55394.00068\42086635.3
BBK DRAFT – MAY 14, 2024
FI
RST SUPPLEMENT TO
MASTER INSTALLMENT PURCHASE AGREEMENT
by
and between the
CI
TY OF SANTA ANA
a
nd the
S
ANTA ANA PUBLIC FINANCING AUTHORITY
D
ated as of _____________, 2024
R
elating to
I
nstallment Payments Secured by
the Water Revenue Fund of
the City of Santa Ana, California
EXHIBIT 3
55394.00068\42086635.3
TABLE OF CONTENTS
Page
-i-
ARTICLE I DEFINITIONS AND AMENDMENTS .......................................................... 2 Section 1.01. Definitions.................................................................................................... 2 Section 1.02. Definitions in Agreement and Indenture...................................................... 3 ARTICLE II REPRESENTATIONS AND WARRANTIES................................................ 3 Section 2.01. The City hereby makes the following representations: ................................ 3 Section 2.02. The Authority hereby makes the following representations and warranties: ............................................................................................ 4
ARTICLE III PURCHASE OF PROJECT BY, AND SALE THEREOF TO, THE AUTHORITY; PAYMENT ............................................................................. 4 Section 3.01. Purchase and Sale of Project ........................................................................ 4 Section 3.02. Payment........................................................................................................ 4
ARTICLE IV PURCHASE OF PROJECT BY, AND SALE THEREOF TO, THE CITY; PAYMENT ........................................................................................... 5 Section 4.01. Purchase and Sale of Project ........................................................................ 5 Section 4.02. The City agrees to pay as Component Installment Payments, solely from Net System Revenues as provided in the Agreement, the following: ............................................................................................. 5 Section 4.03. The Component Installment Payments specified herein are Parity Installment Obligations. ....................................................................... 5 ARTICLE V PREPAYMENT AND REDEMPTION .......................................................... 6 Section 5.01. Prepayment and Redemption ....................................................................... 6 ARTICLE VI ADDITIONAL COVENANTS ....................................................................... 6 Section 6.01. Additional Covenants................................................................................... 6 ARTICLE VII MISCELLANEOUS ........................................................................................ 7 Section 7.01. Liability of City Limited .............................................................................. 7 Section 7.02. Limitation of Rights ..................................................................................... 7 Section 7.03. Assignment .................................................................................................. 7 Section 7.04. Notices ......................................................................................................... 7 Section 7.05. Waiver of Personal Liability ........................................................................ 8 Section 7.06. Article and Section Headings, Gender and References ............................... 8 Section 7.07. Partial Invalidity........................................................................................... 9 Section 7.08. Law Governing ............................................................................................ 9 Section 7.09. Execution in Counterparts............................................................................ 9
EXHIBIT A – THE PROJECT .................................................................................................. A-1 55394.00068\42086635.3
1 FIRST SUPPLEMENT TO
MASTER INSTALLMENT PURCHASE AGREEMENT
This FIRST SUPPLEMENT TO MASTER INSTALLMENT PURCHASE
AGREEMENT, made and entered into as of _________ 1, 2024 (this “Supplement”), 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 previously financed the acquisition, construction and installation of certain improvements to its Water System (the “Project”) (capitalized terms used herein shall have the meanings given such teens in Section 1.01) through the incurrence of certain Prior Obligations, defined herein.
