55394.00068\42092413.3
BBK DRAFT – MAY 13
M
ASTER INSTALLMENT PURCHASE AGREEMENT
by and between the
CITY OF SANTA ANA
and the
SANTA ANA PUBLIC FINANCING AUTHORITY
Dated as of ___________, 2024
R
elating to
Installment Payments Secured by
the Water Revenue Fund of
the City of Santa Ana, California
EXHIBIT 2
55394.00068\42092413.3
TABLE OF CONTENTS
Page
-i-
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS .................................................................................................... 2 SECTION 1.02. RULES OF CONSTRUCTION ........................................................................ 12
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. REPRESENTATIONS BY THE CITY ............................................................ 13 SECTION 2.02. REPRESENTATIONS AND WARRANTIES BY THE AUTHORITY ......... 13
ARTICLE III
ACQUISITION AND CONSTRUCTION OF PROJECT
SECTION 3.01. ACQUISITION AND CONSTRUCTION OF PROJECT;
COMPONENTS ............................................................................................ 14 SECTION 3.02. CHANGES TO THE PROJECT ....................................................................... 15
ARTICLE IV
INSTALLMENT PAYMENTS
SECTION 4.01. PURCHASE PRICE. ........................................................................................ 15 SECTION 4.02. INSTALLMENT PAYMENTS; RESERVE FUND PAYMENTS. ................. 16
ARTICLE V
SYSTEM REVENUES
SECTION 5.01. COMMITMENT OF THE NET SYSTEM REVENUES................................. 16 SECTION 5.02. ALLOCATION OF SYSTEM REVENUES .................................................... 17 SECTION 5.03. ADDITIONAL OBLIGATIONS. ..................................................................... 17 SECTION 5.04. MAINTENANCE AND OPERATION OBLIGATIONS ................................ 18
ARTICLE VI
COVENANTS OF THE CITY
SECTION 6.01. COMPLIANCE WITH INSTALLMENT PURCHASE AGREEMENT AND ANCILLARY AGREEMENTS ........................................................... 19 SECTION 6.02. AGAINST ENCUMBRANCES ....................................................................... 19 SECTION 6.03. DEBT SERVICE RESERVE FUND ................................................................ 19 SECTION 6.04. AGAINST SALE OR OTHER DISPOSITION OF PROPERTY .................... 20 SECTION 6.05. AGAINST COMPETITIVE FACILITIES ....................................................... 20 SECTION 6.06. PROMPT ACQUISITION AND CONSTRUCTION ...................................... 20 55394.00068\42092413.3
TABLE OF CONTENTS
(continued)
Page
-ii-
SECTION 6.07. MAINTENANCE AND OPERATION OF THE WATER SYSTEM; BUDGETS ..................................................................................................... 20 SECTION 6.08. AMOUNT OF RATES AND CHARGES; RATE STABILIZATION FUND. ............................................................................................................ 20 SECTION 6.09. PAYMENT OF CLAIMS ................................................................................. 21 SECTION 6.10. COMPLIANCE WITH CONTRACTS ............................................................ 21 SECTION 6.11. INSURANCE. ................................................................................................... 21 SECTION 6.12. ACCOUNTING RECORDS; FINANCIAL STATEMENTS AND OTHER REPORTS. ....................................................................................... 22 SECTION 6.13. PROTECTION OF SECURITY AND RIGHTS OF THE AUTHORITY ....... 22 SECTION 6.14. PAYMENT OF TAXES AND COMPLIANCE WITH
GOVERNMENTAL REGULATIONS ......................................................... 22 SECTION 6.15. COLLECTION OF RATES AND CHARGES; NO FREE SERVICE ............ 23 SECTION 6.16. EMINENT DOMAIN PROCEEDS .................................................................. 23 SECTION 6.17. TAX COVENANTS ......................................................................................... 23 SECTION 6.18. FURTHER ASSURANCES ............................................................................. 23 SECTION 6.19. OPERATE WATER SYSTEM ......................................................................... 23 SECTION 6.20. ADDITIONAL COVENANTS......................................................................... 24
ARTICLE VII
PREPAYMENT OF INSTALLMENT PAYMENTS
SECTION 7.01. PREPAYMENT OF INSTALLMENT PAYMENTS ...................................... 24
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY
SECTION 8.01. EVENTS OF DEFAULT AND ACCELERATION OF MATURITIES ......... 24 SECTION 8.02. APPLICATION OF NET SYSTEM REVENUES UPON
ACCELERATION ......................................................................................... 25 SECTION 8.03. OTHER REMEDIES OF THE AUTHORITY ................................................. 25 SECTION 8.04. NON-WAIVER ................................................................................................. 25 SECTION 8.05. REMEDIES NOT EXCLUSIVE ...................................................................... 26
ARTICLE IX
DISCHARGE OF OBLIGATIONS
SECTION 9.01. DISCHARGE OF OBLIGATIONS .................................................................. 26
ARTICLE X
MISCELLANEOUS
SECTION 10.01. LIABILITY OF CITY LIMITED TO SYSTEM REVENUES ...................... 26 55394.00068\42092413.3
TABLE OF CONTENTS
(continued)
Page
-iii-
SECTION 10.02. BENEFITS OF INSTALLMENT PURCHASE AGREEMENT LIMITED TO PARTIES................................................................................ 27 SECTION 10.03. AMENDMENTS ............................................................................................ 27 SECTION 10.04. SUCCESSOR IS DEEMED INCLUDED IN ALL REFERENCES TO PREDECESSOR ............................................................................................ 28 SECTION 10.05. WAIVER OF PERSONAL LIABILITY ........................................................ 28 SECTION 10.06. PARTIAL INVALIDITY ............................................................................... 28 SECTION 10.07. ASSIGNMENT ............................................................................................... 28 SECTION 10.08. NET CONTRACT .......................................................................................... 28 SECTION 10.09. CALIFORNIA LAW ...................................................................................... 28 SECTION 10.10. NOTICES ........................................................................................................ 28 SECTION 10.11. EFFECTIVE DATE ........................................................................................ 29 SECTION 10.12. EXECUTION IN COUNTERPARTS ............................................................ 29
EXHIBIT A - DESCRIPTION OF ENTIRE PROJECT ........................................................... A-1
55394.00068\42092413.3
1 MASTER INSTALLMENT PURCHASE AGREEMENT
This MASTER INSTALLMENT PURCHASE AGREEMENT, made and entered into as of ___________, 2024, by and between the CITY OF SANTA ANA, a charter city and municipal corporation organized and existing under and by virtue of the Constitution and the laws of the State of California and its Charter (the “City”), and the SANTA ANA PUBLIC FINANCING AUTHORITY, a joint exercise of powers authority and public entity duly organized and existing under and by virtue of the State of California (the “Authority”); WITNESSETH:
WHEREAS, the City expects to have the need from time to time to finance or refinance the acquisition, construction and installation of improvements to its Water System (capitalized terms used herein shall have the meanings given such terms in Section 1.01); WHEREAS, the Authority desires to assist the City with such financings and refinancings; WHEREAS, in order to accomplish such financings and refinancings, the City will incur obligations payable from net revenues of its Water System; WHEREAS, such obligations may be in the form of bonds of the Authority or may be in the form of installment purchase agreements, leases or other contracts; WHEREAS, the proceeds of such obligations will be used to finance and/or refinance the acquisition, construction, installation and improvement of certain municipal water system facilities of the City, as more fully described in Exhibit A hereof and as may be modified from time to time in conformity with the same (the “Project”);
WHEREAS, the City has determined that the Project and the purchase of the Project and/or Components thereof by the City is necessary and proper for City uses and purposes; WHEREAS, the Authority proposes to sell and/or refinance the Project and/or Components thereof from time to time to the City a nd the City desires to purchase the Project and/or Components thereof from the Authority upon the terms and conditions set forth herein; WHEREAS, concurrently with the prepayment of the Prior Obligations, the City will reacquire the Project and resell the Project to the Authority and then repurchase the Project from the Authority pursuant to a Supplement;
WHEREAS, the City and the Authority have duly authorized the execution of this Installment Purchase Agreement; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Installment Purchase Agreement do exist, have happened and have been performed in regular and due time, Ruin and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Installment Purchase Agreement. 55394.00068\42092413.3
2 NOW, THEREFORE, IN CONSIDERATION OF THESE PREMISES AND OF
THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR
OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this section shall, for all purposes of this Installment Purchase Agreement and any Suppl ement, have the meanings set forth below:
“Accountant’s Report ” means a report signed by an Independent Certified Public Accountant.
“Acquisition Fund” means the fund by that name established pursuant to any Issuing Instrument.
“Authority” means the Santa Ana Public Financing Authority, a joint exercise of powers authority and public entity duly organized and existing under and by virtue of the laws of the State, or its successors and assigns.
