HomeMy WebLinkAboutReso - CC - 036-2013RESOLUTION NO. 36-2013
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
BURLINGAME APPROVING THE ISSUANCE BY THE
BURLINGAME FINANCING AUTHORITY OF NOT TO EXCEED
$15,500,000 AGGREGATE PRINCIPAL AMOUNT OF WATER
AND WASTEWATER REVENUE REFUNDING BONDS TO
REFUND WATER AND +WASTEWATER REVENUE BONDS,
SERIES 2004; AUTHORIZING EXECUTION AND DELIVERY OF
INSTALLMENT SALE AGREEMENTS AND A BOND PURCHASE
CONTRACT; APPROVING FORM OF OFFICIAL STATEMENT;
AND AUTHORIZING EXECUTION OF DOCUMENTS AND THE
TAKING OF ALL NECESSARY ACTIONS RELATING TO THE
FINANCING WITH THE BURLINGAME FINANCING
AUTHORITY
WHEREAS, the Burlingame Financing Authority (the "Authority") was duly
created and established on May 15, 1995; and
WHEREAS, pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the
Government Code of the State of California (the "Marks -Roos Local Bond Pooling Act of
1985"), the Authority is authorized to issue bonds for financing or refinancing public capital
improvements whenever there are significant public benefits to be realized; and
WHEREAS, the City of Burlingame (the "City") desires to approve the
Authority's issuance of not to exceed $15,500,000 aggregate principal amount of Burlingame
Financing Authority Water and Wastewater Revenue Refunding Bonds, Series 2013 (the
"Bonds") for the purpose of refunding the Authority's Water and Wastewater Revenue Bonds,
Series 2004 (the "Prior Bonds"); and
WHEREAS, in order to refund the Prior Bonds, the City desires to enter into an
installment sale agreement (water system) and an installment sale agreement (wastewater
system) (collectively, the "Installment Sale Agreements"); and
WHEREAS, the Authority and City will enter into a Bond Purchase Agreement
(the "Bond Purchase Agreement") with E. J. De La Rosa & Co., Inc. (the "Underwriter); and
WHEREAS, there have been submitted and are on file with the City Clerk
proposed forms of the Installment Sale Agreements, Bond Purchase Agreement, an Official
Statement with respect to the Bonds proposed to be issued by the Authority, and a Trust
Agreement by and between the Authority and The Bank of New York Mellon Trust Company,
N.A. (the "Trust Agreement"); and
WHEREAS, the issuance of the Bonds by the Authority and the execution and
delivery of the Installment Sale Agreements will result in significant public benefits through
demonstrable savings in the effective interest rates and bond issuance costs expected to be paid
for the Bonds, and that it furthers the public purpose to assist in such financing;
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NOW THEREFORE, the City Council of the City of Burlingame hereby finds,
determines, declares and resolves as follows:
Section 1. All of the recitals set forth above are true and correct, and the City
Council so finds and determines.
Section 2. The City Council hereby approves the issuance of the Bonds by the
Authority, in an aggregate principal amount not to exceed $15,500,000, to refund the Prior
Bonds. The City Manager and Finance Director/Treasurer of the City are hereby directed to
perform the duties, if any, imposed upon each of them by the provisions of the financing
documents approved herein, including the Trust Agreement for the Bonds and the. Installment
Sale Agreements, and the Finance Director/Treasurer of the City is hereby authorized and
directed to hold the funds and accounts created in said financing documents and directed or
permitted to be held by the City.
Section 3. The proposed form of Installment Sale Agreement (Water System) by
and between the City and the Authority, on file with the City Clerk, is hereby approved. The
City Manager and the Finance Director/Treasurer, jointly and severally, are hereby authorized
and directed, for and in the name and on behalf of the City, to execute and deliver an installment
sale agreement in substantially said form, with such changes therein as such officers may require
or approve, such approval to be conclusively evidenced by the execution and delivery thereof;
provided, however, that the term of said installment sale agreement shall end no later than
April 1, 2029 and the interest rate or rates shall not exceed a true interest cost of three and one-
half percent (3.5%) per annum.
Section 4. The proposed form of Installment Sale Agreement (Wastewater
System) by and between the Authority and City, on file with the City Clerk, is hereby approved.
The City Manager and Finance Director/Treasurer, jointly and severally, are hereby authorized
and directed, for and in the name and on behalf of the City, to execute and deliver an installment
sale agreement in substantially said form, with such changes therein as such officers may require
or approve, such approval to be conclusively evidenced by the execution and delivery thereof;
provided, however, that the tern of said installment sale agreement shall end no later than
April 1, 2029 and the interest rate or rates shall not exceed a true interest cost of three and one-
half percent (3.5%) per annum.
Section 5. The proposed form of Bond Purchase Agreement, by and among the
Underwriter, the Authority and the City, on file with the City Clerk, is hereby approved. The
City Manager and the Finance Director/Treasurer, jointly and severally, or any such officer's
designee, are each hereby authorized and directed, on behalf of the City, to execute and deliver a
bond purchase agreement in substantially said form, with such changes therein as such officer
may require or approve, such approval to be conclusively evidenced by the execution and
delivery thereof, provided, however, the underwriting discount (not including original issue
discount) shall not exceed one and twenty-five hundredths percent (1.25%) of the aggregate
principal amount of the Bonds.
Section 6. The proposed form of Official Statement relating to the Bonds (the
"Official Statement"), on file with the City Clerk, is hereby approved. The City Manager and the
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Finance Director/Treasurer, jointly and severally, are hereby authorized and directed, for and in
the name and on behalf of the City, to execute and deliver an Official Statement in substantially
said form, with such changes therein as such officer may require or approve, such approval to be
conclusively evidenced by the execution and delivery thereof. The Underwriter is hereby
directed to distribute copies of the Official Statement to all actual purchasers of the Bonds.
Distribution by the Underwriter of a preliminary Official Statement relating to the Bonds is
hereby approved and the City Manager and Finance Director/Treasurer, jointly and severally, are
hereby authorized and directed, to execute a certificate confirming that the preliminary Official
Statement has been "deemed final' by the City for purposes of Securities and Exchange
Commission Rule 15c2-12.
Section 7. The City Manager and Finance Director/Treasurer, jointly and
severally, are hereby authorized on behalf of the City to execute a Continuing Disclosure
Certificate containing such covenants of the City as shall be necessary to comply with the
requirements of Securities and Exchange Commission Rule 15c2-12. The City hereby covenants
and agrees that it will comply with and carry out all of the provisions of such Continuing
Disclosure Certificate.
Section 8. The officers and City Council members of the City are hereby
authorized and directed, jointly and severally, to do any and all things and to execute and deliver
any and all documents and certificates which they deem necessary or advisable in order to
consummate the execution and delivery of the documents mentioned herein and otherwise to
effectuate the purposes of this Resolution and the transactions contemplated hereby, including,
but not limited to, making appropriate changes to the year referenced in the series designation for
the Bonds and changes to dates in the documents.
Section 9. All actions heretofore taken by the officers and agents of the Council
of the City with respect to the refunding of the Prior Bonds are hereby ratified, confirmed and
approved.
Section 10. This Resolution shall take effect from and after its adoption and
approval.
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I hereby certify that the foregoing is a full, true and correct copy of a resolution
duly passed and adopted by the City Council of the City of Burlingame at a regular meeting
thereof held on the 15ffi day of April, 2013, by the following vote of the members thereof:
AYES: COUNCILMEMBERS: BAYLOCK, BROWNRIGG, DEAL, KEIGHRAN, NAGEL
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: NONE
e�
ATTEST: G I
Clerk
oxsusA:751018648.7 -4-
CLERK'S CERTIFICATE
I, Mary Ellen Kearney, City Clerk of the City of Burlingame, do hereby certify as
follows:
The foregoing resolution is a full, true and correct copy of a resolution duly
adopted by a vote of a majority of the City Council of the City of Burlingame at a regular
meeting of said Council duly and regularly and legally held at the Council Chambers, 501
Prirnrose Road, Burlingame, California, on April 15, 2013, of which all of such members had
due notice, as follows:
AYES: BAYLOCK, BROWNRIGG, DEAL, KEIGHRAN, NAGEL
NOES: NONE
ABSTAIN: NONE
ABSENT: NONE
An agenda of said meeting was posted at least 72 hours before said meeting at
501 Primrose Road, Burlingame, California, a location freely accessible to members of the
public, and a brief description of said resolution appeared on said agenda.
I have carefully compared the foregoing with the original minutes of said meeting
on file and of record in my office, and the foregoing is a full, true and correct copy of the original
resolution adopted at said meeting and entered in said minutes.
Said resolution has not been amended, modified or rescinded since the date of its
adoption �anjjd the same is now in full force and effect.
`7"
Dated: — lS 2013.
City Clerk of the City of Burlingam
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April 15, 2013
Installment Sale Agreement
(Water System)
2013 INSTALLMENT SALE AGREEMENT
(WATER SYSTEM)
This 2013 INSTALLMENT SALE AGREEMENT (WATER SYSTEM) (the
"2013 Installment Sale Agreement"), dated as of April 1, 2013, by and between the CITY OF
BURLINGAME, a municipal corporation duly organized and existing under and by virtue of the
laws of the State of California (the "City"), and the BURLINGAME FINANCING
AUTHORITY, a joint powers agency duly organized and existing under and by virtue of the
laws of the State of California (the "Authority");
WITNESSETH:
WHEREAS, the City has heretofore determined that the financing of the
acquisition of certain additions, betterments, extensions and improvements as hereinafter
described (the "2004 Project") to its municipal water system were necessary and proper for City
purposes and uses under the terms of applicable law and were for the common benefit of the City
as a whole; and
WHEREAS, the Authority heretofore determined to acquire and construct the
2004 Project for, and sell the 2004 Project to, the City; and
WHEREAS, pursuant to the 2004 Installment Sale Agreement, dated as of
March 1, 2004 (the "2004 Installment Sale Agreement"), by and between the City and the
Authority, the City heretofore determined to make installment sale payments (the "2004
Installment Sale Payments") to the Authority for the purchase of the 2004 Project; and
WHEREAS, the City has determined that it is in the best interests of the City and
its residents to refund the City's obligation to make the 2004 Installment Sale Payments, and the
Authority is willing to assist the City in effecting such refunding; and
WHEREAS, in order to refinance the 2004 Project, the City has determined to sell
the 2004 Project to the Authority and repurchase the 2004 Project through the 2013 Installment
Sale Agreement; and
WHEREAS, all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in connection with the execution and
delivery of the 2013 Installment Sale Agreement do exist, have happened and have been
performed in regular and due time, form and manner as required by law, and the parties hereto
are now duly authorized to execute and enter into the 2013 Installment Sale Agreement;
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF
THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR
OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE
AS FOLLOWS:
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ARTICLE I
DEFINITIONS l
Section 1.01. Definitions. Unless the context otherwise requires, the terms
defined in this section shall -for all purposes hereof and of any amendment hereof or supplement
hereto and of any opinion or report or other document mentioned herein or therein have the
meanings defined herein, the following definitions to be equally applicable to both the singular
and plural forms of any of the terms defined herein:
Accountant's Report
"Accountant's Report" means a report signed by an Independent Certified Public
Accountant.
Accreted Value
"Accreted Value" means, with respect to any Capital Appreciation Bonds, as of
the date of calculation, the initial amount thereof plus the interest accrued thereon to such date of
calculation, compounded from the date of initial delivery at the approximate interest rate thereof
on each April 1 and October 1, as determined in accordance with the table of accreted values for
any Capital Appreciation Bonds prepared by the City at the time of sale thereof, assuming in any
year that such Accreted Value increases in equal daily amounts on the basis of a year of three
hundred sixty (360) days composed of twelve (12) months of thirty (30) days each.
Authori
"Authority" means the Burlingame Financing Authority, a joint powers authority
duly organized and existing under and by virtue of the laws of the State of California and a Joint
Exercise of Powers Agreement, dated May 15, 1995, between the Redevelopment Agency of the
City of Burlingame and the City.
Authority Bonds
"Authority Bonds" means the Water and Wastewater Revenue Refunding Bonds,
Series 2013, issued by the Authority under and pursuant to the Trust Agreement.
Bonds
"Bonds" means all revenue bonds of the City authorized, executed, issued and
delivered by the City under and pursuant to applicable law, the interest and principal and
redemption premium, if any, payments under and pursuant to which are payable from System
Net Revenues on a parity with the payment of the 2013 Installment Payments.
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Business Dav
"Business Day" means a day that is not a Saturday, Sunday or legal holiday on
which banking institutions in the State of New York or California are authorized to remain
closed, or a day on which the Federal Reserve system is closed.
Capital Appreciation Bonds
"Capital Appreciation Bonds" means any Bonds described as such when issued.
City
"City" means the City of Burlingame, a municipal corporation duly organized and
existing under and by virtue of the laws of the State of California.
Code
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations issued thereunder.
Contracts
"Contracts" means all installment sale contracts, loan agreements, capital leases
or similar obligations of the City authorized and executed by the City under and pursuant to
applicable law, the interest and principal and prepayment premium, if any, payments under and
pursuant to which are payable from System Net Revenues on a parity with the payment of the
2013 Installment Payments, including, but not limited to, the 2007 Contract and the 2011
Contract.
Debt Service
"Debt Service" means, for any Fiscal Year, the sum of (1) the interest accruing
during such Fiscal Year on all outstanding Bonds, assuming that all outstanding serial Bonds are
retired as scheduled and that all outstanding term Bonds are redeemed or paid from sinking fund
payments as scheduled (except to the extent that such interest is to be paid from the proceeds of
sale of any Bonds), (2) that portion of the principal amount of all outstanding serial Bonds
maturing on the next succeeding principal payment date that would have accrued during such
Fiscal Year if such principal amount were deemed to accrue daily in equal amounts from the next
preceding principal payment date or during the year preceding the first principal payment date,
as the case may be, (3) that portion of the principal amount of all outstanding term Bonds
required to be redeemed or paid on the next succeeding redemption date (together with the
redemption premiums, if any, thereon) that would have accrued during such Fiscal Year if such
principal amount (and redemption premiums) were deemed to accrue daily in equal amounts
from the next preceding redemption date or during the year preceding the first redemption date,
as the case may be, and (4) that portion of the Installment Payments required to be made at the
times provided in the Contracts that would have accrued during such Fiscal Year if such
Installment Payments were deemed to accrue daily in equal amounts from, in each case, the next
preceding Installment Payment Date of interest or principal or the date of the pertinent Contract,
OHSUSA:751018378.4
as the case may be; provided, that (a) if any of such Bonds are Capital Appreciation Bonds or if
the Installment Payments due under any of such Contracts secure Capital Appreciation Bonds,
then the Accreted Value payment shall be deemed a principal payment and interest that is l
compounded and paid as Accreted Value shall be deemed due on the scheduled redemption or
payment date of such Capital Appreciation Bond; (b) if any of such Bonds or if the Installment
Payments due under any such Contracts bear interest payable pursuant to a variable interest rate
formula, the interest rate on such Bonds or such Contracts for periods when the actual interest
rate cannot yet be determined, shall be assumed to be equal to the greater of (i) the actual rate on
the date of calculation, or if such Bonds or Contracts are not yet outstanding, the initial rate (if
then established and binding), (ii) if the Bonds or Contracts have been outstanding for at least
twelve months, the average rate over the twelve months immediately preceding the date of
calculation, and (iii)(1) if interest on such Bonds or Contracts is excludable from gross income
under the applicable provisions of the Internal Revenue Code, the most recently published "Bond
Buyer 25 Bond Revenue Index" (or comparable index if no longer published) or (2) if interest is
not so excludable, the interest rate on direct U.S. Treasury obligations with comparable
maturities plus fifty (50) basis points; (c) if any of such Bonds or Contracts is secured by an
irrevocable letter of credit issued by a bank having a combined capital and surplus of at least one
hundred million dollars ($100,000,000), the principal payments or deposits with respect to such
Bonds or Contracts nominally due in the last Fiscal Year in which such Bonds or Contracts
mature may, at the option of the City, be treated as if they were due as specified in any loan
agreement or reimbursement agreement issued in connection with such letter of credit or
pursuant to the repayment provisions of such letter of credit and interest on such Bonds or
Contracts after such Fiscal Year shall be assumed to be payable pursuant to the terms of such
loan agreement or reimbursement agreement or repayment provisions and (d) if any of such
Bonds or Contracts is not secured by a letter of credit as described in clause (c) of this definition
and 20% or more of the original principal of such Bonds or the Installment Payments due under
such Contracts is not due until the final stated maturity of such Bonds or the Installment
Payments due under such Contracts, such principal may, at the option of the City, be treated as if
it were due based upon a level amortization of such principal over the term of such Bonds or
Installment Payments or twenty-five (25) years, whichever is greater.
