Attachment #3. Installment Sale Agreement: This is the agreement between the City and Authority that provides the mechanism by which the bonds are repaid. The Authority issues bonds payable from installment payments of the City, which are secured by the pledge of net revenues from the Electric Enterprise.
Attachment #4. Indenture of Trust: This agreement provides for execution and delivery of the Bonds in exchange for proceeds in the par amount of the Bonds, and further lays out the covenants and specifics of the Bonds, as well as the Trustee’s duties, repayment mechanisms, default and remedies provisions, and Bondholder’s associated rights and remedies.
Attachment #5. Preliminary Official Statement: The offering document that discloses to prospective investors certain information that would aid in and investors decision to purchase the Bonds. The current version of the Official Statement (OS) as attached to this staff report is the Preliminary Official Statement. The OS outlines the terms of the sale of the Bonds, security for the Bonds, interest rate, obligations of the City and Authority, information about the City, and potential risks of purchasing the Bonds.
Attachment #6. Contract of Purchase: In this agreement, the underwriter (RBC Capital Markets) agrees to purchase all the Bonds provided that the terms and conditions set forth therein are satisfied. RBC Capital Markets will then sell the Bonds to investors.
TIMING:
Assuming approval of the resolutions by the City and the Authority, City Staff and its financing team will deliver a credit rating presentation to S&P Global Ratings (S&P) in mid-February. S&P will provide a public credit rating for the Bonds. Upon receipt of the credit rating, Staff anticipates that the Bonds will be sold to investors in early-to-mid-March, at which time, a final interest rate will be locked. Delivery of funds is expected in late March.
FINANCIAL IMPACT:
The annual debt service on the Bonds is estimated to be approximately $680,000 (principal and interest) for the entire term of the Bonds (FY 2051-52).
GOOD FAITH ESTIMATES:
The following information consists of estimates that have been provided by the Municipal Advisor (NHA Advisors, LLC) and has been represented by such party to have been provided in good faith:
1. True Interest Cost of the Bonds: 3.30%
2. Finance Charge of the Bonds (sum of all fees/charges paid to third parties): $226,910
3. Net Proceeds of the Bonds to be Received (net of finance charges, reserves and capitalized interest, if any): $10,000,000. Par value of the bonds sold will be higher to account for issuance costs and any premiums or discounts at the time of sale.
4. Total Payment Amount through Maturity of the Bonds: $16,206,658 The foregoing constitute good faith estimates only. The principal amount of the Bonds, the true interest cost of the Bonds, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to: (a) the actual date of the sale of the Bonds being different than the date assumed for purposes of such estimates; (b) the actual principal amount of Bonds sold being different from the estimated amount used for purposes of such estimates; (c) the actual amortization of the Bonds being different than the amortization assumed for purposes of such estimates; (d) the actual market interest rates at the time of sale of the Bonds being different than those estimated for
purposes of such estimates; (e) other market conditions; or (f) alterations in the City’s financing plan, or a combination of such factors.
The actual date of sale of the Bonds and the actual principal amount of Bonds sold will be determined by the City based on a variety of factors. The actual interest rates borne by the Bonds may be subject to change from what is presented above and that may have an impact on the amortization of the Bonds.
Recommended Action: Adopt a resolution authorizing the issuance of electric revenue bonds and authorizing the City Manager to execute all related documents for the improvement to various capital assets of City's electric system.
BUDGET AMENDMENT REQUIRED: N/A
CURRENT BUDGET AMOUNT: N/A
PROPOSED BUDGET AMOUNT: N/A
FINANCING SOURCE: N/A
PREVIOUS CONTRACT/PURCHASE ORDER NO.: N/A
COORDINATED WITH: NHA Advisors
Attachment 1
RESOLUTION 2022-____
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UKIAH AUTHORIZING AN
ELECTRIC SYSTEM FINANCING AND APPROVING THE ISSUANCE AND SALE OF
ELECTRIC REVENUE BONDS BY THE UKIAH PUBLIC FINANCING AUTHORITY TO
FINANCE PUBLIC CAPITAL IMPROVEMENTS, AND APPROVING RELATED
DOCUMENTS AND OFFICIAL ACTIONS RELATED THERETO
WHEREAS, the City of Ukiah (the “City”) desires to finance capital improvements to its electric system (collectively, the “Project”); and
WHEREAS, the Ukiah Public Financing Authority (the “Authority”) was formed to, among other things, assist the City with financing public capital improvements, including the Project; and
WHEREAS, the City and the Authority desire to enter into an Installment Sale Agreement (the “Installment Sale Agreement”), pursuant to which the City will pay for the Project over time, via payment to the Authority of semi-annual installment payments; and WHEREAS, to raise upfront funds for the Project, the Authority proposes to issue and sell its Electric Revenue Bonds, Series 2022 (the “Bonds”) under Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code (the “Bond Law”); and
WHEREAS, in order to secure the payments of principal of and interest on the Bonds, the Authority proposes to pledge the payment of the installment payments by the City under the Installment Sale Agreement to owners of the Bonds pursuant to an Indenture of Trust, between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Indenture”); and
WHEREAS, to provide for development of the most favorable debt structure for the City and to ensure the most favorable reception in the marketplace for the Bonds, the City has requested the Authority to sell the Bonds through a negotiated sale pursuant to the terms of a Bond Purchase Agreement (the “Bond Purchase Agreement”) between the Authority, the City and RBC Capital Markets, LLC, as underwriter (the “Underwriter”); and WHEREAS, for purposes of the sale of the Bonds, the City has caused to be prepared an Official Statement describing the Bonds, the preliminary form of which is on file with the City Clerk and the Council, with the aid of their staff, have undertaken such review of the Official Statement as hereinafter described as is necessary to assure proper disclosure of all material facts relating to the Bonds that are within the personal knowledge of Council members and the staff; and
WHEREAS, as required by Section 6586.5 of the California Government Code, the City caused publication of a notice of a public hearing on the financing of the public capital improvements included within the Project once at least five (5) days prior to the hearing in a newspaper of general circulation in the City; and
WHEREAS, on February 16, 2022, the Council held a public hearing at which all interested persons were provided the opportunity to speak on the subject of financing such public capital improvements; and
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WHEREAS, the information required to be obtained and disclosed by the City Council related to the Bonds pursuant to Government Code Section 5852.1 is set forth in the staff report accompanying this Resolution; and
WHEREAS, the Council wishes at this time to approve all proceedings of the City relating to the foregoing;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ukiah, as follows:
Section 1. The Council hereby approves the issuance of the Bonds by the Authority under the Bond Law in a maximum principal amount not to exceed $11,000,000, for the purpose of financing the Project. The Council hereby finds that issuance of the Bonds by the Authority for the purpose of financing the Project will result in significant public benefits of the type described in Section 6586 of the California Government Code, including, but not limited to, a more efficient delivery of City services to residential and commercial developments within the City and demonstrable savings in effective interest rate, bond preparation, bond underwriting and/or bond issuance costs.
Section 2. The Council hereby approves each of the following agreements required for the issuance and sale of the Bonds, in substantially the respective forms on file with the City Clerk together with any changes therein or additions thereto deemed advisable by the Mayor, Vice Mayor, City Manager, Finance Director, or a designee appointed by such person (each, an “Authorized Officer”), whose execution thereof shall be conclusive evidence of the approval of any such changes or additions. An Authorized Officer is hereby authorized and directed for and on behalf of the City to execute, and the City Clerk is hereby authorized and directed to attest, the final form of each such agreement, as follows:
Installment Sale Agreement, between the City as purchaser and the Authority as seller, under which the City purchases the Project over time in consideration of the payment of semi-annual installment payments; and
Continuing Disclosure Certificate, to be executed by the City for the purpose of providing annual financial information and notice of certain enumerated events to holders and beneficial owners of the Bonds.
Section 3. The Council hereby approves the negotiated sale of the Bonds by the Authority to the Underwriter. The Bonds shall be sold pursuant to the terms and provisions of the Bond Purchase Agreement among the Authority, the City and the Underwriter in substantially the form on file with the City Clerk together with any changes therein or additions thereto deemed advisable by an Authorized Officer. The true interest cost of the Bonds shall not exceed 3.75% and the Underwriter’s discount shall not exceed 0.70%.
Section 4. The Council hereby approves the preliminary Official Statement describing the Bonds in substantially the form on file with the City Clerk. An Authorized Officer is hereby authorized and directed to approve any changes in or additions to said preliminary Official Statement, and to execute an appropriate certificate stating the City’s determination that the preliminary Official Statement (together with any changes therein or additions thereto) has been deemed nearly final within the meaning of Rule 15c2-12 of the Securities
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Exchange Act of 1934. Distribution of the preliminary Official Statement is hereby approved. An Authorized Officer is hereby authorized and directed to approve any changes in or additions to a final form of said Official Statement, and the execution thereof by an Authorized Officer shall be conclusive evidence of approval of any such changes and additions. The Council hereby authorizes the distribution of the final Official Statement by the underwriter of the Bonds. The final Official Statement shall be executed on behalf of the City by an Authorized Officer.
Section 5. The firm of NHA Advisors LLC is hereby retained as municipal advisor to the City in connection with the issuance and sale of the Bonds by the Authority. An Authorized Officer is authorized to execute an agreement with said firm in a form as approved by an Authorized Officer, as necessary.
Section 6. The firm of Jones Hall, A Professional Law Corporation, is hereby retained as bond counsel and disclosure counsel to the City in connection with the issuance and sale of the Bonds by the Authority. An Authorized Officer is authorized to execute an agreement with said firm in a form as approved by an Authorized Officer, as necessary.
Section 7. The Authorized Officers, the City Attorney, the City Clerk and all other officers of the City are each authorized and directed on behalf of the City to make any and all leases, assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance or termination, warrants and other documents, which they or any of them deem necessary or appropriate in order to consummate any of the transactions contemplated by the agreements and documents approved under this Resolution. Whenever in this Resolution any officer of the City is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer is absent or unavailable.
Section 8. This Resolution shall take effect immediately upon its passage and adoption. * * * * * * * * *
PASSED AND ADOPTED by the City Council of the City of Ukiah on February 22, 2022 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
__________________________
Jim O. Brown, Mayor
ATTEST:
__________________________
Kristine Lawler, City Clerk
Attachment 2
RESOLUTION NO. PFA 2022-____
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE UKIAH PUBLIC
FINANCING AUTHORITY AUTHORIZING THE ISSUANCE AND SALE OF LEASE
REVENUE BONDS TO FINANCE PUBLIC CAPITAL IMPROVEMENTS, AND
APPROVING RELATED DOCUMENTS AND OFFICIAL ACTIONS RELATED
THERETO
WHEREAS, the City of Ukiah (the “City”) desires to finance capital improvements to its electric system (collectively, the “Project”); and
WHEREAS, the Ukiah Public Financing Authority (the “Authority”) was formed to, among other things, assist the City with financing public capital improvements, including capital projects of the City; and
WHEREAS, the City and the Authority desire to enter into an Installment Sale Agreement (the “Installment Sale Agreement”), pursuant to which the City will pay for the Project over time, via payment to the Authority of semi-annual installment payments; and WHEREAS, to raise upfront funds for the Project, the Authority proposes to issue and sell its Electric Revenue Bonds, Series 2022 (the “Bonds”) under Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code (the “Bond Law”); and
WHEREAS, in order to secure the payments of principal of and interest on the Bonds, the Authority proposes to pledge the payment of the installment payments by the City under the Installment Sale Agreement to owners of the Bonds pursuant to an Indenture of Trust, between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Indenture”); and
WHEREAS, to provide for development of the most favorable debt structure for the City and to ensure the most favorable reception in the marketplace for the Bonds, the City has requested the Authority to sell the Bonds through a negotiated sale pursuant to the terms of a Bond Purchase Agreement (the “Bond Purchase Agreement”) between the Authority, the City and RBC Capital Markets, LLC, as underwriter (the “Underwriter”); and WHEREAS, for purposes of the sale of the Bonds, the City has caused to be prepared an Official Statement describing the Bonds, the preliminary form of which is on file with the Secretary and the Board of Directors, with the aid of their staff, have undertaken such review of the Official Statement as hereinafter described as is necessary to assure proper disclosure of all material facts relating to the Bonds that are within the personal knowledge of members of the Board of Directors and the staff; and WHEREAS, as required by Section 6586.5 of the California Government Code, the City caused publication of a notice of a public hearing on the financing of the public capital improvements included within the Project once at least five (5) days prior to the hearing in a newspaper of general circulation in the City; and
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WHEREAS, on February 16, 2022, the City Council of the City held a public hearing at which all interested persons were provided the opportunity to speak on the subject of financing such public capital improvements; and
WHEREAS, the information required to be obtained and disclosed by the Board of Directors related to the Bonds pursuant to Government Code Section 5852.1 is set forth in the staff report accompanying this Resolution; and
WHEREAS, the Board wishes at this time to approve all proceedings of the Authority relating to the foregoing.
NOW, THEREFORE, IT IS HEREBY DETERMINED AND RESOLVED BY THE BOARD OF DIRECTORS OF THE UKIAH PUBLIC FINANCING AUTHORITY AS FOLLOWS:
Section 1. The Board of Directors hereby authorizes the issuance of the Bonds under the Bond Law in a maximum principal amount not to exceed $11,000,000, for the purpose of financing the Project. The Bonds shall be issued under the Bond Law and the Indenture of Trust that is approved below.
Section 2. The Board hereby approves each of the following agreements required for the issuance and sale of the Bonds, in substantially the respective forms on file with the Secretary together with any changes therein or additions thereto deemed advisable by the Chair, Vice Chair, Executive Director, Treasurer, or a designee appointed by such person (each, an “Authorized Officer”), whose execution thereof shall be conclusive evidence of the approval of any such changes or additions. Such changes or additions may include, but is not limited to, providing that payment of the Bonds be insured by a financial guaranty policy from a bond insurance company and/or secured by a reserve surety policy, if in the judgment of an Authorized Officer such insurance and/or reserve surety policy is in the best interest of the Authority. An Authorized Officer is hereby authorized and directed for and on behalf of the Authority to execute, and the Secretary is hereby authorized and directed to attest, the final form of each such agreement, as follows:
Installment Sale Agreement, between the City as purchaser and the Authority as seller, under which the City purchases the Project over time in consideration of the payment of semi-annual installment payments; and
Indenture of Trust, between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee, setting forth the terms and provisions relating to the Bonds;
Section 3. The Board of Directors hereby authorizes and directs the negotiated sale of the Bonds to the Underwriter. The Bonds shall be sold pursuant to the terms and provisions of the Bond Purchase Agreement among the Authority, the City and the Underwriter in substantially the form on file with the Secretary together with any changes therein or additions thereto deemed advisable by an Authorized Officer. The true interest cost of the Bonds shall not exceed 3.75% and the Underwriter’s discount shall not exceed
0.70%.
Section 4. The Board of Directors hereby approves the preliminary Official Statement describing the Bonds in substantially the form on file with the Secretary. An Authorized Officer is hereby authorized and directed to approve any changes in or additions to said
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preliminary Official Statement and to execute an appropriate certificate stating the Authority’s determination that the preliminary Official Statement (together with any changes therein or additions thereto) has been deemed nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934. Distribution of the preliminary Official Statement is hereby approved. An Authorized Officer is hereby authorized and directed to approve any changes in or additions to a final form of said Official Statement, and the execution thereof by an Authorized Officer shall be conclusive evidence of approval of any such changes and additions. The Board of Directors hereby authorizes the distribution of the final Official Statement by the underwriter of the Bonds. The final Official Statement shall be executed on behalf of the Authority by the Chair or an Authorized Officer.
Section 5. The Authorized Officers, the General Counsel to the Authority, the Secretary and all other officers of the Authority are each authorized and directed on behalf of the Authority to make any and all leases, assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance or termination, warrants and other documents, which they or any of them deem necessary or appropriate in order to consummate any of the transactions contemplated by the agreements and documents approved under this Resolution. Whenever in this resolution any officer of the Authority is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such officer is absent or unavailable.
Section 7. This Resolution shall take effect immediately upon its passage and adoption. * * * * * * * * *
THE FOREGOING RESOLUTION WAS PASSED AND ADOPTED by the Board of Directors of the Ukiah Public Financing Authority at a regular meeting held on this February 16, 2022 by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
__________________________
Jim O. Brown, Chair of the Ukiah Public
Financing Authority
ATTEST:
__________________________
Kristine Lawler, Secretary of the Ukiah Public Financing Authority
Jones Hall Draft of Feb. 8, 2022
INSTALLMENT SALE AGREEMENT
Dated as of March 1, 2022
between the
UKIAH PUBLIC FINANCING AUTHORITY,
as Seller
and the
CITY OF UKIAH,
as Purchaser
Relating to:
Ukiah Public Financing Authority
Electric Revenue Bonds
Attachment 3
-iTABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.............................................................................................................. 2 Section 1.2. Interpretation ......................................................................................................... 5
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of the City........................................ 6 Section 2.2. Representations, Covenants and Warranties of Authority...................................... 7
ARTICLE III
ISSUANCE OF BONDS; CONSTRUCTION OF PROJECT
Section 3.1. Issuance of Bonds ................................................................................................. 8 Section 3.2. Deposit of Bond Proceeds ..................................................................................... 8 Section 3.3. Appointment of City as Agent ................................................................................ 8 Section 3.4. Construction of the Projects................................................................................... 8 Section 3.5. Plans and Specifications; Modification of Project Description ................................ 9 Section 3.6. Certificate of Project Completion............................................................................ 9
ARTICLE IV
INSTALLMENT SALE OF PROJECTS;
Section 4.1. Installment Sale of Projects ................................................................................... 9 Section 4.2. Term ...................................................................................................................... 9 Section 4.3. Transfer of Title ..................................................................................................... 9 Section 4.4. Installment Payments .......................................................................................... 10 Section 4.5. Pledge and Application of Net Revenues............................................................. 10 Section 4.6. Special Obligation of the City; Obligations Absolute............................................. 12 Section 4.7. Additional Payments............................................................................................ 13
ARTICLE V
FINANCIAL COVENANTS
Section 5.1. Disclaimer of Warranties...................................................................................... 13 Section 5.2. Sale or Eminent Domain of Electric System......................................................... 13 Section 5.3. Insurance............................................................................................................. 14 Section 5.4. Records and Accounts......................................................................................... 14 Section 5.5. Rates and Charges.............................................................................................. 15 Section 5.6. Establishment of Rate Stabilization Fund............................................................. 15 Section 5.7. Issuance of Parity Debt........................................................................................ 15 Section 5.8. Senior Lien Debt.................................................................................................. 16 Section 5.9. Compliance with Parity Debt Documents ............................................................. 16 Section 5.10. Operation of Electric System in Efficient and Economical Manner ..................... 16 Section 5.11. Tax Covenants Relating to Bonds...................................................................... 16 Section 5.12. Assignment and Amendment Hereof ................................................................. 17 Section 5.13. Continuing Disclosure........................................................................................ 17 Section 5.14. Covenants and Agreements Related to the Insurance Policies.......................... 17 Section 5.15. Payment of 6% In-Lieu Franchise Tax 17
ARTICLE VI
EVENTS OF DEFAULT
Section 6.1. Events of Default Defined .................................................................................... 18 Section 6.2. Remedies on Default ........................................................................................... 18 Section 6.3. No Remedy Exclusive.......................................................................................... 19 Section 6.4. Agreement to Pay Attorneys’ Fees and Expenses ............................................... 19 Section 6.5. No Additional Waiver Implied by One Waiver....................................................... 19 Attachment 3
-iiSection 6.6. Trustee and Bond Owners to Exercise Rights...................................................... 19
ARTICLE VII
PREPAYMENT OF 2022 INSTALLMENT PAYMENTS
Section 7.1. Security Deposit .................................................................................................. 20 Section 7.2. Optional Prepayment........................................................................................... 20 Section 7.3. Special Mandatory Prepayment........................................................................... 20 Section 7.4. Credit for Amounts on Deposit............................................................................. 20
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Further Assurances ............................................................................................. 21 Section 8.2. Notices ................................................................................................................ 21 Section 8.3. Governing Law .................................................................................................... 21 Section 8.4. Binding Effect ...................................................................................................... 21 Section 8.5. Severability of Invalid Provisions.......................................................................... 21 Section 8.6. Article and Section Headings and References..................................................... 22 Section 8.7. Payment on Non-Business Days ......................................................................... 22 Section 8.8. Execution of Counterparts ................................................................................... 22 Section 8.9. Waiver of Personal Liability.................................................................................. 22 Section 8.10. Trustee as Third Party Beneficiary..................................................................... 22 APPENDIX A Schedule of Installment Payments
APPENDIX B Description of the Projects
[APPENDIX C Provisions related to the Insurance Policies] Attachment 3
INSTALLMENT SALE AGREEMENT
This INSTALLMENT SALE AGREEMENT (this “Agreement”), dated as of March 1, 2022, is between the UKIAH PUBLIC FINANCING AUTHORITY, a joint powers agency duly organized and existing under laws of the State of California (the “Authority”), as seller, and the CITY OF UKIAH, a municipal corporation duly organized and existing under the laws of the State of California (the “City”), as purchaser.
BACKGROUND:
1. The City owns and operates a system for the generation, transmission and distribution of electricity within the service area of the City (as more specifically defined herein, the “Electric System”), and the City wishes to provide funds for financing the acquisition, construction and installation of certain improvements to the Electric System (as more specifically defined herein, collectively, the “Projects”).
2. In order to provide financing for Projects, the City has requested the Authority to issue its Electric Revenue Bonds, Series 2022 in the aggregate principal amount of $_________ (the “2022 Bonds”) under an Indenture of Trust dated as of March 1, 2022 (as may be supplemented from time to time, the “Indenture”), between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), and under the provisions of Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code (the “Bond Law”).
3. The Authority was formed for the purpose of assisting the City in the financing and refinancing of facilities and property which are useful to the City, and in order to provide funds to finance the Projects, the Authority has proposed to enter into this Agreement with the City under which the Authority agrees to issue the 2022 Bonds and thereby provide funds to finance the Projects, and the Authority further agrees to sell the completed Projects to the City in consideration of the agreement by the City to pay semiannual installment payments (the “Installment Payments”) as the purchase price thereof.
