, and if received by the Authority at any time shall be transferred by the Authority with the Trustee within one Business Day after the receipt thereof. All Base Rental Payments received by the Trustee shall be deposited by the Trustee in the Base Rental Payment Fund. (b) The Trustee shall transfer the amounts on deposit in the Base Rental Payment Fund, at the times and in the manner hereinafter provided, to the following respective funds:
(i) Interest Fund . On the Business Day immediately preceding each Interest Payment Date, the Trustee shall transfer from the Base Rental Payment Fund to the Interest Fund the amount, if any, necessary to cause the amount on deposit in the Interest Fund to be equal to the interest due on the Bonds on such Interest Payment Date. (ii) Principal Fund. On the Business Day immediately preceding each June 15, commencing June 15, 2022, the Trustee shall transfer from the Ba se Rental Payment Fund to the Principal Fund the amount, if any, necessary to cause the amount on deposit in the Principal Fund to be equal to the principal amount of the Bonds due on such June 15, either as a result of the maturity thereof or mandatory si nking fund redemption payments required to be made with respect thereto.
Moneys in the Principal Fund shall be used by the Trustee for the purpose of paying the principal of the Bonds when due and payable at their maturity dates or upon earlier mandatory sinking fund redemption.
(iii) Redemption Fund. The Trustee, on the redemption date specified in the Written Request of the City filed with the Trustee at the time that any prepaid Base Rental Payment is paid to the Trustee pursuant to the Lease Agreement, shal l deposit in the Redemption Fund that amount of moneys representing the portion of the Base Rental Payments designated as prepaid Base Rental Payments. Additionally, the Trustee shall deposit in the Redemption Fund any amounts required to be deposited the rein pursuant to Section 5.03 or Section 5.04 hereof. Moneys in the Redemption Fund shall be used by the Trustee for the purpose of paying the principal of and interest and premium, if any, on Bonds redeemed pursuant to the provisions of subsections (a), (b) and (c) of Section 4.01 hereof.
(c) Upon receipt of a Written Certificate of the City pursuant to Section 3.06 of the Lease Agreement that the City has commenced repairs of the Property, the Trustee will transfer moneys from the Prepaid Base Rental Account at the times and in the manner required by subsection (b) above if and to the extent there are insufficient funds in the Base Rental Payment Fund to make such transfers.
Upon receipt of a Written Certificate of the City pursuant to Section 3.06 of the Lease Agreement that the City has completed repairs of the Property and will recommence to make Base Rental Payments, or that the City has determined not to make such repairs or such repairs do not require the City to vacate the Property, and made the certifications required pursuant to the Lease Agreement , the Trustee will transfer any funds remaining on deposit in the Prepaid Base Rental Account to the City for any lawful use.
(d) Surplus. Any amounts remaining in the Base Rental Payment Fund shall be withdrawn therefrom and transferred to the City to be used for any lawful purposes of the City.
Section 5.03 Application of Net Insurance Proceeds. If the Property or any portion thereof shall be damaged or destroyed, subject to the further requirements of this Section, the C ity shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or 294
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replacement thereof, unless the City elects not to repair or replace the Property or the affected portion thereof in accordance with the provisions hereof.
The Net Insurance Proceeds (other than Net Insurance Proceeds of rental interruption insurance), including the proceeds of any self -insurance, received on account of any damage or destruction of the Property or a portion thereof shall as soon as possible be deposited with the Trustee and be held by the Trustee in a special account and made available for and, to the extent necessary, shall be applied to the cost of repair or replacement of the Property or the affected portion thereof upon receipt of a Written Request of the City, together with invoices therefor. Pending such application, such proceeds may be invested by the Trustee as directed by the City in Permitted Investments that mature not later than such times moneys are expected to be needed to pay such costs of repair or replacement.
Notwithstanding the foregoing, the City shall, within 60 days of the occurrence of the event of damage or destruction, notify the Trustee in writing as to whether the City intends to replace or repair the Property or the portions of the Property which were damaged or destroyed. If the City does intend to replace or repair the Property or portions thereof, the City shall deposit with the Trustee the full amount of any insurance deductible to be credited to the special account.
If the damage, destruction or loss was such that there resulted a substantial interference with the City’s right to the use or occupancy of the Property and an abatement of Rental Payments results from such damage or destruction pursuant to Section 3.06 of the Lease Agreement, then the City shall be required either to (a) apply sufficient funds from the insurance proceeds and other legally available funds to the replacement or repair of the Property or the portions thereof which have been damaged to the condition which existed prior to such damage or destruction, or (b) apply sufficient funds from the insurance proceeds and other legally available funds to the redemption, as set forth in subsection (a) of Section 4.01 hereof, in full of all the Outstanding Bonds or all of those Outstanding Bonds which would have been payable from that portion of the Base Rental Payments which are abated as a result of the damage or destruction. Funds to be applied to the redemption of Bonds in accordance with clause (b) above shall be deposited in the Redemption Fund. If the City is not required to replace or repair the Property, or the affected portion thereof, as set forth in clause (a) above or to use such amounts to redeem Bonds as set forth in clause (b) above, then such proceeds shall, if there is first delivered to the Trustee a Written Certificate of the City to the effect that the annual fair rental value of the Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, is at least equal to 100% of the maximum amount of Base Rental Payments becoming due under the Lease Agreement in the then current Rental Period or any subsequent Rental Period and the fair replacement value of the Property after such damage or destruction is at least equal to the principal amount of the Outstanding Bonds, be paid to the City to be used for any lawful purpose.
Proceeds of rental interruption insurance shall be applied to the payment of Base Re ntal Payments to the extent of any abatement thereof pursuant to the Lease Agreement, and otherwise as directed in writing by the City.
The proceeds of any award in eminent domain received in respect to the Property shall be deposited by the Trustee in the Redemption Fund and applied to the redemption of Bonds pursuant to subsection (a) of Section 4.01 hereof.
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Section 5.04 Title Insurance . Proceeds of any policy of title insurance received by the Trustee in respect of the Property shall be applied and disbursed by the Trustee as follows:
(a) if the City determines that the title defect giving rise to such proceeds has not substantially interfered with its use and occupancy of the Property and will not result in an abatement of Rental Payments payable by the City under the Lease Agreement, such proceeds shall be remitted to the City and used for any lawful purpose thereof; or (b) if the City determines that the title defect giving rise to such proceeds has substantially interfered with its use and occupancy of the Property a nd will result in an abatement of Rental Payments payable by the City under the Lease Agreement, then the Trustee shall immediately deposit such proceeds in the Redemption Fund and such proceeds shall be applied to the redemption of Bonds in the manner provided in subsection (a) of Section 4.01 hereof.
Section 5.05 Rebate Fund.
(a) Upon the conversion to the Tax -Exempt Rate on the Tax -Exempt Reissuance Date, the Trustee shall establish and maintain a special fund designated the “Rebate Fund” and the provisions in this Section 5.05 shall become applicable to the Bonds. There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate, as specified in a Written Request of the Authority. All money at any time depo sited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement, for payment to the United States of America. Notwithstanding defeasance of the Bonds pursuant to Article X hereof or anything to the contrary contained herein, all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclus ively to have complied with such provisions if it follows the written directions of the Authority, and shall have no liability or responsibility to enforce compliance by the Authority with the terms of the Tax Certificate. The Trustee may conclusively rely upon the Authority’s determinations, calculations and certifications required by the Tax Certificate. The Trustee shall have no responsibility to independently make any calculation or determination or to review the Authority’s calculations. (b) Any funds re maining in the Rebate Fund after payment in full of all of the Bonds and after payment of any amounts described in this Section, shall be withdrawn by the Trustee and remitted to the Authority.
Section 5.06 Investment of Moneys. Except as otherwise provided herein, al l moneys in any of the funds or accounts established pursuant to this Indenture and held by the Trustee shall be invested by the Trustee solely in Permitted Investments, as directed in writing by the Authority.
Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Indenture; provided, however, that such Permitted Investments may be redeemed at par so as to be available on each Interest Payment Date. Absent timely written direction from the Authority, the Trustee shall hold any funds held by it uninvested.
All interest, profits and other income received from the investment of moneys in any f und or account established pursuant to this Indenture shall be retained therein. 296
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Permitted Investments acquired as an investment of moneys in any fund established under this Indenture shall be credited to such fund. For the purpose of determining the amou nt in any fund, all Permitted Investments credited to such fund shall be valued by the Trustee at the fair market value thereof, such valuation to be performed not less frequently than semiannually on or before each March 15 and September 15. In determini ng fair market value, the Trustee may use and rely conclusively on any generally recognized securities pricing service available to it (including brokers and dealers in securities). The parties hereto acknowledge that the Trustee is not providing investment supervision, recommendations or advice.
The Trustee may act as principal or agent in the making or disposing of any investment. Upon the Written Request of the Authority, the Trustee shall sell or present for redemption any Permitted Investments so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investments is credited, and the Trustee shall not be liable or responsible f or any loss resulting from any investment made or sold pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of the funds and accounts established hereunder.
The Trustee may make any investments hereunder through the bond or investment department or trust investment department of the entity acting as Trustee hereunder, or those of such entity’s parent or any affiliate, and such entity, or its parent or affiliate, as applicable, shall be entitled to its normal, customary and reasonable compensation for such services.
The entity acting as Trustee hereunder, or any of its affiliates, may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder and such entity, or its affiliate, as applicable, shall be entitled to its normal, customary and reasonable compensation for such services.
The Authority and the City acknowledge that, to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority and the City the right to receive brokerage confirmations of security transactions as they occur, at no additional cost, the Authority and the City specifically waive receipt of such confirmations to the extent permitted by law.
ARTICLE VI
COVENANTS
Section 6.01 Compliance with Agreements. The Trustee will not authenticate or deliver any Bonds in any manner other than in accordance with the provisions hereof, and the Authority and the City will not suffer or permit any default by them to occur hereunder, but will f aithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms hereof required to be complied with, kept, observed and performed by them.
Section 6.02 Compliance with Ground Lease and Lease Agreement. The Authority and the City wi ll faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Ground Lease and the Lease Agreement required to be complied with, kept, observed and performed by them and, together with the Trustee , will enforce the Ground Lease and the Lease Agreement against the other party thereto in accordance with their respective terms.
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Section 6.03 Observance of Laws and Regulations . The Authority, the City and the Trustee will faithfully comply with, keep, observe and p erform all valid and lawful obligations or regulations now or hereafter imposed on them by contract, or prescribed by any law of the United States of America or of the State of California, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by them, including their right to exist and carry on their respective businesses, to the end that such franchises, rights and priv ileges shall be maintained and preserved and shall not become abandoned, forfeited or in any manner impaired.
Section 6.04 Other Liens. The City will keep the Property and all parts thereof free from judgments and materialmen’s and mechanics’ liens and free from all claims, demands, encumbrances and other liens of whatever nature or character, and free from any claim or liability which materially impairs the City in conducting its business or utilizing the Property, and the Trustee at its option (after first giving the City ten days’ written notice to comply therewith and failure of the City to so comply within such ten-day period) may, but is in no event obligated to, defend against any and all actions or proceedings, or may pay or compromise any claim or demand assert ed in any such actions or proceedings; provided, however, that, in defending against any such actions or proceedings or in paying or compromising any such claims or demands, the Trustee shall not in any event be deemed to have waived or released the City from liability for or on account of any of its agreements and covenants contained herein, or from its liability hereunder and to perform such agreements and covenants.
So long as any Bonds are Outstanding, none of the Trustee, the Authority or the City shal l create or suffer to be created any pledge of or lien the amounts on deposit in any of the funds or accounts created hereunder, other than the pledge and lien hereof.
The Authority, the City and the Trustee shall not encumber the Property other than in accordance with the Ground Lease, the Lease Agreement, the Indenture and the Assignment Agreement.
Section 6.05 Prosecution and Defense of Suits . The City will promptly, upon request of the Trustee (which request the Trustee is not required to make), take such action fr om time to time as may be necessary or proper to remedy or cure any cloud upon or defect in the title to the Property or any part thereof, whether now existing or hereafter developing, will prosecute all actions, suits or other proceedings as may be appropriate for such purpose and will indemnify and save the Trustee harmless from all cost, damage, expense or loss, including attorneys’ fees and expenses, which it or the Owner may incur by reason of any such cloud, defect, action, suit or other proceeding.
Section 6.06 Accounting Records and Statements . The Trustee will keep proper accounting records in which complete and correct entries shall be made of all transactions relating to the receipt, deposit and disbursement of the Base Rental Payments, and such accounting records shall be available for inspection by the Authority and the City at reasonable hours and under reasonable conditions.
Section 6.07 Recordation and Filing. The City will record, or cause to be recorded, with the appropriate county recorder, the Lease Agreement, th e Ground Lease and the Assignment Agreement, or memoranda thereof.
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Section 6.08 Tax Covenants.
(a) On and after the Tax -Exempt Reissuance Date, if any, this Section 6.08 shall apply to the Bonds. Neither the Authority nor the City will take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on any tax-exempt Bonds under Section 103 of the Code. Without limiting the generality of the foregoing, the Authority and the City w ill comply with the requirements of the Tax Certificate, which is incorporated herein as if fully set forth herein, This covenant shall survive payment in full or defeasance of the Bonds.