Director of Finance
"Director of Finance" means the Director of Finance of the City or its successor
designated by the City Council.
Engineer's Report
"Engineer's Report" means a report signed by an Independent Engineer.
Event of Default
"Event of Default" means an event described in Section 6.01.
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Federal Securities
"Federal Securities" means United States of America Treasury bills, notes, bonds
or certificates of indebtedness, or obligations for which the full faith and credit of the United
States of America are pledged for the payment of interest and principal.
Fiscal Year
"Fiscal Year" means the period beginning on July 1 of each year and ending on
the next succeeding June 30, or any other annual accounting period hereafter selected and
designated by the City Council of the City as the Fiscal Year of the City.
Generally Accpted Accounting Principles
"Generally Accepted Accounting Principles" means the uniform accounting and
reporting procedures set forth in publications of the American Institute of Certified Public
Accountants or its successor and the Governmental Accounting Standards Board or its successor,
or by any other generally accepted authority on such procedures, and includes, as applicable, the
standards set forth by the Financial Accounting Standards Board or its successor.
Independent Certified Public Accountant
"Independent Certified Public Accountant" means any certified public accountant or firm
of such accountants duly licensed and entitled to practice and practicing as such under the laws
of the State, appointed and paid by the City, and who, or each of whom:
(A) is in fact independent according to the Statement of Auditing Standards No. 1 and
not under the domination of the City;
(B) does not have a substantial financial interest, direct or indirect, in the operations
of the City; and
(C) is not connected with the City as a councilmember, officer or employee of the
City, but who may be regularly retained to audit the accounting records of and make reports
thereon to the City.
Independent Engineer
"Independent Engineer" means any registered engineer or firm of registered
engineers of national reputation generally recognized to be well qualified in engineering matters
relating to Systems, appointed and paid by the City, and who or each of whom --
(1) is in fact independent and not under the domination of the City;
(2) does not have a substantial financial interest, direct or indirect, in the
operations of the City; and
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(3) is not connected with the City as a councilmember, officer or employee of
the City, but may be regularly retained to make reports to the City. l
Installment Payment Date; 2013 Installment Payment Date
"Installment Payment Date" means any date on which Installment Payments are
scheduled to be paid by the City under and pursuant to any Contract. "2013 Installment Payment
Date" means any date on which 2013 Installment Payments are scheduled to be paid by the City
under and pursuant hereto.
Installment Payments• 2013 Installment Payments
"Installment Payments" means the installment sale, rental or other periodic
payments scheduled to be paid by the City under and pursuant to the Contracts, including the
2013 Installment Payments. "2013 Installment Payments" means the Installment Payments
scheduled to be paid by the City under and pursuant hereto.
Insurance Consultant
"Insurance Consultant" means (a) the Risk Manager for the City or (b) any
insurance consultant or firm of insurance consultants generally recognized to be well qualified in
insurance consulting matters relating to water and other municipal systems, appointed and paid
by the City, and who or each of whom --
(1) is in fact independent and not under the domination of the City;
(2) does not have a substantial financial interest, direct or indirect, in the
operations of the City; and
(3) is not connected with the City as a councilmember, officer, or employee of
the City, but may be regularly retained to make reports to the City.
Interest Payment Date
"Interest Payment Date" means a date on which an interest installment of the
2013 Installment Payment is due and payable, being April 1 and October 1 of each year to which
reference is made, commencing on October 1, 2013.
Maintenance and Operation Costs
"Maintenance and Operation Costs" means the reasonable and necessary costs
paid or incurred by the City for maintaining and operating the System, determined in accordance
with Generally Accepted Accounting Principles, including all reasonable expenses of
management and repair and other expenses necessary to maintain and preserve the System in
good repair and working order, and including all administrative costs of the City that are charged
directly or apportioned to the operation of the System, such as salaries and wages of employees,
overhead, taxes (if any) and insurance premiums, and including all other reasonable and
necessary costs of the City or charges required to be paid by it to comply with the terms hereof
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or of any resolution authorizing the issuance of any Bonds or of such Bonds, or of any resolution
authorizing the execution of any Contract or of such Contract, such as compensation,
reimbursement and indemnification of the trustee for any such Bonds or Contracts and fees and
expenses of Independent Certified Public Accountants and Independent Engineers, Insurance
Consultants and the Director of Finance, but excluding in all cases depreciation, replacement and
obsolescence charges or reserves therefor, amortization of intangibles and intergovernmental
transfers by the City which are not reimbursements or payments for overhead or other
administrative expenses incurred by the City.
Maximum Annual Debt Service
"Maximum Annual Debt Service" means the greatest total Debt Service payable
in any Fiscal Year during the period commencing with the next ensuing Fiscal Year and
terminating with the Fiscal Year in which payments are due under the last outstanding Bonds or
the last outstanding Contract, whichever is later.
Maximum Annual 2013 Installment Payments
"Maximum Annual 2013 histallment Payments" means the greatest total 2013
Installment Payments payable in any 2013 Installment Payment Year during the period
commencing with the then current 2013 Installment Payment Year and terminating with the 2013
Installment Payment Year ending on April 1, _.
Opinion of Counsel
"Opinion of Counsel" means a written opinion of counsel of recognized national
standing in the field of law relating to municipal bonds, appointed by the City.
Parity Obligations
"Panty Obligations" means, collectively, Bonds and Contracts.
Principal Office
"Principal Office" means the corporate trust office of the Trustee located in San
Francisco, California or such other office or offices as the Trustee shall designate from time to
time 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..
Project. 2004 Protect
"Project" means any additions, betterments, extensions or improvements to the
System designated by the City Council of the City as a Project, the design, acquisition or
construction of which (together with the incidental costs and expenses related thereto) is to be
financed by the proceeds of any Parity Obligations. "2004 Project" means the capital
improvements described in Exhibit A hereto and such additions, substitutions and deletions as
OHSUSA:751018378.4 7
shall be specified in a Certificate of the City stating that such additions, substitutions or deletions
constitute part of the 2004 Project. l
Purchase Price
"Purchase Price" means the principal amount plus the interest thereon owed by
the City to the Authority under the conditions and terms hereof for the repayment of the costs of
the design, acquisition and construction of the 2004 Project and the incidental costs and expenses
related thereto paid by the Authority.
Rate Stabilization Fund
"Rate Stabilization Fund" means the fund by that name established pursuant to
Section 3.02.
Subordinate Obligations
"Subordinate Obligations" mean obligations of the City authorized and executed by the
City under applicable law, the payments under and pursuant to which are payable from System
Net Revenues, subject and subordinate to the payment of the 2013 Installment Payments and to
the payment of Parity Obligations. Such obligations may be payable from any fund established
for the purpose of paying debt service on such Subordinate Obligations.
System
"System" means properties and assets, real and personal, tangible and intangible, l
of the City, now or hereafter existing, used or pertaining to the purchase, generation,
transmission, distribution and sale of water, including all additions, extensions, expansions,
improvements and betterments thereto and equippings thereof, together with any other properties
or assets hereafter determined by the City Council of the City to be part of the System.
System Gross Revenues
"System Gross Revenues" means all gross income and revenue received by the
City from the ownership and operation of the System, determined in accordance with Generally
Accepted Accounting Principles, including, without limiting the generality of the foregoing,
(a) all income, rents, rates, fees, connection fees, charges or other moneys derived from the
services, facilities and commodities sold, famished or supplied through the facilities of the
System, (b) the earnings on and income derived from the investment of such income, rents, rates,
fees, charges or other moneys (including all investment earnings credited by the Trustee to the
Revenue Fund), (c) the proceeds derived by the City directly or indirectly from the sale, lease or
other disposition of a part of the System as permitted in the Installment Sale Agreement, and
(d) any transfers from (but excluding transfers to) a rate stabilization fund for the System;
provided, however, that the term "System Gross Revenues" shall not include customers' deposits
or any other deposits subject to refund until such deposits have become the property of the City.
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System Net Revenues
"System Net Revenues" means for any period of computation, the amount of the
System Gross Revenues during such period less the amount of Maintenance and Operation
Expenses during such period.
System Revenue Fund
"System Revenue Fund" means the fund by that name established pursuant to
Section 3.02.
Treasurer of the Authori
"Treasurer of the Authority" means the Treasurer of the Authority or its successor
designated by the Authority.
Trust Agreement
"Trust Agreement" means that certain Trust Agreement dated as of April 1, 2013,
by and between The Bank of New York Mellon Trust Company, N.A., as Trustee, and the
Authority, as originally executed and as it may from time to time be amended or supplemented in
accordance with its terms.
Trustee
"Trustee" means The Bank of New York Mellon Trust Company, N.A. at its
Principal Office, acting in its capacity as trustee under and pursuant to the Trust Agreement, and
its successors and assigns as provided in the Trust Agreement.
2004 Contract
"2004 Contract" means the Installment Sale Agreement (Water System) by and
between the City and the Authority, dated as of March 1, 2004, as originally executed and as it
may from time to time be amended or supplemented in accordance with its terms.
2007 Contract
"2007 Contract" means the Installment Sale Agreement (Water System) by and
between the City and the Authority, dated as of March 1, 2007, as originally executed and as it
may from time to time be amended or supplemented in accordance with its terms.
2011 Contract
"2011 Contract" means the Installment Sale Agreement (Water System) by and
between the City and the Authority, dated as of November 1, 2011, as originally executed and as
it may from time to time be amended or supplemented in accordance with its terms.
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2013 Installment Payment Yeaz
"2013 Instalhment Payment Year" means the twelve-month period ending on l
April 1 of each year.
2013 Installment Sale Agreement
"2013 Installment Sale Agreement" means this installment sale agreement by and
between the City and the Authority, dated as of November 1, 2013, as originally executed and as
it may from time to time be amended or supplemented in accordance herewith and with the terms
of the Trust Agreement.
Water Service
"Water Service" means the municipal water service furnished, made available or
provided by the System.
ARTICLE II
PURCHASE OF THE 2004 PROJECT; TERMINATION OF 2004 CONTRACT
Section 2.01. Purposes. The purposes of this 2013 Installment Sale Agreement
are to provide for the refunding of the unpaid Installment Sale Payments under the 2004
Contract, together with interest accrued thereon. To effect such purposes, the Authority shall
issue Authority Bonds to be sold and the proceeds of the sale thereof to be deposited and applied
in accordance with the Trust Agreement.
Section 2.02. Transfer of 2004 Project. In consideration of the deposit of the
proceeds of the sale of the Bonds pursuant to Section 3.01 of the Trust Agreement and the
application of such moneys pursuant thereto, the City hereby sells, assigns, and transfers to the
Authority, and the Authority hereby purchases from the City, all of the City's right, title and
interest in the 2004 Project.
Section 2.03. Purchase of 2004 Project by the City. In consideration of the
obligation of the City to pay the Purchase Price as provided in Section 3.01 hereof, the Authority
hereby sells, assigns and transfers to the City, and the City hereby purchases from the Authority,
all of the Authority's right, title and interest in the 2004 Project.
Section 2.04. Termination of the 2004 Contract. The Authority and the City
hereby acknowledge that the 2004 Contract has terminated pursuant to the provisions of Article
VII thereof.
OHSUSA:751018378.4 10
ARTICLE III
2013 INSTALLMENT PAYMENTS
Section 3.01. Purchase Price.
(a) The Purchase Price to be paid by the City to the Authority hereunder is the
sum of the principal amount of the City's obligation hereunder plus the interest to accrue on the
unpaid balance of such principal amount from the date hereof over the term hereof, subject to
prepayment as provided in Section 3.03.
(b) The principal amount of the Purchase Price to be paid by the City to the
Authority hereunder is dollars ($ ).
(c) The interest to accrue on the unpaid balance of such principal amount shall
be paid by the City as and shall constitute interest paid on the principal amount of the City's
Purchase Price obligation hereunder.
(d) Interest on the unpaid balance of the principal amount of the Purchase
Price shall accrue, from 2013, on the principal component of each 2013
Installment Payment at the following rates:
Principal Interest Rate
Payment Date Installment (per annum) Interest Amount
OHSUSA:751018378.4 I I
Principal Interest Rate
Payment Date Installment (per annum) Interest Amount
Section 3.02. Payment of 2013 Installment Payments. The City shall, subject to
prepayment as provided in Section 3.03, pay the Authority the Purchase Price, without offset or
deduction of any kind, by paying the principal installments of the 2013 Installment Payments due
annually on April 1, together with interest installments of the 2013 Installment Payments, which
interest installments shall be paid semiannually on each April I and October 1, commencing
October 1, 2013.
The obligation of the City to pay the Purchase Price by paying the 2013
Installment Payments is, subject to Section 8.01, absolute and unconditional, and until such time
as the 2013 Installment Payments shall have been paid in full (or provision for the payment �(
thereof shall have been made pursuant to Section 7.01), the City will not discontinue or suspend F
any 2013 Installment Payments required to be paid by it under this section when due, whether or
not the System or any part thereof is operating or operable, or its use is suspended, interfered
with, reduced, curtailed or terminated in whole or in part, and such payments shall not be subject
to reduction whether by offset or otherwise and shall not be conditional upon the performance or
nonperformance by any parry to any agreement for any cause whatsoever.
In order to carry out and effectuate the obligation of the City contained herein to
pay the Purchase Price by paying the 2013 Installment Payments, the City agrees and covenants
that all System Gross Revenues received by it shall be deposited when and as received in trust in
the City of Burlingame Water System Revenue Fund (also known as the City of Burlingame
Water Fund) which fund is hereby established and is hereby pledged and a security interest is
granted therein and which fund the City agrees and covenants to maintain so long as any 2013
Installment Payments remain unpaid, and all money on deposit in the System Revenue Fund
shall be applied and used only as provided herein. The City shall pay all Maintenance and
Operation Costs (including amounts reasonably required to be set aside in contingency reserves
for Maintenance and Operation Costs the payment of which is not then immediately required)
from the System Revenue Fund as they become due and payable, and all remaining money on
deposit in the System Revenue Fund shall be set aside and deposited by the City at the following
times in the following order of priority:
OHSUSA:751018378.4 12
(a) Transfers to Trustee.
Revenue Fund Deposits. On or before the fourth Business Day before
each date on which a 2013 Installment Payment becomes due and payable under this
2013 Installment Sale Agreement, the City shall, from the money in the System Revenue
Fund, transfer to the Trustee for deposit in the Revenue Fund established pursuant to the
Trust Agreement a sum equal to the 2013 Installment Payments becoming due and
payable under this 2013 Installment Sale Agreement on such due date, except that no
such deposit need be made to the extent the Trustee then holds money for such purpose in
the Revenue Fund available to pay the 2013 Installment Payment becoming due and
payable under this 2013 Installment Sale Agreement on such date. The City shall also,
from such remaining moneys in the System Revenue Fund, pay to the party entitled
thereto or transfer or cause to be transferred to any applicable debt service or other
payment fund or account for any Panty Obligations, without preference or priority
between transfers made pursuant to this sentence and the preceding sentence, and in the
event of any insufficiency of such moneys ratably without any discrimination or
preference, on the dates specified in the proceedings relating to such Panty Obligations,
the sum or sums required to be paid or deposited in such debt service or other payment
fund or account with respect to principal, premium, if any, and interest on Parity
Obligations in accordance with the terms of such Panty Obligations.