“Authorized City Representative ” means the Mayo r, the City Manager, Assistant City Manager or the Treasurer of the City or such other officer or employee of the City or other person who has been designated as such representative by resolution of the City Council of the City. “Balloon Indebtedness ” means, with respect to any Series of Obligations, twenty -five percent (25%) or more of the principal of which matures on the same date or within a 12 -month period (with sinking fund payments on Term Obligations deemed to be payments of matured principal), that portion of such Series of Obligations which matures on such date or within such 12-month period; provided, however, that to constitute Balloon Indebtedness the amount of indebtedness maturing on a single date or over a 12- month period must equal or exceed 150% of the amount of such Series of Obligations which matures during any preceding 12- month period.
For purposes of this definition, the principal amount maturing on any date shall be reduced by the amount of such indebtedness which is required, by the documents governing such indebtedness, to be amortized by prepayment or redemption prior to its stated maturity date. “Bond Counsel” means any attorney at law or fi rm of attorneys, of nationally recognized standing in matters pertaining to the validity of, and exclusion from gross income for federal income tax purposes of interest on, bonds issued by states and political subdivisions and duly admitted to practice law before the highest court of any state of the United States and acceptable to the City.
“Charter” means the Charter of the City as it now exists or may hereafter be amended, and any new or successor Charter.
55394.00068\42092413.3
3 “City” means the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution, the laws of the State and its Charter. “Code” means the Internal Revenue Code of 1986, and the regulations thereunder, as amended.
“Components” means components of the Project specified in a Supplement. “Consultant” means the consultant, consulting firm, engineer, architect, engineering firm, architectural firm, accountant or accounting firm retained by the City to perform acts or carry out the duties provided for such consultant in this Installment Purchase Agreement. Such consultant, consulting firm, engineer, architect, engineering firm or architectural firm shall be nationally recognized within its profession for work of the character required. Accountants or accounting films shall be independent certified public accountants licensed to practice in the State. “Credit Provider” means any municipal bond insurance company, bank or other financial institution or organization which is performing in all material respects its obligations under any Credit Support Instrument for some or all of the Parity Obligations. “Credit Provider Reimbursement Obligations” means obligations of the City to repay, from Net System Revenues, amounts advanced by a Credit Provider as credit or liquidity support for Parity Obligations.
“Credit Support Instrument ” means a policy of insurance, a letter of credit, a stand- by purchase agreement, revolving credit agreement or other credit arrangement pursuant to which a Credit Provider provides credit or liquidity support with respect to the payment of interest, principal or the purchase price of any Parity Obligations. “Debt Service” means, for any Fiscal Year, the sum of (1) the interest payable during such Fiscal Year on all outstanding Parity Obligations, assuming that all outstanding Serial Parity Obligations are retired as scheduled and that all outstanding Term Parity Obligations are redeemed or paid from sinking fund payments as scheduled (except to the extent that such interest is to be paid from the proceeds of sale of any Parity Obligations), (2) that portion of the principal amount of all outstanding Serial Parity Obligations maturing on the next succeeding principal payment date which falls in such Fiscal Year (excluding Serial Obligations which at the time of issuance are intended to be paid from the sale of a corresponding amount of Parity Oblig ations), and (3) that portion of the principal amount of all outstanding Term Parity Obligations required to be redeemed or paid on any redemption date which falls in such Fiscal Year (together with the redemption premiums, if any, thereon); provided that, (a) as to any Balloon Indebtedness, Tender Indebtedness and Variable Rate Indebtedness, interest thereon shall be calculated as provided in the definition of Maximum Annual Debt Service and principal shall be deemed due at the nominal maturity dates there of; (b) the amount on deposit in a debt service reserve fund on any date of calculation of Debt Service shall be deducted from the amount of principal due at the final maturity of the Parity Obligations for which such debt service reserve fund was establis hed and in each preceding year until such amount is exhausted; (c) the amount of any interest payable on any Parity Obligation for which there exists a Qualified Swap Agreement shall be the net amount payable by the City as provided in paragraph (iv) or pa ragraph (viii), as applicable, of the definition of 55394.00068\42092413.3
4 Maximum Annual Debt Service; and (d) the amount of payments on account of Parity Obligations which are redeemed, retired or repaid on the basis of the accreted value due on the scheduled redemption, retirement or repayment date shall be deemed principal payments, and interest that is compounded and paid as part of the accreted value shall be deemed payable on the scheduled redemption, retirement or repayment date but not before. For purposes of complying with the rate setting covenants contained herein and satisfying the debt service coverage requirements in connection with the issuance or incurring of Parity Obligations, Debt Service shall not include those portions of Parity Obligations to be paid in suc h period to the extent the interest that is evidenced and represented thereby is capitalized or is reasonably anticipated to be reimbursed to the Authority by the United States of America pursuant to Section 54AA of the Code (Section 1531 of Title I of Division B of the American Recovery and Reinvestment Act of 2009 (Pub. L.
No. 111-5, 23 Stat. 115 (2009), enacted February 17, 2009)), or any future similar program. “Defaulted Obligations” means Obligations in respect of which an Event of Default has occurred and is continuing.
“Engineer’s Report” means a report signed by an Independent Engineer. “Event of Default” means an event described in Section 8.01. “Fiscal Year” means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period selected and designated as the official Fiscal Year of the City.
“Independent Certified Public Accountant” means any firm of certified public accountants appointed by the City, and each of whom is independent pursuant to the Statement on Auditing Standards No. 1 of the American Institute of Certified Public Accountants. “Installment Payment Date ” means any date on which an Installment Payment is due as specified in or determined pursuant to a Supplement.
“Installment Payments” means the Installment Payments scheduled to be paid by the City under and pursuant hereto and any Supplement.
“Installment Payment Obligations” means Obligations consisting of or which are supported in whole by Installment Payments.
“Installment Purchase Agreement” means this Master Installment Purchase Agreement, by and between the City and the Authority, dated as of ___________, 2024, as originally executed and as it may from time to time be amended or supplemented in accordance herewith. “Issuing Instrument” shall mean any indenture, trust agreement or installment purchase agreement including any Supplement under which Obli gations are issued or created. The term Issuing Instrument shall not include a Qualified Swap Agreement. “Maintenance and Operation Costs ” means the reasonable and necessary costs spent or incurred by the City, for maintaining and operating the Water Syste m, calculated in accordance with generally accepted accounting principles, including (among other things) all costs of water 55394.00068\42092413.3
5 purchased or leased by the City, the reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Water System in good repair and working order, and including administrative costs of the City attributable to the Project and the Installment Purchase Agreement, salaries and wages of employees, payments to employees retirement systems (to the extent paid from System Revenues), overhead, taxes (if any), fees of auditors, accountants, attorneys or engineers and insurance premiums, and including all other reasonable and necessary costs of the City or charges required to be paid by it to comply with t he terms of the Obligations, including this Installment Purchase Agreement, including any amounts required to be deposited in the Rebate Fund pursuant to the Tax Certificate, and fees and expenses payable to any Credit Provider (other than in repayment of a Credit Provider Reimbursement Obligation), but excluding in all cases (i) depreciation, replacement and obsolescence charges or reserves therefor, (ii) amortization of intangibles or other bookkeeping entries of a similar nature, (iii) costs of capital additions, replacements, betterments, extensions or improvements to the Water System which under generally accepted accounting principles are chargeable to a capital account or to a reserve for depreciation, (iv) charges for the payment of principal and int erest on any general obligation bond heretofore or hereafter issued for Water System purposes, and (v) charges for the payment of principal and interest on any debt service on account of any obligation on a parity with or subordinate to the Installment Payments.
Payments with respect to Maintenance and Operation Obligations shall be considered Maintenance and Operation Costs if they are incurred in connection with the Maintenance and Operation Costs described in the preceding paragraph.
“Maintenance and Operation Obligation” means any contract or lease for the purchase of any facilities, properties, structures, or works, or any loan of credit to or guaranty of debts, claims or liabilities of any other person for the purpose of obtaining any facilities, properties, structures or works, the final payments under which are due more than five years following the effective date thereof; so long as in each case the payments thereunder are to constitute Maintenance and Operation Costs.
“Maximum Annual Debt Service ” means, at any point in time, with respect to Parity Obligations then Outstanding, the maximum amount of principal and interest becoming due on the Parity Obligations in the then current or any future Fiscal Year, calculated by the City or by an Independent Certified Public Accountant as provided in this definition and provided to the Trustee.