(b) In the event that at any time the Authority is of the opinion that for purposes of this Section it is necessary or helpful to restrict or limit the yield on the investment of any moneys held by the Trustee in any of the funds or accounts established hereunder, the Authority shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions.
(c) Notwithstanding any provisions of this Section, if the Authority shall provide to the Trustee an Opinion of Counsel to the effect that any specified action required under this Section is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Bonds, the Trustee may conclusively rely on such opinion in complying with the requirements of this Section and of the Tax Certificate, and the covenants hereunder shall be deemed to be modified to that extent.
Section 6.09 Reporting Requirements.
(a) Within two hundred seventy (270) days following the end of each Fiscal Year of the City, the City will provide the Owner of the Bonds with a copy of its audited financial statements for such Fiscal Year. Such audited financial statements shall include the City’s Comprehensive Annual Financial Report (“CAFR”), including such information as is required by app licable Government Accounting Standards Board pronouncements and applicable State law. Within thirty (60) days of adoption thereof, the City will provide the Owner of the Bonds with a copy of its annual budget. The City hereby agrees to provide the Owner o f the Bonds with such other information as may be reasonably requested by the Owner of the Bonds.
(b) Promptly upon knowledge thereof, the City will provide notice by telephone, confirmed in writing, of: (i) any event, action or failure to take any action whic h constitutes an event of default hereunder or under the Lease; and (ii) notice of any material litigation which may have a Material Adverse Effect, or any investigation, inquiry or similar proceeding by any governmental authority.
Section 6.10 Further Assurances. Whe never and so often as requested to do so by the Trustee, the Authority and the City will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Trustee all advantages, benefits, interests, powers, privileges and rights conferred or intended to be conferred upon it hereby or b y the Assignment Agreement, the Ground Lease or the Lease Agreement
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Section 6.11 No Public Registration. The Authority and the City shall not take any action which will cause the Bonds to (i) be assigned a rating by any credit rating agency, (ii) registered with The Depository Trust Company or any other securities depository, (iii) offered pursuant to any type of offering document or official statement or (iv) assigned a CUSIP number by Standard & Poor’s CUSIP Service.
ARTICLE VII
DEFAULT AND LIMITATIONS OF LIABILITY
Section 7.01 Action on Default. If an event of default (within the meaning of Article VI of the Lease Agreement) shall happen, then such event of default shall constitute an event of default hereunder. The Trustee shall give notice, as assignee of the Authority, of an event of default under the Lease Agreement to the City. In each and every case during the continuance of an event of default, the Trustee may and, at the direction of the Owner, and upon being indemnified to its reasonable satisfaction therefor, shall, upon notic e in writing to the City and the Authority, exercise any of the remedies granted to the Authority under the Lease Agreement and, in addition, take whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee pursu ant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the Owner by this Indenture or by the Bonds, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right, including any one or more of the remedies set forth in Section 7.02 hereof.
Section 7.02 Other Remedies of the Trustee . Subject to the provisions of Section 7.01 hereof, the Trustee shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Authority or the City or any member, director, officer or employee thereof, and to compel the Authority or the City or any such member, director, officer or employee to perform or carry out its or his or her duties under law and the agreements and covenants required to be performed by it or him or her contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violat e the rights of the Trustee; or
(c) by suit in equity upon the happening of any event of default hereunder to require the Authority and the City to account as the trustee of an express trust.
Section 7.03 Non-Waiver. A waiver of any default or breach of duty or contract b y the Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee by law or by this Article may be enforced and exercised from time to time and as often the Trustee shall deem expedient.
If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or a ny Owner, then subject to any adverse determination, the 300
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Trustee, such Owner, the Authority and the City shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken.
Section 7.04 Remedies Not Exclusive. Subject to the provisions of Section 7.01 hereof, no remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
Section 7.05 No Liability by the Authority to the Owner . Except as expressly provided herein, the Authority shall not have any obligation or liability to the Owner with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of the other agreements and covenants required to be performed by it contained in the Lease Agreement or herein, or with res pect to the performance by the Trustee of any right or obligation required to be performed by it contained herein.
Section 7.06 No Liability by the City to the Owner. Except for the payment when due of the Base Rental Payments and the performance of the other agreemen ts and covenants required to be performed by it contained in the Lease Agreement, the Ground Lease or herein, the City shall not have any obligation or liability to the Owner with respect to this Indenture or the preparation, execution, delivery or transfer of the Bonds or the disbursement of the Base Rental Payments by the Trustee to the Owner, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained herein.
Section 7.07 No Liability of the Trustee to the Owner. Except as expressly provided herein, the Trustee shall not have any obligation or liability to the Owner with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the Authority or the City of the other agreements and covenants required to be performed by them contained in the Lease Agreement, the Ground Lease or herein.
Section 7.08 Application of Amounts After Default. All payments received by the Trustee with respect to the rental of the Property after a default by the City pursuant to Article VI of the Lease Agreement (including, without limitation, any proceeds received in connection with the sale, assignment or sublease of the Authority’s right, title and interest in the Ground Lease), and all damages or other payments received by the Trustee for the enforcement of any rights and powers of the Trustee under Article VI of the Lease Agreement, shall be deposited into the Base Rental Payment Fund and as soon as practicable thereafter applied, together with all other funds held hereunder (except funds in the Rebate Fund):
(a) to the payment of all amounts due the Trustee under Article VIII hereof; (b) to the payment of all amounts then due for interest on the Bonds, in respect of which, or for the benefit of which, m oney has been collected (other than Bonds which have become payable prior to such event of default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of interest on such Bonds due and payable; and
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(c) to the payment of all amounts then due for principal of the Bonds, in respect of which, or for the benefit of which, money has been collected (other than Bonds which have become payable prior to such event of default and money fo r the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of principal of such Bonds due and payable.
Section 7.09 Trustee May Enforce Claims Without Possession of Bonds . All rights of action and claims under this Indenture or the Bonds 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 proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the benefit of the Owner in respect of which such judgment has been recovered.
Section 7.10 Limitation on Suits . The Owner shall not have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or Trustee, or for any other remedy hereunder, unless (a) the Owner shall have previously given written notice to the Trustee of a continuing event of default, (b) the Owner shall have afforded to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expe nses and liabilities to be incurred in compliance with such request, and (c) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceedings.
ARTICLE VIII
THE TRUSTEE
Section 8.01 Employment of the Trustee. The Authority hereby appoints and employs the Trustee to receive, deposit and disburse the Base Rental Payments, to authenticate, deliver and transfer the Bonds and to perform the other functions contained herein, all in the manner provided herei n and subject to the conditions and terms hereof. By executing and delivering this Indenture, the Trustee accepts the appointment and employment hereinabove referred to and accepts the rights and obligations of the Trustee provided herein, subject to the conditions and terms hereof. Other than when an event of default has occurred and is continuing, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations sh all be read into this Indenture against the Trustee. These duties shall be deemed purely ministerial in nature, and the Trustee shall not be liable except for the performance of such duties, and no implied covenants or obligations shall be read into this Agreement against the Trustee. In case an event of default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent p erson would exercise or use under the circumstances in the conduct of his own affairs. The Trustee hereby covenants and agrees that it will not encumber the Property.
Section 8.02 Duties, Removal and Resignation of the Trustee. The Authority may, by an instrument in writing, remove the Trustee initially a party hereto and any successor thereto unless an event of default shall have occurred and then be continuing, and shall remove the Trustee initially a party hereto and any successor thereto if at any time (a) requested to do so by an instrument or concurrent instruments in writing signed by the Owner (or its attorney duly authorized in writing), or (b) the Trustee shall cease to be eligible in accordance with the following sentence, and shall appoint a successor Trust ee. The Trustee and any successor Trustee shall be a banking corporation or 302
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association or trust company having (or if such banking corporation or association or trust company is a member of a bank holding company, its bank holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000 and subject to supervision or examination by federal or state authorities. If such banking corporation or association or trust company publishes a report of condition at least an nually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
The Trustee may at any time resign and be discharged from its duties and obligations hereunder at any time by giving written notice of such resignation to the Authority and the City and by giving notice, by first class mail, postage prepaid, of such resignation to the Owner at its address appearing on the Registration Books. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an inst rument in writing; provided, however, that in the event the Authority does not appoint a successor Trustee within 30 days following receipt of such notice of resignation, the resigning Trustee may, at the expense of the Authority, petition the appropriate court having jurisdiction to appoint a successor Trustee. Any resignation or removal of a Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee.
Any corporation, association or agency into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided that such entity meets the combined capital and surplus requirements of this Section, ipso facto, shall be and become successor trustee under this Indenture a nd vested with all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anyt hing herein to the contrary notwithstanding.
Section 8.03 Compensation of the Trustee . The City shall from time to time, subject to any written agreement then in effect with the Trustee, pay the Trustee reasonable compensation for all its services rendered hereunder a nd reimburse the Trustee for all its reasonable advances and expenditures (which shall not include “overhead expenses” except as such expenses are included as a component of the Trustee’s stated annual fees) hereunder, including but not limited to advances to and reasonable fees and reasonable expenses of accountants, agents, appraisers, consultants or other experts, and counsel not directly employed by the Trustee but an attorney or firm of attorneys retained by the Trustee, employed by it in the exercise and performance of its rights and obligations hereunder.
The Trustee may take whatever legal actions are lawfully available to it directly against the Authority or the City.
The City shall, to the extent permitted by law, indemnify and save the Trustee harmless against any liabilities, costs, claims or expenses, including those of its attorneys, which it may incur in the exercise and performance of its powers and duties hereunder, under the Lease Agreement, or in connection with any document or transaction contemplated hereunder or thereunder, including the enforcement of any remedies and the defense of any suit, and which are not due to its negligence or its misconduct. The duty of the City to indemnify the Trustee shall survive the termination and discharge of this Indenture and the earlier removal or resignation of the Trustee. 303
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No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereund er or in the exercise of any of its rights or powers hereunder.
Upon an event of default, and only upon an event of default, the Trustee shall have a first lien with right of payment prior to payment on account of principal of and premium, if any, and interest on any Bond, upon the trust estate for the foregoing fees, charges and expenses incurred by it. When the Trustee incurs expenses or renders services after the occurrence of an event of default, such expenses and the compensation for such services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law.
Section 8.04 Protection of the Trustee. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any affidavit, order, judgment, decree, bond, certificate, consent, notice, request, requisition, resolution, statement, telegram, voucher, waiver or other paper or document which it shall in good faith believe to be genuine and to have been adopted, executed or delivered by the proper party or pursuant to any of the provisions hereof, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of the Owner of the Bonds pursuant to this Indenture, unless the Owner shall have offered to the Trustee security or indemnity, reasonably satisfactory to the Trustee, against the reasonable costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Trustee may consult with counsel, who may be counsel to the Authority or the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect to any action taken or suffered by it hereunder in good faith in accordance therewith.
The Trustee shall not be responsible for the sufficiency of the Bonds or the Lease Agreement, or of the assignment made to it by the Assignment Ag reement, or for statements made in any preliminary or final official statement relating to the Bonds, or of the title to the Property.
Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the City or a Written Certificate of the Authority, and such certificate shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it deems reasonable.
The Trustee may buy, sell, own, hold and deal in any of the Bonds. The Trustee, either as principal or agent, may also engage in or be interested in any f inancial or other transaction with the Authority or the City, and may act as agent, depository or trustee for any committee or body of the Owner or of owners of obligations of the Authority or the City as freely as if it were not the Trustee hereunder.
The Trustee may, to the extent reasonably necessary, execute any of the trusts or powers hereof and perform any rights and obligations required of it hereunder by or through agents, attorneys or 304
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receivers, and shall be entitled to rely on and shall not be lia ble for any action taken or omitted to be taken by the Trustee in accordance with the advice of counsel or other professionals retained or consulted by the Trustee concerning all matters of trust and its rights and obligations hereunder, and the Trustee shall not be answerable for the negligence or misconduct of any such agent, attorney or receiver selected by it with reasonable care; provided, however, that in the event of any negligence or misconduct of any such attorney, agent or receiver, the Trustee shall in a commercially reasonable manner pursue all remedies of the Trustee against such agent, attorney or receiver. The Trustee shall not be liable for any error of judgment made by it in good faith unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
The Trustee shall not be answerable for the exercise of any trusts or powers hereunder or for anything whatsoever in connection with the funds established hereunder, except only for its own negligence or willful misconduct hereunder.
The Trustee shall not be deemed to have knowledge of an event of default unless a responsible officer of the Trustee shall have received actual knowledge thereof.
The Trustee may, on behalf of the Owner, intervene in any judicia l proceeding to which the Authority or the City is a party and which, in the opinion of the Trustee and its counsel, affects the Bonds or the security therefor, and shall do so if requested in writing by the Owner, provided the Trustee shall have no duty t o take such action unless it has been indemnified to its reasonable satisfaction against all risk or liability arising from such action.
The Trustee’s rights to immunities and protection from liability hereunder and its rights to payment of its fees and ex penses shall survive its resignation or removal and final payment or defeasance of the Bonds.