After making the foregoing deposits and transfers hereinabove required to be made, or, if
sooner, at such time as amounts remaining on deposit in the System Revenue Fund shall be
sufficient to make the remaining transfers hereinabove required to be made in such Fiscal Year
with respect to 2013 Installment Payments and Panty Obligations, the City shall apply any
remaining money in the System Revenue Fund for any lawful purpose of the City.
The City shall distribute System Net Revenues available for Outstanding 2013
Installment Payments and debt service on all Outstanding Parity Obligations on a pro rata basis
without regard to whether each such Parity Obligations has a funded debt service reserve or a
surety bond or other similar funding instrument.
(b) Rate Stabilization Fund Deposit. The City may maintain and hold a
separate fund to be known as the "Rate Stabilization Fund." From time to time the City may
deposit in the Rate Stabilization Fund from such remaining System Gross Revenues such
amounts as the City shall determine, provided that deposits for each Fiscal Year may be made
until (but not after) one hundred fifty (150) days following the end of such Fiscal Year. The City
may withdraw amounts from the Rate Stabilization Fund only for inclusion in System Gross
Revenues for any Fiscal Year, such withdrawals to be made until (but not after) one hundred
fifty (150) days after the end of such Fiscal Year. All interest or other earnings upon deposits in
the Rate Stabilization Fund shall be withdrawn therefrom and accounted for as System Gross
Revenues.
Section 3.03. Prepayment of 2013 Installment Payments. (a) The City may
prepay from any source of available funds as a whole or in part on any date, on or after April 1,
_, all or any part of the principal amount of the unpaid 2013 Installment Payment becoming
due and payable on or after April 1, , in such order of prepayment as the City may
OHSUSA:751018378.4 13
determine upon written direction to the Authority and the Trustee (or, if the City fails to
designate the order of prepayment, in inverse order of Installment Payment Date and by lot
within an Installment Payment Date), at a prepayment price equal to the sum of the principal
amount prepaid, plus accrued interest to the date of prepayment, without premium.
(b) Before making any prepayment pursuant to this section, the City shall give
written notice to the Authority and the Trustee describing such event and specifying the date on
which the prepayment will be paid and the order thereof, which date shall be not less than forty-
five (45) days nor more than sixty (60) days from the date such notice is given; provided, that
notwithstanding any such prepayment, the City shall not be relieved of its obligations hereunder,
including specifically its obligations under this article, until the Purchase Price shall have been
fully paid (or provision for payment thereof shall have been made pursuant to Article VII).
Section 3.04. Pledge of System Net Revenues. All System Net Revenues are
hereby irrevocably pledged to the payment of the 2013 Installment Payments; provided, that out
of the System Net Revenues there may be apportioned such sums for such purposes as are
permitted by this article. This pledge shall constitute alien on the System Net Revenues for the
payment of the 2013 Installment Payments and Parity Obligations.
ARTICLE IV
PARITY OBLIGATIONS
Section 4.01. Conditions for the Execution of Parity Obligations. The City shall
not incur any obligation, the payment of which is payable from and secured by a lien and charge
on the System Net Revenues prior to the lien and charge on System Net Revenues securing the
2013 Installment Payments under this 2013 Installment Sale Agreement. The City may at any
time execute and deliver any Parity Obligation, the payment of which is payable from and
secured by a lien and charge on the System Net Revenues on a parity with the lien and charge on
System Net Revenues securing the 2013 Installment Payments due under this 2013 Installment
Sale Agreement, provided:
(a) Either -
(1) as evidenced by a Certificate of the City, during any twelve (12)
consecutive calendar months out of the immediately preceding eighteen (IS) calendar
month period, the System Net Revenues were at least equal to one hundred twenty
percent (120%) of the Maximum Annual Debt Service for all Outstanding 2013
Installment Payments and all Outstanding Parity Obligations plus the Parity Obligation
proposed to be executed; or
(2) as evidenced by a Certificate of the City, the projected System Net
Revenues during the first Fiscal Year in which Debt Service on the Parity Obligation is
payable (other than from Bond proceeds), is at least equal to one hundred twenty percent
(120%) of the Maximum Annual Debt Service for all Outstanding 2013 Installment
Payments and all Outstanding Parity Obligations plus the Parity Obligation proposed to
be executed;
OHSUSA:751018378.4 14
(b) The proceeds of such Parity Obligation proposed to be executed shall be
used solely to finance or refinance (including reimbursement to the City of amounts advanced for
such costs) one or more additions, betterments or improvements to the System as designated by
the City and to pay any incidental costs and expenses related thereto including the costs of
issuance, execution or delivery of such proposed Parity Obligation;
(c) There shall have been delivered to the City an Opinion of Counsel
substantially to the effect that (1) the City has the right and power under applicable law to
execute and deliver the Parity Obligation, and the Panty Obligation has been duly and lawfully
executed and delivered by the City, is in full force and effect and is a valid and binding special
obligation of the City, and (2) such Parity Obligation has been duly and validly authorized and
issued in accordance herewith;
(d) If required by the terms of such Parity Obligation, a separate reserve has
been established for such Panty Obligation and that provision has been made to fund such
reserve; and
(e) The City is not in default under this 2013 Installment Sale Agreement.
Notwithstanding the foregoing provisions, neither clause (a) nor clause (b) above shall
limit the ability of the City to execute any Parity Obligations at any time to refund any
Outstanding 2013 Installment Payments or Outstanding Panty Obligations if the annual Debt
Service for each Fiscal Year during which such Panty Obligation is Outstanding will not be
increased by reason of the issuance of such Panty Obligation.
Section 4.02. Subordinate Oblieations. The City may incur Subordinate
Obligations without meeting any of the tests set forth in Section 4.01.
ARTICLE V
COVENANTS OF THE CITY
Section 5.01. Compliance with 2013 Installment Sale Agreement and Trust
Agreement. The City will punctually pay the 2013 Installment Payments in strict conformity
with the terms hereof, and will faithfully observe and perform all the agreements, conditions,
covenants and terms contained herein required to be observed and performed by it, and will not
terminate the 2013 Installment Sale Agreement for any cause including, without limiting the
generality of the foregoing, any acts or circumstances that may constitute failure of
consideration, destruction of or damage to the 2004 Project or the System, commercial
frustration of purpose, any change in the tax or other laws of the United States of America or of
the State of California or any political subdivision of either or any failure of the Authority to
observe or perform any agreement, condition, covenant or term contained herein required to be
observed and performed by it, whether express or implied, or any duty, liability or obligation
arising out of or connected herewith or the insolvency, or deemed insolvency, or bankruptcy or
liquidation of the Authority or any force majeure, including Acts of God, tempest, stone,
earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo,
OHSUSA:751018378.4 15
strikes, industrial disputes, lockouts, lack of transportation facilities, fire, explosion, or acts or
regulations of governmental authorities.
The City will faithfully observe and perform all the agreements, conditions,
covenants and terms contained in the Trust Agreement required to be observed and performed by
it, and it is expressly understood and agreed by and among the parties to the 2013 Installment
Sale Agreement and the Trust Agreement that each of the agreements, conditions, covenants and
terms contained in each such agreement is an essential and material term of the obligation of the
City to repay the costs of the acquisition and construction of the 2004 Project and the costs and
expenses incidental thereto paid by the Authority pursuant to, and in accordance with, and as
authorized under law and the 2013 Installment Sale Agreement.
Section 5.02. Use of Proceeds of Authority Bonds. The Authority and the City
agree that the proceeds of the Authority Bonds will be used by the Authority to refinance the
2004 Project and to pay the incidental costs and expenses related thereto as provided herein and
in the Trust Agreement.
Section 5.03. Against Encumbrances. The City will pay or cause to be paid
when due all sums of money that may become due or purporting to be due for any labor,
services, materials, supplies or equipment furnished, or alleged to have been famished, to or for
the City in, upon, about or relating to the System and will keep the System free of any and all
Hens against any portion of the System. In the event any such lien attaches to or is filed against
any portion of the System, the City will cause each such lien to be fully discharged and released
at the time the performance of any obligation secured by any such lien matures or becomes due, `
except that if the City desires to contest any such lien it may do so. If any such lien shall be
reduced to final judgment and such judgment or any process as may be issued for the
enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter expires, the
City will forthwith pay or cause to be paid and discharged such judgment. The City will, to the
maximum extent permitted by law, indemnify and hold the Authority and the Trustee harmless
from, and defend each of them against, any claim, demand, loss, damage, liability or expense
(including attorneys' fees) as a result of any such lien or claim of lien against any portion of the
System.
Section 5.04. Against Sale or Other Disposition of Property. The City will not
sell, lease or otherwise dispose of the System or any part thereof essential to the proper operation
of the System or to the maintenance of the System Net Revenues, and will not enter into any
agreement or lease which would impair the operation of the System or any part thereof necessary
to secure adequate System Net Revenues for the payment of the 2013 Installment Payments, or
which would otherwise impair the rights of the Authority with respect to the System Net
Revenues or the operation of the System; provided, that any real or personal property which has
become nonoperative or which is not needed for the efficient and proper operation of the System,
or any material or equipment which has become worn out, may be sold if such sale will not
reduce the System Net Revenues below the requirements to be maintained under Section 5.14.
Section 5.05. Tax Covenants. (a) The City will not directly or indirectly use or
permit the use of any proceeds of the obligation provided herein or any other funds of the City or
take or omit to take any action that would cause such obligation to be an "arbitrage bond" within
OHSUSA:751018378.4 16
the meaning of Section 148(a) of the Code or a "federal -guaranteed obligation" within the
meaning of Section 149(b) of the Code or a "private activity bond" as described in Section 141
of the Code.
To that end, as long as any 2013 Installment Payments are unpaid, the City will
comply with all requirements of such sections of the Code to the extent applicable to the
obligations provided herein. In the event that at any time the City is of the opinion that for
purposes of this Section it is necessary to restrict or to limit the yield on the investment of any
moneys held by the City under this 2013 Installment Sale Agreement or by the Trustee under the
Trust Agreement, the City shall so instruct the Trustee in writing and the trustee, as appropriate,
shall act in accordance with such instructions.
The City and the Authority covenant that they will at all times do and perform all
acts necessary or desirable in order to assume that the interest on the Authority Bonds will not be
included in gross income of the registered owners thereof for federal income tax purposes and
will take no action that would result in such interest being so included.
(b) Notwithstanding any provision of this section or of Article VIII, if the City
receives an opinion of Bond Counsel that any specified action required under this section is no
longer required or that some further or different action is required to maintain the exclusion from
gross income for federal income tax purposes on the Authority Bonds, the City may conclusively
rely on such opinion in complying with the requirements of this section, and the covenants
hereunder shall be deemed to be modified to that extent.
Section 5.06. Maintenance and Operation of the System; Budgets. The City will
maintain and preserve the System in good repair and working order at all times and will operate
the System in an efficient and economical manner and will pay all Maintenance and Operation
Costs as they become due and payable.
Not later than September 1 of each year, the City will adopt and, if requested,
make available to the Authority and the Trustee, a budget approved by the City Council of the
City setting forth the estimated Maintenance and Operation Costs and the estimated payments for
Panty Obligations for the then current Fiscal Year; provided, that any such budget may be
amended at any time during any Fiscal Year and, if requested, such amended budget shall be
made available to the Authority and the Trustee.
Section 5.07. Compliance with Contracts. The City will comply with, keep,
observe and perform all agreements, conditions, covenants and terms, express or implied,
required to be performed by it contained in all contracts for the use of the System and all other
contracts affecting or involving the System to the extent that the City is a party thereto.
Section 5.08. Payment of Claims. The City will pay and discharge any and all
lawful claims for labor, materials or supplies which, if unpaid, might become a lien on the
System Net Revenues or any part thereof prior or superior to the obligation to make the 2013
Installment Payments as provided herein or which might impair the security of the 2013
Installment Payments.
OHSUSA:751018378.4 17
Section 5.09. Insurance. The City will procure and maintain such insurance
relating to the System which it shall deem advisable or necessary to protect its interests and the
interests of the Authority and the Trustee, which insurance shall afford protection in such
amounts and against such risks as are usually covered in connection with municipal water
systems similar to the System; provided, that any such insurance may be maintained under a self-
insurance program so long as such self-insurance is maintained in the amounts and manner
usually maintained in connection with municipal water systems similar to the System and is, in
the opinion of an Insurance Consultant, financially sound. All policies of insurance required to
be maintained herein shall provide that the Authority and the Trustee shall be given thirty (30)
days' written notice of any intended cancellation thereof or reduction of coverage provided
thereby.
Section 5.10. Accounting Records and Financial Statements.
(a) The City will keep appropriate accounting records in which complete and
correct entries shall be made of all transactions relating to the System, which records shall be
available for inspection by the Authority and the Trustee at reasonable hours and under
reasonable conditions.
(b) The City will prepare and file with the Authority and the Trustee annually
within one hundred eighty (180) days after the close of each Fiscal Year (commencing with the
Fiscal Year ending June 30, 2013) financial statements of the City for the preceding Fiscal Year
prepared in accordance with generally accepted accounting principles, together with an
Accountant's Report thereon.
Section 5.11. Protection of Security and Rights of the Authority and the Trustee.
The City will preserve and protect the security hereof and the rights of the Authority and the
Trustee to the 2013 Installment Payments hereunder and will warrant and defend such rights
against all claims and demands of all persons.
Section 5.12. Payment of Taxes and Compliance with Governmental
Regulations. The City will pay and discharge all taxes, assessments and other governmental
charges which may hereafter be lawfully imposed upon the System or any part thereof when the
same shall become due. The City will duly observe and conform with all valid regulations and
requirements of any governmental authority relative to the operation of the System or any part
thereof, but the City shall not be required to comply with any regulations or requirements so long
as the validity or application thereof shall be contested in good faith.
Section 5.13. Amount of Rates, Fees and Charges. The City will at all times fix,
prescribe and collect rates and charges for the Water Service during each Fiscal Year which will
be at least sufficient to yield: (a) System Net Revenues for such Fiscal Year at least equal to one
hundred twenty percent (120%) of Debt Service for such Fiscal Year and (b) System Net
Revenues, excluding connection fees and transfers from the Rate Stabilization Fund, equal to one
hundred percent (100%) of Debt Service for such Fiscal Year. The City may make adjustments
from time to time in such fees and charges and may make such classification thereof as it deems
necessary, but shall not reduce the rates and charges then in effect unless the System Net
OHSUSA:751018378.4 18
Revenues from such reduced rates and charges will at all times be sufficient to meet the
requirements of this Section.
Section 5.14. Collection of Rates. Fees and Charges. The City will have in
effect at all times rules and regulations requiring each consumer or customer located on any
premises connected with the System to pay the rates, fees and charges applicable to the Water
Service to such premises and providing for the billing thereof and for a due date and a
delinquency date for each bill. The City will not permit any part of the System or any facility
thereof to be used or taken advantage of free of charge by any corporation, funs or person, or by
any public agency (including the United States of America, the State of California and any city,
county, district, political subdivision, public corporation or agency of any thereof); provided, that
the City may without charge use the Water Service.
Section 5.15. Further Assurances. The City will adopt, deliver, execute and
make any and all further assurances, instruments and resolutions as may be reasonably necessary
or proper to carry out the intention or to facilitate the performance hereof and for the better
assuring and confirming unto the Authority of the rights and benefits provided to it herein.
