HomeMy WebLinkAbout12 AUTHORIZE THE ISSUANCE AND SALE OF WATER REVENUE BONDSDocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
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• Agenda Item
Reviewed: °S
AGENDA REPORT City Manager _
Finance Director
MEETING DATE: FEBRUARY 6, 2024
TO: NICOLE BERNARD, ACTING CITY MANAGER
FROM: JENNIFER KING, FINANCE DIRECTOR/CITY TREASURER
SUBJECT: RESOLUTIONS AUTHORIZING THE ISSUANCE AND SALE OF WATER
REVENUE BONDS TO FINANCE IMPROVEMENTS TO THE CITY OF
TUSTIN'S MUNICIPAL WATER ENTERPRISE AND APPROVING
RELATED DOCUMENTS AND OFFICIAL ACTIONS; AND A
RESOLUTION APPROVING THE FORM AND AUTHORIZING THE
EXECUTION OF FIRST AMENDMENTS TO THE INDENTURE OF
TRUSTS DATED AS OF SEPTEMBER 1, 2016 AND FEBRUARY 1, 2020
SUMMARY:
Approval by the City of Tustin ("City") and by the Tustin Public Financing Authority
("Authority") are requested to authorize the issuance of the Tustin Public Financing
Authority, Water Revenue Bonds, Series 2024 (Subordinate Lien) (the "2024 Bonds").
Approval by the City is requested to amend the Indenture of Trusts, dated as of
September 1, 2016, and February 1, 2020, by and between the City and the Bank of New
York Mellon Trust Company, N.A.
RECOMMENDATION:
It is recommended that:
The City Council adopt City Council Resolution 24-07 entitled:
RESOLUTION APPROVING PROCEEDINGS BY THE TUSTIN PUBLIC
FINANCING AUTHORITY FOR THE ISSUANCE AND SALE OF ITS TUSTIN
PUBLIC FINANCING AUTHORITY (ORANGE COUNTY, CALIFORNIA) WATER
REVENUE BONDS TO FINANCE IMPROVEMENTS TO THE CITY'S MUNICIPAL
WATER SYSTEM APPROVING THE FORM AND AUTHORIZING EXECUTION
OF RELATED DOCUMENTS AND APPROVING RELATED OFFICIAL ACTIONS
2. The Board of Directors adopt Resolution 24-01 entitled:
RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF WATER
REVENUE BONDS TO FINANCE IMPROVEMENTS TO THE CITY OF TUSTIN'S
MUNICIPAL WATER ENTERPRISE AND APPROVING RELATED DOCUMENTS
AND OFFICIAL ACTIONS
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3. The City Council adopt City Council resolution 24-08 entitled:
RESOLUTION APPROVING THE FORM AND AUTHORIZING THE EXECUTION
OF A FIRST AMENDMENT TO THE INDENTURE OF TRUST, DATED AS OF
SEPTEMBER 1, 2016, BY AND BETWEEN THE CITY AND THE BANK OF NEW
YORK MELLON TRUST COMPANY, N.A., RELATING TO THE $21,515,000 CITY
OF TUSTIN (ORANGE COUNTY, CALIFORNIA) 2016 WATER REFUNDING
REVENUE BONDS, AND A FIRST AMENDMENT TO THE INDENTURE OF
TRUST, DATED AS OF FEBRUARY 1, 2020, BY AND BETWEEN THE CITY AND
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., RELATING TO
THE $14,910,000 CITY OF TUSTIN (ORANGE COUNTY, CALIFORNIA)
TAXABLE WATER REFUNDING REVENUE BONDS, SERIES 2020
CORRELATION TO THE STRATEGIC PLAN:
Correlates with the City's Strategic Plan Goal C: Financial Strength, Item 5, provide
adequate financial resources for a well -maintained and reliable water system.
FISCAL IMPACT:
The 2024 Bonds will have no financial impact on the City's General Fund, as all payments
of principal and interest on the Bonds will be paid solely from the net revenues of the
Water Enterprise Fund. The annual debt service payments on the 2024 Bonds will be
approximately $325,825 per year for a term of 20 years.
BACKGROUND:
The City provides water to more than 66,000 customers, using both groundwater wells
and imported water from the Metropolitan Water District of Southern California. In
handling the operations of the Water System, the City maintains a separate business
enterprise (the "Water Enterprise") from the General Fund that collects revenues primarily
through user fees (rates and charges) to cover such utility's revenue requirements,
including operating expenses, maintenance costs, debt service payments, capital
improvements and reserves.
In 2016, the City issued its 2016 Water Refunding Revenue Bonds (the "2016 Bonds") in
the original par amount of $21,515,000, all of which remains outstanding. The 2016
Bonds were issued to refund, on an advance basis, the Authority's outstanding Water
Revenue Bonds, Series 2011A, which were issued to finance improvements and
renovations of the water enterprise. The 2016 Bonds mature in 2041.
In 2020, the City issued its Taxable Water Refunding Revenue Bonds, Series 2020 (the
"2020 Bonds") in the original par amount of $14,910,000, of which $14,335,000 remains
outstanding. The 2020 Bonds were issued to pay and prepay the City's remaining
installment payment obligations under an Installment Sale Agreement and thereafter
refund the outstanding Tustin Public Financing Authority's 2013 Water Revenue Bonds,
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the proceeds of which were issued to finance improvements and renovations of the City's
municipal water system. These 2020 Bonds mature in 2043.
The City intends to deliver its 2024 Bonds in one tax-exempt series of approximately
$4.125 million to fund capital improvements for the City's Water System and pay the costs
of issuance. The City's obligation to make debt service payments on the 2024 Bonds will
be payable from a pledge of net revenues of the Water System subordinate to the 2016
Bonds and 2020 Bonds.
Proceeds from the 2024 Bonds will fund a portion of the projects for the Beneta Well, the
Well Rehab Program, and the Lyttle Reservoir (the "Projects"). The Beneta Well project
involves the design and construction of an additional well at the existing Beneta Well site,
with a groundwater production capacity of 1,000 gallons per minute. The Well Rehab
Program focuses on the routine rehabilitation of specific well facilities, including the
Vandenberg Well in FY 2023-24, Main Street #3 in FY 2024-25, and the Pasadena Well
in FY 2025-26. The Lyttle Reservoir project includes the evaluation of the tank's condition,
implementation of safety improvements, as well as interior and exterior recoating. A
qualified contractor will inspect the tank to determine necessary repairs, maintenance, or
improvements.
On December 5, 2023, the City Council approved water rate adjustments for the fiscal
years 2023-24 to 2027-28. These increases will take effect annually on January 1, from
2024 to 2028. These adjustments are crucial for funding infrastructure projects as
described above and preventing disruptions in service by maintaining the reliability and
efficiency of the water system.
ANALYSIS:
In order to secure the funds required to construct the Projects, a Request for Proposal
was sent out to 12 banks on January 9, 2024, and three bids were received on January
18, 2024. A summary of the bids received is provided below:
Bank • Details Notes
Capital One For 10-year call - 15 Year term: 4.73% No charge for lender counsel.
20 Year term: 4.82%
For non -callable - 15 Year term: 4.65%
20 Year term: 4.74%
No Debt Service Reserve Funding (DSRF)
Yes to Default Rate
Zions 15-year: 4.73% for 10-years and variable on Interest rates fixed for 30 days
Bancorporation 4/1/2034 and annually thereafter following approval.
20-year: 4.86% for 10 years and variable on Callable on any date with 30 days'
4/1/2034 and annually thereafter prior written notice
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Bank i • Details Notes
JP Morgan For 10-year call - 15 Year term: 4.56% Rate is only indicative and subject
20 Year term: 4.94% to market fluctuation. Fixed rate is
subject to rate lock letter. Provision
For non -callable - 15 Year term: 4.42% for a higher rate if a taxable event
20 Year term: 4.74% occurs.
No Debt Service Reserve Funding (DSRF) $10,000 for Purchaser Counsel
Yes to Default Rate
Based upon an evaluation of the bids and the specific terms requested by the bidders,
staff and the City's Finance Team are recommending the selection of Capital One Public
Funding, LLC ("Capital One") as the City's Private Placement Provider at a rate of 4.82%
for a 20-year term.
The resolutions being presented for approval authorizes the issuance of the 2024 Bonds,
approves the form, and authorizes execution of the related financing documents. The
resolutions contain parameters that limits the total principal amount of the 2024 Bonds to
not more than $4.5 million, that the average interest rate on the 2024 Bonds is not higher
than 4.82% and that the final maturity date of the 2024 Bonds is not later than April 1,
2044. The financing documents will be completed during the closing process once the
final terms of the agreements are determined. The forms of the documents to be approved
are:
1. Indenture of Trust (Attachment 4) — The Indenture of Trust is a contract between
the Authority and The Bank of New York Mellon Trust Company, acting as Trustee.
The Indenture specifies the dated date, maturity date or dates, interest rate or
rates, interest payment dates, denominations, forms, registration privileges,
manner of execution, place or places of payment, terms of redemption, and other
terms of the 2024 Bonds.
2. Installment Sale Agreement (Attachment 5) — The Installment Sale Agreement
is a contract between the Authority and the City. In order to provide financing for
the Projects, the Authority and the City wish to enter into this agreement under
which the Authority will provide funds to acquire, construct and/or improve the
Projects and sell the Projects to the City in consideration of the agreement by the
City to pay the purchase price thereof in semiannual installment payments. The
obligation of the City to pay installment payments under this agreement will be
secured by a pledge of and lien on the net revenues of the Water System
subordinate to the outstanding 2020 Bonds and 2016 Bonds.
3. Commitment Agreement (Attachment 6) — The Commitment Agreement is a
contract between the City, the Authority, and Capital One, whereby the City and
the Authority agree to sell the 2024 Bonds to Capital One and Capital One agrees
to buy the 2024 Bonds from the City and the Authority for its own account.
4. Placement Agent Agreement (Attachment 7) -The Placement Agent Agreement
is a contract between the City and Stifel, Nicolaus & Company, Inc., acting as
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Placement Agent. The Placement Agent will manage the lender request for the
proposal solicitation process and will coordinate and manage all communication
with lenders.
5. First Amendment to 2016 Indenture of Trust (Attachment 8) and First
Amendment to 2020 Indenture of Trust (Attachment 9) — The Amendments of
Indenture of Trusts in connection with the outstanding 2016 Bonds and 2020
Bonds modifies the existing contracts between the Authority and the Trustee to
make provisions and allow the 2024 Bonds to be issued on subordinate lien level.
Pursuant to the requirements of Section 5852.1 of the California Government Code
("Code"), set forth below are good faith estimates provided by the Municipal Advisor,
based on market conditions as of January 22, 2024. The following estimates and the final
costs will depend on market conditions and can be expected to vary from the estimated
amounts set forth below.
• The true interest cost of the 2024 Bonds is estimated at 4.82% calculated as
provided in Section 5852.1(a)(1)(A) of the Code.
• The finance charge of the 2024 Bonds, including all fees and charges paid to third
parties, is estimated at $125,000.
• Proceeds of the 2024 Bonds received by the City and the Authority for the sale of
the 2024 Bonds, less the finance charge, is equal to $4,000,000.
• The total payment amount calculated as provided in Section 5852.1(a)(1)(D) of the
Code is estimated at $6,559,029.71.
NEXT STEPS:
After the adoption of the resolutions by the City and the Authority, staff and the City's
Finance Team will complete the required actions to close the financing on February 14,
2024, at which time the funds will be available.
The resolutions being presented for approval authorizes the issuance of the 2024 Bonds
to finance the necessary projects of the Water System
, ,4 fz�
Jennifer King
Finance Director/City Treasurer
Attachments:
1. City Resolution No. 24-07
2. Authority Resolution No. 24-01
3. City Resolution No. 24-08
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4. Indenture of Trust
5. Installment Sale Agreement
6. Commitment Agreement
7. Placement Agent Agreement
8. First Amendment to 2016 Indenture
9. First Amendment to 2020 Indenture
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RESOLUTION NO. 24-07
RESOLUTION APPROVING PROCEEDINGS BY THE TUSTIN PUBLIC
FINANCING AUTHORITY FOR THE ISSUANCE AND SALE OF ITS TUSTIN
PUBLIC FINANCING AUTHORITY (ORANGE COUNTY, CALIFORNIA)
WATER REVENUE BONDS TO FINANCE IMPROVEMENTS TO THE CITY'S
MUNICIPAL WATER SYSTEM APPROVING THE FORM AND AUTHORIZING
EXECUTION OF RELATED DOCUMENTS AND APPROVING RELATED
OFFICIAL ACTIONS
WHEREAS, the City of Tustin (the "City") and the former Tustin Community
Redevelopment Agency (the "Agency") have heretofore entered into a joint exercise of
powers agreement (the "Agreement") establishing the Tustin Public Financing Authority
(the "Authority") for the purpose, among others, of issuing its bonds to be used to provide
financial assistance to the City;
WHEREAS, the Successor Agency to the Tustin Community Redevelopment
Agency succeeded to the Agency and the Agreement remains in effect so long as
obligations of Agency remain outstanding, ending in 2040;
WHEREAS, the City proposes to finance the acquisition and construction of certain
improvements and facilities (the "2024 Project") to the City's municipal water enterprise
(the "Enterprise");
WHEREAS, for the purpose of raising funds necessary to provide such financial
assistance to the City, the Authority proposes to authorize the issuance of its revenue
bonds under the provisions of Article 4 (commencing with section 6584) of Chapter 5 of
Division 7 of Title 1 of the California Government Code (the "Act"), designated as the
Tustin Public Financing Authority Water Revenue Bonds, Series 2024 (Subordinate Lien)
(the "Bonds"), all pursuant to and secured by an indenture of trust (the "Indenture"), by
and between the Authority and The Bank of New York Mellon Trust Company, N.A., as
trustee (the "Trustee");
WHEREAS, in order to provide for the repayment of the Bonds, the Authority will
sell the 2024 Project to the City pursuant to an installment sale agreement (the
"Installment Sale Agreement"), under which the City will agree to make installment
payments to the Authority payable from the net revenues of the Enterprise which will be
calculated to be sufficient, in time and amount, to enable the Authority to pay the principal
of and interest and premium (if any) on the Bonds when due and payable;
WHEREAS, the City's obligations under the Installment Sale Agreement will be
subordinate to the City's obligations with respect to the payment of debt service on its
City of Tustin (Orange County, California) 2016 Water Refunding Revenue Bonds and its
Resolution 24-07
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City of Tustin (Orange County, California) Taxable Water Refunding Revenue Bonds,
Series 2020;
WHEREAS, Capital One Public Funding, LLC (the "Purchaser") has proposed to
extend credit to the Authority and the City by purchasing the Bonds and has presented to
the Authority and the City a form of commitment agreement for the Bonds, to be entered
into among the Authority, the City and the Purchaser (the "Commitment Agreement");
WHEREAS, the City Council desires to make a finding of significant public benefit
pursuant to section 6586.5(a)(2) of the California Government Code and to approve of
the financing and the transactions contemplated by the Bonds;
WHEREAS, the City Council approves all of said transactions in furtherance of the
public purposes of the City, and wishes at this time to take its action approving the
issuance and sale of the Bonds and the financing to be accomplished thereby;
WHEREAS, the City Council has held a public hearing as required by section
6586.5 of the California Government Code;
WHEREAS, issuance of the Bonds is in conformity with the City's Debt Policy; and
WHEREAS, pursuant to section 5852.1 of the California Government Code, which
became effective on January 1, 2018 by the enactment of Senate Bill 450, certain
information relating to the Bonds is set forth in Exhibit A attached to this Resolution, and
such information is hereby disclosed and made public;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OIF TUSTIN DOES
HEREBY RESOLVE, DETERMINE, AND ORDER AS FOLLOWS:
Section 1. Recitals True and Correct. The City Council hereby finds and
determines that the foregoing recitals are true and correct.
Section 2. Findings. The finding being made is that significant public benefits will
arise from the issuance of the Bonds to fund the property acquisition and other costs,
including demonstrable savings in effective interest rate, bond preparation and bond
issuance costs achieved by consolidating the assets being leased.
Section I. Approval of Bonds. The City Council hereby approves the issuance of
the Bonds by the Authority for the purpose, among others, of providing funds to finance
the 2024 Project, so long as (a) the principal amount of Bonds does not exceed
$4,125,000, (b) so long as the final maturity date of the Bonds is not later than April 1,
2044, and (c) the average interest rate on the Bonds is not higher than 4.820%.
Resolution 24-07
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Section 2. Approval of Installment Sale Agreement. The City Council hereby
approves the Installment Sale Agreement in the form on file with the City Clerk, together
with such additions thereto and changes therein as the Mayor, the City Manager or the
Finance Director (the "Designated Officers") shall deem necessary, desirable or
appropriate, the execution of which by a Designated Officer shall be conclusive evidence
of the approval of any such additions and changes. The Designated Officers, each acting
alone, are hereby authorized and directed to execute the final form of the Installment Sale
Agreement for and in the name and on behalf of the City. The City Council hereby
authorizes the delivery and performance of the Installment Sale Agreement.
Section 3. Approval of Placement Agent Agreement. The City Council hereby
approves the a placement agent agreement, by and among the Authority, the City and
Stifel, Nicolaus & Company, Incorporated, as placement agent (the "Placement Agent
Agreement"), in the form on file with the City Clerk, together with such additions thereto
and changes therein as the Designated Officers shall deem necessary, desirable or
appropriate, the execution of which by a Designated Officer shall be conclusive evidence
of the approval of any such additions and changes. The Designated Officers, each acting
alone, are hereby authorized and directed to execute the final form of the Placement
Agent Agreement for and in the name and on behalf of the City. The City Council hereby
authorizes the delivery and performance of the Placement Agent Agreement.
Section 4. Sale of Bonds. The City Council hereby approves the sale of the Bonds
by the Authority by negotiation with the Purchaser pursuant to the Commitment
Agreement in the form on file with the City Clerk, together with such additions thereto and
changes therein as a Designated Officer shall deem necessary, desirable or appropriate,
the execution of which by a Designated Officer shall be conclusive evidence of the
approval of such additions and changes. The Designated Officers, each acting alone, are
hereby authorized and directed to execute the final form of the Commitment Agreement
for and in the name and on behalf of the City upon the submission of an offer by the
Purchaser to purchase the Bonds, which offer is acceptable to a Designated Officer and
consistent with the requirements of this Resolution.
Section 5. Deposit to the Rate Stabilization Fund. Resolution No. 23-59, adopted
by the City Council on December 5, 2023, adjusted the water rates provided by the City
and, among other things, established and funded a rate stabilization fund in the amount
of $1,063,300, being 5% of the City's expected 2024 water rate revenue. The City Council
hereby authorizes the transfer from the City's Emergency Reserve Fund to the Rate
Stabilization Fund such additional amount as may be required to insure that the City
meets its rate covenant.
Section 6. Official Actions. The Mayor, the City Manager, the Finance Director, the
City Clerk and any and all other officers of the City are hereby authorized and directed,
for and in the name and on behalf of the City, to do any and all things and take any and
all actions, including execution and delivery of any and all assignments, certificates,
requisitions, agreements, notices, consents, instruments of conveyance, warrants and
Resolution 24-07
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other documents, which they, or any of them, may deem necessary or advisable in order
to consummate the lawful issuance and sale of the Bonds and the consummation of the
transactions as described herein.
Section 7. Effective Date. This Resolution shall take effect from and after the date
of its passage and adoption.
PASSED AND ADOPTED at a regular meeting of the City Council held on the 6th day of
February 2024.
AUSTIN LUMBARD,
Mayor
ATTEST:
ERICA N. YASUDA,
City Clerk
APOPROVED AS TO FORM:
DocuSigned by:
7� Z'179
DA 8EF I`4DIG,
City Attorney
Resolution 24-07
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STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Erica N. Yasuda, City Clerk and ex-officio Clerk of the City Council of the City of Tustin,
California, do hereby certify that the whole number of the members of the City Council of
the City of Tustin is five; that the above and foregoing Resolution No. 24-07 was duly
passed and adopted at a regular meeting of the Tustin City Council, held on the 6t" day
of February 2024, by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
COUNCILMEMBER RECUSED:
ERICA N. YASUDA,
City Clerk
Resolution 24-07
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EXHIBIT A
GOVERNMENT CODE SECTION 5852.1 DISCLOSURE
The following information consists of estimates that have been provided by the Fieldman,
Rolapp & Associates, the City's Municipal Advisor which has been represented to have
been provided in good faith:
(A) True Interest Cost of the Bonds: 4.820%
(B) Finance Charges: $125,000
(C) Net Proceeds to be Received: $4,000,000 (net of finance charges)
(D) Total Payment Amount through Maturity: $6,559,029.71
The foregoing estimates constitute good faith estimates only and are based on market
conditions prevailing at the time of preparation of such estimates.
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
financing plan of the Authority and the City, or a combination of such factors. The actual
date of sale of the Bonds and the actual principal amount of the Bonds sold will be
determined by the Authority and the City based on the timing of the need for proceeds of
the Bonds and other factors. The actual interest rates with respect to the Bonds will
depend on market interest rates at the time of sale thereof. The actual amortization of the
Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market
interest rates are affected by economic and other factors beyond the control of the
Authority and the City.
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TUSTIN PUBLIC FINANCING AUTHORITY
RESOLUTION NO. 24-01
RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF WATER
REVENUE BONDS TO FINANCE IMPROVEMENTS TO THE CITY OF TUSTIN'S
MUNICIPAL WATER ENTERPRISE AND APPROVING RELATED DOCUMENTS
AND OFFICIAL ACTIONS
RESOLVED, by the Board of Directors (the "Board") of the Tustin Public Financing
Authority (the "Authority"), as follows:
WHEREAS, the City of Tustin (the "City") and the former Tustin Community
Redevelopment Agency (the "Agency") have heretofore entered into a joint exercise of
powers agreement (the "Agreement") establishing the Authority for the purpose, among
others, of issuing its bonds to be used to provide financial assistance to the City;
WHEREAS, the Successor Agency to the Tustin Community Redevelopment
Agency succeeded to the Agency and the Agreement remains in effect so long as
obligations of Agency remain outstanding, ending in 2040;
WHEREAS, the City has determined that, due to prevailing financial market
conditions, it is in the best interests of the City to finance the acquisition and construction
of certain improvements and facilities (the "2024 Project") to the City's municipal water
enterprise (the "Enterprise");
WHEREAS, for the purpose of raising funds necessary to provide such financial
assistance to the City, the Authority proposes to authorize the issuance of its revenue
bonds under the provisions of Article 4 (commencing with section 6584) of Chapter 5 of
Division 7 of Title 1 of the California Government Code (the "Act"), designated as the
Tustin Public Financing Authority Water Revenue Bonds, Series 2024 (Subordinate Lien)
(the "Bonds"), all pursuant to and secured by an indenture of trust (the "Indenture"), by
and between the Authority and The Bank of New York Mellon Trust Company, N.A., as
trustee (the "Trustee");
WHEREAS, in order to provide for the repayment of the Bonds, the Authority will
sell the 2024 Project to the City pursuant to an installment sale agreement (the
"Installment Sale Agreement"), under which the City will agree to make installment
payments to the Authority payable from the net revenues of the Enterprise which will be
calculated to be sufficient, in time and amount, to enable the Authority to pay the principal
of and interest and premium (if any) on the Bonds when due and payable;
Resolution 24-01
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WHEREAS, the City's obligations under the Installment Sale Agreement will be
subordinate to the City's obligations with respect to the payment of debt service on its
City of Tustin (Orange County, California) 2016 Water Refunding Revenue Bonds and its
City of Tustin (Orange County, California) Taxable Water Refunding Revenue Bonds,
Series 2020;
WHEREAS, Capital One Public Funding, LLC (the "Purchaser") has proposed to
purchase the Bonds and has presented to the Authority a form of bond purchase
agreement for the Bonds, to be entered into among the Authority, the City and the
Purchaser (the "Bond Purchase Agreement");
WHEREAS, the Board has duly considered such transactions and wishes at this
time to approve said transactions in the public interests of the Authority; and
WHEREAS, pursuant to section 5852.1 of the California Government Code, which
became effective on January 1, 2018 by the enactment of Senate Bill 450, certain
information relating to the Bonds is set forth in Exhibit A attached to this Resolution, and
such information is hereby disclosed and made public;
NOW, THEREFORE, it is hereby ORDERED and DETERMINED, as follows:
Section 1. Issuance of Bonds; Approval of Indenture. The Board hereby authorizes
the issuance of the Bonds under and pursuant to the Bond Law and the Indenture for the
purpose of providing funds to finance the 2024 Project, so long as (a) the principal amount
of Bonds does not exceed $4,125,000, (b) so long as the final maturity date of the Bonds
is not later than April 1, 2044, and (c) the average interest rate on the Bonds is not higher
than 4.820%. The Board hereby approves the Indenture in the form on file with the
Secretary, together with such additions thereto and changes therein as the Chairperson,
the Executive Director, the Assistant Executive Director or the Treasurer, or any designee
thereof (the "Designated Officers") shall deem necessary, desirable or appropriate, the
execution of which by a Designated Officer shall be conclusive evidence of the approval
of any such additions and changes. The Designated Officers, each acting alone, are
hereby authorized and directed to execute the final form of the Indenture for and in the
name and on behalf of the Authority. The Board hereby authorizes the delivery and
performance of the Indenture.
Section 2. Approval of Installment Sale Agreement. The Board hereby approves
the Installment Sale Agreement in the form on file with the Secretary, together with such
additions thereto and changes therein as the Designated Officers shall deem necessary,
desirable or appropriate, the execution of which by a Designated Officer shall be
conclusive evidence of the approval of any such additions and changes. The Designated
Officers, each acting alone, are hereby authorized and directed to execute the final form
-*of the Installment Sale Agreement for and in the name and on behalf of the Authority.
Resolution 24-01
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The Board hereby authorizes the delivery and performance of the Installment Sale
Agreement.
Section 3. Approval of Placement Agent Agreement. The Board hereby approves
the a placement agent agreement, by and among the Authority, the City and Stifel,
Nicolaus & Company, Incorporated, as placement agent (the "Placement Agent
Agreement"), in the form on file with the Secretary, together with such additions thereto
and changes therein as the Designated Officers shall deem necessary, desirable or
appropriate, the execution of which by a Designated Officer shall be conclusive evidence
of the approval of any such additions and changes. The Designated Officers, each acting
alone, are hereby authorized and directed to execute the final form of the Placement
Agent Agreement for and in the name and on behalf of the Authority. The Board hereby
authorizes the delivery and performance of the Placement Agent Agreement.
Section 4. Sale of Bonds. The Board hereby approves the sale of the Bonds by the
Authority by negotiation with the Purchaser, pursuant to the Bond Purchase Agreement
in the form on file with the Secretary, together with such additions thereto and changes
therein as a Designated Officer shall deem necessary, desirable or appropriate, the
execution of which by a Designated Officer shall be conclusive evidence of the approval
of any such additions and changes. The Designated Officers, each acting alone, are
hereby authorized and directed to execute the final form of the Bond Purchase Agreement
for and in the name and on behalf of the Authority upon the submission of an offer by the
Purchaser to purchase the Bonds, which offer is acceptable to a Designated Officer and
consistent with the requirements of this Resolution.
Section 5. Official Actions. The Chairperson, the Executive Director, the Treasurer,
the Secretary and any and all other officers of the Authority are hereby authorized and
directed, for and in the name and on behalf of the Authority, to do any and all things and
take any and all actions, including execution and delivery of any and all assignments,
certificates, requisitions, agreements, notices, consents, instruments of conveyance,
warrants and other documents, which they, or any of them, may deem necessary or
advisable in order to consummate the lawful issuance and sale of the Bonds and the
consummation of the transactions as described herein.
Section 6. Effective Date. This Resolution shall take effect from and after the date
of its passage and adoption.
PASSED AND ADOPTED at a regular meeting of the Board of Directors of the Authority
held on the 6t" day of February 2024.
Resolution 24-01
Page 3 of 4
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AUSTIN LUMBARD,
Chair
ATTEST:
ERICA N. YASUDA,
Secretary
APPROVED AS TO FORM:
DocuSigned by:
DAM 8tF3RCIVDIG,
Authority Counsel
STATE OF CALIFORNIA. )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Erica N. Yasuda, Secretary of the Tustin Public Financing Authority, do hereby certify
that the whole number of the members of the Board of Directors of the Tustin Public
Financing Authority is five; that the above and foregoing Resolution No. 24-01 was duly
passed and adopted at a regular meeting of the Tustin Public Financing Authority, held
on the 6t" day of February 2024, by the following vote:
BOARDMEMBER AYES:
BOARDMEMBER NOES:
BOARDMEMBER ABSTAINED:
BOARDMEMBER ABSENT:
BOARDMEMBER RECUSED:
ERICA N. YASUDA,
Secretary
Resolution 24-01
Page 4 of 4
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EXHIBIT A
GOVERNMENT CODE SECTION 5852.1 DISCLOSURE
The following information consists of estimates that have been provided by Fieldman,
Rolapp & Associates, the City's Municipal Advisor, which has been represented to have
been provided in good faith:
(A) True Interest Cost of the Bonds: 4.820%
(B) Finance Charges: $125,000
(C) Net Proceeds to be Received: $4,000,000 (net of finance charges)
(D) Total Payment Amount through Maturity: $6,559,029.71
The foregoing estimates constitute good faith estimates only and are based on market
conditions prevailing at the time of preparation of such estimates.
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
financing plan of the Authority and the City, or a combination of such factors. The actual
date of sale of the Bonds and the actual principal amount of the Bonds sold will be
determined by the Authority and the City based on the timing of the need for proceeds of
the Bonds and other factors. The actual interest rates with respect to the Bonds will
depend on market interest rates at the time of sale thereof. The actual amortization of the
Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market
interest rates are affected by economic and other factors beyond the control of the
Authority and the City.
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RESOLUTION NO. 24-08
RESOLUTION APPROVING THE FORM AND AUTHORIZING THE EXECUTION
OF A FIRST AMENDMENT TO THE INDENTURE OF TRUST, DATED AS OF
SEPTEMBER 1, 2016, BY AND BETWEEN THE CITY AND THE BANK OF NEW
YORK MELLON TRUST COMPANY, N.A., RELATING TO THE $21,515,000 CITY
OF TUSTIN (ORANGE COUNTY, CALIFORNIA) 2016 WATER REFUNDING
REVENUE BONDS, AND A FIRST AMENDMENT TO THE INDENTURE OF
TRUST, DATED AS OF FEBRUARY 1, 2020, BY AND BETWEEN THE CITY AND
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., RELATING TO
THE $14,910,000 CITY OF TUSTIN (ORANGE COUNTY, CALIFORNIA)
TAXABLE WATER REFUNDING REVENUE BONDS, SERIES 2020
RESOLVED, by the City Council (the "Council") of the City of Tustin (the "City"), as
follows:
WHEREAS, the City and The Bank of New York Mellon Trust Company, N.A. (the
"Trustee") have executed and delivered an indenture of trust, dated as of September 1,
2016 (the "2016 Indenture") under and pursuant to which the City issued its $21,515,000
City of Tustin (Orange County, California) 2016 Water Refunding Revenue Bonds (the
"2016 Bonds");
WHEREAS, the proceeds of the 2016 Bonds were used to refund the outstanding
Water Revenue Bonds, 2011 Series A, proceeds of which were issued to finance the
costs of the acquisition and construction of certain new additions, betterments, extensions
and improvements to the municipal water system owned and operated by the City (the
"Water System");
WHEREAS, it has been determined that the 2016 Indenture is defective in that
Section 5.02 of the 2016 Indenture does not adequately provide for the flow of Gross
Revenues required for the payment of Subordinate Debt (as such term is defined in the
2016 Indenture); and
WHEREAS, Section 10.01(b) of the 2016 Indenture provides that the 2016 Inden-
ture may be modified or amended from time -to -time and at any time by an indenture or
indentures supplemental thereto, which the City and the Trustee may enter into without
the consent of any Owners (as such term is defined in the 2016 Indenture), to make such
provisions for the purpose of curing any ambiguity, or of curing, correcting or supplement-
ing any defective provision contained in therein, or in any other respect whatsoever as
the City may deem necessary or desirable, provided under any circumstances that such
modifications or amendments shall not, in the reasonable determination of the City, ma-
terially adversely affect the interests of the Owners;
Resolution 24-08
Page 1 of 4
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WHEREAS, the City and Trustee also have executed and delivered an indenture
of trust, dated as of February 1, 2020 (the "2020 Indenture") under and pursuant to which
the City issued its $14,910,000 City of Tustin (Orange County, California) Taxable Water
Refunding Revenue Bonds, Series 2020 (the "2020 Bonds");
WHEREAS, the proceeds of the 2020 Bonds were used to refund the outstanding
2013 Water Revenue Bonds, proceeds of which were issued to finance the costs of the
acquisition and construction of certain new additions, betterments, extensions and im-
provements to the Water System;
WHEREAS, it has been determined that the 2020 Indenture is defective in that
Section 5.02 of the 2020 Indenture does not adequately provide for the flow of Gross
Revenues required for the payment of Subordinate Debt (as such term is defined in the
2020 Indenture); and
WHEREAS, Section 10.01(b) of the 2020 Indenture provides that the 2020 Inden-
ture may be modified or amended from time -to -time and at any time by an indenture or
indentures supplemental thereto, which the City and the Trustee may enter into without
the consent of any Owners (as such term is defined in the 2020 Indenture), to make such
provisions for the purpose of curing any ambiguity, or of curing, correcting or supplement-
ing any defective provision contained in therein, or in any other respect whatsoever as
the City may deem necessary or desirable, provided under any circumstances that such
modifications or amendments shall not, in the reasonable determination of the City, ma-
terially adversely affect the interests of the Owners;
NOW, THEREFORE, it is hereby ORDERED and DETERMINED, as follows:
Section 1. Findings. The Board hereby finds that it is necessary and appropriate
to amend the Original Indenture as described above.