For purposes of calculating Maximum Annual Debt Service, the following assumptions shall be used to calculate the principal and interest becoming due in any Fiscal Year:
(i) in determining the principal amount due in each year, payments shall (except to the extent a different subsection of this definition applies for purposes of determining principal maturities or amortization) be assumed to be made in accordance with a ny amortization schedule established for such debt, including the amount of any Parity Obligations which are or have the characteristics of commercial paper and which are not intended at the time of issuance to be retired from the sale of a corresponding a mount of Parity Obligations, and including any scheduled mandatory redemption or prepayment of Parity Obligations on the basis of accreted value due upon such redemption or prepayment, and for such purpose, the redemption payment or prepayment shall be deemed a principal payment; in determining the interest due in each year, interest payable at a fixed 55394.00068\42092413.3
6 rate shall (except to the extent subsection (ii) or (iii) of this definition applies) be assumed to be made at such fixed rate and on the required payment dates; (ii) if all or any portion or portions of an Outstanding Series of Parity Obligations constitutes Balloon Indebtedness or if all or any portion of a Series of Parity Obligations or such payments then proposed to be issued would constitute Balloon Indebtedness, then, for purposes of determining Maximum Annual Debt Service, each maturity which constitutes Balloon Indebtedness shall be treated as if it were to be amortized in substantially equal annual installments of principal and interest over a term of 25 years commencing in the year the stated maturity of such Balloon Indebtedness occurs, the interest rate used for such computation shall be determined as provided in subsections (iv) or (v) below, as appropriate, and all payments of principal and intere st becoming due prior to the year of the stated maturity of the Balloon Indebtedness shall be treated as described in subsection (i) above;
(iii) if any of the Outstanding Series of Parity Obligations constitutes Tender Indebtedness or if Parity Obligations proposed to be issued would constitute Tender Indebtedness, then for purposes of determining Maximum Annual Debt Service, Tender Indebtedness shall be treated as if the principal amount of such Parity Obligations were to be amortized in accordance with t he amortization schedule set forth in such Tender Indebtedness or in the Credit Support Instrument established with respect to such Tender Indebtedness, or if no such amortization schedule is set forth, then such Tender Indebtedness shall be deemed to be amortized in substantially equal annual installments of principal and interest over a term of 25 years commencing in the year in which such Series is first subject to tender, and the interest rate used for such computation shall be determined as provided in subsections (iv) or (v) below, as appropriate; (iv) if any Outstanding Parity Obligations constitute Variable Rate Indebtedness (except to the extent subsection (ii) relating to Balloon Indebtedness or subsection (iii) relating to Tender Indebtedness appl ies), the interest rate on such Parity Obligation shall be assumed to be 110% of the daily average interest rate on such Parity Obligations during the 12 months ending with the month preceding the date of calculation, or such shorter period that such Parity Obligations shall have been Outstanding; provided that in the event that Variable Rate Indebtedness has been issued in connection with a Qualified Swap Agreement, the interest rate for purposes of computing Maximum Annual Debt Service shall be determined by (x) calculating the annualized net amount paid by the City under such Variable Rate Indebtedness and Qualified Swap Agreement (after giving effect to payments made under the Variable Rate Indebtedness and made and received by the City under the Qualifi ed Swap Agreement) during the 12 months ending with the month preceding the date of calculation, or such shorter period that such Qualified Swap Agreement has been in effect, and (y) dividing the amount calculated in clause (x) by the average daily balance of the related Parity Obligations Outstanding during the 12- month period contemplated by clause (x);
(v) if Parity Obligations proposed to be issued will be Variable Rate Indebtedness (except to the extent subsection (ii) relating to Balloon Indebtedness or subsection (iii) relating to Tender Indebtedness applies), then such Parity Obligations shall 55394.00068\42092413.3
7 be assumed to bear interest at 110% of the average of the J.J. Kenny High Grade Index during the prior 12 months ending with the month preceding the date of sa le of such additional Parity Obligations, or if that index is no longer published, another similar index selected by the City, or if the City fails to select a replacement index, an interest rate equal to 80% of the yield for outstanding United States Trea sury bonds having an equivalent maturity, or if there are no such Treasury bonds having such maturities, 100% of the lowest prevailing prime rate of any of the five largest commercial banks in the United States ranked by assets; provided that in the event that such Variable Rate Indebtedness will be issued in connection with a Qualified Swap Agreement, the interest rate for purposes of computing Maximum Annual Debt Service shall be determined by (a) calculating the net amount to be paid by the City under such Variable Rate Indebtedness and Qualified Swap Agreement after giving effect to payments to be made under the Variable Rate Indebtedness and to be made and received by the City under the Qualified Swap Agreement for the period during which the Qualified Swap Agreement is to be in effect and for this purpose any variable rate of interest agreed to be paid thereunder shall be deemed to be the rate at which the related Parity Obligation shall be assumed to bear interest, and (b) dividing the amount calculated in clause (a) by the average principal amount of the related Parity Obligation to be Outstanding during the first year after the issuance of such Parity Obligation;
(vi) if moneys or Permitted Investments have been deposited by the City into a separate fund or account or are otherwise held by the City or by a fiduciary to be used to pay principal and/or interest on specified Parity Obligations, then the principal and/or interest to be paid from such moneys, Permitted Investments or from the earnings thereon shall be disregarded and not included in calculating Maximum Annual Debt Service; (vii) if Parity Obligations are Paired Obligations, the interest thereon shall be the resulting linked rate or effective fixed rate to be paid with respect to such Paired Obligations; and
(viii) in the event that an agreement or commitment which, at the time of calculation is a Qualified Swap Agreement is or is to be in effect with respect to a Parity Obligation which is not Variable Rate Indebtedness, the interest rate of such Parity Obligation for purposes of calculating Maximum Annual Debt Service shall be calculated as follows:
(a) for such a Qualified Swap Agreement which is in effect on the date of calculation, the interest rate shall be calculated in the same manner as is specified in subsection (iv) for a Qualified Swap Agreement issued in connection with Variable Rate Indebtedness which is Outstanding on the date of calculation; and (b) for such a Qualified Swap Agreement which is not in effect on the date of calculation, the interest rate shall be calculated in the same manner as is specified in subsection (v) for a Qualified Swap Agreement to be issued in connection with Variable Rate Indebtedness to be Outstanding after the date of calculation, and for this purpose any variable rate of interest agreed to be paid 55394.00068\42092413.3
8 thereunder shall be assumed to be the rate assumed for Variable Rate Indebtedness described in subsection (v).
“Maximum Rate” means, on any day, the maximum interest rate allowed by law. “Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the state of Delaware, and its successors and assigns, and, if such entity shall for any reason no longer perform the functions of a securities rating agency, “ Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency (other than S&P) designated by the City.
“Net Proceeds ” means, when used with respect to any insurance, self insurance or condemnation award, the proceeds from such award rem aining after payment of all expenses (including attorneys’ fees) incurred in the collection of such proceeds. “Net System Revenues” means, for any Fiscal Year, the System Revenues for such Fiscal Year less the Maintenance and Operation Costs for such Fiscal Year. “Obligations” means (i) obligations of the City for money borrowed (such as bonds, notes or other evidences of indebtedness) or as installment purchase payments under any contract (including Installment Payments), or as lease payments under any financing lease (determined to be such in accordance with generally accepted accounting principles), the principal and interest on which are payable from Net System Revenues; (ii) obligations to replenish any debt service reserve funds with respect to such obligations of the City; (iii) obligations secured by or payable from any of such obligations of the City; and (iv) obligations of the City payable from Net System Revenues under (a) any contract providing for payments based on levels of, or changes in, inte rest rates, currency exchange rates, stock or other indices, (b) any contract to exchange cash flows or a series of payments, or (c) any contract to hedge payment, currency, rate spread or similar exposure, including but not limited to interest rate swap agreements and interest rate cap agreements. “Outstanding,” when used as of any particular time with respect to Obligations, means all Obligations theretofore or thereupon executed, authenticated and delivered by the City or any trustee or other fiduciary, except (i) Obligations theretofore cancelled or surrendered for cancellation; (ii) Obligations paid or deemed to be paid within the meaning of any defeasance provisions thereof; (iii) Obligations owned by the City or the Authority; and (iv) Obligations in lieu of or in substitution for which other Obligations have been executed and delivered. “Owner” means any person who shall be the registered owner of any outstanding Obligation certificate or other evidence of a right to receive Installment Payments directly or as security for payment of the Obligation.
“Parity Installment Obligation ” means Obligations consisting of or payable from Installment Payments which are not subordinated in right of payment to other Installment Payments.
“Parity Obligations” means (i) Parity Installment Obligations, (ii) Obligations the principal and interest of which are payable on a parity with Parity Installment Obligations, and (iii) Qualified Swap Agreements. Notwithstanding the foregoing, any amounts payable with respec t to a 55394.00068\42092413.3
9 Qualified Swap Agreement which represent termination payments or unwinding payments shall not be deemed to be Parity Obligations unless (a) such Qualified Swap Agreement expressly states that such termination payments or unwinding payments are to be considered Parity Obligations and (b) each Rating Agency which currently maintains a rating with respect to any Parity Obligation confirms in writing to the City that the inclusion of such termination payments or unwinding payments as Parity Obligations w ill not result in a downgrading, withdrawal or suspension of such rating.
“Paying Agent” means, with respect to an Installment Payment Obligation or Series of Installment Payment Obligations, the bank, trust company or other financial institution, if any, or other entities designated as the place or entity which shall make payment on such Installment Payment Obligation or a Series of Installment Payment Obligations and/or the interest thereon instead of or in addition to the City Treasurer’s office. “Payment Fund” means the fund designated in the Issuing Instrument as the fund into which Installment Payments are to be deposited for the purposes of paying principal or interest on related Obligations.
“Permitted Investments” means investments which pursuant to an Issuing Instrument are permissible for the investment of funds received from the sale of Obligations pursuant to the Issuing Instrument or from other funds held pursuant to the Issuing Instrument. “Prior Obligations ” means the Santa Ana Financing Authority Water Revenue Bonds, Series 2014 (Payable Solely from Installment Payments Secured by Water System Net Revenues). “Project” means the construction, replacement and improvements to the Water System described in Exhibit A hereto and as modified with res pect to Components in conformance with Section 3.02 hereof.