Section 5.16. Continuing Disclosure. The City hereby covenants and agrees that
it will comply with and carry out all of its obligations under the Continuing Disclosure
Certificate to be delivered by the City in connection with the execution and delivery of the
Authority Bonds. Notwithstanding any other provision hereof, failure of the City to comply with
the Continuing Disclosure Certificate shall not be considered an Event of Default hereunder;
provided, however, that any beneficial owner of Authority Bonds may take such actions as may
be necessary and appropriate, including seeking mandate or specific performance by court order,
to cause the City to comply with its obligations in this section and the Continuing Disclosure
Certificate.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.01. Events of Default and Acceleration of Principal. If one or more of
the following Events of Default shall happen, that is to say --
(1) if default shall be made in the due and punctual payment of
any 2013 Installment Payment or of any Parity Obligation when and as the same shall become
due and payable;
(2) if default shall be made by the City in the performance of
any of the other agreements or covenants contained herein required to be performed by it, and
such default shall have continued for a period of sixty (60) days after the City shall have been
given notice in writing of such default by the Authority or the Trustee; or
(3) if default shall be made by the City in the performance of
any of the agreements or covenants contained in any Parity Obligation required to be performed
by it, other than as set forth in (a) above, and such default shall have continued after any notice
and grace period provided by such Parity Obligation; or
OHSUSA:751018378.4 19
(4) if the City shall file a petition or answer seeking
arrangement or reorganization under the federal bankruptcy laws or any other applicable law of
the United States of America or any state therein, or if a court of competent jurisdiction shall l
approve a petition filed with or without the consent of the City seeking arrangement or
reorganization under the federal bankruptcy laws or any other applicable law of the United States
of America or any state therein, or if under the provisions of any other law for the relief or aid of
debtors any court of competent jurisdiction shall assume custody or control of the City or of the
whole or any substantial part of its property;
then and in each and every such case during the continuance of such Event of Default specified
in clause (1) or (4) above, the Trustee shall, and for any other such Event of Default the Trustee
may, by notice in writing to the City, declare the entire principal amount of the unpaid 2013
Installment Payments and the accrued interest thereon to be due and payable immediately, and
upon any such declaration the same shall become immediately due and payable, anything
contained herein to the contrary notwithstanding. This Section is subject to the condition,
however, that if at any time after the entire amount of the unpaid principal amount of the 2013
Installment Payments and the accrued interest thereon shall have been so declared due and
payable and before any judgment or decree for the payment of the money due shall have been
obtained or entered, the City shall deposit with the Trustee a sum sufficient to pay the unpaid
amount of the 2013 Installment Payments due otherwise than as a result of such declaration and
in the applicable debt service fund(s) the unpaid principal amount of any payments due under
any Parity Obligation referred to in clause (1) above due and payable prior to such declaration
and the accrued interest thereon, with interest on such overdue installments at the rate or rates
applicable to such unpaid 2013 Installment Payments if paid in accordance with their terms and
on the Parity Obligations in accordance with their terms, and the City shall have paid the
reasonable expenses of the Authority, the Trustee and any fiduciaries for Parity Obligations
resulting from such declaration, and any and all other defaults known to the Trustee (other than
in the payment of the entire amount of the unpaid 2013 Installment Payments 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 Trustee, by written notice to the City, may rescind and annul
such declaration and its consequences; but no such rescission and annulment shall extend to or
shall affect any subsequent default or shall impair or exhaust any right or power consequent
thereon.
Section 6.02. Application of System Net Revenues and Rate Stabilization Fund
Upon Acceleration. All System Net Revenues and all moneys on deposit in the Rate
Stabilization Fund upon the date of the declaration of acceleration by the Trustee as provided in
Section 6.01 and all System Net Revenues thereafter received shall be applied in the following
order --
Fust, to the payment of the fees, costs and expenses of the Trustee, if any, in
carrying out the provisions of this article, including reasonable compensation to its agents,
accountants and counsel and including any indemnification expenses; and
Second, to the payment of the interest on the 2013 Installment Payments and
interest then due and payable on the entire principal amount of the unpaid Parity Obligations, and
OHSUSA:751018378.4 20
the unpaid principal components of the 2013 Installment Payments and the principal amount of
the Panty Obligations which has become due and payable, whether on the original due date or
upon acceleration, with interest on the overdue principal amount of the 2013 Installment
Payments at the rate or rates applicable to such 2013 Installment Payments and the principal and
interest amounts of the unpaid Panty Obligations at the rate or rates of interest then applicable to
such Parity Obligations, and, if the amount available shall not be sufficient to pay in full all the
amounts due with respect to the 2013 Installment Payments and the Parity Obligations, together
with such interest on the 2013 Installment Payments and interest on Panty Obligations, then to
the payment thereof ratably, according to the principal and interest due, without any
discrimination or preference.
Section 6.03. Other Remedies. The Trustee shall have the right --
(a) by mandamus or other action or proceeding or suit at law or in equity to
enforce its rights against the City or any councihnember, officer or employee thereof, and to
compel the City or any such councihnember, officer or employee to perform and carry out its or
his duties under law and the agreements and covenants required to be performed by it or him
contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate
the rights of the Authority or the Trustee; or
(c) by suit in equity upon the happening of an Event of Default to require the
City and its councilmembers, officers and employees to account as the trustee of an express trust.
Section 6.04. Non -Waiver. Nothing in this article or in any other provision
hereof shall affect or impair the obligation of the City, which is absolute and unconditional, to
pay the 2013 Installment Payments from the System Net Revenues to the Trustee at the
respective due dates or upon prepayment, or shall affect or impair the right of the Trustee, which
is also absolute and unconditional, to institute suit to enforce such payment by virtue of the
contract embodied herein.
A waiver of any default or breach of duty or contract by the Trustee shall not
affect any subsequent default or breach of duty or contract or impair any rights or remedies on
any such subsequent default or breach of duty or contract. No delay or omission by the Trustee
to exercise any right or remedy accruing upon any default or breach of duty or contract shall
impair any such right or remedy or shall be construed to be a waiver of any such default or
breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon
the Trustee by law or by this article may be enforced and exercised from time to time and as
often as shall be deemed expedient by the Trustee.
If any action, proceeding or suit to enforce any right or exercise any remedy is
abandoned or determined adversely to the Trustee, the Authority and the City and the Trustee
shall be restored to their former positions, rights and remedies as if such action, proceeding or
suit,had not been brought or taken.
Section 6.05. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy
OHSUSA:751018378.4 21
shall be cumulative and shall be in addition to every other remedy given hereunder or now or
hereafter existing in law or in equity or by statute or otherwise and may be exercised without
exhausting and without regard to any other remedy conferred by law. l
F.V Y UN-WAXIA
DISCHARGE OF OBLIGATIONS
Section 7.01. Discharge of Obligations.
(a) If the City shall pay or cause to be paid all the 2013 Installment Payments
at the times and in the manner provided herein, the right, title and interest of the Authority herein
and the obligations of the City hereunder shall thereupon cease, terminate, become void and be
completely discharged and satisfied.
(b) Any unpaid principal installment of the 2013 Installment Payments shall
on its payment date or date of prepayment be deemed to have been paid within the meaning of
and with the effect expressed in subsection (a) of this section if the City makes payment of such
2013 Installment Payments and the prepayment premium, if applicable, in the manner provided
herein.
(c) All or any portion of unpaid principal installments of the 2013 Installment
Payments shall, prior to their payment dates or dates of prepayment, be deemed to have been
paid within the meaning of and with the effect expressed in subsection (a) of this section if (i)
notice is provided by the City to the Trustee as required by the Trust Agreement, (ii) there shall
have been deposited with the Trustee either money in an amount which shall be sufficient, or
Government Securities (as that term is defined in the Trust Agreement), the interest on and
principal of which when paid will provide money which, together with money, if any, deposited
with the Trustee, shall be sufficient to pay when due the principal installments of such 2013
Installment Payments or such portions thereof on and prior to their payment dates or their dates
of prepayment, as the case may be, and the prepayment premiums, if any, applicable thereto, and
(iii) an opinion of nationally recognized bond counsel is filed with the Trustee to the effect that
the action taken pursuant to this subsection will not cause the interest on the Authority Bonds to
be includable in gross income under the Code for federal income tax purposes.
(d) After the payment of all 2013 Installment Payments and prepayment
premiums, if any, as provided in this section, and payment of all fees and expenses of the
Trustee, the Trustee, upon request of the City, shall cause an accounting for such period or
periods as may be requested by the City to be prepared and filed with the City and the Authority
and shall execute and deliver to the City and the Authority all such instruments as may be
necessary or desirable to evidence such total discharge and satisfaction of the 2013 Installment
Sale Agreements, and the Trustee shall pay over and deliver to the City, as an overpayment of
2013 Installment Payments, all such money or investments held by it pursuant hereto other than
such money and such investments as are required for the payment or prepayment of the 2013
Installment Payments, which money and investments shall continue to be held by the Trustee in
trust for the payment of the 2013 Installment Payments and shall be applied by the Trustee
pursuant to the Trust Agreement.
0HSUSA:751018378.4 22
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Liability of City Limited to System Net Revenues.
Notwithstanding anything contained herein, the City shall not be required to advance any
moneys derived from any source of income other than the System Net Revenues for the payment
of the 2013 Installment Payments or for the performance of any agreements or covenants
required to be performed by it contained herein. The City may, however, advance moneys for
any such purpose so long as such moneys are derived from a source legally available for such
purpose and may be legally used by the City for such purpose.
The obligation of the City to make the 2013 Installment Payments is a special
obligation of the City payable solely from the System Net Revenues as provided herein, and does
not constitute a debt of the City or of the State of California or of any political subdivision
thereof within the meaning of any constitutional or statutorydebt limitation or restriction.
Section 8.02. Benefits of 2013 Installment Sale Agreement Limited to Parties.
Nothing contained herein, expressed or implied, is intended to give to any person other than the
Authority or the City or the Trustee any right, remedy or claim under or pursuant hereto, and any
agreement or covenant required herein to be performed by or on behalf of the Authority, the
City, the Trustee or the Bond Insurer shall be for the sole and exclusive benefit of the other
parties.
Section 8.03. Successor Is Deemed Included in all References to Predecessor.
Whenever either the Authority or the City or the Trustee is named or referred to herein, such
reference shall be deemed to include the successor to the powers, duties and functions that are
presently vested in the Authority or the City or the Trustee, and all agreements and covenants
required hereby to be performed by or on behalf of the Authority or the City or the Trustee shall
bind and inure to the benefit of the respective successors thereof whether so expressed or not.
Section 8.04. Waiver of Personal Liability. No councilmember, officer or
employee of the City shall be individually or personally liable for the payment of the 2013
Installment Payment, but nothing contained herein shall relieve any councilmember, officer or
employee of the City from the performance of any official duty provided by any applicable
provisions of law or hereby.
Section 8.05. Article and Section Headings, Gender and References. The
headings or titles of the several articles and sections hereof and the table of contents appended
hereto shall be solely for convenience of reference and shall not affect the meaning, construction
or effect hereof, and words of any gender shall be deemed and construed to include all genders.
All references herein to "Articles," "Sections," "Exhibits" and other subdivisions or clauses are
to the corresponding articles, sections, exhibits, subdivisions or clauses hereof, and the words
"hereby," "herein," "hereof," "hereto," "herewith" and other words of similar import refer to the
2013 Installment Sale Agreement as a whole and not to any particular article, section, exhibit,
subdivision or clause hereof.
oxsUSA:751018378.4 23
Section 8.06. Partial Invalidity. If any one or more of the agreements or
covenants or portions thereof required hereby to be performed by or on the part of the Authority l
or the City shall be contrary to law, then such agreement or agreements, such covenant or
covenants or such portions thereof shall be null and void and shall be deemed separable from the
remaining agreements and covenants or portions thereof and shall in no way affect the validity
hereof. The Authority and the City hereby declare that they would have executed the 2013
Installment Sale Agreement, and each and every other article, section, paragraph, subdivision,
sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections,
paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any
person or circumstance may be held to be unconstitutional, unenforceable or invalid.
Section 8.07. Assignment. The 2013 Installment Sale Agreement and any rights
hereunder shall be assigned by the Authority to the Trustee as provided in the Trust Agreement;
to which assignment the City hereby expressly acknowledges and consents. The City
acknowledges having read the Trust Agreement, approves the Trust Agreement and agrees to
perform all duties imposed on it by the Trust Agreement. Insofar as any section of the Trust
Agreement imposes duties and responsibilities on the City it is specifically incorporated herein
by reference. To the extent that this 2013 Installment Sale Agreement confers upon or gives or
grants the Trustee any right, remedy or claim under or by reason of this 2013 Installment Sale
Agreement, the Trustee is hereby explicitly recognized as being a third -party beneficiary
hereunder and may enforce any such right, remedy or claim conferred, given or granted
hereunder.
Section 8.08. Net Contract. The 2013 Installment Sale Agreement shall be
deemed and construed to be a net contract, and the City shall pay absolutely net during the term
hereof the 2013 Installment Payments and all other payments required hereunder, free of any
deductions and without abatement, diminution or set-off whatsoever.
Section 8.09. California Law. The 2013 Installment Sale Agreement shall be
construed and governed in accordance with the laws of the State of California.
Section 8.10. Indemnification. The City shall, to the full extent then permitted
by law, indemnify, protect, hold harmless, save and keep harmless the Authority and its
directors, officers and employees and the Trustee and its directors, officers and employees from
and against any and all liability, obligations, losses, claims and damages whatsoever, regardless
of the cause thereof, and expenses in connection therewith, including, without limitation, counsel
fees and expenses, penalties and interest arising out of or as the result of the entering into of the
2013 Installment Sale Agreement, the Trustee's acceptance or administration of the trust of the
Trust Agreement, or the exercise or performance of any of its powers or duties thereunder or
under any of the documents relating to the Bonds to which it is a party, the acquisition,
construction, installation and use of the 2004 Project and each portion thereof or any accident in
connection with the operation, use, condition or possession of the 2004 Project or any portion
thereof resulting in damage to property or injury to or death to any person including, without
limitation, any claim alleging latent and other defects, whether or not discoverable by the City or
the Authority; any claim for patent, trademark or copyright infringement; and any claim arising
out of strict liability in tort. The indemnification arising under this section shall continue in full
force and effect notwithstanding the full payment of all obligations hereunder or the termination
OHSUSA:751018378.4 24
hereof for any reason. The City agrees not to withhold or abate any portion of the payments
required pursuant hereto by reason of any defects, malfunctions, breakdowns or infirmities of the
2004 Project. The City and the Authority mutually agree to promptly give notice to each other of
any claim or liability hereby indemnified against following either's learning thereof.
Section 8.11. Funds. Any fund required to be established and maintained herein
by the Director of Finance may be established and maintained in the accounting records of the
Director of Finance either as an account or a fund, and may, for the purpose of such accounting
records, any audits thereof and any reports or statements with respect thereto, be treated either as
an account or a fund; but all such records with respect to any such fund shall at all times be
maintained in accordance with sound accounting practice and with due regard for the protection
of the security of the Authority Bonds and the rights of the owners of the Authority Bonds.
Section 8.12. Notices. All written notices to be given hereunder shall be given
by mail to the party entitled thereto at its address set forth below, or at such other address as such
party may provide to the other party in writing from time to time, namely:
If to the City: City of Burlingame
501 Primrose Road
Burlingame, CA 94010-3997
Attention: Finance Director
If to the Authority: Burlingame Financing Authority
c/o City of Burlingame -Dept. of Finance
501 Primrose Road
Burlingame, CA 94010-3997
Attention: Executive Director
Section 8.13. Effective Date. The 2013 Installment Sale Agreement shall
become effective upon its -execution and delivery, and shall terminate when the Purchase Price
shall have been fully paid (or provision for the payment thereof shall have been made pursuant to
Article VII).
Section 8.14. Execution in Counter. The 2013 Installment Sale Agreement
may be executed in several counterparts, each of which shall be deemed an original, and all of
which shall constitute but one and the same instrument.
oxsusA:751o18378A 25
IN WITNESS WHEREOF, the parties hereto have executed and attested the 2013
Installment Sale Agreement by their officers thereunto duly authorized as of the day and year
first written above.
CITY OF BURLINGAME
QI
Finance Director/Treasurer
BURLINGAME FINANCING
AUTHORITY
LM
OHSUSA:751018378.4 26
Executive Director
A
EXHIBIT A
THE 2004 PROJECT
The 2004 Project consists of the capital improvements funded with the
Burlingame Financing Authority Water and Wastewater Revenue Bonds, Series 2004.
OHSUSA:751018378.4
2013 INSTALLMENT SALE AGREEMENT
(WATER SYSTEM)
by and between the
CITY OF BURLINGAME,
as Purchaser
1 'I
BURLINGAME FINANCING AUTHORITY,
as Seller
for the
CITY OF BURLINGAME
WATER SYSTEM PROJECTS
Dated as of April 1, 2013
OHSUSA:751018378.4
TABLE OF CONTENTS
-i-
OHSUSA:751018378.4
Page
ARTICLE I DEFINITIONS.................................................................................................