4. The Installment Payments are payable from, and are secured by a pledge of and lien on, the Net Revenues of the Electric System, which are allowed to be on a parity with any Parity Debt (defined herein) that may be issued in the future.
5. For the purpose of obtaining the moneys required to finance the Projects in accordance with the terms hereof, the Authority has assigned and transferred certain of its rights under this Agreement to the Trustee under the Indenture.
AGREEMENT:
In consideration of the foregoing and the material covenants hereinafter contained, the City and the Authority formally agree as follows:
Attachment 3
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms in this Agreement have the respective meanings given such terms in this Section. Capitalized terms used in this Agreement and not otherwise defined in this Section have the respective meanings given them in Appendix A to the Indenture. “Additional Payments” means the amounts payable by the City under Section 4.7. “Additional Revenues” means either or both of the following:
(i) An allowance for revenues from any additions to or improvements or extensions of the Electric System to be constructed with the proceeds of such additional obligations, and also for Net Revenues from any such additions, improvements or extensions which have been constructed from any source of funds but which, during all or any part of such Fiscal Year, were not in service, all in an amount equal to 70% of the estimated additional average annual Net Revenues to be derived from such additions, improvements and extensions for the first 36- month period following issuance of the proposed Parity Debt, all as shown by the certificate or opinion of a Financial Consultant employed by the City, may be added to such Net Revenues. (ii) An allowance for earnings arising from any increase in the charges made for service from the Electric System which has become effective prior to the incurring of such additional obligations but which, during all or any part of such Fiscal Year, was not in effect, in an amount equal to 100% of the amount by which the Net Revenues would have been increased if such increase in charges had been in effect during the whole of such Fiscal Year and any period prior to the incurring of such additional obligations, as shown by the certificate or opinion of a Financial Consultant employed by the City. “Balloon Indebtedness” means, with respect to any Parity Debt for which 25% or more of the principal or other face amount matures or becomes due on the same date or within a 12- month period (with mandatory sinking fund payments deemed to be payments of matured principal), that portion of such Parity Debt which matures or becomes due on such date or within such 12-month period.
“Bonds” means (a) the 2022 Bonds and (b) any other bonds, notes or obligations issued under the Indenture and payable in whole or in part from Net Revenues hereunder. “Continuing Disclosure Certificate” means the Continuing Disclosure Certificate which is executed and delivered by the City on the Closing Date. “Debt Service” means, for any period in question, the sum of (a) the Installment Payments due and payable hereunder in such period[, plus any reimbursements payable to an Insurer on a parity with the payment of the Installment Payments]; and (b) the principal and interest[, and reimbursements payable to an Insurer on a parity with the payment thereof] on all Parity Debt due and payable in such period (assuming any proposed Parity Debt to be issued hereunder has in fact been issued); provided, however, that (i) with respect to any Installment Payments or Parity Debt that bear interest at a variable rate, such interest shall be assumed to bear interest at the highest of: (1) the actual rate on the date of calculation, or if such obligation Attachment 3
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is not yet outstanding, the initial rate (if established and binding), (2) if such obligation has been outstanding for at least 12 months, the average rate of the 12 months immediately preceding the date of calculation, or (3)(A) if interest on such obligation is excludable from gross income under the Tax Code, the Bloomberg BVAL AAA Municipal Callable Curve yields for comparable maturities (or comparable index if no longer published) plus 100 basis points, or (B) if interest is not so excludable, the interest rate on direct United States Treasury obligations with comparable maturities plus 100 basis points, and (ii) Balloon Indebtedness shall be treated as if it were to be amortized in substantially equal annual installments during the term of 20 years from the applicable date of calculation.
“Electric Fund” means the fund established and held by the City with respect to the Electric System for the deposit of Gross Revenues.
“Electric System” means the electric public utility system of the City, comprising all electric generation, transmission and distribution facilities and all general plant facilities related thereto now owned by the City and all other properties, structures or works for the generation, transmission or distribution of electricity hereafter acquired by the City, including all contractual rights for electricity or the generation or transmission thereof, together with all additions, betterments, extensions or improvements to such facilities, properties, structures or works or any part thereof hereafter acquired.
“Event of Default” means any of the events specified in Section 6.1. “Financial Consultant” means any consultant or firm of such consultants appointed by the City and who, or each of whom: (a) is judged by the City to have experience in matters relating to the financing of electric systems similar to the Electric System; (b) is in fact independent and not under domination of the City; (c) does not have any substantial interest, direct or indirect, with the City; and (d) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City. “Gross Revenues” means all gross income and revenue received by the City from the ownership and operation of the Electric System, including, without limiting the generality of the foregoing, (a) all amounts levied by the City as a fee for connecting to the Electric System, as such fee is established from time to time under applicable law, (b) all income, rents, rates, fees, charges or other moneys derived from the services and facilities of the Electric System, (c) the earnings on and income derived from the investment of such income, rents, rates, fees, charges or other moneys to the extent that the use of such earnings and income is limited by or under applicable law to the Electric System, (d) the proceeds derived by the City directly or indirectly from the sale, lease or other disposition of a part of the Electric System as permitted under this Agreement, (e) amounts transferred into the Electric Fund from a Rate Stabilization Fund, and (f) amounts received by the City from other public agencies as the proceeds of tax revenues or other amounts payable to the City under contracts for services provided by the City to users of the Electric System; provided, however, that the term “Gross Revenues” shall not include (i) customers’ deposits or any other deposits subject to refund until such deposits have become the property of the City, (ii) the proceeds of any ad valorem property taxes levied to pay general obligation bond indebtedness of the City with respect to the Electric System, and (iii) special assessments or special taxes levied upon real property within any improvement district for the purpose of paying special assessment bonds or special tax obligations of the City relating to the Electric System.
Attachment 3
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“Indenture” means the Indenture of Trust dated as of March 1, 2022, as may be supplemented from time to time, between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee.
“Independent Accountant” means any accountant or firm of such accountants appointed and paid by the City, and who, or each of whom (a) is in fact independent and not under domination of the City; (b) does not have any substantial interest, direct or indirect, with the City; and (c) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make annual or other audits of the books of or reports to the City. “Insurer” means any provider of a municipal bond insurance policy or reserve fund insurance policy or similar instrument or agreement related to the Installment Payments or any Parity Debt.
“Installment Payment Date” means, with respect to any Interest Payment Date, the 6th Business Day immediately preceding such Interest Payment Date. “Installment Payments” means, collectively (a) the 2022 Installment Payments which the City is obligated to pay under Section 4.4(a) and (b) any installment payments which the City is obligated to pay under any supplement hereto entered into for the purpose of issuing Parity Debt.
“Maximum Annual Debt Service” means, as of the date of any calculation, the maximum amount of Debt Service for the current or any future Fiscal Year. “Net Revenues” means, for any period, an amount equal to all of the Gross Revenues received during such period minus the amount required to pay all Operation and Maintenance Costs becoming payable during such period.
“Operation and Maintenance Costs” means all expenses and costs of management, operation, maintenance and repair of the Electric System, including, without limiting the generality of the foregoing, (a) all costs of electric energy and power generated or purchased by the City for resale, costs of transmission, and fuel and water supply in connection with the foregoing, including all amounts required to be paid by the City under contracts for the purchase of capacity, energy, transmission capability or any other commodity or service related thereto that requires payments to be made by the City thereunder to be treated as maintenance and operation costs of the Electric System, (b) all reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Electric System in good repair and working order, (c) all administrative costs of the City that are charged directly or apportioned to the operation of the Electric System, such as salaries and wages of employees, overhead, taxes (if any) and insurance premiums; provided, however, that the term “Operation and Maintenance Costs” shall not include (i) payment of the Installment Payments which the City is required to pay hereunder, (ii) payment of debt service on bonds, notes or other obligations issued by the City with respect to the Electric System, (iii) depreciation, replacement and obsolescence charges or reserves therefor, (iv) capital expenditures made by the City with respect to the Electric System, (v) accrual of employee benefits which are not funded, (vi) amortization of intangibles or other bookkeeping entries of a similar nature, and (vii) the 6% in-lieu franchise tax payable to the General Fund of the City pursuant to Resolution No. 94-4 adopted by the City Council of the City on August 4, 1993, or any successor thereto. “Overdue Rate” means the highest rate of interest on any of the Outstanding Bonds.
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“Parity Debt” means, collectively any and all of the following obligations: (a) bonds, notes, leases, installment sale agreements or other obligations of the City, and (b) additional obligations under this Agreement created by amendment or supplement hereto, in either case, that are payable from and secured by a pledge of and lien upon any of the Net Revenues on a parity with the Installment Payments, entered into or issued under and in accordance with Section 5.7.
“Projects” means, collectively, (a) the 2022 Project and (b) other projects that may be described in any supplement hereto.
“Parity Debt Documents” means, with respect to any issue of Parity Debt, the agreement, indenture of trust, resolution, supplement hereto, or other instrument authorizing the issuance of such Parity Debt.
“Rate Stabilization Fund” means the fund (if any) by that name established and held by the City under Section 5.6.
“2022 Bonds” means the Ukiah Public Financing Authority Electric Revenue Bonds, Series 2022.
“2022 Installment Payments” means the payments described as such and scheduled to be paid by the City under and pursuant to the terms hereof, as described in Appendix A hereto. “2022 Project” means the property, equipment and facilities described more fully in Appendix B, as may be modified by the City in accordance with the provisions of Section 3.5.
Section 1.2. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof.
(c) All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof.
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ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of the City. The City represents, covenants and warrants to the Authority as follows:
(a) Due Organization and Existence. The City is a municipal corporation duly organized and validly existing under the laws of the State of California, has full legal right, power and authority under said laws to enter into this Agreement and to carry out and consummate all transactions contemplated hereby and thereby, and by proper action the City Council of the City has duly authorized the execution and delivery of this Agreement.
(b) Due Execution. The representatives of the City executing this Agreement are fully authorized to execute the same.
(c) Valid, Binding and Enforceable Obligations. This Agreement has been duly authorized, executed and delivered by the City and constitutes the legal, valid and binding agreements of the City enforceable against the City in accordance with its terms; except as the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and except as such enforceability may be subject to the exercise of judicial discretion in accordance with principles of equity. (d) No Conflicts. The execution and delivery of this Agreement and the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the City is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the City, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially adversely affect the consummation of the transactions contemplated by this Agreement or the financial condition, assets, properties or operations of the City, including but not limited to the performance of the City’s obligations under this Agreement. (e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the City or of the voters of the City, and no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of this Agreement or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the City after reasonable investigation, threatened against or affecting the City or the assets, properties or operations of the City which, if Attachment 3
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determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Agreement, or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially adversely affect the consummation of the transactions contemplated by this Agreement, or the financial conditions, assets, properties or operations of the City, including but not limited to the payment and performance of the City’s obligations under this Agreement.
Section 2.2. Representations, Covenants and Warranties of Authority. The Authority represents, covenants and warrants to the City as follows:
(a) Due Organization and Existence. The Authority is a joint powers agency duly organized and existing under Article 1 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6500 of said Code, and has power to enter into this Agreement and the Indenture and to perform the duties and obligations imposed on it hereunder and thereunder. The Board of Directors of the Authority has duly authorized the execution and delivery of this Agreement and the Indenture.
(b) Due Execution. The representatives of the Authority executing this Agreement and the Indenture are fully authorized to execute the same. (c) Valid, Binding and Enforceable Obligations. This Agreement and the Indenture have been duly authorized, executed and delivered by the Authority and constitute the legal, valid and binding agreements of the Authority with the Authority, enforceable against the Authority in accordance with their respective terms; except as the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and except as such enforceability may be subject to the exercise of judicial discretion in accordance with principles of equity.
(d) No Conflicts. The execution and delivery hereof and of the Indenture, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof and thereof, do not and will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any indenture, mortgage, deed of trust, lease, contract or other agreement or instrument to which the Authority is a party or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Authority, which conflict, violation, breach, default, lien, charge or encumbrance would have consequences that would materially adversely affect the consummation of the transactions contemplated hereby and by the Indenture or the financial condition, assets, properties or operations of the Authority, including but not limited to the performance of the Authority’s obligations under this Agreement and the Indenture.
(e) Consents and Approvals. No consent or approval of any trustee or holder of any indebtedness of the Authority, and no consent, permission, authorization, order or Attachment 3
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license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery hereof or of the Indenture, or the consummation of any transaction herein or therein contemplated, except as have been obtained or made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending or, to the knowledge of the Authority after reasonable investigation, threatened against or affecting the Authority or the assets, properties or operations of the Authority which, if determined adversely to the Authority or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of this Agreement or the Indenture, or upon the financial condition, assets, properties or operations of the Authority, and the Authority is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially adversely affect the consummation of the transactions contemplated by this Agreement or the Indenture or the financial conditions, assets, properties or operations of the Authority, including but not limited to the performance of the Authority’s obligations hereunder and under the Indenture.
ARTICLE III
ISSUANCE OF BONDS; CONSTRUCTION OF PROJECT
Section 3.1. Issuance of Bonds. The Authority hereby agrees to issue the Bonds and to cause the proceeds thereof to be applied in accordance with the Indenture and this Agreement. The City hereby approves the Indenture, the assignment thereunder to the Trustee of certain rights of the Authority and the issuance of the Bonds.
Section 3.2. Deposit of Bond Proceeds. On the Closing Date the Authority shall cause the proceeds of the 2022 Bonds to be applied as set forth in Section 3.02 of the Indenture, and any proceeds of any other series of Bonds to be applied as set forth in the applicable supplement hereto.
Section 3.3. Appointment of City as Agent. The Authority hereby appoints the City as its agent to carry out all phases of the acquisition, construction and installation of the Projects under and in accordance with the provisions hereof. The City hereby accepts such appointment and assumes all rights, liabilities, duties and responsibilities of the Authority regarding the acquisition, construction and installation of the Projects. As agent of the Authority hereunder, the City shall enter into, administer and enforce all purchase orders or other contracts relating to the Projects.
Section 3.4. Construction of the Projects. Payment of Project Costs shall be made by the City from amounts held by the Trustee in the Project Fund in accordance with the provisions of this Agreement and the provisions of Section 3.04 of the Indenture. The Trustee shall disburse amounts in the Project Fund from time to time to pay Project Costs upon submission of a Written Requisition of the City, in substantially the form set forth in Appendix C to the Indenture, stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against Attachment 3
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the Project Fund. The Trustee may conclusively rely on the representations set forth in such Written Requisitions and shall be fully protected in relying thereon.
The City hereby agrees with due diligence to supervise and provide for, or cause to be supervised and provided for, the acquisition and construction of the Projects in accordance with the plans and specifications, purchase orders, construction contracts and other documents relating thereto and approved by the City under all applicable requirements of law. All contracts for, and all work relating to, the acquisition and construction of the Projects are subject to all applicable provisions of law relating to the acquisition and construction of public works by the City. The City expects that the acquisition and construction of the Projects will be completed on or before the date set forth in the tax certificate related to the Bonds. The failure of the City to complete the Projects by that date will not constitute an Event of Default hereunder or grounds for termination hereof, nor result in the diminution, abatement or extinguishment of the obligations of the City to pay the Installment Payments when due hereunder.
Section 3.5. Plans and Specifications; Modification of Project Description. The City has the right to specify the exact scope, nature and identification of the Projects and the respective components thereof. Without limiting the generality of the foregoing, the City has the right to amend the description of the Projects contained in Appendix B or in any supplement hereto, including for the purpose of including additional Projects not originally included therein.
Before any payment is made for the Projects or any component thereof from amounts on deposit in the Project Fund, the City shall prepare detailed plans and specifications relating thereto. The City may from time to time amend any the plans and specifications, and thereby change or modify the description of the Projects or any component thereof.
Section 3.6. Certificate of Project Completion. Upon the determination by the City that the Projects have been completed and that no further amounts are required to disbursed from the Project Fund to pay Project Costs, a City Representative shall execute and deliver to the Authority and the Trustee a certificate of a City Representative which states that the acquisition and construction of the Projects have been completed and that no further amounts are required to be disbursed from the Project Fund to pay Project Costs.
ARTICLE IV
INSTALLMENT SALE OF PROJECTS;
Section 4.1. Installment Sale of Projects. The Authority hereby sells the completed Projects to the City, and the City hereby purchases the completed Projects from the Authority, upon the terms and conditions set forth in this Agreement.
Section 4.2. Term. The Term of this Agreement shall commence on the Closing Date and end on the final maturity date for the Bonds, or such later or earlier date on which the Bonds cease to be Outstanding under and within the meaning of the Indenture.
Section 4.3. Transfer of Title. Title to the Projects, and each component thereof, will be deemed conveyed by the City to the Authority upon the completion thereof. The Authority and the City agree that no further action or documentation is intended to be required to cause the transfer of title to the Projects; however, if any further actions or documentation is so Attachment 3
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required, the Authority and the City shall take such actions and execute, deliver and cause to be recorded all such documents.
Section 4.4. Installment Payments.
(a) Obligation to Pay. The City hereby agrees to pay the Authority, as the purchase price of the Projects hereunder, amounts specified in this Section 4.04 and pursuant to any supplement hereto from time-to-time. In furtherance of the foregoing, the City hereby agrees to pay to the Authority, as the purchase price of the 2022 Project the aggregate principal amount of $__________, together with interest (calculated on the basis of a 360-day year of twelve 30- day months) on the unpaid principal balance thereof, payable in semiannual 2022 Installment Payments in the respective amounts and on the respective Installment Payment Dates set forth in Appendix A. The 2022 Installment Payment coming due and payable on any Installment Payment Date shall be deposited by the City with the Trustee, as assignee of the Authority under the Indenture, in an amount which, together with amounts then held by the Trustee in the Bond Fund and the accounts therein, is equal to the full amount of such 2022 Installment Payment. The 2022 Installment Payments shall be secured by and payable solely from the sources specified in Section 4.5.
(b) Effect of Prepayment. If the City prepays all remaining Installment Payments in full, the City’s obligations under this Agreement will thereupon cease and terminate with respect to the Installment Payments; provided, however, that the City’s obligations to compensate and indemnify the Trustee under Section 8.07 of the Indenture will survive such prepayment. If the City prepays the Installment Payments in part but not in whole, the principal component of each succeeding Installment Payment related thereto will be reduced as provided in such Sections, and the interest component of each remaining Installment Payment will be reduced by the aggregate corresponding amount of interest which would otherwise be payable with respect to the Bonds thereby redeemed under the applicable provisions of Section 4.01 of the Indenture, as provided in a certificate of a City Representative. The City shall provide the Trustee with a revised schedule of Installment Payments which results from any such prepayment in such certificate of a City Representative.
(c) Rate on Overdue Payments. If the City fails to make any of the payments required in this Section or in Section 4.7, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to the date of payment, at the Overdue Rate. (d) Assignment. The City understands and agrees that certain rights of the Authority, including but not limited to the right of the Authority to receive payment of the Installment Payments, have been assigned by the Authority to the Trustee in trust under the Indenture, for the benefit of the Owners of the Bonds, and the City hereby consents to such assignment. The Authority hereby directs the City, and the City hereby agrees, to pay to the Trustee at its Office, all payments payable by the City under this Section and all amounts payable by the City under Article VII.
Section 4.5. Pledge and Application of Net Revenues.
(a) Pledge of Net Revenues. The Installment Payments and any Parity Debt are equally secured by a first pledge, charge and lien upon the Net Revenues and (with respect to the Installment Payments) moneys in the Bond Fund, including all amounts derived from the investment of such moneys, without priority for series, issue, number or date, and the payment Attachment 3
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of the Installment Payments shall be and are secured by an exclusive pledge, charge and lien upon the Net Revenues and such moneys. So long as any of the Bonds are Outstanding, the Net Revenues and such moneys may not be used for any other purpose; except that out of the Net Revenues there may be apportioned such sums, for such purposes, as are expressly permitted by this Section and any Parity Debt Document. (b) Deposit of Gross Revenues Into Electric Fund; Transfers to Make Payments. The City has previously established the Electric Fund, which the City shall continue to hold and maintain for the purposes and uses set forth herein. The City shall deposit all Gross Revenues in the Electric Fund promptly upon the receipt thereof, and shall apply amounts in the Electric Fund solely for the uses and purposes set forth herein and for the uses and purposes set forth in any Parity Debt Documents.
The City shall withdraw amounts on deposit in the Electric Fund and apply such amounts at the times and for the purposes, and in the priority, as follows:
(i) Operation and Maintenance Costs. The City shall apply amounts on deposit in the Electric Fund to pay all Operation and Maintenance Costs when due.
(ii) Debt Service. The City shall pay the Installment Payments on or before the applicable Installment Payment Date, and all payments of principal of and interest on outstanding Parity Debt on or before the date specified therefor in the applicable Parity Debt Document.
(iii) Reserve Accounts and Other Required Payments. The City shall make other payments or deposits required to comply with the provisions of this Agreement and all Parity Debt Documents, including but not limited to payments or deposits required to restore the required balances in any reserve account established pursuant to the Indenture for any series of Bonds and any other reserve fund or reserve account which may be established for Parity Debt (or pay any reserve insurer any amounts owed in connection with any draw on any reserve fund insurance policies).
Payment of the Installment Payments and the principal of and interest on the outstanding Parity Debt, and payments made in accordance with any reserve account or reserve fund (including to pay any reserve insurer any amounts owed in connection with any draw on any reserve fund insurance policies), shall be made without preference or priority. If the amount of Net Revenues on deposit in the Electric Fund are any time insufficient to enable the City to pay when due the Installment Payments and the principal of and interest on all outstanding Parity Debt (or payments made in accordance with any reserve account or reserve fund, including to pay any reserve insurer any amounts owed in connection with any draw on any reserve fund insurance policies), such payments will be made on a pro rata basis. (c) Other Uses Permitted. The City shall manage, conserve and apply the amounts on deposit in the Electric Fund in such a manner that all deposits required to be made under the preceding subsection (b) will be made at the times and in the amounts so required. So long as no Event of Default has occurred and is continuing and the City has reserved sufficient amounts to make debt service deposits next required to be made under subsection (b) above and under any Parity Debt Documents, the City may at any time use and apply moneys in the Electric Fund for any one or more of the following purposes:
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(i) the payment of any subordinate obligations or any unsecured obligations, including the 6% in-lieu franchise tax payable to the General Fund of the City; (ii) the acquisition and construction of extensions and improvements to the Electric System;
(iii) the redemption of any obligations of the City relating to the Electric System; or
(iv) any other lawful purpose of the City relating to the Electric System.