All indemnifications and releases from liability granted herein to the Trustee shall extend to the directors, officers, employees and agents of the Trustee (including its counsel).
The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty, and the Trustee shall not be answerable for other than its negligence or willful default. The Trustee shall have no responsibility or liability with respect to any information, statements or recitals in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of these Bonds. The Trustee shall not be accountable for the use or application by the Authority of any of the Bonds or the proceeds thereof or for the use or application of any money paid over by the Trustee in accordance with the provisions of this Indenture or for the use and application of money received by any paying ag ent. Neither the Trustee nor any of its directors, officers, employees, agents or affiliates shall be responsible for nor have any duty to monitor the performance or any action of the City, the Authority , or any of their directors, members, officers, agents, affiliates or employee, nor shall it have any liability in connection with the malfeasance or nonfeasance by such party. The Trustee may assume performance by all such Persons of their respective obligations. The Trustee shall have no enforcement or notification obligations relating to breaches of representations or warranties of any other person.
In no event shall the Trustee be responsible or liable for special, indirect, punitive, incidental or consequential loss or damage of any kind whatsoever (i ncluding, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action . The Trustee shall not be liable to the parties hereto or deemed in 305
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breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include but not limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics, quarantine restrictions or other similar occurrences.
The Trustee shall be entitled to request and receive written instructions hereunder and shall have no responsibility or liability for any losses or damages of any nature that may arise from any action taken or not taken by the Trustee in accordance with written directions received hereunder. The Trustee agrees to accept and act up on instructions or directions pursuant to this Indenture sent by unsecured e -mail, facsimile transmission or other similar unsecured electronic methods; provided, however, that the Trustee shall have received an incumbency certificate listing persons desig nated 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 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.
In acting or omitting to act pursuant to the Lease Agreement or Ground Lease, the Trustee shall be entitled to all of the rights, immunities and indemnities accorded to it under this Indenture and the Lease Agreement, including, but not limited to, this Article VIII.
ARTICLE IX
MODIFICATION OR AMENDMENTS
Section 9.01 Modifications and Amendments Permitted . This Indenture and the rights and obligations of the Authority, the City, the Owner of the Bond s and the Trustee may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into with the written consent of the Owner, which shall have been filed with the Trustee.
Section 9.02 Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Inde nture of the Authority, the City, the Trustee and all Owner 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 Suppl emental 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 pursuant to this Article may, and if the Authority so determines shall, bear a notation by endorsement or otherwise in form approved by the Authority and 306
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the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Owner of the Bonds Outstanding at the time of such execution and presentation of his Bonds for the purpose at the Office of the Trustee 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 and the Trustee, 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 of the Owner o f the 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 interest rate and maturity.
ARTICLE X
DEFEASANCE
Section 10.01 Discharge of Indenture. If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Owner of all Outstanding Bonds the principal thereof and the interest and premium, if any, thereon at the times and in the manner stipulated herein and therein, then the Owner of such Bonds shall cease to be entitled to the pledge of the Base Rental Payments and the other assets as provided herein, and all agreements, covenants and other obligations of the Authority and the City to the Owner of such Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority and the City all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the City all money or securities held by it pursuant hereto which are not required for the payment of the principal of and interest and premium, if any, on such Bonds,
Subject to the provisions of the above paragraph, when any of the Bonds shall have been paid and if, at the time of such payment, the Authority and the City shall have kept, performed and observed all of the covenants and promises in such Bonds and i n this Indenture required or contemplated to be kept, performed and observed by them on or prior to that time, then this Indenture shall be considered to have been discharged in respect of such Bonds and such Bonds shall cease to be entitled to the lien of this Indenture and such lien and all covenants, agreements and other obligations of the Authority and the City hereunder shall cease, terminate become void and be completely discharged as to such Bonds.
Notwithstanding the satisfaction and discharge of th is Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non-presentment of Bonds, and the duties of the Trustee in connection with all of the foregoing, shall remain in effect and shall be binding upon the Trustee and the Owner of the Bonds and the Trustee shall continue to be obligated to hold in trust any moneys or investments then held by the Trustee for the payment of the principal of and interest and premium, if any, on the Bonds, to pay to the Owner of Bonds the funds so held by the Trustee as and when such payment becomes due. Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the compensation and indemnity of the Trustee shall remain in effect and shall be binding upon the Trustee, the City and the Authority.
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Section 10.02 Bonds Deemed To Have Been Paid. If moneys shall have been set aside and held by the Trustee for the payment or redemption of any Bonds and the interest thereon at the maturity or redemption date thereof, such Bonds shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01 hereof. Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in Section 10.01 hereof if (a) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to mail, on a date in accordance with the provisions of Section 4.02 hereof, notice of redemption of such Bonds on said redemption date, said notice to be given in accordance with Section 4.02 hereof, (b) there shall have been deposited with the Trustee either (i) money in an amount which shall be sufficient, or (ii) Federal Securities that are not subject to redemption other than at the option of the holder thereof, the interest on and principal of which when paid will provide money which, together with the money, if any deposited with the Trustee at the same time, shall, as verified by an independent certified public accountant in a report filed with the Authority, the City and the Trustee, be sufficient to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and premium, if any, on such Bonds, (c) the Authority shall have delivered or cause to be delivered an (i) escrow agreement; and (ii) an opinion of Bond Counsel addressed to the Authority, the City and the Trustee to the effect that such Bonds have been discharged in accordance with the Indenture (which opinion may rely upon and assume the accuracy of the independent certified public accountant report referred to above) and (d) in the event such Bonds are not by their terms subject to redemption within the next succeeding 60 days, the Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the owner of such Bonds that the deposit required by clause (b) above has been made with the Trustee and that such Bonds, are deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and premium, if any, on such Bonds.
The Bonds shall be deemed Outstanding under this Indenture unless and until they are in fact paid and retired or the above criteria are met.
Section 10.03 Payment of Bonds After Discharge of Indenture . Notwithstanding any provisions of this Indenture, to the extent permitted by law, any moneys held by the Trustee in trust for the payment of the principal of, or premium or interest on, any Bonds and remaining unclaimed for two years after the date of deposit of such moneys, shall be repaid to the Authority (without liability for interest) 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 may (at the cost of the Authority) first mail, by first class mail postage prepaid, to the Owner of Bonds which have not yet been paid, a t the address 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 Benefits of Indenture Limited to Parties . Nothing contained herein, expressed or implied, is intended to give to any person other than the Authority, the City, the Trustee and the Owner any claim, remedy or right under or pursuant hereto, and any agreement, condition, 308
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covenant or term required herein to be observed or performed by or on behalf of the Authority or the City shall be for the sole and exclusive benefit of the Trustee and the Owner.
Section 11.02 Successor Deemed Included in all References to Predecessor . Whenever the Authority, the City or the T rustee, or any officer thereof, is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Authority, the City or the Trustee, or such officer, and all agreem ents, conditions, covenants and terms required hereby to be observed or performed by or on behalf of the Authority, the City or the Trustee, or any officer thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not.
Section 11.03 Execution of Documents by Owner. Any declaration, request or other instrument which is permitted or required herein to be executed by the Owner may be in one or more instruments of similar tenor and may be executed by the Owner in person or by its attorney appointed in writing. The fact and date of the execution by the Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affi davit of a witness of such execution duly sworn to before such notary public or other officer, or by such other proof as the Trustee may accept which it may deem sufficient.
The ownership of any Bonds and the amount, payment date, number and date of owning the same may be proved by the Registration Books.
Any declaration, request or other instrument in writing of the Owner of any Bond shall bind any future Owner of such Bond with respect to anything done or suffered to be done by the Authority, the City or the Trustee in good faith and in accordance therewith.
Section 11.04 Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the Authority or the City shall be individually or personally liable for the payment of any moneys, including without limitation, the principal of or interest on the Bonds, but nothing contained herein shall relieve any member, officer or employee of the City or the Authority from the performance of any official duty provided by an y applicable provisions of law, by the Lease Agreement or hereby.
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 may, in lieu of such cancellation and delivery, destroy such Bonds.
Section 11.06 Funds and Accounts . Any fund or account required to be established and maintained herein by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such funds and accounts shall at an times be main tained in accordance with sound accounting practice and with due regard for the protection of the security of the Bonds and the rights of the Owner.
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The Trustee may commingle any of the moneys held by it hereunder for investment purposes only; provided, ho wever, that the Trustee shall account separately for the moneys in each fund or account established pursuant to this Indenture. The Trustee may establish such funds and accounts as it deems necessary or appropriate to perform its obligations hereunder.
Section 11.07 Article and Section Headings Gender and References . The singular form of any word used herein, including the terms defined in Section 1.01 hereof, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include correlative words of the other genders. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to “Articles,” “Sections,” subsections or clauses are to the corresponding Articles, Sections, subsections or clauses hereof, and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, subsection or clause thereof.
Section 11.08 Entire Agreement; Partial Invalidity. This Indenture and the exhibits hereto set forth the entire agreement and understanding of the parties related to this transaction and supersedes all prior agreements and understandings, oral or written . If any one or more of the agreements, conditions, covenants or terms required herein to be observed or performed by or on the part of the Authority, the City or the Trustee shall be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms shall be null and void to the extent contrary to law and shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the Bonds, and the Owner shall retain all the benefit, protection and security afforded to them under any applicabl e provisions of law. The Authority, the City and the Trustee hereby declare that they would have executed this Indenture, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized the execution and delivery of the Bonds pursuant hereto irrespective of the fact that any one or more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.
Section 11.09 Disqualified Bonds. In determining whether the Owner has concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are actually known by the Trustee to be owned or held by or for the account of the Authority or the City, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; except that, in determining whether the Trustee shall be protected in relying upon any such demand, request, direction, consent or waiver of an Owner, only Bonds which the Trustee actually knows to be owned or held by or for the account of the Authority or the City, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded unless all Bonds are so owned or held, in which cas e such Bonds shall be considered Outstanding for the purpose of 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. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. 310
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Section 11.10 Money Held for Particular Bonds . The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to par ticular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owner of the Bonds entitled thereto, subject, however, to the provisions of Section 10.03 hereof but without any liability for interest thereon.
Section 11.11 Payment on Non-Business Days. 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 with the same effect as if made on such non-Business Day.
Section 11.12 California Law . This Indenture shall be construed and governed in accordance with the laws of the State of California. The parties hereby (i) irrevocably submit to the exclusive jurisdiction of any federal or state court sitting in California, (ii) waive any objection to laying of venue in any such action or proceeding in such courts, and (iii) waive any objection that such courts are an inconvenient forum or do not have jurisdiction over any party.
Section 11.13 Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely:
If to the City: City of Sanger
1700 7th Street
Sanger, California 93657
Attention: City Manager
If to the Authority: Sanger Financing Authority
c/o City of Sanger
1700 7th Street
Sanger, California 93657
Attention: Executive Director
If to the Trustee: U.S. Bank Trust Company, National Association, 633 West 5th Street, 24th Floor
Los Angeles, California 90071
Attention: Global Corporate Trust
Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier, u pon the sender’s receipt of an appropriate answer back or other written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (d) if given by any other means, upon delivery at the address specified in this Section.
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Section 11.14 Execution in Counter parts. This Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Authority and the City have caused this Indenture to be signed in their respective names by their representative thereunto duly authorized, and the Trustee, 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,
SANGER FINANCING AUTHORITY
By:
Executive Director
ATTEST:
Secretary
CITY OF SANGER
By:
City Manager
ATTEST:
City Clerk
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U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
By:
Authorized Officer
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EXHIBIT A
FORM OF BOND
No. ____ $___________
THE REGISTERED OWNER OF THIS BOND ACKNOWLEDGES AND AGREES THAT THIS BOND MAY
ONLY BE TRANSFERRED IN WHOLE TO A NEW OWNER WHO DELIVERS TO THE AUTHORITY, THE CITY AND THE TRUSTEE A PURCHASER’S CERTIFICATE IN THE FORM REQUIRED BY THE
INDENTURE WHO IS (I) AN AFFILIATE OF THE ORIGINAL PURCHASER OF THIS BOND, (II) A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT , OR (III) AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT
SANGER FINANCING AUTHORITY
LEASE REVENUE REFUNDING BOND
SERIES 2022A
INTEREST RATE MATURITY DATE DATED DATE
______% June 15, 2043 _________, 2022
REGISTERED OWNER:
PRINCIPAL AMOUNT: _________________________ DOLLARS
The Sanger Financing Authority (the “Authority”), for value received, hereby promises to pay, solely from the Base Rental Payments (as hereinafter defined) or amounts in certain funds and accounts held under the Indenture (as hereinafter defined), to the Registered Owner identified abo ve or registered assigns (the “Registered Owner”); on the Maturity Date identified above or on any earlier redemption date, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest R ate identified above in like lawful money from the date hereof payable semiannually on June 15 and December 15 in each year, commencing June 15, 2022 (the “Interest Payment Dates”), until payment of such Principal Amount in full; provided, however, that so long as any event of default shall have occurred and is continuing, the interest rate on the Bonds may, at the option of the Owner of the Bonds, be increased to the Default Rate as provided in the Indenture ; provided further, however, from and after the D ate of Taxability following a Determination of Taxability, the interest rate on the Bonds shall be increased to the Taxable Rate. This Bond shall bear interest from the Interest Payment Date next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the close of business on the first calendar day of the month in which such Interest Payment Date occurs, whether or not such day is a Business Day, in which event it shall bear inter est from such Interest Payment Date, or unless this Bond is authenticated on or prior to June 1, 2022, in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, interest on this Bond shall be payable from the date to which interest hereon has been paid in full, payable on each Interest Payment Date). The Principal Amount hereof is payable upon surrender hereof upon maturity or earl ier redemption at the Office of 315
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the Trustee (as hereinafter defined). Interest hereon is payable by wire or check of U.S. Bank Trust Company, National Association, as Trustee (the “Trustee”), mailed by first class mail, postage prepaid, on each Interest Payment Date to the Registered Owner hereof at the address of the Registered Owner shown on the Registration Books at the close of business on the first calendar day of the month in which such Interest Payment Date occurs. “Office of the Trustee” means the principal corporate trust office of the Trustee in Los Angeles , California, or such other office as may be specified to the Authority and the City of Sanger (the “City”) by the Trustee in writing, except that with respect to presentation of Bonds for paym ent or for registration of transfer and exchange such term shall mean the office or the agency of the Trustee at which, at any particular time, its corporate trust agency shall be conducted as specified to the Authority and the City by the Trustee in writing.