WHEREAS, the City desires to finance and refinance the Project by prepaying the Prior Obligations;
WHEREAS, concurrently with the prepayment of the Prior Obligations, the City will reacquire the Project and will resell the Project to the Authority and then repurchase the Project from the Authority pursuant to this Supplement;
WHEREAS, the City and the Authority have heretofore entered into a Master Installment Purchase Agreement, dated as of ____________ 1, 2024 (the “Agreement”), pursuant to which the Authority has agreed to provide the Project and any Components thereof to the City and the City has agreed from time to time to purchase the Project and/or Components thereof as are specified in a Supplement, and has declared the conditions and terms upon which obligations such as installment payments (the “Component Installment Payments”), and the interest thereon, are to be incurred and secured;
WHEREAS, the Authority proposes to assign without recourse certain of its rights under and pursuant to this Supplement to U.S. Bank Trust C ompany, National Association, as trustee (the “Trustee”);
WHEREAS, in consideration of such assignment and the execution and entering into of the Indenture, dated as of the date hereof, by and between the Trustee and the Authority, the Authority has agreed to issue its Santa Ana Public Financing Authority Water Revenue Bonds, Series 2024 (Payable Solely from Installment Payments Secured by Water System Net Revenues) (the “Component Obligation Series 2024”);
WHEREAS, a portion of the proceeds of the Component Obligation Series 2024 will be used to provide for the prepayment of the Prior Obligations; and 55394.00068\42086635.3
2 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 executi on and delivery of this Supplement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Supplement;
NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS AND AMENDMENTS
SECTION 1.01. Definitions. Al l of the definitions contained in the Agreement shall apply to this Supplement except as otherwise expressly provided. In addition, the following terms are defined herein.
“Closing Date” means _________, 2024.
“Components” means the components of the Proje ct specified in Exhibit A hereto for which the City will be making Installment Payments as hereinafter specified. “Component Installment Payments” means the Installment Payments herein specified which are to pay the Purchase Price of the Components.
“Component Obligation Series 2024” means the Santa Ana Public Financing Authority Water Revenue Bonds, Series 2024 (Payable Solely from Installment Payments Secured by Water System Net Revenues).
“First Supplement” means this First Supplement to Master Ins tallment Purchase Agreement, by and between the City and the Authority, dated as of ___________, 2024, securing the 2024 Bonds.
“Indenture” means the Indenture, dated as of _____________, 2024, by and between the Trustee and the Authority, as originally ex ecuted and as it may from time to time be amended or supplemented in accordance with its terms.
“Person” means an individual, corporation, limited liability company, film, association, partnership, trust or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof.
“Prior Installment Agreement” means the Master Installment Purchase Agreement, dated as of August 1, 2014, as supplemented by the First Supplement to Master Installment Purchase Agreement, dated as of August 1, 2014, each by and between the City and the Santa Ana Financing Authority and securing the payment of the Prior Obligations. 55394.00068\42086635.3
3 “Prior Obligations” means the Santa Ana Financing Authority Water Revenue Bonds, Series 2014 (Payable Solely from Installment Payments Secured by Water System Net Revenues). “Trustee” means U.S. Bank Trust Company, National Association, and its successors or assigns, or any successor trustee.
SECTION 1.02. Definitions in Agreement and Indenture. Except as otherwise herein defined and unless the context otherwise requires, the terms defined in the Agreement or the Indenture shall for all purposes hereof and of any amendment hereof or supplement hereto and of any report or other document mentioned herein, have the meanings defined therein, such definitions to be equally applicable to both the singular and plural forms of any of the terms defined therein. With respect to any defined term which is given a different meaning under this Supplement than under the Agreement or the Indenture, as used herein it shall have the meaning given herein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. The City hereby makes the following representations:
(a) The City is a charter city and municipal corporation of the State, duly organized and validly existing 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 Supplement and carry out its obligations hereunder, to carry out and consummate all transactions contemplated by this Supplement, 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 and delivery of this Supplement 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 Supplement.
(d) The execution and delivery of this Supplement 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 proper ties 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 and that the City refinance the Project in the manner provided for in this Supplement, in order to provide essential services and facilities to the persons residing in the City. 55394.00068\42086635.3
4 SECTION 2.02. The Authority hereby 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 Supplement and to carry out its obligations hereunder and to carry out and consummate all transactions contemplated by this Supplement.
(c) By proper action, the Authority has duly authorized the execution, delivery and due performance of this Supplement.
(d) The execution and delivery of this Supplement 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 whi ch 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 Component Installment Payments will not be includable in the gross income of the owners of such Component Installment Payments for federal income tax purposes.