“Purchase Price” means the principal amount plus interest thereon owed by the City to the Authority under the terms hereof as provided in Section 4.01 and as specified in a Supplement. “Qualified Swap Agreement” means a contract or agreement, payable from Net System Revenues on a parity with Parity Obligations, intended to place Obligations on the interest rate, currency, cash flow or other basis desired by the City, including, without limitation, any interest rate swap agreement, currency swap agreement, forward payment conversion agreement or futures contract, any contract providing for payments based on levels of, or changes in, interest rates, currency exchange rates, stock or other indices, any contract to exchange cash flows or a series of payments, or any contract, including, without limitation, an interest rate floor or cap, or an option, put or call, to hedge payment, currency, rate, spread or similar exposure, between the City and a counterparty; provided that not less than 30 days prior to the City ’s execution of such contract or agreement, each Rating Agency which maintains a rating with respect to any Parity Obligation receives notice in writing of the City’s pending execution thereof; and provided further that at the time of origination each Rating Agency which maintains a rating with respect to any Parity Obligation confirms in writing to the City that the City ’s execution and delivery of such contract will not result in a downgrading, w ithdrawal or suspension of such rating. The counterparty to a Qualified Swap Agreement must have, at the date of execution of the Qualified Swap Agreement, 55394.00068\42092413.3
10 an unsecured, uninsured and nonguaranteed long -term obligation rated not lower than A by Moody’s and S&P; provided, that such counterparty may satisfy such rating requirements by providing an insurance policy for its obligations under any such swap agreement from an insurer whose unsecured ratings are in the rating categories required above, or alternatively by providing an unconditional, irrevocable, unsecured, uninsured and nonguaranteed guaranty of any other entity, including an affiliated entity, whose unsecured ratings are in the rating categories required above.
“Rating Agencies” means Moody’s and S &P, or whichever of them is then rating Parity Obligations.
“Rebate Fund ” means the fund by that name established pursuant to any Issuing Instrument.
“Rebate Requirement” shall have the meaning specified in any Tax Certificate. “Reserve Fund” and “Reserve Account” shall have the meanings given to such terms in any Issuing Instrument or Supplement.
“Reserve Requirement ” shall have the meaning given to such term in any Issuing Instrument or Supplement.
“S&P” means Standard & Poor ’s Global Ratings, its successors and assigns, and if such entity shall be deemed to refer to any other nationally recognized securities rating agency (other than Moody’s) designated by the City.
“Serial Parity Obligations ” means Serial Obligations which are Installment Payments or are payable on a parity with Parity Installment Obligations. “Serial Obligations” means Obligations for which no sinking fund payments are provided. “Series” means Obligations issued at the same time or sharing some other common term or characteristic and designated in the Issuing Instrument pursuant to which such Obligations were issued as a separate issue or series of Obligations.
“State” means the State of California.
“Subordinated Obligations” means any Obligations, the payment of principal and interest on which are subordinated in right of payment to Parity Obligations. “Supplement” means a supplement, supplemental to or amendatory of this Installment Purchase Agreement providing for the payment of specific Installment Payments as the Purchase Price for Components of the Project, executed and delivered by the City and the Authority. “System Revenues” means all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of the Water System, including, without limiting the generality of the foregoing, (i) all income, rents, rates, fees, charges (including standby and capacity charges), insurance proceeds or other moneys derived by the City from the water services, facilities, and 55394.00068\42092413.3
11 commodities or byproducts sold, furnished or supplied through the facilities of or in the conduct or operation of the business of the Water System, (ii) investment earnings on, and income derived from, the amounts referred to in the precedi ng clause (i), including investment earnings on the operating reserves, to the extent that the use of such earnings is limited to the Water System by or pursuant to law, and earnings on any Reserve Fund for Obligations but only to the extent that such earnings may be utilized under the Issuing Instrument for the payment of debt service for such Obligations; (iii) the proceeds derived by the City directly or indirectly from the sale or lease of a part of the Water System; and (iv) any amount received from the levy or collection of taxes which are solely available and are earmarked for the support of the operation of the Water System; provided, however, that System Revenues shall not include: (a) customers ’ deposits or any other deposits or advances subject to refund until such deposits or advances have become the property of the City; and (b) the proceeds of borrowings. Notwithstanding the foregoing, there shall be deducted from System Revenues any amounts transferred into a Rate Stabilization Fund as contemplated by Section 6.08(b), and there shall be added to System Revenues any amounts transferred out of such Rate Stabilization Fund to pay Maintenance and Operation Costs. System Revenues shall include reimbursements from the United States of America pursuan t to Section 54AA of the Code (Section 1531 of Title I of Division B of the American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111- 5, 23 Stat. 115 (2009), enacted February 17, 2009), or any future similar program); provided, however, for purposes of complying with the rate setting covenants contained herein and satisfying the debt service coverage requirements in connection with the issuance or incurring of Parity Obligations. System Revenues shall not include such other reimbursements from the United States of America.
“Tax Certificate” means a certificate relating to the requirements of the Code, signed on behalf of the City and the Authority and delivered in connection with the issuance of Tax-Exempt Installment Payment Obligations.
“Tax-Exempt Installment Payment Obligations ” means Installment Payment Obligations in respect of which it is intended that the interest component thereof will be excluded from gross income of the holders thereof (other than any holder who is a “ substantial user ” of fac ilities financed with such obligations or a “related person” within the meaning of Section 147(a) of the Code) for federal income tax purposes, whether or not such interest in includable as an item of tax preference or otherwise includable directly or indi rectly for purposes of calculating other tax liabilities, including any alternative minimum tax or environmental tax under the Code. “Tender Indebtedness” means any Parity Obligations or portions of Parity Obligations, a feature of which is an option, on t he part of the holders thereof, or an obligation, under the terms of such Parity Obligations, to tender all or a portion of such Parity Obligations to the City, a Paying Agent, or other fiduciary or agent for payment or purchase and requiring that such. B onds or portions of Bonds or that such rights to payments or portions of payments be purchased if properly presented.
“Term Parity Obligations ” means Term Obligations which are Parity Installment Obligations or are payable on a parity with Parity Installment Obligations. 55394.00068\42092413.3
12 “Term Obligations ” means Obligations which are payable on or before their specified maturity dates from sinking fund payments established for that purpose and calculated to retire such Obligations on or before their specified maturity dates. “Trustee” means a financial institution acting in its capacity as Trustee under and pursuant to the Issuing Instrument, and its successors and assigns. “Variable Rate Indebtedness ” means any portion of indebtedness evidenced by Parity Obligations the interest rate on which is not established at the time of incurrence of such indebtedness and has not, at some subsequent date, been established at a rate which is not subject to fluctuation or subsequent adjustment, excluding Paired Obligations. “Water Revenue Fund” has the meaning ascribed thereto in Section 5.02 hereof. “Water Service” means the water storage and distribution services made available or provided by the Water System.
“Water System” means any and all facilities, properties and improvements at any time owned, controlled or operated by the City as part of the Water Revenue Fund (defined in Section
5.02 hereof) for the collection, treatment, distribution, administration, disposal or reclamation of water.
“2014 Master Installment Purchase Agreement ” means the Master Installment Purc hase Agreement, dated as of August 1, 2014, by and between the City and the Santa Ana Financing Authority.
SECTION 1.02. Rules of Construction. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neutral genders. Except where the context otherwise requires, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including districts, agencies and other public bodies, as well as natural persons. Unless otherwise indicated, references herein to subsections, “ Sections” and “Articles” are to such subsections, Sections and Articles of this Installment Purchase Agreement. Unless the context requires otherwise, the terms “herein,” “ hereof,” “ hereunder” and any similar terms, as used in this Installment Purchase Agreement, shall refer to this Installment Purchase Agreement as a whole and not to any particular provisions of this Installment Purchase Agreement. The term “ issue” shall include issuance, creation, incurrence, entering into an agreement or any other act pursuant to which the City may become obligated with respect to an Obligation.
55394.00068\42092413.3
13 ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Representations by the City . The City makes the following representations:
(a) The City is a charter city and municipal corporation of the State, duly organized and validly pursuant to the provisions of the Constitution and the laws of the State and its Charter.
(b) The City has full legal right, power and authority to enter into this Installment Purchase Agreement and carry out its obligations hereunder and to carry out and consummate all transactions contemplated by this Installment Purchase Agreement, and the City has complied with the provisions of the Constitution and the laws of the State and its Charter in all matters relating to such transactions. The execution a nd delivery of this Installment Purchase Agreement is not subject to any voter approval requirement contained in Section 602 of the Charter.
(c) By proper action, the City has duly authorized the execution, delivery and due performance of this Installment Purchase Agreement. (d) The execution and delivery of this Installment Purchase Agreement and the consummation of the transactions herein contemplated will not violate any provision of law, any order of any court or other agency of government, or any indenture, material agreement or other instrument to which the City is now a party or by which it or any of its properties or assets is bound, or be in conflict with, result in a breach of or constitute a default (with due notice or the passage of time or both) under any such indenture, agreement or other instrument, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the City.