This Bond is of a duly authorized issue of bonds issued for the purpose of refinancing the Project designated “Sanger Financing Authority Lease Revenue Refunding Bonds, Series 2022A” (the “Bonds”) in the aggregate principal amount of $__________. The Bonds are issued pursuant to the Indenture, dated as of __________ 1, 2022 (the “Indenture”), by and among the Authority, the City and the Trustee, and this reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. The Indenture is entered into, and this Bond is issued under, the Marks-Roos Local Bond Pooling Act of 1985 (the “Act”) and the laws of the State of California. Capitalized terms not defined herein shall have the meanings set forth in the Indenture.
Pursuant to the Indenture, the principal of and interest on the Bonds are payable solely from certain base rental payments (the “Base Rental Payments”) under and pursuant to that certain Lease Agreement, dated as of __________ 1, 2022 (the “Lease Agreement”), by and between the City, as lessee, and the Authority, as lessor, all of which rights to receive such Base Rental Payments have been assigned without recourse by the Authority to the Trustee. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Base Rental Payments and any other amounts (including proceeds of the sale of the Bonds) held in the Base Rental Payment Fund , the Interest Fund, the Principal Fund and the Redemption Fund established under the Indenture are pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act. Said pledge constitutes a first lien on such assets.
The Bonds are authorized to be issued in the form of a fully registered bond without coupons in the principal amount of $__________.
The Bonds shall be subject to redemption, in whole or in part, on any date, from and to the extent of any Net Insurance Proceeds received with respect to all or a portion of the Property leased under the Lease Agreement, remaining after payment therefrom of all reasonable expenses incurred in the collection t hereof, deposited by the Trustee in the Redemption Fund established under the Indenture, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. [Prior to Tax-Exempt Reissuance Date: The Bonds shall be subject to optional redemption, in whole or in part, on any Interest Payment Date, from and to the extent of prepaid Base Rental Payments paid pursuant the Lease Agreement, at a Redemption Price as set forth in the prepayment schedule set forth in the Lease Agreement.
At the Authority’s and the City’s option and upon satisfaction of certain conditions set forth in the Indenture, on any business date on or after March 17, 2023, the interest rate on this Bond shall 316
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convert to the Tax -Exempt Rate (defined in the Indenture) , and the optional redemption provisions applicable to the Bonds will be modified in the manner described in the Indenture.] [Post Tax-Exempt Reissuance Date (option to be selected by Owner of the Bond):
[OPTION 1: The Bonds shall be subject to optional re demption, in whole or in part, on any Interest Payment Date, from and to the extent of prepaid Base Rental Payments paid pursuant the Lease Agreement, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Date Redemption Price
Through and including December 15, 2023 103%
June 15, 2024 to and including December 15, 2025 102
June 15, 2026 to and including December 15, 2027 101
June 15, 2028 and any Interest Payment Date thereafter 100
OPTION 2: The Bonds shall be subject to optional redemption, in whole or in part, on any Interest Payment Date, from and to the extent of prepaid Base Rental Payments paid pursuant the Lease Agreement, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Date Redemption Price
Through and including December 15, 2025 102%
June 15, 2026 to and including December 15, 2027 101
June 15, 2028 and any Interest Payment Date thereafter 100
OPTION 3: The Bonds shall be subject to optional redemption, in whole or in part, on any Interest Payment Date, from and to the extent of prepaid Base Rental Payments paid pursuant the Lease Agreement, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Date Redemption Price
Through and including December 15, 2027 101%
June 15, 2028 and any Interest Payment Date thereafter 100
OPTION 4: The Bonds are not subject to optional redemption prior to maturity.]] The Bonds maturing on June 15, 2043 are subject to mandatory sinking fund redemption in part (by lot) on each June 15 on and after June 15, 2022, in integral multiples of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed for redemption, with out premium, in accordance with the following schedule:
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Sinking Fund Redemption Date
(June 15)
Principal Amount
To Be Redeemed
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043 (maturity)
The Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice of any redemption to the Owner of any Bonds designated for redemption, at its address appearing on the Registration Books, at least 20 but not more than 60 days prior to the date fixed for redemption; provided, however, t hat neither failure to receive any such notice so mailed, nor any defect therein, shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. T he Redemption Price of the Bonds to be redeemed shall be paid only upon presentation and surrender thereof at the Office of the Trustee.
From and after the date fixed for redemption of any Bonds, interest on such Bonds will cease to accrue and become payable.
Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, fully registered Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount and maturity of fully registered Bonds.
This Bond is transferable by the Registered Owner hereof, in person or by his duly authorized attorney, 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 such transfer a new fully registered Bond, in an Authorized Denomination, for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Authority, the City and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority, the City and the Trustee shall not be affected by any notice to the contrary. 318
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The Indenture and the rights and obligations of the Authority, the City, the Owner of the Bonds and the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture.
The Indenture contains provisions permitting the Authority to make provision for the payment of interest on, and the princi pal and premium, if any, of any of the Bond so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture.
All obligations of the Authority under the Indenture shall be special obligations of the Authority, payable solely from Rental Payments and the other assets pledged therefor under the Indenture; provided, however, that all obligations of the Authority unde r the Bonds shall be special obligations of the Authority, payable solely from Base Rental Payments and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State of Cal ifornia, or any political subdivision thereof, is pledged to the payment of the Bonds.
IN WITNESS WHEREOF, the Authority has caused this Bond to be signed in its name and on its behalf by the facsimile signatures of its Chair and Secretary, all as of the D ated Date identified above.
SANGER FINANCING AUTHORITY
By:
Chair
Attest:
Secretary
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within -mentioned Indenture and registered on the Registration Books.
Date: _____________________ U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee
By:
Authorized Signatory
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[FORM OF ASSIGNMENT]
For value, received the undersigned hereby sells, assigns and transfers unto ____________________________________________ whose address and social security or other tax identifying number is ______________________, the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) ____________________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.
Dated: ____________________
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor.
Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the face of
the within pond in every particular without alteration or enlargement or any change whatsoever.
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EXHIBIT B
SANGER FINANCING AUTHORITY
LEASE REVENUE REFUNDING BONDS
SERIES 2022A
Election of Conversion to the Tax-Exempt Rate
The undersigned, _________ of the Sanger Financing Authority (the “Authority”) and the __________ of the City of Sanger (the “City”), hereby provides notice on behalf of the Authority and the City that the Authority and the City elect to convert the interest rate payable with respect to the above-referenced bonds (the “Bonds”) to the Tax-Exempt Rate on the date hereof. Capitalized terms used herein and not defined shall have the meanings given such terms in the Indenture dated as of __________ 1, 2022, by and among the Authority, the City and U.S. Bank Trust Company, National Association, pursuant to which the Bonds were issued.
Dated: __________, 20__ SANGER FINANCING AUTHORITY
By:
CITY OF SANGER
By:
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EXHIBIT C
[Tax-Exempt Reissuance Date]
Sanger Financing Authority
Sanger, California
City of Sanger
Sanger, California
Re: $__________ Sanger Financing Authority Lease Revenue Refunding Bonds, Series 2022A
Ladies and Gentlemen:
We have examined the Constitution and the laws of the State of California, a certified record of the proceedings of the Sanger Financing Authority (the “Authority”) and the City of Sanger (the “City”) taken in connection with the conversion of t he interest rate payable with respect to Sanger Financing Authority Lease Revenue Refunding Bonds, Series 2022A in the aggregate principal amount of $__________ (the “Bonds”) to the tax -exempt rate and such other information and documents as we consider necessary to render this opinion. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the Authority, the City, the purchaser of the Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.
The Bonds have been issued pursuant to Chapter 4 (commencing with Section 43600) of Division 4 of Title 4 of the Government Code of the State of California and the Indenture dated as of __________ 1, 2022 by and among the Authority, the City and U.S. Bank Trust Company, National Association (collectively, the “Indenture”). Capitalized terms used herein and not defined shall have the meanings given such terms in the Indenture.
Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:
1. Under existing statutes, regulat ions, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds on and after the date hereof is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals.
2. Interest on the Bonds is exempt from State of California personal income tax.
The opinions expressed herein as to the exclusion from gross income of interest on the Bonds are based upon certain representations of fact and certifications made by the Authority and the City and are subject to the condition that the Authority and the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”) that must be satisfied subsequent to the reissuance of the Bonds to assure that such interest on the Bonds will not become includable in gross 322
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income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of reissuance of the Bonds. The Authority and the City have covenanted to comply with all such requirements.
The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. No opinion is expressed herein as to the effect on the exclusion from gross income of interest on the Bonds for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the opinion or advice of counsel other than ourselves. Other than expressly stated herein, we express no other opinion regarding tax consequences with respect to the Bonds.
The opinions expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judic ial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the rights and obligations under the Indenture, the Tax Certificate and the Bonds are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State of California.
Our opinion is limited to matters governed by the laws of the State of California and federal tax law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.
Respectfully submitted,
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[FORM OF RELIANCE LETTER]
[Tax-Exempt Reissuance Date]
[Bond Owner]
[Trustee]
Re: $__________ Sanger Financing Authority Lease Revenue Refunding Bonds, Series 2022A
Ladies and Gentlemen:
On the date hereof, we delivered to the Sanger Financing Authority (the “Authority”) and the City of Sanger (the “City”) our opinion (the “Opinion”) in connection with the conversion of the interest rate payable with respect to the above -captioned bonds (the “Bonds”) to the tax -exempt rate, which have been issued pursuant to Chapter 4 (commencing with Section 43600) of Division 4 of Title 4 of the Government Code of the State of California and the Indenture dated as of __________ 1, 2022 by and among the Authority, the City and U.S. Bank Trust Company, National Association (collectively, the “Indenture”). You are authorized to rely on the Opinion as if it were addressed to you.
This letter is being furnished to you solely for your benefit in connection with the conversion of the interest rate payable with respect to of the Bonds to the tax -exempt rate and is no t to be used, circulated, quoted or otherwise referred to for any other purpose without our prior written consent. The Opinion is limited to matters governed by the laws of the State of California and federal tax law, and we assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction. No attorney -client relationship has existed or exists between our firm and you in connection with the Bonds or by virtue of this letter and we are not assuming any professio nal responsibility to any other person whomsoever.
Respectfully submitted,
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EXHIBIT D
OWNER’S CERTIFICATE
IT IS HEREBY CERTIFIED by the undersigned, __________ (the “Owner”) with respect to the conversion of the interest rate payable with respect to the Sanger Financing Authority Lease Revenue Refunding Bonds, Series 2022A (the “Bonds”) to the Tax -Exempt Rate on the date hereof (the Bonds bearing interest at the Tax-Exempt Rate is referred to herein as the “Tax-Exempt Bonds”) that:
1. The Owner hereby selects the following optional redemption provision to be applicable to the Tax-Exempt Bonds from and after the date hereof:
[OWNER PICKS ONE OF THE FOLLOWING FOUR OPTIONS]
[Option No. 1]
The Bonds, shall be subject to optional redemption, in whole or in part, on any date, from and to the extent of prepaid Base Rental Pa yments paid pursuant to subsection (b) of Section 7.02 of the Lease Agreement, at the following Redemption Prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Date Redemption Price
Through and including June 14, 2023 103%
June 15, 2024 to and including June 14, 2026 102
June 15, 2026 to and including June 14, 2028 101
June 15, 2028 and any date thereafter 100
[Option No. 2]
The Bonds, shall be subject to optional redemption, in whole or in part, on any date, from and to the extent of prepaid Base Rental Payments paid pursuant to subsection (b) of Section 7.02 of the Lease Agreement, at the following Redemption Prices, express ed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Date Redemption Price
Through and including June 14, 2026 102%
June 15, 2026 to and including June 14, 2028 101
June 15, 2028 and any date thereafter 100
[Option No. 3]
The Bonds, shall be subject to optional redemption, in whole or in part, on any date, from and to the extent of prepaid Base Rental Payments paid pursuant to subsection (b) of Section 7.02 of the Lease Agreement, at the following Redemption Prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
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Redemption Date Redemption Price
Through and including June 14, 2028 101%
June 15, 2028 and any date thereafter 100
[Option No. 4]
The Bonds are not subject to optional redemption prior to maturity.