Section 4.6. Special Obligation of the City; Obligations Absolute. The City’s obligation to pay the Installment Payments and any other amounts coming due and payable hereunder shall be a special obligation of the City limited solely to the Net Revenues. Under no circumstances is the City required to advance moneys derived from any source of income other than the Net Revenues and other sources specifically identified herein for the payment of the Installment Payments and such other amounts, and no other funds or property of the City are liable for the payment of the Installment Payments.
The obligation of the City to make the Installment Payments from the Net Revenues and to perform and observe the other agreements contained herein is absolute and unconditional and is not subject to any defense or any right of set-off, counterclaim or recoupment arising out of any breach by the Authority or the Trustee of any obligation to the City or otherwise with respect to the Electric System, whether hereunder or otherwise, or out of indebtedness or liability at any time owing to the City by the Authority or the Trustee. Until all of the Installment Payments, Additional Payments, and other amounts coming due and payable hereunder have been fully paid or prepaid, the City will:
(a) not suspend or discontinue payment of any Installment Payments, Additional Payments or such other amounts,
(b) perform and observe all other agreements contained in this Agreement, and
(c) not terminate this Agreement for any cause, including, without limiting the generality of the foregoing, the occurrence of any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the Electric System, failure to complete the acquisition and construction of the Projects by the estimated completion date thereof, sale of the Electric System, the taking by eminent domain of title to or temporary use of any component of the Electric System, commercial frustration of purpose, any change in the tax or law other laws of the United States of America or the State of California or any political subdivision of either thereof or any failure of the Authority or the Trustee to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Indenture or this Agreement.
Nothing contained in this Section releases the Authority from the performance of any of the agreements on its part contained herein or in the Indenture, and if the Authority fails to perform any such agreements, the City may institute such action against the Authority as the City may deem necessary to compel performance so long as such action does not abrogate the obligations of the City contained in the preceding paragraph. The City may, however, at its cost Attachment 3
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and expense and in its name or in the name of the Authority, prosecute or defend any action or proceeding or take any other action involving third persons which the City deems reasonably necessary in order to secure or protect the City’s rights hereunder, and in that event the Authority will cooperate fully with the City and to take such action necessary to effect the substitution of the City for the Authority in such action or proceeding if the City may request.
Section 4.7. Additional Payments. In addition to the Installment Payments, the City shall pay when due the following amounts to the following parties:
(a) to the Authority, all costs and expenses incurred by the Authority to comply with the provisions of this Agreement and the Indenture; (b) to the Trustee upon request therefor, all of its costs and expenses payable as a result of the performance of and compliance with its duties hereunder or under the Indenture or any related documents;
(c) to the Authority and the Trustee, all amounts required to indemnify the Trustee under Section 8.07 of the Indenture;
(d) to the Insurer all amounts payable to the Insurer not classified as Installment Payments, including Policy Costs (as defined in the Indenture); and (e) all costs and expenses of auditors, engineers and accountants.
The Additional Payments shall be payable from, but are not secured by a pledge or lien upon, the Net Revenues. The rights of the Trustee and the Authority under this Section, and the obligations of the City under this Section, shall survive the termination of this Agreement and the resignation or removal of the Trustee.
ARTICLE V
FINANCIAL COVENANTS
Section 5.1. Disclaimer of Warranties. The Trustee makes no warranty or representation, either express or implied, as to the value, design, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the City of the Projects or any component thereof, or any other representation or warranty with respect to any of the Projects or any component thereof. In no event shall the Authority or the Trustee be liable for incidental, indirect, special or consequential damages, in connection with or arising out of this Agreement or the Indenture for the existence, furnishing, functioning or use of the Projects.
Section 5.2. Sale or Eminent Domain of Electric System. Except as provided herein, the City covenants that the Electric System will not be encumbered, sold, leased, pledged, any charge placed thereon, or otherwise disposed of, as a whole or substantially as a whole if such encumbrance, sale, lease, pledge, charge or other disposition would materially impair the ability of the City to pay the Installment Payments or the principal of or interest on any Parity Debt, or would materially adversely affect its ability to comply with the terms of this Agreement and any Parity Debt Documents. The City may not enter into any agreement which impairs the operation of the Electric System or any part of it necessary to secure adequate Net Revenues to pay the Attachment 3
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Installment Payments and any Parity Debt, or which otherwise would impair the rights of the Bond Owners or the Trustee with respect to the Net Revenues.
If any substantial part of the Electric System is sold, the payment therefor must either (a) be used for the acquisition or construction of improvements and extensions or replacement facilities or (b) be applied to prepay the Installment Payments and/or redeem any Parity Debt in accordance with the related Parity Debt Documents.
Any amounts received as awards as a result of the taking of all or any part of the Electric System by the lawful exercise of eminent domain, if and to the extent that such right can be exercised against such property of the City, shall either (a) be used for the acquisition or construction of improvements and extension of the Electric System, or (b) be applied to prepay the Installment Payments and/or redeem any Parity Debt in accordance with the related Parity Debt Documents.
Section 5.3. Insurance. The City will at all times maintain with responsible insurers all such insurance on the Electric System as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to the Electric System; provided, however, that the City is not required to maintain earthquake insurance with respect to the Electric System or any component thereof. All amounts collected from insurance against accident to or destruction of any portion of the Electric System shall be used, at the option of the City, either (a) to repair or rebuild such damaged or destroyed portion of the Electric System, and/or (b) to prepay the Installment Payments or redeem any Parity Debt in accordance with the related Parity Debt Documents.
The City shall also maintain, with responsible insurers, worker’s compensation insurance and insurance against public liability and property damage to the extent reasonably necessary to protect the City, the Trustee and the Owners of the Bonds. The Trustee has no liability to determine whether the City is in compliance with the provisions of this Section.
Any policy of insurance required under this Section may be maintained as part of or in conjunction with any other insurance coverage carried by the City, and may be maintained in whole or in part in the form of self-insurance by the City or in the form of the participation by the City in a joint powers agency or other program providing pooled insurance.
Section 5.4. Records and Accounts. The City shall keep proper books of record and accounts of the Electric System in which complete and correct entries shall be made of all transactions relating to the Electric System. Said books shall, upon prior request, be subject to the reasonable inspection of the Owners of not less than 10% of the Outstanding Bonds, or their representatives authorized in writing, upon not less than two Business Days’ prior notice to the City.
The City shall cause the books and accounts of the Electric System to be audited annually by an Independent Accountant not more than nine months after the close of each Fiscal Year, and shall make a copy of such report available for inspection by the Bond Owners at the office of the City and at the Office of the Trustee. Such report may be part of a combined financial audit or report covering all or part of the City’s finances.
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Section 5.5. Rates and Charges. The City hereby covenants that it shall prescribe, revise and collect rates, fees and charges for the services and facilities of the Electric System which, after allowances for contingencies and error in the estimates, shall produce Gross Revenues sufficient in each Fiscal Year to provide Net Revenues equal to at least [1.20] times the Debt Service coming due and payable during such Fiscal Year.
Section 5.6. Establishment of Rate Stabilization Fund. The City has the right at any time to establish a rate stabilization fund (the “Rate Stabilization Fund”) to be held by it and administered in accordance with this Section, for the purpose of stabilizing the rates and charges imposed by the City with respect to the Electric System. From time to time the City may deposit amounts in the Rate Stabilization Fund, from any source of legally available funds, including but not limited to Net Revenues which are released from the pledge and lien which secures the Installment Payments and any Parity Debt, as the City may determine.
The City may, but is not required to, withdraw from any amounts on deposit in a Rate Stabilization Fund and deposit such amounts in the Electric Fund in any Fiscal Year for the purpose of paying Debt Service coming due and payable in such Fiscal Year. Amounts so transferred from a Rate Stabilization Fund to the Electric Fund shall constitute Gross Revenues for such Fiscal Year (except as otherwise provided herein), and shall be applied for the purposes of the Electric Fund. Amounts on deposit in a Rate Stabilization Fund shall not be pledged to or otherwise secure the Installment Payments or any Parity Debt. All interest or other earnings on deposits in a Rate Stabilization Fund shall be withdrawn therefrom at least annually and accounted for as Gross Revenues in the Electric Fund. The City has the right at any time to withdraw any or all amounts on deposit in a Rate Stabilization Fund and apply such amounts for any lawful purposes of the City.
Section 5.7. Issuance of Parity Debt.
(a) The City may issue Parity Debt in such principal amount as it determines, subject to the following conditions precedent:
(i) The City is not in default under the terms of this Agreement (and no event has occurred which, once all notice and grace periods have passed, would constitute a default hereunder) unless such default shall be cured upon such issuance; (ii) Net Revenues, calculated on sound accounting principles, as shown by the books of the City for the latest Fiscal Year or any more recent 12-month period selected by the City ending not more than 60 days prior to the adoption or execution of the Parity Debt Document pursuant to which such Parity Debt is issued or incurred, plus, at the option of the City, the Additional Revenues, shall have amounted to at least [1.20] times the Maximum Annual Debt Service coming due and payable in any future Fiscal Year.
(b) The City shall deliver to the Authority and the Trustee a certificate of a City Representative certifying that each of the conditions precedent to the issuance of such Parity Debt set forth above have been satisfied.
(c) Notwithstanding the foregoing provisions of this Section, the City shall not be required to meet the requirements of the foregoing subsection (a)(ii) with respect to the issuance of any Parity Debt the proceeds of which are applied to prepay or discharge the Installment Payments or any Parity Debt, provided that as a result of such prepayment or Attachment 3
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discharge the aggregate amount of Debt Service on the Installment Payments and Parity Debt which will be outstanding following the issuance of such Parity Debt will be reduced in every Fiscal Year.
Section 5.8. Senior Lien Debt. During the Term of this Agreement, the City shall not issue or incur any additional bonds or other obligations having any priority in payment of principal or interest out of the Gross Revenues over the Installment Payments, provided that the City may incur obligations payable as Operation and Maintenance Costs. In addition, nothing herein limits or affects the ability of the City to issue or incur (a) Parity Debt under Section 5.7, or (b) obligations which are either unsecured or which are secured on a basis which is junior and subordinate to the pledge of and lien upon the Net Revenues established hereunder.
Section 5.9. Compliance with Parity Debt Documents. The City shall comply with all of the provisions of the Parity Debt Documents (if any) and shall not take action which constitutes, or which with the passage of time if not cured would constitute, an event of default under and as defined in any of the Parity Debt Documents.
Section 5.10. Operation of Electric System in Efficient and Economical Manner.
The City shall operate the Electric System in an efficient and economical manner and to operate, maintain and preserve the Electric System in good repair and working order.
Section 5.11. Tax Covenants Relating to Bonds. The following covenants apply to Bonds for which interest is intended to be excluded from income under the Tax Code:
(a) Private Business Use Limitation. The City shall assure that the proceeds of the Bonds are not used in a manner which would cause the Bonds to satisfy the private business tests of Section 141(b) of the Tax Code or the private loan financing test of Section 141(c) of the Tax Code.
(b) Federal Guarantee Prohibition. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code. (c) No Arbitrage. The City shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the Bonds or of any other obligations which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date, would have caused the Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Tax Code. (d) Maintenance of Tax Exemption. The City shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the Closing Date.
(e) Rebate of Excess Investment Earnings to United States. The City shall calculate or cause to be calculated the Excess Investment Earnings in all respects at the times and in the manner required under the Tax Code. The City shall pay the full amount of Excess Investment Earnings to the United States of America in such amounts, at such times and in such manner as may be required under the Tax Code. Such payments shall be made by the City from any source of legally available funds of the City, and shall constitute Additional Rental Payments hereunder.
Attachment 3
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The City shall keep or cause to be kept, and retain or cause to be retained for a period of six years following the retirement of the Bonds, records of the determinations made under this subsection. In order to provide for the administration of this subsection, the City may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the City may deem appropriate. The Trustee has no duty or obligation to monitor or enforce compliance by the City of any of the requirements under this subsection.
Section 5.12. Assignment and Amendment Hereof. This Agreement may not be assigned by the City in whole or in part. This Agreement may be amended or supplemented by the City and the Authority, but only (a) for the purpose of providing for the issuance of any other Parity Debt under and in accordance with Section 5.7, or (b) otherwise under the circumstances and to the extent permitted under Section 9.01 of the Indenture.
Section 5.13. Continuing Disclosure. The City shall comply with and carry out all of the provisions of the Continuing Disclosure Certificate executed by the City as of the Closing Date, as originally executed and as it may be amended from time to time in accordance with its terms. Notwithstanding any other provision of this Agreement, failure of the City to comply with such Continuing Disclosure Certificate will not constitute an Event of Default, although any Participating Underwriter (as that term is defined in such Continuing Disclosure Certificate) or any Owner or beneficial owner of the Bonds may take such actions as may be necessary and appropriate to compel performance by the City of its obligations under this Section, including seeking mandate or specific performance by court order.
Section 5.14. Covenants and Agreements Related to the Insurance Policies.
Notwithstanding anything to the contrary set forth in this Agreement, the City shall comply with and carry out all of the provisions related to the Insurance Policies as set forth in Appendix C hereto, which provisions shall govern so long as any of the Bonds are Outstanding. Additionally, to the extent the provisions related to the Insurance Policies as set forth in Appendix C and Appendix D to the Indenture set forth obligations of the City, the City shall comply with and carry out all of such provisions.
Section 5.15. Payment of 6% In-Lieu Franchise Tax . The City covenants and agrees for the benefit of the Bondholders [and the Insurer] that so long as any Bonds are Outstanding, the 6% in-lieu franchise tax payable to the General Fund of the City pursuant to Resolution No. 94-4 adopted by the City Council of the City on August 4, 1993, or any successor thereto, shall be payable by the Electric System to the General Fund on a basis that is subordinate to the payment of debt service on the Bonds and replenishment of any reserve fund (or payment to any reserve insurer of any amounts owed in connection with any draw on any reserve fund insurance policies) established for any Bonds.
Attachment 3
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ARTICLE VI
EVENTS OF DEFAULT
Section 6.1. Events of Default Defined. The following events constitute Events of Default hereunder:
(a) Failure by the City to pay any Installment Payment when due and payable hereunder.
(b) Failure by the City to pay any Additional Payment when due and payable hereunder, and the continuation of such failure for a period of 60 days. (c) Failure by the City to observe and perform any of the other covenants, agreements or conditions on its part contained in this Agreement or in the Indenture, other than as referred to in the preceding clauses (a) or (b), if such failure has continued for a period of 60 days after written notice thereof, specifying such failure and requiring the same to be remedied, has been given to the City by the Authority or the Trustee; provided, however, if in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 60-day period, such failure shall not constitute an Event of Default if the City institutes corrective action within such 60-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time. (d) The City commences a voluntary case under Title 11 of the United States Code or any substitute or successor statute.
(e) The occurrence of an event of default under and as defined in any Parity Debt Documents.
Section 6.2. Remedies on Default. If an Event of Default occurs and is continuing, the Trustee as assignee of the Authority has the right, at its option and without any further demand or notice, to take any one or more of the following actions:
(a) Declare all principal components of the unpaid Installment Payments, together with accrued interest thereon at the Overdue Rate from the immediately preceding Interest Payment Date on which payment was made, to be immediately due and payable, whereupon the same shall immediately become due and payable.
Notwithstanding the foregoing provisions of this subsection, however, if, at any time after the principal components of the unpaid Installment Payments have been so declared due and payable under this subsection, and before any judgment or decree for the payment of the moneys due have been obtained or entered, the City shall deposit with the Trustee a sum sufficient to pay all principal components of the Installment Payments coming due prior to such declaration and all matured interest components (if any) of the Installment Payments, with interest on such overdue principal and interest components calculated at the Overdue Rate, and the reasonable expenses of the Trustee (including any fees and expenses of its attorneys), and any and all other defaults known to the Trustee (other than in the payment of the principal and interest components of the Installment Payments due and payable solely by reason of such declaration) have been made good, then, and in every such case, the Trustee shall rescind and annul such declaration and its consequences. However, no such rescission and annulment shall Attachment 3
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extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. As provided in Section 6.6, the Trustee shall be required to exercise the remedies provided herein in accordance with the Indenture. (b) Take whatever action at law or in equity may appear necessary or desirable to collect the Installment Payments then due or thereafter to become due during the Term of this Agreement, or enforce performance and observance of any obligation, agreement or covenant of the City under this Agreement. (c) As a matter of right, in connection with the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and the Bond Owners hereunder, cause the appointment of a receiver or receivers of the Gross Revenues and other amounts pledged hereunder, with such powers as the court making such appointment may confer.
Section 6.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient.
In order to entitle the Authority to exercise any remedy reserved to it in this Article, it is not necessary to give any notice, other than such notice as may be required in this Article or by law.
Section 6.4. Agreement to Pay Attorneys’ Fees and Expenses. If either party to this Agreement defaults under any of the provisions hereof and the non-defaulting party, the Trustee or the Owner of any Bonds employs attorneys or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of the defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the non-defaulting party, the Trustee or such Owner, as the case may be, the reasonable fees of such attorneys and such other expenses so incurred. The provisions of this Section will survive the expiration of the Term of this Agreement.
Section 6.5. No Additional Waiver Implied by One Waiver. If any agreement contained in this Agreement is breached by either party and thereafter waived by the other party, the waiver will be limited to the particular breach so waived and will not be deemed to waive any other breach hereunder.
Section 6.6. Trustee and Bond Owners to Exercise Rights. Such rights and remedies as are given to the Authority under this Article have been assigned by the Authority to the Trustee under the Indenture, to which assignment the City hereby consents. Such rights and remedies shall be exercised by the Trustee and the Owners of the Bonds as provided in the Indenture.
Attachment 3
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ARTICLE VII
PREPAYMENT OF 2022 INSTALLMENT PAYMENTS
Section 7.1. Security Deposit. Notwithstanding any other provision hereof, the City may on any date secure the payment of 2022 Installment Payments, in whole or in part, by irrevocably depositing with the Trustee an amount of cash which, together with other available amounts (not including amounts receivable under a forward supply contract, if any), is either (a) sufficient to pay all such 2022 Installment Payments, including the principal and interest components thereof, when due under Section 4.4(a), or (b) invested in whole or in part in noncallable Federal Securities in such amount as will, in the report of an Independent Accountant, together with interest to accrue thereon and together with any cash which is so deposited, be fully sufficient to pay all such 2022 Installment Payments when due under Section 4.4(a) or when due on any optional prepayment date under Section 7.2, as the City instructs at the time of said deposit. If the City makes a security deposit under this Section for the payment of all remaining 2022 Installment Payments and all Policy Costs owing to the Insurer (as those terms are defined in the Indenture), all obligations of the City hereunder, and the pledge of Net Revenues and all other security provided by this Agreement for the 2022 Installment Payments, will cease and terminate, excepting only the obligation of the City to make, or cause to be made, all 2022 Installment Payments from such security deposit. A security deposit constitutes a special fund for the payment of such 2022 Installment Payments in accordance with the provisions hereof.
Section 7.2. Optional Prepayment. The City may exercise its option to prepay the principal components of the 2022 Installment Payments in whole or in part on any date on which the 2022 Bonds may be optionally prepaid. Such option shall be exercised by payment of a prepayment price equal to the sum of (a) the aggregate principal components of the 2022 Installment Payments to be prepaid, plus (b) the interest component of the 2022 Installment Payment required to be paid on or accrued to such date. Such prepayment price shall be deposited by the Trustee in the Bond Fund to be applied to the redemption of the Bonds under Section 4.01(a) of the Indenture. If the City prepays the 2022 Installment Payments in part but not in whole, the principal components shall be prepaid among such maturities and in such integral multiples of $5,000 as the City designates in written notice to the Trustee.
Section 7.3. Special Mandatory Prepayment. The 2022 Installment Payments are subject to prepayment in whole or in part on any date from the proceeds of eminent domain award or proceeds of sale under Section 5.2, or from the proceeds of any insurance award under Section 5.3, at a prepayment price equal to the sum of (a) the aggregate principal components of the 2022 Installment Payments to be prepaid, plus (b) the interest component of the 2022 Installment Payment required to be paid on or accrued to such date. Such prepayment price shall be deposited by the Trustee in the Bond Fund to be applied to the redemption of Bonds under Section 4.01(c) of the Indenture. If the City prepays the 2022 Installment Payments in part but not in whole, the principal components shall be prepaid among such maturities and in such integral multiples of $5,000 as the City designates in written notice to the Trustee.
Section 7.4. Credit for Amounts on Deposit. If the City prepays the 2022 Installment Payments in full under this Article, such that the Indenture is discharged by its terms as a result of such prepayment, and upon payment in full of all Additional Payments and other amounts then due and payable hereunder, all available amounts then on deposit in the funds and Attachment 3
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accounts established under the Indenture shall be credited towards the amounts then required to be so prepaid.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Further Assurances. The City agrees that it will execute and deliver any and all such further agreements, instruments, financing statements or other assurances as may be reasonably necessary or requested by the Authority or the Trustee to carry out the intention or to facilitate the performance of this Agreement, including, without limitation, to perfect and continue the security interests herein intended to be created.
Section 8.2. Notices. All notices or communications to be given under this Agreement shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective either (a) 48 hours after deposit in the United States mail, postage prepaid, or (b) in the case of personal delivery to any person, upon actual receipt. The Authority, the City or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.
If to the City: City of Ukiah
300 Seminary Avenue
Ukiah, CA 95482
Attention: City Manager
If to the Authority: Ukiah Public Financing Authority
300 Seminary Avenue
Ukiah, CA 95482
Attention: Executive Director
Section 8.3. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of California.