(e) The City has determined that it is necessary and proper for the City uses and purposes within the terms of the Constitution and the laws of the State and its Charter that the City acquire the Project in the manner provided for in this Installment Purchase Agreement, in order to provide es sential services and facilities to the persons residing in the City.
SECTION 2.02. Representations and Warranties by the Authority . The Authority makes the following representations and warranties:
(a) The Authority is a joint exercise of powers authority and public entity organized and existing under the laws of the State.
(b) The Authority has full legal right, power and authority to enter into this Installment Purchase Agreement and to carry out its obligations hereunder and to carry out and consummate all transactions contemplated by this Installment Purchase Agreement. 55394.00068\42092413.3
14 (c) By proper action, the Authority has duly authorized the execution, delivery and due performance of this Installment Purchase Agreement. (d) The execution and delivery of this Installment Purchase Agreement and the consummation of the transactions herein contemplated will not violate any provision of law, any order of any court or other agency of government, or any indenture, material agreement or other instrument to which the Authority is now a party or by which it or any of its properties or assets is bound, or be in conflict with, result in a breach of or constitute a default (with due notice or the passage of time or both) under any such indenture, agreement or other instrument, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Authority.
(e) The interest components of Tax -Exempt Installment Payment Obligations will not be includable in the gross income of the owners of such Obligations for federal income tax purposes.
ARTICLE III
ACQUISITION AND CONSTRUCTION OF PROJECT
SECTION 3.01. Acquisition and Construction of Project; Components. The Authority agrees to apply proceeds of its Obligations in accordance with Section 5.02 of the Indenture, and in connection therewith, the Authority hereby agrees to cause the Project or any Component thereof to be constructed, acquired and installed by the City, as agent of the Authority. The City shall enter into contracts and provide for, as agent of the Authority, the complete construction, acquisition and installation of the Project or any Component thereof as may be necessary. The City hereby agrees that it will cause the construction, acquisition and installation of the Project to be diligently performed.
It is hereby expressly understood and agreed that, except to the extent of proceeds of Authority Obligations which are deposited in an Acquisition Fund, the Authority shall be under no liability of any kind or character whatsoever for the payment of any cost of the Project or any Components. In the event the proceeds of Authority Obligations deposited in an Acquisition Fund are insufficient to complete the construction, acquisition and installation of the Project or any Components, the City shall cause to be deposited in such Acquisition Fund (or shall otherwise appropriate and encumber) from and to the extent of available amounts on deposit in the Water Revenue Fund (or other lawfully available moneys) an amount equal to that necessary to complete the construction, acquisition and installation of the Project or such Components.
The Authority will not undertake to cause any component of the Project to be constructed, acquired or installed unless and until the City and the Authority have entered into a Supplement specifying the components of the Project to be installed or refinanced, the date of completion, the purchase price to be paid by the City hereunder for that component of the Project, and the Installment Payments or the method of calculating Installment Payments. 55394.00068\42092413.3
15 SECTION 3.02. Changes to the Project. (a) From time to time and at any time, the City may modify or amend the description of the Project, to eliminate any part thereof and/or to substitute another Project or Projects, all w ithout obtaining any consent, by filing an amended Exhibit A with the Authority and the Trustee; provided however, that no such amendment shall substitute a Project or Projects which are not to be owned by the City or shall in any way impair the obligations of the City payable from the Water Revenue Fund and contained in any Supplement executed and delivered prior to any such amendment.
(b) The City may substitute other improvements for those listed as Components in any Supplement, but only if the City firs t files with the Authority and the Trustee a certificate of an Authorized City Representative:
(i) identifying the Components to be substituted and the Components they replace;
(ii) stating that the substituted Components will be owned by the City and payable from the Water Revenue Fund; and
(iii) stating that with respect to Components financed with Tax-Exempt Installment Payment Obligations, the estimated costs of construction, acquisition and installation of the substituted improvements are not less than such costs for the improvements previously planned.
Substituted Components may include or consist of an undivided interest in such Components, in which event the costs associated with the substituted Components over and above the undivided interest need not be deposited in the Acquisition Fund (or otherwise appropriated and encumbered); provided that the certificate of an Authorized City Representative specifies that the funds necessary to complete the substituted Components are on deposit in the Acquisition Fund or otherwise appropriated and encumbered.
ARTICLE IV
INSTALLMENT PAYMENTS
SECTION 4.01. Purchase Price.
(a) The City will pay the Purchase Price for any Components being purchased as provided in a Supplement. The Purchase Price to be paid by the City to the Authority pursuant to any Supplement hereto, solely from Net System Revenues and from no other sources, is the sum of the principal amount of the City’s obligations under such Supplement plus the interest to accrue on the unpaid balance of such principal amount from the effective date thereof over the term thereof, subject to prepayment as provided therein.
(b) The principal amount of the Installment Payments to be made by the City under a Supplement shall be paid at least five days prior to the date such Installment Payments are payable as specified in such Supplement or at such other earlier time or times and in the manner or manners as specified in such Supplement.
55394.00068\42092413.3
16 (c) The interest to accrue on the unpaid balance of such principal amount shall be paid at least five days prior to the date such interest is payable as specified in a Supplement or at such other earlier time or times as specified in such Supplement, and shall be paid by the City as and constitute interest paid on the principal amount of the City’s obligations thereunder. Interest shall be payable in an amount not exceeding the Maximum Rate, at such intervals and according to such interest rate formulas as shall be specified in a Supplement or by reference to any Issuing Instrument to which such Supplement relates, and shall be payable with such frequency as shall be specified therein.
SECTION 4.02. Installment Payments; Reserve Fund Payments. (a) The City may, subject to any rights of prepayment provided for in a Supplement, pay to the Authority, solely from Net System Revenues and from no other sources, the Purchase Price in installment payments over a period not to exceed the maximum period permitted by law, all as specified in a Supplement.
In the event that a Trustee notifies the City that the amount on deposit in a Reserve Fund or Reserve Account is less than the Reserve Requirement, the City shall deposit or cause to be deposited, solely from Net System Revenues, in such Reserve Fund or Reserve Account such amounts on a monthly basis as are necessary to increase th e amount on deposit therein to the Reserve Requirement in the ensuing six months.
(b) The obligation of the City to make the Installment Payments solely from Net System Revenues is absolute and unconditional, and until such time as the Purchase Price shall have been paid in full (or provision for the payment thereof shall have been made pursuant to Article IX), the City will not discontinue or suspend any Installment Payments required to be made by it under this section when due, whether or not the Project or any Component thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payments shall not be subject to reduction whether by offset or otherwise and shall not be conditioned upon the performance or nonperformance by any party of any agreement for any cause whatsoever.
ARTICLE V
SYSTEM REVENUES
SECTION 5.01. Commitment of the Net System Revenues . All Parity Obligations, including Parity Installment Payment O bligations, shall be secured by a prior lien on and pledge of Net System Revenues, and within such lien priority, such Parity Obligations shall be of equal rank without preference, priority or distinction of any Parity Obligations over any other Parity Obligations. The City does hereby grant such prior lien on and pledge of Net System Revenues to secure Parity Obligations. Such lien and pledge shall constitute a first lien on Net System Revenues. This Installment Purchase Agreement constitutes a Parity Obligation under the 2014 Master Installment Agreement. The City hereby represents and states that, except as otherwise stated in the 2014 Master Installment Agreement, it has not previously granted any lien or charge on any of the Net System Revenues except as may be stated in a Supplement; provided, however, 55394.00068\42092413.3
17 that out of Net System Revenues there may be apportioned such sums for such purposes as are expressly permitted by this Article V.
SECTION 5.02. Allocation of System Revenues. (a) In order to carry out and effectuate the commitment and pledge contained in Section 5.01, the City agrees and covenants that all System Revenues shall be received by the City in trust and shall be deposited when and as received in the City of Santa A na Water Revenue Fund (the “ Water Revenue Fund”) and which fund the City agrees and covenants to maintain so long as any Installment Payments remain unpaid, and all moneys in the Water Revenue Fund shall be so held in trust and applied and used solely as provided herein. The City shall pay (i) directly or as otherwise required all Maintenance and Operation Costs, (ii) to the Trustee, as assignee of the Authority, for deposit in the Payment Fund for Parity Obligations, the amounts specified in any Issuing Instrument, as payments due on account of Parity Obligations. In the event there are insufficient Net System Revenues to make all of the payments contemplated by clause (ii) of the immediately preceding sentence, then said payments should be made as nearly as practicable, pro rata, based upon the respective unpaid principal amounts of said Parity Obligations.