2
Section1.01.
Definitions............................................................................................
2
ARTICLE II PURCHASE OF THE 2004 PROJECT; TERMINATION OF 2004
CONTRACT..................................................................................................
10
Section2.01.
Purposes.............................................................................................10
Section 2.02.
Transfer of 2004 Project....................................................................
10
Section 2.03.
Purchase of 2004 Project by the City.................................................10
Section 2.04.
Termination of the 2004 Contract......................................................
10
ARTICLE III 2013 INSTALLMENT PAYMENTS............................................................11
Section 3.01.
Purchase Price....................................................................................
11
Section 3.02.
Payment of 2013 Installment Payments .............................................
12
Section 3.03.
Prepayment of 2013 Installment Payments ........................................
13
Section 3.04.
Pledge of System Net Revenues........................................................14
ARTICLE IV PARITY OBLIGATIONS.............................................................................
14
Section 4.01.
Conditions for the Execution of Parity Obligations ...........................
14
Section 4.02.
Subordinate Obligations.....................................................................
15
ARTICLE V COVENANTS OF THE CITY......................................................................
15
Section 5.01.
Compliance with 2013 Installment Sale Agreement and Trust
Agreement..........................................................................................
15
Section 5.02.
Use of Proceeds of Authority Bonds .................................................
16
Section 5.03.
Against Encumbrances.......................................................................16
Section 5.04.
Against Sale or Other Disposition of Property ..................................
16
Section 5.05.
Tax Covenants...................................................................................
16
Section 5.06.
Maintenance and Operation of the System; Budgets .........................
17
Section 5.07.
Compliance with Contracts................................................................
17
Section 5.08.
Payment of Claims.............................................................................
17
Section 5.09.
Insurance............................................................................................
18
Section 5.10.
Accounting Records and Financial Statements ..................................
18
Section 5.11.
Protection of Security and Rights of the Authority and the
Trustee................................................................................................
18
Section 5.12.
Payment of Taxes and Compliance with Governmental
Regulations........................................................................................
18
-i-
OHSUSA:751018378.4
TABLE OF CONTENTS
(continued)
Page
Section 5.13.
Amount of Rates, Fees and Charges ..................................................
18
Section 5.14.
Collection of Rates, Fees and Charges ..............................................
19
Section 5.15.
Further Assurances.............................................................................
19
Section 5.16.
Continuing Disclosure.......................................................................
19
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES ................................................
19
Section 6.01.
Events of Default and Acceleration of Principal ...............................
19
Section 6.02.
Application of System Net Revenues and Rate Stabilization
Fund Upon Acceleration....................................................................
20
Section 6.03.
Other Remedies..................................................................................
21
Section6.04.
Non-Waiver........................................................................................
21
Section 6.05.
Remedies Not Exclusive....................................................................
21
ARTICLE VII DISCHARGE OF OBLIGATIONS...............................................................
22
Section 7.01.
Discharge of Obligations...................................................................
22
ARTICLEVIII MISCELLANEOUS......................................................................................23
Section 8.01.
Liability of City Limited to System Net Revenues ............................
23
!
Section 8.02.
Benefits of 2013 Installment Sale Agreement Limited to Parties......
23
Section 8.03.
Successor Is Deemed Included in all References to Predecessor ......
23
Section 8.04.
Waiver of Personal Liability ..............................................................
23
Section 8.05.
Article and Section Headings, Gender and References .....................
23
Section 8.06.
Partial Invalidity .................................................................................
24
Section8.07.
Assignment........................................................................................
24
Section8.08.
Net Contract.......................................................................................
24
Section 8.09.
California Law...................................................................................
24
Section 8.10.
Indemnification..................................................................................
24
Section8.11.
Funds..................................................................................................
25
Section8.12.
Notices...............................................................................................
25
Section 8.13.
Effective Date....................................................................................
25
Section 8.14.
Execution in Counterparts..................................................................
25
EXHIBITA THE 2004 PROJECT...................................................................................
A-1
OHSUSA:751018378.4
April 15, 2013
Installment Sale Agreement
(Wastewater System)
a
2013 INSTALLMENT SALE AGREEMENT
(WASTEWATER SYSTEM)
This 2013 INSTALLMENT SALE AGREEMENT (WASTEWATER SYSTEM)
(the "2013 Installment Sale Agreement"), dated as of April 1, 2013, by and between the CITY
OF BURLINGAME, a municipal corporation duly organized and existing under and by virtue of
the laws of the State of California (the "City"), and the BURLINGAME FINANCING
AUTHORITY, a joint powers agency duly organized and existing under and by virtue of the
laws of the State of California (the "Authority");
WITNESSETH:
WHEREAS, the City has heretofore determined that the financing of the
acquisition of certain additions, betterments, extensions and improvements as hereinafter
described (the "2004 Project") to its municipal wastewater system were necessary and proper for
City purposes and uses under the terms of applicable law and were for the common benefit of the
City as a whole; and
WHEREAS, the Authority heretofore determined to acquire and construct the
2004 Project for, and sell the 2004 Project to, the City; and
WHEREAS, pursuant to the 2004 Installment Sale Agreement, dated as of
March 1, 2004 (the "2004 Installment Sale Agreement"), by and between the City and the
Authority, the City heretofore determined to make installment sale payments (the "2004
Installment Sale Payments") to the Authority for the purchase of the 2004 Project; and
WHEREAS, the City has determined that it is in the best interests of the City and
its residents to refund the City's obligation to make the 2004 Installment Sale Payments, and the
Authority is willing to assist the City in effecting such refunding; and
WHEREAS, in order to refinance the 2004 Project, the City has determined to sell
the 2004 Project to the Authority and repurchase the 2004 Project through the 2013 Installment
Sale Agreement; and
WHEREAS, all acts, conditions and things required by law to exist, to have
happened and to have been performed precedent to and in connection with the execution and
delivery of the 2013 Installment Sale Agreement do exist, have happened and have been
performed in regular and due time, form and manner as required by law, and the parties hereto
are now duly authorized to execute and enter into the 2013 Installment Sale Agreement;
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF
THE MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR
OTHER VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE
AS FOLLOWS:
OHSUSA:751018607.4
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context otherwise requires, the terms
defined in this section shall for all purposes hereof and of any amendment hereof or supplement
hereto and of any opinion or report or other document mentioned herein or therein have the
meanings defined herein, the following definitions to be equally applicable to both the singular
and plural forms of any of the terms defined herein:
Accountant's Report
"Accountant's Report" means a report signed by an Independent Certified Public
Accountant.
Accreted Value
"Accreted Value" means, with respect to any Capital Appreciation Bonds, as of
the date of calculation, the initial amount thereof plus the interest accrued thereon to such date of
calculation, compounded from the date of initial delivery at the approximate interest rate thereof
on each April 1 and October 1, as determined in accordance with the table of accreted values for
any Capital Appreciation Bonds prepared by the City at the time of sale thereof, assuming in any
year that such Accreted Value increases in equal daily amounts on the basis of a year of three
hundred sixty (360) days composed of twelve (12) months of thirty (30) days each.
Authori
"Authority" means the Burlingame Financing Authority, a joint powers authority
duly organized and existing under and by virtue of the laws of the State of California and a Joint
Exercise of Powers Agreement, dated May 15, 1995, between the Redevelopment Agency of the
City of Burlingame and the City.
AuthoriBonds
"Authority Bonds" means the Water and Wastewater Revenue Refunding Bonds,
Series 2013, issued by the Authority under and pursuant to the Trust Agreement.
"Bonds" means all revenue bonds of the City authorized, executed, issued and
delivered by the City under and pursuant to applicable law, the interest and principal and
redemption premium, if any, payments under and pursuant to which are payable from System
Net Revenues on a parity with the payment of the 2013 Installment Payments.
OHSUSA:751018607.4 2
Business Day
"Business Day" means a day that is not a Saturday, Sunday or legal holiday on
which banking institutions in the State of New York or California are authorized to remain
closed, or a day on which the Federal Reserve system is closed.
Capital Appreciation Bonds
"Capital Appreciation Bonds" means any Bonds described as such when issued.
city
"City" means the City of Burlingame, a municipal corporation duly organized and
existing under and by virtue of the laws of the State of California.
Code
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations issued thereunder.
Contracts
"Contracts" means all installment sale contracts, loan agreements, capital leases
or similar obligations of the City authorized and executed by the City under and pursuant to
applicable law, the interest and principal and prepayment premium, if any, payments under and
pursuant to which are payable from System Net Revenues on a parity with the payment of the
2013 Installment Payments, including, but not limited to, the 2007 Contract and the 2011
Contract.
Debt Service
"Debt Service" means, for any Fiscal Year, the sum of (1) the interest accruing
during such Fiscal Year on all outstanding Bonds, assuming that all outstanding serial Bonds are
retired as scheduled and that all outstanding term Bonds are redeemed or paid from sinking fund
payments as scheduled (except to the extent that such interest is to be paid from the proceeds of
sale of any Bonds), (2) that portion of the principal amount of all outstanding serial Bonds
maturing on the next succeeding principal payment date that would have accrued during such
Fiscal Year if such principal amount were deemed to accrue daily in equal amounts from the next
preceding principal payment date or during the year preceding the first principal payment date,
as the case may be, (3) that portion of the principal amount of all outstanding term Bonds
required to be redeemed or paid on the next succeeding redemption date (together with the
redemption premiums, if any, thereon) that would have accrued during such Fiscal Year if such
principal amount (and redemption premiums) were deemed to accrue daily in equal amounts
from the next preceding redemption date or during the year preceding the first redemption date,
as the case may be, and (4) that portion of the Installment Payments required to be made at the
times provided in the Contracts that would have accrued during such Fiscal Year if such
Installment Payments were deemed to accrue daily in equal amounts from, in each case, the next
preceding Installment Payment Date of interest or principal or the date of the pertinent Contract,
OHSUSA:751018607.4
as the case may be; provided, that (a) if any of such Bonds are Capital Appreciation Bonds or if
the Installment Payments due under any of such Contracts secure Capital Appreciation Bonds,
then the Accreted Value payment shall be deemed a principal payment and interest that is !
compounded and paid as Accreted Value shall be deemed due on the scheduled redemption or
payment date of such Capital Appreciation Bond; (b) if any of such Bonds or if the Installment
Payments due under any such Contracts bear interest payable pursuant to a variable interest rate
formula, the interest rate on such Bonds or such Contracts for periods when the actual interest
rate cannot yet be determined, shall be assumed to be equal to the greater of (i) the actual rate on
the date of calculation, or if such Bonds or Contracts are not yet outstanding, the initial rate (if
then established and binding), (ii) if the Bonds or Contracts have been outstanding for at least
twelve months, the average rate over the twelve months immediately preceding the date of
calculation, and (iii)(1) if interest on such Bonds or Contracts is excludable from gross income
under the applicable provisions of the Internal Revenue Code, the most recently published "Bond
Buyer 25 Bond Revenue Index" (or comparable index if no longer published) or (2) if interest is
not so excludable, the interest rate on direct U.S. Treasury obligations with comparable
maturities plus fifty (50) basis points; (c) if any of such Bonds or Contracts is secured by an
irrevocable letter of credit issued by a bank having a combined capital and surplus of at least one
hundred million dollars ($100,000,000), the principal payments or deposits with respect to such
Bonds or Contracts nominally due in the last Fiscal Year in which such Bonds or Contracts
mature may, at the option of the City, be treated as if they were due as specified in any loan
agreement or reimbursement agreement issued in connection with such letter of credit or
pursuant to the repayment provisions of such letter of credit and interest on such Bonds or
Contracts after such Fiscal Year shall be assumed to be payable pursuant to the terms of such
loan agreement or reimbursement agreement or repayment provisions and (d) if any of such f
Bonds or Contracts is not secured by a letter of credit as described in clause (c) of this definition l
and 20% or more of the original principal of such Bonds or the Installment Payments due under
such Contracts is not due until the final stated maturity of such Bonds or the Installment
Payments due under such Contracts, such principal may, at the option of the City, be treated as if
it were due based upon a level amortization of such principal over the term of such Bonds or
Installment Payments or twenty-five (25) years, whichever is greater.
Director of Finance
"Director of Finance" means the Director of Finance of the City or its successor
designated by the City Council.
Engineer's Report
"Engineer's Report" means a report signed by an Independent Engineer.
Event of Default
"Event of Default" means an event described in Section 6.01.
OHSUSA:751015607.4 4
Federal Securities
"Federal Securities" means United States of America Treasury bills, notes, bonds
or certificates of indebtedness, or obligations for which the full faith and credit of the United
States of America are pledged for the payment of interest and principal.
Fiscal Year
"Fiscal Year" means the period beginning on July 1 of each year and ending on
the next succeeding June 30, or any other annual accounting period hereafter selected and
designated by the City Council of the City as the Fiscal Year of the City.
Generally Accepted Accounting Principles
"Generally Accepted Accounting Principles" means the uniform accounting and
reporting procedures set forth in publications of the American Institute of Certified Public
Accountants or its successor and the Governmental Accounting Standards Board or its successor,
or by any other generally accepted authority on such procedures, and includes, as applicable, the
standards set forth by the Financial Accounting Standards Board or its successor.
Independent Certified Public Accountant
"Independent Certified Public Accountant" means any certified public accountant or firm
of such accountants duly licensed and entitled to practice and practicing as such under the laws
of the State, appointed and paid by the City, and who, or each of whom:
(A) is in fact independent according to the Statement of Auditing Standards No. 1 and
not under the domination of the City;
(B) does not have a substantial financial interest, direct or indirect, in the operations
of the City; and
(C) is not connected with the City as a councilmember, officer or employee of the
City, but who may be regularly retained to audit the accounting records of and make reports
thereon to the City.
Independent Engineer
"Independent Engineer" means any registered engineer or firm of registered
engineers of national reputation generally recognized to be well qualified in engineering matters
relating to Systems, appointed and paid by the City, and who or each of whom --
(1) is in fact independent and not under the domination of the City;
(2) does not have a substantial financial interest, direct or indirect, in the
operations of the City; and
[e�: rvxY aai of era�r� �
(3) is not connected with the City as a councihmember, officer or employee of
the City, but may be regularly retained to make reports to the City.
Installment Payment Date-, 2013 Installment Payment Date
"Installment Payment Date" means any date on which Installment Payments are
scheduled to be paid by the City under and pursuant to any Contract. "2013 Installment Payment
Date" means any date on which 2013 Installment Payments are scheduled to be paid by the City
under and pursuant hereto.
Installment Payments• 2013 Installment Payments
"Installment Payments" means the installment sale, rental or other periodic
payments scheduled to be paid by the City under and pursuant to the Contracts, including the
2013 Installment Payments. "2013 Installment Payments" means the Installment Payments
scheduled to be paid by the City under and pursuant hereto.
Insurance Consultant
"Insurance Consultant" means (a) the Risk Manager for the City or (b) any
insurance consultant or firm of insurance consultants generally recognized to be well qualified in
insurance consulting matters relating to wastewater and other municipal systems, appointed and
paid by the City, and who or each of whom --
(1) is in fact independent and not under the domination of the City;
(2) does not have a substantial financial interest, direct or indirect, in the
operations of the City; and
(3) is not connected with the City as a councilmember, officer, or employee of
the City, but may be regularly retained to make reports to the City.
Interest Payment Date
"Interest Payment Date" means a date on which an interest installment of the
2013 Installment Payment is due and payable, being April 1 and October 1 of each year to which
reference is made, commencing on October 1, 2013.