Section 8.4. Binding Effect. This Agreement inures to the benefit of and is binding upon the Authority, the City and their respective successors and assigns, subject, however, to the limitations contained herein.
Section 8.5. Severability of Invalid Provisions. If any one or more of the provisions contained in this Agreement are for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions will be deemed severable from the remaining provisions contained in this Agreement and such invalidity, illegality or unenforceability will not affect any other provision of this Agreement, and this Agreement will be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority and the City each hereby declares that it would have entered into this Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid or unenforceable.
Attachment 3
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Section 8.6. Article and Section Headings and References. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and do not affect the meaning, construction or effect of this Agreement. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof; and words of the masculine gender shall mean and include words of the feminine and neuter genders.
Section 8.7. Payment on Non-Business Days. Whenever any payment is required to be made hereunder on a day which is not a Business Day, such payment shall be made on the immediate preceding Business Day.
Section 8.8. Execution of Counterparts. This Agreement may be executed in any number of counterparts, each of which for all purposes is deemed to be an original and all of which shall together constitute but one and the same instrument.
Section 8.9. Waiver of Personal Liability. No member of the City Council, officer, agent or employee of the City has any individual or personal liability for the payment of Installment Payments or Additional Payments or be subject to any personal liability or accountability by reason of this Agreement; but nothing herein contained shall relieve any such member of the City Council, officer, agent or employee from the performance of any official duty provided by law or by this Agreement.
Section 8.10. Trustee as Third Party Beneficiary. The Trustee is hereby made a third party beneficiary hereof and shall be entitled to the benefits of this Agreement with the same force and effect as if the Trustee were a party hereto. [Signature Page Follows]
Attachment 3
[Signature Page to Installment Sale Agreement dated as of March 1, 2022] IN WITNESS WHEREOF, the Authority and the City have caused this Agreement to be executed in their respective names by their duly authorized officers, all as of the date first above written.
UKIAH PUBLIC FINANCING
AUTHORITY, as Seller
By:
Sage Sangiacomo
Executive Director
ATTEST:
By:
Kristine Lawler
Secretary
CITY OF UKIAH, as Purchaser
By:
Sage Sangiacomo
City Manager
ATTEST:
By:
Kristine Lawler
City Clerk
Attachment 3
A-1
APPENDIX A
SCHEDULE OF 2022 INSTALLMENT PAYMENTS
Installment
Payment Date*
Principal
Component
Interest
Component
Total
Payment
Total Annual
Payment
____________
* Installment Payment Dates are the 6th Business Day immediately preceding each Interest Payment Date shown in the table.
Attachment 3
B-1
APPENDIX B
DESCRIPTION OF 2022 PROJECT
The 2022 Project consists of the following improvements to the Electric System, subject to the right of the City to modify this list as provided in Section 3.5:
• [____________]
• [____________]
Fund not used for the above-described 2022 Project may be expended for other improvements to the Electric System.
Attachment 3
C-1
APPENDIX C
PROVISIONS RELATED TO THE INSURANCE POLICIES
Notwithstanding anything to the contrary in this Installment Sale Agreement, the following provisions shall govern with respect to the Insurance Policies; provided that the City shall be obligated to pay amounts owed in connection with a draw on the Insurance Policy (including Insurer Advances) solely from the Net Revenues of the Electric System and no other sources:
[To come, if applicable]
Attachment 3
Jones Hall Draft of Feb. 8, 2022
INDENTURE OF TRUST
Dated as of March 1, 2022
between the
UKIAH PUBLIC FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
Authorizing the issuance of:
$____________
Ukiah Public Financing Authority
Electric Revenue Bonds, Series 2022
Attachment 4
-iTABLE OF CONTENTS
ARTICLE I:
DEFINITIONS; RULES OF CONSTRUCTION:
Section 1.01. Definitions ............................................................................................................................ 2 Section 1.02. Authorization........................................................................................................................ 2 Section 1.03. Interpretation........................................................................................................................ 2 ARTICLE II:
THE 2022 BONDS:
Section 2.01. Authorization of 2022 Bonds ............................................................................................... 3 Section 2.02. Terms of the 2022 Bonds .................................................................................................... 3 Section 2.03. Transfer and Exchange of Bonds ........................................................................................ 4 Section 2.04. Book-Entry Only System ..................................................................................................... 5 Section 2.05. Registration Books............................................................................................................... 6 Section 2.06. Form and Execution of Bonds ............................................................................................. 6 Section 2.07. Bonds Mutilated, Lost, Destroyed or Stolen ........................................................................ 7 ARTICLE III:
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS:
Section 3.01. Issuance of the Bonds ......................................................................................................... 7 Section 3.02. Application of Proceeds of Sale of Bonds ........................................................................... 7 Section 3.03. Establishment and Application of Costs of Issuance Fund ................................................. 8 Section 3.04. Project Fund ........................................................................................................................ 8 Section 3.05. Validity of Bonds .................................................................................................................. 9 ARTICLE IV:
REDEMPTION OF BONDS:
Section 4.01. Terms of Redemption of 2022 Bonds .................................................................................. 9 Section 4.02. Selection of Bonds for Redemption................................................................................... 10 Section 4.03. Notice of Redemption; Rescission..................................................................................... 10 Section 4.04. Partial Redemption of Bonds............................................................................................. 11 Section 4.05. Effect of Redemption ......................................................................................................... 11 ARTICLE V:
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF
PRINCIPAL AND INTEREST:
Section 5.01. Security for the Bonds; Bond Fund.................................................................................... 12 Section 5.02. Allocation of Revenues...................................................................................................... 12 Section 5.03. Interest Account................................................................................................................. 13 Section 5.04. Principal Account............................................................................................................... 13 Section 5.05. Application of Redemption Fund ....................................................................................... 13 Section 5.06. Investments ....................................................................................................................... 13 Section 5.07. Valuation and Disposition of Investments ......................................................................... 14 ARTICLE VI:
COVENANTS OF THE AUTHORITY
Section 6.01. Punctual Payment.............................................................................................................. 15 Section 6.02. Extension of Payment of Bonds ........................................................................................ 15 Section 6.03. Against Encumbrances...................................................................................................... 15 Section 6.04. Power to Issue Bonds and Make Pledge and Assignment................................................ 15 Section 6.05. Accounting Records........................................................................................................... 16 Section 6.06. Limitation on Additional Obligations .................................................................................. 16 Attachment 4
-iiSection 6.07. Tax Covenants................................................................................................................... 16 Section 6.08. Enforcement of Installment Sale Agreement..................................................................... 17 Section 6.09. Waiver of Laws .................................................................................................................. 17 Section 6.10. Further Assurances ........................................................................................................... 17 Section 6.11. Maintenance of Existence ................................................................................................. 17 Section 6.12. Covenants and Agreements Related to the Insurance Policies ........................................ 17 ARTICLE VII:
EVENTS OF DEFAULT AND REMEDIES:
Section 7.01. Events of Default ............................................................................................................... 17 Section 7.02. Remedies Upon Event of Default ...................................................................................... 18 Section 7.03. Application of Revenues and Other Funds After Default................................................... 18 Section 7.04. Trustee to Represent Bond Owners .................................................................................. 19 Section 7.05. Limitation on Bond Owners' Right to Sue.......................................................................... 19 Section 7.06. Absolute Obligation of Authority ........................................................................................ 20 Section 7.07. Termination of Proceedings............................................................................................... 20 Section 7.08. Remedies Not Exclusive.................................................................................................... 20 Section 7.09. No Waiver of Default.......................................................................................................... 20 Section 7.10. Notice to Bond Owners of Default ..................................................................................... 20 ARTICLE VIII:
THE TRUSTEE:
Section 8.01. Appointment of Trustee ..................................................................................................... 21 Section 8.02. Acceptance of Trusts; Removal and Resignation of Trustee ............................................ 21 Section 8.03. Merger or Consolidation .................................................................................................... 23 Section 8.04. Liability of Trustee.............................................................................................................. 23 Section 8.05. Right to Rely on Documents.............................................................................................. 25 Section 8.06. Preservation and Inspection of Documents....................................................................... 26 Section 8.07. Compensation and Indemnification ................................................................................... 26 ARTICLE IX:
MODIFICATION OR AMENDMENT HEREOF:
Section 9.01. Amendments Permitted ..................................................................................................... 27 Section 9.02. Effect of Supplemental Indenture ...................................................................................... 28 Section 9.03. Endorsement of Bonds; Preparation of New Bonds.......................................................... 28 Section 9.04. Amendment of Particular Bonds........................................................................................ 28 ARTICLE X:
DEFEASANCE:
Section 10.01. Discharge of Indenture .................................................................................................... 29 Section 10.02. Discharge of Liability on Bonds ....................................................................................... 29 Section 10.03. Deposit of Money or Securities with Trustee................................................................... 30 Section 10.04. Unclaimed Funds............................................................................................................. 30 ARTICLE XI:
MISCELLANEOUS:
Section 11.01. Liability of Authority Limited to Revenues ....................................................................... 31 Section 11.02. Limitation of Rights to Parties and Bond Owners............................................................ 31 Section 11.03. Funds and Accounts........................................................................................................ 31 Section 11.04. Waiver of Notice; Requirement of Mailed Notice............................................................. 31 Section 11.05. Destruction of Bonds ....................................................................................................... 32 Section 11.06. Severability of Invalid Provisions ..................................................................................... 32 Section 11.07. Notices............................................................................................................................. 32 Section 11.08. Evidence of Rights of Bond Owners................................................................................ 33 Attachment 4
-iiiSection 11.09. Disqualified Bonds........................................................................................................... 33 Section 11.10. Money Held for Particular Bonds..................................................................................... 33 Section 11.11. Waiver of Personal Liability ............................................................................................. 33 Section 11.12. Successor Is Deemed Included in All References to Predecessor................................. 34 Section 11.13. Continuing Disclosure...................................................................................................... 34 Section 11.14. Execution in Several Counterparts .................................................................................. 34 Section 11.15. Payment on Non-Business Day....................................................................................... 34 Section 11.16. Governing Law................................................................................................................. 34
APPENDIX A DEFINITIONS
APPENDIX B FORM OF 2022 BOND
APPENDIX C FORM OF WRITTEN REQUISITION
[APPENDIX D PROVISION RELATING TO 2022 BONDS INSURANCE POLICY] [APPENDIX E PROVISIONS RELATING TO 2022 BONDS RESERVE POLICY] Attachment 4
INDENTURE OF TRUST
This INDENTURE OF TRUST (this “Indenture”), dated for convenience as of March 1, 2022, is between the UKIAH PUBLIC FINANCING AUTHORITY, a joint powers agency duly organized and existing under laws of the State of California (the “Authority”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States of America, with a corporate trust office in San Francisco, California, being qualified to accept and administer the trusts hereby created (the “Trustee”).
BACKGROUND:
1. The Authority is a joint powers authority duly organized and existing under th Constitution and laws of the State of California.
2. Under Article 4 (commencing with section 6584) of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Bond Law”) the Authority is authorized to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations of or for the purpose of making loans to, and to provide financing for public capital improvement of public entities, including the City.
3. The City owns and operates facilities and property for the generation, transmission and distribution of electricity within the service area of the City (as more specifically defined herein, the “Electric System”), and the City wishes to provide funds for the acquisition, construction and installation of certain improvements to the Electric System (as more specifically defined herein, collectively, the “Projects”).
4. In order to provide financing for the Projects, the City has requested the Authority to issue its Electric Revenue Bonds, Series 2022 in the aggregate principal amount of $____________ (the “2022 Bonds”) under this Indenture and the Bond Law.
5. In order to provide revenues for the payment of debt service on the 2022 Bonds and any Additional Bonds that may be issued in the future (together, the “Bonds”), the Authority and the City have entered into an Installment Sale Agreement, dated as of March 1, 2022 (the “Installment Sale Agreement”), under which the Authority agrees to issue the Bonds and thereby provide funds to finance the Projects, and the Authority further agrees to sell the completed Projects to the City in consideration of the agreement by the City to pay semiannual installment payments (the “Installment Payments”) as the purchase price thereof.
6. The Installment Payments are payable from, and are secured by a pledge of and lien on, the Net Revenues of the Electric System.
7. In order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which Bonds are to be issued and to secure the payment of the principal thereof and interest thereon, the Authority has authorized the execution and delivery of this Indenture.
8. [The scheduled payment of principal of and interest on the 2022 Bonds when due will be guaranteed under an insurance policy to be issued concurrently with the delivery of the 2022 Bonds by ____________ (“_______” or the “2022 Bonds Insurer”).] Attachment 4
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9. The Authority has found and determines, and hereby affirms, that all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special obligations of the Authority, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Indenture have been in all respects duly authorized.
AGREEMENT:
In order to secure the payment of the principal of and the interest on all the Outstanding Bonds under this Indenture according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the receipt of which is hereby acknowledged, the Authority and the Trustee do hereby covenant and agree with one another, for the benefit of the respective Owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms defined in Appendix A attached to this Indenture have the respective meanings specified in that Appendix when used in this Indenture.
Capitalized terms in this Indenture and not otherwise defined herein have the respective meanings given them in Section 1.1 of the Installment Sale Agreement.
Section 1.02. Authorization. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Indenture, and has taken all actions necessary to authorize the execution hereof by the officers and persons signing it.
Section 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof.
(c) All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
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ARTICLE II
THE 2022 BONDS
Section 2.01. Authorization of 2022 Bonds. The Authority has reviewed all proceedings heretofore taken and has found, as a result of such review, and hereby finds and determines that all things, conditions and acts required by law to exist, happen or be performed precedent to and in connection with the issuance of the 2022 Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Authority is now duly empowered, under each and every requirement of law, to issue the 2022 Bonds in the manner and form provided in this Indenture.
The Authority hereby authorizes 2022 Bonds under the Bond Law for the purposes of providing funds to finance the costs of acquisition, construction and improvement of the Projects. The 2022 Bonds shall be designated the “Ukiah Public Financing Authority Electric Revenue Bonds, Series 2022,” and shall be issued in the aggregate principal amount of $____________.
Section 2.02. Terms of the 2022 Bonds. The 2022 Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof, so long as no 2022 Bond has more than one maturity date. The 2022 Bonds shall mature on March 1 in each of the years and in the amounts, and bear interest (calculated on the basis of a 360-day year of twelve 30-day months) at the rates, as follows:
Maturity Date
(March 1)
Principal
Amount
Interest
Rate
Maturity Date
(March 1)
Principal
Amount
Interest
Rate
T: 2022 Term Bonds
Interest on the 2022 Bonds is payable from the Interest Payment Date next preceding the date of authentication thereof unless:
(i) a 2022 Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it will bear interest from such Interest Payment Date,
(ii) a 2022 Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date, or (iii) interest on any 2022 Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to Attachment 4
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which interest has been paid in full, payable on each Interest Payment Date.
Interest is payable on each Interest Payment Date to the persons in whose names the ownership of the 2022 Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below.
Interest on any 2022 Bond which is not punctually paid or duly provided for on any Interest Payment Date is payable to the person in whose name the ownership of such 2022 Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which is given to such Owner by first-class mail not less than 10 days prior to such special record date.
The Trustee will pay interest on the 2022 Bonds by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the 2022 Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. At the written request of the Owner of 2022 Bonds in an aggregate principal amount of at least $1,000,000, which written request is on file with the Trustee as of any Record Date, the Trustee will pay interest on such 2022 Bonds on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the United States of America as specified in such written request, which written request will remain in effect until rescinded in writing by the Owner. The Trustee will pay principal of the 2022 Bonds in lawful money of the United States of America by check of the Trustee upon presentation and surrender thereof at the Office of the Trustee.
Section 2.03. Transfer and Exchange of Bonds.
(a) Transfer. Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such Bond to the Trustee at its Office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. The Trustee shall collect any tax or other governmental charge on the transfer of any Bonds under this Section.
Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of like series, interest rate, maturity and aggregate principal amount.
The Authority shall pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer of Bonds.
Prior to any transfer of the Bonds outside the book-entry system (including, but not limited to, the initial transfer outside the book-entry system) the transferor shall provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045, as amended. The Trustee shall conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
(b) Exchange. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations and of the same series, Attachment 4
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interest rate and maturity. The Trustee shall collect any tax or other governmental charge on the exchange of any Bonds under this subsection (b). The Authority shall pay the cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any exchange of Bonds.
(c) Limitations. The Trustee may refuse to transfer or exchange, under the provisions of this Section, any Bonds selected by the Trustee for redemption under Article IV, or any Bonds during the period established by the Trustee for the selection of Bonds for redemption.
Section 2.04. Book-Entry Only System.
(a) Original Delivery. The Bonds will be initially delivered in the form of a separate single fully registered bond (which may be typewritten) for each maturity of the Bonds. Upon initial delivery, the Trustee shall register the ownership of each Bond on the Registration Books in the name of the Nominee. Except as provided in subsection (c), the ownership of all of the Outstanding Bonds shall be registered in the name of the Nominee on the Registration Books.
With respect to Bonds the ownership of which shall be registered in the name of the Nominee, the Authority and the Trustee has no responsibility or obligation to any Depository System Participant or to any person on behalf of which the Nominee holds an interest in the Bonds. Without limiting the generality of the immediately preceding sentence, the Authority and the Trustee has no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Depository System Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed if the Authority elects to redeem the Bonds in part, (iv) the payment to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any amount with respect to principal or interest on the Bonds or (v) any consent given or other action taken by the Depository as Owner of the Bonds. The Authority and the Trustee may treat and consider the person in whose name each Bond is registered as the absolute owner of such Bond for the purpose of payment of principal of and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers of ownership of such Bond, and for all other purposes whatsoever. The Trustee shall pay the principal of and the interest on the Bonds only to the respective Owners or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner shall receive a Bond evidencing the obligation of the Authority to make payments of principal and interest under this Indenture. Upon delivery by the Depository to the Authority of written notice to the effect that the Depository has determined to substitute a new Nominee in its place, and subject to the provisions herein with respect to Record Dates, such new nominee shall become the Nominee hereunder for all purposes; and upon receipt of such a notice the Authority shall promptly deliver a copy of the same to the Trustee.
(b) Representation Letter. In order to qualify the Bonds for the Depository’s bookentry only system, the Authority shall execute and deliver to such Depository a letter representing such matters as shall be necessary to so qualify the Bonds. The execution and delivery of such letter shall not in any way limit the provisions of subsection (a) above or in any other way impose upon the Authority or the Trustee any obligation whatsoever with respect to Attachment 4
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persons having interests in the Bonds other than the Bond Owners. Upon the written acceptance by the Trustee, the Trustee shall agree to take all action reasonably necessary for all representations of the Trustee in such letter with respect to the Trustee to at all times be complied with. In addition to the execution and delivery of such letter, the Authority may take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry only program.
(c) Transfers Outside Book-Entry Only System. If either (i) the Depository determines not to continue to act as Depository for the Bonds, or (ii) the Authority determines to terminate the Depository as such, then the Authority shall thereupon discontinue the book-entry only system with such Depository. In such event, the Depository shall cooperate with the Authority and the Trustee in the issuance of replacement Bonds by providing the Trustee with a list showing the interests of the Depository System Participants in the Bonds, and by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or before the date such replacement Bonds are to be issued. The Depository, by accepting delivery of the Bonds, agrees to be bound by the provisions of this subsection (c). If, prior to the termination of the Depository acting as such, the Authority fails to identify another Securities Depository to replace the Depository, then the Bonds shall no longer be required to be registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging Bonds shall designate, in accordance with the provisions hereof.
If the Authority determines that it is in the best interests of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Authority may notify the Depository System Participants of the availability of such certificated Bonds through the Depository. In such event, the Authority will execute and the Trustee shall authenticate, transfer and exchange Bonds as required by the Depository and others in appropriate amounts; and whenever the Depository requests, the Trustee and the Authority shall cooperate with the Depository in taking appropriate action (y) to make available one or more separate certificates evidencing the Bonds to any Depository System Participant having Bonds credited to its account with the Depository, or (z) to arrange for another Securities Depository to maintain custody of a single certificate evidencing such Bonds, all at the Authority’s expense.
(d) Payments to the Nominee. Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal of and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the representation letter described in subsection (b) of this Section or as otherwise instructed by the Depository.
Section 2.05. Registration Books. The Trustee shall keep or cause to be kept, at the Office of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds, which shall upon reasonable notice as agreed to by the Trustee, be open to inspection during regular business hours with reasonable notice by the Authority; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as hereinbefore provided.
Section 2.06. Form and Execution of Bonds. The Bonds, the form of Trustee’s certificate of authentication, and the form of assignment to appear thereon, are set forth in Appendix B attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture.
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The Director of the Authority shall execute, and the Secretary (or Deputy Secretary) of the Authority shall attest each Bond. Either or both of such signatures may be made manually or may be affixed by facsimile thereof. If any officer whose signature appears on any Bond ceases to be such officer before the Closing Date, such signature will nevertheless be as effective as if the officer had remained in office until the Closing Date. Any Bond may be signed and attested on behalf of the Authority by such persons as at the actual date of the execution of such Bond are the proper officers of the Authority, duly authorized to execute debt instruments on behalf of the Authority, although on the date of such Bond any such person was not an officer of the Authority.
Only those Bonds bearing a certificate of authentication in the form set forth in Appendix B, manually executed and dated by the Trustee, are valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee is conclusive evidence that such Bonds have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
Section 2.07. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond is mutilated, the Authority, at the expense of the Owner of such Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. The Trustee shall cancel every mutilated Bond surrendered to it and deliver such mutilated Bond to, or upon the order of, the Authority. If any Bond is lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence is satisfactory and if indemnity satisfactory to the Trustee is given, the Authority, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen. The Trustee may require payment of a sum not exceeding the actual cost of preparing each new Bond issued under this Section and of the expenses which may be incurred by the Trustee in connection therewith. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen will constitute an original additional contractual obligation on the part of the Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds issued under this Indenture.
Notwithstanding any other provision of this Section, in lieu of delivering a new Bond for which principal has become due for a Bond which has been mutilated, lost, destroyed or stolen, the Trustee may make payment of such Bond in accordance with its terms upon receipt of indemnity satisfactory to the Trustee.