(b) After the payments contemplated by paragraph (a) above have been made, any remaining Net System Revenues shall be used to make up any deficiency in the Reserve Funds and Reserve Accounts for Parity Obligations. In the event there are insufficient Net System Revenues to make up all deficiencies in all Reserve Funds and Reserve Accounts for Parity Obligations, such payments into Reserve Funds and Reserve Accounts shall be made as nearly as practicable pro rata based on the respective unpaid principal amount of all Parity Obligations. Any amounts thereafter remaining in the Water Revenue Fund may from time to time be used to pay for capital expenditures f or the Water System or any other lawful purpose of the City, including payments on account of Subordinated Obligations, provided the following conditions are met:
(1) all Maintenance and Operation Costs are being and have been paid and are then current; and
(2) all deposits and payments contemplated by clause (ii) of paragraph (a) above shall have been made in full and no deficiency in any Reserve Fund or Reserve Account for Parity Obligations shall exist.
SECTION 5.03. Additional Obligations.
(a) The City may not create any Obligations the payments of which are senior or prior in right to the payment by the City of Parity Obligations. (b) Without regard to Section 5.03(c), the City may at any time enter into or create an obligation or commitment which is a Credit Provider Reimbursement Obligation or a Qualified Swap Agreement provided the Obligation to which the Qualified Swap Agreement relates is a Parity Obligation.
(c) After the initial issuance of Parity Obligations hereunder, the City may at any time and from time to time issue or create any other Parity Obligations, provided:
(1) The City is not in default under the term of this Agreement. 55394.00068\42092413.3
18 (2) (i) Net System Revenues, as certified by the City, for the most recent audited Fiscal Year preceding the date of execution of the Parity Obligations, plus (ii) projected Net System Revenues (as described below) are at least equal to 120% of Maximum Annual Debt Service.
The projections described in clause (2)(ii) above may take into account (A) increases in the charges made for service from the Water System which have been adopted by the City prior to the date of issuance or incurrence of such Parity Obligations, but which were not in effect for all or part of such preceding Fiscal Year, and which are scheduled to be effective in the period of Debt Service shown for such Parity Obligations, and (2) an allowance for estimated additional average annual Net System Revenues from any additions or connections to or improvements or extensions of the Water System which have occurred from the end of Fiscal Year preceding the date of execution of the Parity Obligations.
(3) Notwithstanding the requirements described above, Parity Obligations may be issued or incurred to refund outstanding Parity Obligations if, after giving effect to the application of the proceeds thereof, total Debt Service will not be increased in any Fiscal Year in which Parity Obligations (outstanding on the date of issuance or incurrence of such refunding Parity Obligations, but excluding such refunding Parity Obligations) not being refunded are outstanding.
(4) The City may but shall not be required to fund a reserve fund or obtain a reserve fund surety or instrument with respect to any Parity Obligations. If a reserve fund is funded for any Parity Obligations or a qualified reserve fund surety or instrument is obtained with respect to any Parity Obligations, such funded reserve fund or qualified reserve fund surety or instrument shall secure only the related Parity Obligations and shall not support the Bonds or any other Parity Obligations.
(5) Subordinate Obligations. The City further covenants that it shall not issue or incur any Subordinate Obligations unless Net System Revenues or projected Net System Revenues, calculated in the same manner as described in paragraph (b) above, are equal to at least 100% of the sum of Debt Service on all Parity Obligations and Subordinate Obligations outstanding immediately subsequent to the incurring of such additional obligations.
SECTION 5.04.
Maintenance and Operation Obligations . Amounts to be paid by the City with respect to any Maintenance and Operation Obligation shall constitute Maintenance and Operation Costs only if at the time such Obligation is entered into the City shall deliver to each Trustee a Certificate of the City to the effect that (i) the making of payments on such Obligation as Maintenance and Operation Costs will not impair the City’s ability to comply with the covenant set forth in Section 6.08(a) hereof during the next five Fiscal Years or five Fiscal Years beyo nd the commercial operation date of the project being financed with such Obligation, whichever is later, and (ii) the properties, services or commodities to be furnished pursuant to such Obligation can be economically and beneficially utilized by the City. If the amounts to be paid by the City for a Maintenance and Operation Obligation do not constitute Maintenance and Operation Costs, then such amounts shall be paid as Subordinate Obligations, in accordance with Section 5.02(b) hereof 55394.00068\42092413.3
19 unless, at the time such Obligation is initially incurred, the City demonstrates compliance with Section 5.03(c), in which event such amounts may be paid as Parity Obligations, in accordance with Section 5.02(a) hereof.
ARTICLE VI
COVENANTS OF THE CITY
SECTION 6.01. Compliance with Installment Pur chase Agreement and Ancillary Agreements. The City will punctually pay Parity Obligations in strict conformity with the provisions hereof and any ancillary agreement, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, and will not terminate the Installment Purchase Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State or any political subdivision of either or any failure of the Authority to observe or perform any agreement, condition, covenant or term contained herein required to be observed and performed by it, whether express or implied, or any duty, liability or obligation arising out of or connected herewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Authority or any force majeure, including acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lock outs, lack of transportation facilities, fire, explosion, or acts or regulations of governmental authorities.
The City will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Installment Purchase Agreement, including Supplements, and any Issuing Instrument relating to Parity Obligations required to be observed and performed by it, and it is expressly understood and agreed by and between the parties to the Installment Purchase Agreement that, subject to Section 10.07 hereof, each of the agreements, conditions, covenants and terms contained herein and therein is an essential and material term of the purchase of and payment for each Component by the City pursuant to, and in accordance with, and as authorized under the Constitution, laws of the State and the Charter.
The City shall be unconditionally and irrevocably obligated, as long as any Installment Payment Obligations remain outstanding and unpaid, to take all lawful action necessary or required to continue to entitle the City to collect and deposit such System Revenues in the Water Revenue Fund for use as provided in this Installment Purchase Agreement, provided however, such obligation does not, in any way, limit the City ’s ability to undertake any and all legal actions, including any appeals, in the defense of a federal court order dictating a water system configuration other than that approved and adopted by the City.
SECTION 6.02. Against Encumbrances. The City will not make any pledge of or place any lien on the Net System Revenues except as otherwise provided or permitted herein.
SECTION 6.03. Debt Service Reserve Fund . The City may maintain or cause to be maintained each Reserve Fund and Reserve Account at the applicable Reserve Requirement. In the event the amount in any such fund or account falls below the applicable Reserve Requirement, 55394.00068\42092413.3
20 the City will replenish such fund or account up to the applicable Reserve Requirement pursuant to Section 5.02.
SECTION 6.04. Against Sale or Other Disposition of Property. The City will not sell, lease or otherwise dispose of the Water System or any part thereof essential to the proper operation of the Water System or to the maintenance of the System Revenues, except as provided herein.
Further, the City will not, except as otherwise provided herein, enter into any a greement or lease which impairs the operation of the Water System or any part thereof necessary to secure adequate Net System Revenues for the payment of the Parity Obligations or which would otherwise impair the rights of the Authority with respect to the System Revenues or the operation of the Water System. Any real or personal property which has become nonoperative or which is not needed for the efficient and proper operation of the Water System, or any material or equipment which has become worn out, ma y be sold if such sale will not materially reduce the Net System Revenues and if the proceeds of such sale are deposited in the Water Revenue Fund.
SECTION 6.05.
Against Competitive Facilities . The City will not, to the extent permitted by existing law, construct, ac quire, maintain or operate and will not, to the extent permitted by existing law and within the scope of its powers, permit any other public or private agency, authority, district or political subdivision or any person whomsoever to acquire, construct, maintain or operate within the City any water system competitive with the Water System.
SECTION 6.06.
Prompt Acquisition and Construction. The City will take all necessary and appropriate steps to construct, acquire and install the Project, as agent of the Authority, wi th all practicable dispatch and in an expeditious manner and in conformity with law so as to complete the same as soon as possible.
SECTION 6.07.
Maintenance and Operation of the Water System; Budgets. The City will maintain and preserve the Water System in good repair and working order at all times and will operate the Water System in an efficient and economical manner and will pay all Maintenance and Operation Costs as they become due and payable. The City will adopt and file with the Authority, on or before the effective date hereof, a budget approved by the City Council of the City setting forth the estimated Maintenance and Operation Costs for the period from such date until the close of the then current Fiscal Year. On or before August 1, of each Fiscal Year, the City will adopt, and on or before one hundred and twenty (120) days after the beginning of the Fiscal Year, file with the Authority a budget approved by the City Council of the City setting forth the estimated Maintenance and Operation Costs for such Fiscal Year. Any budget may be amended at any time during any Fiscal Year and such amended budget shall be filed by the City with the Authority.
SECTION 6.08.
Amount of Rates and Charges; Rate Stabilization Fund.
(a) The City hereby covenants to fix, prescribe, revise and collect rates and charges for the services and facilities furnished by the Water System during each Fiscal Year which (together with other funds accumulated from System Revenues and which are lawfully available to the City for payment of any of the following amounts during such Fiscal Year) are at least sufficient, after making allowances for contingencies and errors in estimates, to pay the following amounts in the following order:
55394.00068\42092413.3
21 (i) all Maintenance and Operation Costs of the Water System estimated by the City to become due and payable in such Fiscal Year;
(ii) all Debt Service coming due and payable in such Fiscal Year; and (iii) all payments required to meet any other obligations of City which are charges, liens or encumbrances upon, or payable from, the Net System Revenues.