Maintenance and Operation Costs
"Maintenance and Operation Costs" means the reasonable and necessary costs
paid or incurred by the City for maintaining and operating the System, determined in accordance
with Generally Accepted Accounting Principles, including all reasonable expenses of
management and repair and other expenses necessary to maintain and preserve the System in
good repair and working order, and including all administrative costs of the City that are charged
directly or apportioned to the operation of the System, such as salaries and wages of employees,
overhead, taxes (if any) and insurance premiums, and including all other reasonable and
necessary costs of the City or charges required to be paid by it to comply with the terms hereof
OHSUSA:751018607.4
or of any resolution authorizing the issuance of any Bonds or of such Bonds, or of any resolution
authorizing the execution of any Contract or of such Contract, such as compensation,
reimbursement and indemnification of the trustee for any such Bonds or Contracts and fees and
expenses of Independent Certified Public Accountants and Independent Engineers, Insurance
Consultants and the Director of Finance, but excluding in all cases depreciation, replacement and
obsolescence charges or reserves therefor, amortization of intangibles and intergovernmental
transfers by the City which are not reimbursements or payments for overhead or other
administrative expenses incurred by the City.
Maximum Annual Debt Service
"Maximum Annual Debt Service" means the greatest total Debt Service payable
in any Fiscal Year during the period commencing with the next ensuing Fiscal Year and
terminating with the Fiscal Year in which payments are due under the last outstanding Bonds or
the last outstanding Contract, whichever is later.
Maximum Annual 2013 Installment Payments
"Maximum Annual 2013 Installment Payments" means the greatest total 2013
Installment Payments payable in any 2013 Installment Payment Year during the period
commencing with the then current 2013 Installment Payment Year and terminating with the 2013
Installment Payment Year ending on April 1,
Opinion of Counsel
"Opinion of Counsel" means a written opinion of counsel of recognized national
standing in the field of law relating to municipal bonds, appointed by the City.
Parity Obligations
"Parity Obligations" means, collectively, Bonds and Contracts.
Principal Office
"Principal Office" means the corporate trust office of the Trustee located in San
Francisco, California or such other office or offices as the Trustee shall designate from time to
time 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.
Project, 2004 Project
"Project" means any additions, betterments, extensions or improvements to the
System designated by the City Council of the City as a Project, the design, acquisition or
construction of which (together with the incidental costs and expenses related thereto) is to be
financed by the proceeds of any Parity Obligations. "2004 Project" means the capital
improvements described in Exhibit A hereto and such additions, substitutions and deletions as
OHSUSA:751018607.4 7
shall be specified in a Certificate of the City stating that such additions, substitutions or deletions
constitute part of the 2004 Project.
Purchase Price
"Purchase Price" means the principal amount plus the interest thereon owed by
the City to the Authority under the conditions and terms hereof for the repayment of the costs of
the design, acquisition and construction of the 2004 Project and the incidental costs and expenses
related thereto paid by the Authority.
Rate Stabilization Fund
"Rate Stabilization Fund" means the fund by that name established pursuant to
Section 3.02.
Subordinate Oblieations
"Subordinate Obligations" mean obligations of the City authorized and executed by the
City under applicable law, the payments under and pursuant to which are payable from System
Net Revenues, subject and subordinate to the payment of the 2013 Installment Payments and to
the payment of Panty Obligations. Such obligations may be payable from any fund established
for the purpose of paying debt service on such Subordinate Obligations.
System
"System" means properties and assets, real and personal, tangible and intangible,
of the City, now or hereafter existing, used or pertaining to the collection, treatment or disposal
of sewage and waste, including all additions, extensions, expansions, improvements and
betterments thereto and equippings thereof, together with any other properties or assets hereafter
determined by the City Council of the City to be part of the System.
System Gross Revenues
"System Gross Revenues" means all gross income and revenue received by the
City from the ownership and operation of the System, determined in accordance with Generally
Accepted Accounting Principles, including, without limiting the generality of the foregoing,
(a) all income, rents, rates, fees, connection fees, charges or other moneys derived from the
services, facilities and commodities sold, furnished or supplied through the facilities of the
System, (b) the earrings on and income derived from the investment of such income, rents, rates,
fees, charges or other moneys (including all investment earnings credited by the Trustee to the
Revenue Fund), (c) the proceeds derived by the City directly or indirectly from the sale, lease or
other disposition of a part of the System as permitted in the Installment Sale Agreement, and
(d) any transfers from (but excluding transfers to) a rate stabilization fund for the System;
provided, however, that the term "System Gross Revenues" shall not include customers' deposits
or any other deposits subject to refund until such deposits have become the property of the City.
OHSUSA:751018607.4
System Net Revenues
"System Net Revenues" means for any period of computation, the amount of the
System Gross Revenues during such period less the amount of Maintenance and Operation
Expenses during such period.
System Revenue Fund
"System Revenue Fund" means the fund by that name established pursuant to
Section 3.02.
Treasurer of the Authority
"Treasurer of the Authority" means the Treasurer of the Authority or its successor
designated by the Authority.
Trust Agreement
"Trust Agreement" means that certain Trust Agreement dated as of April 1, 2013,
by and between The Bank of New York Mellon Trust Company, N.A., as Trustee, and the
Authority, as originally executed and as it may from time to time be amended or supplemented in
accordance with its terms.
Trustee
"Trustee" means The Bank of New York Mellon Trust Company, N.A. at its
Principal Office, acting in its capacity as trustee under and pursuant to the Trust Agreement, and
its successors and assigns as provided in the Trust Agreement.
2004 Contract
"2004 Contract" means the Installmient Sale Agreement (Wastewater System) by
and between the City and the Authority, dated as of March 1, 2004, as originally executed and as
it may from time to time be amended or supplemented in accordance with its terms.
2007 Contract
"2007 Contract" means the Installment Sale Agreement (Wastewater System) by
and between the City and the Authority, dated as of March 1, 2007, as originally executed and as
it may from time to time be amended or supplemented in accordance with its terms.
2011 Contract
"2011 Contract" means the Installment Sale Agreement (Wastewater System) by
and between the City and the Authority, dated as of November 1, 2011, as originally executed
and as it may from time to time be amended or supplemented in accordance with its terms.
OHSUSA:751018607.4 9
2013 Instalhnent Payment Year
"2013 Installment Payment Year" means the twelve-month period ending on
April 1 of each year.
2013 Installment Sale Agreement
"2013 Installment Sale Agreement" means this instalment sale agreement by and
between the City and the Authority, dated as of April 1, 2013, as originally executed and as it
may from time to time be amended or supplemented in accordance herewith and with the terms
of the Trust Agreement.
Wastewater Service
"Wastewater Service" means the municipal wastewater service furnished, made
available or provided by the System.
ARTICLE H
PURCHASE OF THE 2004 PROJECT; TERMINATION OF 2004 CONTRACT
Section 2.01. Purposes. The purposes of this 2013 Installment Sale Agreement
are to provide for the refunding of the unpaid Installment Sale Payments under the 2004
Contract, together with interest accrued thereon. To effect such purposes, the Authority shall
issue Authority Bonds to be sold and the proceeds of the sale thereof to be deposited and applied
in accordance with the Trust Agreement.
Section 2.02. Transfer of 2004 Project. In consideration of the deposit of the
proceeds of the sale of the Bonds pursuant to Section 3.01 of the Trust Agreement and the
application of such moneys pursuant thereto, the City hereby sells, assigns, and transfers to the
Authority, and the Authority hereby purchases from the City, all of the City's right, title and
interest in the 2004 Project.
Section 2.03. Purchase of 2004 Project by the City. In consideration of the
obligation of the City to pay the Purchase Price as provided in Section 3.01 hereof, the Authority
hereby sells, assigns and transfers to the City, and the City hereby purchases from the Authority,
all of the Authority's right, title and interest in the 2004 Project.
Section 2.04. Termination of the 2004 Contract. The Authority and the City
hereby acknowledge that the 2004 Contract has terminated pursuant to the provisions of Article
VII thereof.
OHSUSA:751018607.4 10
". 0)a_B_III
2013 INSTALLMENT PAYMENTS
Section 3.01. Purchase Price.
(a) The Purchase Price to be paid by the City to the Authority hereunder is the
sum of the principal amount of the City's obligation hereunder plus the interest to accrue on the
unpaid balance of such principal amount from the date hereof over the term hereof, subject to
prepayment as provided in Section 3.03.
(b) The principal amount of the Purchase Price to be paid by the City to the
Authority hereunder is dollars
(c) The interest to accrue on the unpaid balance of such principal amount shall
be paid by the City as and shall constitute interest paid on the principal amount of the City's
Purchase Price obligation hereunder.
(d) Interest on the unpaid balance of the principal amount of the Purchase
Price shall accrue, from , 2013, on the principal component of each 2013
Installment Payment at the following rates:
Principal Interest Rate
Payment Date Installment (per annum) Interest Amount
OHSUSA:751018607.4 I I
Principal Interest Rate `
Payment Date Installment (per annum) Interest Amount 1
Section 3.02. Payment of 2013 Installment Payments. The City shall, subject to
prepayment as provided in Section 3.03, pay the Authority the Purchase Price, without offset or
deduction of any kind, by paying the principal installments of the 2013 Installment Payments due
annually on April 1, together with interest installments of the 2013 Installment Payments, which
interest installments shall be paid semiannually on each April 1 and October 1, commencing
October 1, 2013.
The obligation of the City to pay the Purchase Price by paying the 2013
Installment Payments is, subject to Section 8.01, absolute and unconditional, and until such time
as the 2013 Installment Payments shall have been paid in full (or provision for the payment
thereof shall have been made pursuant to Section 7.01), the City will not discontinue or suspend
any 2013 Installment Payments required to be paid by it under this section when due, whether or
not the System or any part thereof is operating or operable, or its use is suspended, interfered
with, reduced, curtailed or terminated in whole or in part, and such payments shall not be subject
to reduction whether by offset or otherwise and shall not be conditional upon the performance or
nonperformance by any party to any agreement for any cause whatsoever.
In order to carry out and effectuate the obligation of the City contained herein to
pay the Purchase Price by paying the 2013 Installment Payments, the City agrees and covenants
that all System Gross Revenues received by it shall be deposited when and as received in trust in
the City of Burlingame Wastewater System Revenue Fund (also known as the City of
Burlingame Wastewater Fund) which fund is hereby established and is hereby pledged and a
security interest is granted therein and which fund the City agrees and covenants to maintain so
long as any 2013 Installment Payments remain unpaid, and all money on deposit in the System
Revenue Fund shall be applied and used only as provided herein. The City shall pay all
Maintenance and Operation Costs (including amounts reasonably required to be set aside in
contingency reserves for Maintenance and Operation Costs the payment of which is not then
immediately required) from the System Revenue Fund as they become due and payable, and all
remaining money on deposit in the System Revenue Fund shall be set aside and deposited by the
City at the following times in the following order of priority:
OHSUSA:751018607A 12
(a) Transfers to Trustee.
Revenue Fund Deposits. On or before the fourth Business Day before
each date on which a 2013 Installment Payment becomes due and payable under this
2013 Installment Sale Agreement, the City shall, from the money in the System Revenue
Fund, transfer to the Trustee for deposit in the Revenue Fund established pursuant to the
Trust Agreement a sum equal to the 2013 Installment Payments becoming due and
payable under this 2013 Installment Sale Agreement on such due date, except that no
such deposit need be made to the extent the Trustee then holds money for such purpose in
the Revenue Fund available to pay the 2013 Installment Payment becoming due and
payable under this 2013 Installment Sale Agreement on such date. The City shall also,
from such remaining moneys in the System Revenue Fund, pay to the party entitled
thereto or transfer or cause to be transferred to any applicable debt service or other
payment fund or account for any Panty Obligations, without preference or priority
between transfers made pursuant to this sentence and the preceding sentence, and in the
event of any insufficiency of such moneys ratably without any discrimination or
preference, on the dates specified in the proceedings relating to such Parity Obligations,
the sum or sums required to be paid or deposited in such debt service or other payment
fund or account with respect to principal, premium, if any, and interest on Parity
Obligations in accordance with the terms of such Parity Obligations.
After making the foregoing deposits and transfers hereinabove required to be made, or, if
sooner, at such time as amounts remaining on deposit in the System Revenue Fund shall be
sufficient to make the remaining transfers hereinabove required to be made in such Fiscal Year
with respect to 2013 Installment Payments and Parity Obligations, the City shall apply any
remaining money in the System Revenue Fund for any lawful purpose of the City.
The City shall distribute System Net Revenues available for Outstanding 2013
Installment Payments and debt service on all Outstanding Parity Obligations on a pro rata basis
without regard to whether each such Parity Obligations has a funded debt service reserve or a
surety bond or other similar funding instrument.
(b) Rate Stabilization Fund Deposit. The City may maintain and hold a
separate fund to be known as the "Rate Stabilization Fund." From time to time the City may
deposit in the Rate Stabilization Fund from such remaining System Gross Revenues such
amounts as the City shall determine, provided that deposits for each Fiscal Year may be made
until (but not after) one hundred fifty (150) days following the end of such Fiscal Year. The City
may withdraw amounts from the Rate Stabilization Fund only for inclusion in System Gross
Revenues for any Fiscal Year, such withdrawals to be made until (but not after) one hundred
fifty (150) days after the end of such Fiscal Year. All interest or other earnings upon deposits in
the Rate Stabilization Fund shall be withdrawn therefrom and accounted for as System Gross
Revenues.
Section 3.03. Prepayment of 2013 Installment Payments. (a) The City may
prepay from any source of available funds as a whole or in part on any date, on or after April 1,
, all or any part of the principal amount of the unpaid 2013 Installment Payment becoming
due and payable on or after April 1, , in such order of prepayment as the City may
OHSUSA:751018607.4 13
determine upon written direction to the Authority and the Trustee (or, if the City fails to
designate the order of prepayment, in inverse order of Installment Payment Date and by lot
within an Installment Payment Date), at a prepayment price equal to the sum of the principal
amount prepaid, plus accrued interest to the date of prepayment, without premium.
(b) Before making any prepayment pursuant to this section, the City shall give
written notice to the Authority and the Trustee describing such event and specifying the date on
which the prepayment will be paid and the order thereof, which date shall be not less than forty-
five (45) days nor more than sixty (60) days from the date such notice is given; provided, that
notwithstanding any such prepayment, the City shall not be relieved of its obligations hereunder,
including specifically its obligations under this article, until the Purchase Price shall have been
fully paid (or provision for payment thereof shall have been made pursuant to Article VII).
Section 3.04. Pledge of System Net Revenues. All System Net Revenues are
hereby irrevocably pledged to the payment of the 2013 Installment Payments; provided, that out
of the System Net Revenues there may be apportioned such sums for such purposes as are
permitted by this article. This pledge shall constitute a lien on the System Net Revenues for the
payment of the 2013 histall hent Payments and Parity Obligations.
ARTICLE IV
PARITY OBLIGATIONS
Section 4.01. Conditions for the Execution of Parity Obligations. The City shall `
not incur any obligation, the payment of which is payable from and secured by a lien and charge l
on the System Net Revenues prior to the lien and charge on System Net Revenues securing the
2013 Installment Payments under this 2013 Installment Sale Agreement. The City may at any
time execute and deliver any Parity Obligation, the payment of which is payable from and
secured by a lien and charge on the System Net Revenues on a parity with the lien and charge on
System Net Revenues securing the 2013 Installment Payments due under this 2013 Installment
Sale Agreement, provided:
(a) Either -
(1) as evidenced by a Certificate of the City, during any twelve (12)
consecutive calendar months out of the immediately preceding eighteen (18) calendar
month period, the System Net Revenues were at least equal to one hundred twenty
percent (120%) of the Maximum Annual Debt Service for all Outstanding 2013
Installment Payments and all Outstanding Parity Obligations plus the Parity Obligation
proposed to be executed; or
(2) as evidenced by a Certificate of the City, the projected System Net
Revenues during the first Fiscal Year in which Debt Service on the Parity Obligation is
payable (other than from Bond proceeds), is at least equal to one hundred twenty percent
(120%) of the Maximum Annual Debt Service for all Outstanding 2013 Installment
Payments and all Outstanding Parity Obligations plus the Parity Obligation proposed to
be executed;
OHSUSA:751018607.4 14
(b) The proceeds of such Parity Obligation proposed to be executed shall be
used solely to fmance or refinance (including reimbursement to the City of amounts advanced for
such costs) one or more additions, betterments or improvements to the System as designated by
the City and to pay any incidental costs and expenses related thereto including the costs of
issuance, execution or delivery of such proposed Parity Obligation;
(c) There shall have been delivered to the City an Opinion of Counsel
substantially to the effect that (1) the City has the right and power under applicable law to
execute and deliver the Parity Obligation, and the Parity Obligation has been duly and lawfully
executed and delivered by the City, is infullforce and effect and is a valid and binding special
obligation of the City, and (2) such Parity Obligation has been duly and validly authorized and
issued in accordance herewith;
(d) If required by the terms of such Parity Obligation, a separate reserve has
been established for such Parity Obligation and that provision has been made to fund such
reserve; and
(e) The City is not in default under this 2013 Installment Sale Agreement.