ARTICLE III
ISSUANCE OF 2022 BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the 2022 Bonds. At any time after the execution of this Indenture, the Authority may execute and the Trustee shall authenticate and, upon the Written Request of the Authority, deliver 2022 Bonds to the Original Purchaser.
Section 3.02. Application of Proceeds of Sale of 2022 Bonds. Upon the receipt of payment for the 2022 Bonds on the Closing Date in the amount of $__________, the Trustee Attachment 4
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shall deposit the proceeds thereof into a temporary account called the Proceeds Fund which the Trustee shall establish, maintain and hold in trust, and which shall be disbursed in full on the Closing Date (whereupon said temporary account shall be closed) as follows:
(a) The Trustee shall deposit the amount of $_________ into the Costs of Issuance Fund, to be applied to pay the Costs of Issuance for the 2022 Bonds.
(b) The Trustee shall deposit the amount of $___________, constituting the remainder of such proceeds, in the Project Fund.
[In addition, the Trustee shall deposit the 2022 Reserve Policy in the 2022 Bonds Reserve Account.]
Section 3.03. Establishment and Application of Costs of Issuance Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the “Costs of Issuance Fund” into which the Trustee shall deposit a portion of the proceeds of sale of the 2022 Bonds under Section 3.02(a). The Trustee shall disburse amounts in the Costs of Issuance Fund from time to time to pay the Costs of Issuance of the Bonds upon submission of a Written Requisition of the Authority stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against the Costs of Issuance Fund. The Trustee may conclusively rely on the representations set forth in such Written Requisitions and shall be fully protected in relying thereon. On May 1, 2022, or upon the earlier Written Request of the Authority, the Trustee shall transfer all amounts remaining in the Costs of Issuance Fund to the Project Fund and shall thereupon close the Costs of Issuance Fund.
Section 3.04. Project Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the “Project Fund” into which the Trustee shall deposit a portion of the proceeds of sale of the 2022 Bonds under Section 3.02(b). The Trustee shall disburse amounts in the Project Fund from time to time to pay Project Costs upon submission of a Written Requisition of the City in substantially the form attached hereto as Appendix C. Each such Written Requisition of the City shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts.
Upon the determination by the City that the Projects have been completed and that no further amounts are required to be disbursed from the Project Fund to pay Project Costs, the City shall file a Written Certificate with the Trustee to that effect in accordance with Section 3.6 of the Installment Sale Agreement. Upon receipt of such Written Certificate, the Trustee shall withdraw all amounts remaining on deposit in the Project Fund and deposit such amounts in the Interest Account, to be applied as a credit towards the Installment Payments next coming due and payable and shall thereupon close the Project Fund.
Section 3.05. Reserve Fund and Accounts Therein. [The Trustee shall establish, maintain and hold in trust a separate fund designated as the “Reserve Fund,” and within the Reserve Fund a reserve account for each series of Bonds secured thereby, for the benefit of the Owners of the applicable series of Bonds; provided, that nothing in this Section 3.05 shall require reserve accounts for future series of Bonds.]
[On the Closing Date for the 2022 Bonds, the Trustee shall establish the “2022 Bonds Reserve Account,” in trust as a reserve for the payment of the principal of, interest, and Attachment 4
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premium, if any, on the 2022 Bonds. The 2022 Bonds Reserve Account shall be funded at the closing of the 2022 Bonds in the amount of the 2022 Bonds Reserve Requirement with the deposit of the 2022 Bonds Reserve Policy, and the Authority shall have no obligation to replace the 2022 Bonds Reserve Policy, or, other than payment to the Insurer for draws on the 2022 Reserve Policy, to fund the 2022 Bonds Reserve Account with cash or any other security if, at any time that the 2022 Bonds are Outstanding, amounts are not available under 2022 Bonds Reserve Policy, there is a rating downgrade of the 2022 Bonds Insurer or for any other reason.] [The amounts available under the 2022 Bonds Reserve Policy will be used and withdrawn by the Trustee solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in such account for the purpose of paying scheduled principal and interest on the of 2022 Bonds. The Trustee will comply with all documentation relating to the 2022 Bonds Reserve Policy as required to maintain the 2022 Bonds Reserve Policy in full force and effect and as required to receive payments thereunder if and to the extent required to make any payment when and as required, including as set forth in Appendix E.] Section 3.06. Validity of Bonds. The recital contained in the Bonds that the same are issued under the laws of the State of California shall be conclusive evidence of their validity and of compliance with the provisions of law in their issuance.
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. Terms of Redemption of 2022 Bonds.
(a) Optional Redemption. The 2022 Bonds maturing on or before March 1, ____, are not subject to optional redemption prior to their respective stated maturity dates. The 2022 Bonds maturing on or after March 1, ____ are subject to redemption in whole, or in part at the Written Request of the Authority among maturities on such basis as the Authority may designate and by lot within a maturity, at the option of the Authority, on any date on or after March 1, ____, from any available source of funds, at a redemption price equal to 100% of the principal amount of the 2022 Bonds to be redeemed, plus accrued interest to the date of redemption, without premium.
The Authority shall give the Trustee written notice of its intention to redeem 2022 2022 Bonds under this subsection (a), and the manner of selecting such 2022 Bonds for redemption from among the maturities thereof, at least 45 days prior to the redemption date. (b) Mandatory Sinking Fund Redemption. The 2022 Term Bonds are subject to mandatory redemption in part by lot, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts and on March 1 in the respective years as set forth in the following tables; provided, however, that if some but not all of the 2022 Term Bonds have been redeemed under subsections (a) or (c) of this Section, the total amount of all future sinking fund payments shall be reduced by the aggregate principal amount of the 2022 Term Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000 (as set forth in a schedule provided by the Authority to the Trustee).
Attachment 4
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2022 Term Bonds Maturing March 1, ____
Sinking Fund
Redemption Date
(March 1)
Principal
Amount To Be
Redeemed
2022 Term Bonds Maturing March 1, ____
Sinking Fund
Redemption Date
(March 1)
Principal
Amount To Be
Redeemed
(c) Special Mandatory Redemption From Insurance and Sale Proceeds. The 2022 Bonds are also subject to redemption as a whole or in part, on any date, from and to the extent of the proceeds of disposition of Electric System properties or the proceeds of hazard insurance not used to repair or rebuild the Electric System, which proceeds are required to be used for such purpose under Section 7.3 of the Installment Sale Agreement, at a redemption price equal to the principal amount of the 2022 Bonds plus interest accrued thereon to the date fixed for redemption, without premium.
The Authority shall give the Trustee written notice of its intention to redeem 2022 Bonds under this subsection (c), and the manner of selecting such 2022 Bonds for redemption from among the maturities and series thereof, at least 45 days prior to the redemption date.
Section 4.02. Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds of a single series or maturity, the Trustee shall select the Bonds of that series and maturity to be redeemed by lot in any manner which the Trustee in its sole discretion deems appropriate. For purposes of such selection, the Trustee shall treat each Bond as consisting of separate $5,000 portions and each such portion shall be subject to redemption as if such portion were a separate Bond.
Section 4.03. Notice of Redemption; Rescission. The Trustee shall mail notice of redemption of the Bonds by first class mail, postage prepaid, not less than 20 nor more than 60 days before any redemption date, to the respective Owners of any Bonds designated for redemption at their addresses appearing on the Registration Books and to one or more Securities Depositories and to the Municipal Securities Rulemaking Board. Each notice of redemption shall state the date of the notice, the redemption date, the place or places of redemption, whether less than all of the series of Bonds (or all Bonds of a single maturity) are to be redeemed, the CUSIP numbers and (in the event that not all Bonds within a maturity are Attachment 4
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called for redemption) Bond series and numbers of the Bonds to be redeemed and the maturity or maturities of the Bonds to be redeemed, and in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on the redemption date there will become due and payable on each of said Bonds the redemption price thereof, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Bonds be then surrendered. Neither the failure to receive any notice nor any defect therein shall affect the sufficiency of the proceedings for such redemption or the cessation of accrual of interest from and after the redemption date. Notice of redemption of Bonds shall be given by the Trustee, at the expense of the Authority, for and on behalf of the Authority.
The Authority has the right to rescind any notice of optional redemption of Bonds under Section 4.01(a) by written notice to the Trustee on or prior to the dated fixed for redemption.
Any notice of optional redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default. The Authority and the Trustee have no liability to the Bond Owners or any other party related to or arising from such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under this Section.
In lieu of redemption of Bonds as provided above, amounts held by the Trustee for such redemption may be applied by the Trustee to the purchase of Bonds at public or private sale as and when and at such prices (including brokerage, accrued interest and other charges) at the direction of the Authority or the City received by the Trustee at least 75 days prior to the selection of the Bonds for redemption, but such purchase price must not exceed the redemption price that would be payable if such Bonds were redeemed.
Section 4.04. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized denominations and of the same series, equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered.
Section 4.05. Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the redemption price of, together with interest accrued to the date fixed for redemption on the redemption date designated in such notice, the Bonds (or portions thereof) so called for redemption shall become due and payable, interest on the Bonds so called for redemption shall cease to accrue, said Bonds (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture, and the Owners of said Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof.
All Bonds redeemed under the provisions of this Article shall be canceled by the Trustee upon surrender thereof and destroyed in accordance with the retention policy of the Trustee then in effect.
Attachment 4
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ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF
PRINCIPAL AND INTEREST
Section 5.01. Security for the Bonds; Bond Fund.
(a) Pledge of Revenues and Other Amounts. Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, all of the Revenues and all amounts (including proceeds of the sale of the Bonds) held in any fund or account established under this Indenture and held by the Trustee are hereby pledged to secure the payment of the principal of and interest on the Bonds in accordance with their terms and the provisions of this Indenture, including payment of any Insurer Reimbursement Amounts (as defined in Appendix D) and payment of any Policy Costs (as defined in Appendix E). Said pledge constitutes a lien on and security interest in the Revenues and such amounts and shall attach, be perfected and be valid and binding from and after the Closing Date, without the need for any physical delivery thereof or further act. (b) Assignment to Trustee. The Authority hereby irrevocably transfers, assigns and sets over to the Trustee, without recourse to the Authority, all of its rights in the Installment Sale Agreement (excepting only the Authority’s rights under Sections 4.7 and 6.4 thereof), including but not limited to all of the Authority’s rights to receive and collect all of the Installment Payments. The Trustee shall be entitled to collect and receive all of the Installment Payments, and any Installment Payments collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and shall forthwith be paid by the Authority to the Trustee. The Trustee is also entitled to and shall, subject to the provisions of Article VIII, take all steps, actions and proceedings which the Trustee determines to be reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority and all of the obligations of the City under the Installment Sale Agreement.
(c) Deposit of Revenues in Bond Fund. All Revenues shall be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the “Bond Fund” which the Trustee shall establish, maintain and hold in trust; except that all moneys received by the Trustee and required hereunder or under the Installment Sale Agreement to be deposited in the Redemption Fund shall be promptly deposited in such fund. All Revenues deposited with the Trustee shall be held, disbursed, allocated and applied by the Trustee only as provided in this Indenture. Any surplus remaining in the Bond Fund, after payment in full of (i) the principal of and interest on the Bonds or provision therefor under Article X, (ii) payment of amounts due to any Insurer, and (iii) any applicable fees and expenses to the Trustee, shall be withdrawn by the Trustee and remitted to the City.
Section 5.02. Allocation of Revenues. On or before the 6th Business Day preceding each Interest Payment Date, the Trustee shall transfer from the Bond Fund and deposit into the following respective accounts and fund, the following amounts in the following order of priority:
(a) Deposit to Interest Account. The Trustee shall deposit in the Interest Account (which the Trustee shall establish and maintain within the Bond Fund) an amount required to cause the aggregate amount on deposit in the Interest Account to be at least equal to the amount of interest becoming Attachment 4
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due and payable on such Interest Payment Date on all Bonds then Outstanding.
(b) Deposit to Principal Account. The Trustee shall deposit in the Principal Account (which the Trustee shall establish and maintain within the Bond Fund) an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds coming due and payable on such Interest Payment Date, including the principal amount of Term Bonds which are subject to mandatory sinking fund redemption on such Interest Payment Date under Section 4.01(b).
(c) Deposit to Accounts within Reserve Fund. The Trustee shall deposit into the accounts within the Reserve Fund amount(s) which are needed to replenish the amounts therein to the applicable reserve requirement therefor or pay amounts due to any insurer with respect to any Qualified Reserve Fund Credit Instrument, including to pay Policy Costs due to any Insurer.
Section 5.03. Interest Account. All amounts in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it comes due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity).
Section 5.04. Principal Account. All amounts in the Principal Account shall be used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at their respective maturity dates, and the principal amount of Term Bonds which are subject to mandatory sinking fund redemption on such Interest Payment Date under Section 4.01(b).
Section 5.05. Application of Redemption Fund. Upon the determination by the Authority to redeem any Bonds under Section 4.01(a) or Section 4.01(c), the Trustee shall establish and maintain the Redemption Fund, into which the Trustee shall deposit a portion of the Revenues received, in accordance with a Written Request of the Authority. Amounts on deposit in the Redemption Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds to be redeemed under Section 4.01(a) or Section
4.01(c), as the case may be. At any time prior to the selection of Bonds for redemption, the Trustee may apply such amounts to the purchase of Bonds at public or private sale, when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as shall be directed pursuant to a Written Request of the Authority, except that the purchase price (exclusive of accrued interest) may not exceed the redemption price then applicable to the Bonds. The Trustee is entitled to conclusively rely on any Written Request of the Authority received under this Section, and is fully protected in relying thereon.
Section 5.06. Investments. All moneys in any of the funds or accounts established with the Trustee under this Indenture shall be invested by the Trustee solely in Permitted Investments. Such investments shall be directed by the Authority under a Written Request of the Authority filed with the Trustee at least two Business Days in advance of the making of such investments. In the absence of any such directions from the Authority, the Trustee shall invest any such moneys in Permitted Investments which constitute money market funds; provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a written request of the Authority specifying a specific money market fund and, if no such written request of the Attachment 4
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Authority is so received, the Trustee shall hold such moneys uninvested. Permitted Investments purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account. To the extent Permitted Investments are registrable, such Permitted Investments must be registered in the name of the Trustee.
All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder with the Trustee shall be deposited in the Bond Fund. For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder. The Trustee or any of its affiliates may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee shall incur no liability for losses arising from any investments made under this Section.
The Trustee may make any investments hereunder through its own bond or investment department or trust investment department, or those of its parent or any affiliate. The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder. The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or is dealing as a principal for its own account.
The Authority acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations of security transactions as they occur, the Authority waives receipt of such confirmations to the extent permitted by law. The Authority further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker. The Trustee will furnish the Authority a periodic cash transaction statements which shall include detail for all investment transactions made by the Trustee hereunder. Upon the Authority’s election, such statements will be delivered via the Trustee’s online service and upon electing such service, paper statements will be provided only upon request.
Section 5.07. Valuation and Disposition of Investments. (a) Except as otherwise provided in subsection (b) of this Section, the Authority covenants that all investments of amounts deposited in any fund or account created by or under this Indenture, or otherwise containing gross proceeds of the Bonds (within the meaning of Section 148 of the Tax Code) shall be acquired, disposed of and valued at the Fair Market Value thereof as such term is defined in subsection (d) below. The Trustee shall have no duty in connection with the determination of Fair Market Value other than to follow the investment directions of the Authority in any Written Request of the Authority. (b) Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Tax Code shall be valued at cost thereof, (consisting of present value thereof within the meaning of Section 148 of the Tax Code); provided that the Authority shall inform the Trustee which funds are subject to a yield restriction. (c) Except as provided in the preceding subsection (b), for the purpose of determining the amount in any fund or account established hereunder, the value of Permitted Investments credited to such fund shall be valued by the Trustee at least annually on or before September
15. The Trustee may sell or present for redemption, any Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to provide moneys to meet any required Attachment 4
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payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investment is credited, and the Trustee shall not be liable or responsible for any loss resulting from any such Permitted Investment.
(d) For purposes of this Section, the term “Fair Market Value” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, or (iii) the investment is a United States Treasury Security -- State and Local Government Series which is acquired in accordance with applicable regulations of the United States Bureau of Public Debt. (e) To the extent of any valuations made by the Trustee hereunder, the Trustee may utilize and conclusively rely upon computerized securities pricing services that may be available to it, including those available through its regular accounting system with respect to the Bonds.
ARTICLE VI
COVENANTS OF THE AUTHORITY
Section 6.01. Punctual Payment. The Authority shall punctually pay or cause to be paid the principal of and interest on all the Bonds in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of the Revenues and other amounts pledged for such payment as provided in this Indenture.
Section 6.02. Extension of Payment of Bonds. The Authority shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which have not been so extended.
Section 6.03. Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the pledge and assignment created by this Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, and reserves the right to issue other obligations for such purposes.
Section 6.04. Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized under law to issue the Bonds and to enter into this Indenture and to pledge and assign the Revenues and other amounts purported to be pledged and assigned, Attachment 4
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respectively, under this Indenture in the manner and to the extent provided in this Indenture.
The Bonds and the provisions of this Indenture are and will be the legal, valid and binding special obligations of the Authority in accordance with their terms, and the Authority and the Trustee shall at all times, subject to the provisions of Article VIII and to the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the Bond Owners under this Indenture against all claims and demands of all persons whomsoever.
Section 6.05. Accounting Records. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with corporate trust industry standards, in which accurate entries shall be made of all transactions made by it relating to the proceeds of Bonds and all funds and accounts established under this Indenture.
The Trustee shall make such books of record and account available for inspection by the Authority and the City, during business hours, upon reasonable notice, and under reasonable circumstances.
Section 6.06. Additional Obligations Payable from Revenues. The Authority covenants that no additional bonds, notes or other indebtedness shall be issued or incurred which are payable out of the Revenues in whole or in part, except as set forth in Section
9.01(b)(v) and Section 5.7 of the Installment Sale Agreement.
Section 6.07. Tax Covenants. The following covenants apply to Bonds for which interest is intended to be excluded from income under the Tax Code:
(a) Private Business Use Limitation. The Authority shall assure that the proceeds of the Bonds are not used in a manner which would cause the Bonds to satisfy the private business tests of Section 141(b) of the Tax Code or the private loan financing test of Section 141(c) of the Tax Code.
(b) Federal Guarantee Prohibition. The Authority shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code. (c) No Arbitrage. The Authority shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the Bonds or of any other obligations which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date, would have caused the Bonds to be “arbitrage bonds” within the meaning of Section 148(a) of the Tax Code. (d) Maintenance of Tax Exemption. The Authority shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the Closing Date.
(e) Rebate of Excess Investment Earnings to United States. The Authority shall calculate or cause to be calculated all amounts of Excess Investment Earnings which are required to be rebated to the United States of America under Section 148(f) of the Tax Code, at the times and in the manner required under the Tax Code. The Authority shall pay when due an amount equal to Excess Investment Earnings to the United States of America in such amounts, at such times and in such manner as may be required under the Tax Code, such payments to be made from any amounts provided by the City for that purpose under Section 5.11(e) of the Attachment 4
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Installment Sale Agreement. The Authority shall keep or cause to be kept, and retain or cause to be retained for a period of six years following the retirement of the Bonds, records of the determinations made under this subsection (e).
Section 6.08. Enforcement of Installment Sale Agreement. The Trustee shall promptly collect all amounts (to the extent any such amounts are available for collection) due from the City under the Installment Sale Agreement. Subject to the provisions of Article VIII, the Trustee shall enforce, and take all steps, actions and proceedings which the Trustee determines to be reasonably necessary for the enforcement of all of its rights thereunder as assignee of the Authority and for the enforcement of all of the obligations of the City under the Installment Sale Agreement.
Section 6.09. Waiver of Laws. The Authority shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at any time hereafter in force that may affect the covenants and agreements contained in this Indenture or in the Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by the Authority to the extent permitted by law.
Section 6.10. Further Assurances. The Authority will make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in this Indenture.
Section 6.11. Maintenance of Existence. The Authority shall maintain its existence as a joint exercise of powers agency while any Bonds are Outstanding. [Section 6.12. Covenants and Agreements Related to the Insurance Policies]. [Notwithstanding anything to the contrary set forth in this Indenture, the Authority shall comply with and carry out all of the provisions related to the Insurance Policy as set forth in Appendix D hereto and the Reserve Policy as set forth in Appendix E hereto, which provisions shall govern so long as any of the 2022 Bonds are Outstanding.]
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The following events constitute Events of Default hereunder:
(a) Failure to pay any installment of the principal of any Bonds when due, whether at maturity as therein expressed, by proceedings for redemption, by acceleration, or otherwise.
(b) Failure to pay any installment of interest on the Bonds when due. (c) Subject to clause (e) of Appendix D, failure by the Authority to observe and perform any of the other covenants, agreements or conditions on its part contained in this Indenture or in the Bonds, if such failure has continued for Attachment 4
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a period of 60 days after written notice thereof, specifying such failure and requiring the same to be remedied, has been given to the Authority by the Trustee; provided, however, if in the reasonable opinion of the Authority the failure stated in the notice can be corrected, but not within such 60-day period, such failure shall not constitute an Event of Default if the Authority institutes corrective action within such 60-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time. (d) The commencement by the Authority of a voluntary case under Title 11 of the United States Code or any substitute or successor statute. (e) The occurrence and continuation of an event of default under and as defined in the Installment Sale Agreement.
Section 7.02. Remedies Upon Event of Default. If any Event of Default occurs, then, and in each and every such case during the continuance of such Event of Default, the Trustee may, and at the written direction of the Owners of a majority in aggregate principal amount of the Bonds at the time Outstanding shall, in each case, upon receipt of indemnification satisfactory to the Trustee against the costs, expenses and liabilities to be incurred by the Trustee in connection with such action, upon notice in writing to the Authority, declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Bonds to the contrary notwithstanding.