2. The Owner hereby acknowledges receipt of the “ Sanger Financing Authority Lease Revenue Refunding Bonds, Series 2022A,” in the principal amount of $__________, maturing, bearing interest at the Tax-Exempt Rate and subject to redemption prior to maturity as provided in the Indenture dated as of __________ 1, 2022 by and among the Authority, the City and U.S. Bank Trust Company, National Association (together, the “Indenture”) and as set forth above, and the Tax-Exempt Bonds is registered in the name of the Owner.
3. The Owner intends to retain the Tax-Exempt Bonds for its own portfolio until maturity and does not intend to reoffer the Tax-Exempt Bonds to the public.
4. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture.
WITNESS my hand on this ___________, 20__.
[OWNER]
By .
Authorized Officer
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EXHIBIT E
FORM OF PURCHASER’S CERTIFICATE
__________, 20__
Sanger Financing Authority
Sanger, California
City of Sanger
Sanger, California
U.S. Bank Trust Company, National Association
Los Angeles, California
Re: Sanger Financing Authority Lease Revenue Refunding Bonds, Series 2022A Ladies and Gentlemen:
The undersigned (the “Investor”) hereby acknowledges that it is purchasing $__________ aggregate principal amount of Sanger Financing Authority Lease Revenue Refunding Bonds, Series 2022A (the “Bonds”) issued in the Authorized Denomination amount pursuant to an Indenture, dated as of __________ 1, 2022 (the “Authorizing Document”), by and among the Sanger Financing Authority (the “Issuer”), the City of Sanger and U.S. Bank Trust Company, National Association, as trustee. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Authorizing Document.
The Investor acknowledges that the proceeds of the Bonds will be used for the purposes, and Bond principal and interest thereon shall be payable solely from the sources, descr ibed in the Authorizing Document.
In connection with the sale of the Bonds to the Investor, the Investor hereby makes the following representations upon which you may rely:
1. The Investor has the authority and is duly authorized to extend credit to the Is suer by purchasing the Bond and to execute this letter and any other instruments and documents required to be executed by the Investor in connection with its purchase of the Bond. The Investor (a) is a bank, any entity directly or indirectly controlled by the bank or under common control with the bank, other than a broker, dealer or municipal securities dealer registered under the Securities Exchange Act of 1934, or a consortium of such entities; and (b) has the present intent to hold the Bond to maturity o r earlier redemption.
2. The Investor is (a) a “qualified institutional buyer” as that term is defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or (b) an “accredited investor” as that term is defined in Rule 501(a)(1),(2),(3), or (7) under the Securities Act.
3. The Investor is not purchasing the Bond for more than one account or with a view to distributing the Bond.
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4. The Investor understands that the Bond is not, and is not intended to be, registered under the Securities Act and that such registration is not legally required as of the date hereof, and further understands that the Bond (a) is not being registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any state, (b) wil l not be listed in any stock or other securities exchange, (c) will not carry a rating from any rating agency, and (d) will be delivered in a form that may not be readily marketable.
5. The Investor acknowledges that it has either been supplied with or bee n given access to information which it has requested from the Issuer and to which a reasonable lender would attach significance in making lending decisions, and the Investor has had the opportunity to ask questions and receive answers from knowledgeable individuals, including its own counsel, concerning the Issuer and the Bond and the security therefor so that, as a reasonable lender, the Investor has been able to make a decision to purchase the Bond. The Investor has such knowledge and experience in finan cial and business matters that it is capable of evaluating the merits and risks of its prospective purchase of the Bond.
6. The Investor acknowledges that the obligations of the Issuer under the Authorizing Document do not constitute obligations of the Issuer for which the Issuer is obligated to levy or pledge, or has levied or pledged, general or special taxes. The Bond is a limited obligation of the Issuer but is not a debt of the Issuer, the State of California or any of its political subdivisions withi n the meaning of any constitutional or statutory limitation or restriction.
7. The Investor has made its own inquiry and analysis with respect to the Bond and the security therefor, and other material factors affecting the security and payment of the Bond. The Investor is aware that there are certain economic and regulatory variables and risks that could adversely affect the security for the Bond. The Investor has reviewed the documents executed in conjunction with the issuance of Bond, or summaries thereo f, including, without limitation, the Authorizing Document.
8. The Investor acknowledges and agrees that the Issuer take no responsibility for, and make no representation to the Investor, or any subsequent purchaser, with regard to, a sale, transfer or other disposition of the Bond in violation of the provisions of the Authorizing Document, or any securities law or income tax law consequences thereof. The Investor also acknowledges that, with respect to the Issuer’s obligations and liabilities, the Investor is solely responsible for compliance with the sales restrictions on the Bond in connection with any subsequent transfer of the Bond made by the Investor.
9. The Investor agrees that it is bound by and will abide by the provisions of the Authorizing Document relating to transfer, the restrictions noted on the face of the Bond and this Investor Letter. The Investor also covenants to comply with all applicable federal and state securities laws, rules and regulations in connection with any resale or transfer of the Bond by the Investor.
10. The Investor acknowledges that the sale of the Bond to the Investor is made in reliance upon the certifications, representations, and warranties herein made to the addressees hereto.
11. The interpretation of the provis ions hereof shall be governed and construed in accordance with State of California law without regard to principles of conflicts of laws. 328
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12. All representations of the Investor contained in this letter shall survive the execution and delivery of the Bond to the Investor as representations of fact existing as of the date of execution and delivery of this Investor Letter.
13. Inasmuch as the Bond represents a negotiated transaction, the Investor is not acting as a fiduciary of the Issuer, but rather is acting solely in its capacity as the initial Bondowner, for its own loan account. The Investor acknowledges and agrees that (i) the transaction contemplated herein is an arm’s length commercial transaction between the Issuer and the Investor and its affiliates, (ii) in connection with such transaction, the Investor 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 Investor and its affiliates are relying on the purchaser exemption in the Municipal Advisor Rules, (iv) the Investor and its affiliates have not provided any advic e or assumed any advisory or fiduciary responsibility in favor of the Issuer with respect to the transaction contemplated by the Bond and the discussions, undertakings and procedures leading thereto (whether or not the Investor, or any affiliate of the Investor, has provided other services or advised, or is currently providing other services or advising the Issuer on other matters) and (v) the Investor and its affiliates have financial and other interests that differ from those of the Issuer. [PURCHASER/TRANSFEREE]]
By:
Its:
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RECORDING REQUESTED BY:
Sanger Financing Authority
AND WHEN RECORDED RETURN TO:
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Reed Glyer, Esq.
[Space above for Recorder’s use.]
This Transaction is Exempt from California
Documentary Transfer Tax Pursuant to Section 11921
of the California Revenue and Taxation Code. This
Document is Exempt From Recording Fees Pursuant
to Section 27383 of the California Government Code.
ASSIGNMENT AGREEMENT
by and between
SANGER FINANCING AUTHORITY
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Dated as of __________ 1, 2022
Relating to
$__________
SANGER FINANCING AUTHORITY
LEASE REVENUE REFUNDING BONDS, SERIES 2022A
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ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (as amended and supplemented hereafter, this “Assignment Agreement”), executed and entered into as of __________ 1, 2022, is by and b etween the SANGER FINANCING AUTHORITY, a joint exercise of powers entity organized and existing under and by virtue of the laws of the State of California (the “Authority”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States, as Trustee (the “Trustee”).
WITNESSETH:
WHEREAS, the City and the Authority previously financed the costs of various public improvements (the “Project”) through the issuance of the Sanger Financing Authority Lease Revenue Bonds, Series 2013 (the “2013 Bonds”);
WHEREAS, the City and the Authority desire to refinance the costs of the Project by refunding the 2013 Bonds through the issuance of the Bonds (as defined in the Indenture defined below); WHEREAS, in connection with the issuance of the Bonds, the City will lease certain real property and the improvements located thereon (the “Property”) to the Authority pursuant to a Ground Lease, dated as of the date hereof, and the City will sub lease the Property back from the Authority pursuant to a Lease Agreement;
WHEREAS, the Property is more particularly described in Exhibit A hereto; WHEREAS, under the Lease Agreement, the City is obligated to make Base Rental Payments (as defined in the Lease Agreement) to the Authority;
WHEREAS, the Authority desires to assign without recourse certain of its rights in the Ground Lease and the Lease Agreement, including its right to receive the Base Rental Payments, to the Trustee for the benefit of the owner of Bonds to be issued pursuant to the Indenture, dated as of the date hereof (the “Indenture”), by and among the Authority, the City and the Trustee; WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Assignment Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly aut horized to execute and enter into this Assignment Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties hereto do hereby agree as follows:
Section 1. Assignment. The Authority, for good and valuable consideration, the receipt of which is hereby acknowledged, does hereby sell, assign and transfer to the Trustee, irrevocably and absolutely, without recourse, for the benefit of the owner of the Bonds, all of its right, title and interest in and to the Ground Lease and the Lease Agreement including, without limitation, its right to receive the Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement; provided, however, that the Authority shall retain its obligations under the Lease Agreement and Ground Lease, 331
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the rights to indemnification, to give approvals and consents under the Lease Agreement and the Ground Lease and to payment or reimbursement of its reasonable costs and expenses under the Lease Agreement.
Section 2. Acceptance. The Trustee hereby accepts the foregoing assignment, subject to the terms and provisions of the Indenture, and all such Base Rental Payments shall be applied and the rights so assigned shall be exercised by the T rustee as provided in the Lease Agreement and the Indenture.
Section 3. Conditions. This Assignment Agreement shall impose no obligations upon the Trustee beyond those expressly provided in the Indenture.
Section 4. Further Assurances. The Authority shall make, execute and de liver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Assignment Agreement, and for the better assuring and confirming to the Trustee, for the benefit of the owner of the Bonds, the rights intended to be conveyed pursuant hereto.
Section 5. Governing Law . THIS ASSIGNMENT AGREEMENT SHALL BE
GOVERNED EXCLUSIVELY BY THE PROVISIONS HEREOF AND BY THE LAWS OF THE STATE OF CALIFORNIA AS THE SAME FROM TIME TO TIME EXIST.
Section 6. Execution. This Assignment Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same Assignment Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF , the Authority and the Trustee have caused this Assignment Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first above-written.
SANGER FINANCING AUTHORITY
By:
Tim Chapa
Executive Director
ATTEST:
Rebecca Ramirez
Secretary
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By:
__________
__________
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CONSENT
The City of Sanger hereby consents to the foregoing.
CITY OF SANGER, as Lessee
By:
Tim Chapa
City Manager
ATTEST:
Rebecca Ramirez
City Clerk
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF FRESNO )
On ___________________ before me, ____________________________________, Notary Public,
personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is /are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
SIGNATURE OF NOTARY PUBLIC
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On ___________________ before me, ____________________________________, Notary Public,
personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose names(s) is /are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
SIGNATURE OF NOTARY PUBLIC
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EXHIBIT A
DESCRIPTION OF THE PROPERTY
All that real property situated in the City of Sanger, County of Fresno, State of California, described as follows:
PARCEL 2 OF PARCEL MAP NO. 75-4, RECORDED IN BOOK 16, PAGE 92, OF PARCEL MAPS, RECORDS OF SAID COUNTY.
APN 317-094-35
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SANGER FINANCING AUTHORITY
LEASE REVENUE BONDS,
SERIES 2013
ESCROW AGREEMENT
This ESCROW AGREEMENT (the “Escrow Agreement”), made and entered into as of _____ 1, 2022 , by and among the City of Sanger (the “City”), the Sanger Financing Authority (the “Authority”), and U.S. Bank Trust Company , National Association, as escrow agent (the “Escrow Agent”), a national banking association organized and existing under the laws of the United States of America and being qualified to accept and administer the escrow hereby created.