Notwithstanding the foregoing provisions, neither clause (a) nor clause (b) above shall
limit the ability of the City to execute any Parity Obligations at any time to refund any
Outstanding 2013 Installment Payments or Outstanding Parity Obligations if the annual Debt
Service for each Fiscal Year during which such Parity Obligation is Outstanding will not be
increased by reason of the issuance of such Parity Obligation.
Section 4.02. Subordinate Obligations. The City may incur Subordinate
Obligations without meeting any of the tests set forth in Section 4.01.
F41 UNJIM
COVENANTS OF THE CITY
Section 5.01. Compliance with 2013 Installment Sale Agreement and Trust
Agreement. The City will punctually pay the 2013 Installment Payments in strict conformity
with the terms hereof, and will faithfully observe and perform all the agreements, conditions,
covenants and terms contained herein required to be observed and performed by it, and will not
terminate the 2013 Installment Sale Agreement for any cause including, without limiting the
generality of the foregoing, any acts or circumstances that may constitute failure of
consideration, destruction of or damage to the 2004 Project or the System, commercial
frustration of purpose, any change in the tax or other laws of the United States of America or of
the State of California or any political subdivision of either or any failure of the Authority to
observe or perform any agreement, condition, covenant or term contained herein required to be
observed and performed by it, whether express or implied, or any duty, liability or obligation
arising out of or connected herewith or the insolvency, or deemed insolvency, or bankruptcy or
liquidation of the Authority or any force majeure, including Acts of God, tempest, storm,
earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo,
OHSUSA:751018607.4 15
strikes, industrial disputes, lockouts, lack of transportation facilities, fire, explosion, or acts or
regulations of governmental authorities. l
The City will faithfully observe and perform all the agreements, conditions,
covenants and terms contained in the Trust Agreement required to be observed and performed by
it, and it is expressly understood and agreed by and among the parties to the 2013 Installment
Sale Agreement and the Trust Agreement that each of the agreements, conditions, covenants and
terms contained in each such agreement is an essential and material term of the obligation of the
City to repay the costs of the acquisition and construction of the 2004 Project and the costs and
expenses incidental thereto paid by the Authority pursuant to, and in accordance with, and as
authorized under law and the 2013 Installment Sale Agreement.
Section 5.02. Use of Proceeds of Authority Bonds. The Authority and the City
agree that the proceeds of the Authority Bonds will be used by the Authority to refinance the
2004 Project and to pay the incidental costs and expenses related thereto as provided herein and
in the Trust Agreement.
Section 5.03. Against Encumbrances. The City will pay or cause to be paid
when due all sums of money that may become due or purporting to be due for any labor,
services, materials, supplies or equipment furnished, or alleged to have been furnished, to or for
the City in, upon, about or relating to the System and will keep the System free of any and all
liens against any portion of the System. In the event any such lien attaches to or is filed against
any portion of the System, the City will cause each such lien to be fully discharged and released
at the time the performance of any obligation secured by any such lien matures or becomes due, /
except that if the City desires to contest any such lien it may do so. If any such lien shall be
reduced to final judgment and such judgment or any process as may be issued for the
enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter expires, the
City will forthwith pay or cause to be paid and discharged such judgment. The City will, to the
maximum extent permitted by law, indemnify and hold the Authority and the Trustee harmless
from, and defend each of them against, any claim, demand, loss, damage, liability or expense
(including attorneys' fees) as a result of any such lien or claim of lien against any portion of the
System.
Section 5.04. Against Sale or Other Disposition of Property. The City will not
sell, lease or otherwise dispose of the System or any part thereof essential to the proper operation
of the System or to the maintenance of the System Net Revenues, and will not enter into any
agreement or lease which would impair the operation of the System or any part thereof necessary
to secure adequate System Net Revenues for the payment of the 2013 Installment Payments, or
which would otherwise impair the rights of the Authority with respect to the System Net
Revenues or the operation of the System; provided, that any real or personal property which has
become nonoperative or which is not needed for the efficient and proper operation of the System,
or any material or equipment which has become worn out, may be sold if such sale will not
reduce the System Net Revenues below the requirements to be maintained under Section 5.14.
Section 5.05. Tax Covenants. (a) The City will not directly or indirectly use or
permit the use of any proceeds of the obligation provided herein or any other funds of the City or
take or omit to take any action that would cause such obligation to be an "arbitrage bond" within
OHSUSA:751018607.4 16
the meaning of Section 148(a) of the Code or a "federal -guaranteed obligation" within the
meaning of Section 149(b) of the Code or a "private activity bond" as described in Section 141
of the Code.
To that end, as long as any 2013 Installment Payments are unpaid, the City will
comply with all requirements of such sections of the Code to the extent applicable to the
obligations provided herein. In the event that at any time the City is of the opinion that for
purposes of this Section it is necessary to restrict or to limit the yield on the investment of any
moneys held by the City under this 2013 Installment Sale Agreement or by the Trustee under the
Trust Agreement, the City shall so instruct the Trustee in writing and the trustee, as appropriate,
shall act in accordance with such instructions.
The City and the Authority covenant that they will at all times do and perform all
acts necessary or desirable in order to assume that the interest on the Authority Bonds will not be
included in gross income of the registered owners thereof for federal income tax purposes and
will take no action that would result in such interest being so included.
(b) Notwithstanding any provision of this section or of Article VIII, if the City
receives an opinion of Bond Counsel that any specified action required under this section is no
longer required or that some further or different action is required to maintain the exclusion from
gross income for federal income tax purposes on the Authority Bonds, the City may conclusively
rely on such opinion in complying with the requirements of this section, and the covenants
hereunder shall be deemed to be modified to that extent.
Section 5.06. Maintenance and Operation of the System; Budgets. The City will
maintain and preserve the System in good repair and working order at all times and will operate
the System in an efficient and economical manner and will pay all Maintenance and Operation
Costs as they become due and payable.
Not later than September 1 of each year, the City will adopt and, if requested,
make available to the Authority and the Trustee, a budget approved by the City Council of the
City setting forth the estimated Maintenance and Operation Costs and the estimated payments for
Parity Obligations for the then current Fiscal Year; provided, that any such budget may be
amended at any time during any Fiscal Year and, if requested, such amended budget shall be
made available to the Authority and the Trustee.
Section 5.07. Compliance with Contracts. The City will comply with, keep,
observe and perform all agreements, conditions, covenants and terms, express or implied,
required to be performed by it contained in all contracts for the use of the System and all other
contracts affecting or involving the System to the extent that the City is a party thereto.
Section 5.08. Payment of Claims. The City will pay and discharge any and all
lawful claims for labor, materials or supplies which, if unpaid, might become a lien on the
System Net Revenues or any part thereof prior or superior to the obligation to make the 2013
Installment Payments as provided herein or which might impair the security of the 2013
Installment Payments.
OHSUSA:751018607.4 17
Section 5.09. Insurance. The City will procure and maintain such insurance
relating to the System which it shall deem advisable or necessary to protect its interests and the
interests of the Authority and the Trustee, which insurance shall afford protection in such l
amounts and against such risks as are usually covered in connection with municipal wastewater
systems similar to the System; provided, that any such insurance may be maintained under a self-
insurance program so long as such self-insurance is maintained in the amounts and manner
usually maintained in connection with municipal wastewater systems similar to the System and
is, in the opinion of an Insurance Consultant, financially sound. All policies of insurance
required to be maintained herein shall provide that the Authority and the Trustee shall be given
thirty (30) days' written notice of any intended cancellation thereof or reduction of coverage
provided thereby.
Section 5.10. Accounting Records and Financial Statements.
(a) The City will keep appropriate accounting records in which complete and
correct entries shall be made of all transactions relating to the System, which records shall be
available for inspection by the Authority and the Trustee at reasonable hours and under
reasonable conditions.
(b) The City will prepare and file with the Authority and the Trustee annually
within one hundred eighty (180) days after the close of each Fiscal Year (commencing with the
Fiscal Year ending June 30, 2013) financial statements of the City for the preceding Fiscal Year
prepared in accordance with generally accepted accounting principles, together with an
Accountant's Report thereon.
Section 5.11. Protection of Security and Rights of the Authority and the Trustee.
The City will preserve and protect the security hereof and the rights of the Authority and the
Trustee to the 2013 Installment Payments hereunder and will warrant and defend such rights
against all claims and demands of all persons.
Section 5.12. Payment of Taxes and Compliance with Governmental
Regulations. The City will pay and discharge all taxes, assessments and other governmental
charges which may hereafter be lawfully imposed upon the System or any part thereof when the
same shall become due. The City will duly observe and conform with all valid regulations and
requirements of any governmental authority relative to the operation of the System or any part
thereof, but the City shall not be required to comply with any regulations or requirements so long
as the validity or application thereof shall be contested in good faith.
Section 5.13. Amount of Rates, Fees and Charges. The City will at all times fix,
prescribe and collect rates and charges for the Wastewater Service during each Fiscal Year which
will be at least sufficient to yield: (a) System Net Revenues for such Fiscal Year at least equal to
one hundred twenty percent (120%) of Debt Service for such Fiscal Year and (b) System Net
Revenues, excluding connection fees and transfers from the Rate Stabilization Fund, equal to one
hundred percent (100%) of Debt Service for such Fiscal Year. The City may make adjustments
from time to time in such fees and charges and may make such classification thereof as it deems
necessary, but shall not reduce the rates and charges then in effect unless the System Net
OHSUSA:751018607.4 18
Revenues from such reduced rates and charges will at all times be sufficient to meet the
requirements of this Section.
Section 5.14. Collection of Rates, Fees and Charges. The City will have in
effect at all times rules and regulations requiring each consumer or customer located on any
premises connected with the System to pay the rates, fees and charges applicable to the
Wastewater Service to such premises and providing for the billing thereof and for a due date and
a delinquency date for each bill. The City will not permit any part of the System or any facility
thereof to be used or taken advantage of free of charge by any corporation, firm or person, or by
any public agency (including the United States of America, the State of California and any city,
county, district, political subdivision, public corporation or agency of any thereof); provided, that
the City may without charge use the Wastewater Service.
Section 5.15. Further Assurances. The City will adopt, deliver, execute and
make any and all further assurances, instruments and resolutions as may be reasonably necessary
or proper to carry out the intention or to facilitate the performance hereof and for the better
assuring and confirming unto the Authority of the rights and benefits provided to it herein.
Section 5.16. Continuing Disclosure. The City hereby covenants and agrees that
it will comply with and carry out all of its obligations under the Continuing Disclosure
Certificate to be delivered by the City in connection with the execution and delivery of the
Authority Bonds. Notwithstanding any other provision hereof, failure of the City to comply with
the Continuing Disclosure Certificate shall not be considered an Event of Default hereunder;
provided, however, that any beneficial owner of Authority Bonds may take such actions as may
be necessary and appropriate, including seeking mandate or specific performance by court order,
to cause the City to comply with its obligations in this section and the Continuing Disclosure
Certificate.
ARTICLE VI
EVENTS OF DEFAULT AND
Section 6.01. Events of Default and Acceleration of Principal. If one or more of
the following Events of Default shall happen, that is to say --
(1) if default shall be made in the due and punctual payment of
any 2013 Installment Payment or of any Parity Obligation when and as the same shall become
due and payable;
(2) if default shall be made by the City in the performance of
any of the other agreements or covenants contained herein required to be performed by it, and
such default shall have continued for a period of sixty (60) days after the City shall have been
given notice in writing of such default by the Authority or the Trustee; or
(3) if default shall be made by the City in the performance of
any of the agreements or covenants contained in any Parity Obligation required to be performed
by it, other than as set forth in (a) above, and such default shall have continued after any notice
and grace period provided by such Parity Obligation; or
OHSUSA:751018607.4 19
(4) if the -City shall file a petition or answer seeking
arrangement or reorganization under the federal bankruptcy laws or any other applicable law of f
the United States of America or any state therein, or if a court of competent jurisdiction shall l
approve a petition filed with or without the consent of the City seeking arrangement or
reorganization under the federal bankruptcy laws or any other applicable law of the United States
of America or any state therein, or if under the provisions of any other law for the relief or aid of
debtors any court of competent jurisdiction shall assume custody or control of the City or of the
whole or any substantial part of its property;
then and in each and every such case during the continuance of such Event of Default specified
in clause (1) or (4) above, the Trustee shall, and for any other such Event of Default the Trustee
may, by notice in writing to the City, declare the entire principal amount of the unpaid 2013
Installment Payments and the accrued interest thereon to be due and payable immediately, and
upon any such declaration the same shall become immediately due and payable, anything
contained herein to the contrary notwithstanding. This Section is subject to the condition,
however, that if at any time after the entire amount of the unpaid principal amount of the 2013
Installment Payments and the accrued interest thereon shall have been so declared due and
payable and before any judgment or decree for the payment of the money due shall have been
obtained or entered, the City shall deposit with the Trustee a sum sufficient to pay the unpaid
amount of the 2013 Installment Payments due otherwise than as a result of such declaration and
in the applicable debt service fund(s) the unpaid principal amount of any payments due under
any Parity Obligation referred to in clause (1) above due and payable prior to such declaration
and the accrued interest thereon, with interest on such overdue installments at the rate or rates
applicable to such unpaid 2013 Installment Payments if paid in accordance with their terms and `
on the Panty Obligations in accordance with their terms, and the City shall have paid the
reasonable expenses of the Authority, the Trustee and any fiduciaries for Panty Obligations
resulting from such declaration, and any and all other defaults known to the Trustee (other than
in the payment of the entire amount of the unpaid 2013 Installment Payments 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 Trustee, by written notice to the City, may rescind and annul
such declaration and its consequences; but no such rescission and annulment shall extend to or
shall affect any subsequent default or shall impair or exhaust any right or power consequent
thereon.
Section 6.02. Application of System Net Revenues and Rate Stabilization Fund
Upon Acceleration. All System Net Revenues and all moneys on deposit in the Rate
Stabilization Fund upon the date of the declaration of acceleration by the Trustee as provided in
Section 6.01 and all System Net Revenues thereafter received shall be applied in the following
order --
First, to the payment of the fees, costs and expenses of the Trustee, if any, in
carrying out the provisions of this article, including reasonable compensation to its agents,
accountants and counsel and including any indemnification expenses; and
Second, to the payment of the interest on the 2013 Installment Payments and
interest then due and payable on the entire principal amount of the unpaid Parity Obligations, and
OHSUSA:751018607.4 20
the unpaid principal components of the 2013 Installment Payments and the principal amount of
the Parity Obligations which has become due and payable, whether on the original due date or
upon acceleration, with interest on the overdue principal amount of the 2013 Installment
Payments at the rate or rates applicable to such 2013 Installment Payments and the principal and
interest amounts of the unpaid Parity Obligations at the rate or rates of interest then applicable to
such Parity Obligations, and, if the amount available shall not be sufficient to pay in full all the
amounts due with respect to the 2013 Installment Payments and the Parity Obligations, together
with such interest on the 2013 Installment Payments and interest on Parity Obligations, then to
the payment thereof ratably, according to the principal and interest due, without any
discrimination or preference.
Section 6.03. Other Remedies. The Trustee shall have the right --
(a) by mandamus or other action or proceeding or suit at law or in equity to
enforce its rights against the City or any councihnember, officer or employee thereof, and to
compel the City or any such councilmember, officer or employee to perform and carry out its or
his duties under law and the agreements and covenants required to be performed by it or him
contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate
the rights of the Authority or the Trustee; or
(c) by suit in equity upon the happening of an Event of Default to require the
City and its councilmembers, officers and employees to account as the trustee of an express trust.