Any such declaration is subject to the condition that if, at any time after such declaration and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Authority deposits with the Trustee a sum sufficient to pay all the principal of and installments of interest on the Bonds payment of which is overdue, with interest on such overdue principal at the rate borne by the respective Bonds to the extent permitted by law, and the reasonable fees, charges and expenses (including those of its legal counsel, agents and advisors, including the allocated costs of internal attorneys) of the Trustee, and any and all other Events of Default known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate has been made therefor, then, and in every such case, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Authority, the City and the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences and waive such Event of Default; but no such rescission and annulment shall extend to or shall affect any subsequent Event of Default, or shall impair or exhaust any right or power consequent thereon.
Section 7.03. Application of Revenues and Other Funds After Default. If an Event of Default occurs and is continuing, all Revenues and any other funds then held or thereafter received by the Trustee under any of the provisions of this Indenture shall be applied by the Trustee in the following order of priority:
(a) To the payment of reasonable fees, charges and expenses of the Trustee (including reasonable fees and disbursements of its legal counsel including outside counsel and the allocated costs of internal attorneys, agents and Attachment 4
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advisors) incurred in and about the performance of its powers and duties under this Indenture;
(b) To the payment of the principal of and interest then due on the Bonds (upon presentation of the Bonds to be paid, and stamping or otherwise noting thereon of the payment if only partially paid, or surrender thereof if fully paid) in accordance with the provisions of this Indenture, as follows:
First: To the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and Second: To the payment to the persons entitled thereto of the unpaid principal of any Bonds which shall have become due, whether at maturity or by acceleration or redemption, with interest on the overdue principal at the rate borne by the respective Bonds (to the extent permitted by law), and, if the amount available shall not be sufficient to pay in full all the Bonds, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the persons entitled thereto, without any discrimination or preference Section 7.04. Trustee to Represent Bond Owners. The Trustee is hereby irrevocably appointed (and the successive respective Owners of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-fact of the Owners of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Owners under the provisions of the Bonds, this Indenture and applicable provisions of any law. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Owners of such Bonds, subject to the provisions of this Indenture.
Section 7.05. Limitation on Bond Owners’ Right to Sue. Notwithstanding any other provision hereof, no Owner of any Bonds has the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Installment Sale Agreement or any other applicable law with respect to such Bonds, unless (a) such Owner has given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of the Bonds then Outstanding have requested the Trustee in writing to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) such Owner or Owners have tendered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee has failed to comply with such request for a period of 60 days after such written request has been received by, and said tender of indemnity has been made to, the Trustee; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding.
Attachment 4
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Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder or under law; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Owners of Bonds, or to enforce any right under the Bonds, this Indenture, the Installment Sale Agreement or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of this Indenture.
Section 7.06. Absolute Obligation of Authority. Nothing in this Section or in any other provision of this Indenture or in the Bonds affects or impairs the obligation of the Authority, which is absolute and unconditional, to pay the principal of and interest on the Bonds to the respective Owners of the Bonds at their respective dates of maturity, or upon acceleration or call for redemption, as herein provided, but only out of the Revenues and other assets herein pledged therefor, or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.
Section 7.07. Termination of Proceedings. In case any proceedings taken by the Trustee or by any one or more Bond Owners on account of any Event of Default have been discontinued or abandoned for any reason or have been determined adversely to the Trustee or the Bond Owners, then in every such case the Authority, the Trustee and the Bond Owners, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Authority, the Trustee and the Bond Owners shall continue as though no such proceedings had been taken.
Section 7.08. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
Section 7.09. No Waiver of Default. No delay or omission of the Trustee or any Owner of the Bonds to exercise any right or power arising upon the occurrence of any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or an acquiescence therein; and every power and remedy given by this Indenture to the Trustee or to the Owners of the Bonds may be exercised from time to time and as often as may be deemed expedient by the Trustee or the Bond Owners.
Section 7.10. Notice to Bond Owners of Default. Upon becoming aware of the occurrence of an Event of Default, but in no event later than five Business Days following becoming aware of such occurrence, the Trustee shall promptly give written notice thereof by first class mail, postage prepaid, to the Owner of each Outstanding Bond, unless such Event of Default has been cured before the giving of such notice; provided, however that except in the case of an Event of Default described in Sections 7.01(a) or 7.01(b), the Trustee may elect not to give such notice to the Bond Owners if and so long as the Trustee in good faith determines that it is in the best interests of the Bond Owners not to give such notice.
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ARTICLE VIII
THE TRUSTEE
Section 8.01. Appointment of Trustee. The Bank of New York Mellon Trust Company, N.A. is hereby appointed Trustee by the Authority for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The Authority will maintain a Trustee which is qualified under the provisions of the foregoing provisions of this Article VIII so long as any Bonds are Outstanding.
Section 8.02. Acceptance of Trusts; Removal and Resignation of Trustee. The Trustee hereby accepts the express trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of Default which may have occurred, perform such duties and only such duties as are expressly and specifically set forth in this Indenture and no implied duties or covenants shall be read into this Indenture against the Trustee. In case an Event of Default has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by the Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’sown affairs. (b) The Authority may remove the Trustee at any time, unless an Event of Default has occurred and is then continuing, and shall remove the Trustee (i) if at any time requested to do so by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys duly authorized in writing) or (ii) if at any time the Trustee ceases to be eligible in accordance with subsection(e) of this Section, or becomes incapable of acting, or is adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property is appointed, or any public officer takes control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation. Any such removal shall be made upon at least 30 days’ prior written notice to the Trustee. (c) The Trustee may at any time resign by giving written notice of such resignation to the Authority and the City, and by giving the Bond Owners notice of such resignation by mail at the addresses shown on the Registration Books.
(d) Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. In the event of the removal or resignation of the Trustee under subsections (b) or (d), respectively, the Authority shall promptly appoint a successor Trustee.
If no successor Trustee has been appointed and accepted appointment within 45 days of giving notice of removal or notice of resignation as Attachment 4
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aforesaid, the resigning Trustee may petition, at the expense of the Authority, any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture, must signify its acceptance of such appointment by executing and delivering to the Authority and to its predecessor Trustee a written acceptance thereof, and after payment by the Authority of all unpaid fees and expenses of the predecessor Trustee, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein. At the Written Request of the Authority or the request of the successor Trustee, such predecessor Trustee shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Authority shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Authority shall promptly mail or cause the successor trustee to mail a notice of the succession of such Trustee to the trusts hereunder to each rating agency which is then rating the Bonds and to the Bond Owners at the addresses shown on the Registration Books. If the Authority fails to mail such notice within 15 days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Authority.
(e) Any Trustee appointed under this Indenture shall be a corporation or association organized and doing business under the laws of any state or the United States of America or the District of Columbia, shall be authorized under such laws to exercise corporate trust powers, shall have (or, in the case of a corporation or association that is a member of a bank holding company system, the related bank holding company has) a combined capital and surplus of at least $50,000,000, and shall be subject to supervision or examination by a federal or state agency, so long as any Bonds are Outstanding. If such corporation or association publishes a report of condition at least annually under law or to the requirements of any supervising or examining agency above referred to, then for the purpose of this subsection (e), the combined capital and surplus of such corporation or association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If the Trustee at any time ceases to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign in the manner and with the effect specified in this Section.
(f) Notwithstanding any other provision of this Indenture, the Trustee may be removed at any time for any breach of the trust set forth herein.
Attachment 4
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Section 8.03. Merger or Consolidation. Any national banking association, bank, federal savings association, or trust company into which the Trustee may be merged or converted or with which it may be consolidated or any national banking association, bank, federal savings association, or trust company resulting from any merger, conversion or consolidation to which it shall be a party or any national banking association, bank, federal savings association, or trust company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such national banking association, bank, federal savings association, or trust company shall be eligible under subsection (e) of Section 8.02 shall be the successor to such Trustee, without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.
Section 8.04. Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall be taken as statements of the Authority, and the Trustee shall not assume responsibility for the correctness of the same, or make any representations as to the validity or sufficiency of this Indenture, the Bonds or the Installment Sale Agreement, nor shall the Trustee incur any responsibility in respect thereof, other than as expressly stated herein in connection with the respective duties or obligations of Trustee herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence. The Trustee may become the Owner of Bonds with the same rights it would have if it were not Trustee, and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bond Owners, whether or not such committee shall represent the Owners of a majority in principal amount of the Bonds then Outstanding.
(b) The Trustee is not liable for any error of judgment made by a responsible officer, unless it is proved that the Trustee was grossly negligent in ascertaining the pertinent facts. (c) The Trustee is not liable with respect to any action taken or omitted to be taken by it in accordance with the direction of the Owners of a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture or assigned to it hereunder. (d) The Trustee is not liable for any action taken by it and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. (e) The Trustee shall not be deemed to have knowledge of any Event of Default hereunder, or any other event which, with the passage of time, the giving of notice, or both, would constitute an Event of Default hereunder unless and until it shall have actual knowledge thereof, or a corporate trust officer shall have received written notice thereof at its Office from the City, the Authority or the Owners of at least 25% in aggregate principal amount of the Outstanding Bonds. Except as otherwise expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to the performance or observance by the Authority or the City of any of the terms, conditions, covenants or agreements herein, under the Installment Sale Agreement or the Bonds or of any of the documents executed in connection with the Bonds, or as to the existence of a default or an Event of Default or an event which would, with the giving of notice, the passage of time, or both, constitute an Event of Default. The Trustee is not Attachment 4
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responsible for the validity, effectiveness or priority of any collateral given to or held by it.
Without limiting the generality of the foregoing, the Trustee shall not be required to ascertain or inquire as to the performance or observance by the City or the Authority of the terms, conditions, covenants or agreements set forth in the Installment Sale Agreement, other than the covenants of the City to make Installment Payments to the Trustee when due and to file with the Trustee when due, such reports and certifications as the City is required to file with the Trustee thereunder.
(f) No provision of this Indenture requires the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers.
(g) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or through agents, receivers or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent, receiver or attorney appointed with due care by it hereunder.
(h) The Trustee has no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of the Bond Owners under this Indenture, unless such Owners have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities (including but not limited to fees and expenses of its attorneys) which might be incurred by it in compliance with such request or direction. No permissive power, right or remedy conferred upon the Trustee hereunder shall be construed to impose a duty to exercise such power, right or remedy.
(i) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee is subject to the provisions of Section 8.02(a), this Section and Section 8.05, and shall be applicable to the assignment of any rights to the Trustee hereunder.
(j) The Trustee is not accountable to anyone for the subsequent use or application of any moneys which are released or withdrawn in accordance with the provisions hereof. (k) The Trustee makes no representation or warranty, expressed or implied as to the title, value, design, compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose for the use contemplated by the Authority or the City of the Projects. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from the Installment Sale Agreement or this Indenture for the existence, furnishing or use of the Projects. (l) The Trustee has no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds.
(m) The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using Electronic Means (“Electronic Means” shall mean the following communications methods: email, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder); provided, however, that the Authority and City shall provide to the Trustee an incumbency Attachment 4
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certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Authority and City whenever a person is to be added or deleted from the listing. If the Authority and City elect to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Authority and City understand and agree that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Authority and City shall be responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Authority and City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the District. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The Authority and City agree: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Authority and City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
(n) The Trustee shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of delay in the performance of such obligations due to unforeseeable causes beyond its control and without its fault or negligence, including, but not limited to, acts of God or of the public enemy or terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to zoning or other governmental action or inaction pertaining to the Projects, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee. (o) Ratings of Permitted Investments referred to herein shall be determined at the time of purchase of such Permitted Investments and without regard to rating subcategories. The Trustee shall have no responsibility to monitor the ratings of Permitted Investments after the initial purchase of such Permitted Investments, or the responsibility to validate Permitted Investments the ratings of Permitted Investments prior to the initial purchase. (p) The Trustee may conclusively rely upon the Authority’s written instructions as to both the suitability and legality of the directed investments and such written direction shall be deemed to be a certification that such directed investments constitute Permitted Investments.
Section 8.05. Right to Rely on Documents. The Trustee shall be protected and shall incur no liability in acting or refraining from acting in reliance upon any notice, resolution, Attachment 4
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request, consent, order, certificate, report, opinion, bonds or other paper or document believed by them to be genuine and to have been signed or presented by the proper party or parties.
The Trustee is under no duty to make any investigation or inquiry as to any statements contained or matter referred to in any paper or document but may accept and conclusively rely upon the same as conclusive evidence of the truth and accuracy of any such statement or matter and shall be fully protected in relying thereon. The Trustee may consult with counsel, who may be counsel of or to the Authority, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
The Trustee may treat the Owners of the Bonds appearing in the Registration Books as the absolute owners of the Bonds for all purposes and the Trustee shall not be affected by any notice to the contrary.
Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee deems it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate, Written Request or Written Requisition of the Authority or the City, and such Written Certificate, Written Request or Written Requisition shall be full warrant to the Trustee for any action taken or suffered under the provisions of this Indenture in reliance upon such Written Certificate, Written Request or Written Requisition, and the Trustee shall be fully protected in relying thereon, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may deem reasonable.
Section 8.06. Preservation and Inspection of Documents. All documents received by the Trustee under the provisions of this Indenture shall be retained in its respective possession and in accordance with its retention policy then in effect and shall, upon reasonable notice to Trustee, be subject to the inspection of the Authority, the City and any Bond Owner, and their agents and representatives duly authorized in writing, during business hours and under reasonable conditions as agreed to by the Trustee.
Section 8.07. Compensation and Indemnification. The Authority shall pay to the Trustee from time to time, on demand, the compensation for all services rendered under this Indenture and also all reasonable expenses, advances (including any interest on advances), charges, legal (including outside counsel and the allocated costs of internal attorneys) and consulting fees and other disbursements, incurred in and about the performance of its powers and duties under this Indenture.
The Authority shall indemnify the Trustee, its officers, directors, employees and agents from and against any cost, loss, liability or expense whatsoever (including but not limited to fees and expenses of its attorneys) incurred without negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this trust and this Indenture, including costs, legal fees and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers hereunder or under the Installment Sale Agreement. The rights of the Trustee and the obligations of the Authority under this Section shall survive the resignation or removal of the Trustee or the discharge of the Bonds and this Indenture and the Installment Sale Agreement.
Attachment 4
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ARTICLE IX
MODIFICATION OR AMENDMENT HEREOF
Section 9.01. Amendments Permitted.
(a) Amendments With Owner Consent. This Indenture and the rights and obligations of the Authority and of the Owners of the Bonds and of the Trustee may be modified or amended from time to time and at any time by Supplemental Indenture, which the Authority and the Trustee may enter into when the written consents of the Owners of a majority in aggregate principal amount of all Bonds then Outstanding are filed with the Trustee. No such modification or amendment may (i) extend the fixed maturity of any Bonds, or reduce the amount of principal thereof or extend the time of payment, or change the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, without the consent the Owner of each Bond so affected, or (ii) reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to effect any such modification or amendment, or (iii) permit the creation of any lien on the Revenues and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture except as permitted herein, or deprive the Owners of the Bonds of the lien created by this Indenture on such Revenues and other assets (except as expressly provided in this Indenture), without the consent of the Owners of all of the Bonds then Outstanding, or (iv) without its written consent thereto, modify any of the rights or obligations of the Trustee. It is not necessary for the consent of the Bond Owners to approve the particular form of any Supplemental Indenture, but it is sufficient if such consent approves the substance thereof.
(b) Amendments Without Owner Consent. This Indenture and the rights and obligations of the Authority, of the Trustee and the Owners of the Bonds may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority and the Trustee may enter into without the consent of any Bond Owners, if the Trustee has been furnished an opinion of counsel that the provisions of such Supplemental Indenture shall not materially adversely affect the interests of the Owners of the Bonds, including, without limitation, for any one or more of the following purposes:
(i) to add to the covenants and agreements of the Authority in this Indenture contained, other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Authority;
(ii) to cure any ambiguity, inconsistency or omission, or to cure or correct any defective provision, contained in this Indenture, or in regard to matters or questions arising under this Indenture, as the Authority deems necessary or desirable, provided that such modification or amendment does not materially adversely affect the interests of the Bond Owners, in the opinion of Bond Counsel filed with the Trustee;
(iii) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute; and
Attachment 4
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(iv) to modify, amend or supplement this Indenture in such manner as to assure that the interest on the Bonds remains excluded from gross income under the Tax Code.
(v) to modify, amend or supplement this Indenture in such manner as to provide for the issuance of additional bonds, notes or other obligations in accordance with Section 6.06.
(c) Limitation. The Trustee is not obligated to enter into any Supplemental Indenture authorized by subsections (a) or (b) of this Section which materially adversely affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise. (d) Bond Counsel Opinion Requirement. Prior to the Trustee entering into any Supplemental Indenture hereunder, if requested by the Trustee, the Authority shall deliver to the Trustee an opinion of Bond Counsel stating, in substance, that such Supplemental Indenture has been adopted in compliance with the requirements of this Indenture and that the adoption of such Supplemental Indenture will not, in and of itself, adversely affect the exclusion from gross income for purposes of federal income taxes of interest on the Bonds.
Section 9.02. Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture under this Article IX, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Authority, the Trustee and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the execution of any Supplemental Indenture under this Article may, and if the Authority so determines shall, bear a notation by endorsement or otherwise in form approved by the Authority as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand on the Owner of any Bonds Outstanding at the time of such execution and presentation of his Bonds for the purpose at the Office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation shall be made on such Bonds. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Authority, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the Authority and authenticated by the Trustee, and upon demand on the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee, without cost to any Bond Owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in equal aggregate principal amount of the same maturity.
Section 9.04. Amendment of Particular Bonds. The provisions of this Article IX do not prevent any Bond Owner from accepting any amendment as to the particular Bonds held by such Owner.
Attachment 4
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ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Indenture. Any or all of the Outstanding Bonds may be paid by the Authority in any of the following ways, provided that the Authority also pays or causes to be paid any other sums payable hereunder by the Authority:
(a) by paying or causing to be paid the principal of and interest on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee or an escrow bank, at or before maturity, money or securities in the necessary amount (as provided in Section 10.03) to pay or redeem such Bonds; or
(c) by delivering all of such Bonds to the Trustee for cancellation.
If the Authority also pays or causes to be paid all other sums payable hereunder by the Authority, then and in that case, at the election of the Authority (evidenced by a Written Certificate of the Authority, filed with the Trustee, signifying the intention of the Authority to discharge all such indebtedness and this Indenture), and notwithstanding that any of such Bonds shall not have been surrendered for payment, this Indenture and the pledge of Revenues and other assets made under this Indenture with respect to such Bonds and all covenants, agreements and other obligations of the Authority under this Indenture with respect to such Bonds shall cease, terminate, become void and be completely discharged and satisfied, subject to Section 10.02. In such event, upon the Written Request of the Authority, the Trustee shall execute and deliver to the Authority, at the expense of the Authority, all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over, transfer, assign or deliver to the Authority all moneys or securities or other property held by it under this Indenture which are not required for the payment or redemption of any of such Bonds not theretofore surrendered for such payment or redemption. The Trustee is entitled to conclusively rely on any such Written Certificate or Written Request and, in each case, is fully protected in relying thereon.
Section 10.02. Discharge of Liability on Bonds. Upon the deposit with the Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section 10.03) to pay or redeem any Outstanding Bonds (whether upon or prior to the maturity or the redemption date of such Bonds), provided that, if such Bonds are to be redeemed prior to maturity, notice of such redemption shall have been given as provided in Article IV or provision satisfactory to the Trustee shall have been made for the giving of such notice, then all liability of the Authority in respect of such Bonds shall cease, terminate and be completely discharged, and the Owners thereof shall thereafter be entitled only to payment out of such money or securities deposited with the Trustee as aforesaid for their payment, subject, however, to the provisions of Section 10.04.
Notwithstanding anything to the contrary in this Article X, in the event of defeasance of all Outstanding Bonds, such defeasance will not operate to discharge any of the following:
(a) the obligation of the Trustee to transfer and exchange Bonds hereunder, Attachment 4
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(b) the obligation of the Authority to pay or cause to be paid to the Owners of such Bonds, from the amounts so deposited with the Trustee, all sums due thereon, and
(c) the obligations of the Authority to compensate and indemnify the Trustee under Section 8.07.
The Authority may at any time surrender to the Trustee, for cancellation by Trustee, any Bonds previously issued and delivered, which the Authority may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired.
Section 10.03. Deposit of Money or Securities with Trustee. Whenever in this Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee or an escrow bank money or securities in the necessary amount to pay or redeem any Bonds, the money or securities so to be deposited or held may include money or securities held by the Trustee or an escrow bank in the funds and accounts established under this Indenture and shall be:
(a) lawful money of the United States of America in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in the case of Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemption shall have been given as provided in Article IV or provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount to be deposited or held shall be the principal amount of such Bonds and all unpaid interest thereon to the redemption date; or
(b) non-callable Federal Securities, the principal of and interest on which when due will, in the written opinion of an Independent Accountant filed with the City, the Authority and the Trustee, provide money sufficient to pay the principal of and interest on the Bonds to be paid or redeemed, as such principal and interest become due, provided that in the case of Bonds which are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in Article IV or provision satisfactory to the Trustee has been made for the giving of such notice; provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the terms of this Indenture or by Written Request of the Authority) to apply such money to the payment of such principal and interest with respect to such Bonds, and (ii) the Authority shall have delivered to the Trustee an opinion of Bond Counsel to the effect that such Bonds have been discharged in accordance with this Indenture (which opinion may rely upon and assume the accuracy of the Independent Accountant’s opinion referred to above). The Trustee shall be entitled to conclusively rely on such Written Request or opinion and shall be fully protected, in each case, in relying thereon.
Section 10.04. Unclaimed Funds. Notwithstanding any provisions of this Indenture, any moneys held by the Trustee in trust for the payment of the principal of, or interest on, any Bonds and remaining unclaimed for two years after the principal of all of the Bonds has become due and payable (whether at maturity or upon call for redemption or by acceleration as provided in this Indenture), if such moneys were so held at such date, or two years after the date of Attachment 4
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deposit of such moneys if deposited after said date when all of the Bonds became due and payable, shall be repaid to the Authority free from the trusts created by this Indenture, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the Authority as aforesaid, the Trustee shall (at the cost of the Authority) first mail to the Owners of Bonds which have not yet been paid, at the addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the Authority of the moneys held for the payment thereof.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of Authority Limited to Revenues. Notwithstanding anything in this Indenture or in the Bonds contained, the Authority is not required to advance any moneys derived from any source other than the Revenues and other assets pledged under this Indenture for any of the purposes in this Indenture mentioned, whether for the payment of the principal of or interest on the Bonds or for any other purpose of this Indenture. Nevertheless, the Authority may, but is not required to, advance for any of the purposes hereof any funds of the Authority which may be made available to it for such purposes.