W I T N E S S E T H :
WHEREAS, the Authority has heretofore issued its Sanger Financing Authority Lease Revenue Bonds , Series 2013 (the “Prior Bonds”), pursuant to the te rms of that certain Indenture dated as of November 1, 2013 (the “Prior Indenture”), by and between the Authority and U.S. Bank Trust Company , National Association , as successor trustee to Union Bank, N.A. (the “Prior Trustee”); and
WHEREAS, the Authority h as determined to cause the issuance and sale of its Sanger Financing Authority Lease Revenue Refunding Bonds, Series 202 2A (the “Bonds”), for the purpose of providing moneys to the Escrow Agent, which amount will be sufficient to pay the principal and interest due on the Prior Bonds through and including June 15, 2023, and to redeem on June 15, 2023 (the “Redemption Date”) the Prior Bonds maturing on and after June 15, 2024 at a redemption price equal to the principal amount to be redeemed, without premium (the “Redemption Price”); and WHEREAS, pursuant to Section 2 of this Escrow Agreement, the Authority will cause a prescribed portion of the proceeds of the Bonds to be set aside with the Escrow Agent, in order to provide for the payment of the prin cipal and interest due on the Prior Bonds through and including June 15, 2023, and to pay on June 15, 2023, the Redemption Price of the Prior Bonds, such proceeds and funds to be deposited in an escrow fund to be created hereunder designated as the “Sanger Financing Authority 2013 Bonds Escrow Fund” to be maintained by the Escrow Agent (the “Escrow Fund”) which moneys will be used to purchase securities as described on Schedule II hereto (the “Federal Securities”) , provided the principal of and the interest on which when paid will provide money which, together with the moneys deposited with the Escrow Agent at the same time pursuant to this Escrow Agreement, will be sufficient to pay when and as due the regularly scheduled principal and interest on the Prior Bonds through and including June 15, 2023, and to pay on June 15, 2023, the Redemption Price of the Prior Bonds, set forth in Schedule III hereto; NOW, THEREFORE , the City, the Authority and the Escrow Agent hereby agree as follows:
SECTION 1. Establishment and Main tenance of Escrow Fund . The Escrow Agent agrees to establish and maintain, until the Prior Bonds have been paid in full, the Escrow Fund, and to hold the moneys therein at all times as a special and separate escrow fund (wholly segregated from all other s ecurities, investments or moneys on deposit with the Escrow Agent). All moneys in the 338
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Escrow Fund are hereby irrevocably pledged, subject to the provisions of Section 2 hereof, to secure the payment when due of the principal of and interest on the Prior B onds and the Redemption Price of the Prior Bonds.
SECTION 2. Funding of the Escrow Fund.
(a) The Authority agrees that, not later than ____, 2022 (the “Closing Date”), the Authority will cause to be transferred to the Escrow Agent for deposit in the Escrow Fund $ _____ from the proceeds of the Bonds.
(b) The Authority hereby directs the Escrow Agent to immediately apply $ _____ of such amounts to acquire, on the Closing Date, the Federal Securities set forth in Schedule II and to hold $_____ uninvested as cash.
SECTION 3. Investment of Moneys . The Escrow Agent acknowledges receipt of the moneys described in Section 2 and agrees immediately to invest such moneys in the Federal Securities listed on Schedule II hereto and to deposit such Federal Securities in the Escrow Fund.
The Escrow Agent shall be entitled to rely upon the conclusion of Causey Demgen & Moore P.C. (the “Verification Agent”), that the Federal Securi ties listed on Schedule II hereto mature and bear interest payable in such amounts and at such times as, together with cash on deposit in the Escrow Fund, will be sufficient to pay through and including June 15, 2023, the principal and interest due on the Prior Bonds and to pay on June 15, 2023, the Redemption Price.
SECTION 4. Investment of Any Remaining Moneys . At the written direction of the Authority, the Escrow Agent shall reinvest any other amount of principal and interest, or any portion thereof, received from the Federal Securities prior to the date on which such payment is required for the purposes set forth herein, in noncallable Federal Securities maturing not later than the date on which such payment or portion thereof is required for the purposes set forth in Section 6, at the written direction of the Authority, as verified in a report prepared by an independent certified public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of obligations of political subdivisions to the effect that the reinvestment described in said report will not ad versely affect the sufficiency of the amounts of securities, investments and money in the Escrow Fund to pay through and including June 15, 2023, the principal and interest due on the Prior Bonds and to pay on June 15, 2023, the Redemption Price, and provided that the Authority has obtained and delivered to the Escrow Agent an unqualified opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, that such reinvestment will not adversely affect the exclusion from gross income for federal income tax purposes or of the interest with respect to the Prior Bonds.
In the absence of such written direction such other amounts shall be held uninvested. Any interest income resulting from investment or reinvestment of moneys pursuant to this Section 4 which is not required for the purposes set forth in Section 6, as verified in the letter of the Verification Agent originally obtained by the Authority with respect to the refunding of the Prior Bonds or in any other report prepared by an independent certifie d public accountant or firm of certified public accountants of favorable national reputation experienced in the refunding of tax -exempt obligations of political subdivisions, shall be paid to the Authority promptly upon the receipt of such interest income by the Escrow Agent. The determination of the Authority as to whether an accountant qualifies under this Escrow Agreement shall be conclusive. The Escrow Agent is hereby authorized, in making or disposing of any investment permitted by this Escrow Agreement, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or any such affiliate is acting as agent of the Escrow Agent or for any third person or dealing as principal for its own account. 339
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SECTION 5. Substitution of Se curities. Upon the written request of the Authority, and subject to the conditions and limitations herein set forth and applicable governmental rules and regulations, the Escrow Agent shall sell, redeem or otherwise dispose of the Federal Securities, provided that there are substituted therefor from the proceeds of the Federal Securities other Federal Securities, but only after the Authority has obtained and delivered to the Escrow Agent: (i) an unqualified opinion of Stradling Yocca Carlson & Rauth, a Pro fessional Corporation, to the effect that the substitution of securities is permitted under the legal documents in effect with respect to the Prior Bonds and that such reinvestment will not adversely affect the exclusion from gross income for federal income tax purposes of the interest with respect to the Prior Bonds; and (ii) a report by a firm of independent certified public accountants to the effect that the reinvestment described in said report will not adversely affect the sufficiency of the amounts of securities, investments and money in the Escrow Fund to pay through and including June 15, 2023, the principal and interest due on the Prior Bonds and to pay on June 15, 2023, the Redemption Price. The Escrow Agent shall not be liable or responsible for any loss resulting from any reinvestment made pursuant to this Escrow Agreement and in full compliance with the provisions hereof.
SECTION 6. Payment and Redemption of the Prior Bonds . The Authority hereby requests and irrevocably instructs the Escrow Agent to pay through and including June 15, 2023, the principal and interest due on the Prior Bonds and to pay on June 15 , 2023, the Redemption Price. Upon payment in full of the Prior Bonds, the Escrow Agent shall transfer any moneys remaining in the Escrow Fund to the City and, after provision for payment of amounts due to the Prior Trustee and the Escrow Agent pursuant to Section 6 and 9 hereof, this Escrow Agreement shall terminate. The Escrow Fund cash flow for the Escrow Fund is set forth in Schedule III attached hereto.
SECTION 7. Notices of Defeasance and Redemption of the Prior Bonds. The Authority hereby instructs the Escrow Agent to mail, first class, postage prepaid, a notice to the owners of the Prior Bond s in the form attached hereto as Schedule I -A stating that the defeasance of th e Prior Bonds has occurred. The Authority hereby further instructs the Escrow Agent to provide a notice in substantially the form attached hereto as Schedule I -B of redemption with respect to the Prior Bonds in accordance with the procedures set forth in Section 4.03 of the Prior Indenture.
SECTION 8. Notice of Possible Deficiencies . If at any time the Escrow Agent has actual knowledge that the moneys and securities in the Escrow Fund will not be sufficient to make all payments required by Section 6 hereof, the Escrow Agent shall notify the Authority in writing as soon as is reasonably practicable, of such fact, the amount of such deficiency and if known, the reason therefor; provided, however, that the Authority shall have no liability for any such deficiency.
SECTION 9. Fees and Costs . The Escrow Agent shall receive its reasonable fees and expenses as previously agreed to by the Escrow Agent and the Authority, and any other reasonable fees and expenses of the Escrow Agent (including attorneys’ fees) approved by the Authority. The parties hereto agree that the duties and obligations of the Escrow Agent shall be as expressly provided herein, and no implied duties or obligations shall be read into this Escrow Agreement against the Escrow Agent. The fee s of and the costs incurred by the Escrow Agent shall in no event be deducted or payable from, or constitute a lien against, the Escrow Fund.
SECTION 10. Merger or Consolidation . Any company into which the Escrow Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Escrow Agent may sell or transfer all or substantially all of its corporate trust business, provided such 340
4 4890-2384-9227v2/022765-0007
company shall be eligible under this Escrow Agreement, shall be the successor of such Escrow Agent without the execution or filing of any paper or any further act, notwithstanding anything herein to the contrary.
SECTION 11. Entire Agreement; Severability. This Escrow Agree ment and the exhibits hereto set forth the entire agreement and understanding of the parties related to this transaction and supersedes all prior agreements and understandings, oral or written . If any section, paragraph, sentence, clause or provision of t his Escrow Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, sentence, clause or provisions shall not affect any of the remaining provisions of this Escrow Agreement.
SECTION 12. Execution of Counterparts. This Escrow Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which shall together constitute but one and the same instrument.
SECTION 13. Applicable Law. This Escrow Agreement shall be governed by and construed in accordance with the laws of the State of California. The parties hereby (i) irrevocably submit to the exclusive jurisdiction of any federal or state court sitting in the State of California, (ii) waive any objection to laying of venue in any such action or proceeding in such courts, and (iii) waive any objection that such courts are an inconvenient forum or do not have jurisdiction over any party.
SECTION 14. Indemnification. The Authority agrees to indemnify, hol d harmless and defend the Escrow Agent, its officers, employees, directors, and agents, to the extent permitted by law from and against any and all losses, damages, claims, actions, liabilities, costs and expenses of whatever nature, kind or character (inc luding, without limitation, attorneys’ fees, litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments) which may be imposed on, or incurred by or asserted against the Escrow Agent directly or indirectly arising out of or related to any claim, suit, investigation, proceeding or action commenced or threatened as a result the execution by the Escrow Agent of this Escrow Agreement, the performance of its obligations hereunder, or of the payment of the Prior Bonds; provided, however, that this indemnification shall not cover any losses or expenses incurred by the Escrow Agent as a result of its negligence or willful misconduct. The agreements of the Authority hereunder shall survive the discharge of the Prior Indenture and th e payment of the Redemption Price and the resignation or removal of the Prior Trustee.
SECTION 15. Immunities and Liability of Escrow Agent.
(a) The Escrow Agent undertakes to perform only such duties as are expressly and specifically set forth in this Escrow Agreement, a nd no implied duties or obligations shall be read into this Escrow Agreement against Escrow Agent. The permissive rights of the Escrow Bank to do the things enumerated in this Escrow Agreement shall not be construed as a duty and, with respect to such per missive rights, the Escrow Bank shall not be answerable for other than its negligence or willful misconduct.
(b) The Escrow Agent shall not have any liability hereunder except to the extent of its own negligence or willful misconduct. In no event shall the Es crow Agent be liable for any special, indirect, punitive, incidental or consequential loss or damages of any kind whatsoever, (including, but not limited to, loss of profit), even if the Escrow Agent or the Authority knows of the possibility of such damage s and regardless of the form of action. The Escrow Agent shall have no 341
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duty or responsibility under this Escrow Agreement in the case of any default in the performance of the covenants or agreements contained in the resolutions, indenture and fiscal agent agreement relating to the Prior Bonds. The Escrow Agent is not required to resolve conflicting demands to money or property in its possession under this Escrow Agreement. The Escrow Agent shall not be liable for any action taken or omitted by it or any of its officers, employees or agents in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. The Escrow Agent shall not be liable for any actions taken or errors of judgement made in good faith by a responsible officer, unless it shall be proved that the Escrow Agent was negligent in ascertaining the pertinent facts. The Escrow Agent shall neither be responsible for, nor chargeable with, knowledge of the terms and conditions of an y other agreement, instrument, or document other than this Escrow Agreement, whether or not an original or a copy of such agreement has been provided to the Escrow Agent. The Escrow Agent shall have no duty to know or inquire as to the performance or nonp erformance of any provision of any other agreement, instrument, or document other than this Escrow Agreement.
(c) The Escrow Agent may act through attorneys or agents and shall not be responsible for the acts or omissions of any such attorney or agent appointe d with due care. The Escrow Agent may consult with counsel and other professionals of its own choice . The Escrow Agent shall be entitled to rely on and shall not be liable for any action taken or omitted to be taken by the Escrow Agent in accordance with the advice of counsel or other professionals retained or consulted by the Escrow Agent , and the opinion of such counsel or other professionals shall be full and complete authorization to take or suffer any action hereunder in accordance with such opinion. (d) The Escrow Agent shall not be responsible for any of the recitals or representations contained herein.
(e) The Escrow Agent may become the owner of, or acquire any interest in, any of the Prior Bonds with the same rights that it would have if it were not the Escrow Agent and may engage or be interested in any financial or other transaction with the Authority. (f) The Escrow Agent shall not be liable for the accuracy of any calculations provided as to the sufficiency of the moneys and securities deposited with it t o pay the prescribed Prior Bonds.
(g) The Escrow Agent shall not be liable for any action or omission of the Authority under this Escrow Agreement.
(h) Whenever in the administration of this Escrow Agreement the Escrow Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate of any authorized representative of the Authority and/or opinion of counsel, and such certificate or opinion shall, in the absence of negligence or willful misconduct on the part of the Escrow Agent, be full warrant to the Escrow Agent for any action taken or su ffered by it under the provisions of this Escrow Agreement.