Section 2. Approval of First Amendment to 2016 Indenture. The Council hereby
approves an amendment to the 2016 Indenture (the "2016 First Amendment") in the form
on file with the City Clerk, together with such additions thereto and changes therein as
the Mayor, the City Manager or the Finance Director (the "Designated Officers"), or any
designee thereof, shall deem necessary, desirable or appropriate, the execution of which
by the City shall be conclusive evidence of the approval of any such additions and
changes. Any of the Designated Officers is hereby authorized and directed to execute the
final form of the 2016 First Amendment for and in the name and on behalf of the City. The
Council hereby authorizes the delivery and performance of the 2016 First Amendment.
Section 3. Approval of First Amendment to 2020 Indenture. The Council hereby
approves an amendment to the 2020 Indenture (the "2020 First Amendment") in the form
on file with the City Clerk, together with such additions thereto and changes therein as
any Designated Officer or any designee thereof, shall deem necessary, desirable or
Resolution 24-08
Page 2 of 4
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appropriate, the execution of which by the City shall be conclusive evidence of the ap-
proval of any such additions and changes. Any of the Designated Officers is hereby au-
thorized and directed to execute the final form of the 2020 First Amendment for and in the
name and on behalf of the City. The Council hereby authorizes the delivery and perfor-
mance of the 2020 First Amendment.
Section 4. Official Actions. The Mayor, the City Manager, the Finance Director, the
City Clerk and any and all other officers of the City are hereby authorized and directed,
for and in the name and on behalf of the City, to do any and all things and take any and
all actions, including execution and delivery of any and all assignments, certificates, req-
uisitions, agreements, notices, consents, instruments of conveyance, warrants and other
documents, which they, or any of them, may deem necessary or advisable in order to
consummate the transactions as described herein.
Section 5. Effective Date. This Resolution shall take effect from and after the date
of its passage and adoption.
PASSED AND ADOPTED at a regular meeting of the City Council held on the 6th day of
February 2024.
AUSTIN LUMBARD,
Mayor
ATTEST:
ERICA N. YASUDA,
City Clerk
APOPROVED AS TO FORM:
DocuSigned by:
�"Z17
DA 8EF?WE DIG,
City Attorney
Resolution 24-08
Page 3 of 4
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STATE OF CALIFORNIA. )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Erica N. Yasuda, City Clerk and ex-officio Clerk of the City Council of the City of Tustin,
California, do hereby certify that the whole number of the members of the City Council of
the City of Tustin is five; that the above and foregoing Resolution No. 24-08 was duly
passed and adopted at a regular meeting of the Tustin City Council, held on the 6th day
of February 2024, by the following vote:
COUNCILMEMBER AYES:
COUNCILMEMBER NOES:
COUNCILMEMBER ABSTAINED:
COUNCILMEMBER ABSENT:
COUNCILMEMBER RECUSED:
ERICA N. YASUDA,
City Clerk
Resolution 24-08
Page 4 of 4
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Quint & Thimmig LLP 12 / 18 / 23
01/03/24
01/10/24
01/22/24
01/26/24
INDENTURE OF TRUST
Dated as of February 1, 2024
by and between the
TUSTIN PUBLIC FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
$4,125,000
Tustin Public Financing Authority
Water Revenue Bonds, Series 2024
(Subordinate Lien)
20027.04
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section1.01. Definitions................................................................................................................................................................. 3
Section1.02. Interpretation..........................................................................................................................................................12
ARTICLE II
THE BONDS
Section2.01. Authorization of Bonds.........................................................................................................................................14
Section2.02. Terms of the Bonds.................................................................................................................................................14
Section2.03. Form of Bonds.........................................................................................................................................................15
Section2.04. Execution of Bonds.................................................................................................................................................15
Section2.05. Transfer of Bonds....................................................................................................................................................15
Section2.06. Exchange of Bonds.................................................................................................................................................16
Section2.07. Registration Books..................................................................................................................................................16
Section2.08. Temporary Bonds...................................................................................................................................................16
Section 2.09. Bonds Mutilated, Lost, Destroyed or Stolen.......................................................................................................16
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; ADDITIONAL BONDS
Section3.01. Issuance of the Bonds.............................................................................................................................................18
Section 3.02. Application of Proceeds of the Bonds.................................................................................................................18
Section 3.03. Establishment and Application of Costs of Issuance Fund..............................................................................18
Section 3.04. Establishment and Application of 2024 Project Fund.......................................................................................18
Section3.05. Validity of Bonds....................................................................................................................................................19
ARTICLE IV
REDEMPTION OF BONDS
Section4.01. Terms of Redemption............................................................................................................................................. 20
Section4.02. Notice of Redemption............................................................................................................................................ 20
Section4.03. Partial Redemption of Bonds................................................................................................................................ 21
Section4.04. Effect of Redemption.............................................................................................................................................. 21
ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.01. Pledge and Assignment; Bond Fund................................................................................................................... 22
Section5.02. Allocation of Revenues.......................................................................................................................................... 22
Section 5.03. Application of Interest Account........................................................................................................................... 23
Section 5.04. Application of Sinking Account and Principal Account.................................................................................. 23
Section5.05. Investments............................................................................................................................................................. 23
Section 5.06. Valuation and Disposition of Investments......................................................................................................... 24
ARTICLE VI
PARTICULAR COVENANTS
Section6.01. Punctual Payment................................................................................................................................................... 25
Section 6.02. No Extension of Payment of Bonds..................................................................................................................... 25
Section6.03. Against Encumbrances.......................................................................................................................................... 25
Section 6.04. Power to Issue Bonds and Make Pledge and Assignment............................................................................... 25
Section 6.05. Accounting Records and Financial Statements.................................................................................................. 25
Section 6.06. No Additional Obligations.................................................................................................................................... 25
Section6.07. Tax Covenants......................................................................................................................................................... 25
Section 6.08. Installment Sale Agreement.................................................................................................................................. 26
Section6.09. Waiver of Laws....................................................................................................................................................... 26
Section6.10. Further Assurances................................................................................................................................................. 26
Section 6.11. Continued Existence of the Authority................................................................................................................. 26
0C
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section7.01. Events of Default....................................................................................................................................................
28
Section 7.02. Remedies Upon Event of Default.........................................................................................................................
28
Section 7.03. Application of Revenues and Other Funds After Default................................................................................
29
Section 7.04. Trustee to Represent Bond Owner.......................................................................................................................
29
Section 7.05.Owner Direction of Proceedings..........................................................................................................................
29
Section 7.06. Limitation on Owner's Right to Sue....................................................................................................................
30
Section 7.07. Absolute Obligation of Authority........................................................................................................................
30
Section 7.08. Termination of Proceedings..................................................................................................................................
30
Section7.09. Remedies Not Exclusive........................................................................................................................................
30
Section7.10. No Waiver of Default.............................................................................................................................................
30
Section7.11. Parties Interested Herein.......................................................................................................................................
30
ARTICLE VIII
THE TRUSTEE
Section8.01. Appointment of Trustee........................................................................................................................................
32
Section8.02. Acceptance of Trustee............................................................................................................................................
32
Section 8.03. Fees, Charges and Expenses of Trustee...............................................................................................................
35
Section 8.04. Notice to Owner of Default...................................................................................................................................
35
Section8.05. Intervention by Trustee.........................................................................................................................................
36
Section8.06. Removal of Trustee.................................................................................................................................................
36
Section8.07. Resignation by Trustee..........................................................................................................................................
36
Section 8.08. Appointment of Successor Trustee......................................................................................................................
36
Section8.09. Merger or Consolidation.......................................................................................................................................
36
Section 8.10. Concerning any Successor Trustee......................................................................................................................
37
Section8.11. Appointment of Co-Trustee..................................................................................................................................
37
Section 8.12. Indemnification; Limited Liability of Trustee....................................................................................................
37
ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section9.01. Amendments Permitted........................................................................................................................................ 39
Section 9.02. Effect of Supplemental Indenture........................................................................................................................ 40
Section 9.03. Endorsement of Bonds; Preparation of New Bonds.......................................................................................... 40
Section 9.04. Amendment of Particular Bonds.......................................................................................................................... 40
ARTICLE X
DEFEASANCE
Section10.01. Discharge of Indenture........................................................................................................................................ 41
Section 10.02. Discharge of Liability on Bonds......................................................................................................................... 41
Section 10.03. Deposit of Money or Securities with Trustee................................................................................................... 41
Section10.04. Unclaimed Funds.................................................................................................................................................. 42
ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of Authority Limited to Revenues...................................................................................................... 43
Section 11.02. Limitation of Rights to Parties and Owner....................................................................................................... 43
Section11.03. Funds and Accounts............................................................................................................................................. 43
Section 11.04. Waiver of Notice; Requirement of Mailed Notice...........................................................................................43
Section11.05. Destruction of Bonds............................................................................................................................................ 43
Section 11.06. Severability of Invalid Provisions...................................................................................................................... 43
Section11.07. Notices.................................................................................................................................................................... 44
Section 11.08. Evidence of Rights of Owner.............................................................................................................................. 44
Section11.09. Disqualified Bonds............................................................................................................................................... 45
Section 11.10. Money Held for Particular Bonds...................................................................................................................... 45
Section 11.11. Waiver of Personal Liability................................................................................................................................45
Section 11.12. Successor Is Deemed Included in All References to Predecessor.................................................................. 45
Section 11.13. Execution in Several Counterparts.................................................................................................................... 45
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Section11.14. Governing Law..................................................................................................................................................... 45
EXHIBIT A FORM OF BOND
EXHIBIT B FORM OF PURCHASER LETTER
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INDENTURE OF TRUST
THIS INDENTURE OF TRUST, made and entered into and dated as of February 1, 2024,
is by and between the TUSTIN PUBLIC FINANCING AUTHORITY, a joint exercise of powers
entity duly organized and existing under and by virtue of the 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 Los Angeles, California, being qualified to accept and administer the
trusts hereby created (the "Trustee");
WITNESSETH:
WHEREAS, the City of Tustin (the "City") and the former Tustin Community
Redevelopment Agency (the "Agency") have heretofore entered into a joint exercise of powers
agreement (the "Agreement") establishing the Authority for the purpose, among others, of
issuing its bonds to be used to provide financial assistance to the City;
WHEREAS, the Successor Agency to the Tustin Community Redevelopment Agency
succeeded to the Agency and the Agreement remains in effect so long as obligations of Agency
remain outstanding, ending in 2040;
WHEREAS, the Authority is a joint powers authority duly organized and existing under
and pursuant to that certain Joint Exercise of Powers Agreement, dated May 1, 1995, by and
between the City of Tustin (the "City") and the former Tustin Community Redevelopment
Agency;
WHEREAS, 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, public entities including the City, and to provide
financing for public capital improvements of public entities including the City;
WHEREAS, the City has determined that, due to prevailing financial market conditions,
it is in the best interests of the City to finance the acquisition and construction of certain
improvements and facilities (the "2024 Project") which constitute part of the City's municipal
water enterprise (the "Enterprise");
WHEREAS, for the purpose of raising funds necessary to provide such financial
assistance to the City, the Authority proposes to authorize the issuance of its revenue bonds
under the provisions of Article 4 (commencing with section 6584) of Chapter 5 of Division 7 of
Title 1 of the California Government Code (the "Act"), designated as the Tustin Public
Financing Authority Water Revenue Bonds, Series 2024 (Subordinate Lien) (the "Bonds"), all
pursuant to and secured by this Indenture of Trust;
WHEREAS, in order to provide for the repayment of the Bonds, the Authority will sell
the 2024 Project to the City pursuant to an installment sale agreement, under which the City will
agree to make installment payments to the Authority (the "Installment Payments") which will
be calculated to be sufficient to enable the Authority to pay the principal of and interest on the
Bonds when due and payable;
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WHEREAS, the City's obligation to make Installment Payments will be payable from a
pledge of the net revenues of the Enterprise, in all respects, junior, subordinate and inferior to
the City's obligations with respect to the payment of debt service on its City of Tustin (Orange
County, California) 2016 Water Refunding Revenue Bonds and its City of Tustin (Orange
County, California) Taxable Water Refunding Revenue Bonds, Series 2020;
WHEREAS, the Authority has determined that in order to provide for the authentication
and delivery of the Bonds, to establish and declare the terms and conditions upon which the
Bonds are to be issued and secured and to secure the payment of the principal thereof and
interest thereon, the Authority has authorized the execution and delivery of this Indenture; and
WHEREAS, the Authority hereby certifies 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;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the
payment of the principal of and the interest on all Bonds at any time issued and outstanding
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 whereof is hereby acknowledged, the Authority does hereby covenant and agree with
the Trustee, for the benefit of the respective owners from time to time of the Bonds, as follows:
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ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this
Section 1.01 shall, for all purposes of this Indenture and of any indenture supplemental hereto
and of any certificate, opinion or other document herein mentioned, have the meanings herein
specified, to be equally applicable to both the singular and plural forms of any of the terms
herein defined. In addition, all capitalized terms used herein and not otherwise defined in this
Section 1.01 shall have the respective meanings given such terms in the Installment Sale
Agreement.
"Acquisition and Construction" means, with respect to any portion of the 2024 Project, the
acquisition, construction, improvement, equipping, renovation, remodeling or reconstruction
thereof.
"Act" means Articles 1 through 4 (commencing with section 6500) of Chapter 5, Division
7, Title 1 of the California Government Code, as in existence on the Closing Date or as thereafter
amended from time to time.
"Additional Payments" means the payments so designated and required to be paid by the
City pursuant to Sections 4.9 and 4.10 of the Installment Sale Agreement.
"Annual Debt Service" means, for each Fiscal Year, the aggregate amount (without
duplication) of principal and interest with respect to the Installment Payments and all Parity
Obligations.
"Authority" means the Tustin Public Financing Authority, a joint powers authority duly
organized and existing under the laws of the State.
"Authorized Representative" means: (a) with respect to the Authority, its Chairman, Vice
Chairman, Executive Director, Assistant Executive Director, Treasurer or any other person
designated as an Authorized Representative of the Authority by a Written Certificate of the
Authority signed by its Chairman and filed with the City and the Trustee; and (b) with respect
to the City, its Mayor, City Manager, Treasurer, Finance Director or any other person
designated as an Authorized Representative of the City by a Written Certificate of the City
signed by its Mayor and filed with the Trustee.
"Board of Directors" means the governing body of the Authority.
'Bond Counsel' means (a) Quint & Thimmig LLP, or (b) any other attorney or firm of
attorneys appointed by or acceptable to 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 Code.
"Bond Fund" means the fund by that name established and held by the Trustee pursuant
to Section 5.01.
"Bond Law" means the Marks -Roos Local Bond Pooling Act of 1985, constituting Article
4 (commencing with section 6584) of Chapter 5 of Division 7 of Title 1 of the California
Government Code, as in existence on the Closing Date or as thereafter amended from time to
time.
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"Bond Year" means each twelve-month period extending from April 2 in one calendar
year to April 1 of the succeeding calendar year, both dates inclusive; provided that the first
Bond Year shall begin on the Closing Date and shall end on April 1, 2025.
"Bonds" means the $4,125,000 aggregate principal amount of Tustin Public Financing
Authority Water Revenue Bonds, Series 2024 (Subordinate Lien), authorized by and at any time
Outstanding pursuant to the Bond Law and this Indenture.
"Business Day" means any day, other than a Saturday or Sunday or a day on which
commercial banks in New York, New York, Los Angeles, California, or San Francisco,
California, or the Trust Office, are required or authorized by law to close or a day on which the
New York Stock Exchange is closed.
"City" means the City of Tustin, a municipal corporation and general law city organized
under the laws of the State.
"Closing Date" means February 14, 2024, being the date of delivery of the Bonds to the
Original Purchaser.
"Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of
the Bonds or (except as otherwise referenced herein) as it may be amended to apply to
obligations issued on the date of issuance of the Bonds, together with applicable proposed,
temporary and final regulations promulgated under the Code.
"Completion Date" means, with respect to any component of the 2024 Project, the date on
which the Authority files a Written Certificate with the City and the Trustee stating that the
Acquisition and Construction of such component of the 2024 Project has been completed
pursuant to Article III.
"Costs of Issuance" means all expenses incurred in connection with the authorization,
issuance, sale and delivery of the Bonds and the application of the proceeds of the Bonds,
including but not limited to all compensation, fees and expenses (including but not limited to
fees and expenses for legal counsel) of the Authority, initial fees and expenses of the Trustee
and its counsel, compensation to any financial consultants or underwriters, legal fees and
expenses, filing and recording costs, costs of preparation and reproduction of documents and
costs of printing.
"Costs of Issuance Fund" means the fund by that name established and held by the
Trustee pursuant to Section 3.03.
"County" means the County of Orange, a public body corporate and politic organized
under the laws of the State.
"Date of Taxability" means the date from and for which interest on the Bonds is subject to
federal income taxation as a result of a Determination of Taxability.
"Debt Service" means, during any period of computation, the amount obtained for such
period by totaling the following amounts:
(a) The principal components of the Installment Payments and of payments with respect
to Parity Obligations coming due and payable by their terms in such period; and
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(b) The interest component of the Installment Payments and of payments with respect to
Parity Obligations which would be due during such period on the aggregate principal amount
of the Installment Payments and payments with respect to Parity Obligations that would be
unpaid in such period if the Installment Payments and payments with respect to Parity
Obligations are retired as scheduled, but deducting and excluding from such aggregate amount
the amount of Installment Payments and payments with respect to Parity Obligations no longer
unpaid.
"Default Rate" means the rate of 7.820% per annum.
"Defeasance Obligations" means (a) cash, (b) direct non -callable obligations of the United
States of America, (c) securities fully and unconditionally guaranteed as to the timely payment
of principal and interest by the United States of America, to which direct obligation or
guarantee the full faith and credit of the United States of America has been pledged, (d) Refcorp
interest strips, (e) CATS, TIGRS, STRPS, and (f) defeased municipal bonds rated AAA by S&P or
Aaa by Moody's (or any combination of the foregoing).
"Determination of Taxability" means any determination, decision, or decree made by the
Commissioner or any District Director of the Internal Revenue Service, or by any court of
competent jurisdiction, that as a result of any actions or omissions of the Authority or the City
with respect to the Bonds the interest payable on the Bonds is includable in the gross income for
federal income tax purposes of the Owner, provided, however, that no such Determination of
Taxability shall be deemed to have occurred if the Authority and the City are contesting such
determination in good faith and is diligently proceeding to prosecute such contest until the
earliest of (a) a final determination from which no appeal may be taken with respect to such
determination, or (b) abandonment of such appeal by the Authority and the City.
"Enterprise" means any and all facilities, properties and improvements at any time
controlled or operated by the City used or pertaining to the supply of water, consisting of the
entire water production and distribution enterprise of the City, including all additions,
extensions, expansions, improvements and betterments thereto and equippings thereof and any
necessary lands, rights of way and other real and personal property useful in connection
therewith, but exclusive of any portion of the existing system not required for the continued
operation thereof; provided, however, that to the extent the City is not the sole owner of an
asset or property, or lessee thereof from the City, only the City's ownership interest in such
asset or property or leasehold interest therein from the City, shall be considered a part of the
Enterprise.
"Event of Default" means, (a) with respect to the Bonds, any of the events described in
Section 7.01 of this Indenture, and (b) with respect to the Installment Sale Agreement, any of the
events described in Section 8.1 of the Installment Sale Agreement.
"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 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 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 Code, (iii) the investment is a United States Treasury Security --State and
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Local Government Series that is acquired in accordance with applicable regulations of the
United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment
Fund of the State but only if at all times during which the investment is held its yield is
reasonably expected to be equal to or greater than the yield on a reasonably comparable direct
obligation of the United States.
"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 Authority as its official fiscal year period.
"Government Obligations" means, with respect to the Bonds: (a) direct obligations (other
than an obligation subject to variation in principal repayment) of the United States of America
("U.S. Treasury Obligations"), (b) obligations fully and unconditionally guaranteed as to timely
payment of principal and interest by the United States of America, (c) obligations fully and
unconditionally guaranteed as to timely payment of principal and interest by any agency or
instrumentality of the United States of America when such obligations are backed by the full
faith and credit of the United States of America, or (d) evidence of ownership of proportionate
interests in future interest and principal payments on obligations described above held by a
bank or trust company as custodian, under which the owner of the investment is the real party
in interest and has the right to proceed directly and individually against the obligator and the
underlying government obligations are not available to any person claiming through the
custodian or to whom the custodian may be obligated.
"Gross Revenues" means all gross charges received for, and all other gross income and
revenues derived by the City from, the operation of the Enterprise or otherwise arising from the
Enterprise, including but not limited to (a) all fees and charges received by the City for the
services of the Enterprise, (b) charges received by the City for water connections, (c) capital
charges, and (d) all receipts derived from the investment of such income or revenues, but
excluding customer deposits. "Gross Revenues" also include amounts transferred from the Rate
Stabilization Fund to the Bond Fund during any Fiscal Year in accordance with Section 4.11 of
the Installment Sale Agreement. "Gross Revenues" do not include amounts which are
transferred from the Rate Stabilization Fund pursuant to Section 4.11 of the Installment Sale
Agreement that are in excess of twenty percent (20%) of the amounts payable under paragraphs
(b) and (c) of Section 4,.7 of the Installment Sale Agreement in such Fiscal Year.
"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 pursuant to the
provisions hereof.
"Independent Accountant" means any certified public accountant or firm of certified
public accountants, appointed and paid by the Authority or the City, and who, or each of whom
(a) is in fact independent and not under domination of the Authority or the City; (b) does not
have any substantial interest, direct or indirect, in the Authority or the City; and (c) is not
connected with the Authority or the City as an officer or employee of the Authority or the City
but who may be regularly retained to make annual or other audits of the books of or reports to
the Authority or the City.
"Independent Counsel" means an attorney duly admitted to the practice of law before the
highest court of the state in which such attorney maintains an office and who is not an
employee of the Authority, the Trustee or the City.
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"Installment Payment Date" means the twenty-fifth (25th) day of each March and
September during the Term of the Installment Sale Agreement, commencing September 25,
2024.
"Installment Payments" means the amounts payable by the City pursuant to Section 4.4 of
the Installment Sale Agreement, including any prepayments thereof pursuant to Article IX of
the Installment Sale Agreement.
"Installment Sale Agreement" means that certain Installment Sale Agreement by and
between the Authority as seller and the City as purchaser of the 2024 Project, dated as of
February 1, 2024, as originally executed and as it may from time to time be supplemented,
modified or amended in accordance with the terms thereof and of this Indenture.
"Interest Account" means the account by that name established in the Bond Fund
pursuant to Section 5.02.
"Interest Payment Date" means each April 1 and October 1, commencing October 1, 2024.
"Maintenance and Operation Costs" means (a) the reasonable and necessary costs of
maintaining and operating the Enterprise, calculated based upon accounting principles
consistently applied, including (among other things) the reasonable expenses of management,
personnel, services, equipment, repair and other expenses necessary to maintain and preserve
the Enterprise in good repair and working order, and reasonable amounts for administration,
overhead, insurance, taxes (if any) and other similar costs, and (b) all costs of water purchased
or otherwise acquired for delivery by the Enterprise (including any interim or renewed
arrangement therefor), but excluding in all cases depreciation and obsolescence charges or
reserves therefor and amortization of intangibles or other bookkeeping entries of a similar
nature.
"Material Adverse Effect" means an event or occurrence which adversely affects in a
material manner (a) the ability of the City to carry out its business in the manner conducted as
of the date of the Installment Sale Agreement or to meet or perform its obligations under the
Installment Sale Agreement on a timely basis, (b) the validity or enforceability of the Installment
Sale Agreement, or (c) the exclusion of the interest component of the Installment Payments from
gross income for federal income tax purposes or the exemption of such interest for state income
tax purposes.
"Material Litigation" means any action, suit, proceeding, inquiry or investigation against
the Authority or the City in any court or before any arbitrator of any kind or before or by any
Governmental Authority, (i) if determined adversely to the City, may have a Material Adverse
Effect, (ii) seek to restrain or enjoin any of the transactions contemplated by the Installment Sale
Agreement, or (iii) may adversely affect (A) the exclusion of the interest component of the
Installment Payments from gross income for federal income tax purposes or the exemption of
such interest for state income tax purposes or (B) the ability of the City to perform its
obligations under the Installment Sale Agreement.
"Maximum Aggregate Annual Debt Service" means, as of the date of calculation, the
maximum amount of debt service for the current or any future Bond Year with respect to the
Senior Obligations, the Installment Sale Agreement and all Parity Obligations outstanding.
"Moody's" means Moody's Investors Service, its successors and assigns.
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"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 Maintenance and Operation
Costs becoming payable during such period.
"Original Purchaser" means Capital One Public Funding, LLC, the first purchaser of the
Bonds upon their authentication and delivery by the Trustee on the Closing Date.
"Outstanding," when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 11.10) 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 shall have been discharged in accordance with Section 10.02,
including Bonds (or portions thereof) described in Section 11.10; and (c) Bonds for the transfer
or exchange of or in lieu of or in substitution for which other Bonds shall have been
authenticated and delivered by the Trustee pursuant to this Indenture.
"Owner," whenever used herein with respect to a Bond, means the person in whose
name the ownership of such Bond is registered on the Registration Books.
"Parity Obligations" means any leases, loan agreements, installment sale agreements,
bonds, notes, interest rate swap agreements, currency swap agreements, forward payment
agreements, futures, or contracts providing for payments based on levels of, or changes in,
interest rates, currency exchange rates, stock or other indices, or contracts to exchange cash
flows or a series of payments, or contracts, including, without limitation, interest rate floors or
caps, options, puts or calls to hedge payment, currency, rate, spread, or similar exposure (except
termination payments relating thereto which shall be payable on a subordinate basis) or other
obligations of the City payable from and secured by a pledge of and lien upon any of the
Pledged Net Revenues on a parity with the Installment Payments, entered into or issued
pursuant to and in accordance with Section 4.8(b) of the Installment Sale Agreement.
"Permitted Investments" means any of the following which at the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein,
but only to the extent that the same are acquired at Fair Market Value (provided the Trustee
may rely upon the Request of the Authority directing investment under the Indenture as a
determination that such investment is a Permitted Investment):
(a) Government Obligations.
(b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by
any of the following federal agencies and provided such obligations are backed by the full faith
and credit of the United States of America (stripped securities are only permitted if they have
been stripped by the agency itself):
1. U.S. Export -Import Bank (Eximbank)
Direct obligations or fully guaranteed certificates of beneficial ownership
2. U.S. Farmers Home Administration (FmHA)
Certificates of Beneficial Ownership
3. Federal Financing Bank
4. Federal Housing Administration Debentures (FHA)
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5. General Services Administration
Participation Certificates
6. Government National Mortgage Association (GNMA or Ginnie Mae)
GNMA—guaranteed mortgage -backed bonds
GNMA—guaranteed pass -through obligations
7. U.S. Maritime Administration
Guaranteed Title XI financing
8. U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government guaranteed public
housing notes and bonds
(c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by
any of the following federal agencies which are not backed by the full faith and credit of the
United States of America (stripped securities are only permitted if they have been stripped by
the agency itself):
1. Federal Home Loan Bank System
Senior debt obligations
2. Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac)
Participation Certificate
Senior debt obligations
3. Federal National Mortgage Association (FNMA or Fannie Mae)
Mortgage -backed securities and senior debt obligations
4. Student Loan Marketing Association (SLMA or Sallie Mae)
Senior debt obligations
5. Resolution Funding Corp. (REFCORP) obligations
6. Farm Credit System
Consolidated systemwide bonds and notes
(d) Money market funds registered under the Federal Investment Company Act of 1940,
whose shares are registered under the Federal Securities Act of 1933, which invest solely in
Federal Securities, if rated by S&P, having a rating at the time of investment of AAAm-G; and if
rated by Moody's having a rating at the time of investment of Aaa, including such funds for
which the Trustee, its affiliates or subsidiaries provide investment advisory or other
management services or for which the Trustee or an affiliate of the Trustee serves as investment
administrator, shareholder servicing agent, and / or custodian or subcustodian, notwithstanding
that (i) the Trustee or an affiliate of the Trustee receives fees from funds for services rendered,
(ii) the Trustee collects fees for services rendered pursuant to this Indenture, which fees are
separate from the fees received from such funds, and (iii) services performed for such funds and
pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee
or an affiliate of the Trustee.
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(e) Certificates of deposit secured at all times by collateral described in (a) and / or (b)
above. Such certificates must be issued by commercial banks or savings and loan associations
(including the Trustee or its affiliates). The collateral must be held by a third party and the
Bondholders must have a perfected first security interest in the collateral.
(f) Certificates of deposit, savings accounts, deposit accounts or money market deposits
which are fully insured by FDIC or secured at all times by collateral described in (a) and/or (b)
above.
(g) Commercial paper rated, at the time of purchase, "Prime -I" by Moody's and "A-1"
or better by S&P.
(h) Federal funds or bankers acceptances with a maximum term of 180 days of any bank
which has an unsecured, uninsured and unguaranteed obligation rating at the time of
investment of "Prime-1" or better by Moody's and "A-1" or better by S&P.
(i) The Local Agency Investment Fund of the State, created pursuant to 16429.1 of the
California Government Code.
(j) The County pooled investment fund.
(k) Municipal obligations rated "A" or higher by S&P.
(1) Other forms of investments that satisfy the City's Statement of Investment Policy as of
the time of investment.
"Plans and Specifications" means, with respect to the 2024 Project or any component
thereof, the plans and specifications relating thereto filed by the City with the Authority
pursuant to Section 3.2 of the Installment Sale Agreement, as such plans and specifications may
be revised from time to time by the City pursuant to Section 3.2 of the Installment Sale
Agreement.
"Pledged Net Revenues" means, for any period, an amount equal to all of the Net
Revenues received during such period minus the amount required to be paid with respect to
the Senior Obligations during such period.
"Principal Account" means the account by that name established in the Bond Fund
pursuant to Section 5.02.
"Rate Stabilization Fund" means the account by that name established by the City
pursuant to Section 4.11 of the Installment Sale Agreement.
"Record Date" means, with respect to any Interest Payment Date, the fifteenth (15th)
calendar day of the month preceding such Interest Payment Date.
"Registration Books" means the records maintained by the Trustee pursuant to Section
2.05 for the registration and transfer of ownership of the Bonds.
"Revenues" means (a) all amounts received by the Authority or the Trustee pursuant or
with respect to the Installment Sale Agreement, including, without limiting the generality of the
foregoing, all of the Installment Payments (including both timely and delinquent payments, any
late charges, and whether paid from any source) and prepayments, and (b) all interest, profits or
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other income derived from the investment of amounts in any fund or account established
pursuant to this Indenture; but excluding any Additional Payments.
"S&P" means S&P Global Ratings, and its successors.