The City shall fix, prescribe, revise and collect rates and charges for the services and facilities furnished by the Water System during each Fiscal Year which are sufficient to yield Net System Revenues, at least equal to one hundred and twenty percent (120%) of the amounts payable under the preceding clause (ii) in such Fiscal Year.
(b) The City may establish, as a fund within the Water Revenue Fund, a fund denominated the Rate Stabilization Fund. From time to time the City may deposit into the Rate Stabilization Fund, from current System Revenues, such amounts as the City shall determine and the amount of available current System Revenues shall be reduced by the amount so transferred.
Amounts may be transferred from the Rate Stabilization Fund solely and exclusively to pay Maintenance and Operation Costs, and any amounts so transferred shall be deemed System Revenues when so transferred. All interest or other earnings upon amounts in the Rate Stabilization Fund may be withdrawn therefrom and accounted for as System Revenues.
SECTION 6.09. Payment of Claims. The City will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien on the Net System Revenues or any part thereof or on any funds in the hands of the City or the Trustee might impair the security of the Installment Payments, but the City shall not be required to pay such claims if the validity thereof shall be contested in good faith.
SECTION 6.10.
Compliance with Contracts. The City will comply with, keep, observe and perform all agreements, conditions, covenants and terms, express or implied, required to be performed by it contained in all contracts for the use of the Water System and all other contracts affecting or involving the Water System to the extent that the City is a party thereto.
SECTION 6.11.
Insurance.
(a) The City will procure and maintain or cause to be procured and maintained insurance on the Water System with responsible insurers, or provide self insurance reserves, in such amounts and against such risks (including accident to or destruction of the Water System) as are usually covered in connection with water systems similar to the Water System. In the event of any damage to or destruction of the Water System caused by the perils covered by such insurance or self insurance, the Net Proceeds thereof shall be applied to the reconstruction, repair or replacement of the damaged or destroyed portion of the Water System. The City shall begin such reconstruction, repair or replacement promptly after such damage or destruction shall occur, and shall continue and properly complete such reconstruction, repair or replacement as expeditiously as possible, and shall pay out of such Net Proceeds all costs and expenses in connection with such reconstruction, repair or replacement so that the same shall be completed and the Water System shall be free and clear of all claims and liens unless the City determines that such property or facility is not necessary to the efficient or proper operation of the Water System and therefore 55394.00068\42092413.3
22 determines not to reconstruct, repair or replace such project or facility. If such Net Proceeds exceed the costs of such reconstruction, repair or replacement, then the excess Net Proceeds shall be deposited in the Water Revenue Fund and be available for other proper uses of funds deposited in the Water Revenue Fund.
(b) The City will procure and maintain such other insurance which it shall deem advisable or necessary to protect its interests and the interests of the Authority, which insurance shall afford protection in such amounts and against such risks as are usually covered in connection with water systems similar to the Water System; provided that any such insurance may be maintained under a self -insurance program so long as such se lf-insurance is maintained in the amounts and manner usually maintained in connection with water systems similar to the Water System and is, in the opinion of an accredited actuary, actuarially sound.
All policies of insurance required to be maintained herein shall, to extent reasonably obtainable, provide that the Authority and the Trustee shall be given thirty (30) days’ written notice of any intended cancellation thereof or reduction of coverage provided thereby.
SECTION 6.12. Accounting Records; Financial Statements and Other Reports. (a) The City will keep appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the Water System, which records shall be available for inspection by the Authority and the Trustee at reasonable hours and under reasonable conditions.
(b) The City will prepare and file with the Authority annually within the number of days specified below after the close of each Fiscal Year (commencing with the Fiscal Year ending June 30, 2024) --
(1) within 270 days, financial statements of the Water Revenue Fund for the preceding Fiscal Year prepared in accordance with generally accepted accounting principles, together with an Accountant’s Report thereon; and (2) within 60 days, a detailed report as to all insurance policies maintained and self-insurance programs maintained by the City with respect to the Water System as of the close of such Fiscal Year, including the names of the insurers which have issued the policies and the amounts thereof and the property or risks covered thereby, together with a certification from the City to the Authority and the Trustee that it is in compliance with the insurance requirements hereunder.
(c) The City will furnish a copy of the financial statements referred to in (b)(1) above to any Owner of the Bonds requesting a copy thereof.
SECTION 6.13. Protection of Security and Rights of the Authority . The City will preserve and protect the security hereof and the rights of the Authority to the Installment Payments hereunder and will warrant and defend such rights against all claims and demands of all persons.
SECTION 6.14. Payment of Taxes and Compliance with Governmental Regulations.
The City will pay and discharge all taxes, assessments and other governmental charges which may 55394.00068\42092413.3
23 hereafter be lawfully imposed upon the Water System or any part thereof or upon the System Revenues when the same shall become due. The City will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the Water System or any part thereof, but the City shall not be required to comply with any regulations or requirements so long as the validity or application thereof shall be contested in good faith.
SECTION 6.15. Collection of Rates and Charges; No Free Service. The City will have in effect at all times rules and regulations for the payment of bills for Water Service. In each case where a bill remains unpaid in whole or in part after it becomes delinquent, the City may disconnect such premises from the water service, and such premises shall not thereafter be reconnected to the water service except in accordance with City operating rules and regulations governing such situations of delinquency. The City will not permit any part of the Water System or any facility thereof to be used or taken advantage of free of charge by any authority, firm or person, or by any public agency (including the United States of America, the State and any city, county, district, political subdivision, public authority or agency thereof).
SECTION 6.16.
Eminent Domain Proceeds. If all or any part of the Water System shall be taken by eminent domain proceedings, then the Net Proceeds thereof shall be applied to the replacement of the property or facilities so taken, unless the City determines that such property or facility is not necessary to the efficient or proper operation of the Water System and therefore determines not to replace such property or facilities. Any Net Proceeds of such award not applied to replacement or remaining after such work has been completed shall be deposited in the Water Revenue Fund and be available for other proper uses of funds deposited in the Water Revenue Fund.
SECTION 6.17.
Tax Covenants. There shall be included in each Supplement relating to Tax-Exempt Installment Payment Obliga tions such covenants as are deemed necessary or appropriate by Bond Counsel for the purpose of assuring that interest on such Installment Payment Obligations shall be excluded from gross income under Section 103 of the Code.
SECTION 6.18.
Further Assurances. The City will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Authority of the rights and benefits provided to it herein.
SECTION 6.19.
Operate Water System. The City will operate the Water System in an efficient and economical manner, provided that the City may remove from service on a temporary or permanent basis such part or parts of the Water System so long as (a) Net System Revenues are equal to one hundred twenty percent (120%) of the Debt Service for the then current Fiscal Year and for each Fiscal Year thereafter to and including the Fiscal Year during which the last Installment Payment is due as evidenced by an Engineer’s Report on file with the City, and (b) the City shall have filed with the Trustee an opinion of nationally recognized Bond Counsel to the effect that the removal of such part or parts of the Water Sys tem will not adversely affect the exclusion from gross income for federal income tax purposes of the interest on Tax -Exempt Installment Payment Obligations.
55394.00068\42092413.3
24 SECTION 6.20. Additional Covenants . The City may provide additional covenants pursuant to any Supplement, including covenants relating to any Credit Support obtained for Installment Payment Obligations; provided, however, that such additional covenants do not materially and adversely affect the right of Owners of Outstanding Obligations issued prior to any such Supplement.
ARTICLE VII
PREPAYMENT OF INSTALLMENT PAYMENTS
SECTION 7.01. Prepayment of Installment Payments. Provisions may be made in any Supplement for the prepayment of Installment Payments, in whole or in part, in such multiples and in such order of maturity and from funds of any source, and with such prepayment premiums and other terms as are specified in the Supplement. Said Supplement shall also provide for any notices to be given relating to such prepayment.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY
SECTION 8.01. Events of Default and Acceleration of Maturities . If one or more of the following Events of Default shall happen, that is to say -- (1) if default shall be made in the due and punctual payment of or on account of any Parity Obligation (other than a Qualified Swap Agreement) as the same shall become due and payable;
(2) if default shall be made by the City in the performance of any of the agreements or covenants required herein to be performed by it (other than as specified in clause (1) above and other than any such agreements or covenants, if any, arising in connection with any Qualified Swap Agreement), and such default shall have continued for a period of sixty (60) days after the City shall have been given notice in writing of such default by the Authority;
(3) if any Event of Default specified in any Supplement or Issuing Instrument shall have occurred and be continuing; or
(4) if the City shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the City seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property; then and in each and every such case during the continuance of such Event of Default the Authority shall upon the written request of the Owners of twenty-five percent (25%) or more of the aggregate 55394.00068\42092413.3
25 principal amount of all Series of Parity Installment Obligations Outstanding, voting collectively as a single class, by notice in writing to the City, declare the entire unpaid principal amount thereof and the accrued interest thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything contained herein to the contrary notwithstanding; provided, that with respect to a Series of Parity Installment Obligations supported by a Credit Support Instrument, acceleration sh all not be effective unless the declaration is consented to by the related Credit Provider. This subsection however, is subject to the condition that if at any time after the entire principal amount of all Series of Parity Installment Obligations and the a ccrued interest thereon shall have been so declared due and payable and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the City shall deposit with the Authority a sum sufficient to pay the unpaid principal amount of all such Series of Parity Installment Obligations and the unpaid payments of any other Parity Obligations referred to in clause (l) above due prior to such declaration and the accrued interest thereon, with interest on such overdue installments at the rate or rates applicable thereto in accordance with their terms, and the reasonable expenses of the Authority, and any and all other defaults known to the Authority (other than in the payment of the entire principal amount of the unpaid Parity Installment Obligations and the accrued interest thereon due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Authority or provision deemed by the Authority to be adequate shall have been made therefor, then and in every such case the Authority, by written notice to the City, may rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default or shall impair or exhaust any right or power consequent thereon.