Section 6.04. Non -Waiver. Nothing in this article or in any other provision
hereof shall affect or impair the obligation of the City, which is absolute and unconditional, to
pay the 2013 Installment Payments from the System Net Revenues to the Trustee at the
respective due dates or upon prepayment, or shall affect or impair the right of the Trustee, which
is also absolute and unconditional, to institute suit to enforce such payment by virtue of the
contract embodied herein.
A waiver of any default or breach of duty or contract by the Trustee shall not
affect any subsequent default or breach of duty or contract or impair any rights or remedies on
any such subsequent default or breach of duty or contract. No delay or omission by the Trustee
to exercise any right or remedy accruing upon any default or breach of duty or contract shall
impair any such right or remedy or shall be construed to be a waiver of any such default or
breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon
the Trustee by law or by this article may be enforced and exercised from time to time and as
often as shall be deemed expedient by the Trustee.
If any action, proceeding or suit to enforce any right or exercise any remedy is
abandoned or determined adversely to the Trustee, the Authority and the City and the Trustee
shall be restored to their former positions, rights and remedies as if such action, proceeding or
suit had not been brought or taken.
Section 6.05. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy
OHSUSA:751018607.4 21
shall be cumulative and shall be in addition to every other remedy given hereunder or now or
hereafter existing in law or in equity or by statute or otherwise and may be exercised without
exhausting and without regard to any other remedy conferred by law. l
ARTICLE VII
DISCHARGE OF OBLIGATIONS
Section 7.01. Discharge of Obligations.
(a) If the City shall pay or cause to be paid all the 2013 Installment Payments
at the times and in the manner provided herein, the right, title and interest of the Authority herein
and the obligations of the City hereunder shall thereupon cease, terminate, become void and be
completely discharged and satisfied.
(b) Any unpaid principal installment of the 2013 Installment Payments shall
on its payment date or date of prepayment be deemed to have been paid within the meaning of
and with the effect expressed in subsection (a) of this section if the City makes payment of such
2013 Installment Payments and the prepayment premium, if applicable, in the manner provided
herein.
(c) All or any portion of unpaid principal installments of the 2013 Installment
Payments shall, prior to their payment dates or dates of prepayment, be deemed to have been
paid within the meaning of and with the effect expressed in subsection (a) of this section if (i)
notice is. provided by the City to the Trustee as required by the Trust Agreement, (ii) there shall
have been deposited with the Trustee either money in an amount which shall be sufficient, or l
Government Securities (as that term is defined in the Trust Agreement), the interest on and
principal of which when paid will provide money which, together with money, if any, deposited
with the Trustee, shall be sufficient to pay when due the principal installments of such 2013
Installment Payments or such portions thereof on and prior to their payment dates or their dates
of prepayment, as the case may be, and the prepayment premiums, if any, applicable thereto, and
(iii) an opinion of nationally recognized bond counsel is filed with the Trustee to the effect that
the action taken pursuant to this subsection will not cause the interest on the Authority Bonds to
be includable in gross income under the Code for federal income tax purposes.
(d) After the payment of all 2013 Installment Payments and prepayment
premiums, if any, as provided in this section, and payment of all fees and expenses of the
Trustee, the Trustee, upon request of the City, shall cause an accounting for such period or
periods as may be requested by the City to be prepared and filed with the City and the Authority
and shall execute and deliver to the City and the Authority all such instruments as may be
necessary or desirable to evidence such total discharge and satisfaction of the 2013 Installment
Sale Agreements, and the Trustee shall pay over and deliver to the City, as an overpayment of
2013 Installment Payments, all such money or investments held by it pursuant hereto other than
such money and such investments as are required for the payment or prepayment of the 2013
Installment Payments, which money and investments shall continue to be held by the Trustee in
trust for the payment of the 2013 Installment Payments and shall be applied by the Trustee
pursuant to the Trust Agreement.
OHSUSA:751018607.4 22
ARTICLE VIII
NIISCELLANEOUS
Section 8.01. Liability of City Limited to System Net Revenues.
Notwithstanding anything contained herein, the City shall not be required to advance any
moneys derived from any source of income other than the System Net Revenues for the payment
of the 2013 Installment Payments or for the performance of any agreements or covenants
required to be performed by it contained herein. The City may, however, advance moneys for
any such purpose so long as such moneys are derived from a source legally available for such
purpose and may be legally used by the City for such purpose.
The obligation of the City to make the 2013 Installment Payments is a special
obligation of the City payable solely from the System Net Revenues as provided herein, and does
not constitute a debt of the City or of the State of California or of any political subdivision
thereof within the meaning of any constitutional or statutory debt limitation or restriction.
Section 8.02. Benefits of 2013 Installment Sale Agreement Limited to Parties.
Nothing contained herein, expressed or implied, is intended to give to any person other than the
Authority, the City or the Trustee any right, remedy or claim under or pursuant hereto, and any
agreement or covenant required herein to be performed by or on behalf of the Authority or the
City or the Trustee shall be for the sole and exclusive benefit of the other parties.
Section 8.03. Successor Is Deemed Included in all References to Predecessor.
Whenever either the Authority or the City or the Trustee is named or referred to herein, such
reference shall be deemed to include the successor to the powers, duties and functions that are
presently vested in the Authority or the City or the Trustee, and all agreements and covenants
required hereby to be performed by or on behalf of the Authority or the City or the Trustee shall
bind and inure to the benefit of the respective successors thereof whether so expressed or not.
Section 8.04._ Waiver of Personal Liability. No councilmember, officer or
employee of the City shall be individually or personally liable for the payment of the 2013
Installment Payment, but nothing contained herein shall relieve any councilmember, officer or
employee of the City from the performance of any official duty provided by any applicable
provisions of law or hereby.
Section 8.05. Article and Section Headings, Gender and References. The
headings or titles of the several articles and sections hereof and the table of contents appended
hereto shall be solely for convenience of reference and shall not affect the meaning, construction
or effect hereof, and words of any gender shall be deemed and construed to include all genders.
All references herein to "Articles," "Sections," "Exhibits" and other subdivisions or clauses are
to the corresponding articles, sections, exhibits, subdivisions or clauses hereof; and the words
"hereby," "herein," "hereof," "hereto," "herewith" and other words of similar import refer to the
2013 Installment Sale Agreement as a whole and not to any particular article, section, exhibit,
subdivision or clause hereof.
OHSUSA:751018607.4 23
Section 8.06. Partial Invalidity. If any one or more of the agreements or
covenants or portions thereof required hereby to be performed by or on the part of the Authority f
or the City shall be contrary to law, then such agreement or agreements, such covenant or l
covenants or such portions thereof shall be null and void and shall be deemed separable from the
remaining agreements and covenants or portions thereof and shall in no way affect the validity
hereof. The Authority and the City hereby declare that they would have executed the 2013
Installment Sale Agreement, and each and every other article, section, paragraph, subdivision,
sentence, clause and phrase hereof irrespective of the fact that any one or more articles, sections,
paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any
person or circumstance may be held to be unconstitutional, unenforceable or invalid.
Section 8.07. Assignment. The 2013 Installment Sale Agreement and any rights
hereunder shall be assigned by the Authority to the Trustee as provided in the Trust Agreement;
to which assignment the City hereby expressly acknowledges and consents. The City
acknowledges having read the Trust Agreement, approves the Trust Agreement and agrees to
perform all duties imposed on it by the Trust Agreement. Insofar as any section of the Trust
Agreement imposes duties and responsibilities on the City it is specifically incorporated herein
by reference. To the extent that this 2013 Installment Sale Agreement confers upon or gives or
grants the Trustee any right, remedy or claim under or by reason of this 2013 Installment Sale
Agreement, the Trustee is hereby explicitly recognized as being a third -party beneficiary
hereunder and may enforce any such right, remedy or claim conferred, given or granted
hereunder.
Section 8.08. Net Contract. The 2013 Installment Sale Agreement shall be `
deemed and construed to be a net contract, and the City shall pay absolutely net during the term t
hereof the 2013 Installment Payments and all other payments required hereunder, free of any
deductions and without abatement, diminution or set-off whatsoever.
Section 8.09. California Law. The 2013 Installment Sale Agreement shall be
construed and governed in accordance with the laws of the State of California.
Section 8.10. Indemnification. The City shall, to the full extent then permitted
by law, indemnify, protect, hold harmless, save and keep harmless the Authority and its
directors, officers and employees and the Trustee and its directors, officers and employees from
and against any and all liability, obligations, losses, claims and damages whatsoever, regardless
of the cause thereof, and expenses in connection therewith, including, without limitation, counsel
fees and expenses, penalties and interest arising out of or as the result of the entering into of the
2013 Installment Sale Agreement, the Trustee's acceptance or administration of the trust of the
Trust Agreement, or the exercise or performance of any of its powers or duties thereunder or
under any of the documents relating to the Bonds to which it is a party, the acquisition,
construction, installation and use of the 2004 Project and each portion thereof or any accident in
connection with the operation, use, condition or possession of the 2004 Project or any portion
thereof resulting in damage to property or injury to or death to any person including, without
limitation, any claim alleging latent and other defects, whether or not discoverable by the City or
the Authority; any claim for patent, trademark or copyright infringement; and any claim arising
out of strict liability in tort. The indemnification arising under this section shall continue in full
force and effect notwithstanding the full payment of all obligations hereunder or the termination
OHSUSA:751018607.4 24
hereof for any reason. The City agrees not to withhold or abate any portion of the payments
required pursuant hereto by reason of any defects, malfunctions, breakdowns or infirmities of
the 2004 Project. The City and the Authority mutually agree to promptly give notice to each
other of any claim or liability hereby indemnified against following either's learning thereof.
Section 8.11. Funds. Any fund required to be established and maintained herein
by the Director of Finance may be established and maintained in the accounting records of the
Director of Finance either as an account or a fund, and may, for the purpose of such accounting
records, any audits thereof and any reports or statements with respect thereto, be treated either as
an account or a fund; but all such records with respect to any such fund shall at all times be
maintained in accordance with sound accounting practice and with due regard for the protection
of the security of the Authority Bonds and the rights of the owners of the Authority Bonds.
Section 8.12. Notices. All written notices to be given hereunder shall be given
by mail to the party entitled thereto at its address set forth below, or at such other address as such
party may provide to the other party in writing from time to time, namely:
If to the City: City of Burlingame
501 Primrose Road
Burlingame, CA 94010-3997
Attention: Finance Director
If to the Authority: Burlingame Financing Authority
c/o City of Burlingame -Dept. of Finance
501 Primrose Road
Burlingame, CA 94010-3997
Attention: Executive Director
Section 8.13. Effective Date. The 2013 Installment Sale Agreement shall
become effective upon its execution and delivery, and shall terminate when the Purchase Price
shall have been fully paid (or provision for the payment thereof shall have been made pursuant to
Article VII).
Section 8.14. Execution in Counterparts. The 2013 Installment Sale Agreement
may be executed in several counterparts, each of which shall be deemed an original, and all of
which shall constitute but one and the same instrument.
oHSosA:751018607.4 25
IN WITNESS WHEREOF, the parties hereto have executed and attested the 2013
Installment Sale Agreement by their officers thereunto duly authorized as of the day and year
first written above. l
CITY OF BURLINGAME
IC
Finance Director/Treasurer
BURLINGAME FINANCING
AUTHORITY
:A
OHSUSA:751018607A 26
Executive Director
.4.I1: .I
THE 2004 PROJECT
The 2004 Project consists of the capital improvements funded with the
Burlingame Financing Authority Water and Wastewater Revenue Bonds, Series 2004.
OHSUSA:751018607.4
2013 INSTALLMENT SALE AGREEMENT
(WASTEWATER SYSTEM)
by and between the
CITY OF BURLINGAME,
as Purchaser
►:`u -1x- ry
BURLINGAME FINANCING AUTHORITY,
as Seller
for the
CITY OF BURLINGAME
WASTEWATER SYSTEM PROJECTS
Dated as of April 1, 2013
OHSUSA:751018607.4
c
TABLE OF CONTENTS
Page
( ARTICLE I DEFINITIONS................................................................................................
2
Section1.01.
Definitions............................................................................................
2
ARTICLE II PURCHASE OF THE 2004 PROJECT; TERMINATION OF 2004
CONTRACT..................................................................................................
10
Section2.01.
Purposes.............................................................................................10
Section 2.02.
Transfer of 2004 Project....................................................................
10
Section 2.03.
Purchase of 2004 Project by the City .................................................
10
Section 2.04.
Termination of the 2004 Contract... ...................................................
10
ARTICLE III 2013 INSTALLMENT PAYMENTS............................................................
11
Section 3.01.
Purchase Price....................................................................................
11
Section 3.02.
Payment of 2013 Installment Payments .............................................
12
Section 3.03.
Prepayment of 2013 Installment Payments ........................................
13
Section 3.04.
Pledge of System Net Revenues........................................................
14
ARTICLE IV PARITY OBLIGATIONS.............................................................................14
Section 4.01.
Conditions for the Execution of Parity Obligations ...........................14
Section 4.02.
Subordinate Obligations.....................................................................
15
ARTICLE V COVENANTS OF THE CITY......................................................................15
Section 5.01.
Compliance with 2013 Installment Sale Agreement and Trust
Agreement..........................................................................................
15
Section 5.02.
Use of Proceeds of Authority Bonds .................................................
16
Section 5.03.
Against Encumbrances.......................................................................16
Section 5.04.
Against Sale or Other Disposition of Property ..................................
16
Section 5.05.
Tax Covenants...................................................................................
16
Section 5.06.
Maintenance and Operation of the System; Budgets .........................
17
Section 5.07.
Compliance with Contracts................................................................
17
Section 5.08.
Payment of Claims.............................................................................
17
Section5.09.
Insurance............................................................................................
18
Section 5.10.
Accounting Records and Financial Statements ..................................
18
Section 5.11.
Protection of Security and Rights of the Authority and the
Trustee................................................................................................
18
Section 5.12.
Payment of Taxes and Compliance with Governmental
Regulations........................................................................................
18
Section 5.13.
Amount of Rates, Fees and Charges ..................................................
18
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OHSUSA:751018607.4
TABLE OF CONTENTS
(continued)
Page
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OHSUSA:751018607.4
Section 5.14.
Collection of Rates, Fees and Charges ..............................................
19
Section 5.15.
Further Assurances.............................................................................
19
Section 5.16.
Continuing Disclosure.......................................................................
19
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES ................................................
19
Section 6.01.
Events of Default and Acceleration of Principal ...............................
19
Section 6.02.
Application of System Net Revenues and Rate Stabilization
Fund Upon Acceleration....................................................................
20
Section 6.03.
Other Remedies..................................................................................
21
Section6.04.
Non-Waiver........................................................................................
21
Section 6.05.
Remedies Not Exclusive....................................................................
21
ARTICLE VII DISCHARGE OF OBLIGATIONS...............................................................
22
Section 7.01.
Discharge of Obligations...................................................................
22
ARTICLE VIII MISCELLANEOUS...................................................................................... 23
Section 8.01.
Liability of City Limited to System Net Revenues ............................
23
Section 8.02.
Benefits of 2013 Installment Sale Agreement Limited to Parties......
23
Section 8.03.
Successor Is Deemed Included in all References to Predecessor ......
23
Section 8.04.
Waiver of Personal Liability..............................................................
23
Section 8.05.
Article and Section Headings, Gender and References .....................
23
Section 8.06.
Partial Invalidity.................................................................................
24
Section 8.07.
Assignment........................................................................................
24
Section 8.08.
Net Contract.......................................................................................
24
Section 8.09.
California Law...................................................................................
24
Section 8.10.
Indemnification..................................................................................
24
Section8.11.
Funds..................................................................................................
25
Section8.12.
Notices...............................................................................................
25
Section 8.13.
Effective Date....................................................................................
25
Section 8.14.
Execution in Counterparts..................................................................
25
EXHIBIT A THE 2004 PROJECT...................................................................................
A-1
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