"Senior Obligations" means, collectively, the 2016 Bonds and the 2020 Bonds.
"Sinking Account" means the account by that name established in the Bond Fund
pursuant to Section 5.02.
"State" means the State of California.
"Subordinate Obligations" means any obligations of the City payable from and secured by
a pledge of and lien upon any of the Pledged Net Revenues subordinate to the City's payment
obligations under the Installment Sale Agreement and any Parity Obligations.
"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.
"Taxable Rate" means, from and after the Date of Taxability following a Determination of
Taxability, 6.350% per annum based on a 30-day month and a 360-day year for calculating
interest.
"Tax -Exempt Rate" means 4.820% per annum based on a 30-day month and a 360-day
year for calculating interest.
"Term of the Installment Sale Agreement" means the time during which the Installment
Sale Agreement is in effect, as provided in Section 4.2 of the Installment Sale Agreement.
"Trustee" means 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, or
its successor, as Trustee hereunder as provided in Section 8.01.
"Trust Office" means the corporate trust office of the Trustee at 700 South Flower Street,
Suite 500, Los Angeles, California 90017-4104, or at such other or additional offices as may be
specified in writing to the Authority and the City, except that with respect to presentation of
Bonds for payment or for registration of transfer and exchange such term shall mean the office
or agency of the Trustee at which, at any particular time, its corporate trust agency business
shall be conducted.
"2016 Bonds" means, the City of Tustin (Orange County, California) 2016 Water
Refunding Revenue Bonds.
"2020 Bonds" means, the City of Tustin (Orange County, California) Taxable Water
Refunding Revenue Bonds, Series 2020.
"2024 Project" means the land, improvements and other property described more fully in
Exhibit B attached to the Installment Sale Agreement and by this reference incorporated herein,
as such description may be amended by the City from time to time pursuant to and in
accordance with Section 3.2 of the Installment Sale Agreement. The precise identification of the
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2024 Project or any component thereof shall be determined by reference to the Plans and
Specifications therefor.
"2024 Project Costs" means, with respect to any 2024 Project, all costs of the Acquisition
and Construction thereof, including but not limited to:
(a) all costs required to be paid to any person under the terms of any agreement for or
relating to the Acquisition and Construction of the 2024 Project;
(b) obligations incurred for labor and materials in connection with the Acquisition and
Construction of the 2024 Project;
(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 and
Construction of the 2024 Project;
(d) all costs of engineering and architectural services, including the actual out-of-pocket
costs for test borings, surveys, estimates, plans and specifications and preliminary
investigations therefor, development fees, sales commissions, and for supervising construction,
as well as for the performance of all other duties required by or consequent to the proper
Acquisition and Construction of the 2024 Project;
(e) any sums required to reimburse the Authority or 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 and Construction of the 2024 Project;
(f) all financing costs incurred in connection with the Acquisition and Construction of
the 2024 Project, including but not limited to Costs of Issuance and other costs incurred in
connection with the Installment Sale Agreement and the financing of the 2024 Project; and
(g) the interest components of the Installment Payments during the period of
Acquisition and Construction of the 2024 Project, to the extent not paid from the proceeds of the
Bonds deposited in the Interest Account pursuant to the Indenture.
"2024 Project Fund" means the fund by that name established pursuant to Section 3.04.
"Water Fund" means the City's existing water enterprise fund, established and held by
the City with respect to the Enterprise.
"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 or the City by its Authorized 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.
Section 1.02. 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.
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(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 BONDS
Section 2.01. Authorization of Bonds. The Authority hereby authorizes the issuance
hereunder of the Bonds, which shall constitute special obligations of the Authority, for the
purpose of providing funds to enable the City to refinance the Acquisition and Construction of
the 2024 Project. The Bonds are hereby designated the "Tustin Public Financing Authority
Water Revenue Bonds, Series 2024 (Subordinate Lien)." The principal amount of Bonds initially
issued and Outstanding under this Indenture shall equal four million one hundred twenty-five
thousand dollars ($4,125,000). This Indenture constitutes a continuing agreement with the
Trustee and the Owner from time to time of the Bonds to secure the full payment of the
principal of and interest on all the Bonds, subject to the covenants, provisions and conditions
herein contained.
Section 2.02. Terms of the Bonds. The Bonds shall be issued as one fully registered bond,
registered initially in the name of the Original Purchaser, in the principal amount of four
million one hundred twenty-five thousand dollars ($4,125,000, shall bear interest at the Tax -
Exempt Rate and shall mature on April 1, 2044; provided, however, that so long as an Event of
Default shall have occurred and is continuing, the interest rate may, at the option of the Owner,
be increased to the Default Rate, as provided in a written notice to the Trustee, the Authority
and the City; provided further, however, that from and after the Date of Taxability following a
Determination of Taxability, the interest rate may, at the option of the Owner, be increased to
the Taxable Rate.
Registered ownership of the Bonds, or any portion thereof, may not thereafter be
transferred except as set forth herein.
Interest on the Bonds shall be payable semi-annually calculated based on a 360-day year
of twelve (12) thirty -day months on each Interest Payment Date to the person whose name
appears on the Registration Books as the Owner thereof as of the Record Date immediately
preceding each such Interest Payment Date The Trustee shall pay principal of and interest on
the Bonds when due by wire transfer (or other form of electronic payment) in immediately
available funds to the Owner as of the Record Date in accordance with such wire transfer
instructions as shall be filed by the Owner with the Trustee from time to time, or, with the
Owner's consent, by another commercially reasonable method of payment. Payments of
principal of the Bonds shall be made without the requirement for presentation and surrender of
the Bonds by the Owner, provided that principal of the Bonds that is payable at final maturity
shall be made only upon presentation and surrender thereof at the Trust Office. Principal of and
interest on the Bonds shall be payable in lawful money of the United States of America.
Each Bond shall be dated the Closing Date and shall bear interest from the Interest
Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated
after a Record Date and on or before the following Interest Payment Date, in which event it
shall bear interest from such Interest Payment Date, or (b) unless it is authenticated on or before
September 15, 2024, in which event it shall bear interest from the Closing Date; provided,
however, that if, as of the date of authentication of any Bond, interest thereon is in default, such
Bond shall bear interest from the Interest Payment Date to which interest has previously been
paid or made available for payment thereon.
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The Bonds shall not be (a) assigned a rating by any rating agency, (b) registered with
The Depository Trust Company or any other securities depository, or (c) issued pursuant to any
type of offering document or official statement.
Section 2.03. Form of Bonds. The Bonds, the Trustee's Certificate of Authentication, and
the Assignment to appear thereon, shall be substantially in the form set forth in Exhibit A,
which is attached hereto and by this reference incorporated herein, with such variations,
omissions and insertions, as permitted or required by this Indenture.
Section 2.04. Execution of Bonds. The Bonds shall be executed in the name and on behalf
of the Authority with the facsimile or manual signature of the Chairperson of the Board of
Directors and attested by the facsimile or manual signature of the Secretary of the Board of
Directors. The Bonds shall then be delivered to the Trustee for authentication by it. In case any
of the officers who shall have signed or attested any of the Bonds shall cease to be such officer
or officers of the Authority before the Bonds so signed or attested shall have been authenticated
or delivered by the Trustee or issued by the Authority such Bonds may nevertheless be
authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be
as binding upon the Authority as though those who signed and attested the same had
continued to be such officers of the Authority and also any Bond may be signed and attested on
behalf of the Authority by such persons as at the actual date of execution of such Bond shall be
the proper officers of the Authority although at the nominal date of such Bond any such person
shall not have been such officer of the Authority.
Only such of the Bonds as shall bear thereon a certificate of authentication substantially
in the form set forth in Exhibit A attached hereto, manually executed by the Trustee, shall be
valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such
certificate of the Trustee shall be conclusive evidence that the Bonds so authenticated have been
duly executed, authenticated and delivered hereunder and are entitled to the benefits of this
Indenture.
Section 2.05. Transfer of Bonds.
(a) The Bonds may, in accordance with their 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 Trust Office for cancellation,
accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee,
duly executed. Whenever any Bonds shall be surrendered for registration of transfer, the
Authority shall execute and the Trustee shall deliver a new Bond or Bonds, of like interest rate,
maturity and principal amount. The Trustee shall collect from the Owner any tax or other
governmental charge on the transfer of any Bonds pursuant to this Section 2.05. The cost of
printing Bonds and any services rendered or expenses incurred by the Trustee in connection
with any transfer shall be paid by the City.
The Trustee may refuse to transfer, under the provisions of this Section 2.03, either (a)
any Bonds during the period fifteen (15) days prior to the date established by the Trustee for the
selection of Bonds for redemption, or (b) any Bonds selected by the Trustee for redemption.
(b) Ownership of the Bonds may be transferred in whole only and only to a (i) an
affiliate of the Owner or (ii) a bank, trust, custodian, insurance company or other financial
institution or an affiliate thereof, in each case that executes and delivers to the Trustee a
representation letter in substantially the form attached hereto as Exhibit B.
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Nothing herein limits the right of the Owner to sell or assign participation interests in
the Bonds, in minimum amounts of $250,000, to one or more entities listed in (i) or (ii), provided
that any participation, custodial or similar agreement under which multiple ownership interests
in the Bonds are created shall provide the method by which the owners of such interests shall
establish the rights and duties of a single entity, owner, servicer or other fiduciary or agent
acting on behalf of all of such owners (a loan servicer) to act on their behalf with respect to the
rights and interests of the Owner, including with respect to the exercise of rights and remedies
of the Owner on behalf of such owners upon the occurrence of an event of default under this
Indenture.
Prior to any transfer of the Bonds, 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
section 6045 of the Code, 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.
Section 2.06. Exchange of Bonds. Any Bond may be exchanged at the Trust Office for a
like aggregate principal amount of Bonds of other authorized denominations and of like
maturity. The Trustee shall require the Owner requesting such exchange to pay any tax or other
governmental charge required to be paid with respect to such exchange.
Section 2.07. Registration Books. The Trustee will keep or cause to be kept, at the Trust
Office, sufficient records for the registration and transfer of ownership of the Bonds, which shall
at all reasonable times with reasonable prior notice be open to inspection during regular
business hours by the Authority, the City and the Owner; 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 2.08. Temporary Bonds. The Bonds may be issued in temporary form
exchangeable for definitive Bonds when ready for delivery. Any temporary Bonds may be
printed, lithographed or typewritten, shall be of such denominations as may be determined by
the Authority, shall be in fully registered form without coupons and may contain such reference
to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be
executed by the Authority and authenticated by the Trustee upon the same conditions and in
substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds
it will execute and deliver definitive Bonds as promptly thereafter as practicable, and thereupon
the temporary Bonds may be surrendered, for cancellation, at the Trust Office and the Trustee
shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate
principal amount of definitive Bonds of authorized denominations. Until so exchanged, the
temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds
authenticated and delivered hereunder.
Section 2.09. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become
mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and
substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so
mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and
delivered to, or upon the order of, the Authority. If any Bond shall be lost, destroyed or stolen,
evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence
be satisfactory to it and indemnity satisfactory to it shall be given, the Authority, at the expense
of the Owner of such lost, destroyed or stolen Bond, shall execute, and the Trustee shall
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thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for
the Bond so lost, destroyed or stolen (or if any such Bond shall have matured, instead of issuing
a substitute Bond, the Trustee may pay the same without surrender thereof). The Authority may
require payment by the Owner of a sum not exceeding the actual cost of preparing each new
Bond issued under this Section 2.08 and of the expenses which may be incurred by the City, the
Authority and the Trustee in the premises. Any Bond issued under the provisions of this
Section 2.08 in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original
additional contractual obligation on the part of the Authority whether or not the Bond so
alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be
entitled to the benefits of this Indenture with all other Bonds secured by this Indenture.
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ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; ADDITIONAL BONDS
Section 3.01. Issuance of the 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 Bonds in the principal amount of four million one hundred twenty-five
thousand dollars ($4,125,000).
Section 3.02. Application of Proceeds of the Bonds. The proceeds received from the sale
of the Bonds ($4,125,000.00), being the principal amount of the Bonds, shall be deposited in trust
with the Trustee or transferred as follows:
(a) The Trustee shall deposit the amount of $125,000.00 in the Costs of Issuance Fund;
and
(b) The Trustee shall deposit the remaining balance of such proceeds ($4,000,000.00) in
the 2024 Project Fund.
The Trustee may, in its discretion, establish a temporary fund or account to facilitate the
foregoing transfers.
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." The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee
to pay the Costs of Issuance upon submission of Written Requisitions 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 said fund. Each
Written Requisition of the Authority 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. On May
14, 2024, or upon the earlier Written Request of the Authority, all amounts remaining in the
Costs of Issuance Fund shall be transferred by the Trustee to the City for deposit in the 2024
Project Fund and the Costs of Issuance Fund shall be closed.
Section 3.04. Establishment and Application of 2024 Project Fund.
(a) The Trustee shall establish when required and maintain and hold in trust a separate
fund designated as the "2024 Project Fund." The moneys in the 2024 Project Fund shall be used
by the City to pay the costs of the 2024 Project, including any interest payable during the
construction of such project, if applicable. Amounts deposited in the 2024 Project Fund shall be
used solely for payment of 2024 Project Costs.
(b) Before any payment from the 2024 Project Fund shall be made, the City shall file or
cause to be filed with the Trustee a Written Requisition of the City stating (i) the name of the
person to whom each such payment is due, which may be the City in the case of reimbursement
for costs of the 2024 Project theretofore paid or to be paid by the City; (ii) the respective
amounts to be paid; (iii) the purpose by general classification for which each obligation to be
paid was incurred; and (iv) that each item thereof is a proper charge against the 2024 Project
Fund and has not been previously paid from said Fund. The Trustee may conclusively rely on
the accuracy of each such Written Requisition and shall have no duty or obligation to verify the
content of any Written Requisition.
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(c) When the 2024 Project has been completed, the City shall notify the Trustee of such
completion. Any moneys remaining in the 2024 Project Fund upon such notification shall be
transferred and applied upon the written order of the City to the Bond Fund and the 2024
Project Fund shall be closed. The City shall acquire, construct and install the 2024 Project or
cause the 2024 Project to be acquired, constructed and installed and shall proceed with due
diligence and use its best efforts to cause the construction and / or installation of the 2024 Project
to be completed by February 14, 2027, delays beyond the reasonable control of the City only
excepted.
Section 3.05. Validity of Bonds. The validity of the authorization and issuance of the
Bonds is not dependent on and shall not be affected in any way by any proceedings taken by
the Authority or the Trustee with respect to or in connection with the Installment Sale
Agreement. The recital contained in the Bonds that the same are issued pursuant to the
Constitution and laws of the State shall be conclusive evidence of their validity and of
compliance with the provisions of law in their issuance.
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ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. Terms of Redemption.
(a) Sinking Account Redemption. The Bonds are subject to mandatory redemption, in part,
from Sinking Account payments set forth in the following schedule on April 1, 2025, and on
April 1 in each year thereafter to and including April 1, 2044, at a redemption price equal to the
principal amount thereof to be redeemed (without premium), together with interest accrued
thereon to the date fixed for redemption; provided, however, that if some but not all of the Bonds
have been redeemed pursuant to subsection (b) below, the total amount of Sinking Account
payments to be made subsequent to such redemption shall be reduced in an amount equal to
the principal amount of the Bonds so redeemed by reducing future Sinking Account payment in
inverse order of payment date.
Redemption Date
(April 1)
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
t Maturity.
Principal
Amount
$105,000
135,000
140,000
145,000
155,000
160,000
170,000
180,000
185,000
195,000
205,000
215,000
225,000
235,000
245,000
260,000
270,000
285,000
300,000
315,000
(b) Optional Redemption. The Bonds are subject to redemption, at the option of the City on
or after April 1, 2034, as a whole on any date or in part on any Interest Payment Date, by lot,
from any available source of funds, from prepayments of the Installment Payments made at the
option of the City pursuant to Section 9.2 of the Installment Sale Agreement, at a redemption
price equal to the principal amount of the Bonds to be redeemed, together with accrued interest
thereon to the date fixed for redemption, without premium. Partial redemptions shall be
applied to the principal of the Bond in inverse order of sinking account payment.
Section 4.02. Notice of Redemption. Notice of redemption shall be mailed by first class
mail, postage prepaid, not less than thirty (30) nor more than sixty (60) days before any
redemption date, to the Owner at its address appearing on the Registration Books. 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 Bonds are to be redeemed and, in the case of Bonds to
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be redeemed in part only, the 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 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.
Notice of any redemption of Bonds (other than redemptions pursuant to Section 4.01(a))
shall either (i) explicitly state that the proposed redemption is conditioned on there being on
deposit in the applicable fund or account on the redemption date sufficient money to pay the
full redemption price of the Bonds to be redeemed, or (ii) be sent only if sufficient money to pay
the full redemption price of the Bonds to be redeemed is on deposit in the applicable fund or
account.
Section 4.03. 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 equal in aggregate principal amount to the unredeemed portion of the Bonds
surrendered.
Section 4.04. 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 Bonds (or portions thereof) so called for redemption being
held by the Trustee, 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 Owner of said Bonds shall have no rights
in respect thereof except to receive payment of the redemption price thereof.
All Bonds redeemed pursuant to the provisions of this Article shall be canceled by the
Trustee upon surrender thereof and destroyed.
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ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.01. Pledge and Assignment; Bond Fund.
(a) 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 any other
amounts (including proceeds of the sale of the Bonds) held in any fund or account established
pursuant to this Indenture 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. Said
pledge shall constitute a lien on and security interest in such assets and shall attach, be
perfected and be valid and binding from and after the Closing Date, without any physical
delivery thereof or further act.
(b) The Authority hereby transfers in trust, grants a security interest in and assigns to
the Trustee, for the benefit of the Owner from time to time of the Bonds, all of the Revenues and
all of the rights of the Authority in the Installment Sale Agreement (other than the rights of the
Authority under Sections 4.9, 6.3 and 8.4 thereof). The Trustee shall be entitled to and shall
collect and receive all of the Revenues, and any Revenues 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
also shall be 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.
The assignment of the Installment Sale Agreement to the Trustee is solely in its capacity
as Trustee under this Indenture and the duties, powers and liabilities of the Trustee in acting
thereunder shall be subject to the provisions of this Indenture, including, without limitation, the
provisions of Article VIII hereof. The Trustee shall not be responsible for any representations,
warranties, covenants or obligations of the Authority.
(c) 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. All Revenues deposited with the Trustee shall be held, disbursed, allocated and
applied by the Trustee only as provided in this Indenture.
(d) The Trustee shall provide written notice to the City, at least ten Business Days
preceding each Interest Payment Date, of the amount of Revenues, derived from Installment
Payments as required by the Installment Sale Agreement, due to the Trustee on such Interest
Payment Date, taking into account any investment earnings which shall be applied as a credit
against such required payment. If, on the 5th Business Day preceding each Interest Payment
Date, the Trustee is not in receipt of the total amount due to the Trustee on such Interest
Payment Date, the Trustee shall provide a second similar notice to the City and promptly notify
the Director of Finance / City Treasurer by telephone. Notwithstanding the foregoing, the failure
of the Trustee to provide either of such notices shall in no way relieve the City of its obligation
to make all Installment Payments as required by the Installment Sale Agreement.
Section 5.02. Allocation of Revenues. On each date on which principal of or interest on
the Bonds becomes due and payable, the Trustee shall transfer from the Bond Fund and deposit
into the following respective accounts (each of which the Trustee shall establish and maintain
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within the Bond Fund), the following amounts in the following order of priority, the
requirements of each such account (including the making up of any deficiencies in any such
account resulting from lack of Revenues sufficient to make any earlier required deposit) at the
time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
(a) The Trustee shall deposit in the Interest Account 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 due and payable on such date on all Bonds then Outstanding.
(b) The Trustee shall deposit in the Sinking Account or the Principal Account an amount
required to cause the aggregate amount on deposit in the Sinking Account or the Principal
Account to equal the principal amount or the Sinking Account redemption of the Bonds coming
due and payable on such date.
Section 5.03. Application of 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 shall become due and payable (including accrued interest on any Bonds purchased or
redeemed prior to maturity pursuant to this Indenture).
Section 5.04. Application of Sinking Account and Principal Account. All amounts in the
Sinking Account and Principal Account shall be used and withdrawn by the Trustee solely to
pay the principal amount or the Sinking Account redemption of the Bonds at their respective
maturity dates.
Section 5.05. Investments. All moneys in any of the funds or accounts established with
the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted
Investments. Such investments shall be directed by the Authority pursuant to a Written Request
of the Authority filed with the Trustee at least two (2) 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 the money market fund set forth in the letter of authorization and
direction executed by the Authority and delivered to the Trustee. If no specific money market
fund had been specified by the Authority, the Trustee shall make a request to the Authority for
investment directions and, if no investment directions are provided, such amount shall be held
in cash, uninvested until specific investment directions are provided by the Authority to the
Trustee. 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 investments are registrable, such
investments shall be registered in the name of the Trustee.
All interest or gain derived from the investment of amounts in 2024 Project Fund shall
be retained therein. All interest or gain derived from the investment of amounts in Costs of
Issuance Fund shall be retained therein. All interest or gain derived from the investment of
amounts in Interest Account shall be retained therein. All interest or gain derived from the
investment of amounts in any other funds or accounts established hereunder shall be
transferred when received to the Interest Account.
For purposes of acquiring any investments hereunder, the Trustee may commingle
funds held by it hereunder. The Trustee or an affiliate 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 pursuant to
this Section 5.05.
Such investments shall be valued by the Trustee not less often than quarterly, at the
market value thereof, exclusive of accrued interest. Deficiencies in the amount on deposit in any
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fund or account resulting from a decline in market value shall be restored no later than the
succeeding valuation date.
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 will not receive
such confirmations to the extent permitted by law. The Trustee will furnish the Authority with
account transaction statements as provided herein which shall include detail for all investment
transactions made by the Trustee hereunder.
The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection
with any investments made by the Trustee hereunder.
Section 5.06. Valuation and Disposition of Investments. All moneys held by the Trustee
shall be held in trust, but need not be segregated from other funds unless specifically required
by this Indenture. Except as specifically provided in this Indenture, the Trustee shall not be
liable to pay interest on any moneys received by it, but shall be liable only to account to the
Authority for earnings derived from funds that have been invested.
The Authority covenants that all investments of amounts deposited in any fund or
account created by or pursuant to this Indenture, or otherwise containing gross proceeds of the
Bonds (within the meaning of section 148 of the Code) shall be acquired, disposed of, and
valued (as of the date that valuation is required by this Indenture or the Code) at Fair Market
Value.
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ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Punctual Pam. 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
Revenues and other assets pledged for such payment as provided in this Indenture.
Section 6.02. No 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
shall not have been so extended. Nothing in this Section 6.02 shall be deemed to limit the right
of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such
issuance shall not be deemed to constitute an extension of maturity of the Bonds.
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 pursuant to law to issue the Bonds and to enter into this Indenture and to
pledge and assign the Revenues and other assets purported to be pledged and assigned,
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 Owner under this Indenture against all claims and demands of all persons
whomsoever.
Section 6.05. Accounting Records and Financial Statements. 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 complete and accurate entries shall be made of all
transactions made by it relating to the proceeds of Bonds, the Revenues, the Installment Sale
Agreement and all funds and accounts established pursuant to this Indenture. Such books of
record and account shall be available for inspection by the Authority and the City, during
business hours and under reasonable circumstances. The Trustee shall deliver a monthly
accounting of all funds and accounts except for any fund or account which has a balance of
$0.00 and has not had any activity since the last reporting date. The Trustee shall establish such
other funds and accounts as it deems necessary to carry out its duties under this Indenture.
Section 6.06. No Additional Obligations. 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.
Section 6.07. Tax Covenants.
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(a) No Arbitrage. The Authority shall not take, or permit to be taken by the Trustee, the
City or otherwise, any action with respect to the proceeds of the Bonds which, if such action had
been reasonably expected to have been taken, or had been deliberately and intentionally taken,
on the date of issuance of the Bonds would have caused the Bonds to be "arbitrage bonds'
within the meaning of section 148 of the Code.
(b) Rebate Requirement. The Authority shall cause the City to take any and all actions
necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess
investments earnings, if any, to the federal government, to the extent that such section is
applicable to the Bonds.
(c) Private Activity Bond Limitation. The Authority shall assure that the proceeds of the
Bonds are not so used as to cause the Bonds to satisfy the private business tests of section 141(c)
of the Code or the private loan financing test of section 141(b) of the Code.
(d) 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 any of the Bonds to be
"federally guaranteed" within the meaning of section 149(b) of the Code.
(e) Maintenance of Tax Exemption. The Authority shall take any and all actions necessary
to assure the exclusion of interest on the Bonds from the gross income of the Owner to the same
extent as such interest is permitted to be excluded from gross income under the Code as in
effect on the date of issuance of the Bonds.
(f) Small Issuer Exemption from Bank Deductibility Restriction. The Authority hereby
designates the Bonds for purposes of paragraph (3) of section 265(b) of the Code and represents
that not more than $10,000,000 aggregate principal amount of obligations the interest on which
is excludable (under section 103(a) of the Code) from gross income for federal income tax
purposes (excluding (i) private activity bonds, as defined in section 141 of the Code, except
qualified 501(c)(3) bonds as defined in section 145 of the Code and (ii) current refunding
obligations to the extent the amount of the refunding obligation does not exceed the
outstanding amount of the refunded obligation), has been or will be issued by or on behalf of
the City, including all subordinate entities of the City, during the calendar year 2024.
Section 6.08. Installment Sale Agreement. The Trustee shall promptly collect all amounts
due from the City pursuant to 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 Owner of the rights and benefits provided in this
Indenture.
Section 6.11. Continued Existence of the Authority. The Authority will take or cause to
be taken all actions reasonably necessary to continue its existence until such time as the Bonds
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have been paid in full, including but not limited to the addition or substitution of one or more
new members.
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The following events shall be Events of Default
hereunder:
(a) Default in the due and punctual payment of the principal of any Bonds when and as
the same shall become due and payable, whether at maturity as therein expressed, by
acceleration, or otherwise.
(b) Default in the due and punctual payment of any installment of interest on any Bonds
when and as the same shall become due and payable.
(c) Default by the Authority in the observance of any of the other covenants, agreements
or conditions on its part in this Indenture or in the Bonds contained, if such default shall have
continued for a period of thirty (30) days after written notice thereof, specifying such default
and requiring the same to be remedied, shall have been given to the Authority by the Trustee;
provided, however, that if in the reasonable opinion of the Authority the default stated in the
notice can be corrected, but not within such thirty (30) day period, such default shall not
constitute an Event of Default hereunder if the Authority shall commence to cure such default
within such thirty (30) day period and thereafter diligently and in good faith cure such failure
in a reasonable period of time; provided that such additional cure period may not exceed 30
days without the written consent of the Owner.
(d) 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 shall occur, then,
and in each and every such case during the continuance of such Event of Default, the Trustee
may, and shall at the written direction of the Owner, upon notice in writing to the Authority
and the City, 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
contained 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 or the City shall deposit 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
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) shall have been made good or cured to the satisfaction of the Trustee or
provision deemed by the Trustee to be adequate shall have been made therefor, then, and in
every such case, the Owner, by written notice to the Authority, the City and the Trustee, or the
Trustee if such declaration was made by the Trustee, may, on behalf of the Owner, 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.
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Section 7.03. Application of Revenues and Other Funds After Default. If an Event of
Default shall occur and be 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 as follows and in the following order:
(a) To the payment of any expenses necessary in the opinion of the Trustee to protect the
interests of the Owner and payment of reasonable fees, charges and expenses of the Trustee
(including reasonable fees and disbursements of its counsel) 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, 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 Owner. 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 Owner for the purpose of exercising and prosecuting on their behalf such
rights and remedies as may be available to such Owner under the provisions of the Bonds, this
Indenture and applicable provisions of any law. Upon the occurrence and continuance of an
Event of Default or other occasion giving rise to a right in the Trustee to represent the Owner,
the Trustee in its discretion may, and upon the written request of the Owner, and upon being
indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights
of such Owner by such appropriate action, suit, mandamus or other proceedings as it shall
deem most effectual to protect and enforce any such right, at law or in equity, either for the
specific performance of any covenant or agreement contained herein, or in aid of the execution
of any power herein granted, or for the enforcement of any other appropriate legal or equitable
right or remedy vested in the Trustee or in the Owner under the Bonds, this Indenture or any
other law; and upon instituting such proceeding, the Trustee shall be entitled, as a matter of
right, to the appointment of a receiver of the Revenues and other assets pledged under this
Indenture, pending such proceedings. 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 the Owner, subject to the provisions of this Indenture.
Section 7.05. Owner Direction of Proceedings. Anything in this Indenture to the contrary
notwithstanding, the Owner shall have the right, by an instrument or concurrent instruments in
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writing executed and delivered to the Trustee, and upon indemnification of the Trustee to its
reasonable satisfaction, to direct the method of conducting all remedial proceedings taken by
the Trustee hereunder, provided that such direction shall not be otherwise than in accordance
with law and the provisions of this Indenture, and that the Trustee shall have the right to
decline to follow any such direction which in the opinion of the Trustee would expose it to
liability.
Section 7.06. Limitation on Owner's Right to Sue. Notwithstanding any other provision
hereof, the Owner shall have no 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)
the Owner shall have given to the Trustee written notice of the occurrence of an Event of
Default; (b) the Owner shall have made written request upon the Trustee to exercise the powers
hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) the
Owner shall have tendered to the Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request; (d) the Trustee shall have failed to
comply with such request for a period of sixty (60) days after such written request shall have
been received by, and said tender of indemnity shall have been made to, the Trustee; and (e) no
direction inconsistent with such written request shall have been given to the Trustee during
such sixty (60) day period by the Owner.
Section 7.07. Absolute Obligation of Authority. Nothing in Section 7.06 or in any other
provision of this Indenture or in the Bonds contained shall affect or impair the obligation of the
Authority, which is absolute and unconditional, to pay the principal of and interest on the
Bonds to the Owner at its date of maturity, but only out of the Revenues and other assets herein
pledged therefor, or affect or impair the right of the Owner, which is also absolute and
unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.
Section 7.08. Termination of Proceedings. In case any proceedings taken by the Trustee
or the Owner on account of any Event of Default shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Trustee or the Owner, then in every
such case the Authority, the Trustee and the Owner, 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
Owner shall continue as though no such proceedings had been taken.
Section 7.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Trustee or to the Owner 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 7.10. No Waiver of Default. No delay or omission of the Trustee or of the Owner
to exercise any right or power arising upon the occurrence of any Event of Default shall impair
any such right or power or shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and every power and remedy given by this Indenture to the Trustee or the
Owner may be exercised from time to time and as often as may be deemed expedient.
Section 7.11. Parties Interested Herein. Nothing in this Indenture expressed or implied is
intended or shall be construed to confer upon, or to give to, any person or entity, other than the
City, the Authority or the Trustee, their officers, employees and agents, and the Owner any
right, remedy or claim under or by reason of this Indenture, or any covenant, condition or
stipulation hereof, and all covenants, stipulations, promises and agreements in this Indenture
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contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the
City, the Authority or the Trustee, their officers, employees and agents, and the Owner.
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ARTICLE VIII
THE TRUSTEE
Section 8.01. Appointment of Trustee. The Bank of New York Mellon Trust Company,
N.A., a national banking association organized and existing under and by virtue of the laws of
the United States of America, 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 agrees that it will maintain a
Trustee having a corporate trust office in the State, with (or if a member of a bank holding
company system, its parent holding company shall have) a combined capital and surplus of at
least fifty million dollars ($50,000,000), and subject to supervision or examination by federal or
State authority, so long as any Bonds are Outstanding. If such national banking association,
bank or trust company publishes a report of condition at least annually pursuant to law or to
the requirements of any supervising or examining authority above referred to, then for the
purpose of this Section 8.01 the combined capital and surplus of such national banking
association, bank or trust company shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
The Trustee is hereby authorized to pay the principal of and interest and maturity
amount on the Bonds when duly presented for payment at maturity, and to cancel all Bonds
upon payment thereof. The Trustee shall keep accurate records of all funds administered by it
and of all Bonds paid and discharged.