ARTICLE III
PURCHASE OF PROJECT BY, AND SALE THEREOF TO, THE AUTHORITY;
PAYMENT
SECTION 3.01. Purchase and Sale of Project . Upon prepayment of the Prior Obligations and the discharge of the City’s obligations under the First Installment Agreement, the City represents and warrants that it is the sole and exclusive owner of the Project. The Authority hereby purchases from the City, and the City hereby sells to the Authority, the Project in accordance with the provisions of this Supplement. All right, title and interest in the Project shall immediately vest in the Authority on the Closing Date without further action on the part of the Authority or the City.
SECTION 3.02. Payment. On the Closing Date, the Authority shall pay to the City, as and for the purchase price of the Project, the amount of $______________, which amount shall be paid from the proceeds of the Component Obligation Series 2024. 55394.00068\42086635.3
5 ARTICLE IV
PURCHASE OF PROJECT BY, AND
SALE THEREOF TO, THE CITY; PAYMENT
SECTION 4.01. Purchase and Sale of Project . The City hereby purchases from the Authority, and the Authority hereby sells to the City, the Project in accordance with the provisions of this Supplement. On the Closing Date, immediately subsequent to the vesting of all right, title and interest in the Project in the Authority pursuant to Section 2.01 hereof, all right, title and interest in the Project shall vest in the City without further action on the part of the City or the Authority
SECTION 4.02. The City agrees to pay as Component Installment Payments, solely from Net System Revenues as provided in the Agreement, the following:
Installment
Payment Date
(September 1)
Interest
Portion of
Installment
Payments
Principal
Portion of
Installment
Payments
Total Component
Installment
Payments
SECTION 4.03. The Component Installment Payments specified herein are Parity Installment Obligations.
55394.00068\42086635.3
6 ARTICLE V
PREPAYMENT AND REDEMPTION
SECTION 5.01. Prepayment and Redemption. The City shall have the following rights and duties to prepay Component Installment Payments:
The Component Installment Payments payable on or after September 1, ____ are subject to prepayment, at the option of the City, upon at least 45 days prior written notice to the Authority and the Trustee specifying the date and amount of such prepayment, on or after September 1, ____, at a prepayment price equal to 100% of the Principal Portion of Component Installment Payments to be prepaid plus the unpaid Interest Portion of Component of Installment Payments up to the date fixed for prepayment.
ARTICLE VI
ADDITIONAL COVENANTS
SECTION 6.01. Additional Covenants . In addition to the covenants specified in the Agreement, the following additional covenants are added with respect to the Component Obligation Series 2024:
The City will not directly or indirectly use or permit the use of any proceeds of the Component Obligation Series 2024 or any other funds of the City or of the Project or take or omit to take any action that would cause the Component Obligation Series 2024 to be “private activity bonds” within the meaning of Section 141 of the Code, or obligations whi ch are “federally guaranteed” within the meaning of Section 149(b) of the Code.
The City covenants that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest represented by the Component Obligation Series 2024 under Section 103 of the Code. The City will not directly or indirectly use or permit the use of any proceeds of the Component Obligation Series 2024 or any other funds of the City, or take or omit to take any action, that would cause the Component Obligation Series 2024 to be “arbitrage bonds” within the meaning of Section 148(a) of the Code. To that end, the City will comply with all requirements of Section 148 of the Code to the extent applicable to the Component Obligation Series 2024. In the event that at any time the City is of the opinion that for purposes of this Section it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee under the Indenture or otherwise, the City shall so instruct the Trustee in writing, and shall cause the Trustee to take such action as may be necessary in accordance with such instructions.
Without limiting the generality of the foregoing, the City agrees that ther e shall be paid from time to time all amounts required to be rebated to the United States of America pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury Regulations as may be applicable to the Component Obligation Series 2024 from time to time. This covenant shall survive payment in full or defeasance of the Component Obligation Series 2024. The City specifically covenants to pay or cause to be paid to the United States of America at the times and in the amounts 55394.00068\42086635.3
7 determined under this Section the Rebate Requirement, as described in the Tax Certificate and to otherwise comply with the provisions of the Tax Certificate executed by the City in connection with the execution and delivery of the Component Obligation Series 2024.