(i) The Escrow Agent shall be entitled to request and receive written instructions hereunder and shall have no responsibility or liability for any losses or damages of any nature that may arise from a ny action taken or not taken by the Escrow Agent in accordance with such written 342
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direction. The Escrow Agent may conclusively rely, as to the truth and accuracy of the statements and correctness of any written notice, instruction, request, certificate, do cument, order, judgment, decree or opinion furnished to it and the calculations provided to it in connection with this Escrow Agreement and shall be protected in acting, or refraining from acting, upon any written notice, instruction, request, certificate, document, calculations or opinion furnished to the Escrow Agent in compliance with this Escrow Agreement and reasonably believed by the Escrow Agent to have been signed or presented by the proper party, not only as to due execution, validity and effective ness, but also as to the truth and accuracy of any information contained therein, and it need not investigate any fact or matter stated in such notice, instruction, request, certificate or opinion. (j) The Escrow Agent shall incur no liability for losses arising from any investment made pursuant to this Escrow Agreement. The parties hereto acknowledge that the Escrow Agent is not providing investment supervision, recommendations, or advice. (k) No provision of this Escrow Agreement shall require the Escrow Agent to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. (l) The l iability of the Escrow Agent to make the payments required by this Escrow Agreement shall be limited to the moneys and securities in the Escrow Fund. (m) The Escrow Agent shall furnish the Authority periodic cash transaction statements which include detail for all investment transactions effected by the Escrow Agent or brokers selected by the Authority. Upon the Authority’s election, such statements will be delivered via the Escrow Agent’s online 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 Escrow Agent as they occur, to the extent permitted by law. The Authority further understands that trade confirmations fo r securities transactions effected by the Escrow Agent will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker.
(n) The Escrow Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under this Escrow Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control, including without limitation, any act or provision of any present or future law or regulation or governmental authority; acts of God; earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotage; epidemics; quarantine restrictions; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions; or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility.
(o) The Escrow Agent shall be under no obligat ion to exercise any of the rights or powers vested in it by this Escrow Agreement at the request or direction of the Authority, pursuant to the provisions of this Escrow Agreement, unless such parties shall have offered to the Escrow Agent security or indemnity (satisfactory to the Escrow Agent in its sole and absolute discretion) against the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction. The Escrow Agent may resign and be discharged from its duties and obligations hereunder at any time by giving no less than thirty (30) calendar days’ prior written notice of such resignation to the Authority, specifying the date when such resignation shall take effect. 343
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SECTION 16. Termination and Modification of Agreement . Up on final payment in full of the principal of and interest on the Prior Bonds pursuant to this Escrow Agreement, all obligations of the Escrow Agent under this Escrow Agreement shall cease and terminate, except for the obligation of the Escrow Agent to pay or cause to be paid to the owners of the Prior Bonds not presented for payment all sums due thereon and the obligation of the Authority to pay to the Escrow Agent any amounts due and owing to the Escrow Agent hereunder. This Escrow Agreement may not be amended or modified in any manner which is materially adverse to the Owners of the Prior Bonds without the unanimous prior written consent of the Owners of the Prior Bonds. 344
S-1
4890-2384-9227v2/022765-0007
IN WITNESS WHEREOF, City of Sanger, the Sanger Financing Authority and U.S. Bank Trust Company, National Association, as Escrow Agent, have caused this Escrow Agreement to be executed each on its behalf by duly authorized officers as of the day and year first above written.
CITY OF SANGER
By:
City Manager
ATTEST:
City Clerk
SANGER FINANCING AUTHORITY
By:
Executive Director
ATTEST:
Secretary
[SIGNATURES CONTINUED ON NEXT PAGE.]
345
S-2
4890-2384-9227v2/022765-0007
[SIGNATURE PAGE CONTINUED.]
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Escrow Agent
By:
Authorized Officer
346
SCHEDULE I-A
4890-2384-9227v2/022765-0007
SCHEDULE I-A
FORM OF NOTICE OF DEFEASANCE
NOTICE OF DEFEASANCE OF
$_____
SANGER FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2013
BASE CUSIP NO. ___
CUSIP*
Maturity
(June 15) Amount
Notice is hereby given to the holders of all of the outstanding $ _____ Sanger Financing Authority Lease Revenue Bonds , Series 2013, maturing on and after June 15, 2022, as listed above (the “Refunded Bonds”) (i) that there has been deposited with U.S. Bank Trust Company , National Association, as Escrow Agent (the “Escrow Agent”), moneys and securities under the Escrow Agreement, dated as of _____ 1, 2022 (the “Escrow Agreement”), by and among the City of Sanger (the “City”), the Sanger Financing Authority (the “Authority”) and the Escrow Agent, which will provide moneys sufficient and available to pay through and including June 15, 2023, the principal and interest due on the Refunded Bonds and to redeem on June 15 , 2023 the Refunded Bonds maturing on and after June 15 , 2024, at a redemption price equal to the principal amount of the Refunded Bonds to be redeemed, without premium; ( ii) that the Escrow Agent has been irrevocably instructed to redeem on June 15, 2023 the Refunded Bonds maturing on and after June 15, 2024; and (iii) that the Refunded Bonds are deemed to be paid in accordance with Section 10.01 of the Indenture by and b etween the Authority and U.S. Bank Trust Company , National Association, as Successor Trustee, dated as of November 1, 2013, pursuant to which the Refunded Bonds were issued.
CONTINUING DISCLOSURE FILINGS : As a consequence of the defeasance of the Refunded Bonds listed herein, the City will no longer file annual reports, or notices of certain enumerated events for the Refunded Bonds pursuant to the continuing disclosure undertaking for the Refunded Bonds.
347
SCHEDULE I-A
4890-2384-9227v2/022765-0007
* The CUSIP numbers are included solely for the conve nience of the Holders of the Refunded Bonds. None of the City, the Authority or the Escrow Agent shall be responsible for any error of any nature relating to such numbers.
Dated this day ___ of _____, 2022.
CITY OF SANGER
SANGER FINANCING AUTHORITY
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION
as Escrow Agent
348
SCHEDULE I-B-1
4890-2384-9227v2/022765-0007
SCHEDULE I-B
FORM OF NOTICE OF REDEMPTION
$_____
SANGER FINANCING AUTHORITY
LEASE REVENUE BONDS
SERIES 2013
BASE CUSIP NO. _____
NOTICE IS HEREBY GIVEN to the owners of the above -captioned Bonds (the “Bonds”) of the Sanger Financing Authority (the “Authority”) issued on November 26, 2013, pursuant to the Indenture, dated as of November 1, 2013 (the “Indenture”), by and between the Authority and U.S.
Bank Trust Company, National Association, as trustee (the “Trustee”), that the Bonds listed below in the amount of $_____ have been selected for redemption on June 15, 2023 (the “Redemption Date”).
CUSIP*
Maturity
(June 15) Rate Amount
Redemption
Price
The Bonds will be payable on the Redemption Date at a redemption price equal to the principal amount to be redeemed plus interest accrued to the Redemption Date (the “Redemption Price”), without premium. The Redemption Price of the Bonds will become due and payable on the Redemption Date. Interest with respect to the Bonds to be redeemed will cease to accrue on and after the Redemption Date, and such Bonds will be surrendered to the Trustee.
All Bonds are required to be surrendered to the principal corporate trust office of the Trustee, on the Redemption D ate at the following location. If the Bonds are mailed, the use of registered, insured mail is recommended:
U.S. Bank Trust Company, National Association
Global Corporate Trust
111 Fillmore Avenue E
St. Paul, MN 55107
If the Owner of any Bond subject to optional redemption fails to deliver such Bond to the Trustee on the Redemption Date, such Bond shall nevertheless be deemed redeemed on the 349
SCHEDULE I-B-2
4890-2384-9227v2/022765-0007
Redemption Date and the Owner of such Bond shall have no rights in respect ther eof except to receive payment of the Redemption Price from funds held by the Trustee for such payment.
A form W -9 must be submitted with the Bonds. Failure to provide a completed form W -9 will result in 31% backup withholding pursuant to the Interest and Dividend Tax Compliance Act of 1983. Under the Jobs and Growth Tax Relief Reconciliation Act of 2003, 28% will be withheld if the tax identification number is not properly certified. * The CUSIP numbers are included solely for the convenience of the Hol ders of the Bonds. Neither the Authority nor the Trustee shall be responsible for any error of any nature relating to such numbers.
U.S. Bank Trust Company , National Association, as
Trustee
DATED this ____ day of __________, 2023.
350
SCHEDULE II
4890-2384-9227v2/022765-0007
SCHEDULE II
FEDERAL SECURITIES
Security Maturity
Principal
Amount
Interest
Rate Price
351
SCHEDULE III
4890-2384-9227v2/022765-0007
SCHEDULE III
ESCROW FUND CASH FLOW
Date
Cash
Receipts
from Federal
Securities
Principal
Due
Principal
Redeemed Interest Due
Total Debt
Payment Cash Balance
Cash deposited on _____, 2022 in the Escrow Fund in the amount of $ _____ of which $ _____ will be used to purchase the Federal Securities listed in Schedule II hereto and $ _____ to be held uninvested.
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Trevor Mael | SVP, Public Finance | Tel: 916.724.2423 | Email: tmael@ff -inc.com January 25, 2022
RE: City of Sanger
Lease Financing
Based upon your request and preliminary review of the information provided to-date, First Foundation Public Finance (“FFPF”) would like express its interest in underwriting and obtaining c redit approval for the f ollowing Credit Facility to the City of Sanger , CA (“Borrower”) based on the terms outlined below. This Letter is provided by First Foundation Public Finance for disc ussion purposes only. It is not intended to be binding, does not create any obligation on the part of First Foundation Public Finance to Sponsor or any third party, and is not a commitment to lend or agreement of any kind. No obligation whatsoever on the part of First Foundation Public Finance shall arise until execution and delivery of a formal commitment or loan documentation by a duly authorized officer of First Foundation Public Finance, which obligation shall be subject to all of the conditions contained therein.
The proposed loan c onditions are:
STRUCTURE: Cinderella (taxable converting to tax-exempt) PURPOSE: Refinance existing 2013 Lease Revenue Bonds
MAX. LOAN AMT: $1,500,000
INTEREST RATE: Taxable: 3.25%, Tax-Exempt BQ: 2.65%
RATE LOCK: The Rate will be locked for 60-days. If the Credit Facility fails to close within this period, FFPF reserves the right to adjust the rate.
TERM: 22-years
REPAYMENT: Semi-annual interest and principal payments
AVERAGE LIFE: 11.9-years
PRE-PAYMENT: Repayable at 103% of par in years 1-2, declining to 102% in years 3-4, and 101% in years 5-6. Redeemable at par beginning in year 7.
COLLATERAL: Lease payments to be paid by the Borrower from any legally available funds. The Credit Facility will be secured with a leasehold interest in an essential asset of the Borrower (with insured value to meet or exc eed the Loa n Amount).
ADDITIONAL TERMS:Doc uments to be prepared by the Borrower’s Bond Counsel for review by FFPF’s c ounsel Nixon Peabody, LLP .
Legal fees and expenses of Nixon Peabody, LLP should not exc eed $12,500. All other filing fees and related fees shall be paid by the Borrower in c onnec tion with the issuanc e (including applicable CDIAC fees).
Periodic financ ial and c ollateral reporting by the Borrower, as well as representations and warranties of the Borrower regarding its status and ability to repay, taxability gross -up and c ovenants and c onditions that are appropriate for a Credit Fac ility of the sc ope and nature proposed above will be determined as part of FFPF’s underwriting and c redit approval proc ess.
PDF’s of all exec uted and other doc uments listed on the Closing Index shall be provided to F FPF no later tha n
24 hours before the time of the requested wire; provided, that if any doc uments c an only be signed after rec eipt of the wire, those documents shall be provided immediately after receipt of the wire.
In an event of default, a default rate equal to the Interest Rate + 3.00% will be required.
353
Trevor Mael | SVP, Public Finance | Tel: 916.724.2423 | Email: tmael@ff -inc.com
If you have any questions, please call me at 916-724-2423. If the proposed terms aren’t ac c epted by February 4, 2022 this letter will expire.
Sincerely,
By: _________________________________
Trevor Mael
Direc tor of Public Financ e
First Foundation Public Financ e
Reviewed & Accepted
_________________________________________
By: Date
Notice: The Federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to enter into a binding contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act. The federal agency that administers compliance w ith this law concerning this creditor is the Federal Deposit Insurance Corporation, Consumer Response Center, 1100 Walnut Street, Box #11, Kans as City, MO 64106.
354
Fot the Meeting of:
Agenda Item No.:
February 77,2022
!,sCrrYoF SINGER
RE.PORT TO THE CITY COUNCIL
Mayor and Councilmembers
David Brletic, Community Development Director
Approve Round Four ofthe Small Business Grant Program and Provide Direction on Guideline Criteria.
ResolutionNo. Zo:: -rY
Most Current (Round Three) Approved Small Business Grant Packet CONFLICT OF INTEREST:
Recusal is required of any member of City Council with a business in the City of Sanger.
RECOMMENDATION:
Staff recommends that the City Council adopt Resolution No. POJf -lr'f Approving Round Four of the Small Business Grant Program to distribute approximately $275,000 in remaining funds and approving Guidelines and Criteria.