Section 8.02. Acceptance of Trustee. The Trustee hereby accepts the 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, prior to the occurrence of an Event of Default and after curing of all
Events of Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of Default hereunder has
occurred (which has not been cured or waived), the Trustee may exercise such of the rights and
powers vested in it by this Indenture, and shall use the same degree of care and skill and
diligence in their exercise, as a prudent person would use in the conduct of its own affairs.
(b) The Trustee may execute any of the trusts or powers hereof and perform the duties
required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled to
advice of counsel concerning all matters of trust and its duty hereunder. 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. The Trustee may conclusively rely upon an opinion of
counsel as full and complete protection for any action taken or suffered by it hereunder.
(c) The Trustee shall not be responsible for any recital herein, or in the Bonds, or for any
of the supplements thereto or instruments of further assurance, or for the sufficiency of the
security for the Bonds issued hereunder or intended to be secured hereby and the Trustee shall
not be bound to ascertain or inquire as to the observance or performance of any covenants,
conditions or agreements on the part of the Authority hereunder.
(d) Except as provided in Section 3.02, the Trustee shall not be accountable for the use of
any proceeds of sale of the Bonds delivered hereunder. The Trustee may become the Owner of
secured hereby with the same rights which it would have if not the Trustee; may acquire and
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dispose of other bonds or evidences of indebtedness of the Authority with the same rights it
would have if it were not the Trustee.
(e) The Trustee shall be protected in acting, in good faith and without negligence, upon
any notice, request, consent, certificate, order, affidavit, letter, telegram, requisition, facsimile
transmission, electronic mail or other paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons. Any action taken or
omitted to be taken by the Trustee in good faith and without negligence pursuant to this
Indenture upon the request or authority or consent of any person who at the time of making
such request or giving such authority or consent is the Owner, shall be conclusive and binding
upon all future Owners and upon Bonds issued in exchange therefor or in place thereof. The
Trustee shall not be bound to recognize any person as an Owner or to take any action at his
request unless the ownership of such Bond by such person shall be reflected on the Registration
Books.
(f) As to the existence or non-existence of any fact or as to the sufficiency or validity of
any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a Written
Certificate of the Authority as sufficient evidence of the facts therein contained and prior to the
occurrence of an Event of Default hereunder of which the Trustee has been given notice or is
deemed to have notice, as provided in Section 8.02(h) hereof, shall also be at liberty to accept a
Written Certificate of the Authority to the effect that any particular dealing, transaction or
action is necessary or expedient, but may at its discretion secure such further evidence deemed
by it to be necessary or advisable, but shall in no case be bound to secure the same.
(g) The permissive right of the Trustee to do things enumerated in this Indenture shall
not be construed as a duty and it shall not be answerable for other than its negligence or willful
misconduct. The immunities and exceptions from liability of the Trustee shall extend to its
officers, directors, employees and agents.
(h) The Trustee shall not be required to take notice or be deemed to have notice of any
Event of Default hereunder, under the Installment Sale Agreement, except failure by the
Authority to make any of the payments to the Trustee required to be made by the Authority
pursuant hereto or failure by the Authority to file with the Trustee any document required by
this Indenture to be so filed subsequent to the issuance of the Bonds, unless the Trustee shall be
specifically notified in writing of such default by the Authority, and all notices or other
instruments required by this Indenture to be delivered to the Trustee must, in order to be
effective, be delivered at the Trust Office of the Trustee, and in the absence of such notice so
delivered the Trustee may conclusively assume there is no Event of Default hereunder except as
aforesaid.
(i) At any and all reasonable times the Trustee and its duly authorized agents, attorneys,
experts, accountants and representatives, shall have the right (but not any duty) fully to inspect
all books, papers and records of the Authority pertaining to the Bonds, and to make copies of
any of such books, papers and records such as may be desired but which is not privileged by
statute or by law.
(j) The Trustee shall not be required to give any bond or surety in respect of the
execution of the said trusts and powers or otherwise in respect of the premises hereof.
(k) Notwithstanding anything elsewhere in this Indenture with respect to the execution
of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever
within the purview of this Indenture, the Trustee shall have the right, but shall not be required,
to demand any showings, certificates, opinions, appraisals or other information, or corporate
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action or evidence thereof, as may be deemed desirable for the purpose of establishing the right
of the Authority to the execution of any Bonds, the withdrawal of any cash, or the taking of any
other action by the Trustee.
(1) Before taking any action under Article VII hereof or this Article VIII at the request or
direction of the Owner, the Trustee may require payment or reimbursement of its fees and
expenses, including fees and expenses of counsel and receipt of an indemnity bond satisfactory
to it from the Owner to protect it against all liability, except liability which is adjudicated to
have resulted from its own negligence or willful misconduct in connection with any action so
taken. Before being required to take any action, the Trustee may require an opinion of
Independent Counsel acceptable to the Trustee, which opinion shall be made available to the
other parties hereto upon request, which counsel may be counsel to any of the parties hereto, or
a verified certificate of any party hereto, or both, concerning the proposed action. If it does so in
good faith, the Trustee shall be absolutely protected in relying thereon.
(m) All moneys received by the Trustee shall, until used or applied or invested as herein
provided, be held in trust for the purposes for which they were received but need not be
segregated from other funds except to the extent required by law.
(n) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, unless it shall be provided that the Trustee was negligent in ascertaining the
pertinent facts.
Whether or not therein expressly so provided, every provision of this Indenture, the
Installment Sale Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Article.
The Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, coupon or other paper or document.
(o) The Trustee shall have no responsibility for or liability in connection with assuring
that all of the procedures or conditions to closing set forth in the contract for purchase of the
Bonds have been met on the closing date or, that all documents required to be delivered on the
Closing Date to the parties are actually delivered, except its own responsibility to receive the
proceeds of the sale, deliver the Bonds or other certificates expressly required to be delivered by
it and its counsel.
The Trustee may assume that parties to the contract for purchase of the Bonds have
waived their rights to receive documents or to require the performance of procedures if the
parties to whom such documents are to be delivered or for whom such procedures are to be
performed do not require delivery or performance on or prior to the Closing Date.
(p) The Trustee shall have 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.
(q) 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 enforced delay ("unavoidable 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
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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 2024 Project,
malicious mischief, condemnation, and unusually severe weather or delays of suppliers or
subcontractors due to such causes or any similar even and / or occurrences beyond the control of
the Trustee.
(r) Whenever in the administration of the trusts imposed upon it by this Trust
Agreement the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate of the Authority or City, and such certificate shall be full
warrant to the Trustee for any action taken or suffered in good faith under the provisions of this
Indenture in reliance upon such certificate, but in its discretion the Trustee may, in lieu thereof,
accept other evidence of such matter or may require such additional evidence as it may deem
reasonable.
(s) The Trustee agrees to accept and act upon instructions or directions pursuant to this
Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured
electronic methods, provided, however, that, the Trustee shall have received an incumbency
certificate listing persons designated to give such instructions or directions and containing
specimen signatures of such designated persons, which such incumbency certificate shall be
amended and replaced whenever a person is to be added or deleted from the listing. If the
Authority elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar
electronic method) and the Trustee in its discretion elects to act upon such instructions, the
Trustee's understanding of such instructions shall be deemed controlling. The Trustee shall not
be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's
reliance upon and compliance with such instructions notwithstanding such instructions conflict
or are inconsistent with a subsequent written instruction. The Authority agrees to assume all
risks arising out of the use of such electronic methods to submit instructions and directions to
the Trustee, including without limitation the risk of the Trustee acting on unauthorized
instructions, and the risk of interception and misuse by third parties.
(t) The Trustee shall not be liable in connection with the performance of its duties
hereunder, except for its own negligence or willful misconduct.
(u) The Trustee may consult with counsel, including, without limitation, counsel of or to
the Authority or City, with regard to legal questions, and, shall be full and complete
authorization and protection in respect of any action taken or suffered by the Trustee hereunder
in accordance therewith.
Section 8.03. Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to
payment and reimbursement for reasonable fees for its services rendered hereunder and all
advances, counsel fees (including expenses) and other expenses reasonably and necessarily
made or incurred by the Trustee in connection with such services. Upon the occurrence of an
Event of Default hereunder, but only upon an Event of Default, the Trustee shall have a first
lien with right of payment prior to payment of any Bond upon the amounts held hereunder for
the foregoing fees, charges and expenses incurred by it respectively.
Section 8.04. Notice to Owner of Default. If an Event of Default hereunder occurs with
respect to any Bonds of which the Trustee has been given or is deemed to have notice, as
provided in Section 8.02(h) hereof, then the Trustee shall immediately give written notice
thereof, by first-class mail to the Owner, unless such Event of Default shall have been cured
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before the giving of such notice; provided, however, that unless such Event of Default consists of
the failure by the Authority to make any payment when due, the Trustee shall, within thirty
(30) days of the Trustee's knowledge thereof, give such notice to the Owner unless the Trustee
in good faith determines that it is in the best interests of the Owner not to give such notice.
Section 8.05. Intervention by Trustee. In any judicial proceeding to which the Authority
is a party which, in the opinion of the Trustee and its counsel, has a substantial bearing on the
interests of the Owner, the Trustee may intervene on behalf of the Owner, and subject to Section
8.02(1) hereof, shall do so if requested in writing by the Owner.
Section 8.06. Removal of Trustee. The Owner may at any time, and the Authority may,
so long as no Event of Default shall have occurred and then be continuing, remove the Trustee
initially appointed, and any successor thereto, by an instrument or concurrent instruments in
writing delivered to the Trustee, whereupon the Authority (with the written consent of the
City) or the Owner, as the case may be, shall appoint a successor or successors thereto; provided
that any such successor shall be a bank or trust company meeting the requirements set forth in
Section 8.01.
Section 8.07. Resignation by Trustee. The Trustee and any successor Trustee may at any
time give written notice of its intention to resign as Trustee hereunder, such notice to be given
to the Authority and the City by first class mail. Upon receiving such notice of resignation, the
Authority (with the written approval of the City) shall promptly appoint a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor Trustee shall become
effective upon acceptance of appointment by the successor Trustee. Upon such acceptance, the
Authority shall cause notice thereof to be given by first class mail, postage prepaid, to the
Owner at its address set forth on the Registration Books.
Section 8.08. Appointment of Successor Trustee. In the event of the removal or
resignation of the Trustee pursuant to Sections 8.06 or 8.07, respectively, and if the Owner shall
not have approved a successor Trustee, then, with the prior written consent of the City, the
Authority shall promptly appoint a successor Trustee. In the event the Authority shall for any
reason whatsoever fail to appoint a successor Trustee within sixty (60) days following the
delivery to the Trustee of the instrument described in Section 8.06 or within sixty (60) days
following the receipt of notice by the Authority pursuant to Section 8.07, the Trustee may, at the
expense of the Authority, apply to a court of competent jurisdiction for the appointment of a
successor Trustee meeting the requirements of Section 8.01 hereof. Any such successor Trustee
appointed by such court shall become the successor Trustee hereunder notwithstanding any
action by the Authority purporting to appoint a successor Trustee following the expiration of
such ninety -day period.
Within sixty (60) days following the appointment of a successor Trustee hereunder, the
former Trustee shall deliver to such successor Trustee (a) all funds and accounts held by the
former Trustee hereunder, and (b) any and all information and documentation as may be
required or reasonably requested by the Authority or such successor Trustee in connection with
the transfer to such successor Trustee of all the duties and functions of the Trustee hereunder.
The Authority shall pay the reasonable costs and expenses of such former Trustee incurred in
connection with such transfer.
Section 8.09. Merger or Consolidation. Any company into which the Trustee may be
merged or converted or with which it may be consolidated or any company resulting from any
merger, conversion or consolidation to which it shall be a party or any company to which the
Trustee may sell or transfer all or substantially all of it corporate trust business, provided that
such company shall meet the requirements set forth in Section 8.01, shall be the successor to the
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Trustee and vested with all of the title to the trust estate and all of the trusts, powers,
discretion, immunities, privileges and all other matters as was its predecessor, without the
execution or filing of any paper or further act, anything herein to the contrary notwithstanding.
Section 8.10. Concerning any Successor Trustee. Every successor Trustee appointed
hereunder shall execute, acknowledge and deliver to its predecessor and also to the Authority
an instrument in writing accepting such appointment hereunder and thereupon such successor,
without any further act, deed or conveyance, shall become fully vested with all the estates,
properties, rights, powers, trusts, duties and obligations of its predecessors; but such
predecessor shall, nevertheless, on the Request of the Authority, or of the Trustee's successor,
execute and deliver an instrument transferring to such successor all the estates, properties,
rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall
deliver all securities and moneys held by it as the Trustee hereunder to its successor. Should
any instrument in writing from the Authority be required by any successor Trustee for more
fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested
or intended to be vested in the predecessor Trustee, any and all such instruments in writing
shall, on request, be executed, acknowledged and delivered by the Authority.
Section 8.11. Appointment of Co -Trustee. It is the purpose of this Indenture that there
shall be no violation of any law of any jurisdiction (including particularly the law of the State)
denying or restricting the right of banking corporations or associations to transact business as
Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture,
and in particular in case of the enforcement of the rights of the Trustee on default, or in the case
the Trustee deems that by reason of any present or future law of any jurisdiction it may not
exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the
properties, in trust, as herein granted, or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Trustee appoint an additional
individual or institution as a separate co -trustee. The following provisions of this Section 8.11
are adopted to these ends.
In the event that the Trustee appoints an additional individual or institution as a
separate or co -trustee, each and every remedy, power, right, claim, demand, cause of action,
immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised
by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest
in such separate or co -trustee but only to the extent necessary to enable such separate or co -
trustee to exercise such powers, rights and remedies, and every covenant and obligation
necessary to the exercise thereof by such separate or co -trustee shall run to and be enforceable
by either of them.
Should any instrument in writing from the Authority be required by the separate trustee
or co -trustee so appointed by the Trustee for more fully and certainly vesting in and confirming
to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments
in writing shall, on request, be executed, acknowledged and delivered by the Authority. In case
any separate trustee or co -trustee, or a successor to either, shall become incapable of acting,
resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of
such separate trustee or co -trustee, so far as permitted by law, shall vest in and be exercised by
the Trustee until the appointment of a new trustee or successor to such separate trustee or co -
trustee.
Section 8.12. Indemnification; Limited Liability of Trustee. The Authority further
covenants and agrees to indemnify and save the Trustee and its officers, directors, agents and
employees, harmless against any loss, expense, including legal fees and expenses, and liabilities
which it may incur arising out of or in the exercise and performance of its powers and duties
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hereunder, including the reasonable costs and expenses of defending against any claim of
liability or arising out of any untrue statement or alleged untrue statement of any material fact
or omission or alleged omission to state a material fact necessary to make the statements made,
in light of the circumstances under which they were made, not misleading in any official
statement or other disclosure utilized in connection with the sale of the Bonds, but excluding
any and all losses, expenses and liabilities which are due to the negligence or misconduct of the
Trustee, its officers, directors, agents or employees. No provision in this Indenture shall require
the Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder
if repayment of such funds or adequate indemnity against such liability or risk is not assured to
it. The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance
with the direction of the Owner relating to the time, method and place of exercising any trust or
power or conducting any proceeding or remedy available to the Trustee under this Indenture of
for any special, indirect, consequential or punitive damages. The obligations of the Authority
hereunder and Section 8.03 shall survive the resignation or removal of the Trustee, or the
discharge of this Indenture.
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ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS INDENTURE
Section 9.01. Amendments Permitted.
(a) This Indenture and the rights and obligations of the Authority and of the Owner and
of the Trustee may be modified or amended from time to time and at any time by an indenture
or indentures supplemental thereto, which the Authority and the Trustee may enter into when
the written consent of the Owner, exclusive of Bonds disqualified as provided in Section 11.09
hereof, shall have been filed with the Trustee. No such modification or amendment shall (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 of the Owner of each Bond so affected,
or (ii) reduce the aforesaid percentage of Bonds the consent of the Owner of which is required to
effect any such modification or amendment, or 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 Owner 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 Owner. It shall not be necessary for the consent of the Owner to
approve the particular form of any Supplemental Indenture, but it shall be sufficient if such
consent shall approve the substance thereof.
(b) This Indenture and the rights and obligations of the Authority, of the Trustee and the
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
Owner, 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 Owner,
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 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;
(iii) to modify, amend or supplement this Indenture in such manner as to cause
interest on the Bonds to remain excludable from gross income under the Code; or
(iv) to facilitate the issuance of Parity Obligations by the City pursuant to the
Installment Sale Agreement.
(c) The Trustee may in its discretion, but shall not be obligated to, enter into any such
Supplemental Indenture authorized by subsections (a) or (b) of this Section 9.01 which
materially adversely affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
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(d) Prior to the Trustee entering into any Supplemental Indenture hereunder, there shall
be delivered 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 pursuant to 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 the Owner 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 pursuant to this Article may, and if the Trustee so
determines shall, bear a notation by endorsement or otherwise in form approved by the
Authority and the Trustee as to any modification or amendment provided for in such
Supplemental Indenture, and, in that case, upon demand on the Owner at the time of such
execution and presentation of his Bonds for the purpose at the Trust Office 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 and the Trustee, to any modification or amendment
contained in such Supplemental Indenture, shall be prepared and executed by the Authority
and authenticated by the Trustee, and upon demand on the Owner shall be exchanged at the
Trust Office, 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 series and
maturity.
Section 9.04. Amendment of Particular Bonds. The provisions of this Article IX shall not
prevent any Bond Owner from accepting any amendment as to the particular Bonds held by
him.
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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 depositing with the Trustee, in trust, 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 to the Trustee, for cancellation by it, all of such Bonds.
If the Authority shall also pay or cause 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. In such
event, upon the Written Request of the Authority, the Trustee shall execute and deliver to 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 City all moneys or
securities or other property held by it pursuant to this Indenture which are not required for the
payment of any of such Bonds not theretofore surrendered for such payment.
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.
The Authority may at any time surrender to the Trustee for cancellation by it 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 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 in the funds and
accounts established pursuant to this Indenture and shall be:
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(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; or
(b) Defeasance Obligations, 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,
as such principal and interest become due;
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).
Section 10.04. Unclaimed Funds. Notwithstanding any provisions of this Indenture, and
subject to applicable provisions of State law, any moneys held by the Trustee in trust for the
payment of the principal of, or interest on, any Bonds and remaining unclaimed for a period
ending on the earlier of 10 days prior to the date unclaimed funds would escheat to the state or
(a) two (2) years after the principal of all of the Bonds has become due and payable (whether at
maturity or by acceleration as provided in this Indenture), if such moneys were so held at such
date, or (b) two (2) years after the date of 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 City as
aforesaid, the Trustee may (at the cost of the City) first mail to the Owner, 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.
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ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of Authority Limited to Revenues. Notwithstanding anything in
this Indenture or in the Bonds contained, the Authority shall not be 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 shall not be 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 Owner. 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 Owner, 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 Owner.
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.
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 shall be required to be given
by mail, such requirement shall be satisfied by the deposit of such notice in the United States
mail, postage prepaid, by first class mail.
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,
upon Written Request of the Authority, in lieu of such cancellation and delivery, destroy such
Bonds (in the presence of an officer of the Authority, if the Authority shall so require) as may be
allowed by law, and 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,
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paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or
unenforceable.
Section 11.07. Notices. All written notices 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) upon transmission by facsimile transmission or other form of
telecommunication, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c)
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 Authority: Tustin Public Financing Authority
c / o City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
Phone: (714) 573-3000
If to the City: City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
Phone: (714) 573-3000
If to the Trustee: The Bank of New York Mellon Trust Company, N.A.
400 South Hope Street, Suite 400
Los Angeles, CA 90071
Attention: Corporate Trust Department
Phone: (213) 630-6249
If to the Original Purchaser: Capital One Public Funding, LLC
1307 Walt Whitman Road, 3rd Floor
Melville, NY 11747
Attention: President
Phone: (631) 531-2824
The City, the Authority, the Trustee and the Original Purchaser, by notice given
hereunder, may designate different addresses to which subsequent notices, certificates or other
communications will be sent.
Section 11.08. Evidence of Rights of Owner. Any request, consent or other instrument
required or permitted by this Indenture to be signed and executed by the Owner may be in any
number of concurrent instruments of substantially similar tenor and shall be signed or executed
by the Owner 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 11.08.
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
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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 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 Owner has 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 11.09 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, any decision by the Trustee taken upon the advice of counsel
shall be full protection to the Trustee. Upon request of the Trustee, the Authority and the City
shall specify in a certificate to the Trustee those Bonds disqualified pursuant to this Section
11.09 and the Trustee may conclusively rely on such certificate.
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 Owner entitled
thereto, subject, however, to the provisions of Section 10.04 hereof 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
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 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 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. 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 11.14. Governing Law. This Indenture shall be governed by and construed in
accordance with the laws of the State.
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IN WITNESS WHEREOF, the TUSTIN PUBLIC FINANCING AUTHORITY has caused
this Indenture to be signed in its name by its Executive Director, 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.
TUSTIN PUBLIC FINANCING
AUTHORITY
LIM
Executive Director
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By
Authorized Signatory
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Quint & Thimmig LLP
EXHIBIT A
FORM OF BOND
12/18/23
01/03/24
01/10/24
01/22/24
01/26/24
THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THIS BOND MAY BE TRANSFERRED ONLY IN
WHOLE TO A TRANSFEREE PERMITTED BY SECTION 2.05 OF THE INDENTURE WHO
DELIVERS TO THE TRUSTEE AND THE AUTHORITY AN EXECUTED
REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM SET FORTH IN THE
INDENTURE.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
ORANGE COUNTY
TUSTIN PUBLIC FINANCING AUTHORITY
Water Revenue Bond, Series 2024
(Subordinate Lien)
INTEREST RATE
MATURITY DATE
ORIGINAL ISSUE DATE
4.820%*
Aril 1, 2044
February 14, 2024
REGISTERED OWNER: CAPITAL ONE PUBLIC FUNDING, LLC
PRINCIPAL AMOUNT: FOUR MILLION ONE HIUNDRED TWENTY-FIVE
THOUSAND DOLLARS
The TUSTIN PUBLIC FINANCING AUTHORITY, a public body corporate and politic,
duly organized and existing under the 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, 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 fifteenth 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 September 15, 2024, 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
If the Default Rate or the Taxable Rate (each as defined in the Indenture) is in effect, interest will be computed
by applying such alternate rate.
Exhibit A 20027.04
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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
April 1 and October 1 in each year, commencing October 1, 2024 (collectively, the "Interest
Payment Dates"), calculated on the basis of a 360-day year composed of twelve 30-day months.
The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee")shall pay
principal of and interest on this Bond when due by wire transfer (or other form of electronic
payment) in immediately available funds to the Registered Owner hereof as of the Record Date
in accordance with such wire transfer instructions as shall be filed by the Registered Owner
with the Trustee from time to time, or, with the Registered Owner's consent, by another
commercially reasonable method of payment, to an account in the United States designated by
the Registered Owner. Payments of principal of this Bond shall be made without the
requirement for presentation and surrender of the Bond by the Registered Owner, provided
that principal of the Bond that is payable at final maturity shall be made only upon presentation
and surrender thereof at the corporate trust office (the "Trust Office") of the Trustee in Los
Angeles, California, or such other place as designated by the Trustee..
This Bond is not a debt of the City of Tustin (the "City"), Orange County, the State of
California, or any of its political subdivisions, 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 Revenues.
This Bond is one of a duly authorized issue of bonds of the Authority designated as the
"Tustin Public Financing Authority Water Revenue Bonds, Series 2024 (Subordinate Lien)" (the
"Bonds"), in an aggregate principal amount of four million one hundred twenty-five thousand
dollars ($4,125,000), all of like tenor and date (except for such variation, if any, as may be
required to designate varying numbers, maturities or interest rates) and all issued pursuant to
the provisions of Article 4 of Chapter 5 of Division 7 of Title 1 (commencing with section 6584)
of the California Government Code (the "Bond Law"), and pursuant to an Indenture of Trust,
dated as of February 1, 2024, by and between the Authority and the Trustee (the "Indenture"),
and a resolution of the Board of Directors of the Authority adopted on February 6, 2024,
authorizing the issuance of the Bonds. 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 Revenues, 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 aid in financing the acquisition and
construction of certain improvements and facilities (the "2024 Project") which constitute part of
the water enterprise of the City, to be sold to the City by the Authority pursuant to an
Installment Sale Agreement, dated as of February 1, 2024, by and between the Authority as
seller and the City as purchaser (the "Installment Sale Agreement"). The City's obligations
under the Installment Sale Agreement will be subordinate to the City's obligations with respect
to the payment of debt service on its City of Tustin (Orange County, California) 2016 Water
Refunding Revenue Bonds and its City of Tustin (Orange County, California) Taxable Water
Refunding Revenue Bonds, Series 2020.
This Bond and the interest hereon and all other Bonds and the interest thereon are
special obligations of the Authority, and are payable from, and are secured by a charge and lien
on the Revenues as defined in the Indenture, consisting primarily of installment payments to be
made by the City under the Installment Sale Agreement as the purchase price for the 2024
Project. As and to the extent set forth in the Indenture, all of the Revenues are exclusively and
Exhibit A
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irrevocably pledged in accordance with the terms hereof and the provisions of the Indenture, to
the payment of the principal of and interest on 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 are subject to redemption, at the option of the City on any date on or after
April 1, 2034, as a whole or in part, by such maturities as shall be determined by the City, and
by lot within a maturity, from any available source of funds, at a redemption price equal to the
principal amount of the Bonds to be redeemed, together with accrued interest thereon to the
date fixed for redemption, without premium.
The Bonds are also subject to mandatory redemption from sinking account payments
made by the Authority, in part by lot, on April 1, 2025, and on April 1 in each year thereafter to
and including April 1, 2044, at a redemption price equal to the principal amount thereof to be
redeemed together with accrued interest thereon to the redemption date, without premium, as
set forth in the following table:
Redemption Date
(April 1)
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
t Maturity.
Principal
Amount
$105,000
135,000
140,000
145,000
155,000
160,000
170,000
180,000
185,000
195,000
205,000
215,000
225,000
235,000
245,000
260,000
270,000
285,000
300,000
315,000
As provided in the Indenture, notice of redemption shall be mailed by the Trustee by
first class mail not less than thirty (30) nor more than sixty (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 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.
Exhibit A
Page 3
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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.
If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds
may be declared due and payable upon the conditions, in the manner and with the effect
provided in the Indenture, but such declaration and its consequences may be rescinded and
annulled as further provided in the Indenture.
Ownership of this Bond may be transferred in whole only and only to a (i) an affiliate of
the Registered Owner or (ii) a bank, trust, custodian, insurance company or other financial
institution or an affiliate thereof, in each case that executes and delivers to the Trustee a
representation letter in substantially the form attached to the Indenture as Exhibit B.
Nothing herein limits the right of the Registered Owner to sell or assign participation
interests in the Bond, in minimum amounts of $250,000, to one or more entities listed in (i) or (ii)
above, provided that any participation, custodial or similar agreement under which multiple
ownership interests in the Bond are created shall provide the method by which the owners of
such interests shall establish the rights and duties of a single entity, owner, servicer or other
fiduciary or agent acting on behalf of all of such owners (a loan servicer) to act on their behalf
with respect to the rights and interests of the Registered Owner, including with respect to the
exercise of rights and remedies of the Registered Owner on behalf of such owners upon the
occurrence of an event of default under the Indenture.
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.
It is hereby certified 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
the Bond Law or 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 shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until the certificate of authentication hereon endorsed shall have
been signed by the Trustee.
Exhibit A
Page 4
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IN WITNESS WHEREOF, the Tustin Public Financing Authority has caused this Bond to
be executed in its name and on its behalf with the facsimile signature of its Chair and attested to
by the facsimile signature of its Secretary, all as of the Original Issue Date.
Attest:
TUSTIN PUBLIC FINANCING
AUTHORITY
By
Chair
Secretary
FORM OF TRUSTEE'S 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
LZ
Exhibit A
Page 5
Authorized Signatory
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FORM OF ASSIGNMENT
For value received, the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within Bond and do(es) 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:
Notice: Signature guarantee shall be made by a Notice: The signature on this assignment must
guarantor institution participating in the Securities correspond with the name(s) as written on the face of
Transfer Agents Medallion Program or in such other the within Bond in every particular without alteration or
guarantee program acceptable to the Trustee. enlargement or any change whatsoever.
Exhibit A
Page 6
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EXHIBIT B
FORM OF INVESTOR'S LETTER
Tustin Public Financing Authority
Tustin, California
City of Tustin
Tustin, California
The Bank of New York Mellon Trust Company, N.A.
Los Angeles, California
Stifel, Nicolaus & Company, Incorporated
Los Angeles, California
Re: Tustin Public Financing Authority Water Revenue Bonds, Series 2024 (Subordinate Lien)
Ladies and Gentlemen:
The undersigned (the "Purchaser"), being the purchaser of the above -referenced bonds
(the "Bonds") from the previous owner thereof (the "Owner") does hereby certify, represent
and warrant for the benefit of the Tustin Public Financing Authority (the "Authority"), the City
of Tustin (the "City") and The Bank of New York Mellon Trust Company, N.A., as trustee (the
"Trustee") that:
(a) The Purchaser (MARK OR INDICATE APPROPRIATELY):
[] is an affiliate of the Owner; or
[] is a bank, trust, custodian, insurance company or other financial institution
or an affiliate thereof.
(b) The Purchaser understands that the Bonds have not been registered
under the United States Securities Act of 1933, as amended (the "Securities Act"), or
under any state securities laws. The Purchaser agrees that it will comply with any
applicable state and federal securities laws then in effect with respect to any disposition
of the Bonds by it, and further acknowledges that any current exemption from
registration of the Bonds does not affect or diminish such requirements.
(c) The Purchaser is not now and has never been controlled by, or under
common control with, the Authority or the City. Neither the Authority nor the City has
ever been and is not now controlled by the Purchaser. The Purchaser has entered into no
arrangements with the Authority or the City or with any affiliate in connection with the
Bonds, other than as disclosed to the Authority and the City.
(d) The Purchaser has authority to purchase the Bonds and to execute this
letter and any other instruments and documents required to be executed by the
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Purchaser in connection with the purchase of the Bonds. The individual who is signing
this letter on behalf of the Purchaser is a duly appointed, qualified, and acting officer of
the Purchaser and is authorized to cause the Purchaser to make the certificates,
representations and warranties contained herein by execution of this letter on behalf of
the Purchaser.
(e) The Purchaser acknowledges that it has the right to sell and transfer the
Bonds, in whole, subject to compliance with the transfer restrictions set forth in Section
2.05 of the Indenture of Trust, dated as of February 1, 2024, by and between the
Authority and the Trustee (the "Indenture'), including in certain circumstances the
requirement for the delivery to the Authority and the Trustee of an purchaser letter in
the same form as this Purchaser Letter, including this paragraph. Failure to comply with
the provisions of Section 2.05 of the Indenture shall cause the purported transfer to be
null and void.
(f) The Bonds are not being acquired by the Purchaser for resale thereof in any
manner that would result in the Purchaser being an agent of the City or an underwriter
within the meaning of the Securities Act.
(g) The Purchaser acknowledges that it has made its own inquiry and analysis
with respect to the Bonds and security therefor, that it has received the documents
executed or adopted by the Authority or the City in connection with the Bonds and
other documents it has requested, and that it has either been supplied with or been
given access to information, including financial statements and other financial
information, to which a reasonable investor would consider important in making
investment decisions, and the Purchaser has had the opportunity to ask questions and
receive answers from knowledgeable individuals concerning the City and the Bonds and
the security therefor so that, as a reasonable investor, the Purchaser has been able to
make its decision to purchase the Bonds. The Purchaser has such knowledge and
experience in financial and business matters that it is capable of evaluating the merits
and risks of its prospective investment in the Bonds.
(h) The Purchaser acknowledges that it may sell or assign participation interests
in the Bonds, in accordance with terms and conditions of the Indenture (including sales
only in minimum amounts of $250,000 and only to an affiliate of the Purchaser or one or
more banks, trusts, custodians, insurance companies, or other financial institutions or
their affiliates). The Purchaser acknowledges that it is solely responsible for compliance,
and covenants and agrees with the City that it will comply, with the Indenture and all
applicable federal or state securities laws then in effect with respect to any subsequent
sale, transfer or other disposition of the Bonds, including disclosure of material
information (without involving the Authority or the City in any manner). The Purchaser
agrees to indemnify the Authority and the City for any liabilities or costs incurred by the
Authority or the City (including attorney fees) in connection with any sale, transfer or
other disposition of the Bonds in violation of such restrictions or laws.