Section 11.02. Limitation of Rights to Parties and Bond Owners. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any person other than the Authority, the Trustee, the City and the Owners of the Bonds, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Authority, the Trustee, the City and the Owners of the Bonds.
Section 11.03. Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with corporate trust industry standards to the extent practicable, and with due regard for the requirements of Section 6.05 and for the protection of the security of the Bonds and the rights of every Owner thereof. The Trustee may establish such funds and accounts as it deems necessary or appropriate to perform its obligations under this Indenture.
Section 11.04. Waiver of Notice; Requirement of Mailed Notice. Whenever in this Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Whenever in this Indenture any notice is required to be given by mail, such requirement may be satisfied by the deposit of such notice in the United States mail, postage prepaid, by first class mail.
Attachment 4
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Section 11.05. Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee, and the delivery to the Authority, of any Bonds, the Trustee may, in lieu of such cancellation and delivery, destroy such Bonds as may be allowed by law, and the Trustee shall deliver a certificate of such destruction to the Authority.
Section 11.06. Severability of Invalid Provisions. If any one or more of the provisions contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority hereby declares that it would have entered into this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable.
Section 11.07. Notices. All notices or communications to be given under this Indenture shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective either (a) 48 hours after deposit in the United States mail, postage prepaid, or (b) in the case of personal delivery to any person, upon actual receipt. The Authority, the City or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder.
If to the City: City of Ukiah
300 Seminary Avenue
Ukiah, CA 95482
Attention: City Manager
If to the Authority: Ukiah Public Financing Authority
300 Seminary Avenue
Ukiah, CA 95482
Attention: Executive Director
If to the Trustee: The Bank of New York Mellon Trust Company, N.A. _______________
San Francisco, California 94111
Attention: Global Corporate Trust
[If to the Insurer:]
[In each case in which notice or other communication refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the 2022 Bonds Insurer’s Deputy General Counsel- Public Finance at the same address, and shall be marked to indicate “URGENT MATERIAL ENCLOSED.”]
Attachment 4
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Section 11.08. Evidence of Rights of Bond Owners. Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Bond Owners may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Bond Owners in person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the holding by any person of Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and the Authority if made in the manner provided in this Section.
The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer.
The ownership of Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Authority in accordance therewith or reliance thereon.
Section 11.09. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are known by the Trustee to be owned or held by or for the account of the Authority or the City, or by any other obligor on the Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City or any other obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination.
Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City or any other obligor on the Bonds. In case of a dispute as to such right, the Trustee shall be entitled to rely upon the advice of counsel in any decision by Trustee and shall be fully protected in relying thereon.
Upon request, the Authority and the City shall specify to the Trustee those Bonds disqualified under this Section. The Trustee may conclusively rely upon such request.
Section 11.10. Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest or principal due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners of the Bonds entitled thereto, subject, however, to the provisions of Section 10.04 but without any liability for interest thereon.
Section 11.11. Waiver of Personal Liability. No member, officer, agent or employee of the Authority shall be individually or personally liable for the payment of the principal of or Attachment 4
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interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law or by this Indenture.
Section 11.12. Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture either the Authority, the City or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Authority, the City or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.
Section 11.13. Continuing Disclosure. The Authority hereby covenants and agrees to undertake and comply with a continuing disclosure undertaking as it may from time to time hereafter be created, amended or supplemented. Notwithstanding any other provision of the Indenture, failure of the Authority to comply with the requirements of a continuing disclosure undertaking, as it may from time to time hereafter be amended or supplemented, will not be considered an Event of Default and the Trustee will have no right to accelerate amounts due under the Indenture as a result thereof; provided, however, that the Trustee and the Owners of not less than 25% in principal amount of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Authority to comply with its obligations in this Section with respect to any such continuing disclosure undertaking.
Section 11.14. Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument.
Section 11.15. Payment on Non-Business Day. In the event any payment is required to be made hereunder on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and with the same effect as if made on such preceding nonBusiness Day.
Section 11.16. Governing Law. This Indenture shall be governed by and construed in accordance with the laws of the State of California.
Attachment 4
[Signature Page to Indenture of Trust dated as of March 1, 2022] IN WITNESS WHEREOF, the UKIAH PUBLIC FINANCING AUTHORITY has caused this Indenture to be signed in its name by its Executive Director and attested to by its Secretary, and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.
UKIAH PUBLIC FINANCING AUTHORITY
By:
Sage Sangiacomo
Executive Director
Attest:
Kristine Lawler
Secretary
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By:
Authorized Officer
Attachment 4
A-1
APPENDIX A
DEFINITIONS
“Additional Bonds” means bonds, notes or other obligations authorized by and at any time Outstanding under the Bond Law and this Indenture. “Authority” means the Ukiah Public Financing Authority, a joint powers authority duly organized and existing under the Joint Exercise of Powers Agreement, dated as of May 5, 2020, by and between the City and the Industrial Development Authority of the City of Ukiah, creating the Authority, together with any amendments thereof and supplements thereto, and under the laws of the State of California. “Authority Representative” means the Chair, Executive Director, Treasurer, Secretary, or any other person designated as an Authority Representative by a Written Certificate of the Authority signed by an Authority Representative and filed with the City and the Trustee.
“Bond Counsel” means (a) Jones Hall, A Professional Law Corporation, or (b) any other attorney or firm of attorneys appointed by or acceptable to the City or the Authority of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Tax Code.
“Bond Fund” means the fund by that name established and held by the Trustee under Section 5.01.
“Bond Law” means the provisions of Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code, as in effect on the Closing Date or as thereafter amended in accordance with its terms.
“Bond Year” means each twelve-month period extending from March 2 in one calendar year to March 1 of the succeeding calendar year, both dates inclusive; except that the first Bond Year commences on the Closing Date and extends to and including March 1, 2023.
“Bonds” means, collectively, (a) the 2022 Bonds and (b) any Additional Bonds. “Business Day” means a day (other than a Saturday or a Sunday) on which banks are not required or authorized to remain closed in the state in which the Office of the Trustee is located, and on which the Federal Reserve Bank system is not closed. “City” means the City of Ukiah, a municipal corporation duly organized and existing under the laws of the State of California.
“City Representative” means the Mayor, City Manager, Finance Director or any other person designated as a City Representative by a Written Certificate of the City signed by a City Representative and filed with the Authority and the Trustee.
Attachment 4
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“Closing Date” means ______, 2022, being the date of delivery of the Bonds to the Original Purchaser.
“Costs of Issuance” means, with respect to each series of Bonds, all items of expense directly or indirectly payable by or reimbursable to the City relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to:
printing expenses; rating agency fees; filing and recording fees; initial fees, expenses and charges of the Trustee and its counsel, including the Trustee’s first annual administrative fee; fees, charges and disbursements of attorneys, financial advisors, accounting firms, consultants and other professionals; premiums for bond insurance and reserve fund insurance; fees and charges for preparation, execution and safekeeping of the Bonds; and any other cost, charge or fee in connection with the original issuance of the Bonds.
“Costs of Issuance Fund” means the fund by that name established and held by the Trustee under Section 3.03.
“Depository” means (a) initially, DTC, and (b) any other Securities Depositories acting as Depository under Section 2.04.
“Depository System Participant” means any participant in the Depository’s bookentry only system. “DTC” means The Depository Trust Company, and its successors and assigns. “Event of Default” means any of the events specified in Section 7.01. “Excess Investment Earnings” means, with respect to the Bonds, an amount required to be rebated to the United States of America under Section 148(f) of the Tax Code due to investment of gross proceeds of the Bonds at a yield in excess of the yield on the Bonds.
“Federal Securities” means any of the following which at the time of investment are legal investments under the laws of the State of California for the funds purported to be invested therein: (a) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America); and (b) obligations of any agency, department or instrumentality of the United States of America the timely payment of principal of and interest on which are fully secured or guaranteed by the full faith and credit of the United States of America.
“Fiscal Year” means any twelve-month period extending from July 1 in one calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month period selected and designated by the City as its official fiscal year period.
“Indenture” means this Indenture of Trust, as originally executed or as it may from time to time be supplemented, modified or amended by any Supplemental Indenture under the provisions hereof.
Attachment 4
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“Interest Account” means the account by that name established and held by the Trustee in the Bond Fund under Section 5.02.
“Installment Payments” means all payments required to be paid by the City on any date under Section 4.4(a) of the Installment Sale Agreement (and any supplements to the Installment Sale Agreement related to additional Projects), including any amounts payable upon delinquent installments, and including any prepayment thereof under Section 7.2 of the Installment Sale Agreement (and any supplements to the Installment Sale Agreement related to additional Projects).
“Interest Payment Date” means March 1 and September 1 in each year, and continuing so long as any Bonds remain Outstanding. With respect to the 2022 Bonds, the first Interest Payment Date is September 1, 2022.
“Installment Sale Agreement” means the Installment Sale Agreement dated as of March 1, 2022, between the City and the Authority, together with any duly authorized and executed amendments or supplements thereto.
“Nominee” means (a) initially, Cede & Co. as nominee of DTC, and (b) any other nominee of the Depository designated under Section 2.04(a). “Office” means the corporate trust office of the Trustee in San Francisco, California, provided that for purposes of payment, prepayment, exchange, transfer, exchange, surrender and cancellation of Bonds, such term means the corporate trust office of the Trustee in San Francisco, California, or such other or additional offices as the Trustee may designate in writing to the Authority from time to time as the corporate trust office for purposes of this Indenture.
“Original Purchaser” means RBC Capital Markets, as the original purchaser of the Bonds upon their delivery by the Trustee on the Closing Date. “Outstanding”, when used as of any particular time with reference to Bonds, means all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under this Indenture except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to which all liability of the Authority has been discharged in accordance with Section 10.02; (c) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee under this Indenture; and (d) Bonds which are required to be disregarded and not deemed Outstanding under this Indenture. “Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein (The Trustee shall be entitled to rely upon any investment direction provided to it hereunder as a certification to the Trustee that such investment constitutes a Permitted Investment):
(a) Federal Securities;
(b) obligations of any federal agency which either (a) represent full faith and credit of the United States of America, or (b) are rated “AA” or better by S&P;
Attachment 4
A-4
(c) U.S. dollar denominated deposit accounts federal funds and banker’s acceptances with domestic commercial banks, which may include the Trustee, its parent holding company, if any, and their affiliates, which have a rating on their short term certificates of deposit on the date of purchase of “A” or better by S&P, maturing no more than 360 days after the date of purchase, provided that ratings on holding companies are not considered as the rating of the bank or which deposits are collateralized by Federal Securities for amounts in excess of FDIC insurance;
(d) commercial paper which is rated at the time of purchase in the single highest classification, “A” or better by S&P, and which matures not more than 270 calendar days after the date of purchase;
(e) investments in a money market mutual fund, including those of an affiliate of the Trustee, rated in the highest short-term rating category by S&P, including funds for which the Trustee, its parent holding company, if any, or any affiliates or subsidiaries of the Trustee receives and retains a fee for services provided to the fund, whether as a custodian, transfer agent, investment advisor or otherwise;
(f) investment agreements with financial institutions whose long-term general credit rating is A or better from S&P, by the terms of which the Trustee may withdraw funds if such rating falls below “A”; and (g) the Local Agency Investment Fund of the State of California, created under Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name.
“Principal Account” means the account by that name established and held by the Trustee in the Bond Fund under Section 5.02.
“Project Costs” means, with respect to the Projects, all costs of the acquisition, construction and installation thereof which are paid from moneys on deposit in the Project Fund, including but not limited to:
(a) all costs required to be paid to any person under the terms of any agreement for the purchase of the Projects or otherwise relating to the acquisition, construction and installation of the Projects; (b) obligations incurred for labor and materials in connection with the acquisition, construction and installation of the Projects; (c) the cost of performance or other bonds and any and all types of insurance that may be necessary or appropriate to have in effect in connection with the acquisition, construction and installation of the Projects;
Attachment 4
A-5
(d) preliminary costs of the Projects, including but not limited to design, environmental, engineering and architectural services, costs for testing, surveys, estimates, plans and specifications and preliminary investigations therefor, development fees and costs for supervising construction, as well as for the performance of all other duties required by or consequent to the proper acquisition, construction and installation of the Projects;
(e) costs of equipping and furnishing the Projects and costs of taking occupancy of the Projects;
(f) any sums required to reimburse the City for advances made for any of the above items or for any other costs incurred and for work done which are properly chargeable to the acquisition, construction and installation of the Projects;
(g) all financing costs incurred in connection with the acquisition, construction and installation of the Projects; and
(h) interest on the Bonds coming due during the period of construction of the Projects and for not more than six months thereafter. “Project Fund” means the fund by that name established and held by the Trustee under Section 3.04.
“Projects” means the property, equipment and facilities described more fully in Appendix B to the Installment Sale Agreement, as may be modified by the City in accordance with the provisions of Section 3.5 of the Installment Sale Agreement. “Qualified Reserve Fund Credit Instrument” means [(a) the 2022 Bonds Reserve Policy and (b) ]an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Trustee, provided that all of the following requirements are met: (i) the long-term credit rating of such bank or insurance company is rated in the top two categories (without regard to modifier) by S&P or Moody’s at the time of issuance; (ii) such letter of credit or surety bond has a term of at least 12 months; (iii) such letter of credit or surety bond has a stated amount at least equal to the portion of the reserve requirement being met by such instrument or with respect to which funds are proposed to be released pursuant to this Indenture; and (iv) the Trustee is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Bond Fund for the purpose of making payments required pursuant to this Indenture.
“Record Date” means, with respect to any Interest Payment Date, the 15th calendar day of the month preceding such Interest Payment Date, whether or not such day is a Business Day.
“Redemption Fund” means the fund by that name established and held by the Trustee under Section 5.05.
Attachment 4
A-6
“Registration Books” means the records maintained by the Trustee under Section
2.05 for the registration and transfer of ownership of the Bonds. “Reserve Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.05.
“Revenues” means: (a) all of the Installment Payments, and (b) all interest, profits or other income derived from the investment of amounts in any fund or account established under this Indenture, other than the Project Fund. “Securities Depositories” means DTC; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Authority designates in written notice filed with the Trustee.
“S&P” means S&P Global Ratings, its successors and assigns. “Supplemental Indenture” means any indenture hereafter duly authorized and entered into between the Authority and the Trustee, supplementing, modifying or amending this Indenture; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
“Tax Code” means the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under said Code.
“Term” means, when used with respect to the Installment Sale Agreement, the time during which the Installment Sale Agreement is in effect, as provided in Section 4.2 thereof.
“Term Bonds” means, as to the 2022 Bonds, the 2022 Bonds maturing on March 1, ____ and March 1, ____.
“Trustee” means The Bank of New York Mellon Trust Company, N.A., or any successor thereto acting as Trustee hereunder.
“2022 Bonds” means the $____________ initial principal amount of Ukiah Public Financing Authority Electric Revenue Bonds, Series 2022 authorized by and at any time Outstanding under the Bond Law and this Indenture.
[“2022 Bonds Insurance Policy” means the insurance policy (Policy No. _______) issued by the 2022 Bonds Insurer guaranteeing the scheduled payment of principal of and interest on the 2022 Bonds when due.]
[“2022 Bonds Insurer” means ________, or any successor thereto or assignee thereof.]
[“2022 Bonds Reserve Account” means the reserve account established for the 2022 Bonds in the Reserve Fund.]
Attachment 4
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[“2022 Bonds Reserve Policy” means Municipal Bond Debt Service Reserve Insurance Policy No. ________ provided by the 2022 Bonds Insurer with respect to the 2022 Bonds for deposit into the 2022 Reserve Account.]
[“2022 Bonds Reserve Requirement” means, with respect to any 2022 Bonds, $__________. This amount has been calculated as the lesser of (a) Maximum Annual Debt Service on the 2022 Bonds, (b) 125% of the average annual debt service on the 2022 Bonds, and (c) 10% of the principal amount of the 2022 Bonds, and is not subject to increase or decrease.]
“Written Certificate,” “Written Request” and “Written Requisition” of the Authority or the City mean, respectively, a written certificate, request or requisition signed in the name of the Authority by an Authority Representative or signed in the name of the City by a City Representative. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.
Attachment 4
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APPENDIX B
FORM OF BOND
No. R- ***$ ***
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
UKIAH PUBLIC FINANCING AUTHORITY
2022 ELECTRIC REVENUE BOND
INTEREST RATE: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:
______% March 1, ____ _________, 2022
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: *** DOLLARS***
The UKIAH PUBLIC FINANCING AUTHORITY, a joint powers agency duly organized and existing under laws of the State of California (the “Authority”), for value received, hereby promises to pay to the Registered Owner specified above or registered assigns (the “Registered Owner”), on the Maturity Date specified above (subject to any right of prior redemption hereinafter provided for), the Principal Amount specified above, in lawful money of the United States of America, and to pay interest thereon in like lawful money from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond unless (i) this Bond is authenticated on or before an Interest Payment Date and after the close of business on the 15th day of the month preceding such interest payment date, in which event it shall bear interest from such Interest Payment Date, or (ii) this Bond is authenticated on or before May 15, 2022, in which event it shall bear interest from the Original Issue Date specified above; provided, however, that if at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on this Bond, at the Interest Rate per annum specified above, payable semiannually on March 1 and September 1 in each year, commencing September 1, 2022 (the “Interest Payment Dates”), calculated on the basis of a 360-day year composed of twelve 30-day months.
Principal hereof is payable upon presentation and surrender hereof at the corporate trust office of The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), in San Francisco, California, or such other place as designated by the Trustee (the “Trust Office”). Interest hereon is payable by check of the Trustee mailed on the applicable Interest Payment Date to the Registered Owner hereof at the Attachment 4
B-2
Registered Owner’s address as it appears on the registration books of the Trustee as of the close of business on the fifteenth day of the month preceding each Interest Payment Date (a “Record Date”), or, upon written request filed with the Trustee as of such Record Date by a registered owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account in the United States designated by such registered owner in such written request.
This Bond is not a debt of the City of Ukiah (the “City”), the County of Mendocino, the State of California, or any of its political subdivisions, in contravention of any constitutional or statutory debt limitation or restriction, and neither the City, said County, said State, nor any of its political subdivisions, is liable hereon nor in any event shall this Bond be payable out of any funds or properties of the Authority other than the Net Revenues.
This Bond is one of a duly authorized issue of bonds of the Authority designated as the “Ukiah Public Financing Authority Electric Revenue Bonds, Series 2022 (the “Bonds”), in an aggregate principal amount of $____________, all of like tenor and date (except for such variation, if any, as may be required to designate varying numbers, maturities, interest rates or redemption provisions) and all issued under the provisions of Article 4 of Chapter 5, Division 7, Title 1 of the Government Code of the State of California, commencing with Section 6584 of said Code (the “Bond Law”), and under an Indenture of Trust dated as of March 1, 2022, between the Authority and the Trustee (the “Indenture”). Reference is hereby made to the Indenture (copies of which are on file at the office of the Authority) and all supplements thereto for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the security for the Bonds, and the rights thereunder of the owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Authority thereunder, to all of the provisions of which the Registered Owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds have been issued by the Authority to finance improvements to the system owned and operated by the City for the generation, transmission and distribution of electricity within the service area of the City (the “Electric System”). The Bonds are special obligations of the Authority which are payable from and secured by a charge and lien on the Revenues as defined in the Indenture, consisting principally of installment payments made by the City under an Installment Sale Agreement dated as of March 1, 2022, between the Authority and the City (the “Installment Sale Agreement”). As and to the extent set forth in the Indenture, all of the Revenues are exclusively and irrevocably pledged in accordance with the terms of the Indenture to the payment of the principal of and interest on the Bonds and any bonds issued on a parity with the Bonds.
The rights and obligations of the Authority and the owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Indenture, but no such modification or amendment shall extend the fixed maturity of any Bonds, or reduce the amount of principal thereof, or extend the time of payment, or change the method of computing the rate of interest thereon, or extend the time of payment of interest thereon, without the consent of the owner of each Bond so affected.
The Bonds maturing on or before March 1, ____ are not subject to optional redemption prior to their respective stated maturity dates. The Bonds maturing on or Attachment 4
B-3
after March 1, ____ are subject to redemption in whole, or in part at the written request of the Authority among maturities on such basis as the Authority may designate and by lot within a maturity, at the option of the Authority, on any date on or after March 1, ____, from any available source of funds, at a redemption price equal to 100% of the principal amount of the Bonds to be redeemed, plus accrued interest to the date of redemption, without premium.
The Bonds are subject to redemption as a whole or in part, on any date, from and to the extent of the proceeds of disposition of Electric System properties or the proceeds of hazard insurance not used to repair or rebuild the Electric System, which proceeds are required to be used for such purpose under the Installment Sale Agreement, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus interest accrued thereon to the date fixed for redemption, without premium.
The Bonds maturing on March 1, ____ and March 1, ____ (the “Term Bonds”) are subject to mandatory redemption in part by lot, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts and on March 1 in the respective years as set forth in the following tables; provided, however, that if some but not all of such Term Bonds have been redeemed under the redemption provisions described in the preceding paragraph, the total amount of all future sinking fund payments shall be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000 (as set forth in a schedule provided by the Authority to the Trustee).
Term Bonds Maturing March 1, ____
Sinking Fund
Redemption Date
(March 1)
Principal
Amount To Be
Redeemed
Term Bonds Maturing March 1, ____
Sinking Fund
Redemption Date
(March 1)
Principal
Amount To Be
Redeemed
As provided in the Indenture, notice of redemption will be mailed by the Trustee by first class mail not less than 20 nor more than 60 days prior to the redemption date to the respective owners of any Bonds designated for redemption at their addresses appearing on the registration books of the Trustee, but neither failure to receive such Attachment 4
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notice nor any defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption or the cessation of accrual of interest thereon from and after the date fixed for redemption.