SECTION 8.02. Application of Net System Revenues Upon Acceleration . Subject to the provisions of any Issuing Instrument, all Net System Revenues received after the date of the declaration of acceleration by the Authority as provided in Section 8.01 shall be applied as set forth in such Issuing Instrument.
SECTION 8.03.
Other Remedies of the Authority . The Authority shall have the right, subject to receipt of consent from any Credit Provider with respect to a particular Series of Parit y Installment Obligations--
(a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the City or any councilmember, officer or employee thereof, and to compel the City or any such councilmember, officer or employee to perform and carry out its or his duties under the Law and the agreements and covenants required to be performed by it or him contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Authority; or
(c) by suit in equity upon the happening of an Event of Default to require the City and its councilmembers, officers and employees to account as the trustee of an express trust.
SECTION 8.04. Non-Waiver. Nothing in this article or in any other provision here of shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the 55394.00068\42092413.3
26 Installment Payments to the Authority at the respective due dates or upon prepayment from the Net System Revenues and the other funds herein committed for such payment, or shall affect or impair the right of the Authority, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein.
A waiver of any default or breach of duty or contract by the Authority shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Authority to exercise any right or remedy accruing upon any default or breach of 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 Authority by the Law or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Authority.
If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to th e Authority, the City and the Authority shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken.
SECTION 8.05. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Authority 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 law.
ARTICLE IX
DISCHARGE OF OBLIGATIONS
SECTION 9.01. Discharge of Obligations . If the City shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Installment Payment Obligations of a Series the interest thereon and the principal thereof and the redemption premiums, if any, thereon or if all such Outstanding Obligations shall be deemed to have been paid at the times and in the manner stipulated in the applicable Issuing Instrument, then all agreements, covenants and other obligations of the City hereunder shall thereupon cease, terminate and become void and be discharged and satisfied (but only as to such Series) except for the obligation of the City to pay or cause to be paid all sums due hereunder.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Liability of City Limited to System Revenues . Notwithstanding anything contained herein, the City shall not be required to advance any moneys derived from any source of income other than the Net System Revenues and the other funds provided herein for the payment of the Installment Payments or for the performance of any other agreements or covenants required to be performed by it contained herein. The City may, however, but in no event shall be 55394.00068\42092413.3
27 obligated to, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the City for such purpose.
The obligation of the City to make the Installment Payments is a special oblig ation of the City payable solely from such Net System Revenues and other funds provided for herein, and does not constitute a debt of the City or of the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limitation or restriction.
SECTION 10.02. Benefits of Installment Purchase Agreement Limited to Parties .
Nothing contained herein, expressed or implied, is intended to give to any person other than the City, the Authority or the assigns of the Authority and any Credit Provider any right, remedy or claim under or pursuant hereto, and any agreement or covenant required herein to be performed by or on behalf of the City or the Authority shall be for the sole and exclusive benefit of the other party.
SECTION 10.03.
Amendments. T his Agreement may be amended with respect to a Series of Installment Payment Obligations in writing as may be mutually agreed by the City and the Authority, with the written consent of any Credit Provider which is providing insurance until the final maturity or payment in full of one or more maturities of such Installment Payment Obligations, or any other Credit Provider for such Installment Payment Obligations and the Owners of a majority in aggregate principal amount of such Installment Payment Obligations then Outstanding, provided that no such amendment shall (a) extend the payment date of any Installment Payment, or reduce the amount of any Installment Payment without the prior written consent of the Owner of each Obligation so affected, or (b) reduce t he percentage of Installment Payment Obligations the consent of the Owners of which is required for the execution of any amendment of this Installment Purchase Agreement.
With the written consent of any Credit Provider, this Agreement and the rights and obligations of the City and the Authority hereunder may also be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding upon execution by the City and the Authority, without the written consents of any Owner of Installment Obligations, but only to the extent permitted by law and only upon receipt of an unqualified opinion of nationally recognized Bond Counsel selected by the City and approved by the Authority to the effect that such amendment or supplement is permitted by the provisions of this Agreement and is not inconsistent with this Agreement and does not adversely affect the exclusion of the interest portion of the Installment Payments received by the Owners from gross income for federal income tax purposes, and only for any one or more of the following purposes -- (1) to add to the covenants and agreements of the Authority or the City contained in this Agreement other covenants and agreements thereafter to be observed or to surrender any right or power herein reserved to or conferred upon the Authority or the City, and which shall not adversely affect the interests of the Owners of the Installment Payment Obligations;
(2) to cure, correct or supplement any ambiguous or defective provision contained in this Agreement or in regard to questions arising under this Agreement, as the 55394.00068\42092413.3
28 Authority or the City may deem necessary or desirable and which shall not adversely affect the interests of the Owners of the Installment Payment Obligations; and (3) to make such other amendments or modifications which shall not materially adversely affect the interests of the Owners of the Installment Payment Obligations.
SECTION 10.04. Successor Is Deemed Included in all References to Predecessor.
Except as otherwise provided herein, whenever either the City or the Authority 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 City or the Authority, and all agreements and covenants required hereby to be performed by or on behalf of the City or the Authority shall bind and inure to the benefit of the respective successors thereof whether so expressed or not.
SECTION 10.05.
Waiver of Personal Liability. No official, officer or employee of the City shall be individually or personally liable for the payment of the Installment Payments, but nothing contained herein shall relieve any official, officer or employee of the City from the performance of any official duty provided by any applicable provisions of law or hereby.
SECTION 10.06.
Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the City or the Authority shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof.
SECTION 10.07.
Assignment. The Installment Purchase Agr eement and any rights hereunder may be assigned by the Authority, as a whole or in part, without the necessity of obtaining the prior consent of the City. The assignment of the Installment Purchase Agreement or rights hereunder or under a Supplement to a T rustee is solely in its capacity as Trustee and the duties, powers and liabilities of the Trustee in acting hereunder shall be subject to the provisions of the Issuing Instrument,
SECTION 10.08.
Net Contract. The Installment Purchase Agreement shall be deemed and construed to be a net contract, and the City shall pay absolutely net during the term hereof the Installment Payments and all other payments required hereunder, free of any deductions and without abatement, diminution or setoff whatsoever.
SECTION 10.09.
California Law . T he Installment Purchase Agreement shall be construed and governed in accordance with the laws of the State.
SECTION 10.10. Notices. All written notices to be given hereunder shall be given by first class mail, postage prepaid, courier or hand delivery to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other party in writing from time to time, namely:
If to the City: City of Santa Ana
20 Civic Center Plaza
Santa Ana, CA 92701
Attn: Department of Finance
55394.00068\42092413.3
29 If to the Authority: Santa Ana Public Financing Authority 20 Civic Center Plaza
Santa Ma, CA 92701
Attn: Executive Director
SECTION 10.11. Effective Date. The Installment Purchase Agreement shall become effective as to Installment Payments provided for in a Supplement upon the execution and delivery of such Supplement or as otherwise specified therein, and shall terminate as to such Supplement when the Installment Payments contemplated by such Supplement shall have been fully paid or prepaid (or provision for the payment thereof shall have been made as provided herein).
SECTION 10.12.
Execution in Counterparts. The Installment Purchase Agreement and each Supplement 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.
(Signature page follows)
55394.00068\42092413.3
S-1
IN WITNESS WHEREOF, the parties hereto have executed and attested this Master Installment Purchase Agreement by their officers thereunto duly authorized as of the day and year first written above.
CITY OF SANTA ANA
By:
City Manager
ATTEST:
Clerk of the Council
APPROVED AS TO FORM:
City Attorney
SANTA ANA PUBLIC FINANCING
AUTHORITY
By:
Executive Director
ATTEST:
Secretary
APPROVED AS TO FORM:
Authority Counsel
-Signature Page-
Master Installment Purchase Agreement
55394.00068\42092413.3
A-1
EXHIBIT A
DESCRIPTION OF ENTIRE PROJECT
Pursuant to Section 3.02 of the Installment Purchase Agreement, this Exhibit A may be amended from time to time and at any time to modify or amend the description of the Project, to eliminate any part thereof and/or to substitute a Project or Proje cts, all without obtaining any consent, by filing an amended Exhibit A with the Authority and the Trustee; provided however, that no such amendment shall in any way impair the obligations of the City contained in any Supplement executed and delivered prior to any such amendment.