(i) Neither the Trustee nor the Authority's bond counsel, or any of their
employees, counsel or agents will have any responsibility to the Purchaser for the
accuracy or completeness of information obtained by the Purchaser from any source
regarding the City or its financial condition, the provision for payment of the Bonds, or
the sufficiency of any security therefor. The Purchaser acknowledges that, as between
the Purchaser and all of such parties, the Purchaser has assumed responsibility for
obtaining such information and making such review as the Purchaser deemed necessary
or desirable in connection with its decision to purchase the Bonds.
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(j) The Purchaser acknowledges that the Bonds are exempt from the
requirements of Rule 15c2-12 of the Securities and Exchange Commission and that
neither the Authority nor the City has undertaken to provide any continuing disclosure
with respect to the Bonds, except as otherwise provided in the Indenture.
(k) The Purchaser understands that the Bonds (a) are not being registered or
otherwise qualified for sale under the "Blue Sky' laws and regulations of any state, (b)
will not be listed in any stock or other securities exchange, (c) will not carry a rating
from any rating agency, and (d) will be delivered in a form that may not be readily
marketable.
(1) The Purchaser acknowledges and agrees that the Placement Agent and
the Issuer take no responsibility for, and make no representation to the Purchaser, or any
subsequent purchaser, with regard to, a sale, transfer or other disposition of the Bonds
in violation of the provisions of the Indenture, or any securities law or income tax law
consequences thereof. The Purchaser also acknowledges that, with respect to the City's
obligations and liabilities, the Purchaser is solely responsible for compliance with the
sales restrictions on the Bonds in connection with any subsequent transfer of the Bonds
made by the Purchaser.
(m) The Purchaser acknowledges that the sale of the Bonds to the Purchaser is
made in reliance upon the certifications, representations, and warranties herein made to
the addressees hereto.
(n) The interpretation of the provisions hereof shall be governed and
construed in accordance with State law without regard to principles of conflicts of laws.
(o) All representations of the Purchaser contained in this letter shall survive
the execution and delivery of the Bonds to the Purchaser as representations of fact
existing as of the date of execution and delivery of this Purchaser Letter.
The Purchaser acknowledges that the sale of the Bonds to the Purchaser is made in
reliance upon the certifications, representations and warranties herein by the addressees hereto.
Capitalized terms used herein and not otherwise defined have the meanings given such terms
in the Indenture.
[PURCHASER]
By
Name
Title
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Quint & Thimmig LLP 12 / 18 / 23
O1/03/24
O1/10/24
O1/22/24
O1/26/24
INSTALLMENT SALE AGREEMENT
Dated as of February 1, 2024
by and between
TUSTIN PUBLIC FINANCING AUTHORITY, as Seller
and the
CITY OF TUSTIN, as Purchaser
$4,125,000
Tustin Public Financing Authority
Water Revenue Bonds, Series 2024 (Subordinate Lien)
20027.04
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section1.1. Definitions................................................................................................................................................................... 2
ARTICLE II
COVENANTS AND REPRESENTATIONS
Section 2.1. Covenants and Representations of the City........................................................................................................... 3
Section 2.2. Covenants and Representations of the Authority................................................................................................. 5
ARTICLE III
ISSUANCE OF BONDS; ACQUISITION AND CONSTRUCTION OF THE 2024 PROJECT
Section3.1. The Bonds.................................................................................................................................................................... 6
Section 3.2. Acquisition and Construction of the 2024 Project................................................................................................. 6
Section3.3. Grant of Easements.................................................................................................................................................... 6
Section 3.4. Appointment of City as Agent of Authority.......................................................................................................... 6
ARTICLE IV
SALE OF ENTERPRISE; INSTALLMENT PAYMENTS
Section4.1. Sale............................................................................................................................................................................. 7
Section 4.2. Term 7
Section4.3. Title............................................................................................................................................................................. 7
Section4.4. Installment Payments................................................................................................................................................. 7
Section 4.5. Application of Gross Revenues; Pledge and Application of Pledged Net Revenues ....................................... 7
Section 4.6. Special Obligation of the City; Obligations Absolute........................................................................................... 8
Section4.7. Rate Covenant............................................................................................................................................................. 9
Section 4.8. Limitations on Future Obligations Secured by Net Revenues...........................................................................10
Section4.9. Additional Payments...............................................................................................................................................11
Section 4.10. Payment of Rebatable Amounts...........................................................................................................................11
Section4.11. Rate Stabilization Fund..........................................................................................................................................12
ARTICLE V
MAINTENANCE, TAXES, INSURANCE AND OTHER MATTERS
Section 5.1. Maintenance, Utilities, Taxes and Assessments...................................................................................................13
Section5.2.Operation of Enterprise...........................................................................................................................................13
Section5.3. Insurance....................................................................................................................................................................13
Section5.6. Eminent Domain.......................................................................................................................................................14
Section5.5. Records and Accounts.............................................................................................................................................14
Section5.6. Against Encumbrances............................................................................................................................................14
Section 5.7. Against Competitive Facilities................................................................................................................................14
Section5.8. Tax Covenants...........................................................................................................................................................14
Section5.9.Other Covenants.......................................................................................................................................................15
ARTICLE VI
DISCLAIMER OF WARRANTIES; ACCESS
Section6.1. Disclaimer of Warranties.........................................................................................................................................17
Section6.2. Access to the Enterprise...........................................................................................................................................17
Section 6.3. Release and Indemnification Covenants...............................................................................................................17
Section 6.4. Non -Liability of Authority for Enterprise Obligations.......................................................................................17
ARTICLE VII
ASSIGNMENT, SALE AND AMENDMENT
Section7.1. Assignment by the City...........................................................................................................................................18
ao
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Section 7.2. Sale or Other Disposition of Enterprise.................................................................................................................18
Section 7.3. Amendment of Installment Sale Agreement........................................................................................................18
ARTICLE VIII
EVENTS OF DEFAULT
Section8.1. Events of Default Defined.......................................................................................................................................19
Section8.2. Remedies on Default................................................................................................................................................19
Section8.3. No Remedy Exclusive..............................................................................................................................................
20
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses...............................................................................................
20
Section 8.5. No Additional Waiver Implied by One Waiver...................................................................................................
20
Section 8.6. Trustee and Bond Owners to Exercise Rights......................................................................................................
20
Section 8.7. Rights of the Owners of Parity Obligations..........................................................................................................
21
ARTICLE IX
PREPAYMENT OF INSTALLMENT PAYMENTS
Section9.1. Security Deposit........................................................................................................................................................ 22
Section9.2.Optional Prepayment............................................................................................................................................... 22
Section 9.3. Credit for Amounts on Deposit.............................................................................................................................. 22
ARTICLE X
MISCELLANEOUS
Section10.1. Further Assurances.................................................................................................................................................
23
Section10.2. Notices......................................................................................................................................................................
23
Section10.3. Third Party Beneficiaries.......................................................................................................................................
23
Section10.4. Governing Law.......................................................................................................................................................
23
Section10.5. Binding Effect..........................................................................................................................................................
23
Section 10.6. Severability of Invalid Provisions........................................................................................................................
23
Section 10.7. Article and Section Headings and References....................................................................................................
24
Section10.8. Execution of Counterparts....................................................................................................................................
24
Section 10.9. Waiver of Personal Liability..................................................................................................................................
24
Section 10.10. Limitation of Rights to Parties and Bond Owners...........................................................................................
24
Section10.11. Captions.................................................................................................................................................................
24
EXHIBIT A SCHEDULE OF INSTALLMENT PAYMENTS
EXHIBIT B DESCRIPTION OF THE 2024 PROJECT
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INSTALLMENT SALE AGREEMENT
THIS INSTALLMENT SALE AGREEMENT, dated as of February 1, 2024, is by and
between the TUSTIN PUBLIC FINANCING AUTHORITY, a joint powers authority duly
organized and existing under the laws of the State of California (the "Authority"), and the CITY
OF TUSTIN, a general law city and municipal corporation duly organized and existing under
the laws of the State of California (the "City"),
WITNESSETH:
WHEREAS, the City has, together with the former Tustin Community Redevelopment
Agency, duly established the Authority and prescribed its purposes and powers;
WHEREAS, the City has determined that, due to prevailing financial market conditions,
it is in the best interests of the City to finance the acquisition and construction of certain
improvements and facilities (the "2024 Project") which constitute part of the City's municipal
water enterprise (the "Enterprise");
WHEREAS, for the purpose of raising funds necessary to provide such financial
assistance to the City, the Authority proposes to authorize the issuance of its revenue bonds
under the provisions of Article 4 (commencing with section 6584) of Chapter 5 of Division 7 of
Title 1 of the California Government Code (the "Act"), designated as the Tustin Public
Financing Authority Water Revenue Bonds, Series 2024 (Subordinate Lien) (the "Bonds"), all
pursuant to and secured by that certain Indenture of Trust, dated as of February 1, 2024, by and
between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee;
WHEREAS, in order to provide for the repayment of the Bonds, the Authority will sell
the 2024 Project to the City pursuant to an installment sale agreement, under which the City will
agree to make installment payments to the Authority (the "Installment Payments") which will
be calculated to be sufficient to enable the Authority to pay the principal of and interest on the
Bonds when due and payable;
WHEREAS, the City's obligation to make Installment Payments will be payable from a
pledge of the net revenues of the Enterprise, in all respects, junior, subordinate and inferior to
the City's obligations with respect to the payment of debt service on its City of Tustin (Orange
County, California) 2016 Water Refunding Revenue Bonds and its City of Tustin (Orange
County, California) Taxable Water Refunding Revenue Bonds, Series 2020;
WHEREAS, the Authority and the City have duly authorized the execution and delivery
of this Installment Sale Agreement;
NOW, THEREFORE, for and in consideration of the premises and the material
covenants hereinafter contained, the parties hereto hereby formally covenant, agree and bind
themselves as follows:
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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 Installment Sale Agreement shall have the
respective meanings specified in the Indenture.
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ARTICLE II
COVENANTS AND REPRESENTATIONS
Section 2.1. Covenants and Representations of the City. The City makes the following
covenants and representations to the Authority that as of the Closing Date:
(a) The City is a general law city and municipal corporation duly organized and validly
existing under the laws of the State, has full legal right, power and authority to enter into this
Installment Sale Agreement and to carry out and consummate all transactions contemplated
hereby, and by proper action has duly authorized the execution and delivery of this Installment
Sale Agreement.
(b) The representatives of the City executing this Installment Sale Agreement are fully
authorized to execute the same.
(c) This Installment Sale Agreement has been duly authorized, executed and delivered
by the City, and constitutes the legal, valid and binding agreement of the City, enforceable
against the City in accordance with its terms.
(d) The execution and delivery of this Installment Sale Agreement, the consummation of
the transactions herein contemplated and the fulfillment of or compliance with the terms and
conditions hereof, 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 the Enterprise or the 2024 Project 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 and
adversely affect the consummation of the transactions contemplated by this Installment Sale
Agreement, or the financial condition, assets, improvements or operations of the Enterprise.
(e) 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 Installment Sale Agreement or the consummation of any transaction herein
contemplated, except as have been obtained or made and as are in full force and effect.
(f) There is no action, suit, proceeding, inquiry or investigation before or by any court or
federal, state, municipal or other governmental authority pending or threatened against or
affecting the City or the Enterprise which, if determined adversely to the City or its interests,
would have a material and adverse effect upon the consummation of the transactions
contemplated by or the validity of this Installment Sale Agreement or upon the financial
condition or operation of the Enterprise, 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
and adversely affect the consummation of the transactions contemplated by this Installment
Sale Agreement, or the financial conditions or operations of the Enterprise.
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(g) The City has heretofore established the Water Fund into which the City deposits and
will continue to deposit all Gross Revenues, and which the City will maintain throughout the
Term of this Installment Sale Agreement.
(h) The City reasonably believes that sufficient funds can be obtained to make all
Installment Payments and all other amounts required to be paid pursuant to this Installment
Sale Agreement, provided that to the extent Pledged Net Revenues is insufficient to make each
Installment Payment when due, the City agrees to make such payment from any available
moneys.
(i) The City has never non -appropriated or defaulted under any of its payment or
performance obligations or covenants, either under any of its bonds, notes, or other debt
obligations.
(j) During the term of this Installment Sale Agreement, the 2024 Project will be used by
the City only for the purpose of performing one or more governmental or proprietary functions
of the City consistent with the permissible scope of the City's authority.
(k) The City has experienced no material change in its financial condition since June 30,
2023.
(1) Except to the extent disclosed to the Original Purchaser, the Enterprise is free of all
Hazardous Substances, and the City is in full compliance with all Applicable Environmental
Laws.
(m) As of the Closing Date, there are no outstanding bonds, notes, loans, leases, water
installment sale agreements or other obligations which have any security interest in or claim
upon the Pledged Net Revenues, which security interest or claim is superior to or on a parity
with the Installment Payments.
(n) The City's audited financial statements for the period ended June 30, 2023, present
fairly the financial condition of the City as of the date thereof and the results of operation for the
period covered thereby. Except as has been disclosed to the Original Purchaser, there has been
no change in the financial condition of the City since June 30, 2023, that will in the reasonable
opinion of the City materially impair its ability to perform its obligations under this Installment
Purchase Agreement.
(o) All information, reports and other papers and data furnished by the City to the
Original Purchaser were, at the time the same were so furnished, complete and accurate in all
material respects and insofar as necessary to give the Original Purchaser a true and accurate
knowledge of the subject matter and were provided in expectation of the Original Purchaser's
reliance thereon in entering into the transactions contemplated by this Installment Purchase
Agreement. No fact is known to the City which has had or, so far as the City can now
reasonably foresee, may in the future have a Material Adverse Effect, which has not been set
forth in the financial statements previously furnished to the Original Purchaser or in other such
information, reports, papers and data or otherwise disclosed in writing to the Original
Purchaser prior to the Closing Date. Any financial, budget and other projections furnished to
the Original Purchaser by the City or its or their agents were prepared in good faith on the basis
of the assumptions stated therein, which assumptions were fair and reasonable in light of the
conditions existing at the time of delivery of such financial, budget or other projections, and
represented, and as of the date of this representation, represent the City's best estimate of its
future financial performance. No document furnished nor any representation, warranty or other
written statement made to the Original Purchaser in connection with the negotiation,
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preparation or execution of this Installment Purchase Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state (as of the date made or
furnished) any material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were or will be made, not misleading.
(p) In connection with the City's compliance with any continuing disclosure
undertakings (each, a "Continuing Disclosure Agreement") entered into by the City pursuant to
SEC Rule 15c2-12 promulgated pursuant to the Securities and Exchange Act of 1934, as
amended (the "Rule"), the City believes it may be required to file with the Municipal Securities
Rulemaking Board's Electronic Municipal Market Access system or its successor ("EMMA")
notice of its incurrence of its obligations with respect to this Installment Sale Agreement and
related documents and notice of any accommodation, waiver, amendment, modification of
terms or other similar events reflecting financial difficulties in connection with this Installment
Sale Agreement and related documents, in each case including a full copy thereof or a
description of the material terms thereof (each such posting, an "EMMA Posting"). The City
agrees that it shall not file or submit or permit the filing or submission of any EMMA Posting
that includes information relating to Capital One Public Funding, LLC ("COPF"), including the
following: unredacted sensitive or confidential information about COPF or its affiliates in any
portion of an EMMA Posting, address and account information of COPF or any affiliates, e-mail
addresses, telephone numbers, fax numbers, names and signatures of officers, employees and
signatories of COPF or its affiliates. The City acknowledges and agrees that COPF and its
affiliates are not responsible for the City's or any other entity's (including, but not limited to,
any broker -dealer's) compliance or noncompliance (or any claims, losses or liabilities arising
therefrom) with the Rule, any Continuing Disclosure Agreement or any applicable securities or
other laws, including but not limited to those relating to the Rule.
Section 2.2. Covenants and Representations of the Authority. The Authority makes the
following covenants and representations to the City that as of the Closing Date:
(a) The Authority is a joint powers entity, duly organized and existing under the laws of
the State. The Authority has the power to enter into the transactions contemplated by this
Installment Sale Agreement and to carry out its obligations hereunder. By proper action of its
governing body, the Authority has been duly authorized to execute, deliver and duly perform
this Installment Sale Agreement and the Indenture.
(b) To finance the 2024 Project and to pay the Costs of Issuance, the Authority will issue
the Bonds, which will mature, bear interest and be subject to redemption as set forth in the
Indenture.
(c) The Bonds will be issued under and secured by the Indenture, and pursuant thereto,
certain of the Authority's interests in this Installment Sale Agreement have been assigned to the
Trustee as security for payment of the principal of and interest on the Bonds.
(d) The Authority is not in default under any of the provisions of the laws of the State,
which default would affect its existence or its powers referred to in subsection (a) of this Section
2.2.
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ARTICLE III
ISSUANCE OF BONDS; ACQUISITION AND CONSTRUCTION OF THE 2024
PROJECT
Section 3.1. The Bonds. The Authority has authorized the issuance of the Bonds pursuant
to the Indenture in the aggregate principal amount of four million one hundred twenty-five
thousand dollars ($4,125,000). The Authority agrees that the proceeds of sale of the Bonds shall
be paid to the Trustee on the Closing Date for deposit pursuant to the terms and conditions of
the Indenture. The City hereby approves the Indenture, the assignment to the Trustee of the
rights of the Authority assigned under and pursuant to the Indenture, and the issuance of the
Bonds by the Authority under and pursuant to the Indenture.
Section 3.2. Acquisition and Construction of the 2024 Project. 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 2024 Project in accordance with Plans and Specifications,
purchase orders, construction contracts and other documents relating thereto pursuant to all
applicable requirements of law. Direct payment of the costs of the 2024 Project shall be made
from amounts on deposit in the 2024 Project Fund, pursuant to Section 3.04 of the Indenture. All
contracts for, and all work relating to, the Acquisition and Construction of the 2024 Project shall
be subject to all applicable provisions of law relating to the acquisition and construction of
public works by the City.
The City shall have the right from time to time in its sole discretion to amend the
description of the 2024 Project to be financed and sold by the Authority hereunder. In order to
exercise such right, the City shall file with the Authority and the Trustee an amended Exhibit B
hereto.
Section 3.3. Grant of Easements. The City hereby grants to the Authority all necessary
easements, rights of way and rights of access in and to all real property or interests therein now
or hereafter acquired and owned by the City, as may be necessary or convenient to enable the
Authority to acquire, construct and install the 2024 Project thereon or thereabouts. The City
covenants that it will execute, deliver and record any and all additional documents as may be
required to be executed, delivered and recorded to establish such easements, rights of way and
rights of access.
Section 3.4. Appointment of City as Agent of Authority. The Authority hereby appoints
the City as its agent to carry out all phases of the Acquisition and Construction of the 2024
Project pursuant to 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 and Construction of the 2024 Project. The Authority, or the City as
agent of the Authority hereunder, shall enter into, administer and enforce all purchase orders or
other contracts relating to the Acquisition and Construction of the 2024 Project. The City shall
submit Written Requisitions of the City to the Trustee from time to time pursuant to and in
accordance with the provisions of Section 3.04 of the Indenture for payment, or for
reimbursement to the City for payment, of all 2024 Project Costs. All contracts for, and all work
relating to, the Acquisition and Construction of the 2024 Project shall be subject to all applicable
provisions of law relating to the acquisition, construction, improvement, and equipping of like
projects and property by joint powers authorities and by municipal corporations.
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ARTICLE IV
SALE OF ENTERPRISE; INSTALLMENT PAYMENTS
Section 4.1. Sale. The Authority hereby agrees to sell the 2024 Project to the City, and the
City hereby agrees to purchase the 2024 Project from the Authority, upon the terms and
conditions set forth in this Installment Sale Agreement.
Section 4.2. Term. The Term of this Installment Sale Agreement shall commence on the
Closing Date, and shall end on the date on which the City shall have paid all of the Installment
Payments and all other amounts due and payable hereunder. The provisions of this Section 4.2
are subject in all respects to any other provisions of this Installment Sale Agreement relating to
the termination hereof with respect to the 2024 Project or any portion thereof.
Section 4.3. Title. Upon the Completion Date of each component of the 2024 Project, title
to such component shall be deemed conveyed to and vested in the City. The Authority and the
City shall execute, deliver and cause to be recorded any and all documents necessary to convey
such title to the City.
Section 4.4. Installment Payments.
(a) Obligation to Pay. The City agrees to pay to the Authority, its successors and assigns,
but solely from the Pledged Net Revenues, as the purchase price of the 2024 Project the
aggregate principal amount of four million one hundred twenty-five thousand dollars
($4,125,000), together with interest on the unpaid principal balance, payable in Installment
Payments coming due and payable in the respective amounts and on each Installment Payment
Date specified in Exhibit A. The Installment Payments shall be paid by the City to the Trustee,
as assignee of the Authority pursuant to the Indenture, in the amounts and at the times as set
forth in Section 4.5(b).
(b) Rate on Overdue Payments. In the event the City should fail to make any of the
payments required in this Section 4.4 and Section 4.10, the payment in default shall continue as
an obligation of the City until the amount in default shall have 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 Default Rate.
(c) Assignment. The City understands and agrees that all Installment Payments have
been assigned by the Authority to the Trustee in trust, pursuant to the Indenture, for the benefit
of the Owners of the Bonds, and the City hereby assents to such assignment. The Authority
hereby directs the City, and the City hereby agrees, to pay to the Trustee at its Trust Office, all
amounts payable by the City pursuant to this Section 4.4 and all amounts payable by the City
pursuant to Article IX.
Section 4.5. Application of Gross Revenues; Pledge and Application of Pledged Net
Revenues.
(a) Deposits Into Water Fund, Transfers to Make Installment Payments. All of the Gross
Revenues shall be deposited by the City immediately upon receipt in the Water Fund.
Upon receipt of Gross Revenues, the City shall segregate such amounts as shall be
estimated to be required (a) to pay all Maintenance and Operation Costs and (b) to make
payments due and payable on the Senior Obligations for the period beginning on such date and
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ending on the next anticipated date of receipt of Gross Revenues. Amounts remaining on
deposit in the Water Fund after payment of such Maintenance and Operation Costs and Senior
Obligations and shall be the Pledged Net Revenues.
The City covenants and agrees that all Pledged Net Revenues will be held by the City in
the Water Fund in trust for the benefit of the Trustee (as assignee of the rights of the Authority
hereunder) and the Bond Owners, and for the benefit of the owners of any Parity Obligations.
(b) Pledge of Pledged Net Revenues; Transfers. All of the Pledged Net Revenues are hereby
irrevocably pledged, charged and assigned to the punctual payment of the Installment
Payments and all Parity Obligations and, except as otherwise provided herein, the Pledged Net
Revenues shall not be used for any other purpose so long as any of the Installment Payments or
payments with respect to any Parity Obligations remain unpaid. Such pledge, charge and
assignment shall constitute a first lien on the Pledged Net Revenues for the payment of the
Installment Payments and all Parity Obligations in accordance with the terms hereof.
On or before the fifth Business Day preceding each Interest Payment Date, commencing
September 25, 2024, the City shall withdraw from the Water Fund (together with similar
withdrawals from the Water Fund with respect to all Parity Obligations):
(i) and transfer to the Trustee for deposit in the Bond Fund, an amount (other
than amounts required for payment of principal of or interest on any Bonds which have
matured but which have not been presented for payment), equal to the interest
component of the Installment Payment and the interest component of any outstanding
Parity Obligations coming due and payable on the next succeeding Interest Payment
Date, and the principal component of the Installment Payment and the principal
component of any outstanding Parity Obligations coming due and payable on the next
succeeding principal payment date, if any, provided that any amounts on deposit in the
Bond Fund shall be credited against the City's obligation to make such deposits or
transfers therein,
(ii) and transfer to funds or accounts established as reserve funds with respect to
Parity Obligations such amounts as are required for the replenishment thereof, the
amount, if any, required to increase the amount on deposit in reserve funds with respect
to Parity Obligations, the amount, if any, required to increase the amount on deposit
therein to the reserve requirement of such funds or account,
(iii) and pay all other amounts, including Additional Payments, when and as due
and payable under this Installment Sale Agreement and under any agreements relating
to Parity Obligations, and
(iv) and pay all amounts when and as due and payable with respect to any
Subordinate Debt.
(c) Release from Lien. Following the transfers described in paragraph (b) of this Section
4.5, excess Pledged Net Revenues shall be released from the lien of this Installment Sale
Agreement and shall be available for any lawful purpose of the City.
Section 4.6. Special Obligation of the City; Obligations Absolute. The City's obligation to
pay the Installment Payments, the Additional Payments, any other amounts coming due and
payable hereunder and payments with respect to Parity Obligations shall be a special obligation
of the City limited solely to the Pledged Net Revenues. Under no circumstances shall the City
be required to advance moneys derived from any source of income other than the Pledged Net
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Revenues and other sources specifically identified herein for the payment of the Installment
Payments, the Additional Payments or payments with respect to Parity Obligations, nor shall
any other funds or property of the City be liable for the payment of the Installment Payments,
the Additional Payments or payments with respect to Parity Obligations and any other amounts
coming due and payable hereunder.
The obligations of the City to make the Installment Payments, the Additional Payments
and payments with respect to Parity Obligations from the Pledged Net Revenues and to
perform and observe the other agreements contained herein and under agreements with respect
to Parity Obligations shall be absolute and unconditional and shall not be subject to any defense
or any right of setoff, counterclaim or recoupment arising out of any breach of the City, the
Authority or the Trustee of any obligation to the City or otherwise with respect to the
Enterprise, whether hereunder or otherwise, or out of indebtedness or liability at any time
owing to the City by the Authority or the Trustee. Until such time as all of the Installment
Payments, all of the Additional Payments and all other amounts coming due and payable
hereunder shall have been fully paid or prepaid, the City (a) will not suspend or discontinue
payment of any Installment Payments, Additional Payments, payments with respect to Parity
Obligations or such other amounts, (b) will perform and observe all other agreements contained
in this Installment Sale Agreement, and (c) will not terminate the Term of this Installment Sale
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 Enterprise, sale of the Enterprise, the
taking by eminent domain of title to or temporary use of any component of the Enterprise,
commercial frustration of purpose, any change in the tax law or other laws of the United States
of America or the State 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
Installment Sale Agreement.
Nothing contained in this Section 4.6 shall be construed to release the Authority or the
Trustee from the performance of any of the agreements on its part contained herein or in the
Indenture, and in the event the Authority or the Trustee shall fail to perform any such
agreements, the City may institute such action against the Authority or the Trustee 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 the
City's own cost and expense and in the City's own 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 such event the Authority hereby agrees to 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 shall so request.
Section 4.7. Rate Covenant. The City covenants to fix, prescribe, revise and collect rates,
fees and charges for the Enterprise as a whole for the services and improvements furnished by
the Enterprise during each Fiscal Year which are at least sufficient, after making allowances for
contingencies and error in the estimates, to yield Gross Revenues that are sufficient to pay the
following amounts in the following order of priority:
(a) all Maintenance and Operation Costs estimated by the City to become due and
payable in such Fiscal Year;
(b) all payments required with respect to Senior Obligations;
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(c) the Installment Payments and all payments required with respect to Parity
Obligations;
(d) all other payments required for compliance with this Installment Sale Agreement
and the instruments pursuant to which any Parity Obligations shall have been issued; and
(e) all payments required to meet any other obligations of the City which are charges,
liens, encumbrances upon or payable from the Gross Revenues,, including transfers to the Rate
Stabilization Fund pursuant to Section 4.11, the Net Revenues or the Pledged Net Revenues.
In addition, the City shall fix, prescribe, revise and collect rates, fees and charges for the
services and facilities furnished by the Enterprise during each Fiscal Year which are sufficient to
yield Net Revenues, including other funds accumulated in the City's Water Fund and which are
lawfully available to the City for payment, of at least one hundred twenty percent (120%) of the
amounts payable under the preceding paragraphs (b) and (c) in such Fiscal Year. When
calculated for purposes of this Section 4.7, Net Revenues do not include amounts which are
transferred from the Rate Stabilization Fund pursuant to Section 4.11 that are in excess of
twenty percent (20%) of the amounts payable under the preceding paragraphs (b) and (c) in
such Fiscal Year.
Section 4.8. Limitations on Future Obligations Secured by Net Revenues.
(a) No Obligations Superior to Installment Payments. In order to protect further the
availability of the Pledged Net Revenues and the security for the Installment Payments and any
Parity Obligations, the City hereby agrees that the City shall not, so long as the Installment
Payments are not fully paid or any Parity Obligations are outstanding, issue or incur any
obligations superior to the Installment Payments or such Parity Obligations.
(b) Parity Obligations. The City further covenants that it will not issue or incur any Parity
Obligations unless Net Revenues, calculated on sound accounting principles, as shown by the
books of the City for the latest Fiscal Year or any more recent twelve (12) month period selected
by the City ending not more than sixty (60) days prior to the adoption of the resolution
pursuant to which instrument such Parity Obligations are issued or incurred, as shown by the
books of the City, plus, at the option of the City, the additional allowance described below, shall
have amounted to at least 1.20 times Maximum Aggregate Annual Debt Service immediately
subsequent to the incurring of such Parity Obligations; provided, however, that the City may at
any time incur Parity Obligations without compliance with the foregoing conditions if the
Maximum Aggregate Annual Debt Service for each Fiscal Year during which such Parity
Obligations are Outstanding will not be increased by reason of the incurrence of such Parity
Obligations. When calculated for purposes of this Section 4.8(b), Net Revenues do not include
amounts which are transferred from the Rate Stabilization Fund pursuant to Section 4.11 that
are in excess of twenty percent (20%) of the amounts payable under paragraphs (b) and (c) of
Section 4.7 in such Fiscal Year.
Either or both of the following items may be added to such Net Revenues for the
purpose of applying the restriction contained herein:
(i) An allowance for revenues from any additions to or improvements or
extensions of the Enterprise to be constructed with the proceeds of such Parity
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,
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improvements and extensions to be constructed during the first 36-month period
following issuance of the proposed Parity Obligations, all as shown by the certificate or
opinion of a qualified independent consultant employed by the City, may be added to
such Net Revenues for the purpose of applying the restriction contained in this
subsection (b)(i) and/or
(ii) An allowance for earnings arising from any increase in the charges made for
service from the Enterprise which has become effective prior to the incurring of such
Parity Obligations but which, during all or any part of such Fiscal Year or any more
recent twelve (12) month period selected by the City ending not more than sixty (60)
days prior to the adoption of the resolution pursuant to which instrument such Parity
Obligations are issued or incurred, as shown by the books of the City, plus, at the option
of the City, the additional allowance, 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
qualified independent consultant employed by the City.
(c) Subordinate Debt. The City further covenants that the City shall not issue or incur any
Subordinate Obligations unless Pledged Net Revenues, calculated on sound accounting
principles, as shown by the books of the City for the latest Fiscal Year or any more recent twelve
(12) month period selected by the City ending not more than sixty (60) days prior to the
adoption of the resolution pursuant to which instrument such Subordinate Obligations are
issued or incurred, as shown by the books of the City shall, after deducting all amounts
required for the payment of the Bonds and any Parity Obligations, have amounted to at least 1.0
times the sum of the maximum annual debt service on all Subordinate Obligations outstanding
immediately subsequent to the incurring of such additional obligations. An allowance for
earnings arising from any increase in the charges made for service from the Enterprise 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, may be added in an amount equal to 100% of
the amount by which the Pledged 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 qualified
independent consultant employed by the City.
Section 4.9. Additional Payments. In addition to the Installment Payments, the City shall
pay when due all costs and expenses incurred by the Authority to comply with the provisions
of the Indenture, including without limitation all Costs of Issuance (to the extent not paid from
amounts on deposit in the Costs of Issuance Fund), and shall pay to the Trustee upon request
therefor all compensation for fees due to the Trustee and 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, together with all amounts required to indemnify the Trustee
pursuant to Section 6.3 hereof or Section 8.12 of the Indenture, and all costs and expenses of
attorneys, auditors, engineers and accountants. The rights of the Trustee and the obligations of
the City under this Section 4.9 shall survive the termination of this Installment Sale Agreement
and the resignation or removal of the Trustee.