EXECUTIVE SUMMARY:
The Council approved three rounds of the Small Business Grant Program to provide relief to local small businesses suffering from business closures caused by COVID restrictions. Round One of the Small Business Grant Program was approved for $100,000. All approved Round One funds were exhausted through twenty (20) grants distributed to qualifying applicants. Round Two of the Small Business Grant Program was approved for $100,000. All approved Round Two funds were exhausted through twenty (20) grants distributed to qualifuing applicants. Round Three of the Small Business Grant Program was approved for $500,000. Forty-Five (45) grants (one remains outstanding), totaling $225,000 from the $500,000 approved were distributed to qualifying applicants. Approximately $275,000 remains available for the Small Business Grant Program.
Ptepared by: Apptoved by:
REVIEW: City Finance: Ciry Attorneyi _
To:
From:
Subject:
Attachments:
TYPE OF ITEM:
Consent
Info Item
X Action Item
X Deoartment Reoott
Redevelooment AsencvloJ
COUNCIL ACTION: APPROVED DENIED NO ACTION
Public Headng
Matter Initiated by a Council Member
Other
Continued to:
355
BACKGROUND:
The Council previously approved three rounds of the Small Business Grant Program. These programs were funded through allocations from the CARES Act. The Small Business Grant Program was developed similar to programs in neighboring jurisdictions and is intended to provide relief to local small business suffering from business closures caused by COVID restrictions.
Round One ofthe Small Business Grant Program was approved by the Council on October 1,2020. Twenty (20) grants, totaling $100,000, were distributed to qualifting applicants during Round One. Round Two of the Small Business Grant Program was approved on January 2I,2021. Twenty (20) grants, totaling $ I 00,000, were distributed to qualifuing applicant during Round Two. Round Three of the Small Business Grant Program was approved by the Council on May 20,2021. Round Three was approved for $500,000.
Forty-Five (45) grants (one remains outstanding), totaling $225,000 were funded during Round Three with approximately $275,000 remaining.
During Round Three of the program, several applications were brought before the Council for clarification. With Council direction, the outstanding applications were authorized to be funded and all but one has since been funded. The one remaining application continues to work towards satisSing all program criteria and can be funded once all requirements have been met.
During Council's discussion on the outstanding Round Three applications, the Council specihed the need to revisit the program criteria for any future rounds. The most current Small Business Grant Program packet is attached for Council review and consideration.
Staff recommends addition to the guidelines as follow:
1. Business with up to a maximum of twenty (20) are qualified.
2. Chain restaurants are not qualified.
Staffs recommended program criteria revisions are to prioritize assistance to small, non-chain restaurants. Several restaurants have been funded during previous Small Business Grant Program rounds but staff anticipates more small restaurants can benefit from the program with the proposed revisions. The recommendation to increase the maximum number of employees to twenty (20) may open the program to restaurants that may not have previously applied due to the previous maximum number of employees. The recornmendation to restrict the program to non-chain restaurants is to further prioritize assistance to small businesses.
In an effort to prioritize small, non-chain restaurants, staff will review applications from previous Small Business Grant Program rounds to identifu small restaurants that were not funded but could qualifu with the revised guidelines. Staff will also work with the Chamber of Commerce to identifu other small restaurants that did not apply during previous rounds but may qualifu with the revised guidelines.
REASON FOR RECOMMENDATION:
Round One ofthe Small Business Grant Program was approved by the Council on October 1,2020. Twenty (20) grants, totaling $100,000, were distributed to qualifuing applicants during Round One. Round Two of the Small Business Grant Program was approved on January 2I,2021. Twenty (20) grants, totaling $100,000, were distributed to quali$ing applicant during Round Two.
Round Three ofthe Small Business Grant Program was approved by the Council on May 20,2021. Round Three was approved for $500,000. Forly-Five (45) grants (one remains outstanding), totaling $225,000 356
were funded during Round Three. Approximately $275,000 remains available to fund proposed Round Four. As many businesses remained open or reopened, this funding can assist many local businesses with their recovery efforts.
F'ISCAL IMPACT:
The available $275,000 funding for proposed Round Four comes from the remainder of the $500,000 approved for Round Three of the Small Business Grant Program that was funded through the $500,000 American Rescue Plan funding. The City of Sanger received this share of the ARP funds in June 2021 for the pu{pose of business assistance. The City must use these funds for authorized purposes by June 2024, or it must return the remainder to Treasury
ALTERNATIVES:
o Revise the recommended qualifuing requirements and provide staff with direction. . Deny the request for Round Four of the Small Business Grant Program. o Provide staff with direction for altemative use of available funds.
ACTIONS FOLLOWING APPROVAL:
Community Development Department will revise the Small Business Grant Program Guidelines and work with Administrative Services to facilitate the program. An applicationprocess will be initiated with athirty- day timeline. Applications will be screened for qualihcation. Checks will be distributed to qualified and approved applications within four weeks of the final submittal date. If necessary, a lottery system will be planned and a drawing will be held publicly.
357
RESOLUTION NO. 2n:l -t4
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANGER APPROVING
ROUND FOUR OF THE SMALL BUSINESS GRANT PROGRAM TO DISTRIBUTE APPROXIMATELY $275,000 IN REMAINING FUNDS AND APPROVING GUIDELINES
AND CRITERIA
WHEREAS, the City of Sanger received ARP funds in June 2021 for the purpose of business assistance. The City must use these funds for authorized purposes by June 2024, or it must return the remainder to Treasury; and
WHEREAS, the City of Sanger Council authorized use of ARP funds for the purpose of a Small Business Grant Program to provide relief to local small businesses suffering from business closures caused by COVID restrictions; and
WHEREAS, the City of Sanger Council approved three rounds of the Small Business Grant Program to provide relief to local small businesses suffering from business closures caused by COVID restrictions; and
WHEREAS, Round One of the Small Business Grant Program was approved by the Council on October 1,2020. Round One ofthe Small Business Grant Program was approved for $100,000. All approved Round One funds were exhausted through twenty (20) grants distributed to qualifying applicants; and
WHEREAS, Round Two of the Small Business Grant Program was approved on January 21,2021. Round Two of the Small Business Grant Program was approved for $100,000. All approved Round Two funds were exhausted through twenty (20) grants distributed to qualifying applicants; and
WHEREAS, Round Three of the Small Business Grant Program was approved by the Council on May 20,2021. Round Three of the Small Business Grant Program was approved for $500,000. Forty-Five (45) grants (one remains outstanding), totaling $225,000 fromthe $500,000 approved were distributed to qualiffing applicants; and WHEREAS, approximately $275,000 remains available for the Small Business Grant Program; and
WHEREAS, at the meeting of February 17, 2022, the Council reviewed the Small Business Grant Program, and discussed funding of Round Four and consideration of revision to the Small Business Grant Program Guidelines; and
WHEREAS, the Small Business Grant Program Guidelines will be revised to include:
1. Business with up to a maximum of twenty (20) are qualified.
2. Chain restaurants are not qualified.; and
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WHERAS, Community Development Department staff will revise the Small Business Grant Program Guidelines and work with Administrative Services to facilitate the program. An application process will be initiated with a thifty-day timeline. Applications will be screened for qualification. Checks will be distributed to qualified and approved applications within four weeks of the final submittal date. If necessary, a lottery system will be planned and a drawing will be held publicly; and
WHEREAS, the City Council of the City of Sanger does hereby approve Round Four of the Small Business Grant Program to distribute approximately $275,000 in remaining funds and approving Guidelines and Criteria; and
NOW THEREFORE, IT IS HEREBY RESOLVED, that the City Council of the City of Sanger, State of California;
l. Approve Round Four of the Small Business Grant Program to distribute approximately $275,000 in remaining.
2. Revises the Small Business Grant Program Guidelines will be revised to include:
a. Business with up to a maximum of twenty (20) arc qualified. b. Chain restaurants are not qualified.; and
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The foregoing resolution was considered by the City Council of the City of Sanger at a regular meeting of said Council held on the 17th day of February 2022 and approved by the following vote:
AYES:
NOES:
ABSTAN:
ABSENT:
COUNCILMEMBERS:
COUNCILMEMBERS:
COUNCILMEMBERS:
COLINCILMEMBERS:
Rebeca P. Ramirez, City Clerk
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Grant Amount Who's Eligible: Eligible Uses: Qualifying Locations:
55,ooo Local Businesses with
1-10 Employees
Working Capital
(business operating
expenses)
City of Sanger
City Limit
City of Sanger Local Business Grant Program
Program Description:
On May 20,2021, the Sanger City Councilapproved Round Three of the City of Sanger Local Business Grant Program. Funds approved under this program total $500,000 and will be awarded to local businesses with ten or less employees in the amount of 55,000. Eligible uses for these funds include business mortgage, business lease or rental payments, utility expenses, operating expenses, payroll, additions or construction related to Covid-19 requirements and other business related expenses.
Grant Program Guidelines:
1. Applicants shall be a for-profit business physically located and operating in the City of Sanger with a demonstrated economic need and have been negatively impacted by COVID-19.
2. Grants must be limited to (1) grant per business entity.
3. Business must have 10 employees or less. Self-employed business owners are eligible.
4. Business applicant must confirm if the business has been approved for or has received funding such as Paycheck Protection Program, Small Business Grant or CARES Act Funding (State or Federal).
5. No application will be accepted from businesses with active Covid-19 violations/citations.
6. Business must be a full-time primary business to be considered for a grant award.
7. Applicant must demonstrate that the business has been operating for at least two full years. A copy of a business License reflecting a date prior to May 25, 2019 is required. All applicants must be current with their business license and/or will need to renew their license if awarded.
8. Applicant is required to submit an IRS W-9 Form. The form can be downloaded at this address https: //www. irs.eov/pu b/irs-pdf/fw9. pdf.
9. Application will be accepted starting on May 25,2O2L. The Deadline for application submittal is no later than 5:00p.m. on Monday June 28, 2021. All application questions must be answered to qualifv for funding.
10. Any applications that fail to submit the required information or that do not qualify will be removed from consideration. lf the number of applications exceed the number of awards available, the City will select applications via a lottery system. Selection of those awards will be made public where possible.
PHOTOGRAPH SUBMITTALS OF THE APPLICATION WIIL NOT BE ACCEPTED 360
1. APPIICANT INFORMATION - Must answer all questions
Business Legal Name: Employer/Tax lD #:
Business Structure:
n sot" Proprietor n Corporation n Partnership ! rrc
Business Address: City: zip:
Mailing Address (if different): City: zip:
Phone/Cell: Business Email:
REFERRAL SOURCE:
! Social Media I word of Mouth n website notner
2019 Annual Gross Sales: # of Employees: FT_ PT_
Year Business Established in City of Sanger: lndustry Type:
Established prior to May 25, 2019: Yes! Non For Profit Business: ! YES n NO ls This Your Primary Occupation: Yes ! No !
lf No, Please List Other Jobs Here:
How Many Hours a Week did you Work in 2019:
PRIMARY OWNERSHIP INFORMATION :
Owner Name: SSN/ITIN: DOB
Title: % Ownership Email
Home Address: City: zip
SECON DARY OWNERSHIP INFORMATION:
Owner Name: ssN/rTrN: DOB
Title % Ownership Email:
Home Address: City zip
SECONDARY OWN ERSHIP INFORMATION:
Owner Name: ssN/rTrN: DOB:
Title: % Ownership Email
Home Address: City: zip:
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2. BUSINESS INFORMATION - All questions below must be answered to qualify for funding.
A. Have you been approved for a Small Business Grant, Cares Act Funding (Federal or State) or a Paycheck Protection Program Loan?
B. Does the business have any unpaid local, state, federal tax liens or judgements? C. Has business owner(s) filed for bankruptcy in the last 3 years or have an active violation?
3. USE OF FUNDS: Working Capital: (rent, payroll, utilities or other fixed operating expenses) D. Please explain how the grant funds will be used for your business if awarded?
4. ADDtTtONAt qUESTIONS
E. Has your business been negatively impacted (closed completely) as a result of the COVID-19 public health emergency?
F. Has your business been partially closed as a result of the COVID-19 public health emergency? G. Has your business closed voluntarily to promote social distancing measures as a result of the COVID-L9 public health emergency?
H. Has your business been compliant with all State and Local Executive orders? l. Have you received citations or fines as a result of a violation with Covid-19 Executive Orders? J. Have you been operating for more than two years? Please provide date of opening.
5. REQUIRED DOCUMENTS
o Business License reflecting a date prior to May 25,2019 . Completed W-9 Form - for City's tax reporting downloadable at https://www.irs.gov/pub/irs- pdf/fw9.pdf.
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6. CERTIFICATION
To the best of my knowledge and beliel I certify: The information in this application is correct and complete.
Applicant's Name Title
Signature: Date
Submittal Directions: When complete, applications can be submitted by email to [email protected]. All submittals must be PDF format. No photos will be accepted. Applications can also be dropped off at the City of Sanger Building Department L7OO,7rh Street, in the drop box located outside of the Building Division in the east parking lot. Please answer all questions and include your W-9 Form and copy of your business license.
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