If this Bond is called for redemption and payment is duly provided therefor as specified in the Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Trust Office, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon registration of such transfer, a new Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor. This Bond may be exchanged at the Trust Office for Bonds of the same tenor, aggregate principal amount, interest rate and maturity, of other authorized denominations.
The Authority and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary.
Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Authority or the Trustee for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.
It is hereby certified by the Authority that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the Bond Law and the laws of the State of California and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond is not entitled to any benefit under the Indenture or valid or obligatory for any purpose until the certificate of authentication hereon endorsed has been manually signed by the Trustee.
Attachment 4
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IN WITNESS WHEREOF, the Ukiah Public Financing Authority has caused this Bond to be executed in its name and on its behalf with the facsimile signature of its Executive Director and attested to by the facsimile signature of its Secretary, all as of the Original Issue Date specified above.
UKIAH PUBLIC FINANCING AUTHORITY
By:
Executive Director
Attest:
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.
Dated:
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By:
Authorized Signatory
Attachment 4
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STATEMENT OF INSURANCE
[To come, if applicable]
FORM OF ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto __________________________________ whose address and social security or other tax identifying number is _________________________________, the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) _______________________ ________________________________________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature guarantee shall be made by a
guarantor institution participating in the Securities
Transfer Agents Medallion Program or in such
other guarantee program acceptable to the
Trustee.
Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the face
of the within Bond in every particular without
alteration or enlargement or any change
whatsoever.
Attachment 4
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APPENDIX C
FORM OF WRITTEN REQUISITION
$____________
UKIAH PUBLIC FINANCING AUTHORITY
Electric Revenue Bonds, Series 2022
WRITTEN REQUISITION NO. __
FOR PROJECT FUND DISBURSEMENT
The undersigned hereby states and certifies that:
(i) I am the duly appointed, qualified and acting _________ of the City of Ukiah, a municipal corporation duly and validly existing under the laws of the State of California (the “City”), and as such, I am familiar with the facts herein certified and am authorized and qualified to certify the same;
(ii) I am a duly designated “City Representative” as such term is defined in that certain Indenture of Trust dated as of March 1, 2022 (the “Indenture”), between the Ukiah Public Financing Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”);
(iii) under Section 3.04 of the Indenture, the Trustee is hereby requested to disburse this date from the Project Fund established thereunder to the payees set forth on Exhibit A attached hereto and by this reference incorporated herein, the respective sum set forth opposite each such payee, for the purposes identified therein; (iv) each item to be paid pursuant to this Requisition has been properly incurred, is a proper charge against the Project Fund and has not been the basis of any previous disbursement;
(v) each amount to be disbursed herein is for payment of a Project Cost; and (vi) all payments shall be made by check or wire transfer in accordance with payment instructions contained in Exhibit A or in any related invoice, and the Trustee has no duty or obligation to authenticate such payment instructions or the authorization thereof.
Capitalized terms used herein and not otherwise defined have the meanings given them in the Indenture.
Dated: CITY OF UKIAH
By:
Name:
Title:
Attachment 4
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EXHIBIT A
PROJECT FUND DISBURSEMENTS
Payee Name and Address Purpose of Obligation Amount
Attachment 4
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APPENDIX D
PROVISIONS RELATING TO
2022 BONDS INSURANCE POLICY
Notwithstanding anything to the contrary in this Indenture, the following provisions shall govern with respect to the 2022 Bonds Insurance Policy; provided that the Authority and the City shall be obligated to pay amounts owed in connection with a draw on the 2022 Bonds Insurance Policy (including Insurer Advances and interest thereon) solely from the Revenues, with respect to the Authority, and Net Revenues of the Electric System, with respect to the City, and no other sources:
[To come, if applicable]
Attachment 4
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APPENDIX E
PROVISIONS RELATING TO
2022 BONDS RESERVE POLICY
Notwithstanding anything to the contrary in this Indenture, the following provisions shall govern with respect to the 2022 Bonds Reserve Policy; provided that the Authority shall be obligated to pay amounts owed in connection with a draw on the 2022 Bonds Reserve Policy solely from the Revenues and no other sources, and the City shall be obligated to pay amounts owed in connection with a draw on the 2022 Reserve Policy solely from the Net Revenues of the Electric System and no other sources:
[To come, if applicable]
Attachment 4
Jones Hall Draft of Feb. 8, 2022
PRELIMINARY OFFICIAL STATEMENT DATED MARCH _____, 2022
NEW ISSUE - FULL BOOK-ENTRY RATING[S]: S&P (Insured): “____” S&P (Underlying): “___”
See “RATING[S]”
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS.” $_____________*
UKIAH PUBLIC FINANCING AUTHORITY
Electric Revenue Bonds,
Series 2022
Dated: Date of Delivery Due: March 1, as shown on inside cover Authority for Issuance. The bonds captioned above (the “Bonds”) are being issued by the Ukiah Public Financing Authority (the “Authority”) under an Indenture of Trust, dated as of March 1, 2022 (the “Indenture”) between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) and pursuant a resolution adopted by the Board of Directors of the Authority.
Use of Proceeds. The Bonds are being issued to (i) finance improvements to the Electric System of the City, and (ii) pay certain costs incurred in connection with the issuance of the Bonds. See “FINANCING PLAN.” Security for the Bonds. The Bonds are payable from and secured by “Revenues” which generally consist of (a) semiannual installment payments (the “Installment Payment”) payable by the City of Ukiah (the “City”) to the Authority pursuant to an Installment Sale Agreement, dated as of March 1, 2022 (the “Installment Sale Agreement”), between the City and the Authority, and (b) all interest, profits or other income derived from the investment of amounts in any fund or account established under the Indenture (other than the Project Fund). The Installment Payments are payable from and secured by a pledge of Net Revenues of the Electric System of the City, where “Net Revenues” means the Gross Revenues of the Electric System less the Operation and Maintenance Costs of the Electric System. Currently, there are no other obligations of the City payable on a parity basis from the Net Revenues of the Electric System, although the City may in the future incur additional parity obligations. See “SECURITY FOR THE BONDS.” Bond Terms; Book-Entry Only. Interest on the Bonds will accrue at the rates (based on a 360-day year of twelve 30-day months) set forth on the inside cover page of this Official Statement, payable semiannually on March 1 and September 1 of each year, beginning on September 1, 2022. The Bonds will be issued in fully registered form in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”) under the book-entry-only system maintained by DTC. So long as Cede & Co. is the registered owner of the Bonds, principal of, premium, if any, and interest on the Bonds will be payable by the Trustee to DTC, which will in turn remit such payments to its participants for subsequent disbursement to beneficial owners of the Bonds, as more fully described herein. Purchasers of the Bonds will not receive physical certificates representing their interests in the Bonds. See “THE BONDS” and “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Reserve Fund. The Authority will establish a debt service reserve fund for the Bonds from proceeds of the Bonds, as described herein. See “SECURITY FOR THE BONDS.”
Redemption. The Bonds are subject to redemption prior to their stated maturities, as described herein. See “THE BONDS – Redemption Provisions.”
[Bond Insurance. The Authority has obtained a commitment for a municipal bond insurance policy for the Bonds and will decide whether to insure some, all, or none of the Bonds in connection with the pricing of the Bonds. If bond insurance is obtained, the insurer of the Bonds may also provide a debt service reserve fund insurance policy in the amount of the reserve requirement for the Bonds.]
NEITHER THE BONDS, NOR THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL OF OR INTEREST THEREON,
NOR THE OBLIGATION OF THE CITY TO MAKE THE INSTALLMENT PAYMENTS, CONSTITUTE A DEBT OR A LIABILITY OF THE
AUTHORITY, THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE BONDS ARE SECURED SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY.
MATURITY SCHEDULE
(see inside cover)
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE OF BONDS. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION WITH RESPECT TO THE PURCHASE OF THE BONDS.
The Bonds are offered when, as and if issued and delivered to and accepted by the Underwriter, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Certain legal matters will also be passed upon for the City and the Authority by Jones Hall as Disclosure Counsel; for the City and the Authority by the City Attorney; and for the Underwriter by Nixon Peabody LLP, Los Angeles, California. It is anticipated that the Bonds will be delivered in book-entry form through the facilities of DTC on or about __________, 2022.
The date of this Official Statement is _____________.
_____________________
* Preliminary; subject to change.
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
Attachment 5
MATURITY SCHEDULE*
$_________ Serial Bonds
(Base CUSIP† No. ______)
Maturity Date Principal Interest
(March 1) Amount* Rate Yield Price CUSIP†
$___________ ____% Term Bonds due March 1, 20___; Price: _____%; Yield: ______; CUSIP†: _______
* Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright© 2022 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database.
CUSIP® numbers are provided for convenience of reference only. None of the City, the Authority nor the Underwriter takes any responsibility for the accuracy of such numbers.
Attachment 5
UKIAH PUBLIC FINANCING AUTHORITY
Ukiah, California
_______________________
AUTHORITY BOARD / CITY COUNCIL
Jim Brown, Chair/Mayor
Josefina Dueñas, Vice Chair/Vice Mayor
Douglas Crane, Authority Member/Councilmember
Mari Rodin, Authority Member/Councilmember
Juan Orozco, Authority Member/Councilmember
CITY / AUTHORITY STAFF
Sage Sangiacomo, City Manager/Executive Director
Allen Carter, City Treasurer
Daniel Buffalo, Finance Director/Authority Treasurer
Mel Grandi, P.E., Electric Utility Director
Tim Eriksen, Public Works Director/City Engineer
Kristine Lawler, City Clerk/Secretary
David Rapport, Esq., City Attorney/Authority Counsel
PROFESSIONAL SERVICES
Bond Counsel and Disclosure Counsel
Jones Hall, A Professional Law Corporation
San Francisco, California
Municipal Advisor
NHA Advisors, LLC
San Rafael, California
Trustee
The Bank of New York Mellon Trust Company, N.A.
Los Angeles, California
Attachment 5
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized.
This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.
This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the City or any other parties described in this Official Statement, or in the condition of the security for the Bonds since the date of this Official Statement.
This Official Statement is submitted in connection with the sale of the Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract with the purchasers of the Bonds. Prospective investors should not construe the contents of this Official Statement as legal, tax or investment advice.
The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness.
The Underwriter has submitted the following statement for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
All references to and summaries of the Indenture or other documents contained in this Official Statement are subject to the provisions of those documents and do not purport to be complete statements of those documents.
The Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934.
Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. No assurance is given that actual results will meet the forecasts of the City in any way, regardless of the level of optimism communicated in the information. The City is not obligated to issue any updates or revisions to the forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the captions “THE ELECTRIC SYSTEM,” “FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY” and “BOND OWNERS’ RISKS.” The references to internet websites in this Official Statement are shown for reference and convenience only; unless explicitly stated to the contrary, the information contained within the websites and any links contained within those websites are not incorporated herein by reference and do not constitute part of this Official Statement.
Attachment 5
i
TABLE OF CONTENTS
Page Page
INTRODUCTION .......................................1
FINANCING PLAN.....................................4
The Project......................................................4 Estimated Sources and Uses .........................4
DEBT SERVICE SCHEDULE ....................5
THE BONDS..............................................6 Authority for Issuance .....................................6 General Provisions..........................................6 Redemption* ...................................................7 SECURITY FOR THE BONDS.................10
General .........................................................10 Revenues; Pledge of Revenues ...................10
Assignment to Trustee..................................10 Deposit of Revenues in Bond Fund..............11
Allocation of Revenues ................................. 11 Installment Payments....................................11 Pledge of Net Revenues...............................12 Debt Service Reserve Fund..........................14
Rate Covenant ..............................................15 Rate Stabilization Fund................................. 15 Senior Lien Debt ...........................................15 Conditions to Issue Additional Parity Debt ...16
THE AUTHORITY....................................17
THE CITY ................................................17 THE ELECTRIC SYSTEM........................18
History and Background................................18 Organization and Employees........................18
Sources of Power Supply .............................19 Regional Transmission Facilities ..................26
Electric Distribution System ..........................27 Service Area, Customer Base and Demand . 27
Electric Rates................................................29 Energy Efficiency and Conservation.............30
Risk Management; Insurance .......................31
Wildfire Mitigation Measures.........................31 Capital Improvement Plan ............................31
ELECTRIC SYSTEM FINANCIAL
INFORMATION........................................32
Significant Accounting Policies .....................32 Audited Financial Statements .......................32
Financial Policies ..........................................32 Retirement Benefits ......................................33 No OPEB ......................................................34 Outstanding Long-Term Obligations ............ 34
Revenues, Expenses and Debt Service
Coverage ...................................................... 35
RATE REGULATION
FACTORS AFFECTING THE ELECTRIC
UTILITY INDUSTRY
Rates and Charges for Service .................... 37
Electric Market Deregulation ........................ 37 State Legislation ........................................... 38 Energy Policy Acts........................................ 42 Federal Cybersecurity Policy........................ 43 Wildfire Mitigation Measures ........................ 43 Other Environmental Issues ......................... 44 PG&E Bankruptcy......................................... 46 Future State and Federal Legislation ........... 47
CONSTITUTIONAL LIMITATIONS ON
TAXES AND APPROPRIATIONS ............48
State Constitution Articles XIIIA and XIIIB.... 48
State Constitution Articles XIIIC and XIIID ... 48
Future Initiatives ........................................... 49 BOND OWNERS’ RISKS .........................49
Limited Obligations ....................................... 50 Limitations on Remedies and Limited
Recourse on Default..................................... 50 Regulatory Risks; Change in Law ................ 51
Environmental Risks..................................... 51 COVID-19 Pandemic .................................... 52 Risk of Inverse Condemnation Actions ........ 53
Cybersecurity................................................ 53 IRS Audit of Tax-Exempt Bond Issues ......... 53
Secondary Market ........................................ 53 [Bond Insurance Risk Factors] ..................... 54
Other Risks to the Electric System............... 55
TAX MATTERS........................................56
CERTAIN LEGAL MATTERS...................58
LITIGATION .............................................58 RATING[S] ...............................................58 CONTINUING DISCLOSURE ..................58
MUNICIPAL ADVISOR.............................59
UNDERWRITING.....................................59
PROFESSIONAL SERVICES ..................60
EXECUTION ............................................60 APPENDIX A: SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
APPENDIX B: AUDITED FINANCIAL STATEMENTS OF THE CITY FOR FISCAL YEAR 2020-21 APPENDIX C: FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX D: GENERAL INFORMATION REGARDING THE CITY OF UKIAH AND COUNTY OF MENDOCINO APPENDIX E: FORM OF OPINION OF BOND COUNSEL
APPENDIX F: DTC AND THE BOOK-ENTRY ONLY SYSTEM
Attachment 5
2 [Insert Regional Location Map]
Attachment 5
1 OFFICIAL STATEMENT
$_____________*
UKIAH PUBLIC FINANCING AUTHORITY
Electric Revenue Bonds,
Series 2022
INTRODUCTION
This introduction contains only a brief summary of certain terms of the Bonds, and a brief overview of the contents of this Official Statement. This summary does not purport to be comprehensive or definitive. All references in this Official Statement to documents are qualified in their entirety by reference to such documents, and references to the Bonds are qualified in their entirety by reference to the form of Bond included in the Indenture. Capitalized terms used but not defined herein have the meanings set forth in the Indenture. See also “APPENDIX A – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”
Authority for Issuance. The Ukiah Public Financing Authority (the “Authority”) is issuing the bonds captioned above (the “Bonds”) under the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 (commencing with Section 6584) of Chapter 5, Division 7, Title 1 of the California Government Code (the “Bond Law”), a Resolution adopted by the Board of Directors of the Authority on [February 16, 2022] (the “Authority Resolution”), a Resolution adopted by the City Council of the City of Ukiah (the “City”) on [February 16, 2022] (the “City Resolution”), and an Indenture of Trust, dated as of March 1, 2022 (the “Indenture”), between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).
Purpose of the Bonds. The Bonds are being issued to (i) finance improvements to the Electric System of the City, and (ii) pay certain costs incurred in connection with the issuance of the Bonds. See “FINANCING PLAN.”
The Authority and the City. The Authority is a joint powers authority established pursuant to that certain Joint Exercise of Powers Agreement dated May 5, 2020. The Authority is governed by a five-member Board of Directors (the “Board”), which consists of the members of the City Council of the City. The Authority was created for the purpose of assisting the financing or refinancing of certain public capital facilities within the City. Under the Bond Law, the Authority has the power to lease real property in furtherance of the acquisition of public improvements necessary or convenient for the operation of the City, or to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale. See “THE AUTHORITY” herein.
The City encompasses approximately five square miles and is located in Mendocino County (the “County”), approximately 100 miles north of San Francisco in the northern coastal __________
* Preliminary, subject to change.
Attachment 5
2 region of the State on U.S. Highway 101. The area is centrally located between the San Francisco Bay area, Eureka and Sacramento. The City was incorporated in 1876 and is a general law city operating under a City Council/City Manager form of government. The City has an estimated population of approximately 16,061 people. For additional background, and certain demographic and economic information regarding the City and the County, see APPENDIX D.
Bond Terms; Book-Entry Only. The Bonds will bear interest at the rates shown on the inside cover page, payable semiannually on March 1 and September 1 of each year, commencing on September 1, 2022. The Bonds will be issued in fully registered form, registered in the name of The Depository Trust Company (“DTC”), or its nominee, which will act as securities depository for the Bonds. Purchasers of the Bonds will not receive certificates representing the Bonds that are purchased. See “THE BONDS – General Provisions” and “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Security for the Bonds. The Bonds are payable from and secured by “Revenues” which generally consist of (i) semiannual installment payments (the “Installment Payment”) payable by the City to the Authority pursuant to an Installment Sale Agreement, dated as of March 1, 2022 (the “Installment Sale Agreement”), between the City and the Authority, and (ii) all interest, profits or other income derived from the investment of amounts in any fund or account established under the Indenture (other than the Project Fund). The Installment Payments are payable from and secured by a pledge of Net Revenues of the Electric System of the City (described herein), where “Net Revenues” means the Gross Revenues of the Electric System less the Operation and Maintenance Costs of the Electric System.
Pursuant to the provisions of the Indenture, the Authority will transfer in trust and assign to the Trustee, for the benefit of the Owners of the Bonds, all of its rights in the Installment Sale Agreement (except for certain of the Authority’s rights under the Installment Sale Agreement), including but not limited to all of the Authority’s rights to receive and collect all of the Installment Payments.
Currently, there are no other obligations of the City payable on a parity basis from the Net Revenues of the Electric System, although the City may in the future incur additional parity obligations. See “SECURITY FOR THE BONDS.”
Redemption. The Bonds are subject to redemption prior to their stated maturity dates.
See “THE BONDS – Redemption.”
[Debt Service Reserve Fund. A debt service reserve fund is required to be maintained under the Indenture in an amount equal to the 2022 Bonds Reserve Requirement (defined herein), and will be fully funded upon issuance of the Bonds [via deposit of a reserve fund insurance policy]. See “SECURITY FOR THE BONDS – Debt Service Reserve Fund.”] [Bond Insurance. The Authority has obtained a commitment for a municipal bond insurance policy for the Bonds and will decide whether to insure some, all, or none of the Bonds in connection with the pricing of the Bonds. If bond insurance is obtained, the insurer of the Bonds may also provide a debt service reserve fund insurance policy in the amount of the reserve requirement for the Bonds.]
Rate Covenant. Under the Installment Sale Agreement, the City covenants that it will prescribe, revise and collect rates, fees and charges for the services and facilities of the Electric System which, after allowances for contingencies and error in the estimates, shall produce Gross Attachment 5
3 Revenues sufficient in each Fiscal Year to provide Net Revenues equal to at least [1.20] times the Debt Service coming due and payable during such Fiscal Year. See “SECURITY FOR THE BONDS – Rate Covenant.”
Limited Obligation. The Bonds are special, limited obligations of the Authority payable solely from and secured by the Revenues and amounts held in certain funds and accounts established under the Indenture. The issuance of the Bonds will not directly, indirectly or contingently obligate the City or the Authority to levy or pledge any form of taxation or to make any appropriation for their payment. The Bonds are not a debt of the Authority, the City or of the State of California or of any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction.
Risks of Investment. The purchase of the Bonds involves certain risks. For a general discussion of certain special factors and considerations relevant to an investment in the Bonds, in addition to the other matters set forth herein, see “BOND OWNERS’ RISKS” herein. The Bonds are not appropriate investments for investors who are not able to bear the associated risks.
Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision.
NEITHER THE BONDS, THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL
OF OR INTEREST THEREON, NOR THE OBLIGATION OF THE CITY TO MAKE THE
INSTALLMENT PAYMENTS, CONSTITUTE A DEBT OR A LIABILITY OF THE AUTHORITY,
THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING
OF ANY CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE BONDS ARE SECURED SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY.
Attachment 5
4 FINANCING PLAN
The Project
The net proceeds of the Bonds are being used to finance approximately $10.0 million of improvements to the Electric System, which are anticipated to consist of items included in the City’s current 5-year capital improvement plan (CIP) for the Electric System. For additional details, see “THE ELECTRIC SYSTEM – Capital Improvement Plan.” Estimated Sources and Uses
The table below sets forth the estimated sources and uses of funds with respect to the Bonds.
Sources:
Principal Amount of Bonds $
Plus/less [net] Original Issue Premium/Discount ___________ TOTAL SOURCES $
Uses:
Deposit to Project Fund $
Deposit to Reserve Fund(1)
Costs of Issuance(2) ___________
TOTAL USES $
(1) Represents the initial Reserve Requirement for the Bonds. (2) Includes cost of preparation of documents, fees of rating agencies, initial fees of the Trustee, legal fees, fees and disbursements of consultants and professionals, Underwriter’s discount and all other costs related to the issuance of the Bonds[, including premiums for bond insurance and reserve fund insurance policies].
Attachment 5