Section 4.10. Payment of Rebatable Amounts. The City agrees to furnish all information
to, and cooperate fully with, the Authority and its officers, employees, agents and attorneys, in
order to assure compliance with the provisions of Section 6.07(b) of the Indenture. In the event
that the Authority shall determine, pursuant to Section 6.07(b) of the Indenture, that any
amounts are due and payable to the United States of America thereunder and that neither the
Authority nor the Trustee has on deposit an amount of available moneys (excluding moneys on
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deposit in the funds and accounts established for the payment of the principal of or interest on
the Bonds) to make such payment, the Authority shall promptly notify the City of such fact.
Upon receipt of any such notice, the City shall promptly pay to the Trustee from any source of
legally available funds, the amounts determined by the Authority to be due and payable to the
United States of America under such Section 6.07(b).
Section 4.11. Rate Stabilization Fund.
(a) There is hereby created a separate fund to be known as the "Rate Stabilization Fund,"
to be held and maintained by the City.
(b) From time to time, the City may deposit in the Rate Stabilization Fund from Gross
Revenues such amounts as the City may determine, as set forth in Section 4.7.
(c) The City may withdraw amounts from the Rate Stabilization Fund (i) for transfer to
the Bond Fund for inclusion in Gross Revenues for any Fiscal Year, for calculating the rate
covenant in Section 4.7, or (ii) for any other lawful purpose of the City.
(d) All interest or other earnings on deposits in the Rate Stabilization Fund shall be
withdrawn therefrom and accounted for as Gross Revenues.
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ARTICLE V
MAINTENANCE, TAXES, INSURANCE AND OTHER MATTERS
Section 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the Term of this
Installment Sale Agreement, all improvement, repair and maintenance of the Enterprise shall be
the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of
all utility services supplied to the Enterprise, which may include, without limitation, janitor
service, security, power, gas, telephone, light, heating, water and all other utility services, and
shall pay for or otherwise arrange for the payment of the cost of the repair and replacement of
the Enterprise resulting from ordinary wear and tear.
The City shall also pay or cause to be paid all taxes and assessments of any type or
nature, if any, charged to the Authority or the City affecting any Enterprise or the respective
interests or estates therein; provided, however, that with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of years, the City
shall be obligated to pay only such installments as are required to be paid during the Term of
this Installment Sale Agreement as and when the same become due.
The City may, at the City's expense and in its name, in good faith contest any such taxes,
assessments, utility and other charges and, in the event of any such contest, may permit the
taxes, assessments or other charges so contested to remain unpaid during the period of such
contest and any appeal therefrom unless the Authority shall notify the City that, in its opinion,
by nonpayment of any such items, the interest of the Authority hereunder or under the
Indenture will be materially adversely affected, in which event the City shall promptly pay such
taxes, assessments or charges or provide the Authority with full security against any loss which
may result from nonpayment, in form satisfactory to the Authority.
Section 5.2. Operation of Enterprise. The City covenants and agrees to operate or cause
to be operated the Enterprise in an efficient and economical manner and to operate, maintain
and preserve or caused to be operated, maintained and preserved the Enterprise in good repair
and working order. The City covenants that, in order to fully preserve and protect the priority
and security of the Bonds, the City shall pay from the Gross Revenues and discharge all lawful
claims for labor, materials and supplies furnished for or in connection with the Enterprise
which, if unpaid, may become a lien or charge upon the Pledged Net Revenues prior or
superior to the lien granted hereunder, or which may otherwise impair the ability of the City to
pay the Installment Payments in accordance herewith.
Section 5.3. Insurance. The City shall maintain or cause to be maintained, throughout the
Term of this Installment Sale Agreement, but only if and to the extent available at reasonable
cost from reputable insurers, liability and casualty insurance in such amounts and against such
risks as shall be appropriate for water systems of like size and with similar facilities as the
Enterprise. Such insurance may be maintained as part of or in conjunction with any other
insurance 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. All amounts collected from insurance against
accident to or destruction of any portion of the Enterprise shall be used to repair, rebuild or
replace such damaged or destroyed portion of the Enterprise. The proceeds of liability
insurance shall be applied toward the extinguishment or satisfaction of the liability with respect
to which such proceeds shall have been paid.
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Section 5.4. Eminent Domain. Any amounts received as awards as a result of the taking
of all or any part of the Enterprise by the lawful exercise of eminent domain, at the election of
the City (evidenced by a Written Certificate of the City filed with the Trustee and the Authority)
shall either (a) be used for the acquisition or construction of improvements and extension of the
Enterprise in replacement of the condemned portions thereof, or (b) with the prior written
consent of the Owner, applied as a credit against the City's obligation to make the Installment
Payments and payments with respect to any Parity Obligations in accordance with written
instructions of the City filed with the Trustee.
Section 5.5. Records and Accounts. The City shall keep proper books of record and
accounts of the Enterprise, separate from all other records and accounts, in which complete and
correct entries shall be made of all transactions relating to the Enterprise. Said books shall, upon
prior request, be subject to the reasonable inspection by the Owners of not less than ten percent
(10%) in aggregate principal amount of the Outstanding Bonds, or their representatives
authorized in writing. The City shall cause the books and accounts of the Enterprise to be
audited annually by an Independent Accountant, not more than one hundred eighty (180) days
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.
Section 5.6. Against Encumbrances. The City will not make any pledge of or place any
lien on moneys in the Water Fund except as provided herein. The City may at any time, or from
time to time, execute Parity Obligations or Subordinate Obligations as permitted herein or incur
evidences of indebtedness or incur other obligations for any lawful purpose which are payable
from and secured by a pledge of lien on Pledged Net Revenues as may from time to time be
deposited therein, provided that such pledge and lien shall be subordinate in all respects to the
pledge of and lien thereon provided herein.
Section 5.7. Against Competitive Facilities. To the extent permitted by law, the City
covenants that it will not acquire, construct, maintain or operate and will not, to the extent
permitted by law and within the scope of its powers, permit any other public or private agency,
corporation, city or political subdivision or any person whomsoever to acquire, construct,
maintain or operate within the City any water system competitive with the Enterprise.
Notwithstanding the foregoing, the City may permit competitive systems where it determines
that provision of water service is either geographically, technically or economically prohibitive
or where provision of such services is more readily obtained from another provider of such
services.
Section 5.8. Tax Covenants.
(a) Private Activity Bond Limitation. The City shall assure that proceeds of the Bonds are
not so used as to cause the Bonds to satisfy the private business tests of section 141(b) of the
Code or the private loan financing test of section 141(c) of the 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 any of the Bonds to be
"federally guaranteed" within the meaning of section 149(b) of the Code.
(c) Rebate Requirement. The City shall take any and all actions necessary to assure
compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings,
if any, to the federal government, to the extent that such section is applicable to the Bonds.
(d) 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 which, if such action had been
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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 of the Code.
(e) Maintenance of Tax -Exemption. The City shall take all actions necessary to assure the
exclusion of interest with respect to 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 Code as in effect on the Closing Date.
Section 5.9.Other Covenants.
(a) Reporting Requirements. The City hereby covenants and agrees that it will provide to
the Owner:
(i) the audited financial statements of the City within nine months after the end
of each fiscal year, which shall include audited financial statements of the City, with a
standard opinion provided by the auditor in accordance with Generally Accepted
Accounting Principles including required supplemental information;
(ii) will cause to be prepared annually, not more than two hundred ten (210) days
after the close of each Fiscal Year an internally prepared balance sheet, and income
statement showing: the assets, liabilities, reserves, revenues and expenditures of the
Enterprise, together with the following additional reports: (A) Gross Revenues and the
amount of all other funds collected which are required to be pledged or otherwise made
available as security for payment of principal and interest with respect to this
Installment Sale Agreement, the disbursements from the Gross Revenues and other
funds in reasonable detail, (B) customer utilization and collection metrics, (C)
independent rate analysis reports (when and if prepared and 30 days after City review),
(D) capital projects underway and proposed, and (E) general narrative of the physical
condition of the Enterprise;
(iii) annually, within 30 days of City approval, an annual financial plan for the
Enterprise with a narrative (when available) for the following year;
(iv) a certification of the City (A) demonstrating the ratio of Net Revenues to
scheduled debt service with respect to the Senior Obligations, this Installment Sale
Agreement, any outstanding Parity Obligations and any subordinate obligations for the
prior fiscal year; and (B) such additional information with respect to the City or Net
Revenues as the Owner may from time to time reasonably request. Said Report to be
provided by October 31 of each year;
(v) immediately upon the City's knowledge thereof, notices of (A) any default on
any debt obligation, (B) Material Litigation, (C) material governmental proceedings, or
(D) Material Adverse Effect; and
(vi) such other information regarding the operations of the Enterprise and the
City's financial condition as the Owner may reasonably request, including without
limitation, information regarding water rates and charges, copies of any rate studies
commissioned by the City, and reports regarding the compliance of Enterprise with
Applicable Environmental Laws.
(b) Event of Default. The City shall immediately notify the Trustee and the Owner by
telephone, promptly confirmed in writing, of any event, action or failure to take any action
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which constitutes an event of default under any obligation or this Installment Sale Agreement,
together with a detailed statement by a City Representative of the steps being taken by the City
to cure the effect of such event of default.
(c) Action, Suit or Proceeding. The City shall promptly notify the Owner in writing (i) of
any action, suit or proceeding or any investigation, inquiry or similar proceeding by or before
any court or other governmental authority, domestic or foreign, against the City which involve
claims equal to or in excess of $1,000,000 or that seeks injunctive relief, any Material Litigation
and the occurrence of any Material Adverse Change.
(d) Costs and Expenses. The City agrees to pay the reasonable out-of-pocket expenses and
disbursements of the Original Purchaser and the necessary and reasonable fees, expenses and
disbursements of counsel to the Original Purchaser in connection with (A) obtaining any waiver
or consent under this Installment Sale Agreement (whether or not the transactions
contemplated thereby shall be consummated) or any Event of Default hereunder, (B) the
preparation, execution, delivery, administration, defense and enforcement or preservation of
rights in connection with a workout, restructuring or waiver with respect to this Installment
Sale Agreement, and (C) the occurrence of an Event of Default and collection and other
enforcement proceedings resulting therefrom.
(e) Indemnification. The City covenants and agrees to indemnify and hold harmless, to the
extent permitted by law, the Owner and its incorporators, members, commissioners, directors,
officers, agents and employees (collectively, the "Owner Indemnified Persons') against all
liability, losses, damages, all reasonable costs and charges (including reasonable fees and
disbursements of attorneys, accountants, consultants and other experts), taxes, causes of action,
suits, claims, demands and judgments of every conceivable kind, character and nature
whatsoever, by or on behalf of any person arising in any manner from the transaction of which
this Installment Sale Agreement is a part, including, but not limited to, losses, claims, damages,
liabilities or reasonable expenses arising out of, resulting from or in any way connected with (i)
the operation of the Enterprise; (ii) any violation of contract, agreement (including this
Installment Sale Agreement) or restriction relating to the Enterprise; or (iii) the carrying out of
any of the transactions contemplated by this Installment Sale Agreement
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ARTICLE VI
DISCLAIMER OF WARRANTIES; ACCESS
Section 6.1. Disclaimer of Warranties. The Authority and the Trustee make 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 2024
Project, or any other representation or warranty with respect to the 2024 Project. 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 Installment Sale Agreement or the Indenture
for the existence, furnishing, functioning or City's use of the 2024 Project.
Section 6.2. Access to the Enterprise. The City agrees that the Authority and the Trustee,
and any duly authorized representative thereof, shall have the right at all reasonable times to
enter upon and to examine and inspect the Enterprise. The City further agrees that the
Authority and the Trustee, and any duly authorized representative thereof, shall have such
rights of access to the Enterprise as may be reasonably necessary to cause the proper
maintenance of the Enterprise in the event of failure by the City to perform its obligations
hereunder.
Section 6.3. Release and Indemnification Covenants. The City shall and hereby agrees to
indemnify and save the Authority and the Trustee and their respective officers, agents,
successors and assigns harmless from and against all claims, losses and damages, including
legal fees and expenses, arising out of (a) the use, maintenance, condition or management of, or
from any work or thing done on the Enterprise by the City, (b) any breach or default on the part
of the City in the performance of any of its obligations under this Installment Sale Agreement,
(c) any negligence or willful misconduct of the City or of any of its agents, contractors, servants,
employees or licensees with respect to the Enterprise, (d) any act or negligence of any sublessee
of the City with respect to the Enterprise , (e) the Acquisition and Construction of the 2024
Project or the authorization of payment of the 2024 Project Costs, (f) the performance by the
Trustee of its duties and obligations under the Indenture, including any duties referred to in
Section 8.12 of the Indenture, (g) the presence on, under or about, or release from, the Enterprise
of any substance, material or waste which is, or which becomes, regulated or classified as
hazardous or toxic under State, federal or local law, or (h) the offer, sale and issuance of the
Bonds. No indemnification is made under this Section 6.3 or elsewhere in this Installment Sale
Agreement for adjudicated willful misconduct or negligence by the Authority or the Trustee, or
their respective officers, employees, successors or assigns. The rights of the Trustee and the
obligations of the City under this Section 6.3 shall survive the termination of this Installment
Sale Agreement and the resignation or removal of the Trustee.
Section 6.4. Non -Liability of Authority for Enterprise Obligations. The Authority and its
successor and assigns shall have no obligation and shall incur no liabilities or debts whatsoever
for the obligations, liabilities and debts of the City incurred in connection with the Enterprise.
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ARTICLE VII
ASSIGNMENT, SALE AND AMENDMENT
Section 7.1. Assignment by the City. The obligations of the City under this Installment
Sale Agreement may not be assigned by the City.
Section 7.2. Sale or Other Disposition of Enterprise. The City covenants that the
Enterprise shall not be encumbered, sold, leased, pledged, any charge placed thereon, or
otherwise disposed of, as a whole or substantially as a whole, without the prior consent of the
Owner. Neither the Pledged Net Revenues nor any other funds pledged or otherwise made
available to secure payment of the Installment Payments shall be mortgaged, encumbered, sold,
leased, pledged, any charge placed thereon, or disposed or used except as authorized by the
terms of this Installment Sale Agreement. The City shall not enter into any agreement which
impairs the operation of the Enterprise or any part of it necessary to secure adequate Pledged
Net Revenues to pay the Installment Payments, or which otherwise would impair the rights of
the Bond Owners and the owners of any Parity Obligations with respect to the Pledged Net
Revenues. If any substantial part of the Enterprise shall be sold, the payment therefor shall
either (a) be used for the acquisition or construction of improvements, extensions or
replacements to the Enterprise, or (b) to the extent not so used, with the prior written consent of
the Owner, be applied to prepay Installment Payments or payments with respect to any Parity
Obligations, in accordance with written instructions of the City filed with the Trustee.
Section 7.3. Amendment of Installment Sale Agreement. The City and the Authority
shall have the right to modify or amend this Installment Sale Agreement without the consent of
any of the Bond Owners or any of the owners of Parity Obligations, but only if such amendment
or modification does not cause interest represented by the Bonds to be includable in gross
income for federal income tax purposes in the opinion of Bond Counsel, and only if such
amendment or modification does not materially adversely affect the interests of the Owners of
the Bonds in the opinion of Bond Counsel, and only if such amendment or modification is for
any one or more of the following purposes:
(a) to provide for the issuance of Parity Obligations pursuant to Section 4.8(b);
(b) to add to the covenants and agreements of the City contained in this Installment Sale
Agreement, other covenants and agreements thereafter to be observed, or to limit or surrender
any rights or power herein reserved to or conferred upon the City; or
(c) to amend any provision thereof for the purpose of complying with the applicable
requirements of the Code.
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ARTICLE VIII
EVENTS OF DEFAULT
Section 8.1. Events of Default Defined. The following events shall be Events of Default
hereunder:
(a) Failure by the City to pay any installments of principal or interest with respect to the
Senior Obligations when and as the same become due and payable.
(b) Failure by the City to pay any Installment Payment when and as the same become
due and payable hereunder.
(c) Failure by the City to pay any Additional Payment when due and payable hereunder,
and the continuation of such failure for a period of ten (10) days.
(d) Failure by the City to observe and perform any covenant, condition or agreement on
its part to be observed or performed, other than as referred to in the preceding clauses (a) or (b),
for a period of thirty (30) days after written notice specifying such failure and requesting that it
be remedied has been given to the City by the Authority or the Trustee; provided, however, that if
the City shall notify the Authority and the Trustee that in its reasonable opinion the failure
stated in the notice can be corrected, but not within such thirty (30) day period, such failure
shall not constitute an Event of Default hereunder if the City shall commence to cure such
failure within such thirty (30) day period and thereafter diligently and in good faith cure such
failure in a reasonable period of time; provided that such additional cure period may not exceed
30 days without the written consent of the Owner.
(e) The filing by the City of a voluntary petition in bankruptcy, or failure by the City
promptly to lift any execution, garnishment or attachment, or adjudication of the City as a
bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an
agreement of composition with creditors, or the approval by a court of competent jurisdiction of
a petition applicable to the City in any proceedings instituted under the provisions of the
Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be
enacted.
(f) The occurrence and continuation of any payment event of default under and as
defined in the instruments authorizing the issuance of any Parity Obligations or any event that
allows the acceleration of Parity Obligations.
Section 8.2. Remedies on Default. Whenever any Event of Default shall have happened
and be continuing, the Trustee as assignee of the Authority shall have the right, at its option and
without any further demand or notice, but subject in all respects to the provisions of Article VII
of the Indenture, to:
(a) declare all principal components of the unpaid Installment Payments, together with
accrued interest thereon at the net effective rate of interest per annum then borne by the
Outstanding Bonds 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;
(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
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Installment Sale Agreement, or enforce performance and observance of any obligation,
agreement or covenant of the City under this Installment Sale Agreement; and
(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 all amounts pledged
hereunder, with such powers as the court making such appointment shall confer.
The provisions of the preceding clause (a), however, are subject to the condition that if,
at any time after the principal components of the unpaid Installment Payments shall have been
so declared due and payable pursuant to the preceding clause (a), and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered, the City shall
deposit with the 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 net effective rate of interest per annum then borne by the Outstanding Bonds,
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) shall have been made good, then, and in every such case, with the written consent
of the Trustee, shall rescind and annul such declaration and its consequences. However, no such
rescission and annulment shall extend to or shall affect any subsequent default, or shall impair
or exhaust any right or power consequent thereon. As provided in Section 8.6, the Trustee shall
be required to exercise the remedies provided herein in accordance with the Indenture.
Section 8.3. 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 Installment Sale 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 VIII it shall not be necessary to give any notice, other than such notice as may
be required in this Article VIII or by law.
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses. In the event either party to
this Installment Sale Agreement shall default under any of the provisions hereof and the
nondefaulting party, the Trustee or the Owner of any Bonds should employ 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 nondefaulting party, the Trustee or such
Owner, as the case may be, the reasonable fees of such attorneys and such other expenses so
incurred.
Section 8.5. No Additional Waiver Implied by One Waiver. In the event any agreement
contained in this Installment Sale Agreement shall be breached by either party and thereafter
waived by the other party, such waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder.
Section 8.6. Trustee and Bond Owners to Exercise Rights. Such rights and remedies as
are given to the Authority under this Article VIII have been assigned by the Authority to the
Trustee under the Indenture, to which assignment the City hereby consents. Such rights and
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remedies shall be exercised by Trustee and the Owners of the Bonds as provided in the
Indenture.
Section 8.7. Rights of the Owners of Parity Obligations. Notwithstanding anything in
this Article VIII to the contrary, it is hereby acknowledged and agreed that the rights of the
Trustee and the Bond Owners hereunder in and to the Pledged Net Revenues and the
Enterprise shall be exercised on a parity and proportionate basis with the rights of the owners of
any Parity Obligations and any fiduciary acting for the benefit of such owners. The provisions
of this Article VIII, and the provisions of any instruments authorizing the issuance of any Parity
Obligations, shall be construed in accordance with the foregoing sentence.
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ARTICLE IX
PREPAYMENT OF INSTALLMENT PAYMENTS
Section 9.1. Security Deposit. Notwithstanding any other provision of this Installment
Sale Agreement, the City may on any date secure the payment of Installment Payments in
whole or in part by irrevocably depositing with the Trustee or any other fiduciary an amount of
cash which, together with amounts on deposit in the Bond Fund and the accounts therein, is
either (a) sufficient to pay all such Installment Payments, including the principal and interest
components thereof, in accordance with the Installment Payment schedule set forth in Exhibit
A, or (b) invested in whole or in part in Federal Securities in such amount as will, in the written
opinion 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 Installment Payments
when due pursuant to Section 4.4(a) , as the City shall instruct at the time of said deposit. In the
event of a security deposit pursuant to this Section 9.1 with respect to all of the Installment
Payments, all obligations of the City under this Installment Sale Agreement, and all security
provided by this Installment Sale Agreement for said obligations, shall cease and terminate,
excepting only the obligation of the City to make, or cause to be made, all of such Installment
Payments from such security deposit, and the obligation of the City to compensate and
indemnify the Trustee pursuant to Sections 4.9 and 6.3. Said security deposit shall be deemed to
be and shall constitute a special fund for the payment of Installment Payments in accordance
with the provisions of this Installment Sale Agreement.
Section 9.2. Optional Prepayment. The City may exercise its option to prepay the
principal components of the Installment Payments on or after March 15, 2033, in whole on any
date, or in part on any Installment Payment Date, in integral multiples of $5,000, by paying a
prepayment price equal to the aggregate principal components of the Installment Payments to
be prepaid, together with the interest component of the Installment Payment required to be
paid on or accrued to such date. Such prepayment price shall be deposited by the Trustee in the
Redemption Fund or in another trustee -held fund to be applied to the redemption of Bonds
pursuant to Section 4.01(b) of the Indenture. The City shall give the Trustee written notice of its
intention to exercise its option not less than forty-five (45) days in advance of the date of
exercise. Prepayments of Installment Payments in part shall be applied to the principal
component of remaining Installment Payments in inverse order of maturity.
Section 9.3. Credit for Amounts on Deposit. 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 accounts established under the Indenture shall be credited towards the
amounts then required to be so prepaid.
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ARTICLE X
MISCELLANEOUS
Section 10.1. 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 Installment Sale Agreement, including, without limitation,
to perfect and continue the security interests herein intended to be created.
Section 10.2. Notices. Any notice, request, complaint, demand or other communication
under this Installment Sale Agreement shall be given by first class mail or personal delivery to
the party entitled thereto at its address set forth below, or by telecopy, telex or other form of
telecommunication, at its number set forth below. Notice shall be effective either (a) upon
transmission by telecopy, telex or other form of telecommunication, (b) 48 hours after deposit in
the United States mail, postage prepaid, or (c) in the case of personal delivery to any person,
upon actual receipt.
If to the Authority: Tustin Public Financing Authority
c / o City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
Phone: (714) 573-3000
If to the City: City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
Phone: (714) 573-3000
If to the Trustee: The Bank of New York Mellon Trust Company, N.A.
400 South Hope Street, Suite 400
Los Angeles, CA 90071
Attention: Corporate Trust Department
Phone: (213) 630-6249
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.
Section 10.3. Third Party Beneficiaries. The Trustee and the Owner shall each be and is
hereby made a third party beneficiary hereunder.
Section 10.4. Governing Law. This Installment Sale Agreement shall be construed in
accordance with and governed by the laws of the State.
Section 10.5. BindingEffect. ffect. This Installment Sale Agreement shall inure to the benefit of
and shall be binding upon the Authority and the City, and their respective successors and
assigns, subject, however, to the limitations contained herein.
Section 10.6. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Installment Sale Agreement 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
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the remaining provisions contained in this Installment Sale Agreement and such invalidity,
illegality or unenforceability shall not affect any other provision of this Installment Sale
Agreement, and this Installment Sale Agreement shall 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 Installment Sale 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 Installment Sale
Agreement may be held illegal, invalid or unenforceable.
Section 10.7. 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 shall not affect the meaning, construction or effect of
this Installment Sale Agreement. All references herein to "Articles," "Sections' and other
subdivisions are to the corresponding Articles, Sections or subdivisions of this Installment Sale
Agreement; the words "herein," "hereof," "hereby," "hereunder" and other words of similar
import refer to this Installment Sale 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 10.8. Execution of Counterparts. This Installment Sale Agreement may be
executed in any number of counterparts, each of which shall for all purposes be deemed to be
an original and all of which shall together constitute but one and the same instrument.
Section 10.9. Waiver of Personal Liability. No member of the City Council, officer, agent
or employee of the City shall be individually or personally liable for the payment of Installment
Payments or Additional Payments or be subject to any personal liability or accountability by
reason of this Installment Sale 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 Installment Sale Agreement.
Section 10.10. Limitation of Rights to Parties and Bond Owners. Nothing in this
Installment Sale Agreement 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 Installment Sale Agreement
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 10.11. Captions. The captions or headings in this Installment Sale Agreement are
for convenience only and in no way define, limit or describe the scope or intent of any
provisions or Section of this Installment Sale Agreement.
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IN WITNESS WHEREOF, the Authority and the City have caused this Installment Sale
Agreement to be executed in their respective names by their duly authorized officers, all as of
the date first above written.
TUSTIN PUBLIC FINANCING
AUTHORITY, as seller
Executive Director
CITY OF TUSTIN, as Purchaser
LIM
City Manager
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EXHIBIT A
SCHEDULE OF INSTALLMENT PAYMENTS
Installment
Payment Date
9/25/24
3/25/25
9/25/25
3/25/26
9/25/26
3/25/27
9/25/27
3/25/28
9/25/28
3/25/29
9/25/29
3/25/30
9/25/30
3/25/31
9/25/31
3/25/32
9/25/32
3/25/33
9/25/33
3/25/34
9/25/34
3/25/35
9/25/35
3/25/36
9/25/36
3/25/37
9/25/37
3/25/38
9/25/38
3/25/39
9/25/39
3/25/40
9/25/40
3/25/41
9/25/41
3/25/42
9/25/42
3/25/43
9/25/43
3/25/44
TOTALS
Principal
Component
$105,000.00
135,000.00
140,000.00
145,000.00
155,000.00
160,000.00
170,000.00
180,000.00
185,000.00
195,000.00
205,000.00
215,000.00
225,000.00
235,000.00
245,000.00
260,000.00
270,000.00
285,000.00
300,000.00
315,000.00
Interest
Component(1)
$ 125,370.21
99,412.50
96,882.00
96,882.00
93,628.50
93,628.50
90,254.50
90,254.50
86,760.00
86,760.00
83,024.50
83,024.50
79,168.50
79,168.50
75,071.50
75,071.50
70,733.50
70,733.50
66,275.00
66,275.00
61,575.50
61,575.50
56,635.00
56,635.00
51,453.50
51,453.50
46,031.00
46,031.00
40,367.50
40,367.50
34,463.00
34,463.00
28,197.00
28,197.00
21,690.00
21,690.00
14,821.50
14,821.50
7,591.50
7,591.50
Total
Installment
Payment
$ 125,370.21
204,412.50
96,882.00
231,882.00
93,628.50
233,628.50
90,254.50
235,254.50
86,760.00
241,760.00
83,024.50
243,024.50
79,168.50
249,168.50
75,071.50
255,071.50
70,733.50
255,733.50
66,275.00
261,275.00
61,575.50
266,575.50
56,635.00
271,635.00
51,453.50
276,453.50
46,031.00
281,031.00
40,367.50
285,367.50
34,463.00
294,463.00
28,197.00
298,197.00
21,690.00
306,690.00
14,821.50
314,821.50
7,591.50
322,591.50
$4,125,000.00 $2,434,029.71 $6,559,029.71
(1) The applicable interest rate is the Tax -Exempt Rate (4.820%). If the Default Rate (7.820%) or the
Taxable Rate (6.350%) is in effect, interest will be computed by applying such alternate rate.
Exhibit A
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EXHIBIT B
DESCRIPTION OF THE 2024 PROJECT
Beneta Well: The Beneta Well project involves the design and construction of an additional well
at the existing Beneta. Well site, with a groundwater production capacity of 1,000 gallons per minute..
Well Rehab Program: Routine rehabilitation of well facilities. The following wells have been
identified for rehabilitation over the next three fiscal years: FY 23-24 Vandenberg Well, FY 24-25 Main
Street #3, and FY 25-26 Pasadena Well.
Lyttle Reservoir: The Lyttle Reservoir project includes the evaluation of the tank's condition,
implementation of safety improvements, as well as interior and exterior recoating. Tank to be inspected
by a qualified contractor to determine appropriate repairs, maintenance, or improvements.
Exhibit B
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Quint & Thimmig LLP 12 / 18 / 23
01/03/24
01/10/24
01/22/24
01/26/24
01/30/24
$4,125,000
TUSTIN PUBLIC FINANCING AUTHORITY
Water Revenue Bonds, Series 2024
(Subordinate Lien)
COMMITMENT AGREEMENT
February 7, 2024
Tustin Public Financing Authority
300 Centennial Way
Tustin, California 92780
City of Tustin
300 Centennial Way
Tustin, California 92780
Ladies and Gentlemen:
The undersigned, Capital One Public Funding, LLC, acting solely as lender and not as
broker, dealer, municipal securities underwriter, municipal advisor, or fiduciary (the
"Purchaser"), hereby offers to enter into this Commitment Agreement (the "Agreement") with
the Tustin Public Financing Authority (the "Authority") and the City of Tustin (the "city" ),
which, upon the Authority's and City's acceptance hereof, will be binding upon the Authority,
the City and the Purchaser. This offer is made subject to written acceptance by the Authority
and the City and the delivery of such acceptance to the Purchaser at or prior to 5:00 P.M.,
California time, on the date hereof. If this offer is not so accepted, this offer will be subject to
withdrawal by the Purchaser upon notice delivered to the Authority and the City at any time
prior to acceptance by the Authority and the City. This Agreement is provided to the Authority
and the City pursuant to and in reliance upon the "bank exemption" provided under the
municipal advisor rules of the Securities and Exchange Commission, Rule 15Ba1-1 et seq. All
capitalized terms used herein and not otherwise defined herein shall have the respective
meanings ascribed thereto in the Indenture (as defined herein).
The Authority and the City acknowledge that:
(a) The Purchaser is acting in this transaction solely for its own loan account and not as a
fiduciary for the Authority or the City or in the capacity of broker, dealer, municipal securities
underwriter, placement agent, or municipal advisor;
(b) The Purchaser has not provided, and will not provide, financial, legal (including
securities law), tax, accounting or other advice to or on behalf of the Authority or the City
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(including to any financial advisor or placement agent engaged by the Authority or the City)
with respect to the structuring of the financing or the execution and delivery of the Indenture or
the Installment Sale Agreement or the issuance of the Bonds;
(c) The Purchaser has no fiduciary duty pursuant to Section 15B of the Securities
Exchange Act of 1934, as amended, to the Authority or the City with respect to the transactions
relating to the structuring of the financing or the execution and delivery of the Indenture or the
Installment Sale Agreement or the issuance of the Bonds and the discussions, undertakings, and
procedures leading thereto;
(d) Each of the Authority, the City, their financial advisor, and their placement agent has
sought and shall seek and obtain financial, legal (including securities law), tax, accounting and
other advice (including as it relates to structure, timing, terms and similar matters) with respect
to the Indenture, the Installment Sale Agreement, the Bonds, and the financing transaction from
its financial, legal, and other advisors (and not the Purchaser or its affiliates) to the extent that
the Authority, the City, their financial advisor, or their placement agent desires to, should, or
needs to obtain such advice;
(e) The Purchaser has expressed no view regarding the legal sufficiency of its
representations for purposes of compliance with any legal requirements applicable to any other
party, including but not limited to the financial advisor or the placement agent for the
Authority and the City, or the correctness of any legal interpretation made by counsel to any
other party, including but not limited to counsel to the financial advisor or placement agent for
the Authority and the City, with respect to any such matters; and
(f) The transactions between the Authority, the City, and the Purchaser are arm's-length,
commercial transactions in which the Purchaser is acting and has acted solely as a principal and
for its own interest, and the Purchaser has not made recommendations to the Authority or the
City with respect to the transactions relating to the Indenture, the Installment Sale Agreement,
and the Bonds.