Notwithstanding any provision of this Section, if the City shall provide to the Trustee an opinion of nationally recognized Bond Counsel to the effect that any action required under this Section is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Component Obligation Series 2024 pursuant to Section 103 of the Code, the Trustee may rely conclusively on such opinion in complying with the provisions hereof, and the covenants hereunder shall be deemed to be modified to that extent.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Liability of City Limited. Notwithstanding anything contained herein, the City shall not be required to advance any moneys derived from any source of income other than Net System Revenues and the other funds provided herein for the payment of the Component Installment Payments, and the interest thereon, and other payments required to be made by it hereunder, or for the performance of any agreements or covenants required to be performed by it contained herein. The City may, however, but in no event shall be 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 pay the Component Installment Payments, and the interest thereon, and other payments required to be made by it hereunder is a special obligation of the City payable, in the manner provided herein, solely from N et 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, in contravention of any constitutional or statutory debt limitation or restriction. Neither the faith and credit nor the taxing power of the City or the State, or any political subdivision thereof, is pledged to the payment of the Component Installment Payments, or the interest thereon, or any other payments required to be made hereunder.
SECTION 7.02. Limitation of Rights. Nothing in this Supplement expressed or implied is intended or shall be construed to give to any Person other than the City, the Authority and the Trustee, as assignee of the Authority, any legal or equitable right, remedy or claim under or in respect of this Supplement or any covenant, condition or provision therein or herein contained, and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the City, the Authority and the Trustee, as assignee of the Authority.
SECTION 7.03. Assignment. The City and the Authority hereby acknowledge the transfer, conveyance and assignment by the Authority to the Trustee of all of the Authority’s rights, title and interest under this Supplement, including the right to receive Component Installment Payments, and the interest thereon, from the City, pursuant to the Indenture.
SECTION 7.04. Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be g iven hereunder shall be 55394.00068\42086635.3
8 given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely:
If to the City: City of Santa Ana
20 Civic Center Plaza
Santa Ana, CA 92701
Attn: Department of Finance
If to the Authority: Santa Ana Public Financing Authority 20 Civic Center Plaza
Santa Ana, CA 92701
Attn: Executive Director
If to the Trustee: U.S. Bank Trust Company, National Association U.S. Bank Tower
633 West 5
th St., 24th Floor
Los Angeles, CA 90071
Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender’s receipt of an appropriate answerback or other written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at the address specified in this Section.
Any notice to be given to or by the Authority hereunder shall, upon the assignment of the Authority’s rights hereunder to the Trustee, also be given to or by the Trustee.
SECTION 7.05. Waiver of Personal Liability. No official, officer or employee of the City shall be individually or personally liable for the payment of the Component Installment Payments, or the interest thereon, or other payments required to be made by the City hereunder, 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 7.06. Article and Section Headings, Gender and References. The headings or titles of the several Articles and Sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and words of any gender shall be deemed and construed to include all genders. All references herein to “Articles,” “Sections” and other subsections or clauses are to the corresponding articles, sections, subsections or clauses hereof, and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith” and other words of similar import refer to this Supplement as a whole and not to any particular Article, Section, subdivision or clause hereof. 55394.00068\42086635.3
9 SECTION 7.07. 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 sha ll be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof.
SECTION 7.08. Law Governing. This Supplement shall be construed and governed in accordance with the laws of the State.
SECTION 7.09. Execution in Counterparts . This 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\42086635.3
S-1
IN WITNESS WHEREOF, the parties hereto have executed and attested this First Supplement to 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-
First Supplement to
Master Installment Purchase Agreement
55394.00068\42086635.3
A-1
EXHIBIT A
THE PROJECT
The acquisition, installation, and construction of water facilities of the City.