1. Purchase, Sale and Delivery of the Bonds.
(a) Subject to the terms and conditions, and in reliance upon the representations,
warranties and agreements set forth herein, the Purchaser hereby agrees to extend credit to the
Authority and the City by purchasing, and the Authority agrees to sell and deliver to the
Purchaser, all (but not less than all) of the $4,125,000 Tustin Public Financing Authority Water
Revenue Bonds, Series 2024 (Subordinate Lien) (the "Bonds'). The Bonds shall be dated the date
of delivery thereof and shall mature on such date and shall bear interest at such rate set forth in
Schedule I attached hereto. Interest on the Bonds shall be payable semiannually on April 1 and
October 1 of each year, commencing October 1, 2024. The aggregate purchase price for the
Bonds shall be $4,125,000, being the principal amount of the Bonds.
(b) The Bonds shall be issued pursuant to the Marks -Roos Local Bond Pooling Act of
1985, consisting of Article 4, Chapter 5, Division 7, Title 1 of the California Government Code
(commencing with Section 6584) (the "Bond Law"), and an Indenture of Trust, dated as of
February 1, 2024 (the "Indenture"), by and between the Authority and The Bank of New York
Mellon Trust Company, N.A., as trustee (the "Trustee"), a resolution of the governing body of
the Authority adopted on February 6, 2024 (the "Authority Resolution"), and a resolution of the
City Council of the City, adopted on February 6, 2024 (the "City Resolution").
The Bonds shall be substantially in the form described in, and shall be issued and
secured under the provisions of, the Indenture. The Bonds shall be secured by a pledge, charge
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and lien upon Revenues which consist primarily of installment payments (the "Installment
Payments") to be made by the City to the Authority pursuant to an Installment Sale Agreement,
dated as of February 1, 2024 (the "Installment Sale Agreement"), by and between the City and
the Authority. The City's obligations under the Installment Sale Agreement will be subordinate
to the City's obligations with respect to the payment of debt service on its City of Tustin
(Orange County, California) 2016 Water Refunding Revenue Bonds and its City of Tustin
(Orange County, California) Taxable Water Refunding Revenue Bonds, Series 2020.
The Bonds are being issued for the purpose of providing funds to finance the acquisition
and construction of certain improvements and facilities to the City's municipal water enterprise
(the "Enterprise").
The Indenture, the Installment Sale Agreement and this Commitment Agreement are
herein referred to as the "Financing Documents."
(c) At 8:00 o'clock A.M., Pacific Standard time, on February 14, 2024, or at such other time
or on such other date as mutually agreed upon by the Authority, the City and the Purchaser
(such time and date herein referred to as the "Closing Date"), the Authority will, subject to the
terms and conditions hereof, sell and deliver, or cause to be delivered, the Bonds to the
Purchaser, in definitive form, duly executed and authenticated, together with the other
documents mentioned herein, and subject to the terms and conditions hereof, the Purchaser will
accept such delivery and pay the purchase price of the Bonds as set forth in subparagraph (a)
above in immediately available funds (such delivery and payment being herein referred to as
the "Closing") to the order of the Trustee. Sale, delivery and payment as aforesaid shall be
made at the offices of Quint & Thimmig LLP ("Bond Counsel"), 900 Larkspur Landing Circle,
Suite 270, Larkspur, CA 94939-1726, or such other place as shall have been mutually agreed
upon by the Authority, the City and the Purchaser.
3. Representations, Warranties and Agreements of the Authority and the City.
(a) The Authority hereby represents, warrants and agrees with the Purchaser as follows:
(1) The Authority is, and will be on the Closing Date, a joint exercise of powers
entity organized and operating pursuant to the laws of the State of California with the
full power and authority to issue the Bonds pursuant to the Bond Law and to enter into
the Financing Documents to which the Authority is a party;
(2) By all necessary official action of the Authority prior to or concurrently with
the acceptance hereof, the Authority has duly authorized and approved the execution
and delivery of, and the performance by the Authority of the obligations on its part
contained in, the Financing Documents to which the Authority is a party and the
consummation by it of all other transactions contemplated by the Financing Documents
to which the Authority is a party;
(3) The Financing Documents to which the Authority is a party, when duly
executed by the other party thereto, will constitute the legal, valid and binding
agreements of the Authority enforceable against the Authority in accordance with their
respective terms; except as enforcement of each of the Financing Documents may be
limited by bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance
laws, laws affecting the enforcement of creditors rights, the application of equitable
principles and judicial discretion, by the covenant of good faith and fair dealing which
may be implied by law into contracts, and by the limitations on legal remedies against
public agencies in the State of California;
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(4) The Authority is not in breach of or default under any applicable
constitutional provision, law or administrative regulation to which it is subject or any
applicable judgment or decree or any loan agreement, indenture, bond, note, resolution,
agreement or other instrument to which the Authority is a party or to which the
Authority or any of its property or assets is otherwise subject, and no event has occurred
and is continuing which with the passage of time or the giving of notice, or both, would
constitute such a default or event of default in any material respect under any such
instrument; and the issuance of the Bonds and the execution and delivery of the
Financing Documents to which the Authority is a party and compliance with the
provisions on the Authority's part contained herein and therein, will not in any material
respect conflict with or constitute a breach of or default under any law, administrative
regulation, judgment, decree, loan agreement, indenture, bond, note, resolution,
agreement or other instrument to which the Authority is a party or is otherwise subject,
nor will any such execution, delivery, adoption or compliance result in the creation or
imposition of any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets of the Authority under the terms of any
such law, administrative regulation, judgment, decree, loan agreement, indenture, bond,
note, resolution, agreement or other instrument, except as provided in the Indenture or
the Installment Sale Agreement;
(5) There is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body, pending or,
to the best knowledge of the Authority, threatened against the Authority affecting the
corporate existence of the Authority or affecting or seeking to prohibit, restrain or enjoin
the issuance, sale or delivery of the Bonds or contesting or affecting the execution and
delivery of the Financing Documents or the Bonds or the lien or pledge or application of
any moneys or security provided thereby, or in any way contesting or affecting the
validity or enforceability of the Financing Documents, the Bonds or the Authority
Resolution, or the compliance by the Authority with the covenants contained in the
Financing Documents, or contesting the power of the Authority to execute and deliver
the Financing Documents to which the Authority is a party or the Bonds, nor to the best
of the Authority's knowledge, is there any basis therefore, wherein an unfavorable
decision, ruling or finding would materially adversely affect the validity or
enforceability of the Bonds or the Financing Documents or materially impair the
investment quality or value of the Bonds;
(6) All authorizations, approvals, licenses, permits, consents and orders of any
governmental authority, legislative body, board, agency or commission having
jurisdiction of the matter which are required for the due authorization by, or which
would constitute a condition precedent to or the absence of which would materially
adversely affect the due performance by, the Authority of its obligations in connection
with the issuance of the Bonds under the Indenture have been duly obtained, except for
such approvals, consents and orders as may be required under the Blue Sky or securities
laws of any state in connection with the offering and sale of the Bonds; and all
authorizations, approvals, licenses, permits, consents and orders of any governmental
authority, board, agency or commission having jurisdiction of the matter which are
required for the due authorization by, or which would constitute a condition precedent
to or the absence of which would materially adversely affect the due performance by,
the Authority of its obligations under the Financing Documents to which the Authority
is a party have been duly obtained;
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(7) Any certificate signed by any authorized official of the Authority, and
delivered to the Purchaser in connection with the delivery of the Bonds, shall be deemed
a representation and warranty by the Authority to the Purchaser as to the statements
made therein.
(b) The City represents, warrants and covenants to the Purchaser that:
(1) The City is and on the Closing Date will be a municipal corporation of the
State of California, with the legal right, power and authority to approve the issuance of
the Bonds, execute, deliver and perform its obligations under the Financing Documents
to which it is a party, and to carry out its obligations as described therein;
(2) The City has duly approved the Financing Documents to which it is a party,
the execution and delivery of, and the performance by the City of the obligations on its
part contained in the Bonds and the Financing Documents to which it is a party, and the
consummation by it of all other transactions contemplated by the Financing Documents;
(3) The Financing Documents to which the City is a party, when duly executed
by the other party thereto, will constitute the legal, valid and binding agreements of the
City enforceable against the City in accordance with their respective terms; except as
enforcement of each of the Financing Documents may be limited by bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance laws, laws affecting the
enforcement of creditors rights, the application of equitable principles and judicial
discretion, by the covenant of good faith and fair dealing which may be implied by law
into contracts, and by the limitations on legal remedies against public agencies in the
State of California;
(4) The City is not in any material respect, in breach of or default under (i) any
applicable law or administrative regulation of the State of California or the United States
or any applicable judgment or decree or (ii) any material loan agreement, indenture,
bond, note, resolution, agreement or other instrument to which it is a party or is
otherwise subject, and no event has occurred and is continuing which, with the passage
of time or the giving of notice or both, would constitute an event of default under any
such instrument;
(5) The execution and delivery of the Bonds and the Financing Documents to
which the City is a party, the consummation of the transactions herein and therein
contemplated, and the fulfillment of or compliance with the terms and conditions hereof
and thereof 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, to the
knowledge of the City, any indenture, mortgage, deed of trust, installment purchase
agreement, lease, contract or other agreement or instrument to which it is a party, or
result in the creation or imposition of any prohibited lien, charge or encumbrance of any
nature whatsoever upon any of the City's assets, which conflict, violation, breach,
default, lien, charge or encumbrance might have consequences that would materially
and adversely affect the consummation of the transactions contemplated by the
Financing Documents to which the City is a party, or the financial condition, assets,
properties or operations of the City;
(6) No consent or approval of any trustee or holder of any indebtedness of the
City, and no consent, permission, authorization, order or license of, or filing or
registration with, any governmental authority (except in connection with Blue Sky
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proceedings, if any) is necessary in connection with the execution and delivery of the
Bonds or the Financing Documents to which the City is a party, or the consummation of
any transaction therein or herein contemplated on the part of the City, except as have
been obtained or made and as are in full force and effect or, as appropriate, will be in
full force and effect at the Closing;
(7) 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, threatened against or affecting the City which, if determined
adversely to the City or the interests thereof, would (a) affect the creation, organization,
existence or powers of the City or the titles of its officers or officials to their respective
offices; (b) in any way question or affect the validity or enforceability of any of the
Financing Documents or the City Resolution; (c) find illegal, invalid or unenforceable
any of the Financing Documents or the transactions contemplated thereby, or any other
agreement or instrument related to the issuance of the Bonds; (d) affect the issuance or
delivery of any of the Bonds, the payment or collection of any revenues or charges of the
Enterprise, the validity of the pledge of or lien on such revenues or charges for the
payment of the Installment Payments payable by the City under the Installment Sale
Agreement; (e) affect the power and authority of the City to establish, maintain and
collect rates and charges for water collection and treatment and other services, facilities
and commodities sold, furnished or supplied through the facilities of the Enterprise; or
(f) affect the City's water supply;
(8) The City does not and will not have outstanding any indebtedness or
obligation which is secured by a pledge of or lien on the Pledged Net Revenues superior
to or on a parity with the lien of the Installment Payments on the Pledged Net Revenues;
(9) Between the date of this Commitment Agreement and the Closing Date, the
City will not, without the prior written consent of the Purchaser, offer or issue any
bonds, notes or other obligations for borrowed money, or incur any material liabilities
direct or contingent, payable from Pledged Net Revenues of the Enterprise, other than in
the ordinary course of its business, nor will there be any adverse change of a material
nature in the financial position, results of operations or condition, financial or otherwise,
of the City;
(10) The City has not in the previous five years failed to comply in any material
respect, and is as of the date hereof in compliance in all material respects, with its
disclosure obligations under any prior undertaking related to the Securities and
Exchange Commission Rule 15c2-12 to provide annual reports or notices of material
event; and
(11) Any certificate signed by any authorized official of the City, and delivered to
the Purchaser in connection with the delivery of the Bonds, shall be deemed a
representation and warranty by the City to the Purchaser as to the statements made
therein.
(c) The representations, warranties and agreements herein shall survive the Closing Date
and any investigation made on behalf of the Authority (with respect to subsection (a) of this
Section 3), the City (with respect to subsection (b) of this Section 3) and the Purchaser of any
matters described in or related the transactions hereby and by this Commitment Agreement, the
Bonds and the Financing Documents to which the Authority or the City, as the case may be, is a
party.
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4. Conditions to the Obligations of the Purchaser. The Purchaser hereby enters into this
Commitment Agreement in reliance upon the representations and warranties of the Authority
and the City contained herein and the representations and warranties of the Authority and the
City to be contained in the documents and instruments to be delivered on or prior to the
Closing Date and upon the performance by the Authority and the City of their obligations both
on and as of the date hereof and as of the Closing Date. Accordingly, the Purchaser's obligations
under this Commitment Agreement to purchase, to accept delivery of and to pay for the Bonds
shall be subject, at the option of the Purchaser, to the accuracy in all material respects of the
representations and warranties of the Authority and the City contained herein as of the date
hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the
officers and other officials of the Authority and the City made in any certificate or other
document furnished pursuant to the provisions hereof, to the performance by the Authority and
the City of their obligations to be performed hereunder and under such documents and
instruments at or prior to the Closing Date, and also shall be subject to the following additional
conditions:
(a) The representations and warranties of the Authority and the City contained herein
shall be true and correct on the date hereof and on the Closing Date, as if made on and at the
Closing Date;
(b) As of the Closing Date, the Financing Documents shall have been duly authorized,
executed and delivered by the respective parties thereto, all in substantially the forms
heretofore submitted to the Purchaser, with only such changes as shall have been agreed to in
writing by the Purchaser, and such Financing Documents shall be in full force and effect and
shall not have been amended, modified or supplemented; and there shall be in full force and
effect such resolution or resolutions of the Authority and the City as, in the opinion of Bond
Counsel, shall be necessary or appropriate in connection with the transactions contemplated
hereby;
(d) Between the date hereof and the Closing Date, the marketability of the Bonds shall
not have been materially adversely affected, in the judgment of the Purchaser (evidenced by a
written notice to the Authority terminating the obligation of the Purchaser to accept delivery of
and make any payment for the Bonds), by reason of any of the following:
(1) an amendment to the Constitution of the United States or the State of
California shall have been passed or legislation shall have been introduced in or enacted
by the Congress of the United States or the legislature of any state having jurisdiction of
the subject matter or legislation pending in the Congress of the United States shall have
been amended or legislation shall have been recommended to the Congress of the
United States or to any state having jurisdiction of the subject matter or otherwise
endorsed for passage (by press release, other form of notice or otherwise) by the
President of the United States, the Treasury Department of the United States, the
Internal Revenue Service or the Chairman or ranking minority member of the
Committee on Finance of the United States Senate or the Committee on Ways and Means
of the United States House of Representatives, or legislation shall have been proposed
for consideration by either such Committee by any member thereof or presented as an
option for consideration by either such Committee by the staff of such Committee or by
the staff of the Joint Committee on Taxation of the Congress of the United States, or
legislation shall have been favorably reported for passage to either House of the
Congress of the United States by a Committee of such House to which such legislation
has been referred for consideration, or a decision shall have been rendered by a court of
the United States or of the State of California or the Tax Court of the United States, or a
ruling shall have been made or a regulation or temporary regulation shall have been
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proposed or made or any other release or announcement shall have been made by the
Treasury Department of the United States, the Internal Revenue Service or other federal
or State of California authority, with respect to federal or State of California taxation
upon revenues or other income of the general character to be derived by the Authority
or upon interest received on obligations of the general character of the Bonds which may
have the purpose or effect, directly or indirectly, of affecting the tax status of the
Authority, its property or income, its securities (including the Bonds) or the interest
thereon, or any tax exemption granted or authorized by State of California legislation or
materially and adversely affecting the market for the Bonds or the market price
generally of obligations of the general character of the Bonds;
(2) legislation enacted, introduced in the Congress or recommended for passage
by the President of the United States, or a decision rendered by a court established
under Article III of the Constitution of the United States or by the Tax Court of the
United States, or an order, ruling, regulation (final, temporary or proposed) or official
statement issued or made by or on behalf of the Securities and Exchange Commission, or
any other governmental agency having jurisdiction of the subject matter shall have been
made or issued to the effect that obligations of the general character of the Bonds, or the
Bonds, including any or all underlying arrangements, are not exempt from registration
under the Securities Act of 1933, as amended, or that the Indenture is not exempt from
qualification under the Trust Indenture Act of 1939, as amended;
(3) any legislation, ordinance, rule or regulation shall be introduced in, or be
enacted by any governmental body, department or agency of the State of California, or a
decision by any court of competent jurisdiction within the State of California or any
court of the United States of America shall be rendered which, in the reasonable opinion
of the Purchaser, materially adversely affects the market price of the Bonds;
(4) the escalation in military hostilities or declaration by the United States of a
national emergency or war or other calamity or crisis;
(5) the declaration of a general banking moratorium by federal, New York or
California authorities, or the general suspension of trading on any national securities
exchange;
(6) the imposition by the New York Stock Exchange or other national securities
exchange, or any governmental authority, of any material restrictions not now in force
with respect to the Bonds or obligations of the general character of the Bonds or
securities generally, or the material increase of any such restrictions now in force,
including those relating to the extension of credit by, or the charge to the net capital
requirements of, the Purchaser;
(7) an order, decree or injunction of any court of competent jurisdiction, or order,
ruling, regulation or official statement by the Securities and Exchange Commission, or
any other governmental agency having jurisdiction of the subject matter, issued or made
to the effect that the issuance, offering or sale of obligations of the general character of
the Bonds, or the issuance, offering or sale of the Bonds, including any or all underlying
obligations, as contemplated hereby, is or would be in violation of the federal securities
laws as amended and then in effect;
(8) any litigation shall be instituted, pending or threatened to restrain or enjoin
the issuance or sale of the Bonds or in any way contesting the validity of the Bonds or
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the Financing Documents, or the existence or powers of the Authority or the City or
having a material adverse impact on the availability of Net Revenues;
(9) the withdrawal or downgrading of any rating of the Bonds by a national
rating agency; or
(10) any other event shall have occurred since the date hereof that in the
reasonable judgment of the Purchaser materially adversely affects the marketability or
market price of the Bonds.
(e) At or prior to the Closing Date, the Purchaser shall have received the following
documents, in each case satisfactory in form and substance to the Purchaser:
(1) Copies of each of the Financing Documents, each duly executed and delivered
by the respective parties thereto;
(2) The approving opinion of Bond Counsel, dated the Closing Date and
addressed to the Authority and a reliance letter relating thereto addressed to the
Purchaser;
(3) The supplemental opinion of Bond Counsel, dated the Closing Date and
addressed to the Purchaser, to the effect that;
(i) this Commitment Agreement has been duly authorized, executed and
delivered by the Authority and the City, and assuming the valid execution and
delivery by the Purchaser, is valid and binding upon the Authority and the City
enforceable in accordance with their terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization moratorium or similar laws or
equitable principles relating to or limiting creditors' rights generally; and
(ii) the Bonds are exempt from registration pursuant to the Securities Act
of 1933, as amended, and the Indenture is exempt from qualification under the
Trust Indenture Act of 1939;
(4) The opinion of counsel to the Authority and the City, dated the Closing Date
and addressed to the Purchaser, is substantially the form attached hereto as Exhibit A;
(5) The opinion of counsel to the Trustee, dated the Closing Date and addressed
to the Authority, the City and the Purchaser, to the effect that (i) the Trustee has duly
authorized, executed and delivered the Indenture and duly authenticated and delivered
the Bonds on the Closing Date; and (ii) the Indenture constitutes the legally valid and
binding obligation of the Trustee, enforceable against the Trustee in accordance with its
terms, except that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws in effect from time to time
affecting the rights of creditors generally and except to the extent that the enforceability
thereof may be limited by the application of general principles of equity;
(6) A certificate or certificates, dated the Closing Date, signed by a duly
authorized official of the Authority to the effect that (i) the representations and
warranties of the Authority contained in this Commitment Agreement and in the
Financing Documents to which it is a party are true, complete and correct on and as of
the Closing Date; (ii) there is no action, suit, proceeding, inquiry or investigation
pending or, to the best knowledge of such official, threatened (a) to restrain or enjoin the
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execution and delivery of any of the Bonds, (b) in any way affecting the validity of the
Bonds or the Financing Documents to which the Authority is a party, or (c) in any way
contesting the corporate existence or powers of the Authority to execute and deliver the
Financing Documents to which the Authority is a party or the Bonds;
(7) A certificate or certificates, dated the Closing Date, signed by a duly
authorized official of the City to the effect that (i) the representations and warranties of
the City contained in this Commitment Agreement and the Financing Documents to
which the City is a party are true, complete and correct on and as of the Closing Date;
and (ii) there is no action, suit, proceeding, inquiry or investigation at law or in equity,
before or by any court, government agency, public board or body, pending or, to the
best knowledge of such official, threatened (a) to restrain or enjoin the execution and
delivery of the Financing Documents to which the City is a party, (b) in any way
contesting or affecting the validity of the Financing Documents to which the City is a
party, (c) in any way contesting the power of the City to execute and deliver the
Financing Documents to which the City is a party, or (d) seeking to prohibit, restrain or
enjoin the collection of moneys from the Enterprise to pay the Installment Payments
securing the Bonds, or the compliance by the City of the covenants contained in the
Financing Documents to which the City is a party, or questioning the authority of the
City to fix, charge and collect rates for the services provided by the Enterprise as
provided in the Installment Sale Agreement, nor to the best knowledge of such official,
is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein
an unfavorable decision, ruling or finding would materially adversely affect the validity
or enforceability of the Bonds or the Financing Documents to which the City is a party or
materially adversely impair the City's ability to perform its obligations the Financing
Documents to which the City is a party;;
(8) A certificate, dated the Closing Date, signed by a duly authorized official of
the Trustee, satisfactory in form and substance to the Purchaser, to the effect that: (i) the
Trustee is a national banking association organized and existing under and by virtue of
the laws of the United States of America, having the full power and being qualified to
enter into and perform its duties under the Indenture; (ii) the Trustee is duly authorized
to enter into the Indenture and to authenticate and deliver the Bonds to the Purchaser
pursuant to the terms of the Indenture; (iii) the execution and delivery of the Indenture
and compliance with the provisions on the Trustee's part contained therein, and the
authentication and delivery of the Bonds will not conflict with or constitute a breach of
or default under any law, administrative regulation, judgment, decree, loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the Trustee is
a party or is otherwise subject (except that no representation, warranty or agreement is
made with respect to any federal or state securities or Blue Sky laws or regulations), nor
will any such execution, delivery, adoption or compliance result in the creation or
imposition of any lien, charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets held by the Trustee pursuant to the lien
created by the Indenture under the terms of any such law, administrative regulation,
judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other
instrument, except as provided by the Indenture; and (iv) there is no action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any court,
governmental agency, public board or body, served on, or, to the best knowledge of
such officer, threatened against, the Trustee, affecting the existence of the Trustee or the
titles of its officers to their respective offices, or in any way contesting or affecting the
validity or enforceability of the Indenture against the Trustee, or contesting the power of
the Trustee or its authority to enter into, adopt or perform its obligations under the
Indenture, wherein an unfavorable decision, ruling or finding would materially
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adversely affect the validity or enforceability of the Indenture against the Trustee or the
authentication and delivery of the Bonds;
(9) A certified copy of the general resolution of the Trustee authorizing the
execution and delivery of the Indenture;
(10) A certified copy of the Authority Resolution;
(11) A certified copy of the City Resolution;
(12) Such additional legal opinions, certificates, proceedings, instruments,
insurance policies or evidences thereof and other documents as the Purchaser, the
Purchaser's counsel or Bond Counsel may reasonably request to evidence the truth and
accuracy, as of the date hereof and as of the Closing Date, of the representations of the
Authority herein, and the due performance or satisfaction by the Authority and the City
on or prior to the Closing Date of all agreements then to be performed and all conditions
then to be satisfied by the Authority and the City in connection with the transactions
contemplated hereby and the Financing Documents.
If the Authority and / or the City shall be unable to satisfy the conditions to the
Purchaser's obligations contained in this Commitment Agreement or if the Purchaser's
obligations shall be terminated for any reason permitted herein, all obligations of the Purchaser
hereunder may be terminated by the Purchaser at, or at any time prior to, the Closing Date by
written notice to the Authority and neither the Purchaser nor the Authority shall have any
further obligations hereunder.
5. Expenses. The Authority or the City shall pay the expenses incident to the
performance of their obligations hereunder including, but not limited to: (i) the cost of
preparation, printing and distribution of the Financing Documents, including a reasonable
number of certified or conformed copies thereof; (ii) the cost of preparation and printing of the
Bonds; (iii) the fees and disbursements of Bond Counsel; (iv) the fees and disbursements of the
Purchaser's counsel; (v) the fees and disbursements of any engineers, accountants and other
experts, consultants or advisors retained by the Authority or the City; (vi) reimbursement of
any incidental expenses incurred by the Purchaser on behalf of the City; and (vii) fees, if any,
payable to the California Debt and Investment Advisory Commission, the Municipal Securities
Rulemaking Board.
6. Notices. Any notice or other communication to be given to the Authority, the City or
the Purchaser under this Commitment Agreement may be given by delivering the same in
writing to
Authority: Tustin Public Financing Authority
c / o City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
City: City of Tustin
300 Centennial Way
Tustin, CA 92780
Attention: City Manager
Purchaser: Capital One Public Funding LLC
1307 Walt Whitman Road, 3rd Floor
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Melville, NY 11747
Attention: President
7. Survival of Representations and Warranties. Representations, warranties and
agreements contained in this Commitment Agreement or made in any certificate delivered by
the Authority or the City hereunder shall remain operative and in full force and effect,
regardless of: (i) any investigations or statements made by or on behalf of the Purchaser; and
(ii) delivery of and payment for the Bonds pursuant to this Commitment Agreement.
8. Effectiveness and Counterpart Signatures. This Commitment Agreement shall
become effective and binding upon the respective parties hereto upon the execution of the
acceptance hereof by duly authorized officers of the Authority and approval by duly authorized
officers of the City and shall be valid and enforceable as of the time of such acceptance and
approval. This Commitment Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
9. Parties in Interest. This Commitment Agreement is made solely for the benefit of the
Authority, the City and the Purchaser (including the successors or assigns of the Purchaser) and
no other person shall acquire or have any right hereunder or by virtue hereof.
10. Headings. The headings of the sections of this Commitment Agreement are inserted
for convenience only and shall not be deemed to be a part hereof.
11. Governing Law. This Commitment Agreement shall be construed in accordance
with the laws of the State of California.
Accepted:
TUSTIN PUBLIC FINANCING
AUTHORITY
Treasurer
CITY OF TUSTIN
Finance Director
Very truly yours,
CAPITAL ONE PUBLIC FUNDING LLC ,
as Purchaser
Catherine DeLuca
Vice President
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SCHEDULE I
MATURITY SCHEDULE
Maturity Date Principal Interest
(Al2rill Amount Rate Price
2044 $4,125,000 4.820% 100.000
REDEMPTION
The Bonds are subject to redemption, at the option of the City on any date on or after April 1,
2034, as a whole or in part, by such maturities as shall be determined by the City, and by lot within a
maturity, from any available source of funds, at a redemption price equal to the principal amount of the
Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without
premium.
The Bonds are also subject to mandatory redemption from sinking account payments made by
the Authority, in part by lot, on April 1, 2025, and on April 1 in each year thereafter to and including
April 1, 2044, at a redemption price equal to the principal amount thereof to be redeemed together with
accrued interest thereon to the redemption date, without premium, as set forth in the following table:
t Maturity.
Redemption Date
(April 1)
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
Schedule I
Page 1
Principal
Amount
$105,000
135,000
140,000
145,000
155,000
160,000
170,000
180,000
185,000
195,000
205,000
215,000
225,000
235,000
245,000
260,000
270,000
285,000
300,000
315,000
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
EXHIBIT A
FORM OF OPINION OF CITY ATTORNEY AND AUTHORITY COUNSEL
Tustin Public Financing Authority
300 Centennial Way
Tustin, California 92780
City of Tustin
300 Centennial Way
Tustin, California 92780
Capital One Public Funding LLC
1307 Walt Whitman Road, 3rd Floor
Melville, NY 11747
Re: $4,125,000 Tustin Public Financing Authority Water Revenue Bonds, Series 2024
(Subordinate Lien)
Ladies and Gentlemen:
I have acted as legal counsel to the City of Tustin, California (the "City") and the Tustin Public
Financing Authority (the "Authority") in connection with the issuance of the above -referenced Bonds by
the Authority. In such capacity, I have examined the original, certified copies, or copies otherwise
identified to my satisfaction as being true copies of such resolutions, documents, ordinances, certificates,
and records as I have deemed relevant and necessary as the basis for the opinions set forth herein.
Relying on such examination and applicable law, I am of the opinion that:
1. The Authority is a joint exercise of powers entity duly organized and validly existing
under all applicable laws, with full legal right, power and authority to enter into and perform its
obligations under the Installment Sale Agreement, dated as of February 1, 2024 (the "Installment Sale
Agreement"), by and between the Authority and the City, the Indenture of Trust, dated as of February 1,
2024 (the "Indenture"), by and between the Authority and The Bank of New York Mellon Trust
Company, N.A., as trustee (the "Trustee"), and the Commitment Agreement, dated February 7, 2024 (the
"Commitment Agreement"), by and among the Authority, the City and First Southwest Company, as
Purchaser, (collectively, the "Authority Documents"). The Authority has duly authorized, executed and
delivered the Authority Documents and, assuming due authorization, execution and delivery by the
other parties thereto (other than the City), each of the Authority Documents constitutes a legal, valid and
binding obligation of the Authority enforceable against the Authority in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, moratorium, insolvency, equitable remedies
and other laws affecting creditors' rights or remedies.
2. The City is a municipal corporation organized and validly existing under all applicable
laws, with full legal right, power and authority to enter into and perform its obligations under the
Installment Sale Agreement and the Commitment Agreement (collectively, the "City Documents"). The
City has duly approved the City Documents and has duly authorized, executed and delivered the City
Documents and, assuming due authorization, execution and delivery by the other parties thereto (other
than the Authority), each of the City Documents constitutes a legal, valid and binding obligation of the
City enforceable against the City in accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, moratorium, insolvency, equitable remedies and other laws affecting creditors'
rights or remedies.
3. The Authority has duly and validly adopted Resolution No. approving the
Authority Documents at a meeting duly called and held, and such Resolution is in full force and effect
and has not been amended, modified or repealed since its adoption.
Exhibit A
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4. The City has duly and validly adopted Resolution No. approving the City
Documents at a meeting duly called and held, and such Resolution is in full force and effect and has not
been amended, modified or repealed since its adoption.
5. There is no action, suit or proceeding before or by any court, government agency, public
board or body pending or, to the best of our knowledge, threatened wherein an unfavorable decision,
ruling or finding would (a) affect the creation, organization, existence or powers of the Authority or the
City or the titles of their respective officers or officials to their respective offices, (b) in any way question
or affect the validity or enforceability of any of the Authority Documents, the City Documents, or any
resolutions, (c) find illegal, invalid or unenforceable any of the Authority Documents, the City
Documents, or the Ordinances or the transactions contemplated thereby, or any other agreement or
instrument related to the issuance of the Bonds to which the Authority or the City is a party, (d) affect the
issuance or delivery of any of the Bonds, the payment or collection of any revenues or charges of the
City's water enterprise, the validity of the pledge of or lien on such revenues or charges for the benefit of
the owners of the Bonds, the exclusion of interest on the Bonds from gross income, the powers of the
Authority or the City, or the authority of the Authority to issue the Bonds or the consummation of any of
the transactions contemplated by the Authority Documents, the City Documents, the Ordinances or the
Bonds, or (e) affect the power and authority of the City to establish, maintain and collect rates and
charges for water collection and treatment and other services, facilities and commodities sold, furnished
or supplied through the facilities of the City's water system.
6. The execution and delivery of the Authority Documents and the City Documents and the
other instruments contemplated by any of such documents, and compliance with the provisions thereof,
do not conflict with or constitute a breach of or default under any applicable law or administrative rule or
regulation of the State of California, the United States or any department or agency of either thereof, or
any applicable court or administrative decree or order or any loan agreement, note, resolution, indenture,
trust agreement, contract, agreement or other instrument to which the Authority or the City is subject or
bound in a manner which would materially adversely affect the Authority's or the City's performance
thereunder.
7. Any and all consents, authorizations, approvals and orders of or filings or registrations
with any governmental authority, legislative body, board, agency or commission having jurisdiction
which would constitute a condition precedent to, or the absence of which would materially adversely
affect, the performance by the Authority or the City of its obligations under the Authority Documents or
the City Documents, respectively, have been obtained and are in full force and effect.
I am furnishing this opinion to you solely for your benefit. This opinion is rendered in connection
with the transaction described herein, and may not be relied upon by you for any other purpose. This
opinion shall not extend to, and may not be used, circulated, quoted, referred to, or relied upon by, any
other person, firm, corporation or other entity without my prior written consent.
Very truly yours,
Exhibit A
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Draft Dated January 22, 2024
PLACEMENT AGENT AGREEMENT
, 2024
Tustin Public Financing Authority
c/o City of Tustin
300 Centennial Way
Tustin, California 92780
City of Tustin
300 Centennial Way
Tustin, California 92780
Re: Tustin Public Financing Authority Water Revenue Bonds, Series 2024
(Subordinate Lien)
The Tustin Public Financing Authority, a joint powers authority duly organized and
existing under the laws of the State of California (the "Issuer"), proposes to issue, offer, and sell
in a private placement the above -referenced bonds of the Issuer (the "Bonds") pursuant to an
Indenture of Trust dated as of February 1, 2024 (the "Indenture"), by and among the Issuer, the
City of Tustin (the "City") and The Bank of New York Mellon Trust Company, N.A., as trustee.
The proceeds of the Bonds will be used to finance the acquisition and construction of certain
improvements and facilities (the "2024 Project") which constitute part of the City's municipal
water enterprise (the "Enterprise"), and to pay the costs of issuing the Bonds.
In order to provide for the repayment of the Bonds, the Authority will sell the 2024 Project
to the City pursuant to an Installment Sale Agreement dated as of February 1, 2024 (the
"Installment Sale Agreement"), between the Issuer and the City, under which the City will agree
to make installment payments to the Authority (the "Installment Payments") which will be
calculated to be sufficient to enable the Authority to pay the principal of and interest on the Bonds
when due and payable. The City's obligation to make Installment Payments will be payable from,
and secured by a pledge of, the net revenues of the Enterprise, in all respects, junior, subordinate
and inferior to the City's obligations with respect to the payment of debt service on its City of
Tustin (Orange County, California) 2016 Water Refunding Revenue Bonds (the "2016 Senior
Bonds") and its City of Tustin (Orange County, California) Taxable Water Refunding Revenue
Bonds, Series 2020 (the "2020 Senior Bonds").
In connection with the issuance of the Bonds, the City will enter into (i) a First Amendment
to Indenture of Trust dated as of February 1, 2024, between the City and The Bank of New York
Mellon Trust Company, N.A., as trustee (the "2016 Trustee"), amending that certain Indenture of
Trust, dated as of September 1, 2016, by and between the City and the 2016 Trustee relating to the
2016 Senior Bonds, and (ii) a First Amendment to Indenture of Trust dated as of February 1, 2024,
between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the "2020
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
Trustee"), amending that certain Indenture of Trust, dated as of February 1, 2020, by and between
the City and the 2020 Trustee relating to the 2020 Senior Bonds (collectively, the "Amendments").
The Bonds, the Indenture, the Installment Sale Agreement and the Amendments are
referred to herein as the "Financing Documents." Capitalized terms used but not defined herein
have the meanings given to such terms in the Indenture.
This Placement Agent Agreement (this "Agreement") confirms the agreement
among the Issuer, the City and Stifel, Nicolaus & Company, Incorporated (the "Placement Agent")
as follows:
1. En2nement. The Issuer and the City hereby engage the Placement Agent
as their exclusive agent to assist the Issuer in placing the Bonds on a best
efforts basis with a purchaser (the "Purchaser") which shall be a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act of
1933 (the "Securities Act") or an "accredited investor," as defined in Rule
501(a)(1),(2),(3), (7), (8) or (9) under the Securities Act, as represented by
the Purchaser in an executed Investor Letter in the form attached as Exhibit
B to the Indenture on a private placement basis (the "Placement"). Sale
and delivery of the Bonds by the Issuer and purchase by the Purchaser will
occur on the day of closing ("Closing Date"). The Issuer and the City
acknowledge and agree that the Placement Agent's engagement hereunder
is not an agreement by the Placement Agent or any of its affiliates to
underwrite or purchase the Bonds or otherwise provide any financing to
the Issuer or the City. The Placement Agent hereby accepts this
engagement upon the terms and conditions set forth in this Agreement.
2. Fees and Expenses.
(a) For its services under this Agreement, the Issuer and the City agree
to pay the Placement Agent a placement fee for its services under
this Agreement of $ payable on the Closing Date, and
$ as reimbursement for the reasonable expenses incurred by
the Placement Agent in preparing to market and marketing the
Bonds, including, but not limited to, travel, fees, and disbursements
of counsel to the Placement Agent and printing and distribution of
the Placement Materials (as defined below), whether or not a closing
occurs, upon the earlier of receipt of an invoice or on the Closing
Date; provided that the Placement Agent shall be under no
obligation to pay any expenses incident to this Agreement; and
(b) In the event the Issuer or the City terminates this Agreement and
within twelve (12) months thereafter the Issuer sells the Bonds to an
investor identified by the Placement Agent to the Issuer and the City
prior to such termination, the amounts payable under (a) above shall
be immediately due and payable by the Issuer.
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3. Disclosure and Due Diligence.
(a) With the assistance of the Placement Agent and the Issuer's
municipal advisor, the Issuer and the City will prepare and provide
the Placement Agent with a term sheet and/or other documents
including the City's audited financial statements, unaudited
financials to the extent audits are not available, current year budget
information, recent rate studies and associated financial projections,
reports, if any, published by Standard & Poor's pertaining to the
Enterprise and other information deemed important the Placement
Agent (the "Information Package") together with the draft Financing
Documents (together with all supplements, modifications, and
additions thereto prior to the Closing Date, the "Placement
Materials"). The Issuer and the City acknowledge and agree that
they have prepared the Information Package and are solely
responsible for the completeness, truth, and accuracy of the
Placement Materials and that the Placement Agent and the
Purchaser may rely upon, as complete, true, and accurate, the
Placement Materials and all information provided by the Issuer and
the City to the Placement Agent for use in connection with the
Placement and that the Placement Agent does not assume any
responsibility therefor.
(b) The Issuer and the City will make available to the Purchaser and the
Placement Agent such documents and other information which the
Purchaser or the Placement Agent reasonably deems appropriate,
will provide access to its officers, directors, employees, accountants,
counsel and other representatives, and will provide the Purchaser
and the Placement Agent the opportunity to ask questions and
receive answers from knowledgeable individuals, including Bond
Counsel (whose opinions each shall receive and upon which they
may rely) concerning the Issuer, the City, the Bonds, and the
security therefor; it being understood that the Purchaser and the
Placement Agent will rely solely upon such information supplied by
the Issuer, the City and their representatives without assuming any
responsibility for independent investigation or verification thereof.
(c) In the event that the Placement Agent is unable to complete "due
diligence" in order to form a reasonable basis for recommending the
Bonds to the Purchaser either (1) because of the failure of the Issuer
or the City to comply with sub -paragraph (a) or (b) of this paragraph
or (2) because the Placement Agent uncovers "red flags" about the
Issuer and/or the City that cause the Placement Agent to be not
satisfied that the Placement Agent can in good faith recommend the
Bonds to the Purchaser, the Placement Agent may terminate this
Agreement without further obligation on the part of the Placement
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Agent to proceed with the Placement and without any obligation on
the part of the Placement Agent to reimburse to the Issuer or the City
any monies advanced by the Issuer or the City to the Placement
Agent. In such event the amounts due to the Placement Agent under
paragraph 2(a) above, with respect to the reimbursement of
reasonable expenses, shall be immediately due and payable.
4. Representations, Warranties, and Agreements of the Issuer and the
Cam. As of the date of this Agreement, unless otherwise stated, the Issuer
and the City represent, warrants, and agrees with the Placement Agent that:
(a) The Issuer and the City are duly organized and validly existing under
the laws of the State of California (the "State") with the power to
execute and deliver the Financing Documents to which they are a
party, perform the agreements on their part contained therein and in
the agreements approved thereby and cause the issuance of the Bonds.
(b) The Issuer and the City will not cause or permit any action to be taken
in the placement of the Bonds in violation of the requirements for
exemption from registration or qualification of the Bonds under all
federal and applicable state securities laws and regulations.
(c) The Issuer and the City have complied, and in all respects on the
Closing Date will be in compliance, with all of the provisions of
applicable law of the State.
(d) The Issuer and the City have duly authorized and approved the
Placement Materials and the delivery thereof to the Purchaser and
the execution and delivery of this Agreement and the Financing
Documents to which they are a party pursuant to resolutions adopted
by their respective governing bodies (collectively, the
"Resolutions"), and the performance of its obligations and the
consummation by it of all other transactions contemplated thereby.
(e) On the Closing Date, the Issuer and the City will have been duly
authorized, executed, and delivered by this Agreement and the
Financing Documents they are a party to, and, assuming due
authorization, execution and delivery by the other parties thereto, as
applicable, constitute legal, valid and binding agreements of the
Issuer and the City enforceable in accordance with their respective
terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or other laws affecting the enforcement of creditors'
rights generally and by the application of equitable principles if
sought and by the limitations on legal remedies imposed on actions
against the Issuer in the State.
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(f) Neither the Issuer nor the City is, and on the Closing Date will not
be, in breach of or default under any applicable law or administrative
regulation of the State or any department, division, agency or
instrumentality thereof, or of the United States, or any applicable
judgment or decree or any loan agreement, note, resolution,
certificate, agreement or other instrument to which the Issuer or the
City is a party or is otherwise subject, which breach or default would
materially and adversely affect the Issuer or the City or its ability to
perform their respective duties and obligations under the Financing
Documents, and the execution and delivery of the Financing
Documents, the adoption of the Resolutions and the issuance by the
Issuer of the Bonds and compliance with the provisions of each will
not conflict with or constitute a breach of or default under any
applicable law or administrative regulation of the State or under any
certificate, agreement or other instrument to which the Issuer or the
City is a party or is otherwise subject, or which breach or default
would materially and adversely affect the Issuer or the City or their
ability to perform their respective duties and obligations under the
Financing Documents.
(g) No action, suit, proceeding or investigation at law or in equity before
or by any court, governmental agency, public board or body is, and
on the Closing Date will not be, pending or, to the knowledge of the
Issuer or the City, threatened: (i) in any way affecting the existence
of the Issuer or the City or the titles of the members of their
respective governing bodies to their respective offices, (ii) seeking
to prohibit, restrain or enjoin the issuance, sale or delivery of the
Bonds, the Financing Documents or collection or payment by the
Issuer of any amounts pledged or to be pledged as security to pay
the principal of and interest on Bonds, (iii) seeking to prohibit,
restrain or enjoin the execution and delivery of the Financing
Documents or collection or payment by the City of any amounts
pledged or to be pledged as security to pay the Installment Payments
under the Installment Sale Agreement, (iv) in any way contesting or
affecting the validity or enforceability of, or the power or authority
of the Issuer to issue or to enter into (as applicable) the Bonds or the
Financing Documents, (v) in any way contesting or affecting the
validity or enforceability of, or the power or authority of the City to
enter into the Financing Documents, (vi) contesting in any way the
completeness, truth, or accuracy of the Placement Materials, (vi)
except as disclosed in the Placement Materials, wherein an
unfavorable decision, ruling or finding would materially adversely
affect the financial position or condition of the Issuer or the City,
would result in any material adverse change in the ability of the
Issuer to pledge or apply the security or source of payment of, or to
pay debt service on the Bonds, or would result in any material
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adverse change in the ability of the City to pledge or apply the
security or source of payment of, or to pay, the Installment
Payments, or (vii) contesting the status of the interest on the Bonds
as excludable from gross income for federal income tax purposes or
as exempt from any applicable state tax.
(h) Regarding information provided by the Issuer and the City to the
Placement Agent:
(1) The Issuer and the City will furnish the Placement Agent and
the Purchaser with the Information Package. The Issuer and
the City represent and warrant that all information made
available to the Placement Agent by the Issuer and the City
or contained in the Information Package, when provided will
be, and will be at all times thereafter during the period of the
engagement of the Placement Agent hereunder, be complete,
true, and accurate in all material respects and will not contain
any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein not misleading in light of the circumstances under
which such statements are made; or
(2) except as otherwise indicated to the contrary in the City 's
Financial statements, all historical financial statements of the
City provided to the Placement Agent and the Purchaser will
be prepared in accordance with generally accepted
accounting principles and practices then in effect in the
United States and will fairly present the financial condition
and operations of the entities covered thereby in all material
respects;
(3) any forecasted financial or market information with respect
to the City or its market provided to the Placement Agent
and the Purchaser by the Issuer has been or will be prepared
in good faith with a reasonable basis for the assumptions and
the conclusions reached therein.
(i) On the Closing Date, the Issuer will deliver or cause to be delivered
to the Placement Agent, in form and substance satisfactory to the Placement Agent, the
following documents:
(1) The opinion of Quint & Thimmig LLP, Bond Counsel to the
Issuer, dated the Closing Date relating to:
(i) the validity of the Bonds;
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(ii) exemption from registration and qualification under
federal and state securities law; and
(i) the tax-exempt status of the Bonds, together with a
reliance letter from such counsel, dated the Closing
Date and addressed to the Placement Agent in the
form attached to this Agreement as Exhibit A, or
such other form as is acceptable to the Placement
Agent;
(2) a certificate of the Issuer, dated the Closing Date, in the form
attached to this Agreement as Exhibit B, stating:
(i) the representations and warranties of the Issuer
contained in this Agreement are true and correct as if
made on the Closing Date;
(ii) the Issuer has complied with and fully satisfied all of
its agreements with and obligations to the Placement
Agent under this Agreement; and
(iii) as of its date and the date hereof, the information
contained in the Placement Materials is complete,
true, and accurate and such information does not
contain any untrue statement of a material fact or
omit to state any material fact necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading;
(3) a certificate of the City, dated the Closing Date, to the effect
that:
(i) the representations and warranties of the City
contained in this Agreement are true and correct as if
made on the Closing Date; and
(ii) the City has complied with and fully satisfied all of
its agreements with and obligations to the Placement
Agent under this Agreement;
(iii) as of its date and the date hereof, the information
contained in the Placement Materials is complete,
true, and accurate and such information does not
contain any untrue statement of a material fact or
omit to state any material fact necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading;
(4) An Investor Letter, in the form attached as Exhibit B to the
Indenture, executed by the Purchaser and addressed to the
Issuer, the City and the Placement Agent; and
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DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
(5) Such additional legal opinions, certificates, proceedings,
instruments and other documents as the Placement Agent or
its counsel, if any, and Bond Counsel may reasonably
request to evidence compliance by the Issuer and the City
with legal requirements, the truth and accuracy, as of the
Closing Date, of the representations of the Issuer and the
City, and the due performance or satisfaction by the Issuer
and the City at or prior to such time of all agreements then
to be performed and all conditions then to be satisfied by
the Issuer and the City.
5. Termination. This Agreement may be terminated by either party upon ten
(10) business days' prior written notice; provided that the provisions of
Paragraph 2 and obligations thereunder shall not be affected by such
termination.
6. Re2ulatory Disclosure. The Issuer and the City acknowledge, in
connection with the purchase and sale of the Bonds, the offering of the
Bonds for sale and the discussions and negotiations relating to the terms of
the Bonds pursuant to and as set forth in this Agreement, that:
(a) the Placement Agent has acted at arm's length, is acting solely for
its own account and is not an agent of or advisor to (including,
without limitation, a Municipal Advisor (as such term is defined in
Section 975(e) of the Dodd -Frank Wall Street Reform and
Consumer Protection Act)), and owes no fiduciary duty to the Issuer,
the City or any other person,
(b) the Placement Agent's duties and obligations to the Issuer and the
City shall be limited to those contractual duties and obligations set
forth in this Agreement,
(c) the Placement Agent may have interests that differ from those of the
Issuer and the City, and
(d) the Issuer and the City have consulted their legal and financial
advisors to the extent they deemed appropriate in connection with
the offering and sale of the Bonds. The Issuer and the City further
acknowledge and agree that they are responsible for making their
judgment with respect to the offering and sale of the Bonds and the
process leading thereto. The Issuer and the City agree that they will
not claim that the Placement Agent acted as a Municipal Advisor to
the Issuer or the City or rendered advisory services of any nature or
respect, or owes a fiduciary or similar duty to the Issuer or the City,
in connection with the offering or sale of the Bonds or the process
leading thereto.
Page 8
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
7. Survival of Certain Representations and Obligations. The respective
agreements, covenants, representations, warranties and other statements of
the Issuer, the City and their officers set forth in or made pursuant to this
Agreement shall survive delivery of and payment for the Bonds and shall
remain in full force and effect, regardless of any investigation, or statements
as to the results thereof, made by or on behalf of the Placement Agent.
Notices. Any notice or other communication to be given to the Issuer or
the City under this Agreement may be given by delivering the same in
writing to the Issuer and the City at their respective address set forth above.
Any notice or other communication to be given to the Placement Agent
under this Agreement may be given by delivering the same in writing to
Stifel, Nicolaus & Company, Incorporated, 2121 Avenue of the Stars, Suite
2150, Los Angeles, California 90067; Attention: Sara Oberlies Brown,
Public Finance.
9. No Boycott. By entering into this Agreement, the Placement Agent certifies
that it and its parent company, wholly or majority -owned subsidiaries, and
other affiliates, are not currently engaged in, or for the duration of this
Agreement will not engage in, a boycott of goods or services from the State
of Israel; companies doing business in or with Israel or authorized by,
licensed by, or organized under the laws of the State of Israel; or persons or
entities doing business in the State of Israel. The Placement Agent
understands that "boycott" includes, but is not limited to, refusing to deal
with, terminating business activities with, or otherwise taking any action
that is intended to penalize, inflict economic harm on, or limit commercial
relations, but does not include an action made for ordinary business
purposes.
10. No Assignment. This Agreement has been made by the Issuer, the City and
the Placement Agent, and no person other than the Issuer, the City and the
Placement Agent, shall acquire or have any right under or by virtue of this
Agreement.
11. Applicable Law. This Agreement shall be interpreted, governed and
enforced in accordance with the laws of the State.
12. Effectiveness. This Agreement shall become effective upon its execution
by duly authorized officials of all parties hereto and shall be valid and
enforceable from and after the time of such execution.
13. Severability. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision
hereof.
Page 9
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
14. Counterparts. This Agreement may be executed in several counterparts
(including counterparts exchanged by email in PDF format), each of which
shall be an original and all of which shall constitute but one and the same
instrument.
[Signature Page Follows]
Page 10
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
Respectfully submitted,
STIFEL, NICOLAUS & COMPANY INCORPORATED
.....................................................................
Sara Oberlies Brown, Managing Director
ACCEPTED this of February, 2024.
TUSTIN PUBLIC FINANCING AUTHORITY
By...................................................................
Executive Director
CITY OF TUSTIN
By...................................................................
City Manager
S-1
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
EXHIBIT A
FORM OF RELIANCE LETTER ON COUNSEL'S OPINION
TO THE PLACEMENT AGENT
[Date of Closing]
Stifel, Nicolaus & Company, Incorporated
2121 Avenue of the Stars, Suite 2150
Los Angeles, California 90067
Re: Tustin Public Financing Authority Water Revenue Bonds, Series 2024 (Subordinate
Lien)
Ladies and Gentlemen:
We have acted as bond counsel to the Tustin Public Financing Authority (the "Issuer") in
connection with the issuance of the Bonds.
Reference is hereby made to our opinion letter as bond counsel addressed to the Issuer
dated of even date herewith and delivered with respect to the above -referenced series of Bonds.
Please be advised that you are entitled to rely on said letter as if the same had been addressed to
you.
This letter is furnished by us to you in our capacity as bond counsel to the Issuer pursuant
to Paragraph 4(i)(1) of the Placement Agent Agreement with respect to the Bonds, dated as of
[date of Agreement], between the Issuer and you. No attorney -client relationship has existed or
exists between our firm and you or any other party in connection with the Bonds or by virtue of
this letter. Our opinion may be relied upon only by the addressee hereof and may not be used or
relied upon by any other person for any purpose whatsoever without, in each instance, our prior
written consent.
Very truly yours,
Page A-1
DocuSign Envelope ID: D991E165-F97E-49A4-82C3-64B73530AC06
Quint & Thimmig LLP 12 / 21 / 23
01/03/24
01/10/24
01/22/24
01/26/24
FIRST AMENDMENT TO INDENTURE OF TRUST
Dated as of February 1, 2024
by and between the
CITY OF TUSTIN
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
Amending that certain Indenture of Trust, dated as of September 1, 2016, by and between the City of
Tustin and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to:
$21,515,000
City of Tustin
(Orange County, California)
2016 Water Revenue Refunding Bonds
20027.04
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
FIRST AMENDMENT TO INDENTURE OF TRUST
This FIRST AMENDMENT TO INDENTURE OF TRUST (this "First Amendment"), dated
as of February 1, 2024, is made between by and between the CITY OF TUSTIN, a municipal
corporation and general law city organized and existing under the constitution and laws of the
State of California (the "City"), 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 Los Angeles, California, as trustee (the "Trustee"),
amending that certain Indenture of Trust, dated as of September 1, 2016, by and between the City
and the Trustee (the "Original Indenture").
WHEREAS, the City and the Trustee have executed and delivered the Original Indenture
under and pursuant to which the City issued its $21,515,000 City of Tustin (Orange County,
California) 2016 Water Refunding Revenue Bonds (the "Bonds");
WHEREAS, the proceeds of the Bonds were used to finance the costs of the acquisition
and construction of certain new additions, betterments, extensions and improvements to the
municipal water system owned and operated by the City;
WHEREAS, it has been determined that the Original Indenture is defective in that Section
5.02 of the Original Indenture does not adequately provide for the flow of Gross Revenues
required for the payment of Subordinate Debt; and
WHEREAS, Section 10.01(b) of the Original Indenture provides that the Original
Indenture may be modified or amended from time -to -time and at any time by an indenture or
indentures supplemental thereto, which the City and the Trustee may enter into without the
consent of any Owners, to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained therein, or in any other
respect whatsoever as the City may deem necessary or desirable, provided under any
circumstances that such modifications or amendments shall not, in the reasonable determination
of the City, materially adversely affect the interests of the Owners;
NOW, THEREFORE, the parties hereto, for good and valuable consideration the receipt
of which is acknowledged, and intending to be legally bound hereby, agree as follows:
Section 1. Definitions. All defined terms used in this First Amendment and the Recitals
hereto, unless defined elsewhere in this First Amendment, shall have the meanings given to those
terms in the Original Indenture.
Section 2. Amendment of Section 5.02 of the Original Indenture. Section 5.02 of the
Original Indenture is hereby amended in full as follow:
Section 5.02. Receipt, Deposit and Application of Gross Revenues and Net
Revenues.
(a) Application of Gross Revenues. All of the Gross Revenues shall be deposited by
the City immediately upon receipt in the Water Fund. All Gross Revenues shall be held
in trust by the City in the Water Fund and shall be applied, transferred, used and
withdrawn only for the following purposes:
20027.04
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
(i) Maintenance and Operation Costs. The City shall first pay from the
moneys in the Water Fund the budgeted Maintenance and Operation Costs as such
Maintenance and Operation Costs become due and payable.
(ii) Payment of Debt Service. On or before the 5th Business Day preceding
each Interest Payment Date, (A) the City shall withdraw from the Water Fund and
transfer to the Trustee, for deposit in the Bond Fund, an amount which, together
with the balance then on deposit in the Bond Fund, the Interest Account, the
Principal Account and the Sinking Account (other than amounts required for
payment of principal of or interest on any Bonds which have matured but which
have not been presented for payment), is equal to the aggregate amount of
principal of and interest coming due and payable on the Bonds and (B) shall
withdraw from the Water Fund and transfer amounts required for the payment of
debt service on any Parity Obligations.
(iii) Payment of Debt Service on Subordinate Debt. On or before the 5th
Business Day preceding each interest payment date with respect to Subordinate
Debt, the City shall withdraw from the Water Fund and transfer amounts required
for the payment of debt service on such Subordinate Debt.
(iv) Surplus. As long as all of the foregoing payments, allocations and
transfers are made at the times and in the manner set forth above, any moneys
remaining in the Water Fund may at any time be treated as surplus and applied
for any lawful purpose.
(b) Application of Moneys in the Bond Fund. On or before the Business Day preceding
each Interest Payment Date, the Trustee shall transfer from the Bond Fund and deposit
into the following respective accounts (each of which the Trustee shall establish and
maintain within the Bond Fund), the following amounts, in the following order of priority,
the requirements of each such account (including the making up of any deficiencies in any
such account resulting from lack of Net Revenues sufficient to make any earlier required
deposit) at the time of deposit to be satisfied before any transfer is made to any account
subsequent in priority:
First: to the Interest Account, the aggregate amount of interest becoming
due and payable on the next succeeding Interest Payment Date on all Bonds then
Outstanding;
Second: to the Principal Account, the aggregate amount of principal
becoming due and payable on the Outstanding Bonds on the next succeeding
Interest Payment Date, if any; and
Third: to the Sinking Account, the aggregate amount of sinking fund
installment becoming due and payable on the Outstanding Bonds on the next
succeeding Interest Payment Date, if any.
Section 3. Survival. Except as specifically provided in this First Amendment, all terms and
conditions of the Original Indenture shall remain in full force and effect, unaltered and
unamended hereby.
Section 4. Counterparts. This First Amendment may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same document.
-2-
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
Section 5. Governing Law. This First Amendment shall be governed by and construed and
interpreted in accordance with the Constitution and laws of the State of California without giving
effect to conflict of laws principles thereof.
Section 6. Headings. Headings of Sections in this First Amendment are for reference
purposes only and shall not be deemed to have any substantive effect.
IN WITNESS WHEREOF, the CITY OF TUSTIN has caused this First Amendment to be
signed in its name by the City Manager and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., in token of its acceptance of the trust created hereunder, has caused this
Indenture to be signed in its corporate name by one of its authorized officers, all as of the day and
year first above written.
CITY OF TUSTIN
'J
City Manager
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
LIM
Authorized Officer
-3-
DocuSign Envelope ID: D991E165-F97E-49A4-82C3-64B73530AC06
Quint & Thimmig LLP 12 / 21 / 23
01/03/24
01/10/24
01/22/24
01/26/24
FIRST AMENDMENT TO INDENTURE OF TRUST
Dated as of February 1, 2024
by and between the
CITY OF TUSTIN
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
Amending that certain Indenture of Trust, dated as of February 1, 2020, by and between the City of
Tustin and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to:
$14,910,000
City of Tustin
(Orange County, California)
Taxable Water Refunding Revenue Bonds, Series 2020
20027.04
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
FIRST AMENDMENT TO INDENTURE OF TRUST
This FIRST AMENDMENT TO INDENTURE OF TRUST (this "First Amendment"), dated
as of February 1, 2024, is made between by and between the CITY OF TUSTIN, a municipal
corporation and general law city organized and existing under the constitution and laws of the
State of California (the "City"), 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 Los Angeles, California, as trustee (the "Trustee"),
amending that certain Indenture of Trust, dated as of February 1, 2020, by and between the City
and the Trustee (the "Original Indenture").
WHEREAS, the City and the Trustee have executed and delivered the Original Indenture
under and pursuant to which the City issued its $14,910,000 City of Tustin (Orange County,
California) Taxable Water Refunding Revenue Bonds, Series 2020 (the 'Bonds");
WHEREAS, the proceeds of the Bonds were used to finance the costs of the acquisition
and construction of certain new additions, betterments, extensions and improvements to the
municipal water system owned and operated by the City;
WHEREAS, it has been determined that the Original Indenture is defective in that Section
5.02 of the Original Indenture does not adequately provide for the flow of Gross Revenues
required for the payment of Subordinate Debt; and
WHEREAS, Section 10.01(b) of the Original Indenture provides that the Original
Indenture may be modified or amended from time -to -time and at any time by an indenture or
indentures supplemental thereto, which the City and the Trustee may enter into without the
consent of any Owners, to make such provisions for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained therein, or in any other
respect whatsoever as the City may deem necessary or desirable, provided under any
circumstances that such modifications or amendments shall not, in the reasonable determination
of the City, materially adversely affect the interests of the Owners;
NOW, THEREFORE, the parties hereto, for good and valuable consideration the receipt
of which is acknowledged, and intending to be legally bound hereby, agree as follows:
Section 1. Definitions. All defined terms used in this First Amendment and the Recitals
hereto, unless defined elsewhere in this First Amendment, shall have the meanings given to those
terms in the Original Indenture.
Section 2. Amendment of Section 5.02 of the Original Indenture. Section 5.02 of the
Original Indenture is hereby amended in full as follow:
Section 5.02. Receipt, Deposit and Application of Gross Revenues and Net
Revenues.
(a) Application of Gross Revenues. All of the Gross Revenues shall be deposited by
the City immediately upon receipt in the Water Fund. All Gross Revenues shall be held
in trust by the City in the Water Fund and shall be applied, transferred, used and
withdrawn only for the following purposes:
20027.04
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
(i) Maintenance and Operation Costs. The City shall first pay from the
moneys in the Water Fund the budgeted Maintenance and Operation Costs as such
Maintenance and Operation Costs become due and payable.
(ii) Payment of Debt Service. On or before the 5th Business Day preceding
each Interest Payment Date, (A) the City shall withdraw from the Water Fund and
transfer to the Trustee, for deposit in the Bond Fund, an amount which, together
with the balance then on deposit in the Bond Fund, the Interest Account, the
Principal Account and the Sinking Account (other than amounts required for
payment of principal of or interest on any Bonds which have matured but which
have not been presented for payment), is equal to the aggregate amount of
principal of and interest coming due and payable on the Bonds and (B) shall
withdraw from the Water Fund and transfer amounts required for the payment of
debt service on any Parity Obligations.
(iii) Payment of Debt Service on Subordinate Debt. On or before the 5th
Business Day preceding each interest payment date with respect to Subordinate
Debt, the City shall withdraw from the Water Fund and transfer amounts required
for the payment of debt service on such Subordinate Debt.
(iv) Surplus. As long as all of the foregoing payments, allocations and
transfers are made at the times and in the manner set forth above, any moneys
remaining in the Water Fund may at any time be treated as surplus and applied
for any lawful purpose.
(b) Application of Moneys in the Bond Fund. On or before the Business Day preceding
each Interest Payment Date, the Trustee shall transfer from the Bond Fund and deposit
into the following respective accounts (each of which the Trustee shall establish and
maintain within the Bond Fund), the following amounts, in the following order of priority,
the requirements of each such account (including the making up of any deficiencies in any
such account resulting from lack of Net Revenues sufficient to make any earlier required
deposit) at the time of deposit to be satisfied before any transfer is made to any account
subsequent in priority:
First: to the Interest Account, the aggregate amount of interest becoming
due and payable on the next succeeding Interest Payment Date on all Bonds then
Outstanding;
Second: to the Principal Account, the aggregate amount of principal
becoming due and payable on the Outstanding Bonds on the next succeeding
Interest Payment Date, if any; and
Third: to the Sinking Account, the aggregate amount of sinking fund
installment becoming due and payable on the Outstanding Bonds on the next
succeeding Interest Payment Date, if any.
Section 3. Survival. Except as specifically provided in this First Amendment, all terms and
conditions of the Original Indenture shall remain in full force and effect, unaltered and
unamended hereby.
Section 4. Counterparts. This First Amendment may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same document.
-2-
DocuSign Envelope ID: D991 E165-F97E-49A4-82C3-64B73530AC06
Section 5. Governing Law. This First Amendment shall be governed by and construed and
interpreted in accordance with the Constitution and laws of the State of California without giving
effect to conflict of laws principles thereof.
Section 6. Headings. Headings of Sections in this First Amendment are for reference
purposes only and shall not be deemed to have any substantive effect.
IN WITNESS WHEREOF, the CITY OF TUSTIN has caused this First Amendment to be
signed in its name by the City Manager and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., in token of its acceptance of the trust created hereunder, has caused this
Indenture to be signed in its corporate name by one of its authorized officers, all as of the day and
year first above written.
CITY OF TUSTIN
'J
City Manager
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
LIM
Authorized Officer
-3-